What changed in this filing

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Item 1. Financial Statements

2025-02-06 compared with 2024-11-07 · 119 added, 58 removed, 310 unchanged (36% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended

September 30,

2024 September 30,

Three Months Ended Six Months Ended

2024 December 31,

2023 December 31,

2024 December 31,

Revenue $ 187,169 $ 175,042 $ 352,748 $ 372,701

19 unchanged sentences

(In thousands)

Three Months Ended

September 30,

2024 September 30,

Three Months Ended Six Months Ended

2024 December 31,

2023 December 31,

2024 December 31,

Net loss $ ( 5,533 ) $ ( 2,851 ) $ ( 14,756 ) $ ( 6,018 )

6 unchanged sentences

(In thousands)

September 30,

2024 June 30,

18 unchanged sentences

(In thousands, except share data)

September 30,

2024 June 30,

16 unchanged sentences

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;

27,888,217 shares issued at December 31, 2024 and June 30, 2024, respectively;

27,602,825 and 27,308,795 shares outstanding as of December 31, 2024 and June 30, 2024, respectively;

Additional paid-in capital 145,608 145,580

1 unchanged sentence

Accumulated other comprehensive loss ( 10,462 ) ( 9,535 )

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

Treasury stock, at cost — 285,392 and 579,422 shares as of December 31, 2024 and June 30, 2024, respectively;

( 2,676 ) ( 6,083 )

5 unchanged sentences

(In thousands)

Three Months Ended

September 30,

2024 September 30,

Six Months Ended

2024 December 31,

Operating activities:

3 unchanged sentences

Stock-based compensation expense 4,568 3,785

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

Gain on disposal of property, plant and equipment (Note 3) ( 64 ) ( 4,589 )

Other ( 19 ) 125

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

6 unchanged sentences

Accrued expenses ( 4,912 ) 2,257

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

Net cash provided by operating activities 45,516 729

Investing activities:

3 unchanged sentences

Financing activities:

Advances under asset-backed credit facility — 10,000

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

Proceeds from issuance of common stock under employee stock purchase plan 102 91

21 unchanged sentences

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

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

Net loss — — — ( 5,533 ) — — — ( 5,533 )

2 unchanged sentences

Treasury shares sold to Employee Stock Purchase Plan — — 14 — — ( 4,677 ) 42 56

Stock-based compensation expense — — 2,257 — — — — 2,257

December 31, 2024 27,888,217 $ 279 $ 145,608 $ 19,185 $ ( 10,462 ) 285,392 $ ( 2,676 ) $ 151,934

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

Net loss — — — ( 2,851 ) — — — ( 2,851 )

Other comprehensive loss — — — — 562 — — 562

Issuance of restricted stock — — ( 1,131 ) — — ( 86,783 ) 1,131 —

Treasury shares sold to Employee Stock Purchase Plan — — ( 4 ) — — ( 3,864 ) 50 46

Stock-based compensation expense — — 2,030 — — — — 2,030

December 31, 2023 27,888,217 $ 279 $ 140,668 $ 52,899 $ ( 8,745 ) 587,732 $ ( 6,191 ) $ 178,910

Common Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury Stock

Shares Amount Shares Amount Total

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

Net loss — — — ( 14,756 ) — — ( 14,756 )

Other comprehensive income — — — — ( 927 ) — ( 927 )

Issuance of restricted stock — — ( 4,537 ) — — ( 408,406 ) 4,537 —

Treasury shares sold to Employee Stock Purchase Plan — ( 3 ) — — ( 9,474 ) 105 102

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

Stock-based compensation expense — — 4,568 — — — 4,568

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

December 31, 2024 27,888,217 $ 279 $ 145,608 $ 19,185 $ ( 10,462 ) 285,392 $ ( 2,676 ) $ 151,934

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

Net loss — — — ( 6,018 ) — — — ( 6,018 )

4 unchanged sentences

Stock-based compensation expense — — 3,785 — — — — 3,785

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

December 31, 2023 27,888,217 $ 279 $ 140,668 $ 52,899 $ ( 8,745 ) 587,732 $ ( 6,191 ) $ 178,910

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

The results of operations for the three and six month periods ended December 31, 2024 may not necessarily be indicative of the results of operations for the full year ending June 30, 2025.

Significant Accounting Policies

13 unchanged sentences

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).

The new requirements will take effect for annual reporting periods beginning after December 15, 2026 (fiscal 2028) and for interim periods within fiscal years beginning after December 15, 2027 (fiscal 2029), with early adoption permitted.

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.

Other accounting pronouncements issued but not effective until after December 31, 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 $ 1.1 billion of remaining performance obligations yet to be satisfied as of September 30, 2024.

We had $ 1.0 billion of remaining performance obligations yet to be satisfied as of December 31, 2024.

We expect to recognize $ 558.9 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,

3 unchanged sentences

Net contract liabilities $ ( 202,826 ) $ ( 137,415 ) $ ( 65,411 )

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.

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 contracts.

The amount of revenue recognized during the six months ended December 31, 2024 that was included in the June 30, 2024 BIE balance was $ 149.9 million.

Progress billings in accounts receivable at December 31, 2024 and June 30, 2024 included retentions to be collected within one year of $ 12.9 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 $ 51.9 million as of December 31, 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.

Costs and estimated earnings in excess of billings on uncompleted contracts included revenues for unpriced change orders and claims of $ 8.4 million at December 31, 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.

5 unchanged sentences

Geographic Disaggregation:

Three Months Ended

September 30,

2024 September 30,

Three Months Ended Six Months Ended

2024 December 31,

2023 December 31,

2024 December 31,

(In thousands)

4 unchanged sentences

Contract Type Disaggregation:

Three Months Ended

September 30,

2024 September 30,

Three Months Ended Six Months Ended

2024 December 31,

2023 December 31,

2024 December 31,

(In thousands)

4 unchanged sentences

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.

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.

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 Catoosa, Oklahoma facility was closed as it was no longer strategic to the future of the business.

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

Note 4 – Debt

8 unchanged sentences

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.

The borrowing base is recalculated on a monthly basis and at December 31, 2024, our borrowing base was $ 59.7 million.

The Company had $ 4.8 million in letters of credit outstanding as of December 31, 2024, which resulted in availability of $ 54.9 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 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.

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;

make investments, including investments in certain international subsidiaries;

incur, assume or permit to exist additional indebtedness and guarantees;

create or permit to exist liens;

pay cash dividends or make distributions;

issue equity instruments;

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.

We were in compliance with all covenants of the ABL Facility as of December 31, 2024.

Note 5 – Income Taxes

Effective Tax Rate

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.

During the three and six months ended December 31, 2024, our effective tax rates were ( 0.3 %) and ( 0.1 )%, respectively.

During the three and six months ended December 31, 2023 our effective tax rates were zero.

The effective tax rates during fiscal 2025 were impacted by valuation allowances of $ 1.8 million and $ 3.1 million, respectively, placed on deferred tax assets

generated during the three and six months ended December 31, 2024.

The effective tax rates during fiscal 2024 were impacted by valuation allowances of $ 1.2 million and $ 1.4 million, respectively, placed on deferred tax assets during the three and six months ended December 31, 2023.

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.

Currently, we 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 as we generate taxable income.

Note 6 – Commitments and Contingencies

32 unchanged sentences

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

Three Months Ended

September 30,

2024 September 30,

Three Months Ended Six Months Ended

2024 December 31,

2023 December 31,

2024 December 31,

(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

September 30,

2024 September 30,

Three Months Ended Six Months Ended

2024 December 31,

2023 December 31,

2024 December 31,

(In thousands)

Nonvested restricted stock units

917 949 926 757

Note 8 – Segment Information

7 unchanged sentences

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.

We also perform power delivery 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.

3 unchanged sentences

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 also engineer and construct thermal vacuum test chambers for aerospace and defense industries and other infrastructure for industries including chemicals, 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.

3 unchanged sentences

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.

Corporate assets consist primarily of cash, restricted cash, prepaid expenses, corporate fixed assets, and corporate operating lease right-of-use assets.

Operating Segment Information - The following tables set forth certain selected financial information for our operating segments for the periods indicated:

1 unchanged sentence

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

Three Months Ended September 30, 2024

Three Months Ended December 31, 2024

Total revenue (1)

4 unchanged sentences

Operating income (loss) $ 1,705 $ ( 152 ) $ ( 1,307 ) $ ( 6,640 ) $ ( 6,394 )

(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.

(1) Total revenues are net of inter-segment revenues which are primarily Process and Industrial Facilities and were $0.8 million for the three months ended December 31, 2024.

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

Three Months Ended September 30, 2023

Three Months Ended December 31, 2023

Total revenue (1)

1 unchanged sentence

Cost of revenue ( 60,522 ) ( 38,729 ) ( 64,634 ) ( 568 ) ( 164,453 )

Gross profit 1,838 1,415 6,671 665 10,589

Selling, general and administrative expenses 4,338 1,978 2,206 7,209 15,731

Operating income (loss) $ ( 2,500 ) $ ( 563 ) $ 4,465 $ ( 6,544 ) $ ( 5,142 )

(1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $0.9 million for the three months ended December 31, 2023.

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

Six Months Ended December 31, 2024

Total revenue (1)

$ 173,746 $ 116,988 $ 62,014 $ — $ 352,748

Cost of revenue ( 161,777 ) ( 112,272 ) ( 59,647 ) ( 347 ) ( 334,043 )

Gross profit (loss) 11,969 4,716 2,367 ( 347 ) 18,705

1 unchanged sentence

Operating income (loss) $ 833 $ ( 2,821 ) $ ( 1,076 ) $ ( 14,097 ) $ ( 17,161 )

(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.

(1) Total revenues are net of inter-segment revenues which are primarily Process and Industrial Facilities and were $1.7 million for the six months ended December 31, 2024.

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

Six Months Ended December 31, 2023

Total revenue (1)

$ 152,504 $ 72,539 $ 146,425 $ 1,233 $ 372,701

Cost of revenue ( 145,714 ) ( 67,428 ) ( 134,676 ) ( 2,435 ) ( 350,253 )

Gross profit (loss) 6,790 5,111 11,749 ( 1,202 ) 22,448

Selling, general and administrative expenses 8,967 3,526 5,293 15,058 32,844

Operating income (loss) $ ( 2,177 ) $ 1,585 $ 6,456 $ ( 16,260 ) $ ( 10,396 )

(1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $1.8 million for the six months ended December 31, 2023.

Total assets by segment

September 30, 2024 June 30, 2024

December 31, 2024 June 30, 2024

Storage and Terminal Solutions $ 172,932 $ 138,529

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements