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, 2024 September 30, 2023 Revenue $ 165,579 $ 197,659 Cost of revenue 157,766 185,800 Gross profit 7,813 11,859 Selling, general and administrative expenses 18,580 17,113 Operating loss ( 10,767 ) ( 5,254 ) Other income (expense): Interest expense ( 89 ) ( 325 ) Interest income 1,572 150 Other (Note 3) 61 2,262 Loss before income tax expense ( 9,223 ) ( 3,167 ) Provision for federal, state and foreign income taxes — — Net loss $ ( 9,223 ) $ ( 3,167 ) Basic loss per common share $ ( 0.33 ) $ ( 0.12 ) Diluted loss per common share $ ( 0.33 ) $ ( 0.12 ) Weighted average common shares outstanding: Basic 27,559 27,113 Diluted 27,559 27,113 See accompanying notes. -1- Table of Contents Matrix Service Company Condensed Consolidated Statements of Comprehensive Income (In thousands) (unaudited) Three Months Ended September 30, 2024 September 30, 2023 Net loss $ ( 9,223 ) $ ( 3,167 ) Other comprehensive income (loss), net of tax: Foreign currency translation gain (loss) 436 ( 538 ) Comprehensive loss $ ( 8,787 ) $ ( 3,705 ) See accompanying notes. -2- Table of Contents Matrix Service Company Condensed Consolidated Balance Sheets (In thousands) (unaudited) September 30, 2024 June 30, 2024 Assets Current assets: Cash and cash equivalents $ 124,610 $ 115,615 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 Inventories 7,508 8,839 Income taxes receivable 180 180 Prepaid expenses and other current assets 12,236 4,077 Total current assets 308,893 301,591 Restricted cash 25,000 25,000 Property, plant and equipment, net 43,247 43,498 Operating lease right-of-use assets 19,155 19,150 Goodwill 29,077 29,023 Other intangible assets, net of accumulated amortization 1,377 1,651 Other assets, non-current (Note 2) 43,408 31,438 Total assets $ 470,157 $ 451,351 See accompanying notes. -3- Table of Contents Matrix Service Company Condensed Consolidated Balance Sheets (In thousands, except share data) (unaudited) September 30, 2024 June 30, 2024 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 61,668 $ 65,629 Billings on uncompleted contracts in excess of costs and estimated earnings 204,612 171,308 Accrued wages and benefits 13,910 15,878 Accrued insurance 4,932 4,605 Operating lease liabilities 3,782 3,739 Other accrued expenses 3,247 3,956 Total current liabilities 292,151 265,115 Deferred income taxes 25 25 Operating lease liabilities 19,149 19,156 Other liabilities, non-current 2,315 2,873 Total liabilities 313,640 287,169 Commitments and contingencies (Note 6) Stockholders’ equity: Common stock — $ 0.01 par value; 60,000,000 shares authorized; 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; 279 279 Additional paid-in capital 143,765 145,580 Retained earnings 24,718 33,941 Accumulated other comprehensive loss ( 9,099 ) ( 9,535 ) Treasury stock, at cost — 338,015 and 579,422 shares as of September 30, 2024 and June 30, 2024, respectively; ( 3,146 ) ( 6,083 ) Total stockholders' equity 156,517 164,182 Total liabilities and stockholders’ equity $ 470,157 $ 451,351 See accompanying notes. -4- Table of Contents Matrix Service Company Condensed Consolidated Statements of Cash Flows (In thousands) (unaudited) Three Months Ended September 30, 2024 September 30, 2023 Operating activities: Net loss $ ( 9,223 ) $ ( 3,167 ) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation and amortization 2,515 2,911 Stock-based compensation expense 2,311 1,755 Loss (gain) on disposal of property, plant and equipment (Note 3) 68 ( 2,366 ) Other 38 72 Changes in operating assets and liabilities increasing (decreasing) cash: Accounts receivable, net of allowance for credit losses ( 5,110 ) ( 6,543 ) Costs and estimated earnings in excess of billings on uncompleted contracts 2,075 2,519 Inventories 1,331 ( 1,716 ) Other assets and liabilities ( 8,580 ) ( 7,669 ) Accounts payable ( 3,903 ) ( 2,173 ) Billings on uncompleted contracts in excess of costs and estimated earnings 33,304 ( 12,303 ) Accrued expenses ( 2,908 ) ( 195 ) Net cash provided (used) by operating activities 11,918 ( 28,875 ) Investing activities: Capital expenditures ( 1,944 ) ( 478 ) Proceeds from sale of property, plant and equipment (Note 3) — 2,618 Net cash provided (used) by investing activities ( 1,944 ) 2,140 Financing activities: Proceeds from issuance of common stock under employee stock purchase plan 46 45 Repurchase of common stock for payment of statutory taxes due on equity-based compensation ( 1,235 ) ( 456 ) Net cash used by financing activities ( 1,189 ) ( 411 ) 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 Cash, cash equivalents and restricted cash, end of period $ 149,610 $ 52,359 Supplemental disclosure of cash flow information: Cash paid (received) during the period for: Income taxes $ — $ ( 27 ) Interest $ 145 $ 389 Non-cash investing and financing activities: Purchases of property, plant and equipment on account $ 197 $ 6 See accompanying notes. -5- 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 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 Net loss — — — ( 9,223 ) — — — ( 9,223 ) Other comprehensive income — — — — 436 — — 436 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, 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 Net loss — — — ( 3,167 ) — — — ( 3,167 ) Other comprehensive loss — — — — ( 538 ) — — ( 538 ) 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, September 30, 2023 27,888,217 $ 279 $ 139,773 $ 55,750 $ ( 9,307 ) 678,379 $ ( 7,372 ) $ 179,123 -6- 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, 2024, included in our Annual Report on Form 10-K. 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 - 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 In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands disclosures about a public entity’s reportable segments and requires enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources. The update will be effective for annual periods beginning after December 15, 2023 (fiscal 2025). 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. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024 (fiscal 2026). 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. 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 -7- Table of Contents 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. 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, 2024 June 30, 2024 Change (In thousands) Costs and estimated earnings in excess of billings on uncompleted contracts $ 31,818 $ 33,893 $ ( 2,075 ) Billings on uncompleted contracts in excess of costs and estimated earnings ( 204,612 ) ( 171,308 ) ( 33,304 ) Net contract liabilities $ ( 172,794 ) $ ( 137,415 ) $ ( 35,379 ) 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, 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 $ 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 series of tables presents revenue disaggregated by geographic area where the work was performed and by contract type: Geographic Disaggregation: Three Months Ended September 30, 2024 September 30, 2023 (In thousands) United States $ 153,222 $ 177,550 Canada 10,768 16,873 Other international 1,589 3,236 Total Revenue $ 165,579 $ 197,659 -8- Table of Contents Contract Type Disaggregation: Three Months Ended September 30, 2024 September 30, 2023 (In thousands) Fixed-price contracts $ 123,769 $ 116,757 Time and materials and other cost reimbursable contracts 41,810 80,902 Total Revenue $ 165,579 $ 197,659 Note 3 – Property, Plant and Equipment 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. 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 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 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 under the ABL Facility. The ABL Facility matures, and any outstanding amounts become due and payable, on September 9, 2026. 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 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. 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 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 September 30, 2024. Note 5 – Income Taxes Effective Tax Rate -9- Table of Contents 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 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. 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 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, 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; 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. -10- Table of Contents Note 7 – Earnings per Common Share 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 September 30, 2024 September 30, 2023 (In thousands, except per share data) Basic EPS: Net loss $ ( 9,223 ) $ ( 3,167 ) Weighted average shares outstanding 27,559 27,113 Basic loss per share $ ( 0.33 ) $ ( 0.12 ) Diluted EPS: Net loss $ ( 9,223 ) $ ( 3,167 ) Diluted weighted average shares outstanding 27,559 27,113 Diluted loss per share $ ( 0.33 ) $ ( 0.12 ) The following securities are considered antidilutive and have been excluded from the calculation of Diluted EPS: Three Months Ended September 30, 2024 September 30, 2023 (In thousands) Nonvested restricted stock units 631 231 -11- Table of Contents Note 8 – Segment Information We operate our business through three reportable segments: • 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, 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. 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, 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. -12- Table of Contents Operating Segment Information - The following tables set forth certain selected financial information for our operating segments for the periods indicated: (In thousands) Storage and Terminal Solutions Utility and Power Infrastructure Process and Industrial Facilities Corporate Total Three Months Ended September 30, 2024 Total revenue (1) $ 78,239 $ 55,912 $ 31,428 $ — $ 165,579 Cost of revenue ( 73,542 ) ( 54,605 ) ( 29,431 ) ( 188 ) ( 157,766 ) Gross profit (loss) 4,697 1,307 1,997 ( 188 ) 7,813 Selling, general and administrative expenses 5,569 3,976 1,766 7,269 18,580 Operating income (loss) $ ( 872 ) $ ( 2,669 ) $ 231 $ ( 7,457 ) $ ( 10,767 ) (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 Three Months Ended September 30, 2023 Total revenue (1) $ 90,144 $ 32,395 $ 75,120 $ — $ 197,659 Cost of revenue ( 85,191 ) ( 28,698 ) ( 70,042 ) ( 1,869 ) ( 185,800 ) Gross profit (loss) 4,953 3,697 5,078 ( 1,869 ) 11,859 Selling, general and administrative expenses 4,629 1,548 3,087 7,849 17,113 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 $0.8 million for the three months ended September 30, 2023. Total assets by segment September 30, 2024 June 30, 2024 Storage and Terminal Solutions $ 159,049 $ 138,529 Utility and Power Infrastructure 103,792 84,108 Process and Industrial Facilities 37,063 81,524 Corporate 170,253 147,190 Total Segment Assets $ 470,157 $ 451,351 -13- Table of Contents