What changed in this filing

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Item 1. Financial Statements

2023-05-09 compared with 2023-02-09 · 110 added, 154 removed, 415 unchanged (39% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended Six Months Ended

2022 December 31,

2021 December 31,

2022 December 31,

Three Months Ended Nine Months Ended

2023 March 31,

2022 March 31,

2023 March 31,

Revenue $ 186,895 $ 177,003 $ 589,166 $ 507,061

9 unchanged sentences

Other ( 116 ) 677 ( 706 ) 534

Loss before income tax expense ( 32,827 ) ( 13,943 ) ( 39,339 ) ( 36,746 )

Provision for federal, state and foreign income taxes — 10,976 — 5,711

Loss before income tax expense (benefit) ( 13,049 ) ( 35,046 ) ( 52,388 ) ( 71,792 )

Provision (benefit) for federal, state and foreign income taxes ( 363 ) ( 147 ) ( 363 ) 5,564

Net loss $ ( 12,686 ) $ ( 34,899 ) $ ( 52,025 ) $ ( 77,356 )

8 unchanged sentences

(In thousands)

Three Months Ended Six Months Ended

2022 December 31,

2021 December 31,

2022 December 31,

Three Months Ended Nine Months Ended

2023 March 31,

2022 March 31,

2023 March 31,

Net loss $ ( 12,686 ) $ ( 34,899 ) $ ( 52,025 ) $ ( 77,356 )

Other comprehensive loss, net of tax:

Foreign currency translation gain (loss) (net of tax expense (benefit) of $0 for the three and six months ended December 31, 2022 and $(8) and $46 for the three and six months ended December 31, 2021, respectively) 1,265 99 ( 488 ) ( 696 )

Foreign currency translation loss (net of tax expense (benefit) of $0 for the three and nine months ended March 31, 2023 and ($16) and $30 for the three and nine months ended March 31, 2022, respectively) ( 234 ) ( 32 ) ( 722 ) ( 728 )

Comprehensive loss $ ( 12,920 ) $ ( 34,931 ) $ ( 52,747 ) $ ( 78,084 )

6 unchanged sentences

Cash and cash equivalents $ 48,204 $ 52,371

Accounts receivable, less allowances (December 31, 2022—$1,112 and June 30, 2022—$1,320) 182,054 153,879

Accounts receivable, less allowances (March 31, 2023—$1,100 and June 30, 2022—$1,320) 163,426 153,879

Costs and estimated earnings in excess of billings on uncompleted contracts 53,398 44,752

34 unchanged sentences

60,000,000 shares authorized;

27,888,217 shares issued as of December 31, 2022 and June 30, 2022;

27,027,323 and 26,790,514 shares outstanding as of December 31, 2022 and June 30, 2022, respectively 279 279

27,888,217 shares issued as of March 31, 2023 and June 30, 2022;

27,037,556 and 26,790,514 shares outstanding as of March 31, 2023 and June 30, 2022, respectively 279 279

Additional paid-in capital 139,257 139,854

2 unchanged sentences

189,892 243,236

Treasury stock, at cost — 860,894 shares as of December 31, 2022, and 1,097,703 shares as of June 30, 2022 ( 10,092 ) ( 15,530 )

Treasury stock, at cost — 850,661 shares as of March 31, 2023, and 1,097,703 shares as of June 30, 2022 ( 9,889 ) ( 15,530 )

Total stockholders' equity 180,003 227,706

4 unchanged sentences

(In thousands)

Six Months Ended

2022 December 31,

Nine Months Ended

2023 March 31,

Operating activities:

5 unchanged sentences

Deferred income tax — 5,323

Loss (gain) on sale of property, plant and equipment 42 ( 102 )

Gain on sale of property, plant and equipment ( 21 ) ( 674 )

Provision for uncollectible accounts ( 63 ) 52

Accelerated amortization of deferred debt amendment fees — 1,518

Other 189 103

Changes in operating assets and liabilities increasing (decreasing) cash:

15 unchanged sentences

(In thousands)

Six Months Ended

2022 December 31,

Nine Months Ended

2023 March 31,

Financing activities:

5 unchanged sentences

Repurchase of common stock for payment of statutory taxes due on equity-based compensation ( 310 ) ( 853 )

Other Treasury Share Purchases — ( 236 )

Other — ( 354 )

Net cash used by financing activities ( 110 ) ( 1,850 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 358 ) ( 334 )

Net increase (decrease) in cash, cash equivalents and restricted cash ( 20,907 ) 8,762

Net decrease in cash, cash equivalents and restricted cash ( 4,167 ) ( 24,786 )

Cash, cash equivalents and restricted cash, beginning of period 77,371 83,878

15 unchanged sentences

Loss Treasury

Balances, September 30, 2022 $ 279 $ 137,651 $ 104,766 $ ( 9,928 ) $ ( 11,517 ) $ 221,251

Balances, December 31, 2022 $ 279 $ 137,989 $ 71,939 $ ( 8,663 ) $ ( 10,092 ) $ 191,452

Net loss — — ( 12,686 ) — — ( 12,686 )

Other comprehensive income — — — 1,265 — 1,265

Issuance of deferred shares (54,702 shares) — ( 1,085 ) — — 1,085 —

Other comprehensive loss — — — ( 234 ) — ( 234 )

Treasury shares sold to Employee Stock Purchase Plan (10,233 shares) — ( 139 ) — — 203 64

Stock-based compensation expense — 1,407 — — — 1,407

Balances, March 31, 2023 $ 279 $ 139,257 $ 59,253 $ ( 8,897 ) $ ( 9,889 ) $ 180,003

Balances, December 31, 2021 $ 279 $ 135,913 $ 132,721 $ ( 7,445 ) $ ( 15,858 ) $ 245,610

Balances, September 30, 2021 $ 279 $ 135,308 $ 157,640 $ ( 7,544 ) $ ( 17,385 ) $ 268,298

Net loss — — ( 34,899 ) — — ( 34,899 )

Other comprehensive income — — — 99 — 99

Exercise of stock options (19,550 shares) — ( 189 ) — — 388 199

Issuance of deferred shares (51,319 shares) — ( 1,018 ) — — 1,018 —

Other comprehensive loss — — — ( 32 ) — ( 32 )

Treasury shares sold to Employee Stock Purchase Plan (9,290 shares) — ( 115 ) — — 184 69

Stock-based compensation expense — 2,088 — — — 2,088

Balances, December 31, 2021 $ 279 $ 135,913 $ 132,721 $ ( 7,445 ) $ ( 15,858 ) $ 245,610

Balances, March 31, 2022 $ 279 $ 137,886 $ 97,822 $ ( 7,477 ) $ ( 15,674 ) $ 212,836

Stock Additional

10 unchanged sentences

Stock-based compensation expense — 5,154 — — — 5,154

Balances, December 31, 2022 $ 279 $ 137,989 $ 71,939 $ ( 8,663 ) $ ( 10,092 ) $ 191,452

Balances, March 31, 2023 $ 279 $ 139,257 $ 59,253 $ ( 8,897 ) $ ( 9,889 ) $ 180,003

Balances, June 30, 2021 $ 279 $ 137,575 $ 175,178 $ ( 6,749 ) $ ( 20,744 ) $ 285,539

Net loss — — ( 77,356 ) — — ( 77,356 )

Other comprehensive income loss — — — ( 696 ) — ( 696 )

Other comprehensive loss — — — ( 728 ) — ( 728 )

Exercise of stock options (19,550 shares) — ( 189 ) — — 388 199

3 unchanged sentences

Stock-based compensation expense — 5,823 — — — 5,823

Balances, December 31, 2021 $ 279 $ 135,913 $ 132,721 $ ( 7,445 ) $ ( 15,858 ) $ 245,610

Balances, March 31, 2022 $ 279 $ 137,886 $ 97,822 $ ( 7,477 ) $ ( 15,674 ) $ 212,836

Matrix Service Company

8 unchanged sentences

The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended June 30, 2022, included in our Annual Report on Form 10-K for the year then ended.

The results of operations for the three and six month periods ended December 31, 2022 may not necessarily be indicative of the results of operations for the full year ending June 30, 2023.

The results of operations for the three and nine month periods ended March 31, 2023 may not necessarily be indicative of the results of operations for the full year ending June 30, 2023.

Significant Accounting Policies

2 unchanged sentences

Remaining Performance Obligations

We had $ 574.6 million of remaining performance obligations yet to be satisfied as of December 31, 2022 .

We had $ 542.7 million of remaining performance obligations yet to be satisfied as of March 31, 2023.

We expect to recognize $ 432.7 million of our remaining performance obligations as revenue within the next twelve months.

2 unchanged sentences

As a result, we carry contract assets and liabilities in our balance sheet.

These contract assets and liabilities are calculated on a contract-by-contract basis and reported on a net basis at the end of each period and are classified as current.

These contract assets and liabilities are calculated on a contract-by-contract basis and are classified as current.

We present our contract assets in the balance sheet as Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts ("CIE").

8 unchanged sentences

Net contract liabilities $ ( 61,331 ) $ ( 20,354 ) $ ( 40,977 )

The difference between the beginning and ending balances of our CIE and BIE primarily results from the timing of revenue recognized relative to its billings.

The amount of revenue recognized during the six months ended December 31, 2022 that was included in the June 30, 2022 BIE balance was $ 52.3 million.

The difference between the beginning and ending balances of our CIE and BIE primarily results from the timing of revenue recognized relative to the billings on the associated contract.

The amount of revenue recognized during the nine months ended March 31, 2023 that was included in the June 30, 2022 BIE balance was $ 57.0 million.

This revenue consists primarily of work performed during the period on contracts with customers that had advance billings.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

Progress billings in accounts receivable at December 31, 2022 and June 30, 2022 included retentions to be collected within one year of $ 19.7 million and $ 16.1 million, respectively.

Contract retentions collectible beyond one year are included in other assets, non-current in the Condensed Consolidated Balance Sheets and totaled $ 9.0 million as of December 31, 2022 and $ 4.0 million as of June 30, 2022.

Progress billings in accounts receivable at March 31, 2023 and June 30, 2022 included retentions to be collected within one year of $ 18.9 million and $ 16.1 million, respectively.

Contract retentions collectible beyond one year are included in other assets, non-current in the Condensed Consolidated Balance Sheets and totaled $ 7.8 million as of March 31, 2023 and $ 4.0 million as of June 30, 2022.

Disaggregated Revenue

2 unchanged sentences

Geographic Disaggregation:

Three Months Ended Six Months Ended

2022 December 31,

2021 December 31,

2022 December 31,

Three Months Ended Nine Months Ended

2023 March 31,

2022 March 31,

2023 March 31,

(In thousands)

4 unchanged sentences

Contract Type Disaggregation:

Three Months Ended Six Months Ended

2022 December 31,

2021 December 31,

2022 December 31,

Three Months Ended Nine Months Ended

2023 March 31,

2022 March 31,

2023 March 31,

(In thousands)

6 unchanged sentences

Revisions in Estimates

Subsequent to the end of the second quarter of fiscal 2023, we received notice from a client that they would not approve adequate compensation to us for the impact that excessive scope changes had on our ability to progress work on a midstream gas processing project according to forecast, as well as for the impact that global supply chain issues and inflation had on the project.

The project is included in the Process and Industrial Facilities segment and reduced gross profit by $9.6 million and $9.4 million during the three and six months ended December 31, 2022, respectively.

We have accrued the full expected loss for the project, which we expect to be mechanically complete in the fourth quarter of fiscal 2023.

During the third quarter of fiscal 2023, unfavorable changes in the estimated recovery of change orders and increased forecasted costs to complete certain midstream gas processing capital projects in the Process and Industrial Facilities segment resulted in the projects reducing gross profit by $ 3.3 million.

Together with prior unfavorable changes in the estimated recovery of change orders and increased costs, the projects reduced gross profit by $ 12.7 million during the nine months ended March 31, 2023.

These charges were primarily the result of the client not approving adequate compensation to us for the impact that excessive scope changes had on our ability to progress work on the project according to forecast and for the impact that global supply chain issues and inflation had on the projects.

We have accrued the full expected loss for these projects, which we expect to be mechanically complete in July 2023.

During the three and nine months ended March 31, 2022, our results of operations were materially impacted by an increase in the forecasted costs to complete a midstream gas processing project in the Process and Industrial Facilities segment, which resulted in a decrease in gross profit of $ 4.8 million.

The increase in forecasted costs was primarily due to performance of a now-terminated subcontractor, which required rework in order to meet our client's expectations.

Matrix Service Company

Notes to Condensed Consolidated Financial Statements

During fiscal 2022, our results of operations were materially impacted by changes in the forecasted costs to complete a large capital project in the Utility and Power Infrastructure segment.

Improved project execution resulted in an increase in gross profit of $ 0.8 million during the three months ended March 31, 2022.

However, increases in the forecasted costs to complete the project during the first half of fiscal 2022 resulted in the project reducing gross profit by $ 5.1 million during the nine months ended March 31, 2022.

The increase in forecasted costs during the first half of the fiscal year was principally due to unexpected equipment repairs during commissioning that delayed the scheduled completion and increased the estimated costs to complete.

The project was completed in fiscal 2022.

During fiscal 2022, our results of operations were materially impacted by an increase in the costs required to complete a thermal energy storage tank repair and maintenance project in the Storage and Terminal Solutions segment, which resulted in a decrease in gross profit of $ 5.5 million in the first half of fiscal 2022.

The increase in costs was primarily due to changes in repair scope, expanded client weld testing and associated schedule delays.

We completed these repairs in the first quarter of fiscal 2023.

Note 3 – Property, Plant and Equipment

The following table presents the components of our property, plant and equipment - net at December 31, 2022 and June 30, 2022:

The following table presents the components of our property, plant and equipment - net at March 31, 2023 and June 30, 2022:

2023 June 30,

9 unchanged sentences

Property, plant and equipment - net $ 50,541 $ 53,869

Note 4 – Leases

We enter into lease arrangements for real estate, construction equipment and information technology equipment in the normal course of business.

Real estate leases accounted for approximately 98 % of all right-of-use assets as of December 31, 2022 .

Most real estate and information technology equipment leases generally have fixed payments that follow an agreed upon payment schedule and have remaining lease terms ranging from less than one year to 13 years.

Construction equipment leases generally have "month-to-month" lease terms that automatically renew as long as the equipment remains in use.

The components of lease expense in the Condensed Consolidated Statements of Income are as follows:

Three Months Ended Six Months Ended

December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Lease expense Location of Expense (in thousands)

Operating lease expense Cost of revenue and Selling, general and administrative expenses $ 1,788 $ 1,878 $ 3,551 $ 3,970

Short-term lease expense (1)

Cost of revenue 7,534 5,292 14,817 10,863

Total lease expense $ 9,322 $ 7,170 $ 18,368 $ 14,833

(1) Primarily represents the lease expense of construction equipment that is subject to month-to-month rental agreements with expected rental durations of less than one year.

Matrix Service Company

Notes to Condensed Consolidated Financial Statements

The future undiscounted lease payments, as reconciled to the discounted operating lease liabilities presented in our Condensed Consolidated Balance Sheets, were as follows:

December 31, 2022

Maturity Analysis:

(in thousands)

Remainder of Fiscal 2023 $ 2,863

Fiscal 2024 5,634

Fiscal 2025 4,269

Fiscal 2026 4,246

Fiscal 2027 4,161

Thereafter 12,843

Total future operating lease payments 34,016

Imputed interest ( 6,769 )

Net present value of future lease payments 27,247

current portion of operating lease liabilities 4,534

Non-current operating lease liabilities $ 22,713

The following is a summary of the weighted average remaining operating lease term and weighted average discount rate as of December 31, 2022 :

Weighted-average remaining lease term (in years) 6.8 years

Weighted-average discount rate 6.1 %

Supplemental cash flow information related to leases is as follows:

Six Months Ended

December 31, 2022

(in thousands)

Cash paid for amounts included in the measurement of lease liabilities:

Operating lease payments $ 3,617

Right-of-use assets obtained in exchange for lease liabilities:

Operating leases $ 5,219

Note 4 – Goodwill and Other Intangible Assets

6 unchanged sentences

( 36 ) — ( 71 ) ( 107 )

Net balance at December 31, 2022 $ 4,234 $ 6,111 $ 19,388 $ 29,733

Net balance at March 31, 2023 $ 4,227 $ 6,111 $ 19,374 $ 29,712

(1) The translation adjustments relate to the periodic translation of Canadian Dollar and South Korean Won denominated goodwill recorded as a part of prior acquisitions in Canada and South Korea, in which the local currency was determined to be the functional currency.

3 unchanged sentences

The fiscal 2022 test indicated that four reporting units with a combined total of $ 33.8 million of goodwill as of June 30, 2022 were at higher risk of future impairment.

Recent negative operating results of one of our reporting units at higher risk of impairment indicated that it was more likely than not that its goodwill was impaired.

This reporting unit is in the Process and Industrial Facilities segment and includes the midstream gas processing project referenced in Note 2 - Revenue, Revisions in Estimates, which experienced a material adverse change in gross profit during the second quarter of fiscal 2023.

Operating results during the second quarter of fiscal 2023 of one of our reporting units at higher risk of impairment indicated that it was more likely than not that its goodwill was impaired.

This reporting unit is in the Process and Industrial Facilities segment and includes the midstream gas processing projects referenced in Note 2 - Revenue, Revisions in Estimates, which experienced a material adverse change in gross profit during the second quarter of fiscal 2023.

Based on the indicated outcome of this project and our near-term outlook for the reporting unit, we performed an interim impairment test for the unit and concluded that its $12.3 million of goodwill was fully impaired.

The impairment was recognized in operating income during the three and six months ended December 31, 2022.

Based on the totality of both positive and negative factors, no impairment indicators related to the other reporting units existed at December 31, 2022.

The impairment was recognized in operating loss during the second quarter of fiscal 2023.

Based on the totality of both positive and negative factors, no impairment indicators related to the other reporting units existed at March 31, 2023.

However, if our view of project opportunities or gross margins deteriorates, particularly for the remaining higher risk reporting units, then we may need to perform an interim goodwill impairment test, which could result in an impairment.

During the three and nine months ended March 31, 2022, we concluded that goodwill impairment indicators existed based on the decline in the price of our stock and operating results that had underperformed during the year.

As such, we performed an interim impairment test and concluded $ 18.3 million of goodwill was impaired.

Other Intangible Assets

Information on the carrying value of other intangible assets is as follows:

At December 31, 2022

At March 31, 2023

Useful Life Gross Carrying

15 unchanged sentences

Total amortizing intangible assets $ 19,889 $ ( 15,093 ) $ 4,796

Amortization expense totaled $ 0.4 million and $ 0.9 million during the three and six months ended December 31, 2022 and $ 0.4 million and $ 1.0 million during the three and six months ended December 31, 2021, respectively.

We estimate that the remaining amortization expense related to December 31, 2022 amortizing intangible assets will be as follows (in thousands):

Amortization expense totaled $ 0.4 million and $ 1.3 million during the three and nine months ended March 31, 2023 and $ 0.4 million and $ 1.4 million during the three and nine months ended March 31, 2022, respectively.

We estimate that the remaining amortization expense related to March 31, 2023 amortizing intangible assets will be as follows (in thousands):

Period ending:

3 unchanged sentences

Fiscal 2026 555

Total estimated remaining amortization expense at December 31, 2022 $ 3,931

Total estimated remaining amortization expense at March 31, 2023 $ 3,499

Matrix Service Company

4 unchanged sentences

The maximum amount of loans under the ABL Facility is limited to $ 90.0 million.

The ABL Facility available borrowings may be increased by an amount not to exceed $ 15.0 million, subject to certain conditions, including obtaining additional commitments.

The ABL Facility's available borrowings may be increased by an amount not to exceed $ 15.0 million, subject to certain conditions, including obtaining additional commitments.

The ABL Facility is intended to be used for working capital, capital expenditures, issuances of letters of credit and other lawful purposes.

Our obligations under the ABL Facility are guaranteed by us and substantially all of our U.S.

Our obligations under the ABL Facility are guaranteed by substantially all of our U.S.

and Canadian subsidiaries and are secured by a first lien on all our assets and the assets of our co-borrowers and guarantors under the ABL Facility.

2 unchanged sentences

The ABL Facility matures, and any outstanding amounts become due and payable, on September 9, 2026 .

At December 31, 2022, our borrowing base was $ 83.2 million, we had $ 15.0 million of outstanding borrowings, and we had $ 19.2 million in letters of credit outstanding, which resulted in availability of $ 49.0 million under the ABL Facility.

At March 31, 2023, our borrowing base was $ 78.5 million, we had $ 15.0 million of outstanding borrowings, and we had $ 19.3 million in letters of credit outstanding, which resulted in availability of $ 44.2 million under the ABL Facility.

Borrowings under the ABL Facility bear interest through maturity at a variable rate based upon, at our option, an annual rate of either a base rate (“Base Rate”), an Adjusted Term Secured Overnight Financing Rate ("Adjusted Term SOFR"), or at the Canadian Prime Rate, plus an applicable margin.

11 unchanged sentences

The fee for undrawn amounts is 0.25 % per annum and is due quarterly.

The interest rate in effect for borrowings outstanding at December 31, 2022, including applicable margin, was 8.75 %.

The interest rate in effect for borrowings outstanding at March 31, 2023, including applicable margin, was approximately 7.17 %.

The ABL Facility contains customary conditions to borrowings, events of default and covenants, including, but not limited to, covenants that restrict our ability to sell assets, engage in mergers and acquisitions, incur, assume or permit to exist additional indebtedness and guarantees, create or permit to exist liens, pay cash dividends, issue equity instruments, make distribution or redeem or repurchase capital stock.

In the event that our availability is less than the greater of (i) $ 15.0 million and (ii) 15.00 % of the commitments under the ABL Facility then in effect, a consolidated Fixed Charge Coverage Ratio of at least 1.00 to 1.00 must be maintained.

We were in compliance with all covenants of the ABL Facility as of December 31, 2022.

We were in compliance with all covenants of the ABL Facility as of March 31, 2023.

Note 6 – Income Taxes

Effective Tax Rate

Our effective tax rates were zero percent for the three and six months ended December 31, 2022 , compared to ( 78.7 )% and ( 15.5 )% during the three and six months ended December 31, 2021, respectively.

The effective tax rates during fiscal 2023 were impacted by valuation allowances of $ 8.4 million and $ 9.8 million placed on deferred tax assets during the three and six months ended December 31, 2022, respectively.

Full Valuation Allowance

We placed a full valuation allowance on our deferred tax assets in the second quarter of fiscal 2022 due to the existence of a cumulative loss over a three-year period.

Our effective tax rates were 2.8 % and 0.7 % for the three and nine months ended March 31, 2023, compared to 0.4 % and ( 7.8 %) during the three and nine months ended March 31, 2022, respectively.

The effective tax rates during fiscal 2023 were impacted by valuation allowances of $ 3.6 million and $ 13.3 million placed on deferred tax assets during the three and nine months ended March 31, 2023, respectively.

Valuation Allowance

We placed a valuation allowance on our deferred tax assets in the second quarter of fiscal 2022 due to the existence of a cumulative loss over a three-year period.

We will continue to place valuation allowances on newly generated deferred tax assets and will realize the benefit associated with the deferred tax assets for which the valuation allowance has been provided to the extent we generate taxable income in the future, or cumulative losses are no longer present and our future projections for growth or tax planning strategies are demonstrated.

3 unchanged sentences

Through provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the "CARES Act"), we had an income tax benefit from the ability to carryback the fiscal 2021 federal net operating loss to a period with a higher statutory federal income tax rate.

We estimate that we will receive a $ 12.6 million tax refund in connection with this carryback, which is included in income taxes receivable in the Condensed Consolidated Balance Sheets.

During the third quarter of fiscal 2023, we received a $ 13.3 million tax refund in connection with this carryback, which was included in income taxes receivable in the Condensed Consolidated Balance Sheet as of June 30, 2022.

Deferred Payroll Taxes

1 unchanged sentence

payroll taxes we deferred through provisions of the CARES Act.

The balance of deferred payroll taxes was included within accrued wages and benefits in the Condensed Consolidated Balance Sheets.

The balance of deferred payroll taxes was included within accrued wages and benefits in the Condensed Consolidated Balance Sheet as of June 30, 2022.

Note 7 – Commitments and Contingencies

9 unchanged sentences

Unpriced Change Orders and Claims

Costs and estimated earnings in excess of billings on uncompleted contracts included revenues for unpriced change orders and claims of $ 18.2 million at December 31, 2022 and $ 8.9 million at June 30, 2022.

Costs and estimated earnings in excess of billings on uncompleted contracts included revenues for unpriced change orders and claims of $ 14.7 million at March 31, 2023 and $ 8.9 million at June 30, 2022.

The amounts ultimately realized may be significantly different than the recorded amounts resulting in a material adjustment to future earnings.

3 unchanged sentences

During the third quarter of fiscal 2020, we commenced litigation in an effort to collect accounts receivable from an iron and steel customer following the deterioration of the relationship in the second quarter of fiscal 2020.

The unpaid account receivable balance at December 31, 2022 was $ 17.0 million.

Litigation is unpredictable, however, based on the terms of the contract with this customer, we believe we are entitled to collect the full amount owed under the contract.

The unpaid account receivable balance at March 31, 2023 was $ 17.0 million.

Litigation is unpredictable;

however, based on the terms of the contract with this customer, we believe we are entitled to collect the full amount owed under the contract.

We are participants in various legal actions.

It is the opinion of management that none of the other known legal actions will have a material impact on our financial position, results of operations or liquidity.

Matrix Service Company

Notes to Condensed Consolidated Financial Statements

Note 8 – Earnings per Common Share

2 unchanged sentences

In the event we report a loss, stock options and nonvested deferred shares are not included since they are anti-dilutive.

Matrix Service Company

Notes to Condensed Consolidated Financial Statements

The computation of basic and diluted earnings per share is as follows:

Three Months Ended Six Months Ended

2022 December 31,

2021 December 31,

2022 December 31,

Three Months Ended Nine Months Ended

2023 March 31,

2022 March 31,

2023 March 31,

(In thousands, except per share data)

5 unchanged sentences

Diluted loss per share $ ( 0.47 ) $ ( 1.30 ) $ ( 1.93 ) $ ( 2.90 )

The following securities are considered antidilutive and have been excluded from the calculation of Diluted EPS:

Three Months Ended Nine Months Ended

2023 March 31,

2022 March 31,

2023 March 31,

(In thousands)

Nonvested deferred shares 133 34 81 110

Matrix Service Company

Notes to Condensed Consolidated Financial Statements

Note 9 – Segment Information

16 unchanged sentences

therefore, no intercompany profit or loss is recognized.

Corporate selling, general and administrative expenses are excluded from our three reportable segments in order to better align controllable costs with the responsibility of segment management, and to be consistent with how our chief operating decision-maker assesses segment performance and allocates resources.

Corporate selling, general and administrative expenses are excluded from our three reportable segments in order to align controllable costs with the responsibility of segment management, and to be consistent with how our chief operating decision-maker assesses segment performance and allocates resources.

In fiscal year 2022, we commenced a project to centralize and standardize certain support functions including accounting, human resources and project support.

5 unchanged sentences

(In thousands)

Three Months Ended Six Months Ended

2022 December 31,

2021 December 31,

2022 December 31,

Three Months Ended Nine Months Ended

2023 March 31,

2022 March 31,

2023 March 31,

Gross revenue

39 unchanged sentences

Notes to Condensed Consolidated Financial Statements

Total assets by segment were as follows:

Total assets by segment were as follows (in thousands):

2023 June 30,

12 unchanged sentences

The restructuring costs consist primarily of severance costs, facility closure costs, consulting fees and other liabilities.

Matrix Service Company

Notes to Condensed Consolidated Financial Statements

Restructuring costs under our business improvement plan are classified as follows:

Three Months Ended Six Months Ended Since Inception of Business Improvement Plan

December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Three Months Ended Nine Months Ended Since Inception of Business Improvement Plan

March 31, 2023 March 31, 2022 March 31, 2023 March 31, 2022

(In thousands)

Utility and Power Infrastructure

Severance and other personnel-related costs $ — $ 36 $ 37 $ 45 $ 2,621

Facility costs — — — — 348

Other intangible asset impairments — — — — 1,150

Other costs — 1 — 1 1

Total Utility and Power Infrastructure $ — $ 37 $ 37 $ 46 $ 4,120

Process and Industrial Facilities

Severance and other personnel-related costs $ 354 $ ( 27 ) $ 666 $ ( 22 ) $ 9,762

Facility costs — 1 2 1 3,208

Other intangible asset impairments — — — — 375

Other costs 28 2 28 4 ( 1,143 )

Total Process and Industrial Facilities $ 382 $ ( 24 ) $ 696 $ ( 17 ) $ 12,202

Storage and Terminal Solutions

Severance and other personnel-related costs $ 379 $ 102 $ 902 $ 69 $ 2,548

Facility costs — — — — 879

Other costs 4 5 4 5 32

Total Storage and Terminal Solutions $ 383 $ 107 $ 906 $ 74 $ 3,459

Severance and other personnel-related costs $ 311 $ — $ 708 $ 44 $ 2,295

Facility costs 126 — 126 16 224

Other costs 76 575 92 1,137 1,677

Total Corporate $ 513 $ 575 $ 926 $ 1,197 $ 4,196

Restructuring Costs by Type:

5 unchanged sentences

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-Q

Item 1. Financial Statements