MATRIX SERVICE CO 10-K

Item 8. Financial Statements and Supplementary Data Financial Statements of the Company Management’s Report on Internal Control Over Financial Reporting 42 Reports of Independent Registered Public Accounting Firm (PCAOB ID 34 ) 43 Consolidated Statements of Income for the Fiscal Years Ended June 30, 202 6 , June 30, 202 5 , and June 30, 202 4 47 Consolidated Statements of Comprehensive Income for the Fiscal Years Ended June 30, 202 6 , June 30, 202 5 , and June 30, 202 4 48 Consolidated Balance Sheets as of June 30, 202 6 and June 30, 202 5 49 Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, 202 6 , June 30, 202 5 , and June 30, 202 4 51 Consolidated Statements of Changes in Stockholders’ Equity for the Fiscal Years Ended June 30, 202 6 , June 30, 202 5 , and June 30, 202 4 52 Notes to Consolidated Financial Statements 53 Schedule II—Valuation and Qualifying Accounts 79 Financial Statement Schedules The financial statement schedule is filed as a part of this report under Schedule II – Valuation and Qualifying Accounts for the three fiscal years ended June 30, 2026, June 30, 2025 and June 30, 2024 immediately following Notes to Consolidated Financial Statements. All other schedules are omitted because they are not applicable or the required information is shown in the financial statements, or notes thereto, included herein. 41 Table of Contents MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING The management of Matrix Service Company and its wholly-owned subsidiaries (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. All internal control systems, no matter how well designed, have inherent limitations and cannot provide absolute assurance that all objectives will be met. Internal control over financial reporting is a process that involves diligence and is subject to lapses in judgment and human error. Internal control over financial reporting can also be circumvented by collusion or management override of controls. Because of these limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis. The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2026. In making this assessment, the Company’s management used the criteria established in Internal Control—Integrated Framework (2013) set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Management’s assessment included an evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, overall control environment and information systems control environment. Based on this assessment, the Company’s management has concluded that the Company’s internal control over financial reporting as of June 30, 2026 was effective. Deloitte & Touche LLP, an independent registered public accounting firm, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of June 30, 2026. Deloitte & Touche LLP’s report on the Company’s internal control over financial reporting is included herein. /s/ Shawn P. Payne /s/ Kevin S. Cavanah Shawn P. Payne Kevin S. Cavanah President and Chief Executive Officer Vice President and Chief Financial Officer September 3, 2026 42 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Matrix Service Company Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Matrix Service Company and subsidiaries (the "Company") as of June 30, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended June 30, 2026, of the Company and our report dated September 3, 2026, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ DELOITTE & TOUCHE LLP Houston, Texas September 3, 2026 43 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Matrix Service Company Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Matrix Service Company and subsidiaries (the "Company") as of June 30, 2026 and 2025, the related consolidated statements of income, comprehensive income, cash flows, and changes in stockholders' equity, for each of the three years in the period ended June 30, 2026, and the related notes and the schedule listed in the Index at Item 8 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2026, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September 3, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Revenue – Fixed Price Contracts – Refer to Notes 1 and 2 to the financial statements Critical Audit Matter Description The Company enters into contracts with customers to provide engineering, procurement, and fabrication and construction services, usually provided in association with capital projects, which commonly are fixed-price contracts and are billed based on project milestones. Revenue on performance obligations associated with fixed-price contracts is recognized over time since these services create or enhance assets the customer controls as they are being created or enhanced. The Company measures progress of satisfying these performance obligations by using the percentage-of-completion method, which is based on costs incurred to date compared to the total estimated costs at completion. Due to the nature of work left to be performed on many of the Company’s contracts, the estimation of total cost at completion for fixed-price contracts is complex, subject to many variables and requires significant judgment. For the fiscal year ended June 30, 2026, revenue totaled $873.6 million, of which $682.9 million related to fixed-price contracts. 44 Table of Contents Given the significant judgment necessary to estimate total costs at completion for fixed-price contracts, auditing these estimates required extensive audit effort due to the volume and complexity of the fixed-price contracts and a high degree of auditor judgment when evaluating the results of audit procedures. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to estimated total costs at completion for fixed price contracts included the following, among others: • We tested the effectiveness of controls over the recognition of revenue for fixed price contracts, including management’s controls over estimates of total costs at completion. • We evaluated the appropriateness and consistency of the methods and assumptions used by management to estimate total costs on fixed price contracts. • We evaluated management’s ability to accurately estimate contract costs by comparing current gross margin to historical gross margin for certain fixed price contracts. • For certain fixed price contracts we performed the following: ◦ Evaluated management’s ability to estimate total costs at completion by performing corroborating inquiries with the Company’s project managers and personnel involved with the selected contracts, including inquiries related to the timeline to completion and estimates of future costs to complete the contract. ◦ Selected a sample of estimates of future costs to complete and evaluated management’s estimates of total costs at completion by performing one of the following: ▪ Comparing management’s estimates to documents such as management’s work plans, customer purchase orders, third-party invoices from suppliers, and subcontractor agreements. ▪ Developing independent estimates of total costs at completion and compared our estimates to management’s estimates. Our independent estimates were based on information such as management’s work plans, customer purchase orders, third-party invoices from suppliers, subcontractor agreements, and similar historical project experience. Goodwill – Certain Reporting Unit– Refer to Notes 1 and 4 to the financial statements Critical Audit Matter Description The Company’s evaluation of goodwill for impairment involves the comparison of management’s estimate of the fair value of each reporting unit to its carrying value. The estimated fair value of each reporting unit was derived primarily by utilizing a discounted cash flow analysis based on the Company’s operating and capital budgets and strategic plan. Significant judgments and assumptions including the revenue growth rate, forecasted gross margins, and discount rate are inherent in the fair value estimates. The use of alternate judgments and/or assumptions could result in a fair value that differs from management’s estimate and could result in the recognition of impairment charges in the financial statements. The Company performed an annual goodwill impairment test as of May 31, 2026, which resulted in no impairment. One reporting unit, with a total of $11.2 million of goodwill as of June 30, 2026 was at higher risk of future impairment. The Company’s total goodwill was $28.9 million as of June 30, 2026. We identified goodwill for one reporting unit with $11.2 million of goodwill as a critical audit matter because of the significant judgments made by management to estimate the fair value of this reporting unit. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the revenue growth rate, forecasted gross margins, and discount rate. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the revenue growth rate, forecasted gross margins, and the discount rate used by management to estimate the fair value of the identified reporting unit included the following, among others: 45 Table of Contents ◦ We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of the identified reporting unit, as well as controls related to management’s forecasted revenue growth rate and gross margins, and selected discount rate. ◦ We evaluated management’s ability to accurately forecast the revenue growth rate and future gross margins by comparing actual results to management’s historical forecasts. ◦ We evaluated the reasonableness of management’s revenue growth rate and forecasted gross margins by comparing the forecasts to: ▪ Historical revenue growth and gross margins. ▪ Internal communications to management and the Board of Directors, including other forward-looking estimates prepared or used by management for other accounting estimates. ▪ Remaining performance obligations. ▪ Information included in Company press releases as well as in analyst and industry reports for the Company and certain of its peer companies and in industry outlooks. ◦ With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) the discount rate, including testing the source information underlying the determination of the discount rate, testing the mathematical accuracy of the calculation, and developing a range of independent estimates and comparing those to the discount rate selected by management. /s/ DELOITTE & TOUCHE LLP Houston, Texas September 3, 2026 We have served as the Company's auditor since 2006. 46 Table of Contents Matrix Service Company Consolidated Statements of Income (In thousands, except per share data) Fiscal Years Ended June 30, 2026 June 30, 2025 June 30, 2024 Revenue $ 873,632 $ 769,286 $ 728,213 Cost of revenue 809,680 729,609 687,740 Gross profit 63,952 39,677 40,473 Selling, general and administrative expenses 63,607 71,173 70,085 Restructuring costs and other 9,963 3,572 501 Operating loss ( 9,618 ) ( 35,068 ) ( 30,113 ) Other income (expense): Interest expense ( 437 ) ( 518 ) ( 1,130 ) Interest income 7,717 6,652 1,339 Other (Note 3) 114 ( 64 ) 4,892 Loss before income tax expense (benefit) ( 2,224 ) ( 28,998 ) ( 25,012 ) Provision (benefit) for federal, state and foreign income taxes 356 464 ( 36 ) Net loss $ ( 2,580 ) $ ( 29,462 ) $ ( 24,976 ) Basic loss per common share $ ( 0.09 ) $ ( 1.06 ) $ ( 0.91 ) Diluted loss per common share $ ( 0.09 ) $ ( 1.06 ) $ ( 0.91 ) Weighted average common shares outstanding: Basic 28,295 27,769 27,379 Diluted 28,295 27,769 27,379 See accompanying notes 47 Table of Contents Matrix Service Company Consolidated Statements of Comprehensive Income (In thousands) Fiscal Years Ended June 30, 2026 June 30, 2025 June 30, 2024 Net loss $ ( 2,580 ) $ ( 29,462 ) $ ( 24,976 ) Other comprehensive income (loss), net of tax: Foreign currency translation gain (loss) ( 1,405 ) 132 ( 766 ) Comprehensive loss $ ( 3,985 ) $ ( 29,330 ) $ ( 25,742 ) See accompanying notes 48 Table of Contents Matrix Service Company Consolidated Balance Sheets (In thousands) June 30, 2026 June 30, 2025 Assets Current assets: Cash and cash equivalents $ 222,966 $ 224,641 Accounts receivable, net of allowance for credit losses 171,955 154,994 Costs and estimated earnings in excess of billings on uncompleted contracts 29,231 29,764 Inventories 6,190 5,917 Income taxes receivable 82 110 Prepaid expenses and other current assets 4,278 4,347 Assets held for sale (Note 3) 948 — Total current assets 435,650 419,773 Restricted cash 25,000 25,000 Property, plant and equipment, net 36,261 42,097 Operating lease right-of-use assets 14,849 17,827 Goodwill 28,878 29,047 Other intangible assets, net of accumulated amortization — 555 Other assets, non-current (Note 2) 61,967 65,957 Total assets $ 602,605 $ 600,256 See accompanying notes 49 Table of Contents Matrix Service Company Consolidated Balance Sheets (continued) (In thousands, except share data) June 30, 2026 June 30, 2025 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 108,722 $ 80,453 Billings on uncompleted contracts in excess of costs and estimated earnings 299,947 323,593 Accrued wages and benefits 19,158 18,961 Accrued insurance 4,447 5,310 Operating lease liabilities 4,363 4,441 Other accrued expenses 5,779 3,617 Total current liabilities 442,416 436,375 Deferred income taxes 22 25 Operating lease liabilities 15,094 16,986 Other liabilities, non-current 3,218 4,154 Total liabilities 460,750 457,540 Commitments and contingencies (Note 7) Stockholders’ equity: Common stock— 0.01 par value; 60,000,000 shares authorized; 28,133,850 shares issued and outstanding as of June 30, 2026; 27,888,217 shares issued and 27,610,486 shares outstanding as of June 30, 2025, respectively 281 279 Additional paid-in capital 150,483 149,969 Retained earnings 1,899 4,479 Accumulated other comprehensive loss ( 10,808 ) ( 9,403 ) Treasury stock, at cost; 0 and 277,731 shares as of June 30, 2026 and June 30, 2025; — ( 2,608 ) Total stockholders' equity 141,855 142,716 Total liabilities and stockholders’ equity $ 602,605 $ 600,256 See accompanying notes 50 Table of Contents Matrix Service Company Consolidated Statements of Cash Flows (In thousands) Fiscal Years Ended June 30, 2026 June 30, 2025 June 30, 2024 Operating activities: Net loss $ ( 2,580 ) $ ( 29,462 ) $ ( 24,976 ) Adjustments to reconcile net loss to net cash provided by operating activities Depreciation and amortization 8,640 10,012 11,023 Stock-based compensation expense 7,145 8,904 7,745 Operating lease impairment due to restructuring 2,935 — — Loss (gain) on disposal of property, plant and equipment (Note 3) ( 606 ) 8 ( 4,923 ) Other 146 234 1,362 Changes in operating assets and liabilities increasing (decreasing) cash: Accounts receivable, net of allowance for credit losses ( 11,296 ) ( 48,796 ) ( 12,077 ) Costs and estimated earnings in excess of billings on uncompleted contracts 533 4,129 10,995 Inventories ( 273 ) 2,922 ( 1,402 ) Other assets and liabilities ( 2,398 ) ( 2,309 ) 3,897 Accounts payable 27,747 14,814 ( 10,385 ) Billings on uncompleted contracts in excess of costs and estimated earnings ( 23,646 ) 152,285 85,872 Accrued expenses 560 4,730 5,440 Net cash provided by operating activities 6,907 117,471 72,571 Investing activities: Capital expenditures ( 5,483 ) ( 7,685 ) ( 6,994 ) Proceeds from sales of property, plant and equipment (Note 3) 1,942 240 6,049 Net cash used by investing activities ( 3,541 ) ( 7,445 ) ( 945 ) Financing activities: Advances under asset-backed credit facility — — 10,000 Repayments of advances under asset-backed credit facility — — ( 20,000 ) Payment of debt amendment fees ( 149 ) — ( 100 ) Proceeds from issuance of common stock under employee stock purchase plan 202 195 184 Payments related to tax withholding for stock-based compensation ( 4,223 ) ( 1,235 ) ( 456 ) Net cash used by financing activities ( 4,170 ) ( 1,040 ) ( 10,372 ) Effect of exchange rate changes on cash ( 871 ) 40 ( 451 ) Net increase (decrease) in cash and cash equivalents ( 1,675 ) 109,026 60,803 Cash, cash equivalents, and restricted cash, beginning of period (Note 1) 249,641 140,615 79,812 Cash, cash equivalents, and restricted cash, end of period (Note 1) $ 247,966 $ 249,641 $ 140,615 Supplemental disclosure of cash flow information: Cash paid (received) during the period for: Income taxes $ 312 $ 328 $ ( 165 ) Interest $ 378 $ 395 $ 880 Non-cash investing and financing activities: Purchases of property, plant and equipment on account $ 129 $ 130 $ 140 See accompanying notes 51 Table of Contents Matrix Service Company Consolidated Statements of Changes in Stockholders’ Equity (In thousands, except share data) Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Shares Amount Shares Amount Total June 30, 2023 27,888,217 $ 279 $ 140,810 $ 58,917 $ ( 8,769 ) 840,899 $ ( 9,753 ) $ 181,484 Net loss — — — ( 24,976 ) — — — ( 24,976 ) Other comprehensive loss — — — — ( 766 ) — — ( 766 ) Issuance of restricted stock — — ( 3,868 ) — — ( 297,026 ) 3,868 — Treasury shares sold to employee stock purchase plan — — ( 74 ) — — ( 19,775 ) 258 184 Treasury shares repurchased to satisfy tax withholding obligations — — — — — 55,324 ( 456 ) ( 456 ) Stock-based compensation expense — — 7,745 — — — — 7,745 Modification of liability-classified awards (Note 10) — — 967 — — — — 967 June 30, 2024 27,888,217 279 145,580 33,941 ( 9,535 ) 579,422 ( 6,083 ) 164,182 Net loss — — — ( 29,462 ) — — — ( 29,462 ) Other comprehensive income — — — — 132 — — 132 Issuance of restricted stock — — ( 4,537 ) — — ( 408,406 ) 4,537 — Treasury shares sold to employee stock purchase plan — — 22 — — ( 17,148 ) 173 195 Treasury shares repurchased to satisfy tax withholding obligations — — — — — 123,863 ( 1,235 ) ( 1,235 ) Stock-based compensation expense — — 8,904 — — — — 8,904 June 30, 2025 27,888,217 279 149,969 4,479 ( 9,403 ) 277,731 ( 2,608 ) 142,716 Net loss — — — ( 2,580 ) — — — ( 2,580 ) Other comprehensive loss — — — — ( 1,405 ) — — ( 1,405 ) Issuance of restricted stock 231,950 2 ( 6,805 ) — — ( 274,578 ) 2,580 ( 4,223 ) Shares issued related to employee stock purchase plan 13,683 — 174 — — ( 3,153 ) 28 202 Stock-based compensation expense — — 7,145 — — — — 7,145 June 30, 2026 28,133,850 $ 281 $ 150,483 $ 1,899 $ ( 10,808 ) — $ — $ 141,855 See accompanying notes 52 Table of Contents Matrix Service Company Notes to Consolidated Financial Statements Note 1— Business, Basis of Presentation and Significant Accounting Policies Business Matrix Service Company and its subsidiaries (“Matrix”, the “Company”, or “we”) provide engineering, fabrication, construction, and maintenance services to support critical energy infrastructure and industrial markets. We maintain regional offices throughout the United States, Canada and other international locations, and operate through separate union and non-union subsidiaries in the United States, Canada, South Korea and Australia. Our reportable segments are Storage and Terminal Solutions, Utility and Power Infrastructure, and Process and Industrial Facilities, see Note 13 - Segment Information. Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and include the accounts of Matrix Service Company and its subsidiaries, all of which are wholly owned. Intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We believe the most significant estimates and judgments are associated with revenue recognition, the recoverability tests that must be periodically performed with respect to our goodwill, deferred tax assets, and the estimation of loss contingencies, including liabilities associated with litigation. Actual results could materially differ from those estimates. Significant Accounting Policies Revenue Recognition General Information about our Contracts with Customers Our revenue comes from contracts to provide engineering, procurement, fabrication and construction, repair and maintenance and other services. Our engineering, procurement and fabrication and construction services are usually provided in association with construction projects, which are commonly fixed-price contracts that are billed based on project milestones. Our repair and maintenance services typically are cost reimbursable or time and material based contracts and are billed monthly or, for projects of short duration, at the conclusion of the project. The elapsed time from award to completion of performance may exceed one year for construction projects. Step 1: Contract Identification We do not recognize revenue unless we have identified a contract with a customer. A contract with a customer exists when it has approval and commitment from both parties, the rights and obligations of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability is probable. We also evaluate whether a contract should be combined with other contracts and accounted for as a single contract. This evaluation requires judgment and could change the timing of the amount of revenue and profit recorded for a given period. Step 2: Identify Performance Obligations Next, we identify each performance obligation in the contract. A performance obligation is a promise to provide a distinct good or service or a series of distinct goods or services to the customer. Revenue is recognized separately for each performance obligation in the contract. Many of our contracts have one clearly identifiable performance obligation. However, many of our contracts provide the customer an integrated service that includes two or more of the following services: engineering, procurement, fabrication, construction, repair and maintenance services. For these contracts, we do not consider the integrated services to be distinct within the context of the contract when the separate scopes of work combine into a single commercial 53 Matrix Service Company Notes to Consolidated Financial Statements (continued) objective or capability for the customer. Accordingly, we generally identify one performance obligation in our contracts. The determination of the number of performance obligations in a contract requires significant judgment and could change the timing of the amount of revenue recorded for a given period. Step 3: Determine Contract Price After determining the performance obligations in the contract, we determine the contract price. The contract price is the amount of consideration we expect to receive from the customer for completing the performance obligation(s). In a fixed-price contract, the contract price is a single lump-sum amount. In reimbursable and time and materials based contracts, the contract price is determined by the agreed upon rates or reimbursements for time and materials expended in completing the performance obligation(s) in the contract. A number of our contracts contain various cost and performance incentives and penalties that can either increase or decrease the contract price. These variable consideration amounts are generally earned or incurred based on certain performance metrics, most commonly related to project schedule or cost targets. Contracts are often modified through change orders, which are changes to the agreed upon scope of work. Most of our change orders are for goods or services that are not distinct from the existing contract due to the significant integration of services provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a change order on the contract price and our measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue on a cumulative catch-up basis. Unpriced change orders represent one of the most common forms of variable consideration included within contract value and typically represent contract modifications for which a change in scope has been authorized or acknowledged by our customer but the final adjustment to contract price is yet to be negotiated. Sometimes we seek claims for amounts in excess of the contract price for delays, errors in specifications and designs, contract terminations, change orders in dispute or other causes of additional costs incurred by us. Recognition of amounts as additional contract price related to claims is appropriate only if there is a legal basis for the claim. The determination of our legal basis for a claim requires significant judgment. We estimate variable consideration at the most likely amount of additional consideration to be received (or paid in the case of penalties), provided that meeting the variable condition is probable. We include estimated amounts of variable consideration in the contract price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the contract price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. In estimating the transaction price for unpriced change orders and claims, we consider all relevant facts, including documented correspondence with the customer regarding acknowledgement of and/or agreement with the modification, as well as historical experience with the customer or similar contractual circumstances. We reassess the amount of variable consideration each accounting period until the uncertainty associated with the variable consideration is resolved. Changes in the assessed amount of variable consideration are accounted for prospectively as a cumulative adjustment to revenue recognized in the current period. Step 4: Assign Contract Price to Performance Obligations After determining the contract price, we assign such price to the performance obligation(s) in the contract. If a contract has multiple performance obligations, we assign the contract price to each performance obligation based on the stand-alone selling prices of the distinct services that comprise each performance obligation. Step 5: Recognize Revenue as Performance Obligations are Satisfied We record revenue for contracts with our customers as we satisfy the contracts' performance obligations. We recognize revenue on performance obligations associated with fixed-price contracts for engineering, procurement, fabrication and construction services over time since these services create or enhance assets the customer controls as they are being created or enhanced. We measure progress of satisfying these performance obligations by using the cost-to-cost input method, which measures our percentage-of-completion of our performance obligations based on costs incurred to date compared to the total estimated costs at completion. We believe this method best depicts the transfer of control of assets being created or enhanced to the customer. 54 Matrix Service Company Notes to Consolidated Financial Statements (continued) We recognize revenue over time for reimbursable and time and material based repair and maintenance contracts since the customer simultaneously receives and consumes the benefit of those services as we perform work under the contract. As a practical expedient allowed under the revenue accounting standards, we record revenue for these contracts in the amount to which we have a right to invoice for the services performed provided that we have a right to consideration from the customer in an amount that corresponds directly with the value of the performance completed to date. Costs incurred may include direct labor, direct materials, subcontractor costs and indirect costs, such as salaries and benefits, supplies and tools, equipment costs and insurance costs. Indirect costs are charged to projects based upon direct costs and overhead allocation rates per dollar of direct costs incurred or direct labor hours worked. Typically, customer contracts will include standard warranties that provide assurance that products and services will function as expected. We do not sell separate warranties. Accordingly, these types of warranties are not considered to be separate performance obligations, but any costs incurred or expected to be incurred in connection with these warranties are included in contract costs. We have numerous contracts that are in various stages of completion which require estimates to determine the forecasted costs at completion. Due to the nature of the work left to be performed on many of our contracts, the estimation of total cost at completion for fixed-price contracts is complex, subject to many variables and requires significant judgment. Estimates of total cost at completion are made each period and changes in these estimates are accounted for prospectively as cumulative adjustments to revenue recognized in the current period. If estimates of costs to complete fixed-price contracts indicate a loss, a provision is made through a contract write-down for the total loss anticipated. Cash, Cash Equivalents and Restricted Cash We include as cash equivalents all highly liquid investments with original maturities of three months or less which are readily convertible into cash. We have cash on deposit at June 30, 2026 with banks in the United States, Canada, South Korea and Australia in excess of Federal Deposit Insurance Corporation ("FDIC"), Canada Deposit Insurance Corporation ("CDIC"), Korea Deposit Insurance Corporation ("KDIC") and Financial Claims Scheme ("FCS") protection limits, respectively. The United States Dollar equivalent of Canadian, South Korean and Australian deposits totaled $ 7.7 million as of June 30, 2026. The ABL Facility requires us to maintain a minimum of $ 25.0 million of restricted cash at all times. Since this cash must be restricted through the maturity date of the ABL Facility, which is beyond one year, we have classified this restricted cash as non-current in our Consolidated Balance Sheets. The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Consolidated Balance Sheets to the total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows (in thousands): June 30, 2026 June 30, 2025 Cash and cash equivalents $ 222,966 224,641 Restricted cash 25,000 25,000 Total cash, cash equivalents and restricted cash $ 247,966 $ 249,641 Accounts Receivable Accounts receivable are carried on a gross basis, less the allowance for credit losses. We estimate the allowance for credit losses based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. In addition, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. Our customers consist primarily of major integrated oil companies, independent refiners and marketers, power companies, petrochemical companies, pipeline companies, mining companies, contractors and engineering firms. We are exposed to the risk of individual customer defaults or depressed cycles in our customers’ industries. To mitigate this risk, many of our contracts require payment as projects progress or advance payment in some circumstances. In addition, in most cases we can place liens against the property, plant or equipment constructed or terminate the contract if a material contract default occurs. Accounts are written off against the allowance for credit losses only after all reasonable collection attempts have been exhausted. The provision for credit losses was $ 5 thousand, $ 0.1 million, and $ 3 thousand in fiscal 2026, 2025, and 2024 respectively. The allowance for credit losses was $ 0.3 million and $ 0.3 million as of June 30, 2026 and 2025, respectively. 55 Matrix Service Company Notes to Consolidated Financial Statements (continued) Retentions Some of our large construction projects may require security in the form of significant retentions. Contract retention represents an unconditional right to cash that is normally held by the customer until a certain time has passed, which is generally marked by certain contractual milestones, typically at or near the end of a project. Contract retentions expected to be collected within one year are included within Accounts Receivable in the Consolidated Balance Sheets. Contract retentions collectible beyond one year are included in Other assets, non-current. Loss Contingencies Various legal actions, claims and other contingencies arise in the normal course of our business. Contingencies are recorded in the consolidated financial statements, or are otherwise disclosed, in accordance with ASC 450-20, “Loss Contingencies”. Specific reserves are provided for loss contingencies to the extent we conclude that a loss is both probable and estimable. We use a case-by-case evaluation of the underlying data and update our evaluation as further information becomes known. Costs incurred for litigation are expensed as incurred. Inventories Inventories consist primarily of steel plate and pipe, and aluminum coil and extrusions. Cost is determined primarily using the average cost method and inventories are stated at the lower of cost or net realizable value. Property, Plant and Equipment Property, plant and equipment consists primarily of construction equipment and are recorded at cost. See Note 3 - Property, Plant and Equipment for more information. Capitalization Policy Expenditures that materially extend the useful life, increase capacity, or improve the efficiency of an asset are capitalized, and routine maintenance and repairs are expensed as incurred. Assets not yet placed into service are included in construction in progress and are not depreciated until placed into service. Depreciation Depreciation is calculated using the straight-line method over the following ranges of estimated useful service lives, in years: Estimated Useful Service Lives (years) Buildings 40 Construction equipment 3-15 Transportation equipment 3-5 Office equipment and software 3-10 Leasehold Improvements Shorter of lease term or useful life Leases We enter into lease arrangements for real estate, construction equipment and information technology equipment in the normal course of business. We determine if an arrangement is or contains a lease at inception of the arrangement. An arrangement is determined to be a lease if it conveys the right to control the use of identified property and equipment for a period of time in exchange for consideration. Operating lease right-of-use assets are recognized as the present value of future lease payments over the lease term as of the commencement date, plus any lease payments made prior to commencement, and less any lease incentives received. Operating lease liabilities are recognized as the present value of the future lease payments over the lease term as of the commencement date. Operating lease expense is recognized based on the undiscounted future lease payments over the remaining lease term on a straight-line basis. Leases with an initial term of twelve months or less are not recorded on the balance sheet; costs for these leases are recognized on a straight-line basis over the lease term. 56 Matrix Service Company Notes to Consolidated Financial Statements (continued) Some of our lease agreements contain non-lease components, such as common area maintenance for our real estate leases, which are accounted for separately. Many of our leases include base rental periods coupled with options to renew or terminate the lease, generally at our discretion. Certain leases additionally include options to purchase the leased asset. In evaluating the lease term, we consider whether we are reasonably certain to exercise such options. We consider various factors, including economic incentives, intent, past history and business need, to determine the likelihood that a renewal option will be exercised. However, based on the nature of our lease agreements, options generally do not provide us with a significant economic incentive and are therefore excluded from the lease term for the majority of our arrangements. Our lease agreements do not contain significant residual value guarantees or material restrictive covenants. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. Determinations with respect to lease term (including any renewals and terminations), incremental borrowing rate used to discount lease payments, variable lease expense and future lease payments require the use of judgment based on the facts and circumstances related to each lease. Right-of-use assets are evaluated for impairment in accordance with our policy for impairment of long-lived assets. Impairment of Long-Lived Assets We evaluate long-lived assets for impairment when events or changes in circumstances indicate, in management’s judgment, that the carrying value of such assets used in operations may not be recoverable. The determination of whether an impairment has occurred is based on management’s estimate of undiscounted future cash flows attributable to the assets as compared to the carrying value of the assets. If an impairment has occurred, the amount of the impairment recognized is determined by estimating the fair value of the assets and, to the extent the carrying value exceeds the fair value of the assets, recording a loss provision. For assets identified to be disposed of in the future, the carrying value of the assets are compared to the estimated fair value less the cost of disposal to determine if an impairment has occurred. Until the assets are disposed of, an estimate of the fair value is redetermined when related events or circumstances change. Goodwill Goodwill represents the excess of the purchase price of acquisitions over the acquisition date fair value of the net identifiable tangible and intangible assets acquired. In accordance with current accounting guidance, goodwill is not amortized and is tested at least annually for impairment at the reporting unit level, which is a level below our reportable segments. We perform our annual impairment test in the fourth quarter of each fiscal year, or in between annual tests whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable, to determine whether an impairment exists and to determine the amount of headroom. We define "headroom" as the percentage difference between the fair value of a reporting unit and its carrying value. The goodwill impairment test involves comparing management’s estimate of the fair value of a reporting unit with its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, then goodwill is not impaired. If the fair value of a reporting unit is less than its carrying value, then goodwill is impaired to the extent of the difference, but the impairment may not exceed the balance of goodwill assigned to that reporting unit. We utilize a discounted cash flow analysis, referred to as an income approach, and market multiples, referred to as a market approach, to determine the estimated fair value of our reporting units. For the income approach, significant judgments and assumptions including forecasted project awards, discount rate, anticipated revenue growth rate, gross margins, operating expenses, working capital needs and capital expenditures are inherent in the fair value estimates, which are based on our operating and capital budgets and on our strategic plan. As a result, actual results may differ from the estimates utilized in our income approach. For the market approach, significant judgments and assumptions include the selection of guideline companies, forecasted guideline company EBITDA (as defined in Note 4 - Goodwill and Other Intangible Assets) and our forecasted EBITDA (as defined in Note 4 - Goodwill and Other Intangible Assets). The use of alternate judgments and/or assumptions could result in a fair value that differs from our estimate and could result in the recognition of additional impairment charges in the financial statements. As a test for reasonableness, we also consider the combined fair values of our reporting units to our market capitalization. 57 Matrix Service Company Notes to Consolidated Financial Statements (continued) Other Intangible Assets Intangible assets that have finite useful lives are amortized by the straight-line method over their useful lives ranging from 6 years to 15 years. A finite intangible asset is considered impaired when its carrying amount is not recoverable and exceeds the asset's fair value. The carrying amount is deemed unrecoverable if it is greater than the sum of undiscounted cash flows expected to result from use and eventual disposition of the asset. An impairment loss is equal to the excess of the carrying amount over the fair value of the asset. If quoted market prices are not available, the fair values of the intangible assets are based on present values of expected future cash flows or royalties avoided using discount rates commensurate with the risks involved. Stock-Based Compensation We have issued time-based and market-based restricted stock unit awards under our long-term incentive compensation plans. We have issued time-based awards that are equity-settled and time-based awards that are cash-settled. The fair value of time-based awards is based on the value of our common stock at the grant date. The fair value of market-based awards is based on several factors, including the probability that the market condition specified in the grant will be achieved, which is calculated using a Monte Carlo model. Cash-settled time-based awards must be settled in cash and are accounted for as liability-type awards and are remeasured at the end of each reporting period at fair value until settlement. For all awards, expense is recognized using the straight-line method over the requisite service period with forfeitures recorded as they occur. Stock-based compensation expense related to market-based awards is expensed at their grant date fair value regardless of performance. Income Taxes We use the asset and liability approach for financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances based on our judgments and estimates are established when necessary to reduce deferred tax assets to the amount expected to be realized in future operating results. Our estimates are based on facts and circumstances in existence as well as interpretations of existing tax regulations and laws applied to the facts and circumstances. Therefore, we estimate and provide for amounts of additional income taxes that may be assessed by the various taxing authorities. We account for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors that include changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. We evaluate uncertain tax positions on a quarterly basis and adjust the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions. Foreign Currency The functional currencies of our operations in Canada, South Korea and Australia are the Canadian Dollar, South Korean Won and U.S. Dollar, respectively. The functional currency of our Australian operations is the U.S. Dollar since its sales are primarily denominated in that currency. For subsidiaries with operations using a foreign functional currency, assets and liabilities are translated at the period-end exchange rates and the income statement accounts are translated at average exchange rates throughout the year. Translation gains and losses are reported in Accumulated Other Comprehensive Loss, net of tax, in the Consolidated Statements of Changes in Stockholders’ Equity and in Other Comprehensive Loss in the Consolidated Statements of Comprehensive Income. Translation gains and losses are reversed from Accumulated Other Comprehensive Loss and are recognized in current period income in the event we dispose of an entity with accumulated translation gains or losses. Transaction gains and losses are reported as a component of Other income (expense) in the Consolidated Statements of Income. Accounting Standards Adopted in 2026 In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity's income tax rate reconciliations table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The Company adopted this ASU prospectively as of and for the year ended June 30, 2026. See Note 6 - Income Taxes for additional information. 58 Matrix Service Company Notes to Consolidated Financial Statements (continued) Accounting Standards Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring companies to provide more detailed and organized disclosures of their expenses. Disclosures will include disaggregation of expense captions presented on the face of the income statement into specific categories, such as purchases of inventory, employee compensation, and costs related to depreciation and amortization. The new requirements will take effect for annual reporting periods beginning after December 15, 2026 (fiscal 2028) and for interim periods within fiscal years beginning after December 15, 2027 (fiscal 2029), with early adoption permitted. Adoption of this ASU will result in additional disclosure, but will not impact the Company's consolidated financial position, results of operations or cash flows. Other accounting pronouncements issued but not effective until after June 30, 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 $ 863.3 million of remaining performance obligations yet to be satisfied as of June 30, 2026. We expect to recognize approximately $ 667.0 million of our remaining performance obligations as revenue within the next twelve months. Contract Balances Billing practices are governed by the contract terms of each project based upon costs incurred, achievement of milestones or predetermined schedules. Billings do not necessarily correlate with revenue recognized over time using the percentage-of-completion method. As a result, we carry contract assets and liabilities in our balance sheet. These contract assets and liabilities are calculated on a contract-by-contract basis and are classified as current. We present our contract assets in the balance sheet as Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts ("CIE"). CIE consists of revenue recognized in excess of billings. We present our contract liabilities in the balance sheet as Billings on Uncompleted Contracts in Excess of Costs and Estimated Earnings ("BIE"). BIE consists of billings in excess of revenue recognized. The following table provides information about CIE and BIE: June 30, 2026 June 30, 2025 Change (In thousands) Costs and estimated earnings in excess of billings on uncompleted contracts $ 29,231 $ 29,764 $ ( 533 ) Billings on uncompleted contracts in excess of costs and estimated earnings ( 299,947 ) ( 323,593 ) 23,646 Net contract liabilities $ ( 270,716 ) $ ( 293,829 ) $ 23,113 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 fiscal year ended June 30, 2026 that was included in the prior period BIE balance was $ 318.9 million. Progress billings in accounts receivable at June 30, 2026 and June 30, 2025 included retentions to be collected within one year of $ 68.2 million and $ 29.0 million, respectively. Contract retentions collectable beyond one year are included in Other assets, non-current in the Consolidated Balance Sheets and totaled $ 56.1 million and $ 61.5 million as of June 30, 2026 and 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 $ 8.1 million and $ 11.4 million at June 30, 2026 and 2025, respectively. The amounts ultimately realized may be different than the recorded amounts resulting in adjustments to future earnings. Generally we expect collection of amounts related to unpriced change orders and claims within twelve months. However, customers may not pay these amounts until final resolution of related claims, which may extend beyond one year. 59 Matrix Service Company Notes to Consolidated Financial Statements (continued) Disaggregated Revenue Revenue disaggregated by reportable segment is presented in Note 13 - Segment Information. The following series of tables presents revenue disaggregated by geographic area where the work was performed and by contract type: Geographic Disaggregation Fiscal Years Ended June 30, 2026 June 30, 2025 June 30, 2024 (In thousands) United States $ 828,132 $ 719,388 $ 662,449 Canada 38,424 41,228 56,420 Other international 7,076 8,670 9,344 Total Revenue $ 873,632 $ 769,286 $ 728,213 Contract type disaggregation Fiscal Years Ended June 30, 2026 June 30, 2025 June 30, 2024 (In thousands) Fixed-price contracts $ 682,893 $ 560,717 $ 455,548 Time and materials and other cost reimbursable contracts 190,739 208,569 272,665 Total Revenue $ 873,632 $ 769,286 $ 728,213 Revisions in Estimates 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 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. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the period it is identified. During fiscal 2026, based on an evaluation of projects that had revisions to total estimated costs or anticipated contract value that individually resulted in a change to gross profit in excess of $1.0 million, we recognized a reduction of gross profit of $4.8 million. During fiscal 2025, lower than anticipated labor productivity on a crude terminal project in the Storage and Terminal Solutions segment resulted in a $5.1 million reduction of gross profit during the fiscal year. This project was completed in early fiscal 2026. Additionally, we lowered our recovery expectations on a legacy project completed in fiscal 2021 that was in arbitration which resulted in a $6.4 million reduction in revenue. The matter was fully resolved in fiscal 2026. 60 Matrix Service Company Notes to Consolidated Financial Statements (continued) Note 3 - Property, Plant and Equipment The following table presents the components of our property, plant and equipment, net at June 30, 2026 and 2025: June 30, 2026 June 30, 2025 Estimated Useful Lives (in years) (In thousands) Property, plant and equipment Land $ 4,852 $ 5,160 Buildings 15,524 15,477 40 Construction equipment 78,923 78,395 3-15 Transportation equipment 32,005 38,362 3-5 Office equipment and software 30,865 30,590 3-10 Leasehold improvements 17,718 17,521 Shorter of lease term or useful life Finance lease 32 32 Construction in progress 655 2,869 Total property, plant and equipment 180,574 188,406 Accumulated depreciation ( 144,313 ) ( 146,309 ) Property, plant and equipment, net $ 36,261 $ 42,097 Depreciation expense totaled $ 8.1 million, $ 8.9 million, and $ 9.6 million in fiscal 2026, 2025 and 2024, respectively. As of June 30, 2026, we classified $ 0.9 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. We began winding down this service line in the fourth quarter of fiscal 2025. We expect to sell the remaining equipment during fiscal 2027. During fiscal 2024, we sold a previously utilized facility in Burlington, Ontario for $ 2.7 million in net proceeds, which resulted in a gain of $ 2.5 million. We closed this previously utilized facility because it was no longer strategic to the future of the business. During fiscal 2024, we also sold a facility in Catoosa, Oklahoma for $ 2.7 million in net proceeds, which resulted in a gain of $ 2.0 million. The facility was previously utilized for our industrial cleaning business, which was sold in fiscal 2023. The gains from these asset sales were included in Other income in the Consolidated Statements of Income. During fiscal 2024, we purchased a facility in Bakersfield, California for $ 4.1 million to replace a facility that was being leased. 61 Matrix Service Company Notes to Consolidated Financial Statements (continued) Note 4 - Goodwill and Other Intangible Assets Goodwill The changes in the carrying amount of goodwill by segment are as follows: Storage and Terminal Solutions Utility and Power Infrastructure Process and Industrial Facilities Total (In thousands) Net balance at June 30, 2023 $ 19,397 $ 4,239 $ 5,484 $ 29,120 Translation adjustment (1) ( 64 ) ( 33 ) — ( 97 ) Net balance at June 30, 2024 19,333 4,206 5,484 29,023 Translation adjustment (1) 16 8 — 24 Net balance at June 30, 2025 19,349 4,214 5,484 29,047 Translation adjustment (1) ( 112 ) ( 57 ) — ( 169 ) Net balance at June 30, 2026 $ 19,237 $ 4,157 $ 5,484 $ 28,878 (1) The translation adjustments relate to the periodic translation of Canadian Dollar and South Korean Won denominated goodwill recorded as a part of prior acquisitions in Canada and South Korea, in which the local currency was determined to be the functional currency. We performed our annual goodwill impairment test as of May 31, 2026, which resulted in no impairment. The fiscal 2026 test indicated that one reporting unit with $ 11.2 million of goodwill as of June 30, 2026 was at higher risk of future impairment. If our view of project opportunities or gross margins deteriorates, particularly for the higher risk reporting unit, then we may be required to record an impairment of goodwill. The estimated fair value of each reporting unit was derived by utilizing a discounted cash flow analysis and market multiples of projected EBITDA. EBITDA is defined as earnings before interest expense, interest income, taxes, depreciation and amortization. The key assumptions used are described in Note 1 - Business, Basis of Presentation and Significant Accounting Policies. Other Intangible Assets Our other intangible assets were fully amortized as of June 30, 2026. Information on the carrying value of other intangible assets as of June 30, 2025 is as follows: June 30, 2025 Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount (Years) (In thousands) Intellectual property 10 $ 130 $ ( 122 ) $ 8 Customer based 9 to 15 11,144 ( 10,597 ) 547 Total other intangible assets $ 11,274 $ ( 10,719 ) $ 555 Amortization expense totaled $ 0.6 million, $ 1.1 million, and $ 1.4 million in fiscal 2026, 2025, and 2024, respectively. Note 5 - Debt On September 9, 2021 , the Company and our primary U.S. and Canada operating subsidiaries entered into an asset-based credit agreement, which was most recently amended on 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. Our obligations under the ABL Facility are guaranteed by substantially all of our U.S. and Canadian subsidiaries and are secured by a first lien on all our assets 62 Matrix Service Company Notes to Consolidated Financial Statements (continued) under the ABL Facility. The ABL Facility matures, and any outstanding amounts become due and payable, on September 9, 2029 . The maximum amount that we may borrow under the ABL Facility is subject to a borrowing base, which is based on restricted cash plus a percentage of the value of certain accounts receivable, inventory and equipment, reduced for certain reserves. We are required to maintain a minimum of $ 25.0 million of restricted cash at all times, but such amounts are also included in the borrowing base. The borrowing base is recalculated on a monthly basis and at June 30, 2026, our borrowing base was $ 65.4 million. During 2026, the Company had no outstanding borrowings under the ABL Facility. The Company had $ 4.5 million in letters of credit outstanding as of June 30, 2026, which resulted in availability of $ 60.9 million under the ABL Facility. Our borrowing base availability has ranged from $ 55.6 million to $ 65.0 million during fiscal 2026. Subsequent to June 30, 2026, we issued an additional $20.0 million project-related letter of credit. The letter of credit resulted in a release of $20.0 million of contract retention, which we collected in August 2026. 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. The Term SOFR rate, whether for one-month or three-month tenor, is provided by a third party as defined in the ABL Facility ("Term SOFR Administrator"). The Term SOFR Administrator publishes a daily set of forward-looking interest rates for various tenors, provided that the Term SOFR cannot be below zero. The Base Rate is defined as a fluctuating interest rate equal to the greater of: (i) rate of interest announced by Bank of Montreal from time to time as its prime rate; (ii) the U.S. federal funds rate plus 0.50 %; (iii) Term SOFR for one month period plus 1.00 %; and (iv) 1.00 %. Depending on the amount of average availability, the applicable margin is between 1.00 % and 1.50 % for Base Rate and Canadian Prime Rate borrowings, which includes either U.S. or Canadian prime rate, and between 2.00 % and 2.50 % for Term SOFR borrowings. Interest is payable either (i) monthly for Base Rate or Canadian Prime Rate borrowings or (ii) the last day of the interest period for Term SOFR borrowings, as set forth in the ABL Facility. The fee for undrawn amounts is 0.25 % per annum and is due quarterly. The ABL Facility contains customary conditions to borrowings, events of default and covenants, including, but not limited to, covenants that limit our ability to sell assets, engage in mergers and acquisitions, incur, assume or permit to exist additional indebtedness and guarantees, create or permit to exist liens, pay cash dividends, issue equity instruments, make distribution or redeem or repurchase capital stock. In the event that our availability is less than the greater of (i) $ 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 June 30, 2026. Note 6 - Income Taxes Sources of Pretax Income (Loss) Fiscal Years Ended June 30, 2026 June 30, 2025 June 30, 2024 (In thousands) Domestic $ ( 198 ) $ ( 26,917 ) $ ( 27,119 ) Foreign ( 2,026 ) ( 2,081 ) 2,107 Total $ ( 2,224 ) $ ( 28,998 ) $ ( 25,012 ) 63 Matrix Service Company Notes to Consolidated Financial Statements (continued) Components of the Provision for Income Tax Expense (Benefit) Fiscal Years Ended June 30, 2026 June 30, 2025 June 30, 2024 (In thousands) Current: Federal $ 39 $ 91 $ ( 80 ) State 63 354 44 Foreign 254 19 — Current Total 356 464 ( 36 ) Deferred Total — — — Total $ 356 $ 464 $ ( 36 ) Our effective tax rate on pre-tax income (loss) for the year ended June 30, 2026 differed from the statutory U.S. federal income tax rate of 21% as a result of the following, presented after prospectively adopting ASU 2023-09: 64 Matrix Service Company Notes to Consolidated Financial Statements (continued) Reconciliation Between the Expected Income Tax Provision Applying the Domestic Federal Statutory Tax Rate and the Reported Income Tax Provision Fiscal Year Ended June 30, 2026 Amount Percent (In thousands) Tax provision at statutory U.S. federal income tax rate $ ( 467 ) 21.0 % State income taxes, net of federal benefit (1) 50 ( 2.2 ) % Foreign tax effects Canada Foreign income tax 154 ( 6.9 ) % Return to provision 91 ( 4.1 ) % Valuation allowance 120 ( 5.4 ) % Statutory rate difference ( 20 ) 0.9 % Australia Statutory rate difference ( 47 ) 2.1 % Valuation allowance 231 ( 10.4 ) % Other 145 ( 6.5 ) % Effect of cross-border tax laws ( 28 ) 1.3 % Tax credits Research & development credit ( 820 ) 36.9 % U.S. Foreign tax credit ( 238 ) 10.7 % Changes in valuation allowances ( 1,296 ) 58.3 % Nontaxable or nondeductible items Officer compensation 1,605 (72.2) % Meals and entertainment 953 (42.9) % Excess tax expense (benefit) on stock-based compensation 118 (5.3) % Other adjustments, net (195) 8.7 % Income tax provision $ 356 ( 16.0 ) % (1) State taxes in New Jersey, Pennsylvania, and Virginia made up the majority of state income tax. 65 Matrix Service Company Notes to Consolidated Financial Statements (continued) The following table presents the Reconciliation Between the Expected Income Tax Provision Applying the Domestic Federal Statutory Tax Rate and the Reported Income Tax Provision for the years ended June 30, 2025 and 2024, prior to the adoption of ASU 2023-09: Fiscal Years Ended June 30, 2025 June 30, 2024 (In thousands) Expected benefit for federal income taxes at the statutory rate $ ( 6,089 ) $ ( 5,253 ) State income taxes, net of federal benefit ( 716 ) ( 2,065 ) Charges without tax benefit, net of non-taxable income 1,042 384 Change in valuation allowance 6,472 8,542 Excess tax expense (benefit) on stock-based compensation 1,063 ( 61 ) Research and development and other tax credits ( 952 ) ( 1,299 ) Foreign tax differential 88 388 Change in uncertain tax positions — ( 81 ) Other ( 444 ) ( 591 ) Provision (benefit) for federal, state and foreign income taxes $ 464 $ ( 36 ) The following table presents income taxes paid, net of refunds, for the year ended June 30, 2026, presented prospectively after the adoption of ASU 2023-09: Fiscal Year Ended June 30, 2026 (In thousands) Federal $ 22 State Other 52 Foreign Canada 138 Other 100 Total $ 312 The following table presents income taxes paid, net of refunds, for the years ended June 30, 2025 and 2024, prior to the adoption of ASU 2023-09: Fiscal Years Ended June 30, 2025 June 30, 2024 (In thousands) Income taxes paid (received), net of refunds $ 328 $ ( 165 ) 66 Matrix Service Company Notes to Consolidated Financial Statements (continued) Significant Components of our Deferred Tax Assets and Liabilities June 30, 2026 June 30, 2025 (In thousands) Deferred tax assets: Accruals and reserves $ 684 $ 2,267 Bad debt reserve 66 65 Insurance reserve 945 971 Net operating loss benefit and credit carryforwards 38,696 32,043 Accrued compensation and pension 1,138 1,487 Stock compensation expense on nonvested restricted stock units 2,274 3,353 Book over tax amortization 2,324 4,033 Research and development capitalization 11,385 14,882 Foreign currency translation and other 1,251 1,271 Total deferred tax assets 58,763 60,372 Valuation allowance ( 54,768 ) ( 55,973 ) Deferred tax assets, net 3,995 4,399 Deferred tax liabilities: Tax over book depreciation 3,826 3,920 Other 191 504 Total deferred tax liabilities 4,017 4,424 Net deferred tax liability $ ( 22 ) $ ( 25 ) 67 Matrix Service Company Notes to Consolidated Financial Statements (continued) Valuation Allowance Due to the existence of a cumulative loss over a three-year period, we recorded a full valuation allowance against our deferred tax assets beginning in fiscal 2022 and have recorded additional valuation allowances against newly generated deferred tax assets in subsequent years through fiscal 2026. These assets are primarily comprised of federal net operating losses, which have an indefinite carryforward, federal tax credits and state net operating losses. To the extent we generate taxable income in the future, or cumulative losses are no longer present and our future projections for growth or tax planning strategies are demonstrated, we will recognize the benefit associated with the net operating losses for which the valuation allowance has been provided. Operating Loss and Tax Credit Carryforwards We have net operating loss carryforwards and tax credit carryforwards in federal, state and foreign jurisdictions. The valuation allowance at June 30, 2026 and June 30, 2025 reduces the recognized tax benefit of these carryforwards to an amount that is more likely than not to be realized. The gross carryforwards will generally expire as shown below for each jurisdiction: Operating Loss and Tax Credit Carryforwards Expiration Period Amount (in thousands) Federal net operating loss Indefinite $ 61,719 Federal tax credits June 2041 to June 2046 $ 6,876 Federal foreign tax credits June 2035 $ 253 State net operating losses June 2027 to indefinite $ 145,402 State tax credits June 2032 to indefinite $ 774 Foreign net operating losses June 2029 to indefinite $ 35,109 Foreign tax credits June 2035 to June 2046 $ 652 Other In general, it is our practice and intention to reinvest the earnings of our foreign subsidiaries in our foreign operations. We do not provide for outside basis differences under the indefinite reinvestment assertion of ASC 740-30. We file tax returns in multiple domestic and foreign taxing jurisdictions. With a few exceptions, we are no longer subject to examination by taxing authorities through fiscal 2021. At June 30, 2026, we updated our evaluation of our open tax years in all known jurisdictions. As of June 30, 2026, we have no liability for unrecognized tax positions. Note 7 - Commitments and Contingencies We are party to various legal actions, claims and other contingencies that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged workers’ compensation claims, personal injury claims, and contract disputes, some of which may be subject to certain insurance coverage. With respect to all such matters, we record a loss when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. In addition, we disclose matters for which management believes a material loss is at least reasonably possible. Litigation In 2020, we commenced litigation in the United States District Court for the Northern District of Ohio, Western Division (Matrix North American Construction, Inc. v. Pro-Tec Coating Company, LLC, Case No. 3:20-cv-00084-JZ) in an effort to collect an account receivable from an iron and steel customer on a reimbursable contract following the deterioration of the relationship. In connection with our suit, the customer filed certain counterclaims against us. In September 2023, a jury returned a verdict in our favor and awarded us the full contract balance. We received full payment of the remaining amount owed of $16.8 million in the second quarter of fiscal 2024. In April 2022, we filed an arbitration demand against Keyera Energy, Inc. in an effort to collect outstanding balances related to a crude oil storage project. In response, the customer filed certain counterclaims against us. We received an interim award in 68 Matrix Service Company Notes to Consolidated Financial Statements (continued) 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 collected $15.1 million for amounts owed on the project and reimbursement of attorneys' fees incurred. We received payment in the fourth quarter of fiscal 2026. In late fiscal 2023, after numerous attempts to collect outstanding receivables for construction services on a mining and minerals facility, we filed a notice of default for lack of payment of outstanding balances, and in early fiscal 2024, we filed a lien on the facility. The customer, 5E Boron Americas, LLC, responded by commencing litigation against us on July 17, 2023 in the United States District Court for the Central District of California, Eastern Division (5E Boron Americas, LLC v. Matrix Service Inc., Case No. 5:23-cv-01396-CV(DTBx)). 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 and received payment of $4.3 million. On July 10, 2026, we were served with two complaints filed in the Superior Court of the State of Washington alleging certain employment claims for unpaid wages and violations of Washington statutes addressing moonlighting restrictions for low-wage employees, and nondisclosure and non-disparagement provisions in employment agreements (Malachi Ridley v. Matrix Service Inc., No. 26-2-01375-37 and Malachi Ridley v. Matrix Service Inc., No. 26-2-01384-1). The complaints were filed by an individual that was employed by Matrix Service Inc. between March 2024 and April 2024, but each complaint seeks class certification. We believe we have substantial legal defenses to class certifications and the claims presented. Additionally, certain claims asserted in the complaints may be subject to insurance coverage. Damages for the claims, if any, have not yet been quantified. Any potential losses associated with this matter cannot be estimated at this time. We and our subsidiaries are participants in various other legal actions. Assessing the eventual outcome of litigation involves forward-looking speculation as to judgment being made by arbitrators, judges, juries and appellate courts in the future. The results of litigation are inherently unpredictable; however, based upon information presently available, and in light of legal and other factual defenses available to the Company, management does not believe that such other known legal actions will have a material adverse effect on our financial position, results of operations or liquidity. Insurance Reserves We maintain insurance coverage for various aspects of our operations. However, we retain exposure to potential losses through the use of deductibles, self-insured retentions and coverage limits. Typically, our contracts require us to indemnify our customers for injury, damage or loss arising from the performance of our services and provide warranties for materials and workmanship. We may also be required to name the customer as an additional insured up to the limits of insurance available. We generally require our subcontractors to indemnify us and our customer and name us as an additional insured for activities arising out of the subcontractors’ work. We also require certain subcontractors to provide additional insurance policies, including surety bonds in favor of us, to secure the subcontractors’ work or as required by the subcontract. There can be no assurance that our insurance and the additional insurance coverage provided by our subcontractors will fully protect us against a valid claim or loss under the contracts with our customers. We establish reserve accruals for claims using a combination of actuarially determined estimates and case-by-case evaluations of the underlying claim data and update our evaluations as further information becomes known. Judgments and assumptions are inherent in our reserve accruals; as a result, changes in assumptions or claims experience could result in changes to these estimates in the future. If actual results of claim settlements are different than the amounts estimated, we may be exposed to future gains and losses that could be material. Bonding Many customers, particularly in connection with new construction, require the Company to post performance and payment bonds. These bonds provide a guarantee that the Company will perform under the terms of a contract and pay its subcontractors and vendors. In certain circumstances, the customer may demand that the surety make payments or provide services under the bond, and the Company must reimburse the surety for any expenses or outlays it incurs. As of June 30, 2026, the Company is not aware of any outstanding material obligations for payments related to bond obligations. However, to the extent future reimbursements are required, the amounts could be material and could adversely affect the Company’s consolidated business, financial condition, results of operations and cash flows. 69 Matrix Service Company Notes to Consolidated Financial Statements (continued) Letters of credit We issue letters of credit under our ABL Facility to support workers' compensation programs. In addition, from time to time, certain customers require the Company to post letters of credit to ensure payment of subcontractors and vendors and guarantee performance under contracts. Such letters of credit are issued under our ABL Facility. Each letter of credit commits the issuer to pay specified amounts to the holder of the letter of credit if the holder claims that the Company has failed to perform specified actions. If this were to occur, the Company would be required to reimburse the lender under the ABL Facility. Depending on the circumstances of such a reimbursement, the Company may also be required to record a charge to earnings for the reimbursement. The Company is not aware of any claims currently asserted or threatened under any of these letters of credit that are material, individually or in the aggregate. However, to the extent payment is required for any such claims, the amount paid could be material and could adversely affect the Company’s consolidated business, financial condition, results of operations and cash flows. Note 8 - Leases We enter into lease arrangements for real estate, construction equipment and information technology equipment in the normal course of business. Real estate leases accounted for most of our right-of-use assets as of June 30, 2026. Most real estate and information technology equipment leases generally have fixed payments that follow an agreed upon payment schedule and have remaining lease terms ranging from less than a year to 10 years. Construction equipment leases generally have "month-to-month" lease terms that automatically renew as long as the equipment remains in use. The components of lease expense in the Consolidated Statements of Income are as follows: Fiscal Years Ended June 30, 2026 June 30, 2025 June 30, 2024 Lease expense Location of Expense in Consolidated Statements of Income (In thousands) Operating lease expense Cost of revenue and selling, general and administrative expenses $ 4,673 $ 5,167 $ 5,994 Short-term lease expense (1) Cost of revenue 29,721 20,932 21,414 Total lease expense $ 34,394 $ 26,099 $ 27,408 (1) Primarily represents the lease expense of construction equipment that is subject to month-to-month rental agreements with expected rental durations of less than one year. The future undiscounted lease payments, as reconciled to the discounted operating lease liabilities presented in our Consolidated Balance Sheets, were as follows: June 30, 2026 Maturity Analysis: (In thousands) Fiscal 2027 $ 5,428 Fiscal 2028 5,040 Fiscal 2029 4,279 Fiscal 2030 3,272 Fiscal 2031 2,530 Thereafter 2,310 Total future operating lease payments 22,859 Imputed interest ( 3,402 ) Net present value of future lease payments 19,457 Less: current portion of operating lease liabilities 4,363 Non-current operating lease liabilities $ 15,094 70 Matrix Service Company Notes to Consolidated Financial Statements (continued) The following is a summary of the weighted-average remaining operating lease term and weighted-average discount rate: Fiscal Years Ended June 30, 2026 June 30, 2025 (In thousands) Weighted-average remaining lease term (in years) 4.9 years 5.2 years Weighted-average discount rate 6.7 % 6.7 % Cash flow information related to leases is as follows: Fiscal Years Ended June 30, 2026 June 30, 2025 June 30, 2024 (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating lease payments $ 5,733 $ 5,444 $ 5,761 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 2,341 $ 2,490 $ 1,956 Note 9 - Stockholders’ Equity Preferred Stock We have 5.0 million shares of preferred stock authorized, none of which was issued or outstanding at June 30, 2026 or June 30, 2025. Stock Repurchase Program We may repurchase common stock pursuant to the Stock Buyback Program, which was approved by the board of directors in November 2018. Under the program, the aggregate number of shares repurchased may not exceed 2,707,175 shares. We may repurchase our stock from time to time in the open market at prevailing market prices or in privately negotiated transactions and are not obligated to purchase any shares. 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 fiscal 2026. The terms of our ABL Facility limit share repurchases to $ 2.5 million per fiscal year provided that we meet certain availability thresholds. There were 1,349,037 shares available for repurchase under the November 2018 Program as of June 30, 2026. Treasury Shares In addition to the stock buyback program, we may withhold shares of common stock to satisfy the tax withholding obligations upon vesting of an employee’s restricted stock units. We withheld 123,850 and 55,324 shares of common stock during fiscal 2025, and 2024, respectively, to satisfy these obligations. These shares were returned to our pool of treasury shares. During fiscal 2026, we utilized remaining treasury shares in connection with equity awards under our incentive plans and for sales to the Employee Stock Purchase Plan. We had no treasury shares as of June 30, 2026. 71 Matrix Service Company Notes to Consolidated Financial Statements (continued) Note 10 - Stock-Based Compensation Plan Information In November 2020, our stockholders approved the Matrix Service Company 2020 Stock and Incentive Compensation Plan (the "2020 Plan"), which provides stock-based and cash-based incentives for officers, directors and other key employees. Stock options, restricted stock, restricted stock units, stock appreciation rights, performance shares and cash-based awards can be issued under this plan. Upon approval of the 2020 Plan, the 2018 Stock and Incentive Compensation Plan ("2018 Plan") was frozen. The 2020 Plan was amended in November 2025 to increase the maximum authorized shares under the plan by 1,025,000 shares, increasing the total authorized shares under the 2020 Plan from 3,975,000 to 5,000,000 shares. Awards totaling 5,000,000 shares have been authorized under the 2020 Plan, as amended. There were 3,115,864 shares available for grant under the amended 2020 Plan as of June 30, 2026. Equity-settled Restricted Stock Units We have issued equity-settled restricted stock units under the following types of arrangements: • Time-based awards—Employee awards generally vest in four equal annual installments beginning one year after the grant date. The award agreements contain a provision that accelerates the service period for retirement eligible participants and participants that become retirement eligible during the vesting period and who elect to retire more than one year after the date of the award. The award is forfeited if retirement occurs before the first anniversary of the award. Settlement still occurs on the normal vesting schedules. Director awards vest one year after the grant date. • Market-based awards—These awards are in the form of performance units which vest 3 years after the grant date only if our common stock achieves certain levels of total shareholder return when compared to the total shareholder return of a peer group of companies as selected by the Compensation Committee of the Board of Directors. The payout can range from zero to 200 % of the original award depending on the Company's relative total shareholder return during the performance period. All awards under the 2020 Plan vest upon the death or disability of the participant or upon a change of control of the Company, provided that the successor company fails to assume or replace the awards in connection with that change of control event. If the successor company does assume the awards, then vesting of the awards will be accelerated in the event of an involuntary termination or other material adverse event that occurs in connection with or following the change of control. Equity-settled time-based restricted stock unit activity for the fiscal year ended June 30, 2026 is as follows: Units Weighted Average Grant Date Fair Value per Unit Balance at June 30, 2025 759,981 $ 8.89 Units granted 294,271 15.14 Units vested and released ( 321,978 ) 9.07 Units canceled ( 119,486 ) 11.54 Balance at June 30, 2026 612,788 $ 11.24 The balance of equity-settled time-based restricted stock units included 288,901 and 301,901 units as of June 30, 2026 and 2025, respectively, that were fully expensed but not yet settled, primarily associated with retirement eligible participants. There were 357,496 and 412,976 equity-settled time-based restricted stock units granted in fiscal 2025 and 2024 with weighted average grant date fair values of $10.20 and $8.51 per share, respectively. There were 305,556 and 297,026 equity-settled time-based restricted stock units that vested and were released in fiscal 2025 and 2024 with weighted average grant date fair values of $8.85 and $9.40 per share, respectively. Measured but unrecognized stock-based compensation expense at June 30, 2026 was $ 2.4 million, which is expected to be recognized as expense over a weighted average period of 1.6 years. 72 Matrix Service Company Notes to Consolidated Financial Statements (continued) Equity-settled market-based restricted stock unit activity for the fiscal year ended June 30, 2026 is as follows: Units Weighted Average Grant Date Fair Value per Unit Balance at June 30, 2025 1,525,332 $ 11.06 Units granted 359,709 19.08 Units vested and released (1) ( 420,631 ) 8.01 Units canceled ( 299,019 ) 15.43 Balance at June 30, 2026 (2) 1,165,391 $ 13.51 (1) The performance stock units vested at 109% of target on August 30, 2025. This payout was based on our relative Total Shareholder Return ("TSR") for the performance period from July 1, 2023 through June 30, 2025, as measured against a designated peer group. (2) Balance includes approximately 578,000 awards due to vest in August 2026. Based on our relative total shareholder return, our performance was below the amount required for threshold payout; therefore, no market-based awards vested in August 2026. There were 468,351 and 626,150 equity-settled market-based restricted stock units granted in fiscal 2025 and 2024 with weighted average grant date fair values of $ 11.49 and $ 12.83 per share, respectively. There were 274,363 and 329,489 equity-settled market-based restricted stock units cancelled in 2025 and 2024 with weighted average grant date fair values of $16.19 and $ 11.61 per share, respectively. Measured but unrecognized stock-based compensation expense at June 30, 2026 for market-based awards was $3.6 million, which is expected to be recognized as expense over a weighted average period of 1.8 years. The grant date fair value of the time-based awards is determined by the market value of our common stock on the grant date. The grant date fair value of the market-based awards is calculated using a Monte Carlo model. For the fiscal 2026 grant, the model estimated the fair value of the award based on 50,000 simulations of the future prices of our common stock compared to the future prices of the common stock of peer companies based on historical volatilities. The Monte Carlo simulation valuation methodology applied the following key inputs: 2026 2025 2024 Valuation date price based on August 27, 2025, August 27, 2024, and August 29, 2023 closing stock prices of Matrix common stock $ 15.37 $ 9.74 $ 8.22 Expected volatility (1) 54 % 57 % 58 % Risk-free interest rate 3.55 % 3.74 % 4.61 % Term in years 2.84 2.84 2.84 (1) The expected volatility inputs are based on historical volatility, which is based on the Company's closing prices over a period equivalent to the performance period In the first quarter of fiscal 2024, due to an insufficient number of remaining shares available for issuance under the 2020 Plan, market-based awards granted in that period were subject to cash settlement upon vesting at the election of the board of directors, and the above-target payout portion of the awards were accounted for as liability awards. In the second quarter of fiscal 2024, stockholders approved an increase in the number of shares available for issuance under the 2020 Plan. In the fourth quarter of fiscal 2024, the compensation committee of the board of directors concluded the Company has the intent and ability to settle the entire market-based awards in equity, and therefore the grants became share-settled, equity-classified awards. The modification resulted in the elimination of the $ 1.0 million liability related to these awards, with a corresponding increase to additional paid-in capital, as presented on the Consolidated Statement of Changes in Stockholders' Equity for the twelve months ended June 30, 2024. Total stock-based compensation expense for the fiscal years ended June 30, 2026, 2025, and 2024 was $ 7.1 million, $ 8.9 million and $ 7.7 million, respectively. The total fair value of awards that vested and were released during fiscal years ended June 30, 2026, 2025, and 2024 was $11.8 million, $4.2 million and $2.6 million, respectively. We withheld 274,578, 123,850, and 55,324 shares for taxes on stock-based compensation vestings for $4.2 million, $1.2 million, and $0.5 million during fiscal 2026, 2025 and 2024, respectively, which are reported as financing cash outflows in our Consolidated Statements of Cash 73 Matrix Service Company Notes to Consolidated Financial Statements (continued) Flows. We recognized excess tax expense (benefit) of $ 0.1 million, $1.1 million, and ($0.1) million related to stock-based compensation vesting for the fiscal years ended June 30, 2026, 2025, and 2024, respectively. Cash-Settled Restricted Stock Units Our cash-settled restricted stock units are time-based awards with terms consistent with equity-settled time based awards described above, except that the awards are ultimately paid in cash at the vesting dates. We granted 175,689, 307,756 , and 360,030 , cash-settled restricted stock units during fiscal years 2026, 2025 and 2024, respectively; with fair values of $2.9 million, $ 3.1 million, and $ 3.0 million, respectively. There were 269,738, 255,110 , and 165,109 shares vested and released in fiscal 2026, 2025, and 2024, respectively; with total fair values of $4.1 million, $ 2.5 million, and $1.4 million, respectively. There were 119,486 shares cancelled in fiscal 2026 with a fair value of $1.4 million. There were 45,325 shares cancelled in fiscal 2025 with a fair value of $ 0.4 million. There were no shares cancelled in fiscal 2024. The grant date fair value of these awards is based on the price of our common stock and the number of shares awarded on the date of grant. The award must be settled in cash and is accounted for as a liability-type award. The expense is recognized over the requisite service period with remeasurement at the end of each reporting period at fair value until settlement. The requisite service period is based on the vesting provisions of the awards which generally occur in four equal annual installments beginning one year after the grant date. These awards contain the same retirement provisions described for time-based awards in the equity-settled restricted stock units section above. We recognized $ 2.7 million, $ 4.7 million, and $ 5.0 million of expense in fiscal years 2026, 2025, and 2024, respectively, for cash-settled restricted stock units, which was included in selling, general and administrative expenses and cost of revenue in the Consolidated Statements of Income. As of June 30, 2026, the current portion of the liability for cash-settled restricted stock units was $ 3.0 million and is included in accrued wages and benefits in the Consolidated Balance Sheets. The non-current portion of the liability was $ 2.3 million and is included in other non-current liabilities in the Consolidated Balance Sheets. Modifications and Cancellations Restricted stock units were impacted during fiscal 2026 by modifications and cancellations of awards as a result of our organizational restructuring. See Note 14 for additional information regarding our organizational restructuring. Equity-settled time-based award activity for fiscal 2026 includes grants of 36,958 units and cancellations of 80,366 units associated with the restructuring. Equity-settled market-based award activity for fiscal 2026 includes grants of 85,658 units and cancellations of 187,940 units associated with the restructuring. Cash-settled award activity for fiscal 2026 includes grants of 36,958 units and cancellations of 80,366 units associated with the restructuring. 74 Matrix Service Company Notes to Consolidated Financial Statements (continued) Note 11 - Earnings per Common Share Basic earnings per share (“EPS”) is calculated based on the weighted average shares outstanding during the period. Diluted earnings per share includes the dilutive effect of employee and director nonvested restricted stock units. Nonvested restricted stock units are considered dilutive (antidilutive) 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. Nonvested restricted stock units are considered antidilutive in the event we report a net loss. The computation of basic and diluted EPS is as follows: Fiscal Years Ended June 30, 2026 June 30, 2025 June 30, 2024 (In thousands, except per share data) Basic EPS: Net loss $ ( 2,580 ) $ ( 29,462 ) $ ( 24,976 ) Weighted average shares outstanding 28,295 27,769 27,379 Basic loss per share $ ( 0.09 ) $ ( 1.06 ) $ ( 0.91 ) Diluted EPS: Weighted average shares outstanding—basic 28,295 27,769 27,379 Diluted weighted average shares 28,295 27,769 27,379 Diluted loss per share $ ( 0.09 ) $ ( 1.06 ) $ ( 0.91 ) 75 Matrix Service Company Notes to Consolidated Financial Statements (continued) The following securities are considered antidilutive and have been excluded from the calculation of Diluted EPS: Fiscal Years Ended June 30, 2026 June 30, 2025 June 30, 2024 (In thousands) Nonvested restricted stock units 238 999 863 Note 12 - Employee Benefit Plans Defined Contribution Plans We sponsor defined contribution savings plans for all eligible employees meeting length of service requirements. Under the primary plan, participants may contribute an amount up to 75 % of pretax annual compensation subject to certain limitations. We match 100 % of the first 3 % of employee contributions and 50 % of the next 2 % of employee contributions. Our matching contributions vest immediately. Our matching contributions were $ 4.9 million, $ 5.0 million and $ 5.1 million in fiscal years ended June 30, 2026, 2025, and 2024, respectively. Multiemployer Pension Plans 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. The related collective-bargaining agreements between those organizations and us, which specify the rate at which we must contribute to the multi-employer defined pension plan, expire at different times between 2026 and 2029. Benefits under these plans are generally based on compensation levels and years of service. For us, the financial risks of participating in multiemployer plans are different from single-employer plans in the following respects: • Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. • If a participating employer discontinues contributions to a plan, the unfunded obligations of the plan may be borne by the remaining participating employers. • If a participating employer chooses to stop participating in a plan, a withdrawal liability may be created based on the unfunded vested benefits for all employees in the plan. Under federal legislation regarding multiemployer pension plans, in the event of a withdrawal from a plan or plan termination, companies may be required to make payments to the plan for their proportionate share of such plan’s unfunded vested benefits. We are a participant in multiple union sponsored multiemployer plans, and, as a plan participant, our potential obligation could be significant. The amount of the potential obligation is not currently ascertainable because the information required to determine such amount is not identifiable or readily available. Our participation in significant plans for the fiscal year ended June 30, 2026 is outlined in the table below. The “EIN/Pension Plan Number” column provides the Employer Identification Number (“EIN”) and the three digit plan number. The zone status is based on the latest information that the Company received from the plan and is certified by the plan’s actuary. Plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are generally less than 80 percent funded, and plans in the green zone are generally at least 80 percent funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. The “Surcharge Imposed” column includes plans in a red zone status that require a payment of a surcharge in excess of regular contributions. 76 Matrix Service Company Notes to Consolidated Financial Statements (continued) Pension Fund EIN/Pension Plan Number Pension Protection Act Zone Status FIP/RP Status Pending or Implemented Company Contributions Fiscal Year Surcharge Imposed 2026 2025 2026 2025 2024 (In thousands) Boilermaker-Blacksmith National Pension Trust 48-6168020/001 Red Green Implemented $ 5,744 $ 6,267 $ 4,494 Yes National Electrical Benefit Fund, IBEW locals 71, 126, 488, and 1319 53-0181657/001 Green Green NA 2,723 2,199 2,666 No Contributions to other multiemployer plans 9,382 8,718 13,673 Total contributions made $ 17,849 $ 17,184 $ 20,833 Based upon the most recently available annual reports, our contribution to each of the individually significant plans listed in the table above was less than 5% of each plan’s total contributions. The amount of additional funds, if any, that the Company may be obligated to contribute to these plans in the future cannot be estimated due to uncertainty of the future levels of work that require the specific use of union employees covered by these plans, as well as the future contribution levels and possible surcharges on contributions applicable to these plans. Employee Stock Purchase Plan The Matrix Service Company 2011 Employee Stock Purchase Plan (“2011 ESPP”) was effective January 1, 2011 through December 31, 2025. The 2011 ESPP allowed employees to purchase shares through payroll deductions and members of the Board of Directors to purchase shares from amounts withheld from their cash retainers. Share purchases were limited to an aggregate market value of no greater than $ 60,000 per calendar year per participant and were purchased from us at the current market value with no discount to the participant. Contributions were with after tax earnings and were accumulated in non-interest bearing accounts for quarterly purchases of company stock. Upon the purchase of shares, the participants received all stockholder rights including dividend and voting rights and were permitted to sell their shares at any time. Effective January 1, 2026, the Board of Directors terminated the 2011 ESPP. There were 11,391 shares issued in fiscal 2026, 17,148 shares issued in fiscal 2025, and 19,775 shares in fiscal 2024 under the 2011 ESPP. Effective January 1, 2026, the Company adopted the Matrix Service Company 2026 Employee Stock Purchase Plan ("2026 ESPP"), which was approved by stockholders on November 4, 2025. The 2026 ESPP is intended to qualify as an "Employee Stock Purchase Plan" under Section 423 of the Internal Revenue Code of 1986, and allows eligible employees to purchase shares of the Company's common stock at a discount through payroll deductions. The ESPP initially authorized the issuance of up to 1,000,000 shares of common stock. The purchase price is currently equal to 90% of the fair market value of the Company's common stock on the purchase date. Offering periods are generally 3 months, and participation is voluntary. As of June 30, 2026, there were 994,555 shares available for purchase. There were 5,445 shares issued in fiscal 2026. Note 13 - Segment Information 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 : delivers integrated engineering, procurement and construction ("EPC") services, along with repair, maintenance and fabrication services for bulk liquid, cryogenic, and refrigerated storage and terminal facilities supporting both traditional and emerging energy markets, including LNG, NGLs, petroleum products, chemicals, hydrogen, and ammonia. We also manufacture and sell specialty, precision-engineered tank products, including geodesic domes, aluminum internal floating roofs, floating suction and skimmer systems, roof drain systems and floating roof seals. • Utility and Power Infrastructure : delivers comprehensive construction, maintenance, upgrades and fabrication services for power generation facilities and power infrastructure systems for a variety of customers, including public and private utilities, energy producers and data center customers. We also deliver integrated EPC, fabrication, and upgrade services for LNG peak shaving facilities. • Process and Industrial Facilities : delivers engineering, construction, maintenance, and repair services across diverse heavy industrial and energy transition markets, including midstream and downstream energy, chemicals, mining and minerals, renewable fuels, and hydrogen. We also engineer and construct highly specialized infrastructure, notably thermal vacuum test chambers for the aerospace and defense sectors. Our Chief Operating Decision Maker ("CODM") is our President and Chief Executive Officer, who regularly reviews operating and financial performance based on our segments. The Company's CODM uses segment operating income as the key metric in evaluating segment performance. The CODM uses this metric in the budget and forecasting processes. The CODM considers budget-to-actual and forecast-to-actual variances when making decisions about allocating resources, including capital and personnel, to the segments. We incur certain expenses at the corporate level that relate to our business as a whole. A portion of these expenses are allocated to our business segments. The balance of the corporate level expenses are reported in the Corporate "Selling, general and administrative expenses" line, which is primarily comprised of corporate facility expense, the cost of the executive management team, and other expenses pertaining to certain centralized functions that benefit the entire Company but are not directly attributable to any specific business segment, such as corporate human resources, legal, governance, compliance and finance functions. The accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies (see Note 1). We eliminate intersegment revenues; therefore, no intercompany profit or loss is recognized. Segment assets consist primarily of accounts receivable, costs and estimated earnings in excess of billings on uncompleted contracts, property, plant and equipment, right-of-use lease assets, goodwill and other intangible assets. Corporate assets consist primarily of centrally managed cash, restricted cash, prepaid expenses, corporate fixed assets, and corporate operating lease right-of-use assets. Operating Segment Information - The following tables set forth certain selected financial information for our operating segments for the periods indicated: (In thousands) Storage and Terminal Solutions Utility and Power Infrastructure Process and Industrial Facilities Corporate Total Fiscal Year Ended June 30, 2026 Total revenue (1) $ 458,296 $ 283,390 $ 131,946 $ — $ 873,632 Cost of revenue ( 430,425 ) ( 251,798 ) ( 127,431 ) ( 26 ) ( 809,680 ) Gross profit (loss) 27,871 31,592 4,515 ( 26 ) 63,952 Selling, general and administrative expenses 22,091 9,389 6,066 26,061 63,607 Restructuring costs and other 2,649 1,855 1,019 4,440 9,963 Operating income (loss) $ 3,131 $ 20,348 $ ( 2,570 ) $ ( 30,527 ) $ ( 9,618 ) (1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $3.1 million for the year ended June 30, 2026. Capital expenditures $ 2,537 $ 1,452 $ 118 $ 1,376 $ 5,483 Depreciation and amortization $ 4,737 $ 2,206 $ 1,423 $ 274 $ 8,640 Storage and Terminal Solutions Utility and Power Infrastructure Process and Industrial Facilities Corporate Total Fiscal Year Ended June 30, 2025 Total revenue (1) $ 365,891 $ 248,691 $ 154,704 $ — $ 769,286 Cost of revenue ( 351,236 ) ( 231,776 ) ( 145,794 ) ( 803 ) ( 729,609 ) Gross profit (loss) 14,655 16,915 8,910 ( 803 ) 39,677 Selling, general and administrative expenses 23,538 12,363 8,293 26,979 71,173 Restructuring costs and other 323 718 138 2,393 3,572 Operating income (loss) $ ( 9,206 ) $ 3,834 $ 479 $ ( 30,175 ) $ ( 35,068 ) (1) Total revenues are net of inter-segment revenues which are primarily Process and Industrial Facilities and were $2.1 million for the year ended June 30, 2025. Capital expenditures $ 3,516 $ 1,123 $ 1,454 $ 1,592 $ 7,685 Depreciation and amortization $ 5,042 $ 3,119 $ 1,636 $ 215 $ 10,012 Storage and Terminal Solutions Utility and Power Infrastructure Process and Industrial Facilities Corporate Total Fiscal Year Ended June 30, 2024 Total revenue (1) $ 276,800 $ 183,920 $ 266,260 $ 1,233 $ 728,213 Cost of revenue ( 265,503 ) ( 174,688 ) ( 244,408 ) ( 3,141 ) ( 687,740 ) Gross profit (loss) 11,297 9,232 21,852 ( 1,908 ) 40,473 Selling, general and administrative expenses 19,823 8,844 10,354 31,064 70,085 Restructuring costs and other — 52 215 234 501 Operating income (loss) $ ( 8,526 ) $ 336 $ 11,283 $ ( 33,206 ) $ ( 30,113 ) (1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $2.4 million for the year ended June 30, 2024. Capital expenditures $ 4,641 $ 581 $ 476 $ 1,296 $ 6,994 Depreciation and amortization $ 4,958 $ 3,000 $ 2,840 $ 225 $ 11,023 Total Assets by Segment June 30, 2026 June 30, 2025 (In thousands) Storage and Terminal Solutions $ 209,076 $ 194,354 Utility and Power Infrastructure 103,531 98,582 Process and Industrial Facilities 28,414 39,490 Corporate 261,584 267,830 Total Segment Assets $ 602,605 $ 600,256 Geographical Disaggregation of Long-Lived Assets The following table presents our long-lived tangible assets including property, plant and equipment, net, and operating right-of-use lease assets at June 30, 2026 and 2025: June 30, 2026 June 30, 2025 (In thousands) United States $ 47,190 $ 55,137 Canada 914 1,150 Other international 3,006 3,637 Total Long-Lived Assets $ 51,110 $ 59,924 Information about Significant Customers by Segment: Significant Customers as a Percentage of Segment Revenue Consolidated Storage and Terminal Solutions Utility and Power Infrastructure Process and Industrial Facilities Fiscal Year ended June 30, 2026 Customer one 20.1 % 38.3 % — % — % Customer two 17.5 % 0.3 % 53.3 % — % Customer three 10.0 % 17.3 % — % 6.5 % Fiscal Year ended June 30, 2025 Customer two 17.4 % 0.7 % 52.7 % — % Customer one 10.5 % 21.0 % 1.6 % — % Fiscal Year ended June 30, 2024 Customer four 10.5 % 27.7 % — % — % Customer five 10.3 % — % — % 28.2 % 77 Matrix Service Company Notes to Consolidated Financial Statements (continued) Note 14 - Restructuring Costs and Other Fiscal Years Ended June 30, 2026 June 30, 2025 (In thousands) CEO and CFO transition $ 3,588 $ — Lease impairment 2,935 — Severance and other personnel-related costs 3,012 3,397 Other 428 175 Total Restructuring costs and other $ 9,963 $ 3,572 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. In the first quarter of 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. 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. Our restructuring plan was substantially complete as of June 30, 2026. During fiscal 2026, we recorded $2.9 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. 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 $1.0 million in expense associated with stock-based compensation that will continue to settle after Mr. Hewitt’s separation. In April 2026, 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. Restructuring costs and other include $0.8 million in expense associated with cash severance payable in the first quarter of fiscal 2027 pursuant to Mr. Cavanah's agreement. 78 Matrix Service Company Schedule II—Valuation and Qualifying Accounts June 30, 2026, June 30, 2025, and June 30, 2024 (In thousands) COL. A COL. B COL. C ADDITIONS COL. D COL. E Balance at Beginning of Period Charged to Costs and Expenses Charged to Other Accounts—Describe Deductions—Describe Balance at End of Period Fiscal Year 2026 Deducted from asset accounts: Allowance for credit losses $ 252 $ 5 $ — $ — $ 257 Valuation allowance for deferred tax assets 55,973 ( 1,274 ) 69 (B) — 54,768 Total $ 56,225 $ ( 1,269 ) $ 69 $ — $ 55,025 Fiscal Year 2025 Deducted from asset accounts: Allowance for credit losses $ 201 $ 51 $ — $ — $ 252 Valuation allowance for deferred tax assets 49,434 6,472 67 (B) — 55,973 Total $ 49,635 $ 6,523 $ 67 $ — $ 56,225 Fiscal Year 2024 Deducted from asset accounts: Allowance for credit losses $ 1,061 $ 3 $ — $ ( 863 ) (A) $ 201 Valuation allowance for deferred tax assets 41,060 8,542 — ( 168 ) (B) 49,434 Total $ 42,121 $ 8,545 $ — $ ( 1,031 ) $ 49,635 (A) Relates to various write-offs and cash receipts of previously reserved accounts from prior periods. (B) Relates to foreign currency translation for the portion of the valuation allowance on net operating loss and tax credit carryforwards in foreign jurisdictions. 79 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.