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What changed in MATRIX SERVICE CO's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of MATRIX SERVICE CO's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+226 added−215 removedSource: 10-K (2025-09-10) vs 10-K (2024-09-10)

Top changes in MATRIX SERVICE CO's 2025 10-K

226 paragraphs added · 215 removed · 160 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe also construct thermal vacuum test chambers for aerospace and defense industries and other infrastructure for industries including petrochemical, sulfur, mining and minerals primarily in the extraction of non-ferrous metals, cement, agriculture, wastewater treatment facilities and other industrial customers. OTHER BUSINESS MATTERS Customers and Marketing We provided services to approximately 270 customers in fiscal 2024.
Biggest changeWe also engineer and construct thermal vacuum test chambers for aerospace and defense industries and other infrastructure for industries including chemicals, petrochemical, sulfur, mining and minerals primarily in the extraction of non-ferrous metals, cement, agriculture, wastewater treatment facilities and other industrial customers. 4 Table of Contents STRATEGIC PRIORITIES Our strategy is focused on delivering long-term value and profitable growth through focused execution, encapsulated within three core pillars: Win Our differentiated capabilities and strong customer relationships position us to capitalize on multi-year spending cycles within LNG and NGL infrastructure, data centers, hydrogen storage and utility infrastructure.
This metric is also used by others in our industry, which allows for a more objective comparison of our performance. Our TRIR was 0.91, 0.73, and 0.51 during fiscal years 2024, 2023, and 2022, respectively.
This metric is also used by others in our industry, which allows for a more objective comparison of our performance. Our TRIR was 0.51, 0.91, and 0.73 during fiscal years 2025, 2024, and 2023, respectively.
Accordingly, we are committed to ensuring 5 Table of Contents compliance with all applicable laws and regulations, and to maintaining the highest standards of ethical conduct in accordance with our code of conduct. Health and Safety Ensuring the safety of our employees and those around us is integral to who we are, and paramount to our success and sustainability.
Accordingly, we are committed to ensuring compliance with all applicable laws and regulations, and to maintaining the highest standards of ethical conduct in accordance with our code of conduct. Health and Safety Ensuring the safety of our employees and those around us is integral to who we are, and paramount to our success and sustainability.
Within the Utility and Power Infrastructure segment, transmission and distribution work is generally scheduled by the public utilities when the demand for electricity is at its lowest. Therefore, revenue volume in the summer months is typically lower than in other periods throughout the year.
Within the Utility and Power Infrastructure segment, power delivery work is generally scheduled by the public utilities when the demand for electricity is at its lowest. Therefore, revenue volume in the summer months is typically lower than in other periods throughout the year.
While our intellectual property is not our main business, we believe that the ability to use these patents, trademarks, and technology enables us to expand our presence in the markets we serve and minimizes the development costs typically associated with organic growth. Regulation Health and Safety Regulations Our operations are subject to regulation by the U.S.
While our intellectual property is not our main business, we believe that the ability to use these patents, trademarks, and technology enables us to expand our presence in the markets we serve and minimizes the development costs typically associated with organic growth. Regulation 8 Table of Contents Health and Safety Regulations Our operations are subject to regulation by the U.S.
REPORTABLE SEGMENTS We operate our business through three reportable segments: • Storage and Terminal Solutions : primarily consists of engineering, procurement, fabrication, and construction services related to cryogenic and other specialty tanks and terminals for liquefied natural gas ("LNG"), natural gas liquids ("NGLs"), hydrogen, ammonia, propane, butane, liquid nitrogen/liquid oxygen, and liquid petroleum.
REPORTABLE SEGMENTS We operate our business through three reportable segments: • Storage and Terminal Solutions : primarily consists of engineering, procurement, fabrication, and construction services related to cryogenic and other specialty tanks and terminals for LNG, NGLs, hydrogen, ammonia, propane, butane, liquid nitrogen/liquid oxygen, and liquid petroleum.
Given the nature of our work, the size of our employee population can vary significantly throughout the year because of the number, type, and size of projects we have in progress at any particular time. As of June 30, 2024, we had 2,064 employees worldwide.
Given the nature of our work, the size of our employee population can vary significantly throughout the year because of the number, type, and size of projects we have in progress at any particular time. As of June 30, 2025, we had 2,239 employees worldwide.
In fiscal 2024, we continued to advance and strengthen our culture by continuing year-round learning opportunities on unconscious bias and other DEI-specific topics through our DEI education offering available to all employees through Matrix University, our internal training and development program.
In fiscal 2025, we continued to advance and strengthen our culture by continuing year-round learning opportunities on unconscious bias and other inclusion-specific topics through our education offerings available to all employees through Matrix University, our internal training and development program.
Diversity, Equity, and Inclusion (DEI) Foundational to attracting, developing, and retaining a diverse, engaged workforce is our commitment to making sure our employees feel safe, know they are valued, know that their work matters, and are provided opportunities to achieve their maximum potential.
Culture and Inclusion Foundational to attracting, developing, and retaining a diverse, engaged workforce is our commitment to making sure our employees feel safe, know they are valued, know that their work matters, and are provided opportunities to achieve their 7 Table of Contents maximum potential.
Human Capital Management Employees Successful execution of our business strategy is dependent on attracting, developing, and retaining key employees who represent our core values and the communities we serve.
Human Capital Management Employees 6 Table of Contents Successful execution of our business strategy is dependent on attracting, developing, and retaining key employees who represent our core values and the communities we serve. Our people are our greatest resource.
The patent for the Training Tank for Personnel Entry, Exit and Rescue relates to a training device that can be used to train personnel on equipment that is made to simulate confined space scenarios.
Our SwingMaster® trademark is used to market our central type swing joints. The patent for the Training Tank for Personnel Entry, Exit and Rescue relates to a training device that can be used to train personnel on equipment that is made to simulate confined space scenarios.
In order to limit costs incurred as a result of environmental exposure, we maintain contractor’s pollution liability insurance that covers liability that may be incurred as a result of accidental releases of hazardous materials. 7 Table of Contents We do not currently foresee any significant future capital spending relating to environmental matters.
In order to limit costs incurred as a result of environmental exposure, we maintain contractor’s pollution liability insurance that covers liability that may be incurred as a result of accidental releases of hazardous materials. We do not currently foresee any significant future capital spending relating to environmental matters. WEBSITE ACCESS TO REPORTS Our public website is matrixservicecompany.com .
Another customer accounted for $75.2 million or 10.3% of our consolidated revenue in fiscal 2024, which was primarily included in the Process and Industrial Facilities segment. See Part II, Item 8. Financial Statement and Supplementary Data, Note 13 - Segment Information, for more information about concentration of revenue by segment.
Another customer accounted for $80.8 million or 10.5% of our consolidated revenue in fiscal 2025, which was primarily included in the Storage and Terminal Solutions segment. See Part II, Item 8. Financial Statement and Supplementary Data, Note 13 - Segment Information, for more information about concentration of revenue by segment.
Investors, the media or other interested parties can subscribe to the X feed at the address listed above. The information contained in our social media accounts is not incorporated into this Annual Report or other documents we file with, or furnish to, the SEC.
The information contained in our social media accounts is not incorporated into this Annual Report or other documents we file with, or furnish to, the SEC.
Most of our revenue comes from long-term customer relationships. One customer accounted for $76.6 million or 10.5% of our consolidated revenue in fiscal 2024, which was primarily included in the Storage and Terminal Solutions segment.
Most of our revenue comes from long-term customer relationships. One customer accounted for $133.9 million or 17.4% of our consolidated revenue in fiscal 2025, which was primarily included in the Utilities and Power Infrastructure segment.
Through Matrix University, our people have access to resources that include a robust Learning Management System (LMS) that provides enterprise-wide access for employees to a number of online learning modules and support tools. 6 Table of Contents Our employees also benefit from the Matrix Performance Development Program, designed for collaborative development of annual performance goals and to promote continuous, transparent feedback between employees and their supervisors.
Through Matrix University, our people have access to resources that include a robust Learning Management System (LMS) that provides enterprise-wide access for employees to a number of online learning modules and support tools.
We are committed to cultivating an inclusive and dynamic work environment where people can find opportunities to succeed, grow and contribute to the success of the company. Our employees work each day to provide safe and reliable services to a wide range of customers in the states where we operate.
Our employees work each day to provide safe and reliable services to a wide range of customers in the states where we operate.
Global trade relationships and other general market and political conditions could also impact production, delivery or pricing of such equipment or materials (e.g., inflation, interest rates, recessionary economic conditions.) We have been proactive with managing our procurement processes to help reduce the impacts of these factors on our business and to help ensure we continue to have the equipment and materials we need available. 4 Table of Contents Rising prices and the potential for equipment and materials shortages have created additional risk in bidding and executing work profitably.
We have been proactive with managing our procurement processes to help reduce the impacts of these factors on our business and to help ensure we continue to have the equipment and materials we need available. Rising prices and the potential for equipment and materials shortages have created additional risk in bidding and executing work profitably. See Item 1A.
Total Rewards Package As part of our compensation philosophy and to attract and retain superior talent, we offer and maintain market-competitive total rewards programs for our employees.
Our ERGs also leverage data available through our participation in the Great Place To Work ® survey to identify areas for improvement specific to culture and inclusion. Total Rewards Package As part of our compensation philosophy and to attract and retain superior talent, we offer and maintain market-competitive total rewards programs for our employees.
Insurance We maintain insurance coverage for various aspects of our operations. However, exposure to potential losses is retained 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.
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.
Our people are our greatest resource, which makes our certification in fiscal 2024 as a Great Place To Work® — for the eighth consecutive year — both a point of pride and an invaluable tool for continuous improvement supporting our objective of remaining an employer of choice.
Since 2016, we have been certified as a Great Place To Work®, both a point of pride and an invaluable tool for continuous improvement supporting our objective of remaining an employer of choice.
Unless the context otherwise requires, all references herein to “Matrix Service Company”, “Matrix”, the “Company” or to “we”, “our”, and “us” are to Matrix Service Company and its subsidiaries.
Our principal executive offices are located at 15 E. 5th Street, Suite 1100, Tulsa, Oklahoma 74103. Our telephone number is (918) 838-8822. Unless the context otherwise requires, all references herein to “Matrix Service Company”, “Matrix”, the “Company” or to “we”, “our”, and “us” are to Matrix Service Company and its subsidiaries.
The Flex-A-Span® and Flex-A-Seal® trademarks are utilized to market our unique seals for floating roof tanks. The Flowdome® trademark is used to market our geodesic dome tank roofs. Our SwingMaster® trademark is used to market our central type swing joints.
Patents and Proprietary Technology Our subsidiaries have several patents and continue to pursue new ideas and innovations to better serve our customers in several areas of our business. The Flex-A-Span® and Flex-A-Seal® trademarks are utilized to market our unique seals for floating roof tanks. The Flowdome® trademark is used to market our geodesic dome tank roofs.
Employee Engagement We also empower our employees to donate time, talent, and resources through Company-led initiatives, matching for employee charitable contributions, and paid volunteer time off. Each year, our employees collectively log thousands of hours participating in individual community service projects in addition to hours they invest serving on boards and participating in Company-sponsored charitable events.
Each year, our employees collectively log thousands of hours participating in individual community service projects in addition to hours they invest serving on boards and participating in Company-sponsored charitable events. We also provide direct corporate financial support to nonprofit organizations in the communities where we live and work.
In 1989, we incorporated in the State of Delaware under the name of Matrix Service Company, and in 1990 we began trading on the NASDAQ exchange. We provide engineering, fabrication, construction, and maintenance services to support critical energy infrastructure and industrial markets.
Item 1. Business BUSINESS We began operations in 1984 as an Oklahoma corporation under the name of Matrix Service. In 1989, we incorporated in the State of Delaware under the name of Matrix Service Company, and in 1990 we began trading on the NASDAQ exchange.
We also perform traditional electrical work for public and private utilities, including construction of new substations, upgrades of existing substations, transmission and distribution line installations, and upgrades and maintenance including live wire work. Work may 3 Table of Contents also include emergency and storm restoration services.
We also perform power delivery work for public and private utilities, including construction of new substations, upgrades of existing substations, and maintenance.
The percentage of our employees represented by trade unions as of June 30, 2024, was approximately 23%. Operating under collective bargaining agreements with various unions, our union employees are provided with benefits including health and welfare, pension, training programs and competitive compensation plans.
Operating under collective bargaining agreements with various unions, our union employees are provided with benefits including health and welfare, pension, training programs and competitive compensation plans. We have not experienced any strikes or work stoppages in recent years and are proud that our relationships with our employees and labor unions are strong.
We maintain regional offices throughout the United States, Canada and other international locations, and operate through separate union and non-union subsidiaries. We operate in all 50 states, in four Canadian provinces and in other international locations. Our principal executive offices are located at 15 E. 5th Street, Suite 1100, Tulsa, Oklahoma 74103. Our telephone number is (918) 838-8822.
We provide engineering, fabrication, construction, and maintenance services to support critical energy infrastructure and industrial markets. We maintain regional offices throughout the United States, Canada and other international locations, and operate through separate union and non-union subsidiaries. We operate in all 50 states, in four Canadian provinces and in other international locations.
Of those employees, 638 were employed in office-based positions and 1,426 were employed in field or craft positions. The breakdown by country was: 1,846 located in the United States, 182 in Canada, and 36 across other international locations. At the end of fiscal 2024, worldwide, women in management represented 2.9% and 19.3% of our field and office teams, respectively.
Of those employees, 633 were employed in office-based positions and 1,606 were employed in field or craft positions. The location of our employees was as follows: Region % of Global Workforce United States 91 % Canada 7 % Other International 2 % The percentage of our employees represented by trade unions as of June 30, 2025, was approximately 23%.
We have not experienced any strikes or work stoppages in recent years and are proud that our relationships with our employees and labor unions are strong. Business Ethics and Core Values Core Values - Our success relies on the skills, experience and dedication of our employees.
Business Ethics and Core Values Core Values - Our success relies on the skills, experience and dedication of our employees. We are committed to cultivating an inclusive and dynamic work environment where people can find opportunities to succeed, grow and contribute to the success of the company.
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Item 1. Business FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K 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.
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Our purpose is to create long-term value for our employees, business partners, shareholders and communities everywhere. We are committed to fulfilling our purpose by being a profitable, innovative, and growth-oriented company of choice for engineering, constructing, and maintaining essential energy and industrial infrastructure that delivers its services safely, with high quality, and on time, resulting in strong customer relationships.
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All statements, other than statements of historical facts, included in this Annual Report 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.
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Through our zero incident safety culture, commitment to execution excellence and highly skilled workforce, we share one goal: to deliver the best to our customers, shareholders, employees and people across the globe who rely on the infrastructure we help design, build and maintain.
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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 Part I, Item 1A, Risk Factors.
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We are focused on increasing our share within existing markets while strategically expanding into high-value adjacent sectors. Execute Operational excellence is at the heart of our approach. We are driving disciplined capital allocation, rigorous project execution, and a strong safety culture to convert backlog into high-quality revenue.
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Consequently, all of the forward-looking statements made in this Annual Report 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.
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This enables us to expand margins, improve operating leverage, and achieve greater earnings potential. Deliver By scaling revenue and enhancing operational efficiency, we are building a resilient platform designed to generate consistent performance and long-term value for our shareholders.
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We assume no obligation to update, except as required by law, any such forward-looking statements, whether as a result of new information, future events or otherwise. 2 Table of Contents BACKGROUND We began operations in 1984 as an Oklahoma corporation under the name of Matrix Service.
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Matrix is well-positioned to benefit from ongoing infrastructure investment and modernization, supported by a proven track record, a strong balance sheet, and a commitment to transparency, performance, and disciplined capital allocation.
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We believe we have an obligation to better the world in which we live and work – to do today’s work in a manner that advances and protects tomorrow’s world for future generations. We are committed to fulfilling our purpose today by safely engineering, constructing, and maintaining essential infrastructure that provides a better, brighter future for tomorrow.
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COMPETITIVE STRENGTHS Our competitive strengths include our strong safety culture, industry leading expertise in complex storage infrastructure, full-service capabilities, long-term client relationships, high return of repeat customers, people/highly skilled workforce, commitment to execution excellence, and strong risk management practices. OTHER BUSINESS MATTERS Customers and Marketing We provided services to approximately 223 customers in fiscal 2025.
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Across the ideals of environmental stewardship, social responsibility, governance, diversity, equity and inclusiveness, we are committed to ensuring our business strategies, policies, and practices align with such ideals so we can have the greatest impact globally and in our own local communities. WEBSITE ACCESS TO REPORTS Our public website is matrixservicecompany.com .
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Types of Contracts We perform work for our customers under contracts with various compensation formats that include fixed-price, time-and-material, cost-plus, or some combination thereof. Fixed-price contracts cover a defined scope of services for a fixed amount.
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The percentage of minorities in management (U.S. only) for field and office represented 9.3% and 18.5%, respectively. Recognizing our commitment to Diversity, Equity and Inclusion (DEI) begins at the top. In fiscal 2024, 43% of our Independent Board Members were diverse, with 29% female and 14% ethnically diverse.
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Time-and-material contracts generally allow services to be provided for agreed-upon hourly rates for labor and reimbursement of the costs of certain materials and equipment, plus fees. Cost-plus contracts provide for reimbursement of the actual costs to perform work plus fees.
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Among the highlights were: • A panel discussion sponsored by our Women In Search of Excellence (WISE) ERG, in which employees from across Matrix and a major client explored ways to address unconscious bias and promote DEI in what has historically been a male-dominated industry. • A six-part video series sponsored by our Foundation of Pride ERG which focused on terms and definitions specific to the LGBTQIA+ community, designed to promote more respectful dialogue and foster a more inclusive work environment. • Research by our Working Parents ERG related to parental leave policies.
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Fixed-price contracts typically present opportunities for higher margins, but carry a greater risk in terms of profitability because cost overruns may not be recoverable. Time-and-material and cost-plus contracts generally have lower margins, but carry a lower risk of cost overruns.
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Our ERGs have also begun to analyze data available through our participation in the Great Place To Work ® survey to identify areas for improvement specific to DEI. We also continued as a member of CEO Action for Diversity & Inclusion and participated in a variety of community events focused on DEI.
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Time-and-material and cost-plus contracts may also include not-to-exceed provisions that impose risk on cost recovery and profitability, or target price and other performance provisions that provide opportunity and risk on profitability. A significant amount of our work is performed under contracts for specific projects on a fixed-price basis.
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We also provide direct corporate financial support to nonprofit organizations in the communities where we live and work. Patents and Proprietary Technology Our subsidiaries have several patents and continue to pursue new ideas and innovations to better serve our customers in several areas of our business.
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While we act as the prime contractor of full engineering, procurement, and construction ("EPC") scopes on many of our projects, we also execute a variety of contract scopes under various project delivery methods implemented by our customers, including but not limited to front-end engineering and design contracts, standalone engineering contracts, standalone fabrication contracts, standalone construction contracts, or some combination thereof, as well as and acting as a subcontractor to prime contractors for various scopes. 5 Table of Contents The Company also performs work under Master Service Agreements (“MSAs”), which allows us to provide more routine services to our customers on an as-needed basis, including but not limited to maintenance and repair services, typically priced using a time-and-material or cost-plus basis.
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Global trade relationships and other general market and political conditions could also impact production, delivery or pricing of such equipment or materials (e.g., inflation, interest rates, recessionary economic conditions, and tariffs).
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Risk Factors, Risks Related to our Business and Operations, for more information. Insurance We maintain insurance coverage for various aspects of our operations. However, exposure to potential losses is retained through the use of deductibles, self-insured retentions and coverage limits.
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Our employees also benefit from the Matrix Performance Development Program, designed for collaborative development of annual performance goals and to promote continuous, transparent feedback between employees and their supervisors. Employee Engagement We also empower our employees to donate time, talent, and resources through Company-led initiatives, matching for employee charitable contributions, and paid volunteer time off.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we experience delays and/or defaults in customer payments, we could suffer liquidity problems or we could be unable to recover amounts owed to us. 11 Table of Contents Under the terms of our contracts, at times we commit resources to customer projects prior to receiving payments from customers in amounts sufficient to cover expenditures on these projects as they are incurred.
Biggest changeUnder the terms of our contracts, at times we commit resources to customer projects prior to receiving payments from customers in amounts sufficient to cover expenditures on these projects as they are incurred. Many of our fixed-price or cost-plus contracts require us to satisfy specified progress milestones or performance standards in order to receive a payment.
Areas requiring significant estimation by our management include: • contract costs and application of percentage-of-completion accounting; • provisions for uncollectable receivables from customers for invoiced amounts; • the amount and collectability of unpriced change orders and claims against customers; • provisions for income taxes and related valuation allowances; • recoverability of goodwill and intangible assets; • valuation of assets acquired and liabilities assumed in connection with business combinations; and • accruals for estimated liabilities, including litigation and insurance reserves.
Areas requiring significant estimation by our management include: • contract costs and application of percentage-of-completion accounting; • provisions for uncollectable receivables from customers for invoiced amounts; • the amount and collectability of unpriced change orders and claims against customers; • provisions for income taxes and related valuation allowances; • recoverability of goodwill and intangible assets; • valuation of assets acquired and liabilities assumed in connection with business combinations; and • accruals for estimated liabilities, including litigation reserves.
The utilization of our workforce is impacted by numerous factors including: • our estimate of the headcount requirements for various operating units based upon our forecast of the demand for our products and services; • our ability to maintain our talent base and manage attrition; • productivity; • our ability to schedule our portfolio of projects to efficiently utilize our employees and minimize downtime between project assignments; and • our need to invest time and resources into functions such as training, business development, employee recruiting, and sales that are not chargeable to customer projects.
The utilization of our workforce is impacted by numerous factors including: • our estimate of the headcount requirements for various operating units based upon our forecast of the demand for our products and services; • our ability to maintain our talent base and manage attrition; • productivity; 10 Table of Contents • our ability to schedule our portfolio of projects to efficiently utilize our employees and minimize downtime between project assignments; and • our need to invest time and resources into functions such as training, business development, employee recruiting, and sales that are not chargeable to customer projects.
Financial Risks Our borrowing capacity under our Credit Agreement is determined by the size of our borrowing base and if the size of our borrowing base combined with our unrestricted cash does not provide adequate liquidity, then we may need to raise additional capital in the future for working capital letters of credit, capital expenditures and/or acquisitions, and we may not be able to do so on favorable terms or at all, which would impair our ability to operate our business or achieve our strategic plan.
Financial Risks Our borrowing capacity under our Credit Agreement is determined by the size of our borrowing base and if the size of our borrowing base combined with our unrestricted cash does not provide adequate liquidity, then we may need to raise 14 Table of Contents additional capital in the future for working capital, letters of credit, capital expenditures and/or acquisitions, and we may not be able to do so on favorable terms or at all, which would impair our ability to operate our business or achieve our strategic plan.
There are numerous factors beyond our control that influence the level of maintenance and capital expenditures of our customers, including: • the demand for alternative and renewable energy products, including hydrogen; • ability and demand to export LNG and other hydrocarbon products; • the demand for natural gas, oil and electricity; • current or projected commodity prices, including natural gas, oil, power and mineral prices; • refining margins; • the ability of energy and industrial companies to generate, access and deploy capital; • interest rates and inflation; • technological challenges and advances; • tax incentives, including those for alternative energy projects; 8 Table of Contents • regulatory restraints on the rates that power companies may charge their customers; and • local, national and international political and economic conditions.
There are numerous factors beyond our control that influence the level of maintenance and capital expenditures of our customers, including: • the demand for alternative and renewable energy products, including hydrogen; • ability and demand to export LNG and other hydrocarbon products; • the demand for natural gas, oil and electricity; • current or projected commodity prices, including natural gas, oil, power and mineral prices; • refining margins; • the ability of energy and industrial companies to generate, access and deploy capital; • interest rates, inflation, and tariffs; • technological challenges and advances; • tax incentives, including those for alternative energy projects; • regulatory restraints on the rates that power companies may charge their customers; and • local, national and international political and economic conditions.
To the extent that cash on hand, cash flow from operations, and borrowing availability under the Credit Agreement are insufficient to make future investments, or provide needed working capital, we may require additional financing from other sources.
To the extent that cash on hand, cash flow from operations, and borrowing availability under the Credit Agreement are insufficient to make future investments, or provide needed working capital or letters of credit, we may require additional financing from other sources.
Payment and claim disputes with customers may also cause us to incur increased interest costs resulting from incurring indebtedness under our revolving line of credit or receiving less interest income resulting from fewer funds invested due to the failure to receive payment for disputed claims and accounts.
Payment and claim disputes with customers may also cause us to incur increased interest costs 16 Table of Contents resulting from incurring indebtedness under our revolving line of credit or receiving less interest income resulting from fewer funds invested due to the failure to receive payment for disputed claims and accounts.
A small portion of our operations are conducted outside the United States, and accordingly, our business is subject to risks associated with doing business internationally, including changes in foreign currency exchange rates, instability in political or economic conditions, difficulty in repatriating cash proceeds, differing employee relations, differing regulatory environments, trade protection measures, and difficulty in administering and enforcing corporate policies which may be different than the normal business practices of local cultures. 16 Table of Contents Item 1B.
A small portion of our operations are conducted outside the United States, and accordingly, our business is subject to risks associated with doing business internationally, including changes in foreign currency exchange rates, instability in political or economic conditions, difficulty in repatriating cash proceeds, differing employee relations, differing regulatory environments, trade protection measures, and difficulty in administering and enforcing corporate policies which may be different than the normal business practices of local cultures.
The profit component is typically expressed in the contract either as a percentage of the reimbursable costs we actually incur or is factored into the rates we charge for labor or for the cost of equipment and materials, if any, we are required to provide.
The profit component is typically expressed in the contract either as a percentage of the 11 Table of Contents reimbursable costs we actually incur or is factored into the rates we charge for labor or for the cost of equipment and materials, if any, we are required to provide.
Further, many of our contracts contain various cost and performance incentives and penalties that impact the earnings we realize from our contracts, and adjustments related to these incentives and penalties are recorded on a percentage of completion basis in the period when estimable and probable.
Further, many of our contracts contain various cost and performance incentives and penalties that impact the earnings we realize from our contracts, 15 Table of Contents and adjustments related to these incentives and penalties are recorded on a percentage of completion basis in the period when estimable and probable.
The Employee Retirement Income Security Act of 1974, as amended by the Multiemployer Pension Plan Amendments Act of 1980, imposes certain liabilities upon employers who are contributors to a multiemployer plan in the event of the employer’s withdrawal from, or upon termination of, such plan.
The Employee Retirement Income Security Act of 1974, as amended by the Multiemployer Pension Plan Amendments Act of 1980, 13 Table of Contents imposes certain liabilities upon employers who are contributors to a multiemployer plan in the event of the employer’s withdrawal from, or upon termination of, such plan.
Additionally, our clients' interest in approving new projects, budgets for capital expenditures and need for our services have in the past been, and may in the future be, adversely affected by, among other things, poor economic conditions, including inflation, slow growth or recession, changes to governments' fiscal or monetary policy and higher interest rates.
Additionally, our clients' interest in approving new projects, budgets for capital expenditures and need for our services have in the past been, and may in the future be, adversely affected by, among other things, poor economic conditions, including inflation, slow growth or recession, changes 12 Table of Contents to governments' fiscal or monetary policy and higher interest rates.
Risk Factors Related to Our Business and Operations Our results of operations depend upon the award of new contracts, the timing of those awards, and the progress of work for those contracts. Our revenue is derived primarily from contracts awarded on a project-by-project basis.
Risk Factors Related to Our Business and Operations Our results of operations depend upon the award of new contracts, the timing of those awards, and the progress of work for those contracts. 9 Table of Contents Our revenue is derived primarily from contracts awarded on a project-by-project basis.
As a result, we may adjust our estimates on one or more occasions as a result of changes in cost estimates, change orders to the original contract, or claims against the customer for increased costs incurred by us due to customer-induced delays and other factors.
We review our estimates of contract revenue, costs and profitability on a monthly basis. As a result, we may adjust our estimates on one or more occasions as a result of changes in cost estimates, change orders to the original contract, or claims against the customer for increased costs incurred by us due to customer-induced delays and other factors.
In addition, project cancellations or scope adjustments may occur from time to time with respect to contracts included in our backlog that could reduce the dollar amount of our backlog and the revenue and profits that we actually earn. Many of our contracts have termination rights. Therefore, project adjustments may occur from time to time to contracts in our backlog.
Projects may remain in our backlog for an extended period of time. In addition, project cancellations or scope adjustments may occur from time to time with respect to contracts included in our backlog that could reduce the dollar amount of our backlog and the revenue and profits that we actually earn. Many of our contracts have termination rights.
Our failure to comply with applicable laws or regulations or acts of misconduct could subject us to fines and penalties, harm our reputation, damage our relationships with customers, reduce our revenue and profits and subject us to criminal and civil enforcement actions.
Our failure to comply with applicable laws or regulations or acts of misconduct could subject us to fines and penalties, harm our reputation, damage our relationships with customers, reduce our revenue and profits and subject us to criminal and civil enforcement actions. Environmental factors and changes in laws and regulations could increase our costs and liabilities.
The terms of our contracts could expose us to unforeseen costs and costs not within our control, which may not be recoverable and could adversely affect our results of operations and financial condition. A significant amount of our work is performed under fixed-price contracts.
Therefore, project adjustments may occur from time to time to contracts in our backlog. The terms of our contracts could expose us to unforeseen costs and costs not within our control, which may not be recoverable and could adversely affect our results of operations and financial condition. A significant amount of our work is performed under fixed-price contracts.
Our projects often involve highly regulated materials, including hazardous wastes. Environmental laws and regulations generally impose limitations and standards for regulated materials and require us to obtain permits and comply with various other requirements.
Environmental laws and regulations generally impose limitations and standards for regulated materials and require us to obtain permits and comply with various other requirements.
In addition, we perform an impairment review whenever events or changes in circumstances indicate the fair value of a goodwill reporting unit may be less than its carrying value or the carrying value of an intangible or fixed asset may not recoverable.
In addition, we perform an impairment review whenever events or changes in circumstances indicate the fair value of a goodwill reporting unit may be less than its carrying value or the carrying value of an intangible or fixed asset may not recoverable. As of June 30, 2025, we had $29.0 million of non-amortizing goodwill representing 4.8% of our total assets.
Climate change legislation or regulations restricting emissions of “greenhouse gases” could result in reduced demand for certain services and products we provide. There has been an increased focus in the last several years on climate change in response to findings that emissions of carbon dioxide, methane and other greenhouse gases present an endangerment to public health and the environment.
There has been an increased focus in the last several years on climate change in response to findings that emissions of carbon dioxide, methane and other greenhouse gases present an endangerment to public health and the environment.
Revenue for fixed-price contracts is recognized using the percentage-of-completion method of accounting. Under percentage-of-completion accounting, contract revenue and earnings are recognized ratably over the contract term based on the proportion of actual costs incurred to total estimated costs. We review our estimates of contract revenue, costs and profitability on a monthly basis.
Accounting Risks Our use of percentage-of-completion accounting for fixed-price contracts could result in a reduction or elimination of previously reported profits. Revenue for fixed-price contracts is recognized using the percentage-of-completion method of accounting. Under percentage-of-completion accounting, contract revenue and earnings are recognized ratably over the contract term based on the proportion of actual costs incurred to total estimated costs.
Our ability to attract and retain qualified engineers, project managers, skilled craftsmen and other experienced professionals in accordance with our need is an important factor in our ability to maintain profitability and grow our business. The market for these professionals is competitive, particularly during periods of economic growth when the supply is limited.
Our ability to attract and retain qualified engineers, project managers, skilled craftsmen and other experienced professionals in accordance with our need is an important factor in our ability to maintain profitability and grow our business.
The availability of engineering and construction projects is dependent upon economic conditions and the outlook for renewable energy, hydrogen, natural gas, oil, petrochemical, industrial, and power industries, and specifically, the level of capital expenditures on energy infrastructure. Additionally, we expect our customers to benefit from bills such as the Infrastructure Investment and Jobs Act and the Inflation Reduction Act.
The availability of engineering and construction projects is dependent upon economic conditions and the outlook for renewable energy, hydrogen, natural gas, oil, petrochemical, industrial, and power industries, and specifically, the level of capital expenditures on energy infrastructure.
We depend on our software vendors to provide long-term software maintenance support for our information systems.
We rely on various software systems to conduct our critical operating and administrative functions. We depend on our software vendors to provide long-term software maintenance support for our information systems.
Environmental factors and changes in laws and regulations could increase our costs and liabilities. 15 Table of Contents Our operations are subject to environmental laws and regulations, including those concerning emissions into the air; discharges into waterways; generation, storage, handling, treatment and disposal of hazardous material and wastes; and health and safety.
Our operations are subject to environmental laws and regulations, including those concerning emissions into the air; discharges into waterways; generation, storage, handling, treatment and disposal of hazardous material and wastes; and health and safety. Our projects often involve highly regulated materials, including hazardous wastes.
We can provide no absolute assurance that our operations will continue to comply with future laws and regulations or that the costs to comply with these laws and regulations and/or a failure to comply with these laws will not significantly adversely affect our business, financial condition and results of operations.
We can provide no absolute assurance that our operations will continue to comply with future laws and regulations or that the costs to comply with these laws and regulations and/or a failure to comply with these laws will not significantly adversely affect our business, financial condition and results of operations. 17 Table of Contents Climate change legislation or regulations restricting emissions of “greenhouse gases” could result in reduced demand for certain services and products we provide.
If the customer fails or refuses to pay us for any reason, there is no assurance we will be able to collect amounts due to us for costs previously incurred.
Under these types of arrangements, we may incur significant costs for labor, equipment and supplies prior to receipt of payment. If the customer fails or refuses to pay us for any reason, there is no assurance we will be able to collect amounts due to us for costs previously incurred.
The loss of one or more of our significant customers could adversely affect us. One or more customers have in the past and may in the future contribute a material portion of our revenue in any one year.
If we do incur additional compensation and benefit costs, our customer contracts may not allow us to pass through these costs. The loss of one or more of our significant customers could adversely affect us. One or more customers have in the past and may in the future contribute a material portion of our revenue in any one year.
As of June 30, 2024, we had $1.7 million of amortizing intangible assets and $29.0 million of non-amortizing goodwill representing 0.4% and 6.4% of our total assets, respectively. 14 Table of Contents Legal, Insurance, Regulatory and Compliance Risks We are involved, and are likely to continue to be involved in legal proceedings, which will increase our costs and, if adversely determined, could have a material effect on our financial condition, results of operations, cash flows and liquidity.
Legal, Insurance, Regulatory and Compliance Risks We are involved, and are likely to continue to be involved in legal proceedings, which will increase our costs and, if adversely determined, could have a material effect on our financial condition, results of operations, cash flows and liquidity.
Because these significant customers generally contract with us for specific projects or for specific periods of time, we may lose 9 Table of Contents these customers from year to year as the projects or maintenance contracts are completed.
Because these significant customers generally contract with us for specific projects or for specific periods of time, we may lose these customers from year to year as the projects or maintenance contracts are completed. The loss of business from any one of these customers could have a material adverse effect on our business or results of operations.
While receivables associated with fixed price work do not increase the borrowing base, such work often has upfront billings, which help support the liquidity needs of the business. As of June 30, 2024, our borrowing base was $60.9 million. Our borrowing base has ranged from $60.9 million to $74.6 million during fiscal 2024.
While receivables associated with fixed price work do not increase the borrowing base, such work often has upfront billings, which help support the liquidity needs of the business.
Any sudden loss, disruption or unexpected costs to maintain these systems could significantly increase our operational expense as well as disrupt the management of our business operations. 12 Table of Contents We rely on various software systems to conduct our critical operating and administrative functions.
We rely on internally and externally developed software applications and systems to support critical functions including project management, estimating, scheduling, human resources, accounting, and financial reporting. Any sudden loss, disruption or unexpected costs to maintain these systems could significantly increase our operational expense as well as disrupt the management of our business operations.
We cannot provide any assurance that we will be successful in our efforts to retain or attract qualified personnel when needed.
The market for these professionals is competitive, particularly during periods of economic growth when the supply is limited. We cannot provide any assurance that we will be successful in our efforts to retain or attract qualified personnel when needed.
Poor safety performance could also jeopardize our relationships with our customers and increase our insurance premiums. We are exposed to credit risk from customers.
Poor safety performance could also jeopardize our relationships with our customers and increase our insurance premiums. We are exposed to credit risk from customers. If we experience delays and/or defaults in customer payments, we could suffer liquidity problems or we could be unable to recover amounts owed to us.
These difficult conditions may also cause us to incur additional, unanticipated costs that we might not be able to pass on to our customers.
These difficult conditions may also cause us to incur additional, unanticipated costs that we might not be able to pass on to our customers. We are susceptible to severe weather conditions, including those caused by climate change or otherwise, which may harm our business and financial results.
The loss of business from any one of these customers could have a material adverse effect on our business or results of operations. Our backlog is subject to unexpected fluctuations, adjustments and cancellations and does not include the full value of our long-term maintenance contracts, and therefore, may not be a reliable indicator of our future earnings.
Our backlog is subject to unexpected fluctuations, adjustments and cancellations and does not include the full value of our long-term maintenance contracts, and therefore, may not be a reliable indicator of our future earnings. Backlog may not be a reliable indicator of our future performance. We cannot guarantee that the revenue projected in our backlog will be realized or profitable.
We are susceptible to severe weather conditions, including those caused by climate change or otherwise, which may harm our business and financial results. 10 Table of Contents Our business may be adversely affected by severe weather in areas where we have significant operations.
Our business may be adversely affected by severe weather in areas where we have significant operations.
Domestic and foreign trade tariffs could raise the price and reduce the availability of raw materials such as steel plate and steel pipe, which are key materials used by us. Supplies of these materials are available throughout the United States and globally from numerous sources. We anticipate that adequate amounts of these materials will be available in the foreseeable future.
Domestic and foreign trade tariffs could raise the price and reduce the availability of raw materials such as steel plate and steel pipe, which are key materials used by us. Increased costs of raw materials could cause us to experience lower gross margins, operational inefficiencies and project delays.
However, if trade tariffs should significantly impact the price and availability of these materials, we could experience lower gross margins, operational inefficiencies and project delays. Unsatisfactory safety performance may subject us to penalties, affect customer relationships, result in higher operating costs, negatively impact employee morale and result in higher employee turnover.
These factors could increase our costs and reduce our customers’ demand for our services, including decisions by our clients on project viability or timing, which could negatively impact our operating results and financial condition. Unsatisfactory safety performance may subject us to penalties, affect customer relationships, result in higher operating costs, negatively impact employee morale and result in higher employee turnover.
Removed
While spending and stimulus bills are expected to provide funding in many of the markets in which we operate, we may not be able to obtain the expected benefits from these bills or similar bills in the future.
Added
One customer accounted for $133.9 million or 17.4% of our consolidated revenue in fiscal 2025, which was primarily included in the Utilities and Power Infrastructure segment. Another customer accounted for $80.8 million or 10.5% of our consolidated revenue in fiscal 2025, which was primarily included in the Storage and Terminal Solutions segment.
Removed
If we do incur additional compensation and benefit costs, our customer contracts may not allow us to pass through these costs.
Added
These factors could materially and adversely affect the demand for our services. Changes in global trade policy and the impact on tariffs may have a material adverse effect on business operations and financial performance. The new U.S. presidential administration has announced tariffs on U.S. imports generally, with higher rates for select U.S. trade partners.
Removed
Our project managers are involved in most aspects of contracting and contract execution, including: • supervising the bidding process, including providing estimates of significant cost components, such as material and equipment needs, and the size, productivity and composition of the workforce; • negotiating contracts; • supervising project performance, including performance by our employees, subcontractors and other third-party suppliers and vendors; • estimating costs for completion of contracts that is used to estimate amounts that can be reported as revenue and earnings on the contract under the percentage-of-completion method of accounting; • negotiating requests for change orders and the final terms of approved change orders; and • determining and documenting claims by us for increased costs incurred due to the failure of customers, subcontractors and other third-party suppliers of equipment and materials to perform on a timely basis and in accordance with contract terms.
Added
Certain foreign governments have also announced retaliatory tariffs. The tariff policy environment has been and is expected to continue to be dynamic, and we cannot predict what additional actions may ultimately be taken by the United States or other governments with respect to tariffs or trade relations.
Removed
Backlog may not be a reliable indicator of our future performance. We cannot guarantee that the revenue projected in our backlog will be realized or profitable. Projects may remain in our backlog for an extended period of time.
Added
We include contract provisions that mitigate our exposure to fluctuations in material costs and to the impact of changes in laws and regulations. We also utilize contracting strategies that allow us to spread the risk of cost increases to other involved parties.
Removed
These factors could materially and adversely affect the demand for our services. Domestic and foreign trade tariffs could raise the price and reduce the availability of raw materials to us, which could negatively impact our operating results and financial condition.
Added
However, we may be unable to pass through some or all of these increases in costs to other parties which may materially affect our results of operations. To the extent we can, we also mitigate these risks primarily by procuring materials upon contract execution to ensure that our purchase price approximates the costs included in the project estimate.
Removed
Many of our fixed-price or cost-plus contracts require us to satisfy specified progress milestones or performance standards in order to receive a payment. Under these types of arrangements, we may incur significant costs for labor, equipment and supplies prior to receipt of payment.
Added
Additionally, tariffs or other trade restrictions may lead to continuing uncertainty and volatility in U.S. economic conditions and commodity markets, declining consumer confidence, significant inflation, and diminished expectations for the economy.
Removed
We rely on internally and externally developed software applications and systems to support critical functions including project management, estimating, scheduling, human resources, accounting, and financial reporting.
Added
Customers may require us to provide forms of performance security, including letters of credit, or surety bonds. We are often required to provide performance security to customers to indemnify the customer should we fail to perform our obligations under the contract.
Removed
A portion of our business depends on our ability to provide surety bonds or letters of credit.
Added
Failure to provide the required performance security on terms required by a customer may result in an inability to bid, win or comply with the contract. Historically, we have had adequate letters of credit capacity but such capacity beyond our Senior Credit Facility is generally at the provider’s sole discretion.
Removed
Current or future market conditions, including losses incurred in the construction industry or as a result of large corporate bankruptcies, as well as changes in our sureties’ assessment of our operating and financial risk, could cause our surety providers and lenders to decline to issue or renew, or substantially reduce the amount of, bid or performance bonds for our work and could increase our costs associated with collateral.
Added
Due to events that affect the banking and insurance markets, letters of credit or surety bonds may be difficult to obtain or may only be available at significant cost. In addition, future projects may require us to obtain letters of credit that extend beyond the term of our Senior Credit Facility.
Removed
These actions could be taken on short notice.
Added
Any inability to bid for or win new contracts due to the failure of obtaining adequate letters of credit, surety bonds or other customary forms of performance security could have a material adverse effect on our business prospects and future revenues.
Removed
If our surety providers or lenders were to limit or eliminate our access to bonding or letters of credit, our alternatives would include seeking capacity from other sureties and lenders or finding more business that does not require bonds or that allows for other forms of collateral for project performance, such as cash.
Removed
We may be unable to secure these alternatives in a timely manner, on acceptable terms, or at all, which could affect our ability to bid for or work on certain future projects requiring financial assurances. 13 Table of Contents Under standard terms in the surety market, sureties issue or continue bonds on a project-by-project basis and can decline to issue bonds at any time or require the posting of additional collateral as a condition to issuing or renewing bonds.
Removed
If we were to experience an interruption or reduction in the availability of bonding capacity as a result of these or other reasons, we may be unable to compete for or work on certain projects that require bonding. Accounting Risks Our use of percentage-of-completion accounting for fixed-price contracts could result in a reduction or elimination of previously reported profits.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCybersecurity Risks, Threats and Material Incidents We describe whether and how risks from identified cybersecurity threats, including as a result of any prior cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial conditions under Item 1A.
Biggest changeIn the event a cybersecurity incident is determined to be potentially material, the incident is reported in a timely manner to our Board of Directors as part of their cybersecurity oversight. 19 Table of Contents Cybersecurity Risks, Threats and Material Incidents We describe whether and how risks from identified cybersecurity threats, including as a result of any prior cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial conditions under Item 1A.
Our Director maintains the following internationally recognized certifications: Global Information Assurance Certification ("GIAC") Security Essentials, GIAC Certified Enterprise Defender, GIAC Certified Incident Handler Certification, GIAC Certified Windows Security Administrator, and GIAC Critical Controls Certification. Our Director reports to our Vice President of Information Technology, who receives continuous updates regarding the prevention, detection, mitigation and remediation of cybersecurity incidents.
Our Director maintains the following internationally recognized certifications: Global Information Assurance Certification ("GIAC"), GIAC Certified Enterprise Defender, GIAC Certified Incident Handler Certification, GIAC Certified Windows Security Administrator, and GIAC Critical Controls Certification. Our Director reports to our Vice President of Information Technology, who receives continuous updates regarding the prevention, detection, mitigation and remediation of cybersecurity incidents.
Risk Factors, Risks Related to our Business and Operations, "A failure or outage in our operations systems or cybersecurity attacks on any of our systems, or those of third parties, may adversely affect our financial results." 18 Table of Contents
Risk Factors, Risks Related to our Business and Operations, "A failure or outage in our operations systems or cybersecurity attacks on any of our systems, or those of third parties, may adversely affect our financial results."
Our Vice President of Information Technology has over 19 years of experience in developing and executing strategic initiatives to drive organizational growth and innovation, with responsibilities for IT governance, technology strategy development, and cybersecurity. In additional to a Masters of Business 17 Table of Contents Administration, our Vice President of Information Technology holds a Certified Information Systems Security Professional certification.
Our Vice President of Information Technology has over 20 years of experience in developing and executing strategic initiatives to drive organizational growth and innovation, with responsibilities for IT governance, technology strategy development, and cybersecurity. In additional to a Masters of Business Administration, our Vice President of Information Technology holds a Certified Information Systems Security Professional certification.
Employees receive training on how to identify and report cyber risks and events through our cybersecurity awareness program. Additionally, we hold cybersecurity risk insurance. We also engage external experts to evaluate our cybersecurity programs. These evaluations include regular audits, threat assessments, simulated attacks, vulnerability scans and advice on information security practices. We routinely conduct incident response exercises with key stakeholders.
We also engage external experts to evaluate our cybersecurity programs. These evaluations include regular audits, threat assessments, simulated attacks, vulnerability scans and advice on information security practices. We routinely conduct incident response exercises with key stakeholders.
These governance processes apply across the enterprise risk management program to other legal, compliance, strategic, operational and financial risk areas, ensuring that cybersecurity risks are managed effectively and are in line with the organization's risk tolerance and business objectives. Our cyber risk program leverages internationally recognized standards as appropriate. All employees participate in multiple information security training programs.
These governance processes apply across the enterprise risk management program to other legal, compliance, strategic, operational and financial risk areas, ensuring that cybersecurity risks are managed effectively and are in line with the organization's risk tolerance and business objectives.
Cybersecurity incidents are reported to our Vice President of Information Technology, and critical events are reported to our CEO and our Chief Legal Counsel. In the event a cybersecurity incident is determined to be potentially material, the incident is reported in a timely manner to our Board of Directors as part of their cybersecurity oversight.
Cybersecurity incidents are reported to our Vice President of Information Technology, and critical events are reported to our CEO and our Chief Legal Counsel.
Added
Our security program generally incorporates the guidelines of the widely utilized National Institute of Standards and Technology Cybersecurity Framework, though this does not imply we meet any particular technical standards, specifications or requirements.
Added
As part of our enterprise-wide risk management strategy and commitment to continuous improvement, we are 18 Table of Contents actively pursuing ISO/IEC 27001 certification, the internationally recognized standard for information security management systems. We have initiated the formal implementation process, including a comprehensive gap assessment and roadmap development.
Added
Progress toward certification is regularly reviewed by the IT Steering Committee and reported to the Board of Directors. All employees participate in multiple information security training programs. Employees receive training on how to identify and report cyber risks and events through our cybersecurity awareness program. Additionally, we hold cybersecurity risk insurance.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties Our principal properties are as follows: Location Description of Facility Segment Interest United States: Tulsa, Oklahoma Corporate headquarters and regional office All segments Leased Bakersfield, California Fabrication facility All segments Owned Bellingham, Washington Regional office, fabrication facility and warehouse Process and Industrial Facilities, Storage and Terminal Solutions Owned Broomall, Pennsylvania Regional office All segments Leased Catoosa, Oklahoma Fabrication facility, regional offices and warehouses All segments Leased & Owned (1) Columbus, Ohio Regional office All segments Leased Houston, Texas Regional offices and warehouse All segments Leased & Owned Irvine, California Regional office All segments Leased Norco, California Regional office and warehouse Process and Industrial Facilities, Storage and Terminal Solutions Leased Orange, California Regional office and fabrication and warehouse facility All segments Leased (2) Pittsburgh, Pennsylvania Regional office All segments Leased Somerset, New Jersey Regional office and warehouse Utility and Power Infrastructure, Process and Industrial Facilities Leased Temperance, Michigan Regional office and warehouse Storage and Terminal Solutions Owned Tucson, Arizona Regional office and warehouse Process and Industrial Facilities, Storage and Terminal Solutions Leased International: Leduc, Alberta, Canada Regional office and warehouse Storage and Terminal Solutions Leased Sarnia, Ontario, Canada Regional office and warehouse Storage and Terminal Solutions Owned Paju-si, Gyeonggi-do, South Korea Fabrication facility, regional office and warehouse Storage and Terminal Solutions Owned Sydney, New South Wales, Australia Regional office Storage and Terminal Solutions Leased (1) We constructed certain facilities on land acquired through ground leases with renewal options.
Biggest changeProperties Our principal properties are as follows: Location Description of Facility Segment Interest United States: Tulsa, Oklahoma Corporate headquarters and regional office All segments Leased Bakersfield, California Fabrication facility All segments Owned Bellingham, Washington Regional office, fabrication facility and warehouse Process and Industrial Facilities, Storage and Terminal Solutions Owned Broomall, Pennsylvania Regional office All segments Leased Catoosa, Oklahoma Fabrication facility, regional offices and warehouses All segments Leased & Owned (1) Columbus, Ohio Regional office All segments Leased Houston, Texas Regional offices and warehouse All segments Leased & Owned Irvine, California Regional office All segments Leased Norco, California Regional office and warehouse Process and Industrial Facilities, Storage and Terminal Solutions Leased Pittsburgh, Pennsylvania Regional office All segments Leased Temperance, Michigan Regional office and warehouse Storage and Terminal Solutions Owned Tucson, Arizona Regional office and warehouse Process and Industrial Facilities, Storage and Terminal Solutions Leased Norwich, Connecticut Regional office Utility Power and Infrastructure Leased Harleysville, Pennsylvania Warehouse All segments Leased International: Leduc, Alberta, Canada Regional office and warehouse Storage and Terminal Solutions Leased Sarnia, Ontario, Canada Regional office and warehouse Storage and Terminal Solutions Owned Paju-si, Gyeonggi-do, South Korea Fabrication facility, regional office and warehouse Storage and Terminal Solutions Owned Sydney, New South Wales, Australia Regional office Storage and Terminal Solutions Leased (1) We constructed certain facilities on land acquired through ground leases with renewal options.
(2) This facility is being replaced by our Bakersfield, California and Irvine, California locations. The Orange, California lease will be terminated in early FY2025. In addition to the locations listed above, we have smaller regional locations and temporary office facilities at numerous customer locations throughout the United States and Canada. 19 Table of Contents
In addition to the locations listed above, we have smaller regional locations and temporary office facilities at numerous customer locations throughout the United States and Canada. 20 Table of Contents

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed2 unchanged
Biggest changeInformation concerning mine safety violations or other regulatory matters required to be disclosed in this annual report under Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Annual Report on Form 10-K. 20 Table of Contents PART II
Biggest changeInformation concerning mine safety violations or other regulatory matters required to be disclosed in this annual report under Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Annual Report on Form 10-K. 21 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−0 removed3 unchanged
Biggest changeAny future dividend payments will depend on the terms of our Credit Agreement, our financial condition, capital requirements and earnings as well as other relevant factors. 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.
Biggest changeFinancial Statement and Supplementary Data, Note 5 - Debt for more information about our Credit Agreement). Any future dividend payments will depend on the terms of our Credit Agreement, our financial condition, capital requirements and earnings as well as other relevant factors.
The graph below assumes an investment of $100 (with reinvestment of all dividends) in our common stock, the NASDAQ Composite Index, and the Dow Jones U.S. Heavy Construction Index on June 30, 2019 and tracks their relative performance through June 30, 2024.
The graph below assumes an investment of $100 (with reinvestment of all dividends) in our common stock, the NASDAQ Composite Index, and the Dow Jones U.S. Heavy Construction Index on June 30, 2019 and tracks their relative performance through June 30, 2025.
The following graph compares, for the period from June 30, 2019 to June 30, 2024, the cumulative stockholder return on our common stock with the cumulative total return of the NASDAQ Composite Index and the Dow Jones U.S. Heavy Construction Index.
The following graph compares, for the period from June 30, 2020 to June 30, 2025, the cumulative stockholder return on our common stock with the cumulative total return of the NASDAQ Composite Index and the Dow Jones U.S. Heavy Construction Index.
The program will continue unless and until it is modified or revoked by the Board of Directors. We made no repurchases under the program during fiscal 2024 and have no current plans to repurchase stock. As of June 30, 2024, there were 1,349,037 shares available for repurchase under the Stock Buyback Program.
We made no repurchases under the program during fiscal 2025 and have no current plans to repurchase stock. As of June 30, 2025, there were 1,349,037 shares available for repurchase under the Stock Buyback Program.
As of August 31, 2024, there were 18 holders of record of our common stock. Dividend Policy We have never paid cash dividends on our common stock and the terms of our Credit Agreement prohibit us from paying cash dividends (see Item 8. Financial Statements and Supplementary Data, Note 5 - Debt for more information about our Credit Agreement).
As of August 31, 2025, there were 17 holders of record of our common stock. Dividend Policy We have never paid cash dividends on our common stock and the terms of our Credit Agreement prohibit us from paying cash dividends (See Part II, Item 8.
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.
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 stock price performance reflected in the following graph is not necessarily indicative of future stock performance. 21 Table of Contents June 30, 2019 2020 2021 2022 2023 2024 Matrix Service Company $ 100.00 $ 47.98 $ 51.83 $ 24.98 $ 29.07 $ 49.01 NASDAQ Composite $ 100.00 $ 126.94 $ 184.36 $ 141.17 $ 178.08 $ 230.80 Dow Jones US Heavy Construction $ 100.00 $ 86.84 $ 158.06 $ 167.88 $ 248.43 $ 302.55
The stock price performance reflected in the following graph is not necessarily indicative of future stock performance. 22 Table of Contents June 30, 2020 2021 2022 2023 2024 2025 Matrix Service Company $ 100.00 $ 108.02 $ 52.06 $ 60.60 $ 102.16 $ 138.99 NASDAQ Composite $ 100.00 $ 145.23 $ 111.21 $ 140.28 $ 181.81 $ 210.31 Dow Jones US Heavy Construction $ 100.00 $ 182.02 $ 193.33 $ 286.09 $ 348.41 $ 484.53
Added
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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeMajor components of cash flows provided by operating activities for the year ended June 30, 2024 are as follows: Net Cash Provided by Operating Activities (In thousands) Fiscal Year Ended June 30, 2024 Net loss $ (24,976) Gain on sale of property, plant and equipment (1) (4,923) Depreciation and amortization 11,023 Stock-based compensation expense 7,745 Other non-cash expenses 1,362 Cash effect of changes in operating assets and liabilities 82,340 Net cash provided by operating activities $ 72,571 (1) Gain on sale of property, plant and equipment includes a $4.5 million total gain on the sale of our Burlington, Ontario facility and Catoosa, Oklahoma facility that were disposed of in the first quarter of fiscal 2024 and the second quarter of fiscal 2024, respectively.
Biggest changeFor additional information regarding our ABL Facility, see Item I of Part I, "Financial Statements - Note 5 - Debt." CASH FLOW ANALYSIS The following table summarizes our changes in cash flow activities for the periods indicated (in thousands): Fiscal Years Ended June 30, 2025 2024 Cash flows provided by operating activities $ 117,471 $ 72,571 Cash flows used by investing activities (7,445) (945) Cash flows used by financing activities (1,040) (10,372) Effect of exchange rate changes on cash 40 (451) Change in cash and cash equivalents 109,026 60,803 Cash and cash equivalents at beginning of period 140,615 79,812 Cash and cash equivalents at end of period $ 249,641 $ 140,615 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): Fiscal Years Ended June 30, 2025 2024 Net loss $ (29,462) $ (24,976) Gain on sale of property, plant and equipment (1) 8 (4,923) Depreciation and amortization 10,012 11,023 Stock-based compensation expense 8,904 7,745 Other non-cash expenses 234 1,362 Cash effect of changes in operating assets and liabilities 127,775 82,340 Net cash provided by operating activities $ 117,471 $ 72,571 (1) Gain on sale of property, plant and equipment includes a $4.5 million total gain on the sale of our Burlington, Ontario facility and Catoosa, Oklahoma facility that were disposed of in the first quarter of fiscal 2024 and the second quarter of fiscal 2024, respectively.
Material Cash Requirements from Contractual and Other Obligations As of June 30, 2024, our short-term and long-term material cash requirements for known contractual and other obligations were as follows: • Operating Leases : In the normal course of business, we lease real estate and equipment under various arrangements which are classified as operating leases.
Material Cash Requirements from Contractual and Other Obligations As of June 30, 2025, our short-term and long-term material cash requirements for known contractual and other obligations were as follows: • Operating Leases : In the normal course of business, we lease real estate and equipment under various arrangements which are classified as operating leases.
We also construct thermal vacuum test chambers for aerospace and defense industries and other infrastructure for industries including petrochemical, sulfur, mining and minerals primarily in the extraction of non-ferrous metals, cement, agriculture, wastewater treatment facilities and other industrial customers.
We also engineer and construct thermal vacuum test chambers for aerospace and defense industries and other infrastructure for industries including chemicals, petrochemical, sulfur, mining and minerals primarily in the extraction of non-ferrous metals, cement, agriculture, wastewater treatment facilities and other industrial customers.
Overview Significant period to period changes in revenue, gross profits and operating results between fiscal 2024 and fiscal 2023 are discussed below on a consolidated basis for each segment. A discussion of results of operations changes between fiscal 2023 and fiscal 2022 is included in Item 7.
Overview Significant period to period changes in revenue, gross profits and operating results between fiscal 2025 and fiscal 2024 are discussed below on a consolidated basis for each segment. A discussion of results of operations changes between fiscal 2024 and fiscal 2023 is included in Item 7.
However, the results of litigation are inherently unpredictable and the possibility exists that the ultimate resolution of one or more of these matters could result in a material effect on our financial position, results of operations or liquidity. 34 Table of Contents
However, the results of litigation are inherently unpredictable and the possibility exists that the ultimate resolution of one or more of these matters could result in a material effect on our financial position, results of operations or liquidity. 37 Table of Contents
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, 2026.
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.
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.
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 34 Table of Contents 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.
These operating assets can fluctuate based on the timing of inventory builds and draw-downs, accrual and receipt of income taxes receivable; prepayments of certain expenses; lease commencement, passage of time, expiration, or termination of operating leases; business volumes; and other timing differences. • Accrued wages and benefits, accrued insurance, operating lease liabilities, other accrued expenses, and other liabilities, non-current increased by $3.0 million during fiscal year 2024, which increased cash flows from operating activities.
These operating assets can fluctuate based on the timing of inventory builds and draw-downs, accrual and receipt of income taxes receivable; prepayments of certain expenses; lease commencement, passage of time, expiration, or termination of operating leases; business volumes; and other timing differences. • Accrued wages and benefits, accrued insurance, operating lease liabilities, other accrued expenses, and other liabilities, non-current increased $3.3 million from fiscal 2024, which increased cash flows from operating activities.
LIQUIDITY AND CAPITAL RESOURCES Overview We define liquidity as the ongoing ability to pay our liabilities as they become due, fund business operations and meet all monetary contractual obligations.
LIQUIDITY AND CAPITAL RESOURCES Overview We assess liquidity as the ongoing ability to pay our liabilities as they become due, fund business operations and meet all monetary contractual obligations.
Provision for income taxes - Our effective tax rates for the fiscal years 2024 and 2023 were 0.1% and 0.8%, respectively The effective tax rates during both periods were impacted by valuation allowances of $8.5 million and $12.6 million, respectively, placed on deferred tax assets generated during the fiscal year.
Provision for income taxes - Our effective tax rates for the fiscal years 2025 and 2024 were (1.6)% and 0.1%, respectively. The effective tax rates during both periods were impacted by valuation allowances of $6.5 million and $8.5 million, respectively, placed on deferred tax assets generated during the fiscal year.
These operating liabilities can fluctuate based on the timing of vendor payments; accruals; lease commencement, lease payments, expiration, or termination of operating leases; business volumes; and other timing differences. • Inventories, income taxes receivable, prepaid expenses, other current assets, operating right-of-use lease assets and other assets, non-current, decreased $4.9 million, during fiscal year 2024, which increased cash flows from operating activities.
These operating liabilities can fluctuate based on the timing of vendor payments; accruals; lease commencement, lease payments, expiration, or termination of operating leases; business volumes; and other timing differences. • Inventories, income taxes receivable, prepaid expenses, other current assets, operating right-of-use lease assets and other assets, non-current, decreased $4.9 million from fiscal 2023, which increased cash flows from operating activities.
Other income - The increase in other income of $3.0 million, is primarily due to gains on sales of assets recorded during the year. In the first quarter of fiscal 2024, we recognized a gain of $2.5 million on the sale of a previously utilized facility in Burlington, Ontario. We received $2.5 million in net proceeds from the sale.
Other income - The decrease in other income of $5.0 million, is primarily due to gains on sales of assets recorded during fiscal 2024. In the first quarter of fiscal 2024, we recognized a gain of $2.5 million on the sale of a previously utilized facility in Burlington, Ontario. We received $2.5 million in net proceeds from the sale.
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 normally extends up to six months or longer in unique circumstances, depending on finalization of scopes, contracts, permits, and facility process requirements.
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.
Our primary sources of liquidity at June 30, 2024 were unrestricted cash and cash equivalents on hand, capacity under our ABL Facility (see "ABL Credit Facility" in this Liquidity and Capital Resources section and Item 8. Financial Statements and Supplementary Data, Note 5 - Debt, for more information), and cash generated from operations.
Our primary sources of liquidity at June 30, 2025 were unrestricted cash and cash equivalents on hand, capacity under our ABL Facility (see "ABL Credit Facility" in this Liquidity and Capital Resources section and See Part II, Item 8. Financial Statement and Supplementary Data, Note 5 - Debt, for more information), and cash generated from operations.
Future payments for such leases, excluding leases with initial terms of one year or less, were $29.6 million at June 30, 2024, with $5.3 million payable within the next 12 months. Refer to Part II. Item 8, Financial Statements, Note 8 - Leases, for more information about our lease obligations and the timing of expected future payments.
Future payments for such leases, excluding leases with initial terms of one year or less, were $25.9 million at June 30, 2025, with $5.8 million payable within the next 12 months. Refer to Part II. Item 8, Financial Statements, Note 8 - Leases, for more information about our lease obligations and the timing of expected future payments.
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 cost-plus and fixed price customer contracts are billed based on milestones which may require us to incur significant expenditures temporarily prior to collections from our customers; ◦ some fixed-price customer contracts allow for significant upfront billings at the beginning of a project, which temporarily increases liquidity near term; ◦ time and material contracts are normally billed in arrears.
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.
Interest expense - The decrease in interest expense of $0.9 million, or 44%, is primarily due to lower average outstanding borrowings as the Company repaid all outstanding borrowings under its revolving credit facility during fiscal 2024. Interest income - The increase in interest income of $1.0 million is primarily due to an increase in our cash balance.
Interest expense - The decrease in interest expense of $0.6 million, or 54%, is primarily due to lower average outstanding borrowings as the Company repaid all outstanding borrowings under its revolving credit facility during fiscal 2024. Interest income - The increase in interest income of $5.3 million is primarily due to an increase in our cash balance.
Due to the various estimates inherent in contract accounting, actual results could differ from those estimates, which could result in material changes to the Company’s Consolidated Financial Statements and related disclosures. See Note 2 - Revenue for further discussion.
Due to the various estimates inherent in contract accounting, actual results could differ from those estimates, which could result in material changes to the Company’s Consolidated Financial Statements and related disclosures. See Part II, Item 8. Financial Statement and Supplementary Data, Note 2 - Revenue for further discussion.
The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Consolidated Balance Sheets to the total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows (in thousands): June 30, 2024 June 30, 2023 Total cash, cash equivalents and restricted cash $ 140,615 $ 79,812 Less: Restricted cash 25,000 25,000 Unrestricted Cash 115,615 54,812 Availability 53,988 37,742 Total Liquidity $ 169,603 $ 92,554 28 Table of Contents The following table provides a summary of changes in our liquidity for the fiscal year ended June 30, 2024 (in thousands): Liquidity at June 30, 2023 $ 92,554 Cash provided by operating activities 72,571 Capital expenditures (6,994) Proceeds from asset sales (1) 6,049 Increase in availability under ABL Facility 16,246 Cash used by other financing activities (10,372) Effect of exchange rate changes on cash (451) Liquidity at June 30, 2024 $ 169,603 (1) Includes $5.4 million of net proceeds in total from the sale of our Burlington, Ontario facility and Catoosa, Oklahoma facility that were disposed of in the first and second quarter of fiscal 2024, respectively.
The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Consolidated Balance Sheets to the total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows, as well as availability and total liquidity (in thousands): June 30, 2025 June 30, 2024 Total cash, cash equivalents and restricted cash $ 249,641 $ 140,615 Less: Restricted cash 25,000 25,000 Unrestricted Cash 224,641 115,615 Availability under ABL Facility 59,815 53,988 Total Liquidity $ 284,456 $ 169,603 29 Table of Contents The following table provides a summary of changes in our liquidity for the fiscal year ended June 30, 2025 (in thousands): Liquidity at June 30, 2024 $ 169,603 Cash provided by operating activities 117,471 Capital expenditures (7,685) Proceeds from asset sales 240 Increase in availability under ABL Facility 5,827 Cash used by financing activities (1,040) Effect of exchange rate changes on cash 40 Liquidity at June 30, 2025 $ 284,456 The following table provides a summary of changes in our liquidity for the fiscal year ended June 30, 2024 (in thousands): Liquidity at June 30, 2023 $ 92,554 Cash provided by operating activities 72,571 Capital expenditures (6,994) Proceeds from asset sales (1) 6,049 Increase in availability under ABL Facility 16,246 Cash used by financing activities (10,372) Effect of exchange rate changes on cash (451) Liquidity at June 30, 2024 $ 169,603 (1) Includes $5.4 million of net proceeds in total from the sale of our Burlington, Ontario facility and Catoosa, Oklahoma facility that were disposed of in the first and second quarter of fiscal 2024, respectively.
As of June 30, 2024, there were $101.3 million of surety bonds in force, of which we expect $93.5 million to expire within the next 12 months. Of the bonds in force, $70.6 million related to performance bonds for ongoing projects and the remainder related to contractor licensing, liens, and other bonds.
As of June 30, 2025, there were $154.6 million of surety bonds in force, of which we expect $93.7 million to expire within the next 12 months. Of the bonds in force, $68.4 million related to performance bonds for ongoing projects and the remainder related to contractor licensing, liens, and other bonds.
The variance is primarily attributable to the timing of billing and collections. • Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") decreased $11.0 million, which increased cash flows from operating activities. Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") increased $85.9 million, which increased cash flows from operating activities.
The variance is primarily attributable to the timing of billing and collections. 32 Table of Contents • Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") decreased $4.1 million from fiscal 2024, which increased cash flows from operating activities.
Off-Balance Sheet Arrangements and Other Commitments 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.
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.
During the second quarter of fiscal 2024, we recognized a gain of $2.0 million from the sale of a facility in Catoosa, Oklahoma for $2.7 million in net proceeds. The facility was previously utilized for our industrial cleaning business, which was sold during the fourth quarter of fiscal 2023.
During the second quarter of fiscal 2024, we recognized a gain of $2.0 million from the sale of a facility in Catoosa, Oklahoma for $2.7 million in net proceeds.
Assuming that all other components of our fair value estimate remain unchanged, a change in the following assumptions would have the following effect on headroom: 33 Table of Contents Headroom Sensitivity Analysis Goodwill as of June 30, 2024 (in thousands) Baseline Headroom Headroom if Revenue Growth Rate Declines by 100 Basis Points Headroom if Gross Margin Declines by 100 Basis Points Headroom if Discount Rate Increases by 100 Basis Points Reporting Unit 1 $ 11,158 13% 6% -1% 5% Reporting Unit 2 $ 8,175 503% 471% 399% 450% Reporting Unit 3 $ 5,484 70% 59% -6% 50% Reporting Unit 4 $ 4,205 950% 910% 809% 886% Income Taxes We use the asset and liability approach for financial accounting and reporting for income taxes.
Assuming that all other components of our fair value estimate remain unchanged, a change in the following assumptions would have the following effect on headroom: Headroom Sensitivity Analysis Goodwill as of June 30, 2025 (in thousands) Baseline Headroom Headroom if Revenue Growth Rate Declines by 100 Basis Points Headroom if Gross Margin Declines by 100 Basis Points Headroom if Discount Rate Increases by 100 Basis Points Reporting Unit 1 $ 11,158 8% —% (7)% (1)% Reporting Unit 2 $ 8,192 580% 546% 471% 520% Reporting Unit 3 $ 5,484 37% 34% 20% 30% Reporting Unit 4 $ 4,213 297% 278% 241% 278% Income Taxes We use the asset and liability approach for financial accounting and reporting for income taxes.
Unrestricted cash and cash equivalents at June 30, 2024 totaled $115.6 million and availability under the ABL Facility totaled $54.0 million, resulting in total liquidity of $169.6 million. During fiscal 2024, liquidity increased $77.0 million, primarily as a result of cash provided by operations.
Unrestricted cash and cash equivalents at June 30, 2025 totaled $224.6 million and availability under the ABL Facility totaled $59.8 million, resulting in total liquidity of $284.5 million. During fiscal 2025, liquidity increased $114.9 million, primarily as a result of cash provided by operations.
We made no repurchases under the program during fiscal 2024 and have no current plans to repurchase stock. As of June 30, 2024, there were 1,349,037 shares available for repurchase under the Stock Buyback Program.
The program will continue unless and until it is modified or revoked by the Board of Directors. We made no repurchases under the program during fiscal 2025 and have no current plans to repurchase stock. As of June 30, 2025, there were 1,349,037 shares available for repurchase under the Stock Buyback Program.
In the third quarter of fiscal 2024 we purchased a fabrication facility in Bakersfield, California for $4.1 million to replace a facility currently being leased by the Company.
We closed these previously utilized facilities as they were no longer strategic to the future of the business. In the third quarter of fiscal 2024 we purchased a fabrication facility in Bakersfield, California for $4.1 million to replace a facility currently being leased by the Company.
The increase is primarily attributable to higher volumes of work from peak shaving projects, partially offset by lower volumes of power delivery. Utility and Power Infrastructure gross profit decreased by $1.5 million, or 6%, in fiscal 2024 compared to fiscal 2023. The segment gross margin was 5.0% for the fiscal 2024 compared to 6.3% in fiscal 2023.
The increase is primarily attributable to higher volumes of work for LNG peak shaving projects, partially offset by decreases in power delivery work. Utility and Power Infrastructure gross profit increased by $7.7 million, or 83%, in fiscal 2025 compared to fiscal 2024.
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 letters of credit or significant retentions.
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; • the mix of work can impact liquidity.
The maximum amount of loans under the ABL Facility is limited to $90.0 million. The ABL Facility is intended to be used for working capital, capital expenditures, issuances of letters of credit and other lawful purposes.
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.
CIE and BIE balances can experience significant fluctuations based on business volume and the timing of when job costs are incurred and the timing of customer billings and payments. • Accounts payable decreased by $10.4 million during the fiscal year ended June 30, 2024, which decreased cash flows from operating activities.
Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") increased $152.3 million from fiscal 2024, which increased cash flows from operating activities. CIE and BIE balances can experience significant fluctuations based on business volume and the timing of when job costs are incurred and the timing of customer billings and payments.
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.
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.
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. We expect to recognize approximately 47% of our total backlog reported as of June 30, 2024 as revenue within fiscal 2025.
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.
We will continue to place valuation allowances on newly generated deferred tax assets and will realize the benefit associated with the deferred tax assets for which the valuation allowance has been provided to the extent we generate taxable income in the future.
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.
Item 8-Financial Statements and Supplementary Data, Note 3 - Property, Plant and Equipment, for more information.) The remaining gain on the sale of property, plant and equipment comprised of equipment sold in the normal course of business. 30 Table of Contents Cash effect of changes in operating assets and liabilities at June 30, 2024 in comparison to June 30, 2023 include the following: • Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased $12.1 million during fiscal 2024, which decreased cash flows from operating activities.
The significant components of the $82.3 million change in operating assets and liabilities for the fiscal year ended June 30, 2024 include the following: • Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased $12.1 million from fiscal 2023, which decreased cash flows from operating activities.
Cash Flows Used by Financing Activities Financing activities used $10.4 million of cash in the fiscal 2024 primarily due to $10.0 million in advances and $20.0 million in repayments under our ABL facility. As of June 30, 2024 we had no outstanding borrowings under our ABL facility.
Cash Flows Used by Financing Activities Financing activities used $1.0 million of cash in fiscal 2025 primarily due to the repurchase of common stock for payment of statutory taxes due on equity-based compensation. Financing activities used $10.4 million of cash in fiscal 2024 primarily due to $10.0 million in advances and $20.0 million in net repayments under our ABL facility.
This segment includes significant opportunities for storage infrastructure projects related to natural gas, LNG, ammonia, hydrogen, NGLs and other forms of renewable energy. We believe LNG and hydrogen projects in particular will be key growth drivers for this segment. Bidding activity on LNG projects has been strong and we expect that to continue.
We believe LNG and ammonia projects in particular will be key growth drivers for this segment. Bidding activity on LNG and ammonia projects has been strong and we expect that to continue. In the Utility and Power Infrastructure segment, we booked $215.4 million of project awards in fiscal 2025.
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. 31 Table of Contents Treasury Shares We had 579,422 treasury shares as of June 30, 2024 and intend to utilize these treasury shares in connection with equity awards under our stock incentive plans and for sales to the Employee Stock Purchase Plan.
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.
These operating liabilities can fluctuate based on the timing of vendor payments; accruals; lease commencement, lease payments, expiration, or termination of operating leases; business volumes; and other timing differences. Cash Flows Used by Investing Activities Investing activities used $0.9 million of cash in the fiscal 2024 primarily due to capital expenditures, offset by proceeds from asset sales.
These operating liabilities can fluctuate based on the timing of vendor payments; accruals; lease commencement, lease payments, expiration, or termination of operating leases; business volumes; and other timing differences. 33 Table of Contents Cash Flows Used by Investing Activities Investing activities used $7.4 million of cash in fiscal 2025 due to capital expenditures associated with improvements at a fabrication facility in Bakersfield, California that we purchased in fiscal 2024, as well as the purchase of construction equipment to support our projects.
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.
We continue to see demand for thermal vacuum chambers in the coming quarters, as well as increasing opportunities in mining and minerals, chemicals, low carbon projects and refinery turnarounds. 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.
Dividend Policy We have never paid cash dividends on our common stock and the terms of our Credit Agreement prohibit us from paying cash dividends. 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.
As of June 30, 2024 and June 30, 2025, we had no outstanding borrowings under our ABL facility. Dividend Policy We have never paid cash dividends on our common stock and the terms of our Credit Agreement prohibit us from paying cash dividends.
We also perform traditional electrical work for public and private utilities, including construction of new substations, upgrades of existing substations, transmission and distribution line installations, and upgrades and maintenance including live wire work. Work may also include emergency and storm restoration services.
We also perform power delivery work for public and private utilities, including construction of new substations, upgrades of existing substations, and maintenance.
The following table provides a summary of changes in our backlog for fiscal 2024: Storage and Terminal Solutions Utility and Power Infrastructure Process and Industrial Facilities Total (In thousands) Backlog as of June 30, 2023 $ 270,659 $ 459,518 $ 359,921 $ 1,090,098 Project awards 804,396 104,099 182,382 1,090,877 Other adjustment (2) — — (24,522) (24,522) Revenue recognized (276,800) (183,920) (266,260) (726,980) Backlog as of June 30, 2024 $ 798,255 $ 379,697 $ 251,521 $ 1,429,473 Book-to-bill ratio (1) 2.9x 0.6x 0.7x 1.5x (1) Calculated by dividing project awards by revenue recognized.
The following table provides a summary of changes in our backlog for fiscal 2025: 25 Table of Contents Storage and Terminal Solutions Utility and Power Infrastructure Process and Industrial Facilities Total (In thousands) Backlog as of June 30, 2024 $ 798,255 $ 379,697 $ 251,521 $ 1,429,473 Project awards 337,731 215,378 172,918 726,027 Other adjustment (2) — — (4,106) (4,106) Revenue recognized (365,891) (248,691) (154,704) (769,286) Backlog as of June 30, 2025 $ 770,095 $ 346,384 $ 265,629 $ 1,382,108 Book-to-bill ratio (1) 0.9x 0.9x 1.1x 0.9x (1) Calculated by dividing project awards by revenue recognized.
We recorded a $2.9 million gain on the sale of our industrial cleaning business in the fourth quarter of fiscal 2023. 26 Table of Contents Results of Operations by Business Segment Fiscal Years Ended June 30, 2024 v 2023 2024 2023 $ % Revenue (In thousands) Storage and Terminal Solutions $ 276,800 $ 255,693 $ 21,107 8 % Utility and Power Infrastructure 183,920 169,504 14,416 9 % Process and Industrial Facilities 266,260 369,823 (103,563) (28) % Corporate 1,233 — 1,233 — % Total Revenue (1) $ 728,213 — $ 795,020 $ (66,807) (8) % (1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $2.4 million for the year ended June 30, 2024.
The facility was previously utilized for our industrial cleaning business, which was sold during the fourth quarter of fiscal 2023. 27 Table of Contents Results of Operations by Business Segment Fiscal Years Ended June 30, 2025 v 2024 2025 2024 Change % Revenue (In thousands) Storage and Terminal Solutions $ 365,891 $ 276,800 $ 89,091 32 % Utility and Power Infrastructure 248,691 183,920 64,771 35 % Process and Industrial Facilities 154,704 266,260 (111,556) (42) % Corporate — 1,233 (1,233) — % Total Revenue (1) $ 769,286 $ 728,213 $ 41,073 6 % (1) Total revenues are net of inter-segment revenues which are primarily Process and Industrial Facilities and were $2.1 million for the year ended June 30, 2025.
In the first quarter of fiscal 2024, we sold a previously utilized facility in Burlington, Ontario for $2.7 million in net proceeds. In the second quarter of fiscal 2024, we sold a facility in Catoosa, Oklahoma. We closed these previously utilized facilities as they were no longer strategic to the future of the business.
Investing activities used $0.9 million of cash in fiscal 2024 due to capital expenditures partially offset by proceeds from asset sales. In the first quarter of fiscal 2024, we sold a previously utilized facility in Burlington, Ontario for $2.7 million in net proceeds. In the second quarter of fiscal 2024, we sold a facility in Catoosa, Oklahoma.
Power delivery opportunities are expected to be driven over the long-term by increasing electrical demand and the 24 Table of Contents related electrical grid requirements. Project opportunities and bidding activity are strong for both the power delivery portion of the business and LNG peak shaving.
Our opportunity pipeline for LNG peak shaving projects continues to be promising; however those awards, while significant, can be less frequent. Power delivery opportunities are expected to be driven over the long-term by increasing electrical demand and the related electrical grid requirements.
The increase was primarily due to higher cash-settled stock-based compensation due to an increase in the price of our stock, higher stock compensation expense, and legal costs related to a jury trial that resulted in a verdict in our favor, partially offset by the recognition of $1.2 million of revenue due to the favorable resolution of that dispute, see Note 7 - Commitments and Contingencies, Litigation, for more information.
Corporate Unallocated corporate gross profit (loss) was $0.8 million during fiscal 2025 compared to a loss of $1.9 million in fiscal 2024, an increase of $1.1 million primarily due to lower legal costs associated with a jury trial in fiscal 2024 that resulted in a verdict in our favor. See Note 7 - Commitments and Contingencies, Litigation, for more information.
The Company had $6.9 million in letters of credit outstanding, which resulted in availability of $54.0 million under the ABL Facility. Our borrowing base has ranged from $60.9 million to $74.6 million during fiscal 2024.
The borrowing base is recalculated on a monthly basis and at June 30, 2025, our borrowing base was $64.6 million. We had no borrowings outstanding and $4.8 million in letters of credit outstanding, which resulted in availability of $59.8 million under the ABL Facility. Our borrowing base has ranged from $57.8 million to $73.8 million during fiscal 2025.
Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended June 30, 2023, which was filed with the SEC on September 12, 2023. 23 Table of Contents Matrix Service Company Results of Operations (In thousands) Operational Update During fiscal 2024, our markets and project opportunities remained strong, driving $1.1 billion of awards added to backlog during the year, and producing a total backlog of $1.4 billion and a book-to-bill ratio of 1.5.
Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended June 30, 2024, which was filed with the SEC on September 10, 2024. 24 Table of Contents Matrix Service Company Results of Operations (In thousands) Operational Update Operating activity increased each quarter during fiscal 2025 as quarterly revenues grew from $165.6 million in the first quarter of fiscal 2025 to $216.4 million in the fourth quarter of fiscal 2025, an increase of 31% and the highest levels since the third quarter of fiscal 2020, which marked the beginning of the COVID-19 pandemic.
Gross profit - Gross profit during fiscal 2024 increased by $9.7 million, or 31%. Gross margin was 5.6% compared to 3.9% in fiscal 2023. Strong project execution and improved margin opportunity on projects in progress during fiscal 2024 was partially offset by the under-recovery of construction overhead costs due to low revenue.
Process and Industrial Facilities gross profit decreased by $12.9 million, or 59% in fiscal 2025 compared to fiscal 2024. The segment gross margin was 5.8% for fiscal 2025 compared to 8.2% for fiscal 2024. The segment gross margin in fiscal 2025 was impacted by increased under-recovery of construction overhead costs due to lower revenue volumes.
As of June 30, 2024, we had $6.9 million of letters of credit outstanding, nearly all of which expire within the next 12 months. The letters of credit that support our workers’ compensation programs are expected to renew annually through the term of our credit facility.
As of June 30, 2025, we had $4.8 million of letters of credit outstanding.The letters of credit that support our workers’ compensation programs are expected to renew annually through the term of our credit facility. 35 Table of Contents CRITICAL ACCOUNTING POLICIES AND ESTIMATES The Company’s accounting policies are more fully described in Note 1 of the Consolidated Financial Statements.
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. 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.
See Note 12 - Employee Benefit Plans for further discussion. • 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.
Fiscal 2024 Versus Fiscal 2023 Consolidated Results of Operations Fiscal Years Ended June 30, 2024 v 2023 2024 2023 $ % (In thousands) Revenue $ 728,213 $ 795,020 $ (66,807) (8) % Cost of revenue 687,740 764,200 (76,460) (10) % Gross profit 40,473 30,820 9,653 31 % Selling, general and administrative expenses 70,085 68,249 1,836 3 % Goodwill impairment — 12,316 (12,316) (100) % Restructuring costs 501 3,142 (2,641) (84) % Operating loss (30,113) (52,887) 22,774 (43) % Other income (expense): Interest expense (1,130) (2,024) 894 (44) % Interest income 1,339 290 1,049 362 % Other 4,892 1,860 3,032 163 % Loss before income tax expense (25,012) (52,761) 27,749 (53) % Provision for federal, state and foreign income taxes (36) (400) 364 (91) % Net loss $ (24,976) $ (52,361) $ 27,385 (52) % Revenue - The decrease in overall revenue of $66.8 million, or 8%, was primarily attributable to reduced revenue volumes in our Process and Industrial Facilities segment partially offset by increases in the Storage and Terminal Solutions and Utility and Power Infrastructure segments.
We expect to recognize approximately 55% of our total backlog reported as of June 30, 2025 as revenue within fiscal 2026. 26 Table of Contents Fiscal 2025 Versus Fiscal 2024 Consolidated Results of Operations Fiscal Years Ended June 30, 2025 v 2024 2025 2024 Change % (In thousands) Revenue $ 769,286 $ 728,213 $ 41,073 6 % Cost of revenue 729,609 687,740 41,869 6 % Gross profit 39,677 40,473 (796) (2) % Selling, general and administrative expenses 71,173 70,085 1,088 2 % Restructuring costs 3,572 501 3,071 613 % Operating loss (35,068) (30,113) (4,955) (16) % Other income (expense): Interest expense (518) (1,130) 612 54 % Interest income 6,652 1,339 5,313 397 % Other (64) 4,892 (4,956) (101) % Loss before income tax expense (28,998) (25,012) (3,986) (16) % Provision (benefit) for federal, state and foreign income taxes 464 (36) 500 1389 % Net loss $ (29,462) $ (24,976) $ (4,486) (18) % Revenue - The increase in overall revenue of $41.1 million, or 6%, was primarily attributable to higher revenue volumes in our Storage and Terminal Solutions and Utility and Power Infrastructure segments, partially offset by reduced revenue volumes in Process and Industrial Facilities.
The letters of credit that support construction contracts carry expiration dates that expire in fiscal 2025. 32 Table of Contents CRITICAL ACCOUNTING POLICIES AND ESTIMATES Revenue Recognition Revenue for contracts that satisfy the criteria for over time recognition is recognized as the work progresses.
Revenue Recognition Revenue for contracts that satisfy the criteria for over time recognition is recognized as the work progresses.
During fiscal 2023, we incurred $3.1 million of restructuring costs, which included severance and other personnel-related costs in connection with our restructuring plan and our closure of an underperforming office. See Item 8. Financial Statements, Note 14 - Restructuring Costs, for more information about our business improvement plan.
Restructuring cost s - The Company incurred $3.6 million of restructuring costs during fiscal 2025 related to organizational restructuring. See Part II, Item 8. Financial Statement and Supplementary Data, Note 14 - Restructuring Costs, for more information about our organizational restructuring plan.
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; • strategic investments in new operations; • borrowing constraints under our ABL Facility and maintaining compliance with all covenants contained in the ABL Facility; • acquisitions and disposals of businesses or assets; and • purchases of shares under our stock buyback program. 29 Table of Contents ABL Credit Facility 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 May 3, 2024 (as amended, the "ABL Facility"), with Bank of Montreal, as Administrative Agent, Swing Line Lender and a Letter of Credit Issuer, and the lenders named therein.
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. 30 Table of Contents 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.
If our view of project opportunities or gross margins deteriorates, particularly for the higher risk reporting units, then we may be required to record an impairment of goodwill. We considered the amount of headroom for each reporting unit when determining whether an impairment existed. The amount of headroom varies by reporting unit.
We performed our annual goodwill impairment test as of May 31, 2025, which resulted in no impairment. 36 Table of Contents We considered the amount of headroom for each reporting unit when determining whether an impairment existed. The amount of headroom varies by reporting unit.
Gross profit (loss) Storage and Terminal Solutions $ 11,297 $ 10,470 $ 827 8 % Utility and Power Infrastructure 9,232 10,699 (1,467) (14) % Process and Industrial Facilities 21,852 10,756 11,096 103 % Corporate (1,908) (1,105) (803) 73 % Total Gross Profit $ 40,473 — $ 30,820 $ 9,653 31 % Operating income (loss) Storage and Terminal Solutions $ (8,526) $ (10,553) $ 2,027 (19) % Utility and Power Infrastructure 336 3,617 (3,281) (91) % Process and Industrial Facilities 11,283 (17,441) 28,724 (165) % Corporate (33,206) (28,510) (4,696) 16 % Total Operating Loss $ (30,113) $ — $ (52,887) $ 22,774 (43) % Storage and Terminal Solutions Storage and Terminal Solutions revenues increased by $21.1 million, or 8%, in fiscal 2024 compared to fiscal 2023.
Gross profit (loss) Storage and Terminal Solutions $ 14,655 $ 11,297 $ 3,358 30 % Utility and Power Infrastructure 16,915 9,232 7,683 83 % Process and Industrial Facilities 8,910 21,852 (12,942) (59) % Corporate (803) (1,908) 1,105 (58) % Total Gross Profit $ 39,677 $ 40,473 $ (796) (2) % Gross margin % Storage and Terminal Solutions 4.0 % 4.1 % (0.1) % (2.4) % Utility and Power Infrastructure 6.8 % 5.0 % 1.8 % 36.0 % Process and Industrial Facilities 5.8 % 8.2 % (2.4) % (29) % Total gross margin % 5.2 % 5.6 % (0.4) % (7.1) % Operating income (loss) Storage and Terminal Solutions $ (9,206) $ (8,526) $ (680) (8) % Utility and Power Infrastructure 3,834 336 3,498 1041 % Process and Industrial Facilities 479 11,283 (10,804) (96) % Corporate (30,175) (33,206) 3,031 9 % Total Operating Loss $ (35,068) $ (30,113) $ (4,955) (16) % Storage and Terminal Solutions Storage and Terminal Solutions revenues increased by $89.1 million, or 32%, in fiscal 2025 compared to fiscal 2024, driven by an increased volume of work for specialty vessel and LNG storage projects, partially offset by decreases in tank repair and maintenance work.
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.
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.
The increase is primarily attributable to increases in work performed for specialty vessel projects awarded in previous fiscal years. Storage and Terminal Solutions gross profit increased by $0.8 million, or 8%, in the fiscal 2024 compared to fiscal 2023. The segment gross margin was 4.1% for both fiscal years 2024 and 2023.
The segment gross margin was 6.8% for fiscal 2025 compared to 5.0% in fiscal 2024, an increase of 1.8% due to mix of work. Process and Industrial Facilities Process and Industrial Facilities revenues decreased by $111.6 million, or 42%, in fiscal 2025 compared to fiscal 2024.
Project execution was strong for the segment; however, the segment continues to be impacted by the under-recovery of construction overhead costs. 27 Table of Contents Utility and Power Infrastructure Utility and Power Infrastructure revenues increased by $14.4 million, or 9%, in fiscal 2024 compared to fiscal 2023.
Additionally, gross profit was negatively impacted by a $6.4 million reduction in revenue related to a legacy project completed in fiscal 2021 discussed above. 28 Table of Contents Utility and Power Infrastructure Utility and Power Infrastructure revenues increased by $64.8 million, or 35%, in fiscal 2025 compared to fiscal 2024.
(2) Backlog was reduced primarily to account for a reduction of work available to us under an existing refinery maintenance program. In the Storage and Terminal Solutions segment, backlog increased by 194.9% as we booked $804.4 million of project awards during fiscal 2024.
(2) Backlog was reduced as a result of the closure of a customer's facility. This customer has historically represented less than 1% of our consolidated revenues. In the Storage and Terminal Solutions segment, we booked $337.7 million of project awards during fiscal 2025.
Removed
Many of these project awards are large construction projects that we expect to generate revenues and efficiently utilize our cost structure over a multi-year period with expected gross margins at our pre-pandemic historical gross margin range. The time to convert these awards to revenue is dependent on a variety of factors, many outside of our control.
Added
The increase was the result of advancing work on several multiyear projects currently in backlog. Project awards during fiscal 2025 were $726.0 million, resulting in a current year book-to-bill ratio of 0.9x, and maintaining our backlog at near-record levels of $1.4 billion.
Removed
Despite these challenges, the company generated positive cash flows from operations during fiscal year 2024, which improved our overall cash balance by $60.8 million, reflecting our ability to efficiently manage capital and maintain financial stability.
Added
Award activity was driven by our Storage and Terminal solutions segment, and included the award of a large specialty storage project. The market drivers for each of our segments are strong and include increased oil and gas demand, the clean energy transition, low-cost feed stock, increased power demands associated with data centers, industrial reshoring/onshoring, grid reliability and electrical supply assurance.
Removed
Combining expected forthcoming revenues from effective project execution and conversion of our historic backlog, we believe we are on a trajectory of upward growth and profitability.
Added
As a result, we believe we will have strong award activity in the coming year. While our award activity during the year was strong, heightened macroeconomic uncertainty and the evolving impact of U.S. trade policy on infrastructure economics has impacted the timing of customer decisions in the near term.
Removed
In the Utility and Power Infrastructure segment, we booked $104.1 million of project awards in fiscal 2024. Our opportunity pipeline for LNG peak shaving projects continues to be promising, however those awards, while significant, can be less frequent.
Added
We believe customer delays in project starts and final investment decisions to be a short-term disruption, while an overall favorable regulatory environment for our customers underpins long-term momentum for our business. We continue to sharpen and better align our business for the current and coming marketplace.
Removed
In the Process and Industrial Facilities segment, we booked $182.4 million of project awards in fiscal 2024. Included in project awards is contract growth on a capital project at a biodiesel facility. Backlog in this segment was adjusted during the year to account for a reduction of work available under an existing refinery maintenance program.
Added
Accordingly, we have consolidated certain aspects of the business to further improve our performance and create a flatter, leaner management structure. In addition, we continue to evaluate our business lines and, where appropriate, reallocate resources to those businesses that present the best opportunities.
Removed
Client spending related to refinery maintenance and turnaround operations has continued to be strong, which also contributed significantly to project awards during the year. We continue to see demand for thermal vacuum chambers in the coming quarters, as well as increasing opportunities in mining and minerals, chemicals, and renewables.
Added
We remain focused on delivering sustainable, long-term shareholder value by building a resilient, growth-oriented platform aligned with the evolving needs of our customers. We believe actions taken in the fourth quarter of fiscal 2025 and the first quarter of fiscal 2026 will reduce our overall cost structure, improving our overhead recovery and operating leverage.
Removed
The gross margin in fiscal 2023 was also negatively impacted by the under-recovery of construction overhead costs, as well as unfavorable changes in the estimated recovery of change orders, increased forecasted costs to complete certain midstream gas processing projects, and continued work on previously-booked projects with reduced gross margins awarded in a highly competitive time period.
Added
Backlog differs from the amount of our remaining performance obligations, which are described in Note 2 - Revenue in the notes to the audited consolidated financial statements.
Removed
Selling, general and administrative expenses - The increase in SG&A expenses of $1.8 million, or 3%, is primarily due to an increase in cash-settled stock-based compensation of $3.5 million, which increased due to a substantially higher stock price year over year.
Added
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.
Removed
The increase was partially offset by a decrease in project pursuit costs of $2.2 million due to the timing of project 25 Table of Contents pursuits, however, we remain active in the market as we pursue additional project opportunities. We continue to focus on cost control in a high inflationary period as we work to leverage our cost control structure.
Added
Project awards included a project for the engineering and construction of large refrigerated propane and butane tanks as well as spheres for related NGL products. This segment includes significant opportunities for storage infrastructure projects related to natural gas, LNG, ammonia, NGLs and other forms of low carbon energy.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeHowever, further growth in our Canadian, South Korean and/or Australian operations and/or significant fluctuations in the Canadian Dollar, South Korean Won and/or Australian Dollar to U.S. Dollar exchange rates could impact our financial results in the future. Management has not entered into derivative instruments to hedge foreign currency risk, but periodically evaluates the materiality of our foreign currency exposure.
Biggest changeDollar exchange rates could impact our financial results in the future. Management has not entered into derivative instruments to hedge foreign currency risk, but periodically evaluates the materiality of our foreign currency exposure. To mitigate our risk, on occasion we convert Canadian Dollar balances into U.S. Dollars to settle U.S. Dollar amounts owed by our Canadian operations.
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”), an Adjusted Term SOFR ("Adjusted Term SOFR"), or at the Canadian Prime Rate, plus an applicable margin.
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 SOFR, or at the Canadian Prime Rate, plus an applicable margin.
We have been proactive with managing our procurement processes to help reduce the impacts of rising materials prices on our business and to help ensure we continue to have the materials we need available. However, rising prices and the potential for materials shortages have created additional risk in bidding and executing work profitably. 35 Table of Contents
We have been proactive with managing our procurement processes to help reduce the impacts of rising materials prices on our business and to help ensure we continue to have the materials we need available. However, rising prices and the potential for materials shortages have created additional risk in bidding and executing work profitably. 38 Table of Contents
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) Adjusted Term SOFR for one month period plus 1.00%; or (iv) 1.00%.
The Base Rate is defined as a fluctuating interest rate equal to the greater of: (i) rate of interest announced by Bank of Montreal from time to time as its prime rate; (ii) the U.S. federal funds rate plus 0.50%; (iii) Term SOFR for one month period plus 1.00%; and (iv) 1.00%.
We mitigate these risks primarily by procuring materials upon contract execution to ensure that our purchase price approximates the costs included in the project estimate, and also by negotiating contract provisions that mitigate our exposure to fluctuations in materials costs.
We mitigate risks associated with these exposures primarily by procuring materials upon contract execution to ensure that our purchase price approximates the costs included in the project estimate, and also by negotiating contract provisions that mitigate our exposure to fluctuations in materials costs.
Historically, movements in the Canadian Dollar to U.S. Dollar exchange rate have not significantly impacted our results. Also, we do not expect exchange rate fluctuations in our South Korean and Australian operations to materially impact our financial results since these operations represent an insignificant portion of our consolidated revenue and expenses.
Also, we do not expect exchange rate fluctuations in our South Korean and Australian operations to materially impact our financial results since these operations represent an insignificant portion of our consolidated revenue and expenses. However, further growth in our Canadian, South Korean and/or Australian operations and/or significant fluctuations in the Canadian Dollar, South Korean Won and/or Australian Dollar to U.S.
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 Adjusted Term SOFR borrowings.
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. As of June 30, 2025, no amounts were drawn on the credit facility.
To mitigate our risk, on occasion we convert Canadian Dollar balances into U.S. Dollars to settle U.S. Dollar amounts owed by our Canadian operations. A 10% unfavorable change in the Canadian Dollar against the U.S. Dollar would not have had a material impact on our financial results for the fiscal year ended June 30, 2024.
A 10% unfavorable change in the Canadian Dollar against the U.S. Dollar would not have had a material impact on our financial results for the fiscal year ended June 30, 2025.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk Our interest rate risk results primarily from our variable rate indebtedness under our ABL Facility, which is influenced by movements in short-term rates.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk Our interest rate risk results primarily from our variable rate indebtedness under our ABL Facility and our cash and cash equivalents balance.
Commodity Price Risk We have no direct commodity exposure, but we do have exposure to materials derived from certain commodities including steel plate, steel pipe, and copper, which are key materials we use. Disruptions to global supply chains in recent years have led to higher prices for some of the materials we need to run our business.
Commodity Price Risk We have no direct commodity exposure, but we do have exposure to materials derived from certain commodities including steel plate, steel pipe, and copper, which are key materials we use.
Foreign Currency Risk We have subsidiaries with operations in Canada and South Korea, which use the Canadian Dollar and South Korean Won, respectively, as their functional currencies. We also have a subsidiary with operations in Australia, but its functional currency is the U.S. Dollar since its sales are primarily denominated in U.S. Dollars.
We also have a subsidiary with operations in Australia, but its functional currency is the U.S. Dollar since its sales are primarily denominated in U.S. Dollars. Historically, movements in the Canadian Dollar to U.S. Dollar exchange rate have not significantly impacted our results.
The Adjusted Term SOFR is defined as (i) the SOFR plus (ii) 11.448 basis points for a one-month tenor and 26.161 basis points for a three-month tenor; provided that the Adjusted Term SOFR cannot be below zero.
The Term SOFR rate, whether for one-month or three-month tenor, is provided by a third party as defined in the ABL Facility ("Term SOFR Administrator"). The Term SOFR Administrator publishes a daily set of forward-looking interest rates for various tenors, provided that the Term SOFR cannot be below zero.
Removed
Interest is payable either (i) monthly for Base Rate or Canadian Prime Rate borrowings or (ii) the last day of the interest period for Adjusted Term SOFR borrowings, as set forth in the ABL Facility. The fee for undrawn amounts is 0.25% per annum and is due quarterly.
Added
We also invest certain cash balances in highly liquid instruments classified as cash equivalents on our balance sheet, which generally earn interest income based upon prevailing interest rates. As of June 30, 2025, we held cash and cash equivalents, including restricted cash, of $249.6 million.
Added
At June 30, 2025, a 100-basis point (or 1%) increase or decrease in the interest rate would increase or decrease interest income by approximately $2.5 million per year. Foreign Currency Risk We have subsidiaries with operations in Canada and South Korea, which use the Canadian Dollar and South Korean Won, respectively, as their functional currencies.

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