MATRIX SERVICE CO 10-Q

Item 1. Financial Statements Matrix Service Company Condensed Consolidated Statements of Income (In thousands, except per share data) (unaudited) Three Months Ended September 30, 2023 September 30, 2022 Revenue $ 197,659 $ 208,431 Cost of revenue 185,800 195,423 Gross profit 11,859 13,008 Selling, general and administrative expenses 17,113 16,811 Restructuring costs — 1,287 Operating loss ( 5,254 ) ( 5,090 ) Other income (expense): Interest expense ( 325 ) ( 372 ) Interest income 150 24 Other (Note 3) 2,262 ( 1,074 ) Loss before income tax expense ( 3,167 ) ( 6,512 ) Provision for federal, state and foreign income taxes — — Net loss $ ( 3,167 ) $ ( 6,512 ) Basic loss per common share $ ( 0.12 ) $ ( 0.24 ) Diluted loss per common share $ ( 0.12 ) $ ( 0.24 ) Weighted average common shares outstanding: Basic 27,113 26,862 Diluted 27,113 26,862 See accompanying notes. -1- Table of Contents Matrix Service Company Condensed Consolidated Statements of Comprehensive Income (In thousands) (unaudited) Three Months Ended September 30, 2023 September 30, 2022 Net loss $ ( 3,167 ) $ ( 6,512 ) Other comprehensive loss, net of tax: Foreign currency translation loss ( 538 ) ( 1,753 ) Comprehensive loss $ ( 3,705 ) $ ( 8,265 ) See accompanying notes. -2- Table of Contents Matrix Service Company Condensed Consolidated Balance Sheets (In thousands) (unaudited) September 30, 2023 June 30, 2023 Assets Current assets: Cash and cash equivalents $ 27,359 $ 54,812 Accounts receivable, less allowances (September 30, 2023—$402 and June 30, 2023—$1,061) 152,300 145,764 Costs and estimated earnings in excess of billings on uncompleted contracts 42,369 44,888 Inventories 9,153 7,437 Income taxes receivable 496 496 Prepaid expenses 10,136 5,741 Other current assets 3,235 3,118 Total current assets 245,048 262,256 Restricted cash 25,000 25,000 Property, plant and equipment - net 45,027 47,545 Operating lease right-of-use assets 20,641 21,799 Goodwill 29,055 29,120 Other intangible assets, net of accumulated amortization 2,635 3,066 Other assets, non-current 14,872 11,718 Total assets $ 382,278 $ 400,504 See accompanying notes. -3- Table of Contents Matrix Service Company Condensed Consolidated Balance Sheets (In thousands, except share data) (unaudited) September 30, 2023 June 30, 2023 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 74,094 $ 76,365 Billings on uncompleted contracts in excess of costs and estimated earnings 73,133 85,436 Accrued wages and benefits 11,511 13,679 Accrued insurance 5,749 5,579 Operating lease liabilities 4,281 4,661 Other accrued expenses 2,641 1,815 Total current liabilities 171,409 187,535 Deferred income taxes 25 26 Operating lease liabilities 19,945 20,660 Borrowings under asset-backed credit facility 10,000 10,000 Other liabilities, non-current 1,776 799 Total liabilities 203,155 219,020 Commitments and contingencies Stockholders’ equity: Matrix Service Company stockholders' equity: Common stock—$.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of September 30, 2023 and June 30, 2023; 27,209,838 and 27,047,318 shares outstanding as of September 30, 2023 and June 30, 2023, respectively 279 279 Additional paid-in capital 139,773 140,810 Retained earnings 55,750 58,917 Accumulated other comprehensive loss ( 9,307 ) ( 8,769 ) 186,495 191,237 Treasury stock, at cost — 678,379 shares as of September 30, 2023, and 840,899 shares as of June 30, 2023 ( 7,372 ) ( 9,753 ) Total stockholders' equity 179,123 181,484 Total liabilities and stockholders’ equity $ 382,278 $ 400,504 See accompanying notes. -4- Table of Contents Matrix Service Company Condensed Consolidated Statements of Cash Flows (In thousands) (unaudited) Three Months Ended September 30, 2023 September 30, 2022 Operating activities: Net loss $ ( 3,167 ) $ ( 6,512 ) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 2,911 3,642 Stock-based compensation expense 1,755 2,055 Loss (gain) on sale of property, plant and equipment (Note 3) ( 2,366 ) 65 Other 72 ( 25 ) Changes in operating assets and liabilities increasing (decreasing) cash: Accounts receivable ( 6,543 ) 4,622 Costs and estimated earnings in excess of billings on uncompleted contracts 2,519 ( 14,857 ) Inventories ( 1,716 ) 1,595 Other assets and liabilities ( 7,669 ) ( 3,370 ) Accounts payable ( 2,173 ) ( 6,376 ) Billings on uncompleted contracts in excess of costs and estimated earnings ( 12,303 ) ( 11,820 ) Accrued expenses ( 195 ) ( 4,248 ) Net cash used by operating activities ( 28,875 ) ( 35,229 ) Investing activities: Capital expenditures ( 478 ) ( 1,578 ) Proceeds from asset sales (Note 3) 2,618 4 Net cash provided (used) by investing activities 2,140 ( 1,574 ) See accompanying notes. Matrix Service Company -5- Table of Contents Condensed Consolidated Statements of Cash Flows (In thousands) (unaudited) Three Months Ended September 30, 2023 September 30, 2022 Financing activities: Proceeds from issuance of common stock under employee stock purchase plan $ 45 $ 65 Repurchase of common stock for payment of statutory taxes due on equity-based compensation ( 456 ) ( 310 ) Net cash used by financing activities ( 411 ) ( 245 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 307 ) ( 981 ) Net decrease in cash, cash equivalents and restricted cash ( 27,453 ) ( 38,029 ) Cash, cash equivalents and restricted cash, beginning of period 79,812 77,371 Cash, cash equivalents and restricted cash, end of period $ 52,359 $ 39,342 Supplemental disclosure of cash flow information: Cash paid (received) during the period for: Income taxes $ ( 27 ) $ — Interest $ 389 $ 421 Non-cash investing and financing activities: Purchases of property, plant and equipment on account $ 6 $ 101 See accompanying notes. -6- Table of Contents Matrix Service Company Condensed Consolidated Statements of Changes in Stockholders’ Equity (In thousands, except share data) (unaudited) Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Balances, June 30, 2023 $ 279 $ 140,810 $ 58,917 $ ( 8,769 ) $ ( 9,753 ) $ 181,484 Net loss — — ( 3,167 ) — — ( 3,167 ) Other comprehensive loss — — — ( 538 ) — ( 538 ) Issuance of restricted stock (210,243 shares) — ( 2,738 ) — — 2,738 — Treasury shares sold to Employee Stock Purchase Plan (7,601 shares) — ( 54 ) — — 99 45 Treasury shares purchased to satisfy tax withholding obligations (55,324 shares) — — — — ( 456 ) ( 456 ) Stock-based compensation expense — 1,755 — — — 1,755 Balances, September 30, 2023 $ 279 $ 139,773 $ 55,750 $ ( 9,307 ) $ ( 7,372 ) $ 179,123 Balances, June 30, 2022 $ 279 $ 139,854 $ 111,278 $ ( 8,175 ) $ ( 15,530 ) $ 227,706 Net loss — — ( 6,512 ) — — ( 6,512 ) Other comprehensive loss — — — ( 1,753 ) — ( 1,753 ) Issuance of restricted stock (204,827 shares) — ( 4,064 ) — — 4,064 — Treasury shares sold to Employee Stock Purchase Plan (13,033 shares) — ( 194 ) — — 259 65 Treasury shares purchased to satisfy tax withholding obligations (52,864 shares) — — — — ( 310 ) ( 310 ) Stock-based compensation expense — 2,055 — — — 2,055 Balances, September 30, 2022 $ 279 $ 137,651 $ 104,766 $ ( 9,928 ) $ ( 11,517 ) $ 221,251 -7- Table of Contents Matrix Service Company Notes to Condensed Consolidated Financial Statements (unaudited) Note 1 – Basis of Presentation and Significant Accounting Policies Basis of Presentation The condensed consolidated financial statements include the accounts of Matrix Service Company and its subsidiaries (“Matrix”, “we”, “our”, “us”, “its” or the “Company”), unless otherwise indicated. Intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission and do not include all information and footnotes required by U.S. generally accepted accounting principles ("GAAP") for complete financial statements. The information furnished reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair statement of the results of operations, cash flows and financial position for the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended June 30, 2023, included in our Annual Report on Form 10-K for the year then ended. The results of operations for the three month period ended September 30, 2023 may not necessarily be indicative of the results of operations for the full year ending June 30, 2024. Significant Accounting Policies Our significant accounting policies are detailed in “Note 1 - Summary of Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended June 30, 2023. Note 2 – Revenue Remaining Performance Obligations We had $ 376.5 million of remaining performance obligations yet to be satisfied as of September 30, 2023. We expect to recognize $ 293.1 million of our remaining performance obligations as revenue within the next twelve months. Contract Balances Contract terms with customers include the timing of billing and payments, which usually differs from the timing of revenue recognition. 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 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"). CIE consists of revenue recognized in excess of billings. We present our contract liabilities in the balance sheet as Billings on Uncompleted Contracts in Excess of Costs and Estimated Earnings ("BIE"). BIE consists of billings in excess of revenue recognized. The following table provides information about CIE and BIE: September 30, 2023 June 30, 2023 Change (in thousands) Costs and estimated earnings in excess of billings on uncompleted contracts $ 42,369 $ 44,888 $ ( 2,519 ) Billings on uncompleted contracts in excess of costs and estimated earnings ( 73,133 ) ( 85,436 ) 12,303 Net contract liabilities $ ( 30,764 ) $ ( 40,548 ) $ 9,784 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 three months ended September 30, 2023 that was included in the June 30, 2023 BIE balance was $ 62.9 million. This revenue consists primarily of work performed during the period on contracts with customers that had advance billings. -8- Table of Contents Matrix Service Company Notes to Condensed Consolidated Financial Statements (unaudited) Progress billings in accounts receivable at September 30, 2023 and June 30, 2023 included retentions to be collected within one year of $ 15.2 million and $ 16.3 million, respectively. Contract retentions collectible beyond one year are included in other assets, non-current in the Condensed Consolidated Balance Sheets and totaled $ 13.4 million as of September 30, 2023 and $ 10.0 million as of June 30, 2023. 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 $ 10.1 million at September 30, 2023 and $ 9.7 million at June 30, 2023. The amounts ultimately realized may be significantly different than the recorded amounts resulting in a material adjustment to future earnings. The determination of our legal basis for a claim requires significant judgment. Generally, collection of amounts related to unpriced change orders and claims is expected within twelve months. However, since customers may not pay these amounts until final resolution of related claims, collection of these amounts may extend beyond one year. Disaggregated Revenue Revenue disaggregated by reportable segment is presented in Note 8 - Segment Information. The following tables presents revenue disaggregated by geographic area where the work was performed and by contract type: Geographic Disaggregation: Three Months Ended September 30, 2023 September 30, 2022 (In thousands) United States $ 177,550 $ 176,180 Canada 16,873 24,925 Other international 3,236 7,326 Total Revenue $ 197,659 $ 208,431 Contract Type Disaggregation: Three Months Ended September 30, 2023 September 30, 2022 (In thousands) Fixed-price contracts $ 116,757 $ 109,473 Time and materials and other cost reimbursable contracts 80,902 98,958 Total Revenue $ 197,659 $ 208,431 Note 3 – Property, Plant and Equipment Burlington Office Disposal During the first quarter of fiscal 2024, we sold a previously utilized facility in Burlington, Ontario for $ 2.7 million in net proceeds, which resulted in a gain of $ 2.5 million. The gain was included in Other income in the Condensed Consolidated Statements of Income. We closed this previously utilized facility during the second quarter of fiscal 2023 because it was no longer strategic to the future of the business. -9- Table of Contents Matrix Service Company Notes to Condensed Consolidated Financial Statements (unaudited) Note 4 – Debt On September 9, 2021 , the Company and our primary U.S. and Canada operating subsidiaries entered into an asset-based credit agreement, which was amended on October 5, 2022 (as amended, the "ABL Facility"), with Bank of Montreal, as Administrative Agent, Swing Line Lender and a Letter of Credit Issuer, and the lenders named therein. The maximum amount of loans under the ABL Facility is limited to $ 90.0 million. 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 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. The maximum amount that we may borrow under the ABL Facility is subject to a borrowing base, which is based on restricted cash plus a percentage of the value of certain accounts receivable, inventory and equipment, reduced for certain reserves. We are required to maintain a minimum of $ 25.0 million of restricted cash at all times, but such amounts are also included in the borrowing base. The ABL Facility matures, and any outstanding amounts become due and payable, on September 9, 2026 . At September 30, 2023, our borrowing base was $ 72.9 million, we had $ 10.0 million of outstanding borrowings, and we had $ 10.0 million in letters of credit outstanding, which resulted in availability of $ 52.9 million under the ABL Facility. We repaid all outstanding borrowings in November 2023. 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. The Adjusted Term SOFR is defined as (i) the SOFR plus (ii) 11.448 basis points for a one-month tenor and 26.161 basis points for a three-month tenor; provided that the Adjusted Term SOFR cannot be below zero. The Base Rate is defined as a fluctuating interest rate equal to the greater of: (i) rate of interest announced by Bank of Montreal from time to time as its prime rate; (ii) the U.S. federal funds rate plus 0.50 %; (iii) Adjusted Term SOFR for one month period plus 1.00 %; or (iv) 1.00 %. Depending on the amount of average availability, the applicable margin is between 1.00 % to 1.50 % for Base Rate and Canadian Prime Rate borrowings, which includes either U.S. or Canadian prime rate, and between 2.00 % and 2.50 % for Adjusted Term SOFR borrowings. Interest is payable either (i) monthly for Base Rate or Canadian Prime Rate borrowings or (ii) the last day of the interest period for Adjusted Term SOFR borrowings, as set forth in the ABL Facility. The fee for undrawn amounts is 0.25 % per annum and is due quarterly. The interest rate in effect for borrowings outstanding at September 30, 2023, including applicable margin, was approximately 7.68 %. 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 September 30, 2023. Note 5 – Income Taxes Effective Tax Rate Our effective tax rates were zero for each of the three months ended September 30, 2023 and 2022, respectively. The effective tax rates during both periods were impacted by valuation allowances of $ 0.2 million and $ 1.4 million, respectively, placed on deferred tax assets generated during the quarters. 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. -10- Table of Contents Matrix Service Company Notes to Condensed Consolidated Financial Statements (unaudited) Note 6 – Commitments and Contingencies Insurance Reserves We maintain insurance coverage for various aspects of our operations. However, we retain exposure to potential losses 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 and workmanship. 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 customer 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 or as required by the subcontract. 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. Litigation During fiscal 2020, we commenced litigation in an effort to collect an account receivable from an iron and steel customer on a reimbursable contract following the deterioration of the relationship. The unpaid receivable balance at September 30, 2023 was $ 16.8 million. In connection with our suit, the customer filed certain counterclaims against us. In September 2023, a jury returned a verdict in our favor and awarded us the full contract balance. We received payment in October 2023. During fiscal 2023, we completed cost reimbursable construction services for a customer at a mining and minerals facility. In late fiscal 2023, after numerous attempts to collect outstanding receivables, we filed a notice of default for lack of payment of outstanding balances, and in early fiscal 2024, we filed a lien on the facility. The customer responded by commencing litigation against us, alleging breach of contract and breach of express warranty. We deny all claims and filed a countersuit against the customer for failure to pay outstanding amounts of accounts receivable, net of BIE, which total $ 5.4 million as of September 30, 2023. 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. During fiscal 2022, we filed an arbitration demand in an effort to collect outstanding balances of $ 32.7 million from a customer for which we completed a crude oil storage terminal project. The customer has filed counterclaims for liquidated damages and miscellaneous warranty items. We deny all claims and believe we are entitled to collect the full amount owed under the contract. Our hearing for this matter is currently scheduled for October 2024. We believe we have set appropriate reserves for the matters described above based on our evaluation of the possible outcomes of the litigation. We and our subsidiaries are participants in various other 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. -11- Table of Contents Matrix Service Company Notes to Condensed Consolidated Financial Statements (unaudited) Note 7 – Earnings per Common Share Basic earnings per share (“Basic EPS”) is calculated based on the weighted average shares outstanding during the period. Diluted earnings per share (“Diluted EPS”) includes the dilutive effect of nonvested restricted stock shares. In the event we report a loss, nonvested restricted stock shares are not included since they are anti-dilutive. The computation of basic and diluted earnings per share is as follows: Three Months Ended September 30, 2023 September 30, 2022 (In thousands, except per share data) Basic EPS: Net loss $ ( 3,167 ) $ ( 6,512 ) Weighted average shares outstanding 27,113 26,862 Basic loss per share $ ( 0.12 ) $ ( 0.24 ) Diluted EPS: Net loss $ ( 3,167 ) $ ( 6,512 ) Diluted weighted average shares outstanding 27,113 26,862 Diluted loss per share $ ( 0.12 ) $ ( 0.24 ) The following securities ar e considered antidilutive and have been excluded from the calculation of Diluted EPS: Three Months Ended September 30, 2023 September 30, 2022 (In thousands) Nonvested restricted stock shares 231 95 -12- Table of Contents Matrix Service Company Notes to Condensed Consolidated Financial Statements (unaudited) Note 8 – Segment Information We report our results of operations through three reportable segments: Storage and Terminal Solutions, Utility and Power Infrastructure, and Process and Industrial Facilities. • Storage and Terminal Solutions : primarily consists of engineering, procurement, fabrication, and construction services related to cryogenic and other specialty tanks and terminals for LNG, NGLs, hydrogen, ammonia, propane, butane, liquid nitrogen/liquid oxygen, and liquid petroleum. We also perform work related to traditional aboveground crude oil and refined product storage tanks and terminals. This segment also includes terminal balance of plant work, truck and rail loading/offloading facilities, and marine structures as well as storage tank and terminal maintenance and repair. Finally, we manufacture and sell precision engineered specialty tank products, including geodesic domes, aluminum internal floating roofs, floating suction and skimmer systems, roof drain systems and floating roof seals. • Utility and Power Infrastructure : primarily consists of engineering, procurement, fabrication, and construction services to support growing demand for LNG utility peak shaving facilities. We also perform traditional electrical work for public and private utilities, including construction of new substations, upgrades of existing substations, transmission and distribution line installations, and upgrades and maintenance including live wire work. Work may also include emergency and storm restoration services. We also provide construction services to a variety of power generation facilities, including natural gas fired facilities in simple or combined cycle configurations. • Process and Industrial Facilities : primarily consists of plant maintenance, repair, and turnarounds in the downstream and midstream markets for energy clients including refining and processing of crude oil, fractionating, and marketing of natural gas and natural gas liquids. We also perform engineering, procurement, fabrication, and construction for refinery upgrades and retrofits for renewable fuels. We also construct thermal vacuum test chambers for aerospace and defense industries and other infrastructure for industries including petrochemical, sulfur, mining and minerals primarily in the extraction of non-ferrous metals, cement, agriculture, wastewater treatment facilities and other industrial customers. We evaluate performance and allocate resources based on operating income. We eliminate intersegment sales; therefore, no intercompany profit or loss is recognized. 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. Segment assets consist primarily of accounts receivable, costs and estimated earnings in excess of billings on uncompleted contracts, property, plant and equipment, right-of-use lease assets, goodwill and other intangible assets. -13- Table of Contents Matrix Service Company Notes to Condensed Consolidated Financial Statements (unaudited) Results of Operations (In thousands) Three Months Ended September 30, 2023 September 30, 2022 Gross revenue Storage and Terminal Solutions $ 90,979 $ 77,290 Utility and Power Infrastructure 32,395 44,870 Process and Industrial Facilities 75,138 86,745 Total gross revenue $ 198,512 $ 208,905 Less: Inter-segment revenue Storage and Terminal Solutions $ 835 $ 357 Process and Industrial Facilities 18 117 Total inter-segment revenue $ 853 $ 474 Consolidated revenue Storage and Terminal Solutions $ 90,144 $ 76,933 Utility and Power Infrastructure 32,395 44,870 Process and Industrial Facilities 75,120 86,628 Total consolidated revenue $ 197,659 $ 208,431 Gross profit (loss) Storage and Terminal Solutions $ 4,953 $ 7,564 Utility and Power Infrastructure 3,697 1,714 Process and Industrial Facilities 5,078 4,330 Corporate ( 1,869 ) ( 600 ) Total gross profit $ 11,859 $ 13,008 Selling, general and administrative expenses Storage and Terminal Solutions $ 4,629 $ 4,158 Utility and Power Infrastructure 1,548 1,738 Process and Industrial Facilities 3,087 4,070 Corporate 7,849 6,845 Total selling, general and administrative expenses $ 17,113 $ 16,811 Restructuring costs Storage and Terminal Solutions $ — $ 522 Utility and Power Infrastructure — 37 Process and Industrial Facilities — 315 Corporate — 413 Total restructuring costs $ — $ 1,287 Operating income (loss) Storage and Terminal Solutions $ 324 $ 2,884 Utility and Power Infrastructure 2,149 ( 61 ) Process and Industrial Facilities 1,991 ( 55 ) Corporate ( 9,718 ) ( 7,858 ) Total operating loss $ ( 5,254 ) $ ( 5,090 ) -14- Table of Contents Matrix Service Company Notes to Condensed Consolidated Financial Statements (unaudited) Total assets by segment were as follows (in thousands): September 30, 2023 June 30, 2023 Storage and Terminal Solutions $ 148,791 $ 139,333 Utility and Power Infrastructure 52,143 67,630 Process and Industrial Facilities 99,673 90,514 Corporate 81,671 103,027 Total segment assets $ 382,278 $ 400,504 Note 9 – Restructuring Costs In fiscal 2020, we initiated a business improvement plan to increase profitability and reduce our cost structure in order to help us become more competitive and deliver higher quality service. As a result of specific events, including the effects of the COVID-19 pandemic and related market disruptions, the Company expanded its business improvement plan. The business improvement plan consisted of an initial phase of discretionary cost reductions, workforce reductions, reduction of capital expenditures and the reduction in size or closure of certain offices in order to increase the utilization of our staff and bring the cost structure of the business in line with revenue volumes. In fiscal 2022, we commenced a second phase of our plan to focus on centralization of support functions, including business development, accounting, human resources, procurement and project services into shared service centers. During the three months ended September 30, 2022, we incurred $1.3 million which was primarily related to severance and other personnel-related costs in connection with the second phase of our plan. Our restructuring efforts were substantially complete as of June 30, 2023. -15- Table of Contents