Matrix Service (NASDAQ: MTRX) back to profit with stronger margins and $1.0B backlog

Rhea-AI Filing Summary

Matrix Service Company returned to profitability in the quarter ended March 31, 2026, posting net income of $0.8 million versus a loss of $3.4 million a year earlier on revenue of $206.7 million, up 3%.

Gross margin improved to 8.3% from 6.4% as Storage and Terminal Solutions and Utility and Power Infrastructure delivered stronger project execution, partly offset by weaker Process and Industrial Facilities results. For the nine months, revenue rose to $629.1 million and the net loss narrowed to $3.7 million from $18.2 million.

The company recorded $3.0 million in quarterly restructuring and other costs, including CEO transition expenses and lease impairments, and $6.5 million year-to-date. Liquidity was strong, with $233.0 million in unrestricted cash and $64.2 million of undrawn availability under its ABL facility, for total liquidity of $297.2 million. Backlog stood at $1.03 billion, and remaining performance obligations were $932.9 million, supporting future revenue visibility.

Insights

Infrastructure & engineering analyst

Matrix edges back to profit with better margins and solid liquidity, though restructuring and segment mix remain key constraints.

Matrix Service Company generated quarterly revenue of $206.7 million and net income of $0.8 million, with gross margin rising to 8.3%. The shift from a $3.4 million loss reflects stronger execution in Storage and Terminal Solutions and Utility and Power Infrastructure, alongside lower SG&A from prior cost actions.

Year-to-date, revenue reached $629.1 million and the net loss narrowed to $3.7 million from $18.2 million, helped by improved margins and reduced overhead. However, restructuring and other costs of $6.5 million, including CEO transition and lease impairments, weighed on operating income, and Process and Industrial Facilities margins weakened due to mix and a $1.1 million legal settlement.

Liquidity appears ample, with $233.0 million in unrestricted cash, $25.0 million in restricted cash, no ABL borrowings, and $64.2 million of additional availability, totaling $297.2 million. Backlog of $1.03 billion and remaining performance obligations of $932.9 million suggest a healthy workload, while ongoing restructuring, leadership transitions and segment performance differences will be important themes in future filings.

Key Figures

Quarterly revenue: $206.7 million Quarterly net income: $0.8 million Quarterly gross margin: 8.3% +5 more

8 metrics

Quarterly revenue $206.7 million Three months ended March 31, 2026

Quarterly net income $0.8 million Three months ended March 31, 2026

Quarterly gross margin 8.3% Three months ended March 31, 2026

Nine-month revenue $629.1 million Nine months ended March 31, 2026

Nine-month net loss $3.7 million Nine months ended March 31, 2026

Backlog $1.03 billion As of March 31, 2026

Total liquidity $297.2 million Unrestricted cash plus ABL availability, March 31, 2026

Remaining performance obligations $932.9 million As of March 31, 2026

Key Terms

remaining performance obligations, asset-based credit agreement, book-to-bill ratio, valuation allowance, +1 more

5 terms

remaining performance obligations financial

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

Remaining performance obligations are the work a company still needs to complete for its customers, like finishing a service or delivering a product. It’s important because it shows how much future income the company has coming in from current agreements, giving a clearer picture of its ongoing business.

asset-based credit agreement financial

"entered into an asset-based credit agreement, which was most recently amended on August 22, 2025 (as amended, the "ABL Facility")"

A loan or credit facility secured by a company’s tangible assets—such as accounts receivable, inventory, machinery or real estate—where the amount a firm can borrow is tied to the value of those assets. Think of it like borrowing against a house or car: lenders set limits and interest based on what they could sell if the borrower can’t pay. Investors watch these deals because they affect a company’s liquidity, borrowing cost, leverage and which creditors get paid first in distress.

book-to-bill ratio financial

"Book-to-bill ratio (1) | 0.3x | 0.8x | 0.7x | 0.5x"

The book-to-bill ratio compares the value of new orders a company receives to the value of products it ships out or bills for over a certain period. If the ratio is above 1, it means the company is getting more orders than it is completing, which can indicate growth. If it's below 1, it suggests demand is slowing down.

valuation allowance financial

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

A valuation allowance is a reserve set aside to reduce the value of certain assets on a company's financial records when there is uncertainty about whether they will generate the expected benefits. It acts like a caution sign, indicating that some assets might not be fully recoverable or worth their recorded amount. This matters to investors because it provides a more realistic picture of a company's financial health and potential risks.

surety bonds financial

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

Surety bonds are agreements in which a third party promises to step in and pay or complete work if the primary party fails to meet a contract or obligation — think of it as a credit-backed promise that something will get done. For investors, surety bonds matter because they lower the risk that projects, contracts or repayments will collapse; their presence and strength affect a project's reliability, a borrower's perceived creditworthiness, and potential recovery if problems arise.

10-Q Quarterly Reports: What Changes Quarter to Quarter →

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________________________

FORM 10-Q 

_______________________________________

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2026

or

☐ Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the transition period from             to            

Commission File No. 1-15461

__________________________________________

MATRIX SERVICE COMPANY

(Exact name of registrant as specified in its charter)

__________________________________________

Delaware						73-1352174
(State of incorporation)						(I.R.S. Employer Identification No.)

15 East 5th Street, Suite 1100, Tulsa, Oklahoma 74103

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (918) 838-8822

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

___________________________ 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock, par value $0.01 per share			MTRX			NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☐

Accelerated Filer

☒

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of May 6, 2026 there were 28,133,850 shares of the Company's common stock, $0.01 par value per share, outstanding.

Table of Contents

TABLE OF CONTENTS

						PAGE
PART I			FINANCIAL INFORMATION
Item 1.			Financial Statements (Unaudited)
			Condensed Consolidated Statements of Income for the Three and Nine Months Ended March 31, 2026 and 2025			1
			Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended March 31, 2026 and 2025			2
			Condensed Consolidated Balance Sheets as of March 31, 2026 and June 30, 2025			3
			Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2026 and 2025			5
			Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended March 31, 2026 and 2025			6
			Notes to Condensed Consolidated Financial Statements			7
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			34
Item 4.			Controls and Procedures			34
PART II			OTHER INFORMATION
Item 1.			Legal Proceedings			35
Item 1A.			Risk Factors			35
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			35
Item 3.			Defaults Upon Senior Securities			35
Item 4.			Mine Safety Disclosures			35
Item 5.			Other Information			35
Item 6.			Exhibits			36
Signature						37

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Matrix Service Company

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(unaudited)

			Three Months Ended												Nine Months Ended
			March 31, 2026						March 31, 2025						March 31, 2026						March 31, 2025
Revenue			$	206,709					$	200,161					$	629,101					$	552,909
Cost of revenue			189,556						187,311						584,631						521,354
Gross profit			17,153						12,850						44,470						31,555
Selling, general and administrative expenses			15,215						17,726						46,661						53,592
Restructuring costs and other			2,986						124						6,536						124
Operating loss			(1,048)						(5,000)						(8,727)						(22,161)
Other income (expense):
Interest expense			(85)						(134)						(330)						(368)
Interest income			2,190						1,518						5,535						4,668
Other			(187)						182						67						(313)
Income (loss) before income tax expense			870						(3,434)						(3,455)						(18,174)
Provision for federal, state and foreign income taxes			35						—						267						16
Net income (loss)			$	835					$	(3,434)					$	(3,722)					$	(18,190)
Basic income (loss) per common share			$	0.03					$	(0.12)					$	(0.13)					$	(0.66)
Diluted income (loss) per common share			$	0.03					$	(0.12)					$	(0.13)					$	(0.66)
Weighted average common shares outstanding:
Basic			28,380						27,836						28,262						27,731
Diluted			28,533						27,836						28,262						27,731

See accompanying notes.

-1-

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Matrix Service Company

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(unaudited)

			Three Months Ended												Nine Months Ended
			March 31, 2026						March 31, 2025						March 31, 2026						March 31, 2025
Net income (loss)			$	835					$	(3,434)					$	(3,722)					$	(18,190)
Other comprehensive income (loss), net of tax:
Foreign currency translation loss			(437)						(23)						(971)						(950)
Comprehensive income (loss)			$	398					$	(3,457)					$	(4,693)					$	(19,140)

See accompanying notes.

-2-

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Matrix Service Company

Condensed Consolidated Balance Sheets

(In thousands)

(unaudited)

			March 31, 2026						June 30, 2025
Assets
Current assets:
Cash and cash equivalents			$	233,021					$	224,641
Accounts receivable, net of allowance for credit losses			139,042						154,994
Costs and estimated earnings in excess of billings on uncompleted contracts			24,917						29,764
Inventories			6,009						5,917
Income taxes receivable			—						110
Prepaid expenses and other current assets			7,917						4,347
Assets held for sale (Note 3)			1,128						—
Total current assets			412,034						419,773
Restricted cash			25,000						25,000
Property, plant and equipment, net			37,255						42,097
Operating lease right-of-use assets			14,030						17,827
Goodwill			28,932						29,047
Other intangible assets, net of accumulated amortization			12						555
Other assets, non-current (Note 2)			99,287						65,957
Total assets			$	616,550					$	600,256

See accompanying notes.

-3-

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Matrix Service Company

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(unaudited)

			March 31, 2026						June 30, 2025
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable			$	90,140					$	80,453
Billings on uncompleted contracts in excess of costs and estimated earnings			340,704						323,593
Accrued wages and benefits			16,266						18,961
Accrued insurance			4,378						5,310
Operating lease liabilities			4,584						4,441
Other accrued expenses			4,125						3,617
Total current liabilities			460,197						436,375
Deferred income taxes			150						25
Operating lease liabilities			14,110						16,986
Other liabilities, non-current			2,673						4,154
Total liabilities			477,130						457,540
Commitments and contingencies (Note 6)
Stockholders’ equity:
Common stock — $0.01 par value; 60,000,000 shares authorized; 28,128,405 shares issued and outstanding at March 31, 2026; 27,888,217 shares issued and 27,610,486 shares outstanding as of June 30, 2025, respectively;			281						279
Additional paid-in capital			148,756						149,969
Retained earnings			757						4,479
Accumulated other comprehensive loss			(10,374)						(9,403)
Treasury stock, at cost — 0 shares as of March 31, 2026 and 277,731 shares as of June 30, 2025;			—						(2,608)
Total stockholders' equity			139,420						142,716
Total liabilities and stockholders’ equity			$	616,550					$	600,256

See accompanying notes.

-4-

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Matrix Service Company

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

			Nine Months Ended
			March 31, 2026						March 31, 2025
Operating activities:
Net loss			$	(3,722)					$	(18,190)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Depreciation and amortization			6,704						7,538
Stock-based compensation expense			5,476						6,754
Operating lease impairment due to restructuring			2,415						—
Gain on disposal of property, plant and equipment			(457)						(122)
Other			236						108
Changes in operating assets and liabilities increasing (decreasing) cash:
Accounts receivable, net of allowance for credit losses			(16,042)						(88,802)
Costs and estimated earnings in excess of billings on uncompleted contracts			4,847						(4,674)
Inventories			(92)						2,450
Other assets and liabilities			(5,311)						(5,120)
Accounts payable			9,152						12,955
Billings on uncompleted contracts in excess of costs and estimated earnings			17,111						161,349
Accrued expenses			(4,600)						2,517
Net cash provided by operating activities			15,717						76,763
Investing activities:
Capital expenditures			(4,104)						(5,425)
Proceeds from sale of property, plant and equipment			1,483						237
Net cash used by investing activities			(2,621)						(5,188)
Financing activities:
Payment of debt amendment fees			(149)						—
Proceeds from issuance of common stock under employee stock purchase plan			144						149
Payments related to tax withholding for stock-based compensation			(4,223)						(1,235)
Net cash used by financing activities			(4,228)						(1,086)
Effect of exchange rate changes on cash			(488)						(563)
Net increase in cash and cash equivalents			8,380						69,926
Cash, cash equivalents and restricted cash, beginning of period			249,641						140,615
Cash, cash equivalents and restricted cash, end of period			$	258,021					$	210,541
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes			$	94					$	39
Interest			$	300					$	316
Non-cash investing and financing activities:
Purchases of property, plant and equipment on account			$	357					$	603

 See accompanying notes.

-5-

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Matrix Service Company

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except share data)

(unaudited)

						Common Stock									Additional Paid-In Capital						Retained Earnings						Accumulated Other Comprehensive Loss						Treasury Stock
						Shares			Amount																								Shares			Amount						Total
Three months ended March 31, 2026
December 31, 2025						28,124,527			$	281					$	147,297					$	(78)					$	(9,937)					—			$	—					$	137,563
Net income						—			—						—						835						—						—			—						835
Other comprehensive loss						—			—						—						—						(437)						—			—						(437)
Shares issued related to employee stock purchase plan						3,878			—						45						—						—						—			—						45
Stock-based compensation expense						—			—						1,414						—						—						—			—						1,414
March 31, 2026						28,128,405			$	281					$	148,756					$	757					$	(10,374)					—			$	—					$	139,420
Three months ended March 31, 2025
December 31, 2024						27,888,217			$	279					$	145,608					$	19,185					$	(10,462)					285,392			$	(2,676)					$	151,934
Net loss						—			—						—						(3,434)						—						—			—						(3,434)
Other comprehensive loss						—			—						—						—						(23)						—			—						(23)
Treasury shares sold to Employee Stock Purchase Plan						—			—						12						—						—						(4,027)			36						48
Stock-based compensation expense						—			—						2,185						—						—						—			—						2,185
March 31, 2025						27,888,217			$	279					$	147,805					$	15,751					$	(10,485)					281,365			$	(2,640)					$	150,710
						Common Stock									Additional Paid-In Capital						Retained Earnings						Accumulated Other Comprehensive Loss						Treasury Stock
						Shares			Amount																								Shares			Amount						Total
Nine months ended March 31, 2026
June 30, 2025						27,888,217			$	279					$	149,969					$	4,479					$	(9,403)					277,731			$	(2,608)					$	142,716
Net loss						—			—						—						(3,722)						—						—			—						(3,722)
Other comprehensive loss						—			—						—						—						(971)						—			—						(971)
Issuance of restricted stock						231,950			2						(6,805)						—						—						(274,578)			2,580						(4,223)
Shares issued related to employee stock purchase plan						8,238			—						116						—						—						(3,153)			28						144
Stock-based compensation expense						—			—						5,476						—						—						—			—						5,476
March 31, 2026						28,128,405			$	281					$	148,756					$	757					$	(10,374)					—			$	—					$	139,420
Nine months ended March 31, 2025
June 30, 2024						27,888,217			$	279					$	145,580					$	33,941					$	(9,535)					579,422			$	(6,083)					$	164,182
Net loss						—			—						—						(18,190)						—						—			—						(18,190)
Other comprehensive loss						—			—						—						—						(950)						—			—						(950)
Issuance of restricted stock						—			—						(4,537)						—						—						(408,406)			4,537						—
Treasury shares sold to Employee Stock Purchase Plan						—			—						8						—						—						(13,501)			140						148
Treasury shares purchased to satisfy tax withholding obligations						—			—						—						—						—						123,850			(1,234)						(1,234)
Stock-based compensation expense						—			—						6,754						—						—						—			—						6,754
March 31, 2025						27,888,217			$	279					$	147,805					$	15,751					$	(10,485)					281,365			$	(2,640)					$	150,710

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Matrix Service Company

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1 – Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements include the accounts of Matrix Service Company and its subsidiaries (“Matrix”, “we”, “our”, “us”, “its” or the “Company”), unless otherwise indicated. Intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission and do not include all information and footnotes required by U.S. generally accepted accounting principles ("GAAP") for complete financial statements. The information furnished reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair statement of the results of operations, cash flows and financial position for the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended June 30, 2025, included in our Annual Report on Form 10-K. The results of operations for the three and nine month periods ended March 31, 2026 may not necessarily be indicative of the results of operations for the full year ending June 30, 2026.

Significant Accounting Policies

Our significant accounting policies are detailed in “Note 1 - Basis of Presentation and Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended June 30, 2025.

Accounting Standards Not Yet Adopted

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 reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024 (fiscal 2026). 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.

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 March 31, 2026 are not expected to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

Note 2 – Revenue

Remaining Performance Obligations

We had $932.9 million of remaining performance obligations yet to be satisfied as of March 31, 2026. We expect to recognize $665.5 million of our remaining performance obligations as revenue within the next twelve months.

Contract Balances

Contract terms with customers include the timing of billing and payments, which usually differs from the timing of revenue recognition. 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

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Costs and Estimated Earnings ("BIE"). BIE consists of billings in excess of revenue recognized. The following table provides information about CIE and BIE:

			March 31, 2026						June 30, 2025						Change
			(In thousands)
Costs and estimated earnings in excess of billings on uncompleted contracts			$	24,917					$	29,764					$	(4,847)
Billings on uncompleted contracts in excess of costs and estimated earnings			(340,704)						(323,593)						(17,111)
Net contract liabilities			$	(315,787)					$	(293,829)					$	(21,958)

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 nine months ended March 31, 2026 that was included in the June 30, 2025 BIE balance was $309.8 million.

Progress billings in accounts receivable at March 31, 2026 and June 30, 2025 included retentions to be collected within one year of $26.8 million and $29.0 million, respectively. Contract retentions collectible beyond one year are included in Other assets, non-current in the Condensed Consolidated Balance Sheets and totaled $93.4 million as of March 31, 2026 and $61.5 million as of June 30, 2025, respectively.

Unpriced Change Orders and Claims

Costs and estimated earnings in excess of billings on uncompleted contracts included revenues for unpriced change orders and claims of $6.8 million at March 31, 2026 and $11.4 million at June 30, 2025. The amounts ultimately realized may be different than the recorded amounts resulting in adjustments to future earnings. 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.

Disaggregated Revenue

Revenue disaggregated by reportable segment is presented in Note 8 - Segment Information. The following series of tables presents revenue disaggregated by geographic area where the work was performed and by contract type:

Geographic Disaggregation:

			Three Months Ended																		Nine Months Ended
			March 31, 2026									March 31, 2025									March 31, 2026									March 31, 2025
			(In thousands)
United States			$	198,332		96		%				$	188,256		94		%				$	594,837		95		%				$	516,967		94		%
Canada			7,028			3		%				8,048			4		%				29,714			5		%				28,864			5		%
Other international			1,349			1		%				3,857			2		%				4,550			—		%				7,078			1		%
Total Revenue			$	206,709		100		%				$	200,161		100		%				$	629,101		100		%				$	552,909		100		%

Contract Type Disaggregation:                                                                

			Three Months Ended																		Nine Months Ended
			March 31, 2026									March 31, 2025									March 31, 2026									March 31, 2025
			(In thousands)
Fixed-price contracts			$	157,939		76		%				$	143,402		72		%				$	482,679		77		%				$	405,121		73		%
Time and materials and other cost reimbursable contracts			48,770			24		%				56,759			28		%				146,422			23		%				147,788			27		%
Total Revenue			$	206,709		100		%				$	200,161		100		%				$	629,101		100		%				$	552,909		100		%

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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 the second quarter of fiscal 2026, costs associated with warranty-type items and third-party commercial matters arising during commissioning of specialty tank work in the Storage and Terminal Solutions segment resulted in a $3.6 million reduction of gross profit. We anticipate completing this work during fiscal 2026.

Note 3 – Assets Held for Sale

As of March 31, 2026, we classified $1.1 million of property, plant and equipment as held for sale. The assets include primarily transportation equipment associated with our transmission and distribution service line in the Utility and Power Infrastructure segment. We began winding down this service line in the fourth quarter of fiscal 2025. We expect to sell this equipment during the remainder of fiscal 2026.

Note 4 – 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 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 March 31, 2026, our borrowing base was $68.6 million. The Company had $4.4 million in letters of credit outstanding as of March 31, 2026, which resulted in availability of $64.2 million under the ABL Facility.

Borrowings under the ABL Facility bear interest through maturity at a variable rate based upon, at our option, an annual rate of either a base rate (“Base Rate”), a Term Secured Overnight Financing Rate ("Term SOFR"), or at the Canadian Prime Rate, plus an applicable margin. The Term SOFR rate, whether for one-month or three-month tenor, is provided by a third party 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%; or (iv) 1.00%. Depending on the amount of average availability, the applicable margin is between 1.00% to 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; make investments, including investments in certain international subsidiaries; incur, assume or permit to exist additional indebtedness and guarantees; create or permit to exist liens; pay cash dividends or make distributions; issue equity instruments; or redeem or repurchase capital stock. In the event that our availability is less than the greater of (i) $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 March 31, 2026.

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Note 5 – Income Taxes

Effective Tax Rate

During the three and nine months ended March 31, 2026, our effective tax rates were 4.0% and (7.7)%. The effective tax rates during both periods were impacted by valuation allowances of $0.2 million and $0.8 million, respectively, placed on deferred tax assets generated during the period. During the three and nine months ended March 31, 2025, our effective tax rates were zero and (0.1)%, respectively. The effective tax rates during both periods were impacted by valuation allowances of $1.2 million and $4.3 million, respectively, placed on deferred tax assets generated during the period.

Valuation Allowance

We recorded a valuation allowance on our deferred tax assets due to the existence of a cumulative loss over a three-year period. We will continue to place valuation allowances on newly generated deferred tax assets. We will realize the benefit associated with the deferred tax assets for which the valuation allowance has been provided as we generate taxable income.

Note 6 – Commitments and Contingencies

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 January 2021, we achieved mechanical completion on a crude oil storage project. On April 1, 2022, we filed an arbitration demand against Keyera Energy, Inc. in an effort to collect outstanding balances related to the project. In response, on June 2, 2022, the customer filed counterclaims seeking liquidated damages and damages with respect to miscellaneous warranty items. As part of the arbitration process, our claim amount was specified at $24.5 million and Keyera's counterclaim was specified at $72.9 million, with both claim amounts including interest. Arbitration proceedings were held in August 2025. We received an interim award in January 2026 and a final award in April 2026 resolving all claims and awarding attorneys' fees to us as the prevailing party. After application of insurance coverages, we will collect $15.1 million for amounts owed on the project and reimbursement of attorneys' fees incurred. As a result, we recorded an increase in our accounts receivable and gross profit of $1.2 million during the third quarter of fiscal 2026. We expect to collect our outstanding receivable in the fourth quarter of fiscal 2026.

During fiscal 2023, we completed construction services on a time and materials basis at a mining and minerals facility. In late fiscal 2023, after numerous attempts to collect outstanding receivables, 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)), alleging breach of contract and breach of express warranty. We denied all claims and filed a countersuit against the customer for failure to pay amounts due. In the third quarter of fiscal 2026, to avoid future legal costs associated with this matter, we entered into a settlement, resulting in a reduction of our gross profit of $1.1 million. We received payment of $4.3 million in the third quarter of fiscal 2026.

We believe we have set appropriate accruals for legal matters, including the matters described above, based on our evaluation of possible outcomes. However, the results of litigation are inherently unpredictable, and the possibility exists that the ultimate resolution of one or more of these matters could result in a material adverse effect on our financial position, results of operations or liquidity. We and our subsidiaries are participants in various other legal actions; however, 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. 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.

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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, or we may be required to purchase special insurance policies or surety bonds for specific customers or provide letters of credit in lieu of bonds to satisfy performance and financial guarantees on some projects. 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.

Note 7 – Earnings per Common Share

Basic earnings per share (“EPS”) is calculated based on the weighted average shares outstanding during the period. Diluted EPS includes the dilutive effect of employee and director nonvested restricted stock units. Nonvested restricted stock units are considered dilutive (antidilutive) to our EPS whenever the average market value of the shares during the period exceeds (is less than) the sum of the related average unamortized compensation expense during the period. Nonvested restricted stock units are considered antidilutive to our EPS in the event we report a net loss.

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

			Three Months Ended												Nine Months Ended
			March 31, 2026						March 31, 2025						March 31, 2026						March 31, 2025
			(In thousands, except per share data)
Basic EPS:
Net income (loss)			$	835					$	(3,434)					$	(3,722)					$	(18,190)
Weighted average shares outstanding			28,380						27,836						28,262						27,731
Basic earnings (loss) per share			$	0.03					$	(0.12)					$	(0.13)					$	(0.66)
Diluted EPS:
Net income (loss)			$	835					$	(3,434)					$	(3,722)					$	(18,190)
Weighted average shares outstanding – basic			28,380						27,836						28,262						27,731
Dilutive nonvested deferred shares			153						—						—						—
Diluted weighted average shares outstanding			28,533						27,836						28,262						27,731
Diluted earnings (loss) per share			$	0.03					$	(0.12)					$	(0.13)					$	(0.66)

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

			Three Months Ended												Nine Months Ended
			March 31, 2026						March 31, 2025						March 31, 2026						March 31, 2025
			(In thousands)
Nonvested restricted stock units			$	145					$	1,279					$	704					$	1,116

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Note 8 – 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: primarily consists of engineering, procurement, fabrication, and construction services related to cryogenic and other specialty tanks and terminals for LNG, NGLs such as butane, propane, ethane, ethylene, and other liquid petroleum products, as well as hydrogen and ammonia. We also perform work related to traditional aboveground crude oil and refined product storage tanks and terminals. This segment also includes terminal balance of plant work, truck and rail loading/offloading facilities, and marine structures as well as storage tank and terminal maintenance and repair. Finally, we manufacture and sell precision engineered specialty 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: primarily consists of engineering, procurement, fabrication, and construction services to support growing demand for LNG utility peak shaving facilities. We also perform power delivery work for public and private utilities, including construction of new substations, upgrades of existing substations, and maintenance. We also provide construction services to a variety of power generation facilities, including natural gas fired facilities in simple or combined cycle configurations for base load, peaking, and backup power supply.

•Process and Industrial Facilities: primarily consists of plant maintenance, repair, and turnarounds in the downstream and midstream markets for energy clients including refining and processing of crude oil, fractionating, and marketing of natural gas and NGLs. We also perform engineering, procurement, fabrication, and construction for refinery upgrades and retrofits for renewable fuels, including hydrogen processing, production, loading and distribution facilities. We also engineer and construct thermal vacuum test chambers for aerospace and defense industries and other infrastructure for industries including chemicals, petrochemical, sulfur, mining and minerals, cement, agriculture, wastewater treatment facilities and other industrial customers.

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 sales; 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.

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

(In thousands)

						Storage and Terminal Solutions						Utility and Power Infrastructure						Process and Industrial Facilities						Corporate						Total
						Three Months Ended March 31, 2026
			Total revenue (1)			$	111,621					$	59,963					$	35,125					$	—					$	206,709
			Cost of revenue			(103,849)						(51,801)						(34,238)						332						(189,556)
			Gross profit			7,772						8,162						887						332						17,153
			Selling, general and administrative expenses			5,312						2,074						1,503						6,326						15,215
			Restructuring costs and other			4						902						94						1,986						2,986
			Operating income (loss)			$	2,456					$	5,186					$	(710)					$	(7,980)					$	(1,048)
			(1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $1.4 million for the three months ended March 31, 2026.
			Capital expenditures			$	415					$	103					$	10					$	389					$	917
			Depreciation and amortization			$	1,107					$	516					$	322					$	66					$	2,011
						Storage and Terminal Solutions						Utility and Power Infrastructure						Process and Industrial Facilities						Corporate						Total
						Three Months Ended March 31, 2025
			Total revenue (1)			$	96,054					$	58,676					$	45,431					$	—					$	200,161
			Cost of revenue			(92,323)						(53,139)						(41,672)						(177)						(187,311)
			Gross profit (loss)			3,731						5,537						3,759						(177)						12,850
			Selling, general and administrative expenses			6,344						2,536						2,142						6,704						17,726
			Restructuring costs and other			—						124						—						—						124
			Operating income (loss)			$	(2,613)					$	2,877					$	1,617					$	(6,881)					$	(5,000)
			(1) Total revenues are net of inter-segment revenues which are primarily Process and Industrial Facilities and were $1.1 million for the three months ended March 31, 2025.
			Capital expenditures			$	1,120					$	417					$	991					$	38					$	2,566
			Depreciation and amortization			$	1,251					$	763					$	446					$	53					$	2,513

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			Storage and Terminal Solutions						Utility and Power Infrastructure						Process and Industrial Facilities						Corporate						Total
			Nine Months Ended March 31, 2026
Total revenue (1)			$	320,932					$	209,870					$	98,299					$	—					$	629,101
Cost of revenue			(301,909)						(187,696)						(94,764)						(262)						(584,631)
Gross profit (loss)			19,023						22,174						3,535						(262)						44,470
Selling, general and administrative expenses			16,283						7,293						4,383						18,702						46,661
Restructuring costs and other			1,882						1,576						870						2,208						6,536
Operating income (loss)			$	858					$	13,305					$	(1,718)					$	(21,172)					$	(8,727)
(1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $3.0 million for the nine months ended March 31, 2026.
Capital Expenditures			$	1,629					$	1,283					$	91					$	1,101					$	4,104
Depreciation and amortization			$	3,597					$	1,873					$	1,030					$	204					$	6,704
			Storage and Terminal Solutions						Utility and Power Infrastructure						Process and Industrial Facilities						Corporate						Total
			Nine Months Ended March 31, 2025
Total revenue (1)			$	269,800					$	175,664					$	107,445					$	—					$	552,909
Cost of revenue			(254,100)						(165,411)						(101,319)						(524)						(521,354)
Gross profit (loss)			15,700						10,253						6,126						(524)						31,555
Selling, general and administrative expenses			17,480						10,073						5,585						20,454						53,592
Restructuring costs and other			—						124						—						—						124
Operating income (loss)			$	(1,780)					$	56					$	541					$	(20,978)					$	(22,161)
(1) Total revenues are net of inter-segment revenues which are primarily Process and Industrial Facilities and were $2.8 million for the nine months ended March 31, 2025.
Capital Expenditures			$	2,830					$	830					$	1,133					$	632					$	5,425
Depreciation and amortization			$	3,743					$	2,535					$	1,103					$	157					$	7,538

Total assets by segment
			March 31, 2026						June 30, 2025
Storage and Terminal Solutions			$	220,011					$	194,354
Utility and Power Infrastructure			93,741						98,582
Process and Industrial Facilities			31,944						39,490
Corporate			270,854						267,830
Total Segment Assets			$	616,550					$	600,256

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Note 9 – Restructuring Costs and other

Restructuring costs and other include the following:

			Three Months Ended						Nine Months Ended
			March 31, 2026
CEO transition			$	1,981					$	1,981
Lease impairment			886						2,415
Severance and other personnel-related costs			115						1,858
Other			4						282
Total Restructuring costs and other			$	2,986					$	6,536

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

In fiscal 2026, we continued the organizational restructuring plan to further integrate our engineering and construction services, consolidate service lines, and close an under-performing office, among other changes. We incurred $2.1 million of severance and other costs during the nine months ended March 31, 2026 associated with these actions.

Additionally, during the first quarter of fiscal 2026, we recorded $1.5 million of operating lease and fixed asset impairments associated with certain real estate leases that we exited as part of our organizational restructuring plan. The fair values of the assets associated with these leases were determined based on Level 3 fair value measurements, utilizing a discounted cash flow method based in part on projected sublease income. During the three months ended March 31, 2026, unfavorable market conditions for an exited office lease negatively impacted our ability to sublease the space. As a result, we recorded an additional $0.9 million of expense, representing a full impairment of the remaining Operating lease right-of-use asset and leasehold improvements, and an accrual of the remaining common area maintenance payments due under the lease.

In connection with the Board’s succession planning, on February 2, 2026, John R. Hewitt and the Company entered into a Transition Agreement providing for Mr. Hewitt to transition from his role as President and Chief Executive Officer and step down effective June 30, 2026. Restructuring costs and other include $1.6 million in expense associated with cash severance payable in the first quarter of fiscal 2027, as well as $0.4 million in expense associated with stock-based compensation that will continue to settle after Mr. Hewitt’s separation. We expect to incur an additional $0.5 million in stock-based compensation expense in the fourth quarter of fiscal 2026 associated with his equity awards.

During the fourth quarter of fiscal 2026, we took further action aimed at reducing our cost structure, which included eliminating multiple positions, including the Chief Administrative Officer position. We also announced a transition and separation agreement with Kevin Cavanah, our Chief Financial Officer, and have commenced a search for a new Chief Financial Officer. We expect to incur approximately $2 million in cost in the fourth quarter associated with these actions.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this Form 10-Q which address activities, events or developments which we expect, believe or anticipate will or may occur in the future are forward-looking statements. The words “believes,” “intends,” “expects,” “anticipates,” “projects,” “estimates,” “predicts” and similar expressions are also intended to identify forward-looking statements. Although we believe that our expectations regarding future events are based on reasonable assumptions, we can give no assurance that such expectations or assumptions will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements are described under Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

These forward-looking statements include, among others, such things as:

•amounts and nature of future project awards, revenue and margins from each of our segments;

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

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

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

•the impact of interest rates and inflation on our operating expenses and our business operations;

•the likely impact of new or existing regulations or market forces on the demand for our services;

•the impact to our business from disruptions to supply chains, inflation and availability of materials and labor;

•our expectations with respect to the likelihood of a future impairment;

•our expectations regarding pending litigation; and

•expansion and other trends of the industries we serve.

These statements are based on certain assumptions and analyses we made in light of our experience and our historical trends, current conditions and expected future developments as well as other factors we believe are appropriate. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties which could cause actual results to differ materially from our expectations, including:

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

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

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

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

•unexpected adjustments to our remaining performance obligations or backlog;

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

•reduced creditworthiness of our customer base and the higher risk of non-payment of receivables;

•the inherently uncertain outcome of current and future litigation;

•the adequacy of our reserves for claims and contingencies; and

•changes in laws or regulations, including the imposition, cancellation or delay of tariffs on imported goods.

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Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business operations. We assume no obligation to update, except as required by law, any such forward-looking statements, whether as a result of new information, future events or otherwise.

Investors should note that we announce material financial information in SEC filings, press releases, presentations and public conference calls. Based on guidance from the SEC, we may use the Investors section of our website (www.matrixservicecompany.com) to communicate with investors and we intend to post presentations and other materials there. It is possible that the financial and other information posted to our website could be deemed to be material information.

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

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RESULTS OF OPERATIONS

Overview

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

•Storage and Terminal Solutions: primarily consists of engineering, procurement, fabrication, and construction services related to cryogenic and other specialty tanks and terminals for LNG, NGLs such as butane, propane, ethane, ethylene, and other liquid petroleum products, as well as hydrogen and ammonia. We also perform work related to traditional aboveground crude oil and refined product storage tanks and terminals. This segment also includes terminal balance of plant work, truck and rail loading/offloading facilities, and marine structures as well as storage tank and terminal maintenance and repair. Finally, we manufacture and sell precision engineered specialty 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: primarily consists of engineering, procurement, fabrication, and construction services to support growing demand for LNG utility peak shaving facilities. We also perform power delivery work for public and private utilities, including construction of new substations, upgrades of existing substations, and maintenance. We also provide construction services to a variety of power generation facilities, including natural gas fired facilities in simple or combined cycle configurations for base load, peaking, and backup power supply.

•Process and Industrial Facilities: primarily consists of plant maintenance, repair, and turnarounds in the downstream and midstream markets for energy clients including refining and processing of crude oil, fractionating, and marketing of natural gas and NGLs. We also perform engineering, procurement, fabrication, and construction for refinery upgrades and retrofits for renewable fuels, including hydrogen processing, production, loading and distribution facilities. We also engineer and construct thermal vacuum test chambers for aerospace and defense industries and other infrastructure for industries including chemicals, petrochemical, sulfur, mining and minerals, cement, agriculture, wastewater treatment facilities and other industrial customers.

Operational Update

The third quarter of fiscal 2026 marked a significant inflection point for our business, as we returned to profitability. For the three months ended March 31, 2026, we reported net income of $0.8 million, compared to a net loss of $3.4 million in the same period last year. This improvement reflects the successful execution of our strategic initiatives, including disciplined project management and targeted restructuring actions.

Our gross margin increased to 8.3% in the third quarter of fiscal 2026, up from 6.4% in the same period last year, driven by improved project execution in our Storage and Terminal Solutions and Utility and Power Infrastructure segments. These results demonstrate the positive impact of our efforts to enhance operational efficiency and optimize our project portfolio. Additionally, the reduction in selling, general and administrative (SG&A) expenses, which are down 14% year-over-year, reflects the benefits of our organizational restructuring and ongoing cost discipline.

While our return to profitability is an important milestone, we recognize that further work is required to achieve our long-term financial objectives. Overhead cost absorption remains an area of focus. We continue to pursue opportunities to better align our cost structure with current and anticipated business volumes, including the reallocation of resources and the streamlining of support functions. Moreover, although SG&A leverage improved this quarter, we are committed to driving additional efficiencies to ensure that our overhead costs scale appropriately as revenue grows. To that end, in the fourth quarter of fiscal 2026, we have taken a number of actions aimed at further reducing our cost structure by reducing our workforce, including the elimination of our Chief Administrative Officer position.

In addition to these actions, during the fourth quarter of fiscal 2026, we announced the planned departure of our Chief Financial Officer, Kevin Cavanah, which is expected to occur in September 2026. We have retained a leading executive search firm to conduct a comprehensive search for our next Chief Financial Officer who will work alongside our incoming President and Chief Executive Officer Shawn Payne to lead the organization in fiscal 2027 and beyond.

Looking ahead, we will maintain our focus on revenue and profitability growth through disciplined project selection, operational execution, and cost management. These priorities are essential to sustaining profitability, improving returns on invested capital, and positioning the company for long-term growth. We believe that the actions we are taking will further strengthen our competitive position and enhance value for our stockholders.

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Backlog

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

•fixed-price awards;

•minimum customer commitments on cost plus arrangements; and

•certain time and material arrangements in which the estimated value is firm or can be estimated with a reasonable amount of certainty in both timing and amounts.

For long-term maintenance contracts with no minimum commitments and other established customer agreements, we include only the amounts that we expect to recognize as revenue over the next 12 months. For arrangements in which we have received a LNTP, we include the entire scope of work in our backlog if we conclude that the likelihood of the full project proceeding is probable. For all other arrangements, we calculate backlog as the estimated contract amount less revenue recognized as of the reporting date. Backlog differs from the amount of our remaining performance obligations, which are described in Note 2 - Revenue in the notes to the unaudited consolidated financial statements. Differences are due primarily to the inclusion within our backlog of estimates of future revenue under long-term maintenance contracts; future revenue for the full scope of work for certain arrangements where we have received an LNTP; and future revenue for arrangements where we have received assurance that we consider firm, but the associated contract has not been fully executed.

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

			Storage and Terminal Solutions						Utility and Power Infrastructure						Process and Industrial Facilities						Total
			(In thousands)
Backlog as of December 31, 2025			$	821,408					$	202,777					$	102,888					$	1,127,073
Project awards			37,535						46,633						24,135						108,303
Revenue recognized			(111,621)						(59,963)						(35,125)						(206,709)
Backlog as of March 31, 2026			$	747,322					$	189,447					$	91,898					$	1,028,667
Book-to-bill ratio(1)			0.3x						0.8x						0.7x						0.5x

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

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

			Storage and Terminal Solutions						Utility and Power Infrastructure						Process and Industrial Facilities						Total
			(In thousands)
Backlog as of June 30, 2025			$	770,095					$	346,384					$	265,629					$	1,382,108
Project awards			298,159						97,172						77,288						472,619
Other adjustments (2)			—						(44,239)						(152,720)						(196,959)
Revenue recognized			(320,932)						(209,870)						(98,299)						(629,101)
Backlog as of March 31, 2026			$	747,322					$	189,447					$	91,898					$	1,028,667
Book-to-bill ratio(1)			0.9x						0.5x						0.8x						0.8x

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

(2)Previous project awards removed from backlog.

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In the Storage and Terminal Solutions segment, we booked $37.5 million of project awards during the third quarter of fiscal 2026. During the nine months ended March 31, 2026, we booked $298.2 million of project awards. This segment includes significant opportunities for storage infrastructure projects related to natural gas, LNG, ammonia, NGLs and other forms of low carbon energy. We believe LNG, NGLS and ammonia projects in particular will be key growth drivers for this segment. Bidding activity in these markets has been strong and we expect that to continue.

In the Utility and Power Infrastructure segment, we booked $46.6 million of project awards during the third quarter of fiscal 2026. During the nine months ended March 31, 2026, we booked $97.2 million of project awards. Our opportunity pipeline for LNG peak shaving projects continues to be promising, with both greenfield facility projects as well as the projects for the upgrade, maintenance, and repair to existing infrastructure. The timing between the major greenfield awards can be extended due to the client activity and bidding diligence, but their addition to backlog is significant and will drive long-term sustainable growth in the segment. The smaller upgrade projects are key measures of our brand power and strength in the market, keeping key resources active while creating opportunities to strengthen execution and engineering teams. Power generation and delivery infrastructure opportunities are expected to be driven over the long-term by increasing electrical demand and the related electrical grid requirements. Project opportunities and bidding activity are strong across the segment.

In the Process and Industrial Facilities segment, we booked $24.1 million of project awards during the third quarter of fiscal 2026. During the nine months ended March 31, 2026, we booked $77.3 million of project awards. We continue to see increasing opportunities in chemicals, renewable fuels, and refinery maintenance and turnarounds. Additionally, after an extended period of limited investment, activity in the U.S. non-ferrous mining sector has begun to improve, supported by demand growth in copper and higher gold prices, as well as policy initiatives related to critical minerals.

During the first quarter of fiscal 2026, backlog was adjusted to reflect the removal of two projects. Backlog in the Utility and Power Infrastructure segment was impacted by the removal of an award originally added to backlog in the fourth quarter of fiscal 2025. Our unwillingness to accept an increased risk profile caused the client to change their award decision. Our backlog in the Process and Industrial Facilities segment was impacted by the removal of an award originally added to backlog in the third quarter of fiscal 2023. The project was removed from backlog as the ultimate customer is now planning to change the project execution and sourcing strategy for the project. While we ultimately may perform some of this work, we determined inclusion of the award in backlog was no longer appropriate.

Project awards in all segments are cyclical and are typically the result of a sales process that can take several months or years to complete. It is common for awards to shift from one period to another as the timing of awards is dependent upon a number of factors including changes in market conditions, permitting, off take agreements, project financing and other factors. Backlog volatility may increase for some segments from time to time when individual project awards are less frequent, but more significant. There is an inherent lag between the time a project is awarded and when it begins to have a material impact on revenue. This lag can vary and can extend up to six months or longer in unique circumstances, depending on finalization of scopes, contracts, permits, and facility process requirements. Additionally, awards for larger construction projects may be recognized as revenue over a multi-year period as the projects may take a few years to complete.

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

The information below is an analysis of our consolidated results for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. See Results of Operations by Business Segment below for additional information describing the performance of each of our reportable segments.

Consolidated Results of Operations

			Three Months Ended
			March 31,												2026 v 2025
Dollars in thousands			2026						2025						Change						%
Revenue			$	206,709					$	200,161					$	6,548					3		%
Cost of revenue			189,556						187,311						2,245						1		%
Gross profit			17,153						12,850						4,303						33		%
Gross margin %			8.3		%				6.4		%				1.9		%				29.7		%
Selling, general and administrative expenses			15,215						17,726						(2,511)						(14)		%
Restructuring costs and other			2,986						124						2,862						2308		%
Operating loss			(1,048)						(5,000)						3,952						79		%
Other income (expense):
Interest expense			(85)						(134)						49						37		%
Interest income			2,190						1,518						672						44		%
Other income (expense)			(187)						182						(369)						(203)		%
Income (loss) before income tax expense			870						(3,434)						4,304						125		%
Provision for federal, state and foreign income taxes			35						—						35						—		%
Net income (loss)			$	835					$	(3,434)					$	4,269					124		%

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

Gross profit - Gross profit in the third quarter of fiscal 2026 increased $4.3 million, or 33%, compared to the third quarter of fiscal 2025. Gross margin was 8.3% for the third quarter of fiscal 2026 compared to gross margin of 6.4% for the third quarter of fiscal 2025. The increase in gross margin was due to higher gross margins in the Storage and Terminal Solutions and Utility and Power Infrastructure segments, partially offset by lower gross margins in the Process and Industrial Facility segment. Overall, gross margins during the period benefited from strong project execution and improved overhead recovery.

Selling, general and administrative expenses - The decrease in selling, general and administrative expenses ("SG&A") of $2.5 million, or 14%, primarily due to cost reductions resulting from our organizational restructuring plan. Additionally, stock compensation expense decreased by $1.0 million primarily as a result of executive separations during the period.

Restructuring costs and other - The Company incurred $3.0 million of restructuring and other costs during the third quarter of fiscal 2026. Costs included $2.0 million related to the CEO transition and $0.9 million associated with a lease impairment. See Part I, Item 1. Financial Statements (Unaudited), Note 9 - Restructuring Costs, for further details.

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

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

Provision for income taxes - Income tax expense for both periods was insignificant. The effective tax rates during both periods were impacted by valuation allowances of $0.2 million and $1.2 million, respectively, placed on deferred tax assets generated during the quarters. We placed a valuation allowance on our deferred tax assets due to the existence of a cumulative loss over a three-year period. Currently, we place valuation allowances on newly generated deferred tax assets. We will realize the benefit associated with the deferred tax assets for which the valuation allowance has been provided as we generate taxable income.

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Results of Operations by Business Segment

			Three Months Ended
			March 31,												2026 v 2025
Dollars in thousands			2026						2025						Change						% Favorable (Unfavorable)
Revenue
Storage and Terminal Solutions			$	111,621					$	96,054					$	15,567					16		%
Utility and Power Infrastructure			59,963						58,676						1,287						2		%
Process and Industrial Facilities			35,125						45,431						(10,306)						(23)		%
Total revenue			$	206,709					$	200,161					$	6,548					3		%
Gross profit (loss)
Storage and Terminal Solutions			$	7,772					$	3,731					$	4,041					108		%
Utility and Power Infrastructure			8,162						5,537						2,625						47		%
Process and Industrial Facilities			887						3,759						(2,872)						(76)		%
Corporate			332						(177)						509						(288)		%
Total gross profit			$	17,153					$	12,850					$	4,303					33		%
Gross margin %
Storage and Terminal Solutions			7.0		%				3.9		%				3.1%						79		%
Utility and Power Infrastructure			13.6		%				9.4		%				4.2%						45		%
Process and Industrial Facilities			2.5		%				8.3		%				(5.8)%						(70)		%
Total gross margin %			8.3		%				6.4		%				1.9%						30		%
Operating income (loss)
Storage and Terminal Solutions			$	2,456					$	(2,613)					$	5,069					194		%
Utility and Power Infrastructure			5,186						2,877						2,309						80		%
Process and Industrial Facilities			(710)						1,617						(2,327)						(144)		%
Corporate			(7,980)						(6,881)						(1,099)						(16)		%
Total operating loss			$	(1,048)					$	(5,000)					$	3,952					79		%

Storage and Terminal Solutions

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

Storage and Terminal Solutions gross profit increased by $4.0 million, or 108%, in the three months ended March 31, 2026 compared to the same period last year. The segment gross margin of 7.0% for the three months ended March 31, 2026 was higher than segment gross margin of 3.9% in the same period last year. Margin improvement was driven by improved project execution overall as well as an improvement in overhead cost absorption.

Utility and Power Infrastructure

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

Utility and Power Infrastructure gross profit increased by $2.6 million, or 47%, in the three months ended March 31, 2026 compared to the same period last year. The segment gross margin was 13.6% for the three months ended March 31, 2026 compared to 9.4% in the same period last year, an increase of 4.2% due to strong project execution throughout the segment.

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Process and Industrial Facilities

Process and Industrial Facilities revenues decreased by $10.3 million, or 23%, in the three months ended March 31, 2026 compared to the same period last year. The decrease is primarily attributable to lower revenue volumes for thermal vacuum chambers, refinery work, and industrial facilities.

Process and Industrial Facilities gross profit decreased by $2.9 million, or 76%, in the three months ended March 31, 2026 compared to the same period last year. The segment gross margin was 2.5% for the three months ended March 31, 2026 compared to 8.3% in the same period last year. The decrease is attributable to mix of work and the settlement of a legal matter, which reduced gross margin by $1.1 million. See Part I, Item 1. Financial Statements (Unaudited), Note 6 - Commitments and Contingencies, for more details.

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

The information below is an analysis of our consolidated results for the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025. See Results of Operations by Business Segment below for additional information describing the performance of each of our reportable segments.

Consolidated Results of Operations

			Nine Months Ended
			March 31,												2026 v 2025
Dollars in thousands			2026						2025						Change						%
Revenue			$	629,101					$	552,909					$	76,192					14		%
Cost of revenue			584,631						521,354						63,277						12		%
Gross profit			44,470						31,555						12,915						41		%
Gross margin %			7.1		%				5.7		%				1.4		%				24.6		%
Selling, general and administrative expenses			46,661						53,592						(6,931)						(13)		%
Restructuring costs and other			6,536						124						6,412						5171		%
Operating loss			(8,727)						(22,161)						13,434						61		%
Other income (expense):
Interest expense			(330)						(368)						38						10		%
Interest income			5,535						4,668						867						19		%
Other income (expense)			67						(313)						380						(121)		%
Loss before income tax expense			(3,455)						(18,174)						14,719						81		%
Provision for federal, state and foreign income taxes			267						16						251						1569		%
Net loss			$	(3,722)					$	(18,190)					$	14,468					80		%

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

Gross profit - Gross profit in the nine months ended March 31, 2026 increased $12.9 million, or 41%, compared to the same period in the prior year. Gross margin increased to 7.1% for the nine months ended March 31, 2026 compared to 5.7% for the same period prior year. The increase in gross margin for the nine months is attributable to higher gross margins in our Storage and Terminal Solutions and Utility and Power Infrastructure segments, partially offset by lower margins in our Process and Industrial Facilities segment. Overall, gross margins during the period benefited from strong project execution and improved overhead recovery.

Selling, general and administrative expenses - The decrease in SG&A expenses of $6.9 million, or 13%, is due in part to cost reductions resulting from our organizational restructuring plan. Stock compensation also decreased by $1.5 million, due in part to executive separations occurring during the third quarter of fiscal 2026. Additionally, SG&A decreased $1.7 million associated with the variable accounting for cash-settled stock-based compensation, primarily as a result of fluctuations in our stock price.

Restructuring costs and other - The Company incurred $6.5 million of costs during the nine months ended March 31, 2026 related to organizational restructuring and other related costs. This included $2.0 million of expense related to the CEO transition, as well as severance for other personnel and lease impairments for exited leases. See Part I, Item 1. Financial Statements (Unaudited), Note 9 - Restructuring Costs, for further details.

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

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

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Provision for income taxes - Income tax expense for both periods was insignificant. The effective tax rates during both periods were impacted by valuation allowances of $0.8 million and $4.3 million, respectively, placed on deferred tax assets generated during the quarters. We placed a valuation allowance on our deferred tax assets due to the existence of a cumulative loss over a three-year period. Currently, we place valuation allowances on newly generated deferred tax assets. We will realize the benefit associated with the deferred tax assets for which the valuation allowance has been provided as we generate taxable income.

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Results of Operations by Business Segment

			Nine Months Ended
			March 31,												2026 v 2025
Dollars in thousands			2026						2025						Change						% Favorable (Unfavorable)
Revenue
Storage and Terminal Solutions			$	320,932					$	269,800					$	51,132					19		%
Utility and Power Infrastructure			209,870						175,664						34,206						19		%
Process and Industrial Facilities			98,299						107,445						(9,146)						(9)		%
Total revenue (1)			$	629,101					$	552,909					$	76,192					14		%
(1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $3.0 million for the nine months ended March 31, 2026.
Gross profit (loss)
Storage and Terminal Solutions			$	19,023					$	15,700					$	3,323					21		%
Utility and Power Infrastructure			22,174						10,253						11,921						116		%
Process and Industrial Facilities			3,535						6,126						(2,591)						(42)		%
Corporate			(262)						(524)						262						50		%
Total gross profit			$	44,470					$	31,555					$	12,915					41		%
Gross margin %
Storage and Terminal Solutions			5.9		%				5.8		%				0.1%						2		%
Utility and Power Infrastructure			10.6		%				5.8		%				4.8%						83		%
Process and Industrial Facilities			3.6		%				5.7		%				(2.1)%						(37)		%
Corporate			—		%				—		%				—%						—		%
Total gross margin %			7.1		%				5.7		%				1.4%						25		%
Operating income (loss)
Storage and Terminal Solutions			$	858					$	(1,780)					$	2,638					148		%
Utility and Power Infrastructure			13,305						56						13,249						23659		%
Process and Industrial Facilities			(1,718)						541						(2,259)						(418)		%
Corporate			(21,172)						(20,978)						(194)						(1)		%
Total operating loss			$	(8,727)					$	(22,161)					$	13,434					61		%

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Storage and Terminal Solutions

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

Storage and Terminal Solutions gross profit increased by $3.3 million, or 21%, in the nine months ended March 31, 2026 compared to the same period last year. The segment gross margin was 5.9% for the nine months ended March 31, 2026 compared to segment gross margin of 5.8% in the same period last year. During the second and third quarter of fiscal 2026, costs associated with warranty-type items and third-party commercial matters arising during commissioning of specialty tank work resulted in a $3.6 million and a $2.6 million reduction of gross profit, respectively. The impact of this work was offset by strong project execution across the remainder of the segment.

Utility and Power Infrastructure

Utility and Power Infrastructure revenues increased by $34.2 million, or 19%, in the nine months ended March 31, 2026 compared to the same period last year. The increase is primarily attributable to higher volumes of work for LNG peak shaving projects and power delivery work.

Utility and Power Infrastructure gross profit increased by $11.9 million, or 116%, in the nine months ended March 31, 2026 compared to the same period last year. The segment gross margin was 10.6% for the nine months ended March 31, 2026 compared to 5.8% in the same period last year due to strong project execution and improved construction overhead cost absorption as a result of higher revenues.

Process and Industrial Facilities

Process and Industrial Facilities revenues decreased by $9.1 million, or 9%, in the nine months ended March 31, 2026 compared to the same period last year. The decrease is primarily attributable to lower revenue volumes for thermal vacuum chambers and industrial facilities, partially offset by higher volumes of refinery work.

Process and Industrial gross profit decreased by $2.6 million, or 42%, in the nine months ended March 31, 2026 compared to the same period last year. The segment gross margin was 3.6% for the nine months ended March 31, 2026 compared to segment gross margin of 5.7% in the same period last year. Improved overhead cost absorption associated with reallocation of resources to other segments was partially offset by reductions in gross margin due to mix of work. Additionally, the settlement of a legal matter reduced gross margin during the third quarter of fiscal 2026 by $1.1 million. See Part I, Item 1. Financial Statements (Unaudited), Note 6 - Commitments and Contingencies, for more details.

LIQUIDITY AND CAPITAL RESOURCES

Overview

We assess liquidity based on the ongoing ability to pay our liabilities as they become due, fund business operations and meet all monetary contractual obligations. Our primary sources of liquidity at March 31, 2026 were unrestricted cash and cash equivalents on hand, capacity under our ABL Facility, and cash generated from operations. Our primary operational uses of capital are expenditures required to execute our projects, fund business operations and fulfill our contractual obligations. We believe that for at least the next 12 months, our cash position, anticipated cash generated by operating activities, along with our availability under the ABL Facility, is sufficient to support our operating requirements.

Unrestricted cash and cash equivalents at March 31, 2026 totaled $233.0 million and availability under the ABL Facility totaled $64.2 million, resulting in total liquidity of $297.2 million. During the third quarter of fiscal 2026, liquidity increased $39.6 million primarily as a result of changes in working capital. During the nine months ended March 31, 2026, liquidity increased by $12.7 million primarily as a result of changes in working capital.

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

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						March 31, 2026						December 31, 2025						September 30, 2025						June 30, 2025
Total cash, cash equivalents and restricted cash						$	258,021					$	223,964					$	217,307					$	249,641
Less: Restricted cash						25,000						25,000						25,000						25,000
Unrestricted cash						233,021						198,964						192,307						224,641
Availability under ABL Facility						64,150						58,615						56,617						59,815
Total Liquidity						$	297,171					$	257,579					$	248,924					$	284,456

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

Liquidity at December 31, 2025			$	257,579
Cash provided by operating activities			34,162
Capital expenditures			(917)
Proceeds from sale of assets			999
Increase in availability under ABL Facility			5,535
Cash provided by financing activities			46
Effect of exchange rate changes on cash			(233)
Liquidity at March 31, 2026			$	297,171

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

Liquidity at June 30, 2025			$	284,456
Cash provided by operating activities			15,717
Capital expenditures			(4,104)
Proceeds from sale of assets			1,483
Increase in availability under ABL Facility			4,335
Cash used by financing activities			(4,228)
Effect of exchange rate changes on cash			(488)
Liquidity at March 31, 2026			$	297,171

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

•changes in costs and estimated earnings in excess of billings on uncompleted contracts and billings on uncompleted contracts in excess of costs due to contract terms that determine the timing of billings to customers and the collection of those billings:

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

◦some cost-plus and fixed-price customer contracts are billed based on milestones which may increase or decrease liquidity in the near term depending on the timing of when we incur significant expenditures and when we collect from our customers;

◦time and material contracts are normally billed in arrears. Therefore, we are routinely required to carry these costs until they can be billed and collected; and

◦some of our large construction projects may require security in the form of significant retentions. Retentions are normally held until certain contractual milestones are achieved; therefore, collection may extend beyond one year;

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•the mix of work can impact liquidity. In periods where fixed-price contracts comprise a larger portion of revenue, liquidity may increase depending on the timing of the billing schedule in relation to project cash outflows. In periods where time and material contracts comprise a larger portion of revenue, liquidity may decrease;

•other changes in working capital, including the timing of tax payments and refunds;

•release of contract retentions, and

•capital expenditures.

Other factors that may impact both short and long-term liquidity include:

•contract disputes;

•collection issues, including those caused by weak commodity prices, economic slowdowns or other factors which can lead to credit deterioration of our customers;

•borrowing constraints under our ABL Facility and maintaining compliance with all covenants contained in the ABL Facility;

•letters of credit. We have certain contracts with customers, and may have future contracts, that permit the customer to obtain, at the customer's expense, letters of credit as a form of security under the contract. Letters of credit reduce our borrowing availability under the Company's ABL Facility;

•acquisitions and disposals of businesses or assets; and

•purchases of shares under our stock buyback program.

ABL Credit Facility

We have an asset-based credit agreement, which was most recently amended on August 22, 2025 (as amended, the "ABL Facility"), with Bank of Montreal, as Administrative Agent, Swing Line Lender and a Letter of Credit Issuer. The maximum amount of loans under the ABL Facility is limited to $90.0 million. The ABL Facility's available borrowings may be increased by an amount not to exceed $15.0 million, subject to certain conditions, including obtaining additional commitments. The ABL Facility is intended to be used for working capital, capital expenditures, issuances of letters of credit and other lawful purposes. 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 under the ABL Facility. The ABL Facility matures, and any outstanding amounts become due and payable, on September 9, 2029.

The borrowing base is recalculated on a monthly basis and at March 31, 2026, our borrowing base was $68.6 million. We had no borrowings outstanding and $4.4 million in letters of credit outstanding, which resulted in availability of $64.2 million under the ABL Facility. For additional information regarding our ABL Facility, see Item I of Part I, "Financial Statements - Note 4 - Debt."

CASH FLOW ANALYSIS

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

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			Nine Months Ended
			March 31,
			2026						2025
Cash flows provided by operating activities			$	15,717					$	76,763
Cash flows used in investing activities			(2,621)						(5,188)
Cash flows used in financing activities			(4,228)						(1,086)
Effect of exchange rate changes on cash			(488)						(563)
Change in cash and cash equivalents			8,380						69,926
Cash and cash equivalents at beginning of period			249,641						140,615
Cash and cash equivalents at end of period			$	258,021					$	210,541

Cash Flows Provided by Operating Activities

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

			Nine Months Ended
			March 31,
			2026						2025
Net loss			$	(3,722)					$	(18,190)
Depreciation and amortization			6,704						7,538
Stock-based compensation expense			5,476						6,754
Operating lease impairment due to restructuring			2,415						—
Gain on disposal of property, plant and equipment			(457)						(122)
Other non-cash expenses			236						108
Cash effect of changes in operating assets and liabilities			5,065						80,675
Net cash provided by operating activities			$	15,717					$	76,763

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

•Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased by $16.0 million which decreased cash flows from operating activities. The increases are primarily attributable to the timing of billing and collections.

•Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") decreased $4.8 million which increased cash flows from operating activities. Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") increased $17.1 million which increased cash flows from operating activities. CIE and BIE balances can experience significant fluctuations based on business volumes and the timing of when job costs are incurred and the timing of customer billings and payments. Some fixed-price customer contracts allow for significant upfront billings at the beginning of a project, which increases liquidity near-term.

•Accounts payable increased by $9.2 million which increased cash flows from operating activities. These operating liabilities can fluctuate based on business volumes; the timing of vendor payments; accruals; and other timing differences.

•Changes in other operating assets and liabilities decreased cash flows from operating activities by $10.0 million. These operating assets and liabilities can fluctuate based on business volumes and timing of certain cash receipts and payments. Additionally, we generally prepay our annual insurance premiums in the first quarter of the fiscal year.

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

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•Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased by $88.8 million which decreased cash flows from operating activities. The increases are primarily attributable to the timing of billing and collections.

•Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") increased $4.7 million which decreased cash flows from operating activities. Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") increased $161.3 million which increased cash flows from operating activities. CIE and BIE balances can experience significant fluctuations based on business volumes and the timing of when job costs are incurred and the timing of customer billings and payments. Some fixed-price customer contracts allow for significant upfront billings at the beginning of a project, which increases liquidity near-term.

•Accounts payable increased by $13.0 million which increased cash flows from operating activities. These operating liabilities can fluctuate based on business volumes; the timing of vendor payments; accruals; and other timing differences.

•Changes in other operating assets and liabilities decreased cash flows from operating activities by $0.1 million. These operating assets and liabilities can fluctuate based on business volumes and timing of certain cash receipts and payments. Additionally, we generally prepay our annual insurance premiums in the first quarter of the fiscal year.

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Cash Flows Used by Investing Activities

Investing activities used $2.6 million and $5.2 million of cash in the nine months ended March 31, 2026 and 2025, respectively. Capital expenditures were $4.1 million and $5.4 million in the nine months ended March 31, 2026 and 2025, respectively. During the nine months ended March 31, 2026, we also received $1.5 million of proceeds from the sale of property plant and equipment, primarily associated with our transmission and distribution service line, which we began winding down in the fourth quarter of fiscal 2025.

Cash Flows Used by Financing Activities

Financing activities used $4.2 million and $1.1 million of cash in the nine months ended March 31, 2026 and 2025, respectively, primarily due to payments of $4.2 million and $1.2 million, respectively, to satisfy tax withholding obligations associated with stock-based compensation.

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Dividend Policy

We have never paid cash dividends on our common stock and the terms of our ABL Facility limit dividends to stock dividends only. Any future dividend payments will depend on the terms of our ABL Facility, our financial condition, capital requirements and earnings as well as other relevant factors.

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 the three months ended March 31, 2026 and have no current plans to repurchase stock. As of March 31, 2026, there were 1,349,037 shares available for repurchase under the Stock Buyback Program. The terms of our ABL Facility limit share repurchases to $2.5 million per fiscal year provided that we meet certain availability thresholds and do not violate our Fixed Charge Coverage Ratio financial covenant.

Off-Balance Sheet Arrangements and Other Commitments

We enter into certain off-balance sheet arrangements in the ordinary course of business that result in risks not directly reflected on our balance sheet. The following represents transactions, obligations or relationships that could be considered material off-balance sheet arrangements.

•Surety Bonds: The terms of our construction contracts frequently require that we obtain from surety companies, and provide to our customers, surety bonds as a condition to the award of such contracts. These surety bonds are issued in return for premiums, which vary depending on the size and type of the bond, and secure our payment and performance obligations under such contracts. We have agreed to indemnify the surety companies for amounts, if any, paid by them in respect of surety bonds issued on our behalf. Surety bonds expire at various times ranging from final completion of a project to a period extending beyond contract completion in certain circumstances. Such amounts can also fluctuate from period to period based upon the mix and level of our bonded operating activity. As of March 31, 2026, there were $286.9 million of surety bonds in force, of which we expect $269.9 million to expire within the next 12 months. Of the bonds in force, $265.4 million related to performance bonds for ongoing projects and the remainder related to contractor licensing, liens, and other bonds. We are not aware of any losses in connection with surety bonds that have been posted on our behalf, and we do not expect to incur significant losses in the foreseeable future.

•Multiemployer pension 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. Benefits under these plans are generally based on compensation levels and years of service. Under federal legislation regarding multiemployer pension plans, in the event of a withdrawal from a plan or plan termination, companies are required to continue funding their proportionate share of such plan’s unfunded vested benefits. Withdrawal liabilities or requirements for increased future contributions could negatively impact our results of operations and liquidity. For more information on our Multiemployer pension plans, see Part II, Item 8 “Note 12 - Employee Benefit Plans” of our Annual Report on Form 10-K for the year ended June 30, 2025.

•Letters of credit: We issue letters of credit under our ABL Facility in the normal course of business to support workers' compensation insurance programs or certain construction contracts. As of March 31, 2026, we had $4.4 million of letters of credit outstanding. The letters of credit that support our workers’ compensation insurance programs are expected to renew annually through the term of our credit facility.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no material changes in our critical accounting policies and estimates from those reported in our fiscal 2025 Annual Report on Form 10-K filed with the SEC. For more information on our critical accounting policies and estimates, see Part II, Item 7 of our fiscal 2025 Annual Report on Form 10-K.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in market risk faced by us from those reported in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, filed with the Securities and Exchange Commission. For more information on market risk, see Part II, Item 7A in our fiscal 2025 Annual Report on Form 10-K.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures” in Rule 13a-15(e).

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level at March 31, 2026.

There have been no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting during the quarter ended March 31, 2026.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings

We are a party to a number of legal proceedings. See Part I., Item 1. Financial Statements, Note 6 - Commitments and Contingencies, Litigation, for a description of our material ongoing litigation.

Item 1A. Risk Factors

There were no material changes in our Risk Factors from those reported in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

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. As of March 31, 2026, 1,349,037 shares were available for repurchase under the stock buyback program. 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. The terms of our ABL Facility also limit share repurchases to $2.5 million per fiscal year provided that we meet certain availability thresholds and we do not violate our Fixed Charge Coverage Ratio financial covenant. We made no repurchases under the stock buyback program in the third quarter of fiscal 2026 and have no current plans to repurchase stock.

Dividend Policy

We have never paid cash dividends on our common stock and the terms of our ABL Facility limit dividends to stock dividends only. Any future dividend payments will depend on the terms of our ABL Facility, our financial condition, capital requirements and earnings as well as other relevant factors.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") requires domestic mine operators to disclose violations and orders issued under the Federal Mine Safety and Health Act of 1977 (the "Mine Act") by the Federal Mine Safety and Health Administration. We do not act as the owner of any mines, but as a result of our performing services or construction at mine sites as an independent contractor, we are considered an "operator" within the meaning of the Mine Act.

Information concerning mine safety violations or other regulatory matters required to be disclosed in this quarterly report under Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K is included in Exhibit 95.

Item 5. Other Information

Trading Arrangements

On February 16, 2026, Mr. Kevin S. Cavanah, our Vice President and Chief Financial Officer, entered into a trading plan with his broker intended to satisfy the affirmative defense conditions of Rule 10b5-1 under the Securities and Exchange Act of 1934 (“Rule 10b5-1 Trading Plan”). The Rule 10b5-1 Trading Plan allows Mr. Cavanah to sell up to 120,000 shares of Matrix Service Company common stock. Mr. Cavanah’s Rule 10b5-1 Trading Plan expires upon the earlier of October 1, 2027 or the date all trades pursuant to such trading plan are executed.

Amended and Restated Bylaws

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On May 5, 2026, the Board of Directors of the Company amended and restated the Company’s Amended and Restated Bylaws (as so amended and restated, the “Amended and Restated Bylaws”), which became effective immediately. The Amended and Restated Bylaws enhance clarity and effect technical and administrative changes to conform to changes in the Delaware General Corporation Law (the “DGCL”). The amendments effected by the Amended and Restated Bylaws, among other things:

•modify certain provisions to reflect and conform to changes in the DGCL, including, those relating to the stock ledger available to stockholders prior to a meeting of stockholders and waiver of notice of a meeting;

•clarify that the vote of the holders of a majority of the issued and outstanding voting stock present in person or represented by proxy and entitled to vote on the matter shall decide any matter brought before a meeting of stockholders, except as provided to the contrary by the DGCL, the Company’s Certificate of Incorporation or the Amended and Restated Bylaws;

•modify the list of required and discretionary officers of the Company and the respective duties and authority of such officers;

•eliminate as redundant with disclosure rules the requirement that the Board present certain information regarding the business and condition of the Company at any stockholder meeting; and

•incorporate certain ministerial and conforming changes to provide clarification and consistency.

The foregoing summary of the Amended and Restated Bylaws does not purport to be a complete description and is qualified in its entirety by reference to the full text of the Amended and Restated Bylaws, a copy of which is filed as Exhibit 3.2 to this filing and incorporated herein by reference.

Item 6. Exhibits: 

The following documents are included as exhibits to this Quarterly Report on Form 10-Q. Any exhibits below incorporated by reference herein are indicated as such by the information supplied in the parenthetical hereafter.

Exhibit No.						Description
Exhibit 3.2						Amended and Restated Bylaws, effective as of May 5, 2026.
Exhibit 31.1:						Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 – CEO.
Exhibit 31.2:						Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 – CFO.
Exhibit 32.1:						Certification Pursuant to 18 U.S.C. 1350 (section 906 of Sarbanes-Oxley Act of 2002) – CEO.
Exhibit 32.2:						Certification Pursuant to 18 U.S.C. 1350 (section 906 of Sarbanes-Oxley Act of 2002) – CFO.
Exhibit 95:						Mine Safety Disclosure.
Exhibit 101.INS:						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH:						XBRL Taxonomy Schema Document.
Exhibit 101.CAL:						XBRL Taxonomy Extension Calculation Linkbase Document.
Exhibit 101.DEF:						XBRL Taxonomy Extension Definition Linkbase Document.
Exhibit 101.LAB:						XBRL Taxonomy Extension Labels Linkbase Document.
Exhibit 101.PRE:						XBRL Taxonomy Extension Presentation Linkbase Document.
Exhibit 104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

						MATRIX SERVICE COMPANY
Date:			May 7, 2026			By: /s/ Kevin S. Cavanah
						Kevin S. Cavanah Vice President and Chief Financial Officer
						(Duly Authorized Officer and Principal Accounting Officer)

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FAQ

How did Matrix Service Company (MTRX) perform in the quarter ended March 31, 2026?

Matrix Service returned to profitability, reporting net income of $0.8 million versus a $3.4 million loss a year earlier. Revenue rose 3% to $206.7 million, and gross margin improved to 8.3%, reflecting stronger project execution and better overhead recovery.

What were Matrix Service Company’s results for the nine months ended March 31, 2026?

For the nine months, Matrix Service generated $629.1 million in revenue, up from $552.9 million a year earlier. The net loss narrowed to $3.7 million from $18.2 million, as gross margin improved to 7.1% and SG&A declined due to restructuring actions.

What is Matrix Service Company’s liquidity position as of March 31, 2026?

Matrix Service held $233.0 million in unrestricted cash and $25.0 million in restricted cash, with no borrowings under its ABL facility. Availability under the facility was $64.2 million, giving total reported liquidity of $297.2 million at March 31, 2026.

How large is Matrix Service Company’s backlog and remaining performance obligations?

Backlog totaled $1.03 billion at March 31, 2026, including $747.3 million in Storage and Terminal Solutions. Remaining performance obligations were $932.9 million, with the company expecting to recognize $665.5 million of that as revenue within the next twelve months.

What restructuring and leadership changes did Matrix Service Company undertake in fiscal 2026?

Matrix Service recorded $6.5 million in year-to-date restructuring and other costs, including $2.0 million related to the CEO transition and lease impairments. The CEO is scheduled to step down on June 30, 2026, and the company announced a planned CFO departure in fiscal 2027.

How did Matrix Service Company’s business segments perform in the quarter?

Storage and Terminal Solutions revenue rose 16% to $111.6 million, with a 7.0% gross margin. Utility and Power Infrastructure delivered 13.6% gross margin on $60.0 million revenue. Process and Industrial Facilities revenue declined to $35.1 million, with gross margin falling to 2.5%.