What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-05-09 · 105 added, 185 removed, 263 unchanged (52% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended Nine Months Ended

2024 March 31,

2023 March 31,

2024 March 31,

Three Months Ended

September 30,

2024 September 30,

Revenue $ 165,579 $ 197,659

2 unchanged sentences

Selling, general and administrative expenses 18,580 17,113

Goodwill impairment — — — 12,316

Restructuring costs — 316 — 2,881

Operating loss ( 10,767 ) ( 5,254 )

15 unchanged sentences

(In thousands)

Three Months Ended Nine Months Ended

2024 March 31,

2023 March 31,

2024 March 31,

Three Months Ended

September 30,

2024 September 30,

Net loss $ ( 9,223 ) $ ( 3,167 )

Other comprehensive income (loss), net of tax:

Foreign currency translation loss ( 548 ) ( 234 ) ( 524 ) ( 722 )

Foreign currency translation gain (loss) 436 ( 538 )

Comprehensive loss $ ( 8,787 ) $ ( 3,705 )

3 unchanged sentences

(In thousands)

September 30,

2024 June 30,

1 unchanged sentence

Cash and cash equivalents $ 124,610 $ 115,615

Accounts receivable, less allowances (March 31, 2024—$ 428 and June 30, 2023—$ 1,061 )

172,924 145,764

Accounts receivable, net of allowance for credit losses 132,541 138,987

Costs and estimated earnings in excess of billings on uncompleted contracts 31,818 33,893

1 unchanged sentence

Income taxes receivable 180 180

Prepaid expenses 6,606 5,741

Other current assets — 3,118

Prepaid expenses and other current assets 12,236 4,077

Total current assets 308,893 301,591

10 unchanged sentences

(In thousands, except share data)

September 30,

2024 June 30,

10 unchanged sentences

Operating lease liabilities 19,149 19,156

Borrowings under asset-backed credit facility — 10,000

Other liabilities, non-current 2,315 2,873

Total liabilities 313,640 287,169

Commitments and contingencies

Commitments and contingencies (Note 6)

Stockholders’ equity:

Matrix Service Company stockholders' equity:

Common stock — $ 0.01 par value;

60,000,000 shares authorized;

27,888,217 shares issued as of March 31, 2024 and June 30, 2023;

27,304,734 and 27,047,318 shares outstanding as of March 31, 2024 and June 30, 2023, respectively

27,888,217 shares issued at September 30, 2024 and June 30, 2024, respectively;

27,550,202 and 27,308,795 shares outstanding as of September 30, 2024 and June 30, 2024, respectively;

Additional paid-in capital 143,765 145,580

1 unchanged sentence

Accumulated other comprehensive loss ( 9,099 ) ( 9,535 )

Treasury stock, at cost — 583,483 shares as of March 31, 2024, and 840,899 shares as of June 30, 2023

Treasury stock, at cost — 338,015 and 579,422 shares as of September 30, 2024 and June 30, 2024, respectively;

( 3,146 ) ( 6,083 )

5 unchanged sentences

(In thousands)

Nine Months Ended

2024 March 31,

Three Months Ended

September 30,

2024 September 30,

Operating activities:

Net loss $ ( 9,223 ) $ ( 3,167 )

Adjustments to reconcile net loss to net cash used by operating activities:

Adjustments to reconcile net loss to net cash provided (used) by operating activities:

Depreciation and amortization 2,515 2,911

Goodwill impairment — 12,316

Stock-based compensation expense 2,311 1,755

Gain on sale of property, plant and equipment (Note 3) ( 4,530 ) ( 21 )

Provision for uncollectible accounts ( 33 ) ( 63 )

Other 202 189

Loss (gain) on disposal of property, plant and equipment (Note 3)

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

6 unchanged sentences

Accrued expenses ( 2,908 ) ( 195 )

Net cash provided by operating activities 25,567 2,403

Net cash provided (used) by operating activities 11,918 ( 28,875 )

Investing activities:

Capital expenditures ( 1,944 ) ( 478 )

Proceeds from asset sales (Note 3) 5,535 110

Net cash used by investing activities ( 154 ) ( 6,102 )

Proceeds from sale of property, plant and equipment (Note 3)

Net cash provided (used) by investing activities ( 1,944 ) 2,140

Financing activities:

Advances under asset-backed credit facility 10,000 10,000

Repayments of advances under asset-backed credit facility ( 20,000 ) ( 10,000 )

Proceeds from issuance of common stock under employee stock purchase plan 46 45

1 unchanged sentence

Net cash used by financing activities ( 1,189 ) ( 411 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 243 ) ( 358 )

Net increase (decrease) in cash, cash equivalents and restricted cash 14,846 ( 4,167 )

Effect of exchange rate changes on cash 210 ( 307 )

Net increase (decrease) in cash and cash equivalents 8,995 ( 27,453 )

Cash, cash equivalents and restricted cash, beginning of period 140,615 79,812

10 unchanged sentences

(In thousands, except share data)

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury

Balances, December 31, 2023 $ 279 $ 140,668 $ 52,899 $ ( 8,745 ) $ ( 6,191 ) $ 178,910

Net loss — — ( 14,581 ) — — ( 14,581 )

Other comprehensive income — — — ( 548 ) — ( 548 )

Treasury shares sold to Employee Stock Purchase Plan ( 4,249 shares)

— ( 14 ) — — 55 41

Stock-based compensation expense — 1,980 — — — 1,980

Balances, March 31, 2024 $ 279 $ 142,634 $ 38,318 $ ( 9,293 ) $ ( 6,136 ) $ 165,802

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

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

Other comprehensive income — — — ( 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

Stock Additional

Common Stock Additional

Capital Retained

1 unchanged sentence

Comprehensive

Loss Treasury

Loss Treasury Stock

Shares Amount Shares Amount Total

Balances, June 30, 2024 27,888,217 $ 279 $ 145,580 $ 33,941 $ ( 9,535 ) 579,422 $ ( 6,083 ) $ 164,182

1 unchanged sentence

Other comprehensive income — — — — 436 — — 436

Issuance of restricted stock ( 297,026 shares)

— ( 3,868 ) — — 3,868 —

Treasury shares sold to Employee Stock Purchase Plan ( 15,714 shares)

— ( 73 ) — — 205 132

Treasury shares purchased to satisfy tax withholding obligations ( 55,324 shares)

— — — — ( 456 ) ( 456 )

Issuance of restricted stock — — ( 4,109 ) — — ( 360,460 ) 4,109 —

Treasury shares sold to Employee Stock Purchase Plan — — ( 17 ) — — ( 4,797 ) 63 46

Treasury shares purchased to satisfy tax withholding obligations — — — — — 123,850 ( 1,235 ) ( 1,235 )

Stock-based compensation expense — — 2,311 — — — — 2,311

Balances, March 31, 2024 $ 279 $ 142,634 $ 38,318 $ ( 9,293 ) $ ( 6,136 ) $ 165,802

Balances, September 30, 2024 27,888,217 $ 279 $ 143,765 $ 24,718 $ ( 9,099 ) 338,015 $ ( 3,146 ) $ 156,517

Balances, June 30, 2023 27,888,217 $ 279 $ 140,810 $ 58,917 $ ( 8,769 ) 840,899 $ ( 9,753 ) $ 181,484

1 unchanged sentence

Other comprehensive loss — — — — ( 538 ) — — ( 538 )

Issuance of restricted stock ( 259,529 shares)

— ( 5,149 ) — — 5,149 —

Treasury shares sold to Employee Stock Purchase Plan ( 40,377 shares)

— ( 602 ) — — 802 200

Treasury shares purchased to satisfy tax withholding obligations ( 52,864 shares)

— — — — ( 310 ) ( 310 )

Issuance of restricted stock — — ( 2,738 ) — — ( 210,243 ) 2,738 —

Treasury shares sold to Employee Stock Purchase Plan — — ( 54 ) — — ( 7,601 ) 99 45

Treasury shares purchased to satisfy tax withholding obligations — — — — — 55,324 ( 456 ) ( 456 )

Stock-based compensation expense — — 1,755 — — — — 1,755

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

Balances, September 30, 2023 27,888,217 $ 279 $ 139,773 $ 55,750 $ ( 9,307 ) 678,379 $ ( 7,372 ) $ 179,123

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, 2024, included in our Annual Report on Form 10-K.

The results of operations for the three and nine month periods ended March 31, 2024 may not necessarily be indicative of the results of operations for the full year ending June 30, 2024.

The results of operations for the three month period ended September 30, 2024 may not necessarily be indicative of the results of operations for the full year ending June 30, 2025.

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.

Our significant accounting policies are detailed in “Note 1 - Basis of Presentation and Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended June 30, 2024.

Accounting Standards Not Yet Adopted

8 unchanged sentences

Adoption of this ASU will result in additional disclosure, but will not impact the Company's consolidated financial position, results of operations or cash flows.

Other accounting pronouncements issued but not effective until after March 31, 2024 are not expected to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, requiring companies to provide more detailed and organized disclosures of their expenses.

Disclosures will include disaggregation of expense captions presented on the face of the income statement into specific categories, such as purchases of inventory, employee compensation, and costs related to depreciation and amortization.

The new requirements will take effect for annual reporting periods beginning after December 15, 2026 (fiscal 2028).

Adoption of this ASU will result in additional disclosure, but will not impact the Company's consolidated financial position, results of operations or cash flows.

Other accounting pronouncements issued but not effective until after September 30, 2024 are not expected to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

Note 2 – Revenue

Remaining Performance Obligations

We had $ 680.0 million of remaining performance obligations yet to be satisfied as of March 31, 2024.

We had $ 1.1 billion of remaining performance obligations yet to be satisfied as of September 30, 2024.

We expect to recognize $ 591.2 million of our remaining performance obligations as revenue within the next twelve months.

8 unchanged sentences

The following table provides information about CIE and BIE:

September 30,

2024 June 30,

4 unchanged sentences

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, 2024 that was included in the June 30, 2023 BIE balance was $ 84.7 million.

Progress billings in accounts receivable at March 31, 2024 and June 30, 2023 included retentions to be collected within one year of $ 12.7 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 $ 25.9 million as of March 31, 2024 and $ 10.0 million as of June 30, 2023.

The amount of revenue recognized during the three months ended September 30, 2024 that was included in the June 30, 2024 BIE balance was $ 81.0 million.

Progress billings in accounts receivable at September 30, 2024 and June 30, 2024 included retentions to be collected within one year of $ 11.9 million and $ 11.6 million, respectively.

Contract retentions collectible beyond one year are included in Other assets, non-current in the Condensed Consolidated Balance Sheets and totaled $ 40.3 million as of September 30, 2024 and $ 28.6 million as of June 30, 2024, respectively.

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 $ 12.0 million at March 31, 2024 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.

Costs and estimated earnings in excess of billings on uncompleted contracts included revenues for unpriced change orders and claims of $ 9.3 million at September 30, 2024 and $ 9.9 million at June 30, 2024.

The amounts ultimately realized may be different than the recorded amounts resulting in adjustments to future earnings.

Generally, we expect collection of amounts related to unpriced change orders and claims within twelve months.

However, customers may not pay these amounts until final resolution of related claims, and therefore 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:

The following series of tables presents revenue disaggregated by geographic area where the work was performed and by contract type:

Geographic Disaggregation:

Three Months Ended Nine Months Ended

2024 March 31,

2023 March 31,

2024 March 31,

Three Months Ended

September 30,

2024 September 30,

(In thousands)

4 unchanged sentences

Contract Type Disaggregation:

Three Months Ended Nine Months Ended

2024 March 31,

2023 March 31,

2024 March 31,

Three Months Ended

September 30,

2024 September 30,

(In thousands)

2 unchanged sentences

Total Revenue $ 165,579 $ 197,659

Revisions in Estimates

During fiscal 2023, unfavorable changes in the estimated recovery of change orders and increased forecasted costs to complete and closeout certain midstream gas processing construction work in the Process and Industrial Facilities segment resulted in a reduction of gross profit of $ 3.3 million and $ 12.7 million during the three and nine months ended March 31, 2023, respectively.

This was 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 the work according to forecast and for the impacts of global supply chain issues and inflation.

Note 3 – Property, Plant and Equipment

Building Purchase

During the third quarter of fiscal 2024, we purchased a fabrication facility in Bakersfield, California for $ 4.1 million to replace a facility currently being leased by the Company.

Building Disposals

During the second quarter of fiscal 2024, we sold a facility in Catoosa, Oklahoma for $ 2.7 million in net proceeds, which resulted in a gain of $ 2.0 million.

Proceeds were received in January 2024.

The gain was included in Other income in the Condensed Consolidated Statements of Income.

The facility was previously utilized for our industrial cleaning business, which was sold during the fourth quarter of fiscal 2023.

The sale of the Catoosa, Oklahoma facility completed our divestiture and closure of a non-core service offering of the business as part of our strategy to focus the business on core markets.

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.

Note 4 – Goodwill

During the second quarter of fiscal 2023, we had indicators of a potential impairment and performed an interim impairment test within the Process and Industrial Facilities segment.

We concluded that its $ 12.3 million of goodwill was fully impaired and recognized the impairment in operating income during the three and six months ended December 31, 2022.

We did not record any impairments during the three and nine months ended March 31, 2024.

We closed this previously utilized facility because it was no longer strategic to the future of the business.

There were no significant sales of property, plant and equipment in the first quarter of fiscal 2025.

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 May 3, 2024 (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.

and Canada operating subsidiaries entered into an asset-based credit agreement, which was most recently amended on May 3, 2024 (as amended, the "ABL Facility"), with Bank of Montreal, as Administrative Agent, Swing Line Lender and a Letter of Credit Issuer.

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.

and Canadian subsidiaries and are secured by a first lien on all our assets under the ABL Facility.

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

1 unchanged sentence

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 borrowing base is recalculated on a monthly basis and at March 31, 2024, our borrowing base was $ 72.3 million.

The Company had $ 7.0 million in letters of credit outstanding as of March 31, 2024, which resulted in availability of $ 65.3 million under the ABL Facility.

The borrowing base is recalculated on a monthly basis and at September 30, 2024, our borrowing base was $ 61.4 million.

The Company had $ 4.8 million in letters of credit outstanding as of September 30, 2024, which resulted in availability of $ 56.6 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 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.

The ABL Facility contains customary conditions to borrowings, events of default and covenants, including, but not limited to, covenants that limit 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 March 31, 2024.

We were in compliance with all covenants of the ABL Facility as of September 30, 2024.

Note 5 – Income Taxes

Effective Tax Rate

Our effective tax rates were zero for each of the three and nine months ended March 31, 2024.

During the three and nine months ended March 31, 2023, our effective tax rates were 2.8 % and 0.7 %, respectively.

The effective tax rates during fiscal 2024 were impacted by valuation allowances of $ 4.4 million and $ 5.8 million placed on deferred tax assets during the three and nine months ended March 31, 2024, 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.

During the three months ended September 30, 2024 and 2023, our effective tax rates were zero .

The effective tax rates during both periods were impacted by valuation allowances of $ 1.3 million and $ 0.2 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 placed a valuation allowance on our deferred tax assets in 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.

9 unchanged sentences

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.

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.

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 full payment of $ 16.8 million in the second quarter of fiscal 2024.

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.

During fiscal 2023, we completed cost reimbursable construction services for a customer at a mining and minerals facility.

In January 2021, we achieved mechanical completion on a crude oil storage project.

On April 1, 2022, we filed an arbitration demand against Keyera Energy, Inc.

in an effort to collect outstanding balances of $ 32.7 million related to the project.

In response, on June 2, 2022, the customer filed counterclaims seeking $ 20.0 million , which included liquidated damages and damages with respect to miscellaneous warranty items.

On October 31, 2022, the customer amended its counterclaim claiming damages in a range of $ 18.8 million to $ 36.0 million, which included estimated amounts for “potential future costs.” In July 2024, the customer filed a second amended counterclaim which significantly increased the amount of alleged damages to a range of $ 69.6 million to $ 97.9 million, including a new claim for unspecified “other damages” of $ 46.9 million .

A portion of the total alleged damages, if we are held liable, may be subject to certain insurance coverages.

We are actively pursuing our claims and believe we have substantial legal and contractual defenses to the customer's counterclaims.

During fiscal 2023, we completed construction services on a time and materials basis 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, which totaled $ 5.6 million as of March 31, 2024.

Our trial for this matter is currently scheduled for January 2025.

Litigation is unpredictable;

however, we believe we have set appropriate reserves based on our evaluation of the possible outcomes of the litigation.

The customer, 5E Boron Americas, LLC, responded by commencing litigation against us on July 17, 2023 in the United States District Court for the Central District of California, Eastern Division (5E Boron Americas, LLC v.

Matrix Service Inc., Case No.

5:23-cv-01396-AB(DTBx)), alleging breach of contract and breach of express warranty.

We denied all claims and filed a countersuit against the customer for failure to pay amounts due of $ 5.6 million.

We believe we have set appropriate reserves based on our evaluation of the possible outcomes for the matters described above.

However, the results of litigation are inherently unpredictable, and the possibility exists that the ultimate resolution of one or more of these matters could result in a material effect on our financial position, results of operations or liquidity.

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.

however, assessing the eventual outcome of litigation involves forward-looking speculation as to judgement being made by arbitrators, judges, juries and appellate courts in the future.

Based upon information presently available, and in light of legal and other factual defenses available to the Company, management does not believe that such other known legal actions will have a material adverse effect on our financial position, results of operations or liquidity.

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.

Basic earnings per share (“EPS”) is calculated based on the weighted average shares outstanding during the period.

Diluted earnings per share includes the dilutive effect of employee and director nonvested restricted stock units.

Nonvested restricted stock units are considered dilutive (antidilutive) to our EPS whenever the average market value of the shares during the period exceeds (is less than) the sum of the related average unamortized compensation expense during the period plus the related hypothetical estimated excess tax benefit that will be realized when the shares vest.

Nonvested restricted stock units are considered antidilutive to our EPS in the event we report a net loss.

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

Three Months Ended Nine Months Ended

2024 March 31,

2023 March 31,

2024 March 31,

Three Months Ended

September 30,

2024 September 30,

(In thousands, except per share data)

6 unchanged sentences

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

Three Months Ended Nine Months Ended

2024 March 31,

2023 March 31,

2024 March 31,

Three Months Ended

September 30,

2024 September 30,

(In thousands)

Nonvested restricted stock shares 1,056 133 868 81

Nonvested restricted stock units

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.

We operate our business through three reportable segments:

• Storage and Terminal Solutions :

15 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 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, including corporate salaries and facilities costs, 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.

2 unchanged sentences

Storage and Terminal Solutions Utility and Power Infrastructure Process and Industrial Facilities Corporate Total

Three Months Ended March 31, 2024

Total revenue (1)

$ 54,304 $ 46,120 $ 65,589 $ — $ 166,013

Cost of revenue ( 51,991 ) ( 44,711 ) ( 63,822 ) 89 ( 160,435 )

Gross profit 2,313 1,409 1,767 89 5,578

Selling, general and administrative expenses 5,395 2,733 2,590 9,230 19,948

Operating loss $ ( 3,082 ) $ ( 1,324 ) $ ( 823 ) $ ( 9,141 ) $ ( 14,370 )

(1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $1.3 million for the three months ended March 31, 2024.

Storage and Terminal Solutions Utility and Power Infrastructure Process and Industrial Facilities Corporate Total

Three Months Ended March 31, 2023

Total revenue (1)

$ 52,165 $ 35,024 $ 99,706 $ — $ 186,895

Cost of revenue ( 52,975 ) ( 32,234 ) ( 96,546 ) ( 721 ) ( 182,476 )

Gross profit (loss) ( 810 ) 2,790 3,160 ( 721 ) 4,419

Selling, general and administrative expenses 5,735 1,869 3,556 5,702 16,862

Restructuring costs 79 — 106 131 316

Operating income (loss) $ ( 6,624 ) $ 921 $ ( 502 ) $ ( 6,554 ) $ ( 12,759 )

(1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $1.7 million for the three months ended March 31, 2023.

Storage and Terminal Solutions Utility and Power Infrastructure Process and Industrial Facilities Corporate Total

Nine Months Ended March 31, 2024

Three Months Ended September 30, 2024

Total revenue (1)

4 unchanged sentences

Operating income (loss) $ ( 872 ) $ ( 2,669 ) $ 231 $ ( 7,457 ) $ ( 10,767 )

(1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $3.1 million for the nine months ended March 31, 2024.

(1) Total revenues are net of inter-segment revenues which are primarily Process and Industrial Facilities and Storage and Terminal Solutions and were $0.9 million for the three months ended September 30, 2024.

Storage and Terminal Solutions Utility and Power Infrastructure Process and Industrial Facilities Corporate Total

Nine Months Ended March 31, 2023

Three Months Ended September 30, 2023

Total revenue (1)

3 unchanged sentences

Selling, general and administrative expenses 4,629 1,548 3,087 7,849 17,113

Goodwill impairment — — 12,316 — 12,316

Restructuring costs 984 37 803 1,057 2,881

Operating income (loss) $ 324 $ 2,149 $ 1,991 $ ( 9,718 ) $ ( 5,254 )

(1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $2.8 million for the nine months ended March 31, 2023.

(1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $0.8 million for the three months ended September 30, 2023.

Total assets by segment

March 31, 2024 June 30, 2023

September 30, 2024 June 30, 2024

Storage and Terminal Solutions $ 159,049 $ 138,529

3 unchanged sentences

Total Segment Assets $ 470,157 $ 451,351

Note 10 – 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 and nine months ended March 31, 2023, we incurred restructuring costs of $ 0.3 million and $ 2.9 million, respectively.

The restructuring costs were primarily related to severance and other personnel-related costs in connection with the second phase of our plan as well as the closure of an underperforming operating location.

Our restructuring efforts were substantially complete as of June 30, 2023.

No restructuring costs were incurred during the three and nine months ended March 31, 2024.

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