What changed in this filing

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Item 1. Business

2021-09-13 compared with 2020-09-03 · 138 added, 113 removed, 89 unchanged (74% of the section changed)

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These forward-looking statements include, among others, such things as:

• the impact to our business of the COVID-19 pandemic;

• amounts and nature of future project awards, revenue and margins from each of our segments;

• our ability to generate sufficient cash from operations, access our credit facility, or raise cash in order to meet our short and long-term capital requirements;

• our ability to comply with the covenants in our Credit Agreement;

• the impact to our business of changes in crude oil, natural gas and other commodity prices;

• the impact to our business of the COVID-19 pandemic;

• amounts and nature of future revenue and margins from each of our segments;

• trends in the industries we serve;

• the likely impact of new or existing regulations or market forces on the demand for our services;

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• expansion and other trends of the industries we serve.

• our ability to comply with the covenants in our credit agreement.

These statements are based on certain assumptions and analyses we made in light of our experience and our historical trends, current conditions and expected future developments as well as other factors we believe are appropriate.

However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties which could cause actual results to differ materially from our expectations, including:

• the risk factors discussed in Item 1A of this Annual Report and listed from time to time in our filings with the Securities and Exchange Commission;

• economic, market or business conditions in general (including the length and severity of the current economic slowdown) and in the oil, natural gas, power, agricultural and mining industries in particular;

• the risk factors discussed in Item 1A of this Annual Report and listed from time to time in our filings with the Securities and Exchange Commission ("SEC");

• economic, market or business conditions in general (including the length and severity of the COVID-19 pandemic) and in the oil, natural gas, power, petrochemical, agricultural and mining industries in particular;

• the transition to renewable energy sources and its impact on our current customer base;

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• delays in the commencement or progression of major projects, whether due to COVID-19 concerns, permitting issues or other factors;

• reduced creditworthiness of our customer base and the higher risk of non-payment of receivables due to volatility of crude oil, natural gas, and other commodity prices to which our customers' businesses are affected;

• reduced creditworthiness of our customer base and the higher risk of non-payment of receivables due to volatility of crude oil, natural gas, and other commodity prices which affect our customers' businesses;

• the inherently uncertain outcome of current and future litigation;

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• changes in laws or regulations, including the imposition, cancellation or delay of tariffs on imported goods.

• other factors, many of which are beyond our control.

Consequently, all of the forward-looking statements made in this Annual Report are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business operations.

We assume no obligation to update publicly, except as required by law, any such forward-looking statements, whether as a result of new information, future events or otherwise.

The Company began operations in 1984 as an Oklahoma corporation under the name of Matrix Service.

We assume no obligation to update, except as required by law, any such forward-looking statements, whether as a result of new information, future events or otherwise.

We began operations in 1984 as an Oklahoma corporation under the name of Matrix Service.

In 1989, we incorporated in the State of Delaware under the name of Matrix Service Company.

We provide engineering, fabrication, infrastructure, construction, and maintenance services primarily to the oil, gas, power, petrochemical, industrial, agricultural, mining and minerals markets.

We provide engineering, fabrication, infrastructure, construction, and maintenance services primarily to the oil, natural gas, power, petrochemical, industrial, agricultural, mining and minerals markets.

We also sell products for crude oil and refined product aboveground storage tanks.

We maintain regional offices throughout the United States, Canada and other international locations, and operate through separate union and merit subsidiaries.

The Company is licensed to operate in all 50 states, in four Canadian provinces and in other international locations.

We are licensed to operate in all 50 states, in four Canadian provinces and in other international locations.

Our principal executive offices are located at 5100 E.

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We believe we have an obligation to better the world in which we live and work – to do today’s work in a manner that advances and protects tomorrow’s world for future generations.

Across the ideals of environmental stewardship, social responsibility, and governance, we are committed to ensuring our business strategies, policies, and practices align with sustainability goals where we can have the greatest impact globally and in our own local communities.

Across the ideals of environmental stewardship, social responsibility, governance, diversity, inclusiveness and equity, we are committed to ensuring our business strategies, policies, and practices align with sustainability goals where we can have the greatest impact globally and in our own local communities.

We are committed to fulfilling our purpose today by safely engineering, constructing, and maintaining essential infrastructure that provides a better, brighter future for tomorrow.

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Our public website is matrixservicecompany.com .

We make available free of charge through the "Investor Relations" section of our website our annual reports to stockholders, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission ("SEC").

Any materials we file with or furnish to the SEC are also maintained on the SEC website ( sec.gov ).

The information contained on our website, or available by hyperlink from our website, is not incorporated into this Form 10-K or other documents we file with, or furnish to, the SEC.

The information contained on our website, or available by hyperlink from our website, is not incorporated into this Annual Report or other documents we file with, or furnish to, the SEC.

We intend to use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

Such disclosures will be included on our website in the "Investor Relations" section.

Investors should monitor such portions of our website for press releases, investor presentations, SEC filings and public conference calls and webcasts.

While not our primary means of communication, investors can also learn more about the Company by visiting our social media channels.

We encourage investors, the media, and others interested in Matrix to review the information posted by the Company on its Facebook site ( facebook.com/matrixservicecompany ), the company LinkedIn account ( linkedin.com/company/matrix-service-company ) and the company twitter account ( twitter.com/matrixserviceco ).

Such disclosures will be included in the "Investor Relations" section of our website.

Investors should monitor that section of our website for press releases, investor presentations, SEC filings and public conference calls and webcasts.

While not our primary means of communication, investors can also learn more about us by visiting our social media channels.

We encourage investors, the media, and others interested in us to review the information posted on our Facebook site ( facebook.com/matrixservicecompany ), our LinkedIn account ( linkedin.com/company/matrix-service-company ) and our Twitter account ( twitter.com/matrixserviceco ).

Investors, the media or other interested parties can subscribe to the Twitter feed at the address listed above.

OPERATING SEGMENTS

In fiscal 2020, we operated our business through four reportable segments:

Electrical Infrastructure;

Oil Gas & Chemical;

Storage Solutions;

and Industrial.

The Electrical Infrastructure segment consists of power delivery services provided to investor owned utilities, including construction of new substations, upgrades of existing substations, short-run transmission line installations, distribution upgrades and maintenance, as well as emergency and storm restoration services.

We also provide construction and maintenance services to a variety of power generation facilities, such as combined cycle plants and other natural gas fired power stations.

The Oil Gas & Chemical segment serves customers primarily in the downstream and midstream petroleum industries who are engaged in refining crude oil and processing, fractionating, and marketing of natural gas and natural gas liquids.

We also perform work in the petrochemical, and sulfur extraction, recovery and processing markets.

Our services include plant maintenance, turnarounds, engineering and capital construction.

We also offer industrial cleaning services, including hydro-blasting, hydro-excavating, advanced chemical cleaning and vacuum services.

The Storage Solutions segment consists of work related to aboveground storage tanks ("AST") and terminals.

Also included in this segment are cryogenic and other specialty storage tanks and terminals including liquefied natural gas, liquid nitrogen/liquid oxygen, liquid petroleum and other specialty vessels such as spheres as well as marine structures and truck and rail loading/offloading facilities.

Our services include engineering, fabrication and construction, and maintenance and repair, which includes planned and emergency services for both tanks and full terminals.

Finally, we offer AST products, including geodesic domes, aluminum internal floating roofs, floating suction and skimmer systems, roof drain systems and floating roof seals.

The Industrial segment consists of work for various industries, including major mining and minerals companies engaged primarily in the extraction of non-ferrous metals, aerospace and defense, cement, agriculture, and various industrial facilities.

Our services include engineering, fabrication and construction, and maintenance and repair, which includes planned and emergency services.

We also design instrumentation and control systems and offer specialized expertise in the design and construction of bulk material handling systems.

Due to changing markets facing our clients and to better align the financial reporting of the Company with our long-term strategic growth areas, we are changing our reporting segments.

Beginning in fiscal 2021, the Company’s financial results will be reported under the following three segments:

Due to changing markets facing our clients and to better align our financial reporting with our long-term strategic growth areas, we began reporting our financial results under new reportable segments effective July 1, 2020.

The new reportable segments along with a description of each are as follows:

• Utility and Power Infrastructure :

consists of power delivery services provided to investor owned utilities, including construction of new substations, upgrades of existing substations, transmission and distribution line installations, upgrades and maintenance, as well as emergency and storm restoration services.

We also provide construction and maintenance services to a variety of power generation facilities, including natural gas fired facilities in simple or combined cycle configuration and provide engineering, fabrication, and construction services for LNG utility peak shaving facilities.

• Process and Industrial Facilities :

and Storage and Terminal Solutions.

The services provided by each of these segments is described below.

The Utility and Power Infrastructure segment includes services provided in power delivery and power generation, as well as natural gas utility peak shaving.

This segment is similar to the former Electrical Infrastructure segment described above, but includes natural gas utility peak shaving facilities that have been historically reported in the Storage Solutions segment.

The Process and Industrial Facilities segment includes engineering, maintenance, turnarounds and capital projects for the refining, chemical and petrochemical industries;

midstream natural gas processing;

other industrial processing facilities including biofuels, fertilizer, and sulfur;

mining and minerals infrastructure;

and thermal vacuum chambers.

This segment is similar to the former Oil Gas & Chemical segment described above, but includes mining and minerals, thermal vacuum chambers, and work in other industrial facilities which were historically reported in the Industrial segment.

The Storage and Terminal Solutions segment includes engineering, construction, maintenance and repair for aboveground storage tanks and terminals;

LNG facilities for import/export fueling and bunkering;

NGL and other specialty vessels;

aboveground storage tank products;

and other renewable energy storage and terminal solutions.

This segment is similar to the former Storage Solutions segment described above, but does not include the natural gas utility peak shaving facilities, which will be reported as part of the Utility and Power Infrastructure segment.

primarily serves customers in the downstream and midstream petroleum industries who are engaged in refining crude oil and processing, fractionating, and marketing of natural gas and natural gas liquids.

We also serve customers in various other industries such as petrochemical, sulfur, mining and minerals companies engaged primarily in the extraction of non-ferrous metals, aerospace and defense, cement, agriculture, and other industrial customers.

Our services include plant maintenance, turnarounds, industrial cleaning services, engineering, fabrication, and capital construction.

• Storage and Terminal Solutions :

consists of work related to aboveground storage tanks and terminals.

We also include work related to cryogenic and other specialty storage tanks and terminals, including LNG, liquid nitrogen/liquid oxygen, liquid petroleum, hydrogen and other specialty vessels such as spheres in this segment, as well work related to marine structures and truck and rail loading/offloading facilities.

Our services include engineering, fabrication, construction, and maintenance and repair, which includes planned and emergency services for both tanks and full terminals.

Finally, we offer tank products, including geodesic domes, aluminum internal floating roofs, floating suction and skimmer systems, roof drain systems and floating roof seals.

OTHER BUSINESS MATTERS

Customers and Marketing

The Company provided services to approximately 500 customers in fiscal 2020.

We provided services to approximately 470 customers in fiscal 2021.

Most of our revenue comes from long-term customer relationships.

None of our customers individually accounted for more than 10% of our consolidated revenue in fiscal 2020.

However, within our operating segments we do have customer concentrations of varying degrees.

One customer individually accounted for $86.7 million or 12.9% of our consolidated revenue in fiscal 2021, all of which was included in the Utility and Power Infrastructure segment.

No other customers individually accounted for more than 10% of our consolidated revenue in fiscal 2021.

See Part II, Item 8.

Financial Statement and Supplementary Data, Note 13 - Segment Information, for more information about concentration of revenue by segment.

Matrix markets its services and products primarily through its marketing and business development personnel, senior professional staff and its operating management.

We market our services and products primarily through our marketing and business development personnel, senior professional staff and our operating management.

We competitively bid most of our projects;

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Contracts are generally awarded based on price, quality, safety performance, schedule, experience and customer satisfaction.

We define backlog as the total dollar amount of revenue that we expect to recognize as a result of performing work that has been awarded to us through a signed contract, limited notice to proceed or other type of assurance that we consider firm.

The following arrangements are considered firm:

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For long-term maintenance contracts with no minimum commitments and other established customer agreements, we include only the amounts that we expect to recognize as revenue over the next 12 months.

For arrangements in which we have received a limited notice to proceed, we include the entire scope of work in our backlog if we conclude that the likelihood of the full project proceeding as high.

For arrangements in which we have received a LNTP, we include the entire scope of work in our backlog if we conclude that the likelihood of the full project proceeding as high.

For all other arrangements, we calculate backlog as the estimated contract amount less revenue recognized as of the reporting date.

The following table provides a summary of changes in our backlog in fiscal 2021:

Infrastructure Oil Gas &

Chemical Storage

Solutions Industrial Total

Utility and Power Infrastructure Process and Industrial Facilities Storage and Terminal

Solutions Total

(In thousands)

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Project awards 107,279 188,969 155,465 451,713

Project cancellations (1)

Other adjustment (1)

— — (74,219) (74,219)

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0.5 0.9 0.6 0.7

(1) Industrial cancellations related to the deterioration of our relationship with a key customer in the iron and steel industry and the subsequent cancellation of work, the cancellation of a coke battery project in Canada, and cancellation of work due to the final wind-down of our domestic iron and steel maintenance business following our strategic decision to exit the business.

Cancellations in the Oil Gas & Chemical segment consist of turnaround work transferred to a local contractor as a result of COVID-19 precautions.

(1) The other adjustment in the Storage and Terminal Solutions segment was due to a customer's decision not to renew our existing LNTP for a storage tank capital project.

We were paid for all work performed on the project.

This project is still active and we will be required to update pricing when the customer makes its final investment decision, which we expect will occur in fiscal 2022.

(2) Calculated by dividing project awards by revenue recognized.

Due to the impact of the COVID-19 pandemic and current market uncertainty, our customers have remained cautious with their spending levels.

Therefore, we have seen deferrals in award dates across the business and lengthening award cycles.

In the Oil Gas & Chemical segment, we saw a shift in the timing of turnarounds and lower levels of maintenance work.

The updated start dates on many of the delayed activities is uncertain and will depend on the needs of our clients, safety guidelines, and the market.

See Item 1A, Risk Factors Related to our Business, for more information about the risks we face as a result of the COVID-19 pandemic.

Project awards in all segments are cyclical and are typically the result of a sales process that can take several months to complete.

Due to the impact of the COVID-19 pandemic and the resulting disruption to energy and industrial markets, some of our customers continue to be conservative with their spending levels.

In the Utility and Power Infrastructure segment, performance in the power delivery business continues to be strong on lower revenue.

Bidding activity is strong and we expect project awards to increase.

Similarly, our opportunity pipeline for LNG peak shaving projects is building, however those awards, while significant, can be less frequent.

During the third quarter of fiscal 2021, we received a key contract for an upgrade of an LNG peak shaving facility.

We are optimistic that electrical infrastructure and LNG peak shaving will be critical to the spending priorities of the Biden Administration and lead to increased opportunities in this segment.

In the Process and Industrial Facilities segment, the short-term impact of the global pandemic on our refinery maintenance operations has moderated.

We saw an increase in demand for refinery and maintenance work on existing long-term maintenance contracts with certain customers.

However, other customers continue to delay or reduce discretionary maintenance and capital spending.

In addition, we continue to see strong demand for thermal vacuum chambers, as well as increasing opportunities in mining and minerals and chemicals.

The larger midstream natural gas projects continue to be limited, but we are seeing some activity in smaller capital work.

We are also seeing increasing opportunities in projects that support the ongoing transition to greener energy.

In the Storage and Terminal Solutions segment, opportunities for crude oil tanks and terminals continue to be limited as our customers rationalize the near-term demand for crude oil storage and terminalling, which has been significantly disrupted by the pandemic.

We believe crude oil will continue to play an important role in the global economy for some time and we expect crude oil storage and terminal opportunities to return as the world recovers from the pandemic, however, based on the transition to greener energy, the longer-term demand for crude oil storage is less certain.

This segment also includes a strong funnel of opportunities for storage infrastructure projects related to natural gas, LNG, ammonia, NGLs, and chemical feed stocks.

We are also seeing an increase in inquiries related to renewable energy, especially for hydrogen storage and related facilities.

Project awards in all segments are cyclical and are typically the result of a sales process that can take several months or years to complete.

It is common for awards to shift from one period to another as the timing of awards is dependent upon a number of factors including changes in market conditions, permitting, off take agreements, project financing and other factors.

Backlog volatility may increase for some segments from time to time when individual project awards are less frequent, but more significant.

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Seasonality and Other Factors

Our operating results can exhibit seasonal fluctuations, especially in our Oil Gas & Chemical segment, for a variety of reasons.

Our operating results can exhibit seasonal fluctuations, especially in our Process and Industrial Facilities segment, for a variety of reasons.

Turnarounds and planned outages at customer facilities are typically scheduled in the spring and the fall when the demand for energy is lower.

Within the Electrical Infrastructure segment, transmission and distribution work is generally scheduled by the public utilities when the demand for electricity is at its lowest.

Within the Utility and Power Infrastructure segment, transmission and distribution work is generally scheduled by the public utilities when the demand for electricity is at its lowest.

Therefore, revenue volume in the summer months is typically lower than in other periods throughout the year.

During fiscal 2021, our operations were significantly impacted by the COVID-19 pandemic, which led to the closure of certain offices, shutdowns of certain job sites and the loss of productivity, among other issues.

Our business can also be affected, both positively and negatively, by seasonal factors such as energy demand or weather conditions including hurricanes, snowstorms, and abnormally low or high temperatures.

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In addition to the above noted factors, the general timing of project starts and completions could exhibit significant fluctuations.

Accordingly, results for any interim period may not necessarily be indicative of operating results for the full year.

Other factors impacting operating results in all segments come from decreased work volumes during holidays, work site permitting delays or customers accelerating or postponing work.

The differing types, sizes, and durations of our contracts, combined with their geographic diversity and stages of completion, often results in fluctuations in the Company's operating results.

Other factors impacting operating results in all segments come from decreased work volume during holidays, work site permitting delays or customers accelerating or postponing work.

The differing types, sizes, and durations of our contracts, combined with their geographic diversity and stages of completion, often results in fluctuations in our operating results.

Our overhead cost structure is generally fixed.

Significant fluctuations in revenue volumes usually leads to over or under recovery of fixed overhead costs, which can have a material impact on our gross margin and profitability.

Significant fluctuations in revenue volume usually leads to over or under recovery of fixed overhead costs, which can have a material impact on our gross margin and profitability.

Material Sources and Availability

Steel plate and steel pipe are key materials used by the Company.

Supplies of these materials are available throughout the United States and globally from numerous sources.

We anticipate that adequate amounts of these materials will be available in the foreseeable future.

However, the price, quantity, and the delivery schedules of these materials could change rapidly due to various factors, including producer capacity, the level of imports, worldwide demand, tariffs on imported goods and other market conditions.

The Company maintains insurance coverage for various aspects of its operations.

The ongoing COVID-19 pandemic has resulted in disruptions to global supply chains, which have led to higher prices for some of the materials we need to run our business, including, but not limited to, structural steel, steel piping, rebar, valves, copper, and delivery freight.

We have been proactive with managing our procurement processes to help reduce the impacts of rising materials prices on our business and to help ensure we continue to have the materials we need available.

However, rising prices and the potential for materials shortages have created additional risk into bidding and executing work profitably.

The timing of normalization of the global supply chains is uncertain and will depend on several factors, including the speed of recovery from the pandemic, producer capacity, the level of imports, worldwide demand, tariffs on imported goods and other market conditions.

We maintain insurance coverage for various aspects of our operations.

However, exposure to potential losses is retained through the use of deductibles, self-insured retentions and coverage limits.

Typically our contracts require us to indemnify our customers for injury, damage or loss arising from the performance of our services and provide warranties for materials.

The Company may also be required to name the customer as an additional insured up to the limits of insurance available, or we may be required to purchase special insurance policies or surety bonds for specific customers or provide letters of credit in lieu of bonds to satisfy performance and financial guarantees on some projects.

Matrix maintains a performance and payment bonding line sufficient to support the business.

The Company generally requires its subcontractors to indemnify the Company and the Company’s customer and name the Company as an additional insured for activities arising out of the subcontractors’ work.

We also require certain subcontractors to provide additional insurance policies, including surety bonds in favor of the Company, to secure the subcontractors’ work.

We may also be required to name the customer as an additional insured up to the limits of insurance available, or we may be required to purchase special insurance policies or surety bonds for specific customers or provide letters of credit in lieu of bonds to satisfy performance and financial guarantees on some projects.

We maintain a performance and payment bonding line sufficient to support the business.

We generally require our subcontractors to indemnify us and our customers and name us as an additional insured for activities arising out of the subcontractors’ work.

We also require certain subcontractors to provide additional insurance policies, including surety bonds in favor of us, to secure the subcontractors’ work.

There can be no assurance that our insurance and the additional insurance coverage provided by our subcontractors will fully protect us against a valid claim or loss under the contracts with our customers.

As of June 30, 2020, the Company had approximately 2,900 employees of which approximately 850 were employed in non-field positions and 2,050 were employed in field or shop positions.

The number of employees varies significantly throughout the year because of the number, type and size of projects we have in progress at any particular time.

The Covid-19 pandemic has negatively impacted the volume of our work and as a result, the number of employees is significantly lower than in normal periods where employee counts can range from 4,000 to 5,000.

The Company’s subsidiaries include both merit and union companies.

The union businesses operate under collective bargaining agreements with various unions representing different groups of our employees.

Union agreements provide union employees with benefits including health and welfare, pension, training programs and competitive compensation plans.

We have not experienced any strikes or work stoppages in recent years.

We maintain health and welfare, retirement and training programs for our merit employees and administrative personnel.

Human Capital Management

Successful execution of our business strategy is dependent on attracting, developing, and retaining key employees who represent our core values and the communities we serve.

Our people are our greatest resource, which makes our certification in fiscal 2021 as a Great Place To Work® — for the fifth consecutive year — both a point of pride and an invaluable tool for continuous improvement supporting our objective of always being an employer of choice.

Our office-based employee retention rate has consistently been above 90% for the past 5 years.

Given the nature of our work, the size of our employee population can vary significantly throughout the year because of the number, type and size of projects we have in progress at any particular time.

As of June 30, 2021, we had 2,717 employees worldwide.

Of those employees, 689 were employed in office-based positions and 2,028 were employed in field or craft positions.

The breakdown by country was:

2,413 located in the United States, 265 in Canada, and 39 across other international locations.

At the end of fiscal 2021, 48% of our overall workforce and 28% of our management team was represented by women and minorities, and 33% of the independent directors serving on our Board of Directors are female.

The percentage of our employees represented by unions as of June 30, 2021 was approximately 22%.

Operating under collective bargaining agreements with various unions, our union employees are provided with benefits including health and welfare, pension, training programs and competitive compensation plans.

We have not experienced any strikes or work stoppages in recent years and are proud that our relationships with our employees and labor unions are strong.

Business Ethics and Core Values

Our employees are entrusted with engineering, constructing, and maintaining the complex, critical infrastructure that supports modern daily living and quality of life.

Ethics and integrity are foundational in our ability to be successful and are engrained in our culture and core values.

Across all areas of our business, we maintain focus on compliance and doing the right thing, and integrity is essential to every aspect of our business, in both policy and practice.

Accordingly, we are committed to ensuring compliance with all applicable laws and regulations, and to maintaining the highest standards of ethical conduct in accordance with our code of conduct.

Health and Safety

Ensuring the safety of our employees and those around us is integral to who we are, and paramount to our success and sustainability.

The journey to achieving and maintaining a zero-incident safety performance requires robust training along with comprehensive policies, processes, and systems to plan, perform, report, measure, review, and improve our performance.

We have incorporated safety as a key performance metric in our incentive compensation plan by measuring our annual Total Recordable Incident Rate ("TRIR"), which is calculated by multiplying the number of recordable incidents by 200,000 and dividing that number by the total hours worked each year.

This metric is also used by others in our industry, which allows for a more objective comparison of our performance.

In fiscal 2021, our TRIR was 0.28, which represents a record for us and world-class safety performance.

Our commitment to health and safety during the pandemic reached far beyond our employees and included their families, our clients, and our communities.

Relying on our Business Continuity Plan, we took swift, immediate action across our network of offices and on our project sites to help protect our people and those with whom we work.

We provided our clients with our COVID-19 Mitigation Plan and Infectious Disease Response Program, both of which also address supplier requirements, and we worked proactively with our clients to ensure proper protocols were in place and followed.

Diversity, Equity, and Inclusion (DEI)

Foundational to attracting, developing, and retaining a diverse, engaged workforce is our commitment to making sure our employees feel safe, know they are valued and that their work matters, and that they are provided opportunities to achieve their maximum potential.

We believe when we value each other’s differences and encourage everyone’s voice to be heard, we can break down the barriers that stifle ideas and opportunities.

In fiscal 2021, we established our employee diversity baseline to identify areas for improvement and help shape our recruiting efforts, succession planning, and professional development.

We sponsored Days of Understanding and other events covering topics such as implicit and unconscious bias, racism and the Tulsa Race Massacre, uncomfortable conversations, LGBTQ+ history and inclusion, and more.

In late fiscal 2021, we also established the framework to support Employee Resource Groups ("ERGs") and, with input from our employees enterprise-wide, identified our first ERGs, which will focus on the following communities:

Asian, Black, Hispanic/Latino, LGBTQ+, Women, and Veterans.

Our ERGs will be designed to foster a diverse and inclusive workplace through employee-led, organic efforts.

Total Rewards Package

As part of our compensation philosophy and to attract and retain superior talent, we offer and maintain market-competitive, total rewards programs for our employees.

In addition to base salaries, additional programs include incentive and project bonus opportunities, comprehensive healthcare coverage and insurance benefits, Company matched retirement plans, health savings and flexible spending accounts, an Employee Stock Purchase Plan, paid holidays and other paid time off, family leave, and flexible work schedules where possible.

Other offerings include employee assistance programs with 365/24/7 access to resources and help, and Matrix HealthMatters, our robust wellness program that provides resources and education to help employees and their families get and stay healthy, focusing wholistically on physical, mental and financial health.

Training and Employee Development Programs

Investment in continuous learning is essential to providing industry-leading expertise and service to our clients, continuous improvement across our organization, and meaningful career development opportunities for our people.

From in-person to online courses, formalized and other specialized training, our employees benefit from opportunities to strengthen their leadership and management competencies, improve communication and interpersonal skills, and advance their technical proficiency.

Through Matrix University, our people have access to resources that include a robust Learning Management System (LMS) that provides enterprise-wide access for employees to a number of online learning modules and support tools.

Our employees also benefit from the Matrix Performance Development Program, designed for collaborative development of annual performance goals and to promote continuous, transparent feedback between employees and their supervisors.

Employee Engagement

We also empower our employees to donate time, talent, and resources through Company-led initiatives, employee matching, and paid volunteer time off.

Each year, our employees collectively log thousands of hours participating in individual community service projects in addition to hours they invest serving on boards and participating in Company-sponsored charitable events.

We also provide direct corporate financial support to nonprofit organizations in the communities where we live and work.

Patents and Proprietary Technology

Matrix Service Company’s subsidiaries have several patents and patents pending, and continue to pursue new ideas and innovations to better serve our customers in several areas of our business.

The Flex-A-Span® and Flex-A-Seal® trademarks are utilized to market the Company’s unique seals for floating roof tanks.

The FastFroth® trademark is utilized to market the Company’s unique industrial cleaning process.

Our subsidiaries have several patents and patents pending, and continue to pursue new ideas and innovations to better serve our customers in several areas of our business.

The Flex-A-Span® and Flex-A-Seal® trademarks are utilized to market our unique seals for floating roof tanks.

The FastFroth® trademark is utilized to market our unique industrial cleaning process.

Our patented RS 1000 Tank Mixer controls sludge build-up in crude oil tanks through resuspension.

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Our patent for Spacerless or Geocomposite Double Bottom for Storage Tanks relates to a replacement bottom with leak detection and containment that allows for the retrofitting of an existing tank while minimizing the loss of capacity.

The patent for the

Training Tank for Personnel Entry, Exit and Rescue relates to a training device that can be used to train personnel on equipment that is made to simulate confined space scenarios.

The Company also holds a perpetual license to use various patents and technologies related to LNG storage tanks, liquid nitrogen/liquid oxygen storage tanks, liquid petroleum gas storage tanks and thermal vacuum chambers.

While the Company’s intellectual property is not its main business, we believe that the ability to use these patents and technology enables us to expand our presence in the markets we serve and minimizes the development costs typically associated with organic growth.

The patent for the Training Tank for Personnel Entry, Exit and Rescue relates to a training device that can be used to train personnel on equipment that is made to simulate confined space scenarios.

We also hold a perpetual license to use various patents and technologies related to LNG storage tanks, liquid nitrogen/liquid oxygen storage tanks, liquid petroleum gas storage tanks and thermal vacuum chambers.

While our intellectual property is not our main business, we believe that the ability to use these patents and technology enables us to expand our presence in the markets we serve and minimizes the development costs typically associated with organic growth.

Health and Safety Regulations

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In recognition of the potential for accidents within various scopes of work, these agencies have enacted strict and comprehensive safety regulations.

The Company has established and consistently reinforces and monitors compliance with comprehensive programs intended to ensure that it complies with all applicable health and safety regulations to protect the safety of its workers, subcontractors and customers.

While the Company believes that it operates safely and prudently, there can be no assurance that accidents will not occur or that the Company will not incur substantial liability in connection with the operation of its businesses.

In order to minimize the financial exposure resulting from potential accidents associated with the Company's work, the Company maintains liability insurance to limit losses that could result from our work.

We have established and consistently reinforce and monitor compliance with comprehensive programs intended to ensure that we comply with all applicable health and safety regulations to protect the safety of our workers, subcontractors and customers.

While we believe that we operate safely and prudently, there can be no assurance that accidents will not occur or that we will not incur substantial liability in connection with the operation of our businesses.

In order to minimize the financial exposure resulting from potential accidents associated with our work, we maintain liability insurance to limit losses that could result from our work.

Environmental

We believe we have an obligation to better the world in which we live and work – to do today’s work in a manner that advances and protects tomorrow’s world for future generations.

Across our organization, from our project sites to our offices, the Company is committed to environmental stewardship and to continuously seeking better, more sustainable ways to perform our work in existing and new markets, including renewables.

The Company’s operations and the operations of its customers are subject to extensive and changing environmental laws and regulations.

Across our organization, from our project sites to our offices, we are committed to environmental stewardship and to continuously seeking better, more sustainable ways to perform our work in existing and new markets, including renewables.

Our operations and the operations of our customers are subject to extensive and changing environmental laws and regulations.

These laws and regulations relate primarily to air and water pollutants and the management and disposal of hazardous materials.

The Company is exposed to potential liability for personal injury or property damage caused by any release, spill, exposure or other accident involving such pollutants, substances or hazardous materials.

In order to limit costs incurred as a result of environmental exposure, the Company maintains contractor’s pollution liability insurance that covers liability that may be incurred as a result of accidental releases of hazardous materials.

The Company believes that it is currently in compliance, in all material aspects, with all applicable environmental laws and regulations.

The Company does not expect any material charges in subsequent periods relating to environmental conditions that currently exist and does not currently foresee any significant future capital spending relating to environmental matters.

We are exposed to potential liability for personal injury or property damage caused by any release, spill, exposure or other accident involving such pollutants, substances or hazardous materials.

In order to limit costs incurred as a result of environmental exposure, we maintain contractor’s pollution liability insurance that covers liability that may be incurred as a result of accidental releases of hazardous materials.

We believe that we are currently in compliance, in all material aspects, with all applicable environmental laws and regulations.

We do not expect any material charges in subsequent periods relating to environmental conditions that currently exist and do not currently foresee any significant future capital spending relating to environmental matters.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business