MATRIX SERVICE CO
For the period ended Mar 31, 2026. Filed May 7, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 7, 2026
MTRX$9.64+11.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-12-31; filed 2026-02-05.
0000866273-26-000016
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0000866273-26-000029
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 148 previous paragraphs and 152 current paragraphs.
91 unchanged; 44 reworded; 17 added; 13 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 11 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
Investors should note that we announce material financial information in SEC filings, press releases, presentations and public conference calls. Based on guidance from the SEC, we may use the Investors section of our website (www.matrixservicecompany.com) to communicate with investors and we intend to post presentations and other materials there. It is possible that the financial and other information posted to our website could be deemed to be material information.
Current report
The information on our website is not part of, and is not incorporated into, this report.
Current report
The third quarter of fiscal 2026 marked a significant inflection point for our business, as we returned to profitability. For the three months ended March 31, 2026, we reported net income of $0.8 million, compared to a net loss of $3.4 million in the same period last year. This improvement reflects the successful execution of our strategic initiatives, including disciplined project management and targeted restructuring actions.
Current report
Our gross margin increased to 8.3% in the third quarter of fiscal 2026, up from 6.4% in the same period last year, driven by improved project execution in our Storage and Terminal Solutions and Utility and Power Infrastructure segments. These results demonstrate the positive impact of our efforts to enhance operational efficiency and optimize our project portfolio. Additionally, the reduction in selling, general and administrative (SG&A) expenses, which are down 14% year-over-year, reflects the benefits of our organizational restructuring and ongoing cost discipline.
Current report
While our return to profitability is an important milestone, we recognize that further work is required to achieve our long-term financial objectives. Overhead cost absorption remains an area of focus. We continue to pursue opportunities to better align our cost structure with current and anticipated business volumes, including the reallocation of resources and the streamlining of support functions. Moreover, although SG&A leverage improved this quarter, we are committed to driving additional efficiencies to ensure that our overhead costs scale appropriately as revenue grows. To that end, in the fourth quarter of fiscal 2026, we have taken a number of actions aimed at further reducing our cost structure by reducing our workforce, including the elimination of our Chief Administrative Officer position.
Current report
In addition to these actions, during the fourth quarter of fiscal 2026, we announced the planned departure of our Chief Financial Officer, Kevin Cavanah, which is expected to occur in September 2026. We have retained a leading executive search firm to conduct a comprehensive search for our next Chief Financial Officer who will work alongside our incoming President and Chief Executive Officer Shawn Payne to lead the organization in fiscal 2027 and beyond.
Current report
Looking ahead, we will maintain our focus on revenue and profitability growth through disciplined project selection, operational execution, and cost management. These priorities are essential to sustaining profitability, improving returns on invested capital, and positioning the company for long-term growth. We believe that the actions we are taking will further strengthen our competitive position and enhance value for our stockholders.
Current report
Restructuring costs and other- The Company incurred $3.0 million of restructuring and other costs during the third quarter of fiscal 2026. Costs included $2.0 million related to the CEO transition and $0.9 million associated with a lease impairment. See Part I, Item 1. Financial Statements (Unaudited), Note 9 - Restructuring Costs, for further details.
Current report
Interest income - Interest income increased $0.7 million during the third quarter of fiscal 2026, compared to the third quarter of fiscal 2025, primarily due to an increase in our cash balance.
Current report
Storage and Terminal Solutions gross profit increased by $4.0 million, or 108%, in the three months ended March 31, 2026 compared to the same period last year. The segment gross margin of 7.0% for the three months ended March 31, 2026 was higher than segment gross margin of 3.9% in the same period last year. Margin improvement was driven by improved project execution overall as well as an improvement in overhead cost absorption.
Current report
Utility and Power Infrastructure revenues were largely consistent with prior year, increasing by $1.3 million, or 2%, in the three months ended March 31, 2026 compared to the same period last year.
Current report
Process and Industrial Facilities gross profit decreased by $2.9 million, or 76%, in the three months ended March 31, 2026 compared to the same period last year. The segment gross margin was 2.5% for the three months ended March 31, 2026 compared to 8.3% in the same period last year. Thedecrease is attributable to mix of work and the settlement of a legal matter, which reduced gross margin by $1.1 million. See Part I, Item 1. Financial Statements (Unaudited), Note 6 - Commitments and Contingencies, for more details.
Current report
Nine months ended March 31, 2026 Compared to the Nine months ended March 31, 2025
Current report
Restructuring costs and other- The Company incurred $6.5 million of costs during the nine months ended March 31, 2026 related to organizational restructuring and other related costs. This included $2.0 million of expense related to the CEO transition, as well as severance for other personnel and lease impairments for exited leases. See Part I, Item 1. Financial Statements (Unaudited), Note 9 - Restructuring Costs, for further details.
Current report
•Changes in other operating assets and liabilities decreased cash flows from operating activities by $10.0 million. These operating assets and liabilities can fluctuate based on business volumes and timing of certain cash receipts and payments. Additionally, we generally prepay our annual insurance premiums in the first quarter of the fiscal year.
Current report
•Changes in other operating assets and liabilities decreased cash flows from operating activities by $0.1 million. These operating assets and liabilities can fluctuate based on business volumes and timing of certain cash receipts and payments. Additionally, we generally prepay our annual insurance premiums in the first quarter of the fiscal year.
Current report
Investing activities used $2.6 million and $5.2 million of cash in the nine months ended March 31, 2026 and 2025, respectively. Capital expenditures were $4.1 million and $5.4 million in the nine months ended March 31, 2026 and 2025, respectively. During the nine months ended March 31, 2026, we also received $1.5 million of proceeds from the sale of property plant and equipment, primarily associated with our transmission and distribution service line, which we began winding down in the fourth quarter of fiscal 2025.
Removed paragraphs (13)
Previous report
During the quarter, we advanced execution on several large, strategically important projects. These projects are delivering both revenue growth and margin stability, supported by disciplined project management. As these projects advance through key milestones, they are providing increased visibility into revenue conversion and operating margin performance.
Previous report
We expect activity to accelerate over the remainder of the fiscal year, driven by our strong backlog as well as a growing opportunity pipeline and healthy demand across our core markets. Our balance sheet remains a competitive advantage, providing the financial capacity and flexibility to pursue high‑quality opportunities, invest in execution excellence, and manage risk responsibly. These attributes also position us to continue executing on existing projects and to support long-term growth initiatives.
Previous report
Looking longer term, structural macrotrends continue to support durable growth in our end markets. The clean energy transition, rapidly increasing power requirements from data centers, ongoing industrial reshoring and onshoring activity, and heightened focus on grid reliability are all creating sustained demand for the solutions we provide. These trends reinforce the strength of our strategic positioning and our confidence in the company’s ability to deliver long‑term value for shareholders.
Previous report
Interest income - Interest income during the second quarter of fiscal 2026 was consistent with the second quarter of fiscal 2025.
Previous report
Storage and Terminal Solutions gross profit decreased by $2.5 million, or (35)%, in the three months ended December 31, 2025 compared to the same period last year. The segment gross margin of 4.8% for the three months ended December 31, 2025 was lower than segment gross margin of 7.6% in the same period last year. During the second quarter of fiscal 2026, costs associated with warranty-type items and with third-party commercial matters arising during commissioning of specialty tank work resulted in a $3.6 million reduction of gross profit. Additionally, gross margins for this segment continue to be primarily impacted by under-recovery of overhead costs. We believe overhead cost absorption will improve as activity on awards currently in backlog increases through the remainder of fiscal 2026.
Previous report
Utility and Power Infrastructure revenues increased by $14.3 million, or 23%, in the three months ended December 31, 2025 compared to the same period last year. The increase is primarily attributable to a higher volume of work for power delivery and natural gas peak shaving projects.
Previous report
Process and Industrial Facilities gross profit increased by $0.8 million, or 229%, in the three months ended December 31, 2025 compared to the same period last year. The segment gross margin was 3.5% for the three months ended December 31, 2025 compared to 1.2% in the same period last year. The increase is primarily attributable to improved construction overhead cost absorption as a result of higher revenues.
Previous report
Six months ended December 31, 2025 Compared to the Six months ended December 31, 2024
Previous report
•Inventories, income taxes receivable, prepaid expenses, other current assets, operating right-of-use lease assets and other assets, non-current, increased $6.8 million which decreased cash flows from operating activities. These operating assets can fluctuate based on business volumes; the timing of inventory builds and draw-downs, accrual and receipt of income taxes receivable; prepayments of certain expenses; lease commencement, passage of time, expiration, or termination of operating leases; and other timing differences. We generally prepay our annual insurance premiums in the first quarter of the fiscal year.
Previous report
•Accrued wages and benefits, accrued insurance, operating lease liabilities, other accrued expenses, and other liabilities, non-current decreased by $11.9 million which decreased cash flows from operating activities. These operating liabilities can fluctuate based on the timing of payroll, distributions, business volumes; vendor payments; accruals; lease commencement, lease payments, expiration, or termination of operating leases; and other timing differences.
Previous report
•Inventories, income taxes receivable, prepaid expenses, other current assets, operating right-of-use lease assets and other assets, non-current, increased $7.3 million which decreased cash flows from operating activities. These operating assets can fluctuate based on business volumes; the timing of inventory builds and draw-downs, accrual and receipt of income taxes receivable; prepayments of certain expenses; lease commencement, passage of time, expiration, or termination of operating leases; and other timing differences. We generally prepay our annual insurance premiums in the first quarter of the fiscal year.
Previous report
•Accrued wages and benefits, accrued insurance, operating lease liabilities, other accrued expenses, and other liabilities, non-current decreased by $2.9 million which decreased cash flows from operating activities. These operating liabilities can fluctuate based on the timing of payroll, distributions, business volumes; vendor payments; accruals; lease commencement, lease payments, expiration, or termination of operating leases; and other timing differences.
Previous report
Investing activities used $2.7 million and $2.6 million of cash primarily due to capital expenditures in the six months ended December 31, 2025 and 2024, respectively.
Reworded paragraphs (44)
Previous wording
•our ability to comply with the covenants in our credit agreement;
Current wording
•our ability to comply with the covenants in the ABL Facility;
Previous wording
•any risk factors discussed in this Form 10-Q, Form 10-K for the fiscal year ended June 30, 2025, and in our other filings with the Securities and Exchange Commission;
Current wording
•any risks discussed in this Form 10-Q, our Form 10-K for the fiscal year ended June 30, 2025, and in our other filings with the Securities and Exchange Commission;
Previous wording
•economic, market or business conditions in general and in the natural gas, power, oil, petrochemical, industrial and power industries in particular;
Current wording
•economic, market or business conditions in general, disruptions in the global supply chain, and in the natural gas, power, oil, petrochemical, industrial and power industries in particular;
Previous wording
•Process and Industrial Facilities: primarily consists of plant maintenance, repair, and turnarounds in the downstream and midstream markets for energy clients including refining and processing of crude oil, fractionating, and marketing of natural gas and natural gas liquids. We also perform engineering, procurement, fabrication, and construction for refinery upgrades and retrofits for renewable fuels, including hydrogen processing, production, loading and distribution facilities. We also engineer and construct thermal vacuum test chambers for aerospace and defense industries and other infrastructure for industries including chemicals, petrochemical, sulfur, mining and minerals, cement, agriculture, wastewater treatment facilities and other industrial customers.
Current wording
•Process and Industrial Facilities: primarily consists of plant maintenance, repair, and turnarounds in the downstream and midstream markets for energy clients including refining and processing of crude oil, fractionating, and marketing of natural gas and NGLs. We also perform engineering, procurement, fabrication, and construction for refinery upgrades and retrofits for renewable fuels, including hydrogen processing, production, loading and distribution facilities. We also engineer and construct thermal vacuum test chambers for aerospace and defense industries and other infrastructure for industries including chemicals, petrochemical, sulfur, mining and minerals, cement, agriculture, wastewater treatment facilities and other industrial customers.
Previous wording
The following table provides a summary of changes in our backlog for the six months ended December 31, 2025:
Current wording
The following table provides a summary of changes in our backlog for the nine months ended March 31, 2026:
Previous wording
In the Storage and Terminal Solutions segment, we booked $124.5 million of project awards during the second quarter of fiscal 2026, including an award for the construction of an LNG tank. During the six months ended December 31, 2025, we booked $260.6 million of project awards, including a large award for the construction for the balance of plant supporting a dual service full containment storage tank. This segment includes significant opportunities for storage infrastructure projects related to natural gas, LNG, ammonia, NGLs and other forms of low carbon energy. We believe LNG, NGLS and ammonia projects in particular will be key growth drivers for this segment. Bidding activity in these markets has been strong and we expect that to continue.
Current wording
In the Storage and Terminal Solutions segment, we booked $37.5 million of project awards during the third quarter of fiscal 2026. During the nine months ended March 31, 2026, we booked $298.2 million of project awards. This segment includes significant opportunities for storage infrastructure projects related to natural gas, LNG, ammonia, NGLs and other forms of low carbon energy. We believe LNG, NGLS and ammonia projects in particular will be key growth drivers for this segment. Bidding activity in these markets has been strong and we expect that to continue.
Previous wording
In the Utility and Power Infrastructure segment, we booked $15.8 million of project awards during the second quarter of fiscal 2026. During the six months ended December 31, 2025, we booked $50.5 million of project awards. Our opportunity pipeline for LNG peak shaving projects continues to be promising, with both greenfield facility projects as well as the projects for the upgrade, maintenance, and repair to existing infrastructure. The timing between the major greenfield awards can be extended due to the client activity and bidding diligence, but their addition to backlog is significant and will drive long-term sustainable growth in the segment. The smaller upgrade projects are key measures of our brand power and strength in the market, keeping key resources active while creating opportunities to strengthen execution and engineering teams. Power generation and delivery infrastructure opportunities are expected to be driven over the long-term by increasing electrical demand and the related electrical grid requirements. Project opportunities and bidding activity are strong across the segment.
Current wording
In the Utility and Power Infrastructure segment, we booked $46.6 million of project awards during the third quarter of fiscal 2026. During the nine months ended March 31, 2026, we booked $97.2 million of project awards. Our opportunity pipeline for LNG peak shaving projects continues to be promising, with both greenfield facility projects as well as the projects for the upgrade, maintenance, and repair to existing infrastructure. The timing between the major greenfield awards can be extended due to the client activity and bidding diligence, but their addition to backlog is significant and will drive long-term sustainable growth in the segment. The smaller upgrade projects are key measures of our brand power and strength in the market, keeping key resources active while creating opportunities to strengthen execution and engineering teams. Power generation and delivery infrastructure opportunities are expected to be driven over the long-term by increasing electrical demand and the related electrical grid requirements. Project opportunities and bidding activity are strong across the segment.
Previous wording
In the Process and Industrial Facilities segment, we booked $36.2 million of project awards during the second quarter of fiscal 2026. During the six months ended December 31, 2025, we booked $53.2 million of project awards. We continue to see increasing opportunities in mining and minerals, chemicals, renewable fuels, refinery maintenance and turnarounds, and thermal vacuum chambers in this segment.
Current wording
In the Process and Industrial Facilities segment, we booked $24.1 million of project awards during the third quarter of fiscal 2026. During the nine months ended March 31, 2026, we booked $77.3 million of project awards. We continue to see increasing opportunities in chemicals, renewable fuels, and refinery maintenance and turnarounds. Additionally, after an extended period of limited investment, activity in the U.S. non-ferrous mining sector has begun to improve, supported by demand growth in copper and higher gold prices, as well as policy initiatives related to critical minerals.
Previous wording
During the first quarter of fiscal 2026, backlog was adjusted to reflect the removal of two projects. Backlog in the Utility and Power Infrastructure segment was impacted by the removal of an award originally added to backlog in the fourth quarter of fiscal 2025. The removal was the result of a change in certain contractual terms and conditions that significantly increased our risk profile on the project. Considering the strength of the opportunities available in our markets, particularly in this segment, as well as the high quality financial and commercial risk profile of our current backlog, we deemed that it was unnecessary for us to accept an award that deteriorates that position. Our unwillingness to accept this modified risk profile caused the client to change their award decision. Our backlog in the Process and Industrial Facilities segment was impacted by the removal of an award originally added to backlog in the third quarter of fiscal 2023. Field work on this construction-only project has continued to be delayed as our client and the ultimate customer work to finalize the scope and engineering for the project. The project was removed from backlog as the ultimate customer is now planning to change the project execution and sourcing strategy for the project. While we ultimately may perform some of this work, we determined inclusion of the award in backlog was no longer appropriate.
Current wording
During the first quarter of fiscal 2026, backlog was adjusted to reflect the removal of two projects. Backlog in the Utility and Power Infrastructure segment was impacted by the removal of an award originally added to backlog in the fourth quarter of fiscal 2025. Our unwillingness to accept an increased risk profile caused the client to change their award decision. Our backlog in the Process and Industrial Facilities segment was impacted by the removal of an award originally added to backlog in the third quarter of fiscal 2023. The project was removed from backlog as the ultimate customer is now planning to change the project execution and sourcing strategy for the project. While we ultimately may perform some of this work, we determined inclusion of the award in backlog was no longer appropriate.
Previous wording
Revenue - The increase in consolidated revenue of $23.3 million, or 12%, was attributable to higher revenue volumes in each of our segments.
Current wording
Revenue - The increase in consolidated revenue of $6.5 million, or 3%, was attributable to higher revenue volumes in our Storage and Terminal Solutions segment, partially offset by lower revenue volumes in our Processing and Industrial Facilities segment.
Previous wording
Gross profit - Gross profit in the second quarter of fiscal 2026 increased $2.2 million, or 21%, compared to the second quarter of fiscal 2025. Gross margin was 6.2% for the second quarter of fiscal 2026 compared to gross margin of 5.8% for the second quarter of fiscal 2025. The increase in gross margin was due to higher revenues which resulted in improved recovery of overhead costs, as well as strong project execution throughout the majority of the business. However, costs associated with warranty-type items and with third-party commercial matters arising during commissioning of specialty tank work resulted in a $3.6 million reduction of gross profit during the quarter.
Current wording
Gross profit - Gross profit in the third quarter of fiscal 2026 increased $4.3 million, or 33%, compared to the third quarter of fiscal 2025. Gross margin was 8.3% for the third quarter of fiscal 2026 compared to gross margin of 6.4% for the third quarter of fiscal 2025. The increase in gross margin was due to higher gross margins in the Storage and Terminal Solutions and Utility and Power Infrastructure segments, partially offset by lower gross margins in the Process and Industrial Facility segment. Overall, gross margins during the period benefited from strong project execution and improved overhead recovery.
Previous wording
Selling, general and administrative expenses - The decrease in selling, general and administrative expenses ("SG&A") of $2.2 million, or 13%, is primarily due to cost reductions resulting from our organizational realignment, including a decrease in salaries and wages of $0.8 million, year over year. Additionally, SG&A decreased $0.7 million associated with the variable accounting for cash-settled stock-based compensation as a result of fluctuations in our stock price.
Current wording
Selling, general and administrative expenses - The decrease in selling, general and administrative expenses ("SG&A") of $2.5 million, or 14%, primarily due to cost reductions resulting from our organizational restructuring plan. Additionally, stock compensation expense decreased by $1.0 million primarily as a result of executive separations during the period.
Previous wording
Other income (expense) - Other income (expense) increased $0.6 million due primarily to a reduction foreign currency transaction losses associated with our Australian and South Korean subsidiaries.
Current wording
Other income (expense) - Other income (expense) decreased $0.4 million due primarily to an increase in foreign currency translation losses associated with our Australian and South Korean subsidiaries.
Previous wording
Provision for income taxes - Income tax expense for both periods was insignificant. The effective tax rates during both periods were impacted by valuation allowances of $(0.7) million and $1.8 million, respectively, placed on deferred tax assets generated during the quarters. We placed a valuation allowance on our deferred tax assets due to the existence of a cumulative loss over a three-year period. Currently, we place valuation allowances on newly generated deferred tax assets. We will realize the benefit associated with the deferred tax assets for which the valuation allowance has been provided as we generate taxable income.
Current wording
Provision for income taxes - Income tax expense for both periods was insignificant. The effective tax rates during both periods were impacted by valuation allowances of $0.2 million and $1.2 million, respectively, placed on deferred tax assets generated during the quarters. We placed a valuation allowance on our deferred tax assets due to the existence of a cumulative loss over a three-year period. Currently, we place valuation allowances on newly generated deferred tax assets. We will realize the benefit associated with the deferred tax assets for which the valuation allowance has been provided as we generate taxable income.
Previous wording
Storage and Terminal Solutions revenues increased by $4.3 million, or 5%, in the three months ended December 31, 2025 compared to the same period last year, driven by an increased volume of work for LNG and NGL projects, partially offset by lower volumes for crude oil projects.
Current wording
Storage and Terminal Solutions revenues increased by $15.6 million, or 16%, in the three months ended March 31, 2026 compared to the same period last year, driven by an increased volume of work for LNG projects.
Previous wording
Utility and Power Infrastructure gross profit increased by $3.8 million, or 112%, in the three months ended December 31, 2025 compared to the same period last year. The segment gross margin was 9.6% for the three months ended December 31, 2025 compared to 5.6% in the same period last year, an increase of 4.0% due to strong project execution and improved construction overhead cost absorption as a result of higher revenues.
Current wording
Utility and Power Infrastructure gross profit increased by $2.6 million, or 47%, in the three months ended March 31, 2026 compared to the same period last year. The segment gross margin was 13.6% for the three months ended March 31, 2026 compared to 9.4% in the same period last year, an increase of 4.2% due to strong project execution throughout the segment.
Previous wording
Process and Industrial Facilities revenues increased by $4.7 million, or 15%, in the three months ended December 31, 2025 compared to the same period last year. The increase is primarily attributable to higher revenue volumes for refinery turnarounds and maintenance work.
Current wording
Process and Industrial Facilities revenues decreased by $10.3 million, or 23%, in the three months ended March 31, 2026 compared to the same period last year. Thedecrease is primarily attributable to lower revenue volumes for thermal vacuum chambers, refinery work, and industrial facilities.
Previous wording
The information below is an analysis of our consolidated results for the six months ended December 31, 2025, compared to the six months ended December 31, 2024. See Results of Operations by Business Segment below for additional information describing the performance of each of our reportable segments.
Current wording
The information below is an analysis of our consolidated results for the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025. See Results of Operations by Business Segment below for additional information describing the performance of each of our reportable segments.
Previous wording
Revenue - The increase in overall revenue of $69.6 million, or 20%, was primarily attributable to increased revenue volumes in our Storage and Terminal Solutions and Utility and Power Infrastructure segments.
Current wording
Revenue - The increase in overall revenue of $76.2 million, or 14%, was primarily attributable to increased revenue volumes in our Storage and Terminal Solutions and Utility and Power Infrastructure segments.
Previous wording
Gross profit - Gross profit in the six months ended December 31, 2025 increased $8.6 million, or 46%, compared to the same period prior year. Gross margin increased to 6.5% for the six months ended December 31, 2025 compared to 5.3% for the same period prior year. The increase in gross margin for the quarter is attributable to higher gross margins in our Utility and Power Infrastructure and Process and Industrial Facilities segments, partially offset by lower margins in our Storage and Terminal Solutions segment.
Current wording
Gross profit - Gross profit in the nine months ended March 31, 2026 increased $12.9 million, or 41%, compared to the same period in the prior year. Gross margin increased to 7.1% for the nine months ended March 31, 2026 compared to 5.7% for the same period prior year. The increase in gross margin for the nine months is attributable to higher gross margins in our Storage and Terminal Solutions and Utility and Power Infrastructure segments, partially offset by lower margins in our Process and Industrial Facilities segment. Overall, gross margins during the period benefited from strong project execution and improved overhead recovery.
Previous wording
Selling, general and administrative expenses - The decrease in SG&A expenses of $4.4 million, or 12%, is due in part to cost reductions resulting from our organizational realignment, including a decrease in salaries and wages of $1.3 million. Additionally, facilities costs decreased $1.2 million, and SG&A decreased $1.0 million associated with the variable accounting for cash-settled stock-based compensation as a result of fluctuations in our stock price.
Current wording
Selling, general and administrative expenses - The decrease in SG&A expenses of $6.9 million, or 13%, is due in part to cost reductions resulting from our organizational restructuring plan. Stock compensation also decreased by $1.5 million, due in part to executive separations occurring during the third quarter of fiscal 2026. Additionally, SG&A decreased $1.7 million associated with the variable accounting for cash-settled stock-based compensation, primarily as a result of fluctuations in our stock price.
Previous wording
Interest income - The increase in interest income of $0.2 million is primarily due to an increase in our cash balance, partially offset by lower average interest rates.
Current wording
Interest income - The increase in interest income of $0.9 million is primarily due to an increase in our cash balance.
Previous wording
Other income (expense) - Other income increased $0.7 million in the six months ended December 31, 2025 as compared to the same period prior year due primarily to a reduction foreign currency transaction losses associated with our Australian and South Korean subsidiaries.
Current wording
Other income (expense) - Other income increased $0.4 million in the nine months ended March 31, 2026 as compared to the same period prior year due primarily to a reduction in foreign currency transaction losses associated with our Australian and South Korean subsidiaries.
Previous wording
Provision for income taxes - Income tax expense for both periods was insignificant. The effective tax rates during both periods were impacted by valuation allowances of $0.6 million and $3.1 million, respectively, placed on deferred tax assets generated during the quarters. We placed a valuation allowance on our deferred tax assets due to the existence of a cumulative loss over a three-year period. Currently, we place valuation allowances on newly generated deferred tax assets. We will realize the benefit associated with the deferred tax assets for which the valuation allowance has been provided as we generate taxable income.
Current wording
Provision for income taxes - Income tax expense for both periods was insignificant. The effective tax rates during both periods were impacted by valuation allowances of $0.8 million and $4.3 million, respectively, placed on deferred tax assets generated during the quarters. We placed a valuation allowance on our deferred tax assets due to the existence of a cumulative loss over a three-year period. Currently, we place valuation allowances on newly generated deferred tax assets. We will realize the benefit associated with the deferred tax assets for which the valuation allowance has been provided as we generate taxable income.
Previous wording
Storage and Terminal Solutions revenues increased by $35.6 million, or 20%, in the six months ended December 31, 2025 compared to the same period last year, driven by increased volume of work for LNG peak shaving, partially offset by decreases in tanks and terminal work.
Current wording
Storage and Terminal Solutions revenues increased by $51.1 million, or 19%, in the nine months ended March 31, 2026 compared to the same period last year, driven by increased volume of work for specialty storage projects.
Previous wording
Storage and Terminal Solutions gross profit decreased by $0.7 million, or 6%, in the six months ended December 31, 2025 compared to the same period last year. The segment gross margin was 5.4% for the six months ended December 31, 2025 compared to segment gross margin of 6.9% in the same period last year. During the second quarter of fiscal 2026, costs associated with warranty-type items and third-party commercial matters arising during commissioning of specialty tank work resulted in a $3.6 million reduction of gross profit. Additionally, gross margins for this segment continue to be primarily impacted by under-recovery of overhead costs. We believe overhead cost absorption will improve as activity on awards currently in backlog increases through the remainder of fiscal 2026.
Current wording
Storage and Terminal Solutions gross profit increased by $3.3 million, or 21%, in the nine months ended March 31, 2026 compared to the same period last year. The segment gross margin was 5.9% for the nine months ended March 31, 2026 compared to segment gross margin of 5.8% in the same period last year. During the second and third quarter of fiscal 2026, costs associated with warranty-type items and third-party commercial matters arising during commissioning of specialty tank work resulted in a $3.6 million and a $2.6 million reduction of gross profit, respectively. The impact of this work was offset by strong project execution across the remainder of the segment.
Previous wording
Utility and Power Infrastructure revenues increased by $32.9 million, or 28%, in the six months ended December 31, 2025 compared to the same period last year. The increase is primarily attributable to higher volumes of work for LNG peak shaving projects and power delivery work.
Current wording
Utility and Power Infrastructure revenues increased by $34.2 million, or 19%, in the nine months ended March 31, 2026 compared to the same period last year. The increase is primarily attributable to higher volumes of work for LNG peak shaving projects and power delivery work.
Previous wording
Utility and Power Infrastructure gross profit increased by $9.3 million, or 197%, in the six months ended December 31, 2025 compared to the same period last year. The segment gross margin was 9.3% for the six months ended December 31, 2025 compared to 4.0% in the same period last year due to strong project execution and improved construction overhead cost absorption as a result of higher revenues.
Current wording
Utility and Power Infrastructure gross profit increased by $11.9 million, or 116%, in the nine months ended March 31, 2026 compared to the same period last year. The segment gross margin was 10.6% for the nine months ended March 31, 2026 compared to 5.8% in the same period last year due to strong project execution and improved construction overhead cost absorption as a result of higher revenues.
Previous wording
Process and Industrial Facilities revenues increased by $1.2 million, or 2%, in the six months ended December 31, 2025 compared to the same period last year. The increase is primarily attributable to higher revenue volumes for refinery work, partially offset by lower volumes of work for thermal vacuum chambers.
Current wording
Process and Industrial Facilities revenues decreased by $9.1 million, or 9%, in the nine months ended March 31, 2026 compared to the same period last year. The decrease is primarily attributable to lower revenue volumes for thermal vacuum chambers and industrial facilities, partially offset by higher volumes of refinery work.
Previous wording
Process and Industrial gross profit increased by $0.3 million, or 12%, in the six months ended December 31, 2025 compared to the same period last year. The segment gross margin was 4.2% for the six months ended December 31, 2025 compared to segment gross margin of 3.8% in the same period last year. Improved overhead cost absorption associated with reallocation of resources to other segments was partially offset by reductions in gross margin due to mix of work.
Current wording
Process and Industrial gross profit decreased by $2.6 million, or 42%, in the nine months ended March 31, 2026 compared to the same period last year. The segment gross margin was 3.6% for the nine months ended March 31, 2026 compared to segment gross margin of 5.7% in the same period last year. Improved overhead cost absorption associated with reallocation of resources to other segments was partially offset by reductions in gross margin due to mix of work. Additionally, the settlement of a legal matter reduced gross margin during the third quarter of fiscal 2026 by $1.1 million. See Part I, Item 1. Financial Statements (Unaudited), Note 6 - Commitments and Contingencies, for more details.
Previous wording
Unrestricted cash and cash equivalents at December 31, 2025 totaled $199.0 million and availability under the ABL Facility totaled $58.6 million, resulting in total liquidity of $257.6 million. During the second quarter of fiscal 2026, liquidity increased $8.7 million primarily as a result of changes in working capital. During the six months ended December 31, 2025, liquidity decreased by $26.9 million as a result of changes in working capital, as well as payments made for tax withholdings for stock compensation and capital expenditures.
Current wording
Unrestricted cash and cash equivalents at March 31, 2026 totaled $233.0 million and availability under the ABL Facility totaled $64.2 million, resulting in total liquidity of $297.2 million. During the third quarter of fiscal 2026, liquidity increased $39.6 million primarily as a result of changes in working capital. During the nine months ended March 31, 2026, liquidity increased by $12.7 million primarily as a result of changes in working capital.
Previous wording
The following table provides a summary of changes in our liquidity for the six months ended December 31, 2025 (in thousands):
Current wording
The following table provides a summary of changes in our liquidity for the nine months ended March 31, 2026 (in thousands):
Previous wording
The borrowing base is recalculated on a monthly basis and at December 31, 2025, our borrowing base was $63.1 million. We had no borrowings outstanding and $4.5 million in letters of credit outstanding, which resulted in availability of $58.6 million under the ABL Facility. For additional information regarding our ABL Facility, see Item I of Part I, "Financial Statements - Note 4 - Debt."
Current wording
The borrowing base is recalculated on a monthly basis and at March 31, 2026, our borrowing base was $68.6 million. We had no borrowings outstanding and $4.4 million in letters of credit outstanding, which resulted in availability of $64.2 million under the ABL Facility. For additional information regarding our ABL Facility, see Item I of Part I, "Financial Statements - Note 4 - Debt."
Previous wording
The significant components of the $24.2 million change in operating assets and liabilities for the six months ended December 31, 2025 are summarized as follows:
Current wording
The significant components of the $5.1 million change in operating assets and liabilities for the nine months ended March 31, 2026 are summarized as follows:
Previous wording
•Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased by $77.0 million which decreased cash flows from operating activities. The increases are primarily attributable to the timing of billing and collections.
Current wording
•Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased by $16.0 million which decreased cash flows from operating activities. The increases are primarily attributable to the timing of billing and collections.
Previous wording
•Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") decreased $4.5 million which increased cash flows from operating activities. Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") increased $59.3 million which increased cash flows from operating activities. CIE and BIE balances can experience significant fluctuations based on business volumes and the timing of when job costs are incurred and the timing of customer billings and payments. Some fixed-price customer contracts allow for significant upfront billings at the beginning of a project, which increases liquidity near-term.
Current wording
•Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") decreased $4.8 million which increased cash flows from operating activities. Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") increased $17.1 million which increased cash flows from operating activities. CIE and BIE balances can experience significant fluctuations based on business volumes and the timing of when job costs are incurred and the timing of customer billings and payments. Some fixed-price customer contracts allow for significant upfront billings at the beginning of a project, which increases liquidity near-term.
Previous wording
•Accounts payable increased by $7.6 million which increased cash flows from operating activities. These operating liabilities can fluctuate based on business volumes; the timing of vendor payments; accruals; lease commencement, lease payments, expiration, or termination of operating leases; and other timing differences.
Current wording
•Accounts payable increased by $9.2 million which increased cash flows from operating activities. These operating liabilities can fluctuate based on business volumes; the timing of vendor payments; accruals; and other timing differences.
Previous wording
The significant components of the $50.8 million change in operating assets and liabilities for the six months ended December 31, 2024 are summarized as follows:
Current wording
The significant components of the $80.7 million change in operating assets and liabilities for the nine months ended March 31, 2025 are summarized as follows:
Previous wording
•Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased by $18.9 million which decreased cash flows from operating activities. The increases are primarily attributable to the timing of billing and collections.
Current wording
•Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased by $88.8 million which decreased cash flows from operating activities. The increases are primarily attributable to the timing of billing and collections.
Previous wording
•Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") increased $0.8 million which decreased cash flows from operating activities. Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") increased $66.2 million which increased cash flows from operating activities. CIE and BIE balances can experience significant fluctuations based on business volumes and the timing of when job costs are incurred and the timing of customer billings and payments. Some fixed-price customer contracts allow for significant upfront billings at the beginning of a project, which increases liquidity near-term.
Current wording
•Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") increased $4.7 million which decreased cash flows from operating activities. Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") increased $161.3 million which increased cash flows from operating activities. CIE and BIE balances can experience significant fluctuations based on business volumes and the timing of when job costs are incurred and the timing of customer billings and payments. Some fixed-price customer contracts allow for significant upfront billings at the beginning of a project, which increases liquidity near-term.
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