What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2026-02-05 · 144 added, 141 removed, 322 unchanged (47% of the section changed)

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• our ability to generate sufficient cash from operations, access our credit facility, or raise cash in order to meet our short and long-term capital requirements;

• our ability to comply with the covenants in our credit agreement;

• our ability to comply with the covenants in the ABL Facility;

• the impact to our business from economic, market or business conditions in general and in the natural gas, oil, petrochemical, industrial and power industries in particular;

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However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties which could cause actual results to differ materially from our expectations, including:

• any risk factors discussed in this Form 10-Q, Form 10-K for the fiscal year ended June 30, 2025, and in our other filings with the Securities and Exchange Commission;

• economic, market or business conditions in general and in the natural gas, power, oil, petrochemical, industrial and power industries in particular;

• any risks discussed in this Form 10-Q, our Form 10-K for the fiscal year ended June 30, 2025, and in our other filings with the Securities and Exchange Commission;

• economic, market or business conditions in general, disruptions in the global supply chain, and in the natural gas, power, oil, petrochemical, industrial and power industries in particular;

• the transition to renewable energy sources and its impact on our current customer base;

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We assume no obligation to update, except as required by law, any such forward-looking statements, whether as a result of new information, future events or otherwise.

Investors should note that we announce material financial information in SEC filings, press releases, presentations and public conference calls.

Based on guidance from the SEC, we may use the Investors section of our website (www.matrixservicecompany.com) to communicate with investors and we intend to post presentations and other materials there.

It is possible that the financial and other information posted to our website could be deemed to be material information.

The information on our website is not part of, and is not incorporated into, this report.

RESULTS OF OPERATIONS

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• 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.

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Operational Update

During the quarter, we advanced execution on several large, strategically important projects.

These projects are delivering both revenue growth and margin stability, supported by disciplined project management.

As these projects advance through key milestones, they are providing increased visibility into revenue conversion and operating margin performance.

We expect activity to accelerate over the remainder of the fiscal year, driven by our strong backlog as well as a growing opportunity pipeline and healthy demand across our core markets.

Our balance sheet remains a competitive advantage, providing the financial capacity and flexibility to pursue high‑quality opportunities, invest in execution excellence, and manage risk responsibly.

These attributes also position us to continue executing on existing projects and to support long-term growth initiatives.

Looking longer term, structural macrotrends continue to support durable growth in our end markets.

The clean energy transition, rapidly increasing power requirements from data centers, ongoing industrial reshoring and onshoring activity, and heightened focus on grid reliability are all creating sustained demand for the solutions we provide.

These trends reinforce the strength of our strategic positioning and our confidence in the company’s ability to deliver long‑term value for shareholders.

The third quarter of fiscal 2026 marked a significant inflection point for our business, as we returned to profitability.

For the three months ended March 31, 2026, we reported net income of $0.8 million, compared to a net loss of $3.4 million in the same period last year.

This improvement reflects the successful execution of our strategic initiatives, including disciplined project management and targeted restructuring actions.

Our gross margin increased to 8.3% in the third quarter of fiscal 2026, up from 6.4% in the same period last year, driven by improved project execution in our Storage and Terminal Solutions and Utility and Power Infrastructure segments.

These results demonstrate the positive impact of our efforts to enhance operational efficiency and optimize our project portfolio.

Additionally, the reduction in selling, general and administrative (SG&A) expenses, which are down 14% year-over-year, reflects the benefits of our organizational restructuring and ongoing cost discipline.

While our return to profitability is an important milestone, we recognize that further work is required to achieve our long-term financial objectives.

Overhead cost absorption remains an area of focus.

We continue to pursue opportunities to better align our cost structure with current and anticipated business volumes, including the reallocation of resources and the streamlining of support functions.

Moreover, although SG&A leverage improved this quarter, we are committed to driving additional efficiencies to ensure that our overhead costs scale appropriately as revenue grows.

To that end, in the fourth quarter of fiscal 2026, we have taken a number of actions aimed at further reducing our cost structure by reducing our workforce, including the elimination of our Chief Administrative Officer position.

In addition to these actions, during the fourth quarter of fiscal 2026, we announced the planned departure of our Chief Financial Officer, Kevin Cavanah, which is expected to occur in September 2026.

We have retained a leading executive search firm to conduct a comprehensive search for our next Chief Financial Officer who will work alongside our incoming President and Chief Executive Officer Shawn Payne to lead the organization in fiscal 2027 and beyond.

Looking ahead, we will maintain our focus on revenue and profitability growth through disciplined project selection, operational execution, and cost management.

These priorities are essential to sustaining profitability, improving returns on invested capital, and positioning the company for long-term growth.

We believe that the actions we are taking will further strengthen our competitive position and enhance value for our stockholders.

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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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 December 31, 2025:

The following table provides a summary of changes in our backlog for the three months ended March 31, 2026:

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

(In thousands)

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

Backlog as of December 31, 2025 $ 821,408 $ 202,777 $ 102,888 $ 1,127,073

Project awards 37,535 46,633 24,135 108,303

Revenue recognized (111,621) (59,963) (35,125) (206,709)

Backlog as of December 31, 2025 $ 821,408 $ 202,777 $ 102,888 $ 1,127,073

Backlog as of March 31, 2026 $ 747,322 $ 189,447 $ 91,898 $ 1,028,667

Book-to-bill ratio (1)

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

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

The following table provides a summary of changes in our backlog for the nine months ended March 31, 2026:

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

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Revenue recognized (320,932) (209,870) (98,299) (629,101)

Backlog as of December 31, 2025 $ 821,408 $ 202,777 $ 102,888 $ 1,127,073

Backlog as of March 31, 2026 $ 747,322 $ 189,447 $ 91,898 $ 1,028,667

Book-to-bill ratio (1)

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(2) Previous project awards removed from backlog.

In the Storage and Terminal Solutions segment, we booked $124.5 million of project awards during the second quarter of fiscal 2026, including an award for the construction of an LNG tank.

During the six months ended December 31, 2025, we booked $260.6 million of project awards, including a large award for the construction for the balance of plant supporting a dual service full containment storage tank.

In the Storage and Terminal Solutions segment, we booked $37.5 million of project awards during the third quarter of fiscal 2026.

During the nine months ended March 31, 2026, we booked $298.2 million of project awards.

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

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

In the Utility and Power Infrastructure segment, we booked $15.8 million of project awards during the second quarter of fiscal 2026.

During the six months ended December 31, 2025, we booked $50.5 million of project awards.

In the Utility and Power Infrastructure segment, we booked $46.6 million of project awards during the third quarter of fiscal 2026.

During the nine months ended March 31, 2026, we booked $97.2 million of project awards.

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.

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Project opportunities and bidding activity are strong across the segment.

In the Process and Industrial Facilities segment, we booked $36.2 million of project awards during the second quarter of fiscal 2026.

During the six months ended December 31, 2025, we booked $53.2 million of project awards.

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

In the Process and Industrial Facilities segment, we booked $24.1 million of project awards during the third quarter of fiscal 2026.

During the nine months ended March 31, 2026, we booked $77.3 million of project awards.

We continue to see increasing opportunities in chemicals, renewable fuels, and refinery maintenance and turnarounds.

Additionally, after an extended period of limited investment, activity in the U.S.

non-ferrous mining sector has begun to improve, supported by demand growth in copper and higher gold prices, as well as policy initiatives related to critical minerals.

During the first quarter of fiscal 2026, backlog was adjusted to reflect the removal of two projects.

Backlog in the Utility and Power Infrastructure segment was impacted by the removal of an award originally added to backlog in the fourth quarter of fiscal 2025.

The removal was 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 unwillingness to accept an increased risk profile caused the client to change their award decision.

Our backlog in the Process and Industrial Facilities 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.

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

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

Three months ended March 31, 2026 Compared to the Three months ended March 31, 2025

The information below is an analysis of our consolidated results for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

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

December 31, 2025 v 2024

March 31, 2026 v 2025

Dollars in thousands 2026 2025 Change %

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Selling, general and administrative expenses 15,215 17,726 (2,511) (14) %

Restructuring costs 202 — 202 — %

Restructuring costs and other 2,986 124 2,862 2308 %

Operating loss (1,048) (5,000) 3,952 79 %

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Other income (expense) (187) 182 (369) (203) %

Loss before income tax expense (731) (5,517) 4,786 87 %

Income (loss) before income tax expense 870 (3,434) 4,304 125 %

Provision for federal, state and foreign income taxes 35 — 35 — %

Net loss $ (894) $ (5,533) $ 4,639 84 %

Revenue - The increase in consolidated revenue of $23.3 million, or 12%, was attributable to higher revenue volumes in each of our segments.

Gross profit - Gross profit in the second quarter of fiscal 2026 increased $2.2 million, or 21%, compared to the second quarter of fiscal 2025.

Gross margin was 6.2% for the second quarter of fiscal 2026 compared to gross margin of 5.8% for the second quarter of fiscal 2025.

The increase in gross margin was due to higher revenues which resulted in improved recovery of overhead costs, as well as strong project execution throughout the majority of the business.

However, costs associated with warranty-type items and with third-party commercial matters arising during commissioning of specialty tank work resulted in a $3.6 million reduction of gross profit during the quarter.

Selling, general and administrative expenses - The decrease in selling, general and administrative expenses ("SG&A") of $2.2 million, or 13%, is primarily due to cost reductions resulting from our organizational realignment, including a decrease in salaries and wages of $0.8 million, year over year.

Additionally, SG&A decreased $0.7 million associated with the variable accounting for cash-settled stock-based compensation as a result of fluctuations in our stock price.

Interest income - Interest income during the second quarter of fiscal 2026 was consistent with the second quarter of fiscal 2025.

Other income (expense) - Other income (expense) increased $0.6 million due primarily to a reduction foreign currency transaction losses associated with our Australian and South Korean subsidiaries.

Net income (loss) $ 835 $ (3,434) $ 4,269 124 %

Revenue - The increase in consolidated revenue of $6.5 million, or 3%, was attributable to higher revenue volumes in our Storage and Terminal Solutions segment, partially offset by lower revenue volumes in our Processing and Industrial Facilities segment.

Gross profit - Gross profit in the third quarter of fiscal 2026 increased $4.3 million, or 33%, compared to the third quarter of fiscal 2025.

Gross margin was 8.3% for the third quarter of fiscal 2026 compared to gross margin of 6.4% for the third quarter of fiscal 2025.

The increase in gross margin was due to higher gross margins in the Storage and Terminal Solutions and Utility and Power Infrastructure segments, partially offset by lower gross margins in the Process and Industrial Facility segment.

Overall, gross margins during the period benefited from strong project execution and improved overhead recovery.

Selling, general and administrative expenses - The decrease in selling, general and administrative expenses ("SG&A") of $2.5 million, or 14%, primarily due to cost reductions resulting from our organizational restructuring plan.

Additionally, stock compensation expense decreased by $1.0 million primarily as a result of executive separations during the period.

Restructuring costs and other - The Company incurred $3.0 million of restructuring and other costs during the third quarter of fiscal 2026.

Costs included $2.0 million related to the CEO transition and $0.9 million associated with a lease impairment.

See Part I, Item 1.

Financial Statements (Unaudited), Note 9 - Restructuring Costs, for further details.

Interest income - Interest income increased $0.7 million during the third quarter of fiscal 2026, compared to the third quarter of fiscal 2025, primarily due to an increase in our cash balance.

Other income (expense) - Other income (expense) decreased $0.4 million due primarily to an increase in foreign currency translation losses associated with our Australian and South Korean subsidiaries.

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

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Three Months Ended

December 31, 2025 v 2024

March 31, 2026 v 2025

Dollars in thousands 2026 2025 Change % Favorable (Unfavorable)

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Process and Industrial Facilities 2.5 % 8.3 % (5.8)% (70) %

Corporate — % — % —% — %

Total gross margin % 8.3 % 6.4 % 1.9% 30 %

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Storage and Terminal Solutions

Storage and Terminal Solutions revenues increased by $4.3 million, or 5%, in the three months ended December 31, 2025 compared to the same period last year, driven by an increased volume of work for LNG and NGL projects, partially offset by lower volumes for crude oil projects.

Storage and Terminal Solutions gross profit decreased by $2.5 million, or (35)%, in the three months ended December 31, 2025 compared to the same period last year.

The segment gross margin of 4.8% for the three months ended December 31, 2025 was lower than segment gross margin of 7.6% in the same period last year.

During the second quarter of fiscal 2026, costs associated with warranty-type items and with third-party commercial matters arising during commissioning of specialty tank work resulted in a $3.6 million reduction of gross profit.

Additionally, 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.

Storage and Terminal Solutions revenues increased by $15.6 million, or 16%, in the three months ended March 31, 2026 compared to the same period last year, driven by an increased volume of work for LNG projects.

Storage and Terminal Solutions gross profit increased by $4.0 million, or 108%, in the three months ended March 31, 2026 compared to the same period last year.

The segment gross margin of 7.0% for the three months ended March 31, 2026 was higher than segment gross margin of 3.9% in the same period last year.

Margin improvement was driven by improved project execution overall as well as an improvement in overhead cost absorption.

Utility and Power Infrastructure

Utility and Power Infrastructure revenues increased by $14.3 million, or 23%, in the three months ended December 31, 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 $3.8 million, or 112%, in the three months ended December 31, 2025 compared to the same period last year.

The segment gross margin was 9.6% for the three months ended December 31, 2025 compared to 5.6% in the same period last year, an increase of 4.0% due to strong project execution and improved construction overhead cost absorption as a result of higher revenues.

Utility and Power Infrastructure revenues were largely consistent with prior year, increasing by $1.3 million, or 2%, in the three months ended March 31, 2026 compared to the same period last year.

Utility and Power Infrastructure gross profit increased by $2.6 million, or 47%, in the three months ended March 31, 2026 compared to the same period last year.

The segment gross margin was 13.6% for the three months ended March 31, 2026 compared to 9.4% in the same period last year, an increase of 4.2% due to strong project execution throughout the segment.

Process and Industrial Facilities

Process and Industrial Facilities revenues increased by $4.7 million, or 15%, in the three months ended December 31, 2025 compared to the same period last year.

The increase is primarily attributable to higher revenue volumes for refinery turnarounds and maintenance work.

Process and Industrial Facilities gross profit increased by $0.8 million, or 229%, in the three months ended December 31, 2025 compared to the same period last year.

The segment gross margin was 3.5% for the three months ended December 31, 2025 compared to 1.2% in the same period last year.

The increase is primarily attributable to improved construction overhead cost absorption as a result of higher revenues.

Six months ended December 31, 2025 Compared to the Six months ended December 31, 2024

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

Process and Industrial Facilities revenues decreased by $10.3 million, or 23%, in the three months ended March 31, 2026 compared to the same period last year.

The decrease is primarily attributable to lower revenue volumes for thermal vacuum chambers, refinery work, and industrial facilities.

Process and Industrial Facilities gross profit decreased by $2.9 million, or 76%, in the three months ended March 31, 2026 compared to the same period last year.

The segment gross margin was 2.5% for the three months ended March 31, 2026 compared to 8.3% in the same period last year.

The decrease is attributable to mix of work and the settlement of a legal matter, which reduced gross margin by $1.1 million.

See Part I, Item 1.

Financial Statements (Unaudited), Note 6 - Commitments and Contingencies, for more details.

Nine months ended March 31, 2026 Compared to the Nine months ended March 31, 2025

The information below is an analysis of our consolidated results for the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025.

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

Consolidated Results of Operations

Six Months Ended

December 31, 2025 v 2024

Nine Months Ended

March 31, 2026 v 2025

Dollars in thousands 2026 2025 Change %

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Selling, general and administrative expenses 46,661 53,592 (6,931) (13) %

Restructuring costs 3,550 — 3,550 — %

Restructuring costs and other 6,536 124 6,412 5171 %

Operating loss (8,727) (22,161) 13,434 61 %

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Revenue - The increase in overall revenue of $76.2 million, or 14%, was primarily attributable to increased revenue volumes in our Storage and Terminal Solutions and Utility and Power Infrastructure segments.

Gross profit - Gross profit in the six months ended December 31, 2025 increased $8.6 million, or 46%, compared to the same period prior year.

Gross margin increased to 6.5% for the six months ended December 31, 2025 compared to 5.3% for the same period prior year.

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

Selling, general and administrative expenses - The decrease in SG&A expenses of $4.4 million, or 12%, is due in part to cost reductions resulting from our organizational realignment, including a decrease in salaries and wages of $1.3 million.

Additionally, facilities costs decreased $1.2 million, and SG&A decreased $1.0 million associated with the variable accounting for cash-settled stock-based compensation as a result of fluctuations in our stock price.

Interest income - The increase in interest income of $0.2 million is primarily due to an increase in our cash balance, partially offset by lower average interest rates.

Other income (expense) - Other income increased $0.7 million in the six months ended December 31, 2025 as compared to the same period prior year due primarily to a reduction foreign currency transaction losses associated with our Australian and South Korean subsidiaries.

Gross profit - Gross profit in the nine months ended March 31, 2026 increased $12.9 million, or 41%, compared to the same period in the prior year.

Gross margin increased to 7.1% for the nine months ended March 31, 2026 compared to 5.7% for the same period prior year.

The increase in gross margin for the nine months 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 Facilities segment.

Overall, gross margins during the period benefited from strong project execution and improved overhead recovery.

Selling, general and administrative expenses - The decrease in SG&A expenses of $6.9 million, or 13%, is due in part to cost reductions resulting from our organizational restructuring plan.

Stock compensation also decreased by $1.5 million, due in part to executive separations occurring during the third quarter of fiscal 2026.

Additionally, SG&A decreased $1.7 million associated with the variable accounting for cash-settled stock-based compensation, primarily as a result of fluctuations in our stock price.

Restructuring costs and other - The Company incurred $6.5 million of costs during the nine months ended March 31, 2026 related to organizational restructuring and other related costs.

This included $2.0 million of expense related to the CEO transition, as well as severance for other personnel and lease impairments for exited leases.

See Part I, Item 1.

Financial Statements (Unaudited), Note 9 - Restructuring Costs, for further details.

Interest income - The increase in interest income of $0.9 million is primarily due to an increase in our cash balance.

Other income (expense) - Other income increased $0.4 million in the nine months ended March 31, 2026 as compared to the same period prior year due primarily to a reduction in foreign currency transaction losses associated with our Australian and South Korean subsidiaries.

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

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Results of Operations by Business Segment

Six Months Ended

December 31, 2025 v 2024

Nine Months Ended

March 31, 2026 v 2025

Dollars in thousands 2026 2025 Change % Favorable (Unfavorable)

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$ 629,101 $ 552,909 $ 76,192 14 %

(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.

Gross profit (loss)

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Storage and Terminal Solutions

Storage and Terminal Solutions revenues increased by $35.6 million, or 20%, in the six months ended December 31, 2025 compared to the same period last year, driven by increased volume of work for LNG peak shaving, partially offset by decreases in tanks and terminal work.

Storage and Terminal Solutions gross profit decreased by $0.7 million, or 6%, in the six months ended December 31, 2025 compared to the same period last year.

The segment gross margin was 5.4% for the six months ended December 31, 2025 compared to segment gross margin of 6.9% in the same period last year.

During the second quarter of fiscal 2026, costs associated with warranty-type items and third-party commercial matters arising during commissioning of specialty tank work resulted in a $3.6 million reduction of gross profit.

Additionally, 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.

Storage and Terminal Solutions revenues increased by $51.1 million, or 19%, in the nine months ended March 31, 2026 compared to the same period last year, driven by increased volume of work for specialty storage projects.

Storage and Terminal Solutions gross profit increased by $3.3 million, or 21%, in the nine months ended March 31, 2026 compared to the same period last year.

The segment gross margin was 5.9% for the nine months ended March 31, 2026 compared to segment gross margin of 5.8% in the same period last year.

During the second and third quarter of fiscal 2026, costs associated with warranty-type items and third-party commercial matters arising during commissioning of specialty tank work resulted in a $3.6 million and a $2.6 million reduction of gross profit, respectively.

The impact of this work was offset by strong project execution across the remainder of the segment.

Utility and Power Infrastructure

Utility and Power Infrastructure revenues increased by $32.9 million, or 28%, in the six months ended December 31, 2025 compared to the same period last year.

Utility and Power Infrastructure revenues increased by $34.2 million, or 19%, in the nine months ended March 31, 2026 compared to the same period last year.

The increase is primarily attributable to higher volumes of work for LNG peak shaving projects and power delivery work.

Utility and Power Infrastructure gross profit increased by $9.3 million, or 197%, in the six months ended December 31, 2025 compared to the same period last year.

The segment gross margin was 9.3% for the six months ended December 31, 2025 compared to 4.0% in the same period last year due to strong project execution and improved construction overhead cost absorption as a result of higher revenues.

Utility and Power Infrastructure gross profit increased by $11.9 million, or 116%, in the nine months ended March 31, 2026 compared to the same period last year.

The segment gross margin was 10.6% for the nine months ended March 31, 2026 compared to 5.8% in the same period last year 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 increased by $1.2 million, or 2%, in the six months ended December 31, 2025 compared to the same period last year.

The increase is primarily attributable to higher revenue volumes for refinery work, partially offset by lower volumes of work for thermal vacuum chambers.

Process and Industrial gross profit increased by $0.3 million, or 12%, in the six months ended December 31, 2025 compared to the same period last year.

The segment gross margin was 4.2% for the six months ended December 31, 2025 compared to segment gross margin of 3.8% in the same period last year.

Process and Industrial Facilities revenues decreased by $9.1 million, or 9%, in the nine months ended March 31, 2026 compared to the same period last year.

The decrease is primarily attributable to lower revenue volumes for thermal vacuum chambers and industrial facilities, partially offset by higher volumes of refinery work.

Process and Industrial gross profit decreased by $2.6 million, or 42%, in the nine months ended March 31, 2026 compared to the same period last year.

The segment gross margin was 3.6% for the nine months ended March 31, 2026 compared to segment gross margin of 5.7% in the same period last year.

Improved overhead cost absorption associated with reallocation of resources to other segments was partially offset by reductions in gross margin due to mix of work.

Additionally, the settlement of a legal matter reduced gross margin during the third quarter of fiscal 2026 by $1.1 million.

See Part I, Item 1.

Financial Statements (Unaudited), Note 6 - Commitments and Contingencies, for more details.

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 December 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 March 31, 2026 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 December 31, 2025 totaled $199.0 million and availability under the ABL Facility totaled $58.6 million, resulting in total liquidity of $257.6 million.

During the second quarter of fiscal 2026, liquidity increased $8.7 million primarily as a result of changes in working capital.

During the six months ended December 31, 2025, liquidity decreased by $26.9 million as a result of changes in working capital, as well as payments made for tax withholdings for stock compensation and capital expenditures.

Unrestricted cash and cash equivalents at March 31, 2026 totaled $233.0 million and availability under the ABL Facility totaled $64.2 million, resulting in total liquidity of $297.2 million.

During the third quarter of fiscal 2026, liquidity increased $39.6 million primarily as a result of changes in working capital.

During the nine months ended March 31, 2026, liquidity increased by $12.7 million primarily as a result of changes in working capital.

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):

2026 December 31,

2025 September 30,

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Total Liquidity $ 297,171 $ 257,579 $ 248,924 $ 284,456

The following table provides a summary of changes in our liquidity for the three months ended December 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 March 31, 2026 (in thousands):

Liquidity at December 31, 2025 $ 257,579

Cash provided by operating activities 34,162

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Effect of exchange rate changes on cash (233)

Liquidity at December 31, 2025 $ 257,579

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

Liquidity at March 31, 2026 $ 297,171

The following table provides a summary of changes in our liquidity for the nine months ended March 31, 2026 (in thousands):

Liquidity at June 30, 2025 $ 284,456

Cash used by operating activities (18,445)

Cash provided by operating activities 15,717

Capital expenditures (4,104)

Proceeds from sale of assets 1,483

Decrease in availability under ABL Facility (1,200)

Increase in availability under ABL Facility 4,335

Cash used by financing activities (4,228)

Effect of exchange rate changes on cash (488)

Liquidity at December 31, 2025 $ 257,579

Liquidity at March 31, 2026 $ 297,171

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

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

We had no borrowings outstanding and $4.4 million in letters of credit outstanding, which resulted in availability of $64.2 million under the ABL Facility.

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

Six Months Ended

Cash flows provided (used) by operating activities $ (18,445) $ 45,516

Nine Months Ended

Cash flows provided by operating activities $ 15,717 $ 76,763

Cash flows used in investing activities (2,621) (5,188)

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

Six Months Ended

Nine Months Ended

Net loss $ (3,722) $ (18,190)

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Operating lease impairment due to restructuring 2,415 —

Loss on disposal of property, plant and equipment (327) (64)

Gain on disposal of property, plant and equipment (457) (122)

Other non-cash expenses 236 108

Cash effect of changes in operating assets and liabilities 5,065 80,675

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

The significant components of the $24.2 million change in operating assets and liabilities for the six months ended December 31, 2025 are summarized as follows:

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

The significant components of the $5.1 million change in operating assets and liabilities for the nine months ended March 31, 2026 are summarized as follows:

• Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased by $16.0 million which decreased cash flows from operating activities.

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the timing of vendor payments;

lease commencement, lease payments, expiration, or termination of operating leases;

and other timing differences.

• Inventories, income taxes receivable, prepaid expenses, other current assets, operating right-of-use lease assets and other assets, non-current, increased $6.8 million which decreased cash flows from operating activities.

These operating assets can fluctuate based on business volumes;

the timing of inventory builds and draw-downs, accrual and receipt of income taxes receivable;

prepayments of certain expenses;

lease commencement, passage of time, expiration, or termination of operating leases;

and other timing differences.

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 $11.9 million which decreased cash flows from operating activities.

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

vendor payments;

lease commencement, lease payments, expiration, or termination of operating leases;

and other timing differences.

The significant components of the $50.8 million change in operating assets and liabilities for the six months ended December 31, 2024 are summarized as follows:

• Changes in other operating assets and liabilities decreased cash flows from operating activities by $10.0 million.

These operating assets and liabilities can fluctuate based on business volumes and timing of certain cash receipts and payments.

Additionally, we generally prepay our annual insurance premiums in the first quarter of the fiscal year.

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.

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the timing of vendor payments;

lease commencement, lease payments, expiration, or termination of operating leases;

and other timing differences.

• 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;

the timing of inventory builds and draw-downs, accrual and receipt of income taxes receivable;

prepayments of certain expenses;

lease commencement, passage of time, expiration, or termination of operating leases;

and other timing differences.

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;

vendor payments;

lease commencement, lease payments, expiration, or termination of operating leases;

and other timing differences.

• Changes in other operating assets and liabilities decreased cash flows from operating activities by $0.1 million.

These operating assets and liabilities can fluctuate based on business volumes and timing of certain cash receipts and payments.

Additionally, we generally prepay our annual insurance premiums in the first quarter of the fiscal year.

Cash Flows Used by Investing Activities

Investing activities used $2.7 million and $2.6 million of cash primarily due to capital expenditures in the six months ended December 31, 2025 and 2024, respectively.

Investing activities used $2.6 million and $5.2 million of cash in the nine months ended March 31, 2026 and 2025, respectively.

Capital expenditures were $4.1 million and $5.4 million in the nine months ended March 31, 2026 and 2025, respectively.

During the nine months ended March 31, 2026, we also received $1.5 million of proceeds from the sale of property plant and equipment, primarily associated with our transmission and distribution service line, which we began winding down in the fourth quarter of fiscal 2025.

Cash Flows Used by Financing Activities

Financing activities used $4.3 million and $1.1 million of cash in the six months ended December 31, 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.

Financing activities used $4.2 million and $1.1 million of cash in the nine months ended March 31, 2026 and 2025, 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 December 31, 2025 and have no current plans to repurchase stock.

As of December 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 March 31, 2026 and have no current plans to repurchase stock.

As of March 31, 2026, 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.

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

As of December 31, 2025, there were $274.8 million of surety bonds in force, of which we expect $125.6 million to expire within the next 12 months.

As of March 31, 2026, there were $286.9 million of surety bonds in force, of which we expect $269.9 million to expire within the next 12 months.

Of the bonds in force, $265.4 million related to performance bonds for ongoing projects and the remainder related to contractor licensing, liens, and other bonds.

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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 December 31, 2025, we had $4.5 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.

As of March 31, 2026, we had $4.4 million of letters of credit outstanding.

The letters of credit that support our workers’ compensation insurance 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