What changed in this filing

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Item 1. Business

2024-09-10 compared with 2023-09-12 · 39 added, 48 removed, 138 unchanged (39% of the section changed)

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The words “believes,” “intends,” “expects,” “anticipates,” “projects,” “estimates,” “predicts” and similar expressions are also intended to identify forward-looking statements.

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

• 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, obtain letters of credit, 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 from economic, market or business conditions in general and in the natural gas, power, oil, petrochemical, agricultural and mining industries in particular;

• the impact of inflation on our operating expenses and our business operations;

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

• the impact to our business from disruptions to supply chains, inflation and availability of materials and labor;

• our expectations with respect to the likelihood of a future impairment;

• expansion and other trends of the industries we serve.

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 ("SEC");

• economic, market or business conditions in general and in the natural gas, power, oil, petrochemical, agricultural and mining industries in particular;

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

• the under- or over-utilization of our work force;

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

• reduced creditworthiness of our customer base and the higher risk of non-payment of receivables;

• the inherently uncertain outcome of current and future litigation;

• the adequacy of our reserves for claims and contingencies;

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

Although we believe that our expectations regarding future events are based on reasonable assumptions, we can give no assurance that such expectations or assumptions will be achieved.

Important factors that could cause actual results to differ materially from those in the forward-looking statements are described under Part I, Item 1A, Risk Factors.

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.

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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.

In 1989, we incorporated in the State of Delaware under the name of Matrix Service Company, and in 1990 we began trading on the NASDAQ exchange.

We provide engineering, fabrication, construction, and maintenance services to support critical energy infrastructure and industrial markets.

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

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

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

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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, governance, diversity, equity and inclusiveness, we are committed to ensuring our business strategies, policies, and practices align with such ideals so 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.

WEBSITE ACCESS TO REPORTS

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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.

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

The information contained in our social media accounts is not incorporated into this Annual Report or other documents we file with, or furnish to, the SEC.

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• 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.

Also includes work related to traditional aboveground crude oil and refined product storage tanks and terminals.

primarily consists of engineering, procurement, fabrication, and construction services related to cryogenic and other specialty tanks and terminals for liquefied natural gas ("LNG"), natural gas liquids ("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.

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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.

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.

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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.

Also includes engineering, procurement, fabrication, and construction for refinery upgrades and retrofits for renewable fuels.

We also perform engineering, procurement, fabrication, and construction for refinery upgrades and retrofits for renewable fuels, including hydrogen processing, production, loading and distribution facilities.

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.

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

One customer accounted for $84.8 million or 10.7% of our consolidated revenue in fiscal 2023, which was primarily included in the Process and Industrial Facilities segment.

No other customers individually accounted for more than 10% of our consolidated revenue in fiscal 2023.

One customer accounted for $76.6 million or 10.5% of our consolidated revenue in fiscal 2024, which was primarily included in the Storage and Terminal Solutions segment.

Another customer accounted for $75.2 million or 10.3% of our consolidated revenue in fiscal 2024, which was primarily included in the Process and Industrial Facilities segment.

See Part II, Item 8.

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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.

Our overhead cost structure is generally fixed in the short term.

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

Beginning in fiscal 2022, increased demand for certain materials and disruptions to global supply chains 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, electrical components, fabricated products and equipment, 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.

Rising prices and the potential for materials shortages have created additional risk in bidding and executing work profitably.

We depend on the availability of certain equipment and materials for our projects, including, but not limited to, structural steel, steel piping, rebar, valves, copper, electrical components, fabricated products and equipment, and delivery freight.

A number of factors that we may not be able to predict or control could result in increased costs for, or delays in delivery of, this equipment or materials, including supply chain or other logistical challenges.

Global trade relationships and other general market and political conditions could also impact production, delivery or pricing of such equipment or materials (e.g., inflation, interest rates, recessionary economic conditions.) We have been proactive with managing our procurement processes to help reduce the impacts of these factors on our business and to help ensure we continue to have the equipment and materials we need available.

Rising prices and the potential for equipment and materials shortages have created additional risk in bidding and executing work profitably.

We maintain insurance coverage for various aspects of our operations.

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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 2023 as a Great Place To Work® — for the seventh consecutive year — both a point of pride and an invaluable tool for continuous improvement supporting our objective of remaining an employer of choice.

Our people are our greatest resource, which makes our certification in fiscal 2024 as a Great Place To Work® — for the eighth consecutive year — both a point of pride and an invaluable tool for continuous improvement supporting our objective of remaining an employer of choice.

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.

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Business Ethics and Core Values

Core Values - Our success relies on the skills, experience and dedication of our employees.

We are committed to cultivating an inclusive and dynamic work environment where people can find opportunities to succeed, grow and contribute to the success of the company.

Our employees work each day to provide safe and reliable services to a wide range of customers in the states where we operate.

Our core values, listed below, guide our employee behaviors and the ways in which we conduct our business and operations.

• Commitment to Safety

• Positive Relationships

• Stewardship

• Community Involvement

• Deliver the Best

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

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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.

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

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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 2023, we continued to advance and strengthen our culture.

We launched our first Employee Resource Groups (ERGs), creating employee-led pathways for inclusion.

We also continued year-round learning opportunities on unconscious bias and other DEI-specific topics and enhanced our DEI education offering available to all employees through Matrix University, our internal training and development program.

We strengthened our accountability by increasing the diversity of our independent Board Members based on gender and ethnicity;

establishing our ERG Executive Sponsor Program;

advancing development of an employee survey designed to measure effectiveness of our DEI efforts and setting the framework for data analysis to identify opportunities for improvement.

We also continued our participation in CEO Action for Diversity & Inclusion and participated in a variety of community events including Advancing Oklahoma, a state-wide conversation on race, where our leadership served on the committee that developed comprehensive programming to engage participants in discussions about race and history, the criminal justice system, everyday conversations, education, business, image and attitudes, advocacy, and the future.

In fiscal 2024, we continued to advance and strengthen our culture by continuing year-round learning opportunities on unconscious bias and other DEI-specific topics through our DEI education offering available to all employees through Matrix University, our internal training and development program.

Our Employee Resource Groups (ERGs), also advanced understanding by sharing stories and educational information in their regular ERG meetings and across our internal communication channels, and advocated for changes to help ensure our policies are inclusive.

Among the highlights were:

• A panel discussion sponsored by our Women In Search of Excellence (WISE) ERG, in which employees from across Matrix and a major client explored ways to address unconscious bias and promote DEI in what has historically been a male-dominated industry.

• A six-part video series sponsored by our Foundation of Pride ERG which focused on terms and definitions specific to the LGBTQIA+ community, designed to promote more respectful dialogue and foster a more inclusive work environment.

• Research by our Working Parents ERG related to parental leave policies.

Our ERGs have also begun to analyze data available through our participation in the Great Place To Work ® survey to identify areas for improvement specific to DEI.

We also continued as a member of CEO Action for Diversity & Inclusion and participated in a variety of community events focused on DEI.

Total Rewards Package

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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.

We 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