What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-05-08 · 136 added, 193 removed, 240 unchanged (58% of the section changed)

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

• unexpected adjustments to our remaining performance obligations or backlog;

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

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RESULTS OF OPERATIONS

We operate our business through three reportable segments:

We operate our business through a number of different operating subsidiaries, which are organized into three reportable segments based on the type of work performed and the markets serviced:

• 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.

primarily consists of engineering, procurement, fabrication, and construction services related to cryogenic and other specialty tanks and terminals for LNG, NGLs such as butane, propane, ethane, ethylene, and other liquid petroleum products, as well as hydrogen and ammonia.

We also perform work related to traditional aboveground crude oil and refined product storage tanks and terminals.

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We also perform power delivery work for public and private utilities, including construction of new substations, upgrades of existing substations, and maintenance.

We also provide construction services to a variety of power generation facilities, including natural gas fired facilities in simple or combined cycle configurations.

We also provide construction services to a variety of power generation facilities, including natural gas fired facilities in simple or combined cycle configurations for base load, peaking, and backup power supply.

• Process and Industrial Facilities :

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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 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 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, cement, agriculture, wastewater treatment facilities and other industrial customers.

Operational Update

Operating activity increased during the third quarter of fiscal 2025 as revenues showed a 13% increase from second quarter of 2025.

The increase was driven primarily by an increase in activity for refinery maintenance and turnaround services.

As we move forward through the coming quarters, we believe activity levels will rise for projects currently in backlog.

Operating activity increased during the first quarter of fiscal 2026 as revenues showed a 28% increase compared to the first quarter of 2025.

The increase was driven primarily by an increase in activity for LNG storage, LNG peak-shaver, and specialty vessel projects.

Strong project execution on our projects, along with improved overhead cost absorption, generated higher gross margins compared to the same period in prior year.

As we move forward through the coming quarters of fiscal 2026, we believe activity levels will rise for projects currently in backlog.

Project awards during the quarter were $187.8 million, resulting in a current quarter book-to-bill of 0.9x.

Award activity was driven by our Storage and Terminal Solutions segment, and included the award of a large specialty storage project.

Award activity was driven by our Storage and Terminal Solutions segment, and included the award for the construction for the balance of plant supporting a dual service full containment storage tank.

The market drivers for each of our segments are strong and include increased oil and gas demand, the clean energy transition, low-cost feed stock, data center energy demand, industrial reshoring/onshoring, grid reliability and electrical supply assurance.

As a result, we believe we will have strong award activity in the coming quarters.

While our award activity in the quarter was strong, heightened macroeconomic uncertainty and the evolving impact of U.S.

trade policy on infrastructure economics has impacted the timing of customer decisions in the near term.

We believe customer delays in project starts and final investment decisions to be a short-term disruption, while an overall favorable regulatory environment for our customers underpins long-term momentum for our business.

We continue to sharpen and better align our business for the current and coming marketplace.

Accordingly, during the third and fourth quarters, we are consolidating certain aspects of the business to further improve our performance and create a flatter, leaner management structure.

While we always strive to maximize efficiency, we commenced an initiative in the fourth quarter of fiscal 2025 to sharpen and better align our business for the current and coming marketplace.

Accordingly, we have consolidated certain aspects of the business to further improve our performance and create a flatter, leaner management structure.

In addition, we continue to evaluate our business lines and, where appropriate, reallocate resources to those businesses that present the best opportunities.

We remain focused on delivering sustainable, long-term shareholder value by building a resilient, growth-oriented platform aligned with the evolving needs of our customers.

We believe actions taken in the fourth quarter of fiscal 2025 and the first quarter of fiscal 2026 will reduce our overall cost structure, improving our overhead recovery and operating leverage.

We define backlog as the total dollar amount of revenue that we expect to recognize as a result of performing work that has been awarded to us through a signed contract, limited notice to proceed ("LNTP") or other type of assurance that we consider firm.

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For all other arrangements, we calculate backlog as the estimated contract amount less revenue recognized as of the reporting date.

The following table provides a summary of changes in our backlog for the three months ended March 31, 2025:

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

(In thousands)

Backlog as of December 31, 2024 $ 738,986 $ 318,516 $ 253,632 $ 1,311,134

Project awards 204,839 37,686 58,667 301,192

Revenue recognized (96,054) (58,676) (45,431) (200,161)

Backlog as of March 31, 2025 $ 847,771 $ 297,526 $ 266,868 $ 1,412,165

Book-to-bill ratio (1)

2.1 x 0.6 x 1.3 x 1.5 x

(1) Calculated by dividing project awards by revenue recognized.

The following table provides a summary of changes in our backlog for the nine months ended March 31, 2025:

Backlog differs from the amount of our remaining performance obligations, which are described in Note 2 - Revenue in the notes to the unaudited consolidated financial statements.

Differences are due primarily to the inclusion within our backlog of estimates of future revenue under long-term maintenance contracts;

future revenue for the full scope of work for certain arrangements where we have received an LNTP;

and future revenue for arrangements where we have received assurance that we consider firm, but the associated contract has not been fully executed.

The following table provides a summary of changes in our backlog for the three months ended September 30, 2025:

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

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Project awards 136,077 34,744 16,934 187,755

Other adjustment (2)

Other adjustments (2)

— (44,239) (152,720) (196,959)

Revenue recognized (109,459) (74,501) (27,924) (211,884)

Backlog as of March 31, 2025 $ 847,771 $ 297,526 $ 266,868 $ 1,412,165

Backlog as of September 30, 2025 $ 796,713 $ 262,388 $ 101,919 $ 1,161,020

Book-to-bill ratio (1)

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(1) Calculated by dividing project awards by revenue recognized.

(2) Backlog was reduced as a result of the closure of a customer's facility.

This customer has historically represented less than 1% of our consolidated revenues.

In the Storage and Terminal Solutions segment, we booked $204.8 million of project awards during the third quarter of fiscal 2025.

Project awards included a project for the engineering and construction of large refrigerated propane and butane tanks as well as spheres for related NGL products.

During the nine months ended March 31, 2025, we booked $319.3 million of project awards.

(2) Previous project awards removed from backlog.

In the Storage and Terminal Solutions segment, we booked $136.1 million of project awards during the first quarter of fiscal 2026.

Project awards included a large award for the construction for the balance of plant supporting a dual service full containment storage tank.

This segment includes significant opportunities for storage infrastructure projects related to natural gas, LNG, ammonia, NGLs and other forms of low carbon energy.

We believe LNG and ammonia projects in particular will be key growth drivers for this segment.

Bidding activity on LNG and ammonia projects has been strong and we expect that to continue.

In the Utility and Power Infrastructure segment, we booked $37.7 million of project awards during the third quarter of fiscal 2025.

During the nine months ended March 31, 2025, we booked $93.5 million of project awards.

Our opportunity pipeline for LNG peak shaving projects continues to be promising;

however those awards, while significant, can be less frequent.

Power delivery opportunities are expected to be driven over the long-term by increasing electrical demand and the related electrical grid requirements.

Project opportunities and bidding activity are strong for both the power delivery portion of the business and LNG peak shaving.

In the Process and Industrial Facilities segment, we booked $58.7 million of project awards during the third quarter of fiscal 2025.

During the nine months ended March 31, 2025, we booked $126.9 million of project awards, and were notified of a five-year renewal of a refinery maintenance contract.

We continue to see demand for thermal vacuum chambers in the coming quarters, as well as increasing opportunities in mining and minerals, chemicals, low carbon and refinery turnarounds.

We believe LNG, NGLS and ammonia projects in particular will be key growth drivers for this segment.

Bidding activity in these markets has been strong and we expect that to continue.

In the Utility and Power Infrastructure segment, we booked $34.7 million of project awards during the first quarter of fiscal 2026.

Our backlog in this segment was impacted by the removal of an award, originally added to backlog in the fourth quarter of fiscal 2025.

The removal is the result of a change in certain contractual terms and conditions that significantly increased our risk profile on the project.

Considering the strength of the opportunities available in our markets, particularly in this segment, as well as the high quality financial and commercial risk profile of our current backlog, we deemed that it was unnecessary for us to accept an award that deteriorates that position.

Our unwillingness to accept this modified risk profile caused the client to change their award decision.

Our opportunity pipeline for LNG peak shaving projects continues to be promising, with both greenfield facility projects as well as the projects for the upgrade, maintenance, and repair to existing infrastructure.

The timing between the major greenfield awards can be extended due to the client activity and bidding diligence, but their addition to backlog is significant and will drive long-term sustainable growth in the segment.

The smaller upgrade projects are key measures of our brand power and strength in the market, keeping key resources active while creating opportunities to strengthen execution and engineering teams.

Power generation and delivery infrastructure opportunities are expected to be driven over the long-term by

increasing electrical demand and the related electrical grid requirements.

Project opportunities and bidding activity are strong across the segment.

In the Process and Industrial Facilities segment, we booked $16.9 million of project awards during the first quarter of fiscal 2026.

Our backlog in this segment was impacted by the removal of an award, originally added to backlog in the third quarter of fiscal 2023.

Field work on this construction-only project has continued to be delayed as our client and the ultimate customer work to finalize the scope and engineering for the project.

The project was removed from backlog as the ultimate customer is now planning to change the project execution and sourcing strategy for the project.

While we ultimately may perform some of this work, we determined inclusion of the award in backlog was no longer appropriate.

We continue to see increasing opportunities in mining and minerals, chemicals, renewable fuels, refinery maintenance and turnarounds, and thermal vacuum chambers in this segment.

Project awards in all segments are cyclical and are typically the result of a sales process that can take several months or years to complete.

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Additionally, awards for larger construction projects may be recognized as revenue over a multi-year period as the projects may take a few years to complete.

Three months ended March 31, 2025 Compared to the Three months ended March 31, 2024

The information below is an analysis of our consolidated results for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Three months ended September 30, 2025 Compared to the Three months ended September 30, 2024

The information below is an analysis of our consolidated results for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

See Results of Operations by Business Segment below for additional information describing the performance of each of our reportable segments.

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Three Months Ended

March 31, 2025 v 2024

September 30, 2025 v 2024

Dollars in thousands 2025 2024 Change %

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Net loss $ (3,663) $ (9,223) $ 5,560 60 %

Revenue - The increase in consolidated revenue of $34.1 million, or 21%, was primarily attributable to higher revenue volumes in our Storage and Terminal Solutions and Utility and Power Infrastructure segments, partially offset by reduced revenue volumes in Process and Industrial Facilities.

Gross profit - Gross profit in the third quarter of fiscal 2025 increased $7.3 million, or 130%, compared to the third quarter of fiscal 2024.

Gross margin of 6.4% for the third quarter of fiscal 2025 increased compared with gross margin of 3.4% for the third quarter of fiscal 2024.

The increase in gross margin for the quarter is attributable to higher gross margins in our Utility and Power Infrastructure and Process and Industrial Facility segments.

Selling, general and administrative expenses - The decrease in SG&A expenses of $2.2 million, or 11%, is primarily due to a decrease in cash-settled stock-based compensation of $1.6 million.

Revenue - The increase in consolidated revenue of $46.3 million, or 28%, was primarily attributable to higher revenue volumes in our Storage and Terminal Solutions and Utility and Power Infrastructure segments.

Gross profit - Gross profit in the first quarter of fiscal 2026 increased $6.4 million, or 82%, compared to the first quarter of fiscal 2025.

The increase was primarily attributable to the Utility and Power Infrastructure and Storage and Terminal Solutions segments.

Gross margin of 6.7% for the first quarter of fiscal 2026 increased compared with gross margin of 4.7% for the first quarter of fiscal 2025.

The increase in gross margin for the quarter is attributable to higher gross margins in our Utility and Power Infrastructure segment.

Selling, general and administrative expenses - The decrease in SG&A expenses of $2.2 million, or 12%, is primarily due to cost reductions resulting from our organizational realignment.

Restructuring costs - The Company incurred $3.3 million of restructuring costs during the first quarter of fiscal 2026 related to organizational restructuring.

See Part I, Item 1.

Financial Statements (Unaudited), Note 8 - Restructuring Costs, for more information about our organizational restructuring plan.

Interest income - The increase in interest income of $0.2 million is primarily due to an increase in our cash balance.

Provision for income taxes - Our effective tax rates for the three months ended March 31, 2025 and March 31, 2024 were zero.

Provision for income taxes - Income tax expense for both periods was insignificant.

The effective tax rates during both periods were impacted by valuation allowances of $1.4 million and $1.3 million respectively, placed on deferred tax assets generated during the quarters.

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Three Months Ended

March 31, 2025 v 2024

Dollars in thousands 2025 2024 Change % Favorable (Unfavorable)

Storage and Terminal Solutions $ 96,054 $ 54,304 $ 41,750 77 %

Utility and Power Infrastructure 58,676 46,120 12,556 27 %

Process and Industrial Facilities 45,431 65,589 (20,158) (31) %

Total revenue (1)

$ 200,161 $ 166,013 $ 34,148 21 %

(1) Total revenues are net of inter-segment revenues which are primarily Process and Industrial Facilities and were $1.1 million for the three months ended March 31, 2025.

Gross profit (loss)

Storage and Terminal Solutions $ 3,731 $ 2,313 $ 1,418 61 %

Utility and Power Infrastructure 5,537 1,409 4,128 293 %

Process and Industrial Facilities 3,759 1,767 1,992 113 %

Corporate (177) 89 (266) (299) %

Total gross profit $ 12,850 $ 5,578 $ 7,272 130 %

Gross margin %

Storage and Terminal Solutions 3.9 % 4.3 % (.4)% (9) %

Utility and Power Infrastructure 9.4 % 3.1 % 6.3% 203 %

Process and Industrial Facilities 8.3 % 2.7 % 5.6% 207 %

Total gross margin % 6.4 % 3.4 % 3.0% 88 %

Operating income (loss)

Storage and Terminal Solutions $ (2,613) $ (3,082) $ 469 15 %

Utility and Power Infrastructure 2,877 (1,324) 4,201 317 %

Process and Industrial Facilities 1,617 (823) 2,440 296 %

Corporate (6,881) (9,141) 2,260 25 %

Total Operating Loss $ (5,000) $ (14,370) $ 9,370 65 %

Storage and Terminal Solutions

Storage and Terminal Solutions revenues increased by $41.8 million, or 77%, in the three months ended March 31, 2025 compared to the same period last year, driven by an increased volume of work for specialty vessel and LNG storage projects.

Storage and Terminal Solutions gross profit increased by $1.4 million, or 61%, in the three months ended March 31, 2025 compared to the same period last year.

The segment gross margin was 3.9% for the three months ended March 31, 2025 compared to segment gross margin of 4.3% in the same period last year.

Although higher revenue resulted in improved leverage of our cost structure, segment gross margin continues to be impacted by under-recovery as we allocate more resources to this segment in anticipation of continuing revenue growth.

Additionally, gross margin for the third quarter of fiscal 2025 was negatively impacted by lower than anticipated labor productivity on a crude terminal project.

Utility and Power Infrastructure

Utility and Power Infrastructure revenues increased by $12.6 million, or 27%, in the three months ended March 31, 2025 compared to the same period last year.

The increase is primarily attributable to a higher volume of work for natural gas peak shaving projects.

Utility and Power Infrastructure gross profit increased by $4.1 million, or 293%, in the three months ended March 31, 2025 compared to the same period last year.

The segment gross margin was 9.4% for the three months ended March 31, 2025 compared to 3.1% in the same period last year, an increase of 6.3% due to strong project execution and improved construction overhead cost absorption as a result of higher revenues.

Process and Industrial Facilities

Process and Industrial Facilities revenues decreased by $20.2 million, or 31%, in the three months ended March 31, 2025 compared to the same period last year.

The decrease is primarily attributable to lower revenue volumes resulting from the completion of a large renewable diesel project.

We believe this reduction in revenue is temporary given our strong backlog, including a significant gas processing construction project that is expected to commence in early fiscal 2026.

Process and Industrial Facilities gross profit increased by $2.0 million, or 113%, in the three months ended March 31, 2025 compared to the same period last year.

The segment gross margin was 8.3% for the three months ended March 31, 2025 compared to 2.7% in the same period last year.

Gross margin in the prior period was adversely impacted by reduced labor demand for turnaround and maintenance services in the final year of a three-year refinery maintenance contract which has since been renewed.

The accounting for this change resulted in a cumulative catch-up adjustment over the life of the contract, which impacted gross margins during the prior year period.

Nine months ended March 31, 2025 Compared to the Nine months ended March 31, 2024

The information below is an analysis of our consolidated results for the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024.

See Results of Operations by Business Segment below for additional information describing the performance of each of our reportable segments.

Consolidated Results of Operations

Nine Months Ended

March 31, 2025 v 2024

Dollars in thousands 2025 2024 Change %

Revenue $ 552,909 $ 538,714 $ 14,195 3 %

Cost of revenue 521,354 510,688 10,666 2 %

Gross profit 31,555 28,026 3,529 13 %

Selling, general and administrative expenses 53,592 52,792 800 2 %

Restructuring costs 124 — 124 — %

Operating loss (22,161) (24,766) 2,605 11 %

Other income (expense):

Interest expense (368) (787) 419 53 %

Interest income 4,668 477 4,191 879 %

Other (313) 4,481 (4,794) (107) %

Loss before income tax expense (18,174) (20,595) 2,421 12 %

Provision for federal, state and foreign income taxes 16 4 12 — %

Net loss $ (18,190) $ (20,599) $ 2,409 0 12 %

Revenue - The increase in overall revenue of $14.2 million, or 3%, was primarily attributable to increased revenue volumes in our Storage and Terminal Solutions and Utility and Power Infrastructure segments, partially offset by a decrease in Process and Industrial Facilities.

Gross profit - Gross profit in the nine months ended March 31, 2025 increased $3.5 million, or 13%, compared to the same period prior year.

Gross margin increased to 5.7% for the nine months ended March 31, 2025 compared to 5.2% for the same period prior year.

The increase in gross margin for the quarter is attributable to higher gross margins in our Storage and Terminal Solutions and Utility and Power Infrastructure segments, partially offset by lower margins in our Process and Industrial Facility segment.

Selling, general and administrative expenses - The increase in SG&A expenses of $0.8 million, or 2%, is primarily due to an increase in salaries and wages of $2.3 million, all necessitated to support conversion of backlog to revenue and expected growth of the business.

The increase was partially offset by a decrease in cash-settled stock-based compensation expense of $2.1 million.

Interest income - The increase in interest income of $4.2 million is primarily due to an increase in our cash balance.

Other income - Other income decreased $4.8 million in the nine months ended March 31, 2025 as compared to the same period prior year.

Other income during the nine months ended March 31, 2024 included a gain of $2.0 million from the sale of a facility in Catoosa, Oklahoma.

Additionally, in the first quarter of fiscal 2024, we recognized a gain of $2.5 million on the sale of a previously utilized facility in Burlington, Ontario.

Provision for income taxes - Our effective tax rates for the nine months ended March 31, 2025 and March 31, 2024 were (0.1%) and zero, respectively.

The effective tax rates during both periods were impacted by valuation allowances of $4.3 million and $5.8 million, respectively, placed on deferred tax assets generated during the quarters.

We placed a valuation allowance on our deferred tax assets due to the existence of a cumulative loss over a three-year period.

Currently, we place valuation allowances on newly generated deferred tax assets.

We will realize the benefit associated with the deferred tax assets for which the valuation allowance has been provided as we generate taxable income.

Results of Operations by Business Segment

Nine Months Ended

March 31, 2025 v 2024

September 30, 2025 v 2024

Dollars in thousands 2025 2024 Change % Favorable (Unfavorable)

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Process and Industrial Facilities 27,924 31,428 (3,504) (11) %

Corporate — 1,233 (1,233) — %

Total revenue $ 211,884 $ 165,579 $ 46,305 28 %

$ 552,909 $ 538,714 $ 14,195 3 %

(1) Total revenues are net of inter-segment revenues which are primarily Process and Industrial Facilities and were $2.8 million for the nine months ended March 31, 2025.

Gross profit (loss)

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Storage and Terminal Solutions

Storage and Terminal Solutions revenues increased by $63.0 million, or 30%, in the nine months ended March 31, 2025 compared to the same period last year, driven by increased volume of work for specialty vessel and LNG storage, partially offset by decreases in tank repair and maintenance work.

Storage and Terminal Solutions gross profit increased by $6.6 million, or 72%, in the nine months ended March 31, 2025 compared to the same period last year.

The segment gross margin was 5.8% for the nine months ended March 31, 2025 compared to segment gross margin of 4.4% in the same period last year.

The improved gross margin relative to the prior year period reflects consistent project execution and improved construction overhead cost absorption as a result of higher revenues.

Storage and Terminal Solutions revenues increased by $31.2 million, or 40%, in the three months ended September 30, 2025 compared to the same period last year, driven by an increased volume of work for LNG storage and specialty vessel projects.

Storage and Terminal Solutions gross profit increased by $1.8 million, or 38%, in the three months ended September 30, 2025 compared to the same period last year.

The segment gross margin of 5.9% for the three months ended September 30, 2025 was consistent with segment gross margin of 6.0% in the same period last year.

Gross margins for this segment continue to be primarily impacted by under-recovery of overhead costs.

We believe overhead cost absorption will improve as activity on awards currently in backlog increases through the remainder of fiscal 2026.

Utility and Power Infrastructure

Utility and Power Infrastructure revenues increased by $57.0 million, or 48%, in the nine months ended March 31, 2025 compared to the same period last year.

The increase is primarily attributable to higher volumes of work for LNG peak shaving projects, partially offset by decreases in power delivery work.

Utility and Power Infrastructure gross profit increased by $3.7 million, or 57%, in the nine months ended March 31, 2025 compared to the same period last year.

The segment gross margin was 5.8% for the nine months ended March 31, 2025 compared to 5.5% in the same period last year.

Utility and Power Infrastructure revenues increased by $18.6 million, or 33%, in the three months ended September 30, 2025 compared to the same period last year.

The increase is primarily attributable to a higher volume of work for power delivery and natural gas peak shaving projects.

Utility and Power Infrastructure gross profit increased by $5.5 million, or 419%, in the three months ended September 30, 2025 compared to the same period last year.

The segment gross margin was 9.1% for the three months ended September 30, 2025 compared to 2.3% in the same period last year, an increase of 6.8% due to strong project execution and improved construction overhead cost absorption as a result of higher revenues.

Process and Industrial Facilities

Process and Industrial Facilities revenues decreased by $104.6 million, or 49%, in the nine months ended March 31, 2025 compared to the same period last year.

The decrease is primarily attributable to lower revenue volumes for a now completed large renewable diesel project, in addition to lower revenue volumes for thermal vacuum chambers.

We believe this reduction in revenue is temporary given our strong backlog, including a significant gas processing construction project that is expected to commence in early fiscal 2026.

Process and Industrial gross profit decreased by $7.4 million, or 55%, in the nine months ended March 31, 2025 compared to the same period last year.

The segment gross margin was 5.7% for the nine months ended March 31, 2025 compared to 6.4% in the same period last year.

The segment gross margin in the current period was impacted by higher levels of under-recovery of construction overhead costs due to lower revenue.

Process and Industrial Facilities revenues decreased by $3.5 million, or 11%, in the three months ended September 30, 2025 compared to the same period last year.

The decrease is primarily attributable to lower revenue volumes for the engineering and construction of thermal vacuum chambers.

Process and Industrial Facilities gross profit decreased by $0.6 million, or 28%, in the three months ended September 30, 2025 compared to the same period last year.

The segment gross margin was 5.1% for the three months ended September 30, 2025 compared to 6.4% in the same period last year.

The decrease is primarily attributable to mix of work.

Segment gross margins in both periods were impacted by under-recovery of construction overhead costs due to lower revenue volumes.

LIQUIDITY AND CAPITAL RESOURCES

We assess liquidity based on the ongoing ability to pay our liabilities as they become due, fund business operations and meet all monetary contractual obligations.

Our primary sources of liquidity at March 31, 2025 were unrestricted cash and cash equivalents on hand, capacity under our ABL Facility, and cash generated from operations.

Our primary sources of liquidity at September 30, 2025 were unrestricted cash and cash equivalents on hand, capacity under our ABL Facility, and cash generated from operations.

Our primary operational uses of capital are expenditures required to execute our projects, fund business operations and fulfill our contractual obligations.

We believe that for at least the next 12 months, our cash position, anticipated cash generated by operating activities, along with our availability under the ABL Facility, is sufficient to support our operating requirements.

Unrestricted cash and cash equivalents at March 31, 2025 totaled $185.5 million and availability under the ABL Facility totaled $61.5 million, resulting in total liquidity of $247.1 million.

During the third quarter of fiscal 2025, liquidity increased $35.4 million primarily as a result of cash provided by operating activities.

Unrestricted cash and cash equivalents at September 30, 2025 totaled $192.3 million and availability under the ABL Facility totaled $56.6 million, resulting in total liquidity of $248.9 million.

During the first quarter of fiscal 2026, liquidity decreased $35.5 million primarily as a result of cash used by operating activities.

The following table provides a reconciliation of restricted cash and unrestricted cash in the Consolidated Balance Sheets to the total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows, as well as availability and total liquidity (in thousands):

2025 December 31,

September 30,

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Total Liquidity $ 248,924 $ 284,456

The following table provides a summary of changes in our liquidity for the three months ended March 31, 2025 (in thousands):

Liquidity at December 31, 2024 $ 211,697

Cash provided by operating activities 31,247

The following table provides a summary of changes in our liquidity for the three months ended September 30, 2025 (in thousands):

Liquidity at June 30, 2025 $ 284,456

Cash used by operating activities (25,899)

Capital expenditures (2,011)

Proceeds from asset sales 222

Increase in availability under ABL Facility 6,623

Cash provided by financing activities 47

Decrease in availability under ABL Facility (3,198)

Cash used by financing activities (4,329)

Effect of exchange rate changes on cash (317)

Liquidity at March 31, 2025 $ 247,084

The following table provides a summary of changes in our liquidity for the nine months ended March 31, 2025 (in thousands):

Liquidity at September 30, 2025 $ 248,924

The following table provides a summary of changes in our liquidity for the three months ended September 30, 2024 (in thousands):

Liquidity at June 30, 2024 $ 169,603

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Capital expenditures (1,944)

Proceeds from asset sales 237

Increase in availability under ABL Facility 2,654

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Effect of exchange rate changes on cash 210

Liquidity at March 31, 2025 $ 247,084

Liquidity at September 30, 2024 $ 181,252

Factors that routinely impact our short-term liquidity and may impact our long-term liquidity include, but are not limited to:

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ABL Credit Facility

We have 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.

We have an asset-based credit agreement, which was most recently amended on August 22, 2025 (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.

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The ABL Facility matures, and any outstanding amounts become due and payable, on September 9, 2029.

The borrowing base is recalculated on a monthly basis and at March 31, 2025, our borrowing base was $66.3 million.

We had no borrowings outstanding and $4.8 million in letters of credit outstanding as of March 31, 2025, which resulted in availability of $61.5 million under the ABL Facility.

The borrowing base is recalculated on a monthly basis and at September 30, 2025, our borrowing base was $61.4 million.

We had no borrowings outstanding and $4.8 million in letters of credit outstanding, which resulted in availability of $56.6 million under the ABL Facility.

For additional information regarding our ABL Facility, see Item I of Part I, "Financial Statements - Note 3 - Debt."

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The following table summarizes our changes in cash flow activities for the periods indicated (in thousands):

Nine Months Ended

Cash flows provided by operating activities $ 76,763 $ 25,567

Three Months Ended

September 30,

Cash flows provided (used) by operating activities $ (25,899) $ 11,918

Cash flows used in investing activities (1,789) (1,944)

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The following table summarizes the components of cash flows provided by operating activities for the periods indicated (in thousands):

Nine Months Ended

Three Months Ended

September 30,

Net loss $ (3,663) $ (9,223)

Gain on sale of property, plant and equipment (122) (4,530)

Loss (gain) on disposal of property, plant and equipment (217) 68

Depreciation and amortization 2,461 2,515

Stock-based compensation 6,754 5,765

Stock-based compensation expense 1,921 2,311

Operating lease impairment due to restructuring 1,529 —

Other non-cash expenses 94 38

Cash effect of changes in operating assets and liabilities (28,024) 16,209

Net cash provided by operating activities $ 76,763 $ 25,567

The significant components of the $80.7 million change in operating assets and liabilities for the nine months ended March 31, 2025 are summarized as follows:

• Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased by $88.8 million which decreased cash flows from operating activities.

Net cash provided (used) by operating activities $ (25,899) $ 11,918

The significant components of the $28.0 million change in operating assets and liabilities for the three months ended September 30, 2025 are summarized as follows:

• Accounts receivable, excluding credit losses recognized during the period and including retention amounts

classified as non-current, increased by $15.1 million which decreased cash flows from operating activities.

The increases are primarily attributable to the timing of billing and collections.

• Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") increased $8.1 million which decreased cash flows from operating activities.

Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") increased $161.3 million which increased cash flows from operating activities.

Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") decreased $6.0 million which decreased cash flows from operating activities.

CIE and BIE balances can experience significant fluctuations based on business volumes and the timing of when job costs are incurred and the timing of customer billings and payments.

Some fixed-price customer contracts allow for significant upfront billings at the beginning of a project, which increases liquidity near-term.

• Accounts payable increased by $17.7 million which increased cash flows from operating activities.

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and other timing differences.

• Accrued wages and benefits, accrued insurance, operating lease liabilities, other accrued expenses, and other liabilities, non-current increased by $1.1 million which increased cash flows from operating activities.

We generally prepay our annual insurance premiums in the first quarter of the fiscal year.

• Accrued wages and benefits, accrued insurance, operating lease liabilities, other accrued expenses, and other liabilities, non-current decreased by $7.3 million which decreased cash flows from operating activities.

These operating liabilities can fluctuate based on the timing of payroll, distributions, business volumes;

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and other timing differences.

The significant components of the $36.4 million change in operating assets and liabilities for the nine months ended March 31, 2024 are summarized as follows:

The significant components of the $16.2 million change in operating assets and liabilities for the three months ended September 30, 2024 are summarized as follows:

• Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased by $5.1 million which decreased cash flows from operating activities.

The increases are primarily attributable to the timing of billing and collections, partially offset by $16.8 million we received as full payment for the favorable resolution of a legal matter.

The increases are primarily attributable to the timing of billing and collections.

• Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") decreased $2.1 million which increased cash flows from operating activities.

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CIE and BIE balances can experience significant fluctuations based on business volumes and the timing of when job costs are incurred and the timing of customer billings and payments.

Some fixed-price customer contracts allow for significant upfront billings at the beginning of a project, which increases liquidity near-term.

• Accounts payable decreased by $3.9 million which decreased cash flows from operating activities.

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and other timing differences.

• Inventories, income taxes receivable, prepaid expenses, other current assets, operating right-of-use lease assets and other assets, non-current, decreased $3.8 million, which increased cash flows from operating activities.

• Inventories, income taxes receivable, prepaid expenses, other current assets, operating right-of-use lease assets and other assets, non-current, increased $7.3 million which decreased cash flows from operating activities.

These operating assets can fluctuate based on business volumes;

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and other timing differences.

• Accrued wages and benefits, accrued insurance, operating lease liabilities, other accrued expenses, and other liabilities, non-current increased by $4.1 million increased cash flows from operating activities.

We generally prepay our annual insurance premiums in the first quarter of the fiscal year.

• Accrued wages and benefits, accrued insurance, operating lease liabilities, other accrued expenses, and other liabilities, non-current decreased by $2.9 million which decreased cash flows from operating activities.

These operating liabilities can fluctuate based on the timing of payroll, distributions, business volumes;

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Cash Flows Used by Investing Activities

Investing activities used $5.2 million of cash in the nine months ended March 31, 2025 due to capital expenditures associated with improvements at a fabrication facility in Bakersfield, California that we purchased in fiscal 2024, as well as the purchase of construction equipment to support our projects.

Investing activities used $0.2 million of cash in the nine months ended March 31, 2024 due to capital expenditures partially offset by proceeds from asset sales.

In the first quarter of fiscal 2024, we sold a previously utilized facility in Burlington, Ontario for $2.7 million in net proceeds.

In the second quarter of fiscal 2024, we sold a facility in Catoosa, Oklahoma for $2.7 million in net proceeds.

We closed these previously utilized facilities as they were no longer strategic to the future of the business.

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

Investing activities used $1.8 million and $1.9 million of cash primarily due to capital expenditures in the three months ended September 30, 2025 and 2024, respectively.

Cash Flows Used by Financing Activities

Financing activities used $1.1 million of cash in the nine months ended March 31, 2025 primarily due to the repurchase of common stock for payment of statutory taxes due on equity-based compensation.

Financing activities used $10.3 million of cash in the nine months ended March 31, 2024 primarily due to $10.0 million in net repayments under our ABL facility.

Financing activities used $4.3 million and $1.2 million of cash in the three months ended September 30, 2025 and 2024, respectively, primarily due to payments of $4.2 million and $1.2 million, respectively, to satisfy tax withholding obligations associated with stock-based compensation.

Dividend Policy

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The program will continue unless and until it is modified or revoked by the Board of Directors.

We made no repurchases under the program in the three months ended March 31, 2025 and have no current plans to repurchase stock.

As of March 31, 2025, there were 1,349,037 shares available for repurchase under the Stock Buyback Program.

We made no repurchases under the program in the three months ended September 30, 2025 and have no current plans to repurchase stock.

As of September 30, 2025, there were 1,349,037 shares available for repurchase under the Stock Buyback Program.

The terms of our ABL Facility limit share repurchases to $2.5 million per fiscal year provided that we meet certain availability thresholds and do not violate our Fixed Charge Coverage Ratio financial covenant.

Treasury Shares

We had 281,365 treasury shares as of March 31, 2025 and intend to utilize these treasury shares in connection with equity awards under our stock incentive plans and for sales to the Employee Stock Purchase Plan.

Off-Balance Sheet Arrangements and Other Commitments

We enter into certain off-balance sheet arrangements in the ordinary course of business that result in risks not directly reflected on our balance sheet.

The following represents transactions, obligations or relationships that could be considered material off-balance sheet arrangements.

• Surety Bonds :

The terms of our construction contracts frequently require that we obtain from surety companies, and provide to our customers, surety bonds as a condition to the award of such contracts.

These surety bonds are issued in return for premiums, which vary depending on the size and type of the bond, and secure our payment and performance obligations under such contracts.

We have agreed to indemnify the surety companies for amounts, if any, paid by them in respect of surety bonds issued on our behalf.

Surety bonds expire at various times ranging from final completion of a project to a period extending beyond contract completion in certain circumstances.

Such amounts can also fluctuate from period to period based upon the mix and level of our bonded operating activity.

As of September 30, 2025, there were $186.2 million of surety bonds in force, of which we expect $126.9 million to expire within the next 12 months.

Of the bonds in force, $113.3 million related to performance bonds for ongoing projects and the remainder related to contractor licensing, liens, and other bonds.

In October 2025, we obtained an additional surety bond to support a recent award, bringing our total surety bonds in force to $277.1 million.

We are not aware of any losses in connection with surety bonds that have been posted on our behalf, and we do not expect to incur significant losses in the foreseeable future.

• Multiemployer pension plan s:

We contribute to a number of multiemployer defined benefit pension plans in the U.S.

and Canada under the terms of collective-bargaining agreements that cover our union-represented employees, who are represented by more than 100 local unions.

Benefits under these plans are generally based on compensation levels and years of service.

Under federal legislation regarding multiemployer pension plans, in the event of a withdrawal from a plan or plan termination, companies are required to continue funding their proportionate share of such plan’s unfunded vested benefits.

Withdrawal liabilities or requirements for increased future contributions could negatively impact our results of operations and liquidity.

For more information on our Multiemployer pension plans, see Part II, Item 8 “Note 12 - Employee Benefit Plans” of our Annual Report on Form 10-K for the year ended June 30, 2025.

• Letters of credit:

We issue letters of credit under our ABL Facility in the normal course of business to support workers' compensation insurance programs or certain construction contracts.

As of September 30, 2025, we had $4.8 million of letters of credit outstanding.

The letters of credit that support our workers’ compensation programs are expected to renew annually through the term of our credit facility.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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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 2. Management’s Discussion and Analysis