What changed in this filing

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Item 1. Financial Statements

2026-05-07 compared with 2026-02-05 · 115 added, 98 removed, 365 unchanged (37% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended Six Months Ended

December 31, 2025 December 31, 2024 December 31, 2025 December 31, 2024

Three Months Ended Nine Months Ended

March 31, 2026 March 31, 2025 March 31, 2026 March 31, 2025

Revenue $ 206,709 $ 200,161 $ 629,101 $ 552,909

2 unchanged sentences

Selling, general and administrative expenses 15,215 17,726 46,661 53,592

Restructuring costs 202 — 3,550 —

Restructuring costs and other 2,986 124 6,536 124

Operating loss ( 1,048 ) ( 5,000 ) ( 8,727 ) ( 22,161 )

3 unchanged sentences

Other ( 187 ) 182 67 ( 313 )

Loss before income tax expense ( 731 ) ( 5,517 ) ( 4,325 ) ( 14,740 )

Income (loss) before income tax expense 870 ( 3,434 ) ( 3,455 ) ( 18,174 )

Provision for federal, state and foreign income taxes 35 — 267 16

Net loss $ ( 894 ) $ ( 5,533 ) $ ( 4,557 ) $ ( 14,756 )

Basic loss per common share $ ( 0.03 ) $ ( 0.20 ) $ ( 0.16 ) $ ( 0.53 )

Diluted loss per common share $ ( 0.03 ) $ ( 0.20 ) $ ( 0.16 ) $ ( 0.53 )

Net income (loss) $ 835 $ ( 3,434 ) $ ( 3,722 ) $ ( 18,190 )

Basic income (loss) per common share $ 0.03 $ ( 0.12 ) $ ( 0.13 ) $ ( 0.66 )

Diluted income (loss) per common share $ 0.03 $ ( 0.12 ) $ ( 0.13 ) $ ( 0.66 )

Weighted average common shares outstanding:

5 unchanged sentences

(In thousands)

Three Months Ended Six Months Ended

2025 December 31,

2024 December 31,

2025 December 31,

Net loss $ ( 894 ) $ ( 5,533 ) $ ( 4,557 ) $ ( 14,756 )

Three Months Ended Nine Months Ended

2026 March 31,

2025 March 31,

2026 March 31,

Net income (loss) $ 835 $ ( 3,434 ) $ ( 3,722 ) $ ( 18,190 )

Other comprehensive income (loss), net of tax:

Foreign currency translation loss ( 437 ) ( 23 ) ( 971 ) ( 950 )

Comprehensive loss $ ( 900 ) $ ( 6,896 ) $ ( 5,091 ) $ ( 15,683 )

Comprehensive income (loss) $ 398 $ ( 3,457 ) $ ( 4,693 ) $ ( 19,140 )

See accompanying notes.

41 unchanged sentences

60,000,000 shares authorized;

28,124,527 shares issued and outstanding at December 31, 2025;

27,888,217 shares issued at June 30, 2025 and 27,610,486 shares outstanding as of June 30, 2025;

28,128,405 shares issued and outstanding at March 31, 2026;

27,888,217 shares issued and 27,610,486 shares outstanding as of June 30, 2025, respectively;

Additional paid-in capital 148,756 149,969

Retained earnings (accumulated deficit) ( 78 ) 4,479

Retained earnings 757 4,479

Accumulated other comprehensive loss ( 10,374 ) ( 9,403 )

Treasury stock, at cost — 0 shares as of December 31, 2025 and 277,731 shares as of June 30, 2025;

Treasury stock, at cost — 0 shares as of March 31, 2026 and 277,731 shares as of June 30, 2025;

Total stockholders' equity 139,420 142,716

4 unchanged sentences

(In thousands)

Six Months Ended

2025 December 31,

Nine Months Ended

2026 March 31,

Operating activities:

14 unchanged sentences

Accrued expenses ( 4,600 ) 2,517

Net cash provided (used) by operating activities ( 18,445 ) 45,516

Net cash provided by operating activities 15,717 76,763

Investing activities:

8 unchanged sentences

Effect of exchange rate changes on cash ( 488 ) ( 563 )

Net increase (decrease) in cash and cash equivalents ( 25,677 ) 41,162

Net increase in cash and cash equivalents 8,380 69,926

Cash, cash equivalents and restricted cash, beginning of period 249,641 140,615

16 unchanged sentences

Shares Amount Shares Amount Total

Three Months Ended December 31, 2025

September 30, 2025 28,070,427 $ 281 $ 145,100 $ 816 $ ( 9,931 ) — $ — $ 136,266

Net loss — — — ( 894 ) — — — ( 894 )

Three months ended March 31, 2026

December 31, 2025 28,124,527 $ 281 $ 147,297 $ ( 78 ) $ ( 9,937 ) — $ — $ 137,563

Net income — — — 835 — — — 835

Other comprehensive loss — — — — ( 437 ) — — ( 437 )

Issuance of restricted stock 49,740 — — — — — — —

Shares issued related to employee stock purchase plan 3,878 — 45 — — — — 45

Stock-based compensation expense — — 1,414 — — — — 1,414

March 31, 2026 28,128,405 $ 281 $ 148,756 $ 757 $ ( 10,374 ) — $ — $ 139,420

Three months ended March 31, 2025

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

Three Months Ended December 31, 2024

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

Net loss — — — ( 3,434 ) — — — ( 3,434 )

Other comprehensive loss — — — — ( 23 ) — — ( 23 )

Issuance of restricted stock — — ( 428 ) — — ( 47,946 ) 428 —

Treasury shares sold to Employee Stock Purchase Plan — — 12 — — ( 4,027 ) 36 48

Stock-based compensation expense — — 2,185 — — — — 2,185

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

March 31, 2025 27,888,217 $ 279 $ 147,805 $ 15,751 $ ( 10,485 ) 281,365 $ ( 2,640 ) $ 150,710

Common Stock Additional

4 unchanged sentences

Shares Amount Shares Amount Total

Six Months Ended December 31, 2025

Nine months ended March 31, 2026

June 30, 2025 27,888,217 $ 279 $ 149,969 $ 4,479 $ ( 9,403 ) 277,731 $ ( 2,608 ) $ 142,716

4 unchanged sentences

Stock-based compensation expense — — 5,476 — — — — 5,476

December 31, 2025 28,124,527 $ 281 $ 147,297 $ ( 78 ) $ ( 9,937 ) — $ — $ 137,563

Six Months Ended December 31, 2024

March 31, 2026 28,128,405 $ 281 $ 148,756 $ 757 $ ( 10,374 ) — $ — $ 139,420

Nine months ended March 31, 2025

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

5 unchanged sentences

Stock-based compensation expense — — 6,754 — — — — 6,754

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

March 31, 2025 27,888,217 $ 279 $ 147,805 $ 15,751 $ ( 10,485 ) 281,365 $ ( 2,640 ) $ 150,710

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, 2025, included in our Annual Report on Form 10-K.

The results of operations for the three and six month periods ended December 31, 2025 may not necessarily be indicative of the results of operations for the full year ending June 30, 2026.

The results of operations for the three and nine month periods ended March 31, 2026 may not necessarily be indicative of the results of operations for the full year ending June 30, 2026.

Significant Accounting Policies

11 unchanged sentences

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

Other accounting pronouncements issued but not effective until after December 31, 2025 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 March 31, 2026 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 $ 1.0 billion of remaining performance obligations yet to be satisfied as of December 31, 2025.

We had $ 932.9 million of remaining performance obligations yet to be satisfied as of March 31, 2026.

We expect to recognize $ 665.5 million of our remaining performance obligations as revenue within the next twelve months.

15 unchanged sentences

The difference between the beginning and ending balances of our CIE and BIE primarily results from the timing of revenue recognized relative to our billings.

The amount of revenue recognized during the six months ended December 31, 2025 that was included in the June 30, 2025 BIE balance was $ 224.9 million.

Progress billings in accounts receivable at December 31, 2025 and June 30, 2025 included retentions to be collected within one year of $ 26.5 million and $ 29.0 million, respectively.

Contract retentions collectible beyond one year are included in Other assets, non-current in the Condensed Consolidated Balance Sheets and totaled $ 87.5 million as of December 31, 2025 and $ 61.5 million as of June 30, 2025, respectively.

The amount of revenue recognized during the nine months ended March 31, 2026 that was included in the June 30, 2025 BIE balance was $ 309.8 million.

Progress billings in accounts receivable at March 31, 2026 and June 30, 2025 included retentions to be collected within one year of $ 26.8 million and $ 29.0 million, respectively.

Contract retentions collectible beyond one year are included in Other assets, non-current in the Condensed Consolidated Balance Sheets and totaled $ 93.4 million as of March 31, 2026 and $ 61.5 million as of June 30, 2025, 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 $ 8.9 million at December 31, 2025 and $ 11.4 million at June 30, 2025.

Costs and estimated earnings in excess of billings on uncompleted contracts included revenues for unpriced change orders and claims of $ 6.8 million at March 31, 2026 and $ 11.4 million at June 30, 2025.

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 Six Months Ended

2025 December 31,

2024 December 31,

2025 December 31,

Three Months Ended Nine Months Ended

2026 March 31,

2025 March 31,

2026 March 31,

(In thousands)

4 unchanged sentences

Contract Type Disaggregation:

Three Months Ended Six Months Ended

2025 December 31,

2024 December 31,

2025 December 31,

Three Months Ended Nine Months Ended

2026 March 31,

2025 March 31,

2026 March 31,

(In thousands)

4 unchanged sentences

We recognize changes in contract estimates on a cumulative catch-up basis in the period in which the changes are identified.

Such changes in contract estimates can result in the recognition of revenue in a current period for performance obligations which were satisfied or partially satisfied in prior period.

Such changes in contract estimates can result in the recognition of revenue in a current period for performance obligations which were satisfied or partially satisfied in a prior period.

Changes in contract estimates may also result in the reversal of previously recognized revenue if the current estimate differs from the previous estimate.

3 unchanged sentences

Note 3 – Assets Held for Sale

As of December 31, 2025, we classified $2.0 million of property, plant and equipment as held for sale.

As of March 31, 2026, we classified $ 1.1 million of property, plant and equipment as held for sale.

The assets include primarily transportation equipment associated with our transmission and distribution service line in the Utility and Power Infrastructure segment.

12 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 December 31, 2025, our borrowing base was $ 63.1 million.

The Company had $ 4.5 million in letters of credit outstanding as of December 31, 2025, which resulted in availability of $ 58.6 million under the ABL Facility.

The borrowing base is recalculated on a monthly basis and at March 31, 2026, our borrowing base was $ 68.6 million.

The Company had $ 4.4 million in letters of credit outstanding as of March 31, 2026, which resulted in availability of $ 64.2 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”), a Term Secured Overnight Financing Rate ("Term SOFR"), or at the Canadian Prime Rate, plus an applicable margin.

20 unchanged sentences

In the event that our availability is less than the greater of (i) $ 13.5 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 December 31, 2025.

We were in compliance with all covenants of the ABL Facility as of March 31, 2026.

Note 5 – Income Taxes

Effective Tax Rate

During the three and six months ended December 31, 2025, our effective tax rates were ( 22.3 )% and ( 5.4 )%.

The effective tax rates during both periods were impacted by valuation allowances of $( 0.7 ) million and $ 0.6 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.

The effective tax rates during both periods were impacted by valuation allowances of $ 1.8 million and $ 3.1 million, respectively, placed on deferred tax assets generated during the quarters.

During the three and nine months ended March 31, 2026, our effective tax rates were 4.0 % and ( 7.7 )%.

The effective tax rates during both periods were impacted by valuation allowances of $ 0.2 million and $ 0.8 million, respectively, placed on deferred tax assets generated during the period.

During the three and nine months ended March 31, 2025, our effective tax rates were zero and ( 0.1 )%, respectively.

The effective tax rates during both periods were impacted by valuation allowances of $ 1.2 million and $ 4.3 million, respectively, placed on deferred tax assets generated during the period.

Valuation Allowance

13 unchanged sentences

Arbitration proceedings were held in August 2025.

We received an interim award in January 2026, awarding us $ 15.1 million for our claims.

Keyera was awarded $ 12.1 million for their claims, a majority of which is subject to certain of our insurance coverages.

Applications for the calculation of interest and the award of attorneys' fees and costs are due in February 2026.

A final decision for all issues is expected in April 2026.

We expect to collect our outstanding receivable in the fourth quarter of fiscal 2026 or the first quarter of fiscal 2027.

We received an interim award in January 2026 and a final award in April 2026 resolving all claims and awarding attorneys' fees to us as the prevailing party.

After application of insurance coverages, we will collect $ 15.1 million for amounts owed on the project and reimbursement of attorneys' fees incurred.

As a result, we recorded an increase in our accounts receivable and gross profit of $ 1.2 million during the third quarter of fiscal 2026.

We expect to collect our outstanding receivable in the fourth quarter of fiscal 2026.

During fiscal 2023, we completed construction services on a time and materials basis at a mining and minerals facility.

2 unchanged sentences

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.

Based on the current trial schedule, we anticipate this matter will be resolved in calendar year 2026.

5:23-cv-01396-CV(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.

In the third quarter of fiscal 2026, to avoid future legal costs associated with this matter, we entered into a settlement, resulting in a reduction of our gross profit of $ 1.1 million.

We received payment of $ 4.3 million in the third quarter of fiscal 2026.

We believe we have set appropriate accruals for legal matters, including the matters described above, based on our evaluation of possible outcomes.

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.

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 adverse effect on our financial position, results of operations or liquidity.

We and our subsidiaries are participants in various other legal actions;

12 unchanged sentences

Diluted EPS 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 Six Months Ended

2025 December 31,

2024 December 31,

2025 December 31,

Three Months Ended Nine Months Ended

2026 March 31,

2025 March 31,

2026 March 31,

(In thousands, except per share data)

Net loss $ ( 894 ) $ ( 5,533 ) $ ( 4,557 ) $ ( 14,756 )

Net income (loss) $ 835 $ ( 3,434 ) $ ( 3,722 ) $ ( 18,190 )

Weighted average shares outstanding 28,380 27,836 28,262 27,731

Basic loss per share $ ( 0.03 ) $ ( 0.20 ) $ ( 0.16 ) $ ( 0.53 )

Net loss $ ( 894 ) $ ( 5,533 ) $ ( 4,557 ) $ ( 14,756 )

Basic earnings (loss) per share $ 0.03 $ ( 0.12 ) $ ( 0.13 ) $ ( 0.66 )

Net income (loss) $ 835 $ ( 3,434 ) $ ( 3,722 ) $ ( 18,190 )

Weighted average shares outstanding – basic 28,380 27,836 28,262 27,731

Dilutive nonvested deferred shares 153 — — —

Diluted weighted average shares outstanding 28,533 27,836 28,262 27,731

Diluted loss per share $ ( 0.03 ) $ ( 0.20 ) $ ( 0.16 ) $ ( 0.53 )

Diluted earnings (loss) per share $ 0.03 $ ( 0.12 ) $ ( 0.13 ) $ ( 0.66 )

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

Three Months Ended Six Months Ended

2025 December 31,

2024 December 31,

2025 December 31,

Three Months Ended Nine Months Ended

2026 March 31,

2025 March 31,

2026 March 31,

(In thousands)

13 unchanged sentences

• 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.

15 unchanged sentences

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

Three Months Ended December 31, 2025

Three Months Ended March 31, 2026

Total revenue (1)

1 unchanged sentence

Cost of revenue ( 103,849 ) ( 51,801 ) ( 34,238 ) 332 ( 189,556 )

Gross profit (loss) 4,754 7,228 1,219 ( 66 ) 13,135

Gross profit 7,772 8,162 887 332 17,153

Selling, general and administrative expenses 5,312 2,074 1,503 6,326 15,215

Restructuring costs 119 34 47 2 202

Restructuring costs and other 4 902 94 1,986 2,986

Operating income (loss) $ 2,456 $ 5,186 $ ( 710 ) $ ( 7,980 ) $ ( 1,048 )

(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, 2025.

(1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $1.4 million for the three months ended March 31, 2026.

Capital expenditures $ 415 $ 103 $ 10 $ 389 $ 917

1 unchanged sentence

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

Three Months Ended December 31, 2024

Three Months Ended March 31, 2025

Total revenue (1)

3 unchanged sentences

Selling, general and administrative expenses 6,344 2,536 2,142 6,704 17,726

Restructuring costs and other — 124 — — 124

Operating income (loss) $ ( 2,613 ) $ 2,877 $ 1,617 $ ( 6,881 ) $ ( 5,000 )

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

(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.

Capital expenditures $ 1,120 $ 417 $ 991 $ 38 $ 2,566

1 unchanged sentence

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

Six Months Ended December 31, 2025

Nine Months Ended March 31, 2026

Total revenue (1)

3 unchanged sentences

Selling, general and administrative expenses 16,283 7,293 4,383 18,702 46,661

Restructuring costs 1,878 674 776 222 3,550

Restructuring costs and other 1,882 1,576 870 2,208 6,536

Operating income (loss) $ 858 $ 13,305 $ ( 1,718 ) $ ( 21,172 ) $ ( 8,727 )

(1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $1.6 million for the six months ended December 31, 2025.

(1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $3.0 million for the nine months ended March 31, 2026.

Capital Expenditures $ 1,629 $ 1,283 $ 91 $ 1,101 $ 4,104

1 unchanged sentence

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

Six Months Ended December 31, 2024

Nine Months Ended March 31, 2025

Total revenue (1)

3 unchanged sentences

Selling, general and administrative expenses 17,480 10,073 5,585 20,454 53,592

Restructuring costs and other — 124 — — 124

Operating income (loss) $ ( 1,780 ) $ 56 $ 541 $ ( 20,978 ) $ ( 22,161 )

(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.

(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.

Capital Expenditures $ 2,830 $ 830 $ 1,133 $ 632 $ 5,425

1 unchanged sentence

Total assets by segment

December 31, 2025 June 30, 2025

March 31, 2026 June 30, 2025

Storage and Terminal Solutions $ 220,011 $ 194,354

3 unchanged sentences

Total Segment Assets $ 616,550 $ 600,256

Note 9 – Restructuring Costs

Note 9 – Restructuring Costs and other

Restructuring costs and other include the following:

Three Months Ended Nine Months Ended

March 31, 2026

CEO transition $ 1,981 $ 1,981

Lease impairment 886 2,415

Severance and other personnel-related costs 115 1,858

Total Restructuring costs and other $ 2,986 $ 6,536

In the fourth quarter of fiscal 2025, we commenced an organizational restructuring plan to create a flatter, leaner organization by eliminating certain senior-level positions, streamlining our engineering and construction services, and decentralizing elements of our business development organization.

As a result of this restructuring we incurred certain costs, consisting primarily of severance and other personnel-related costs, which totaled $ 3.6 million for fiscal year 2025.

In fiscal 2026, we continued the organizational restructuring plan to further integrate our engineering and construction services, consolidate service lines, and close an under-performing office, among other changes.

We incurred $ 3.6 million of restructuring costs during the six months ended December 31, 2025 associated with these actions.

These costs included $ 1.5 million of operating lease and fixed asset impairments associated with certain real estate leases that we exited as part of our restructuring plan.

We incurred $2.1 million of severance and other costs during the nine months ended March 31, 2026 associated with these actions.

Additionally, during the first quarter of fiscal 2026, we recorded $1.5 million of operating lease and fixed asset impairments associated with certain real estate leases that we exited as part of our organizational restructuring plan.

The fair values of the assets associated with these leases were determined based on Level 3 fair value measurements, utilizing a discounted cash flow method based in part on projected sublease income.

Remaining costs incurred during fiscal 2026 consisted primarily of severance and other personnel-related costs.

Our restructuring plan was substantially complete as of September 30, 2025.

During the three months ended March 31, 2026, unfavorable market conditions for an exited office lease negatively impacted our ability to sublease the space.

As a result, we recorded an additional $0.9 million of expense, representing a full impairment of the remaining Operating lease right-of-use asset and leasehold improvements, and an accrual of the remaining common area maintenance payments due under the lease.

In connection with the Board’s succession planning, on February 2, 2026, John R.

Hewitt and the Company entered into a Transition Agreement providing for Mr.

Hewitt to transition from his role as President and Chief Executive Officer and step down effective June 30, 2026.

Restructuring costs and other include $1.6 million in expense associated with cash severance payable in the first quarter of fiscal 2027, as well as $0.4 million in expense associated with stock-based compensation that will continue to settle after Mr.

Hewitt’s separation.

We expect to incur an additional $0.5 million in stock-based compensation expense in the fourth quarter of fiscal 2026 associated with his equity awards.

During the fourth quarter of fiscal 2026, we took further action aimed at reducing our cost structure, which included eliminating multiple positions, including the Chief Administrative Officer position.

We also announced a transition and separation agreement with Kevin Cavanah, our Chief Financial Officer, and have commenced a search for a new Chief Financial Officer.

We expect to incur approximately $2 million in cost in the fourth quarter associated with these actions.

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