# MATRIX SERVICE CO (MTRX) FY 2026 MD&A

Verbatim Item 7 Management's Discussion and Analysis from MATRIX SERVICE CO's 10-K for fiscal year 2026.

SEC filing source: https://www.sec.gov/Archives/edgar/data/866273/000086627326000057/mtrx-20260630.htm
Accession: 0000866273-26-000057
Filing date: 2026-09-03
Report date: 2026-06-30
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/MTRX/
All MD&A years: /company/MTRX/mda/
Previous year: /company/MTRX/mda/fy2025/ (FY 2025)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). GAAP represents a comprehensive set of accounting and disclosure rules and requirements, the application of which requires management judgments and estimates including, in certain circumstances, choices between acceptable GAAP alternatives. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions. Note 1 - Business, Basis of Presentation and Significant Accounting Policies of the Notes to Consolidated Financial Statements included in Part II, Item 8 - Financial Statements and Supplementary Data in this Annual Report on Form 10-K, contains a comprehensive summary of our significant accounting policies.

RESULTS OF OPERATIONS

Reportable Segments

We operate our business through three reportable segments:

•Storage and Terminal Solutions: delivers integrated engineering, procurement and construction ("EPC") services, along with repair, maintenance and fabrication services for bulk liquid, cryogenic, and refrigerated storage and terminal facilities supporting both traditional and emerging energy markets, including LNG, NGLs, petroleum products, chemicals, hydrogen, and ammonia. We also manufacture and sell specialty, precision-engineered tank products, including geodesic domes, aluminum internal floating roofs, floating suction and skimmer systems, roof drain systems and floating roof seals.

•Utility and Power Infrastructure: delivers comprehensive construction, maintenance, upgrades and fabrication services for power generation facilities and power infrastructure systems for a variety of customers, including public and private utilities, energy producers and data center customers. We also deliver integrated EPC, fabrication, and upgrade services for LNG peak shaving facilities.

•Process and Industrial Facilities: delivers engineering, construction, maintenance, and repair services across diverse heavy industrial and energy transition markets, including midstream and downstream energy, chemicals, mining and minerals, renewable fuels, and hydrogen. We also engineer and construct highly specialized infrastructure, notably thermal vacuum test chambers for the aerospace and defense sectors.

Overview

Significant period to period changes in revenue, gross profits and operating results between fiscal 2026 and fiscal 2025 are discussed below on a consolidated basis and for each segment. A discussion of results of operations changes between fiscal 2025 and fiscal 2024 is included in Item 7. 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, 2025, which was filed with the SEC on September 10, 2025.

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Matrix Service Company

Results of Operations

(In thousands)

Operational Update

Effective July 1, 2026, Shawn P. Payne assumed the role of President and Chief Executive Officer. His appointment reflects the Board's commitment to improving performance and delivering sustainable growth and profitability.

While we believe Matrix is well positioned to benefit from significant investment across its core and emerging markets, the Company's historical results have not consistently reflected the strength of its capabilities, customer relationships, and market opportunities. To address this, Mr. Payne led the development and implementation of Matrix's WIN, EXECUTE, DELIVER strategic framework, which is designed to accelerate growth, strengthen project execution, enhance organizational efficiency, and deliver sustainable profitability.

Under his leadership, Matrix is focused on converting its competitive advantages into stronger financial performance, improved operational outcomes, and long-term shareholder value.

Under our Win strategy, we continue to focus on securing projects that align with our capabilities, experience, and demonstrated track record of execution. We are focused on growing and diversifying our revenue base through expansion into attractive end markets, broadening relationships with existing customers, and accelerating new customer acquisition efforts across North America. We are pursuing opportunities across our traditional energy and industrial infrastructure markets, including LNG and NGL storage and terminal infrastructure, while selectively expanding into attractive growth markets such as power generation, utility infrastructure, data center-related power infrastructure, and mining and minerals. We believe demand in these markets is supported by increasing domestic electricity demand, growth in data center development, investment in power generation and related infrastructure, and continued demand for critical minerals essential to energy, technology, defense, and AI-related infrastructure. We are also expanding our geographic reach across strategically important regions and pursuing additional construction-only opportunities that complement our full-service capabilities and broaden the range of project delivery models we offer customers. We believe these efforts, combined with our focus on strengthening existing customer relationships and expanding our customer base, contributed to fiscal 2026 revenue growth of 14% to $873.6 million compared to $769.3 million in fiscal 2025.

Under our Execute strategy, our focus remains on delivering projects safely, efficiently, and with a high degree of quality while strengthening profitability and operational performance. During fiscal 2026, we advanced a variety of initiatives designed to improve project execution and drive greater consistency across the enterprise, including enhancing project proposal and contracting discipline, strengthening project controls and change management processes, improving engineering and construction execution, reinforcing quality management systems, and further developing our safety culture and performance. We also continued efforts to streamline internal processes, refine organizational workflows, support continuous improvement initiatives across the enterprise, and reinforce accountability throughout the organization with a continued focus on execution, performance, and measurable outcomes. We believe these initiatives contributed to improved project outcomes and operating performance, as evidenced by an increase in gross margin to 7.3% in fiscal 2026 from 5.2% in fiscal 2025.

Under our Deliver strategy, we remain committed to converting profitable growth and operational improvements into sustainable value creation for shareholders. During fiscal 2026, we continued to benefit from actions taken to simplify the organization, streamline operations, and create a flatter and more efficient operating structure. These efforts contributed to a more efficient operating structure and improved performance across the enterprise. As a result, selling, general and administrative expenses declined 11% to $63.6 million in fiscal 2026 compared to $71.2 million in fiscal 2025. Combined with revenue growth and improved profitability, we believe these results demonstrate meaningful progress in executing our strategy, strengthening financial performance, and positioning the Company to pursue both organic and acquisition-related growth opportunities. Supported by a strong balance sheet and liquidity, we believe Matrix remains well positioned to create sustainable value for all stakeholders.

Backlog

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

•fixed-price awards;

•minimum customer commitments on cost plus arrangements; and

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

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

The following table provides a summary of changes in our backlog for fiscal 2026:

[[GREPCENT_TABLE]]
[["","","Storage and Terminal Solutions","","Utility and Power Infrastructure","","Process and Industrial Facilities","","Total"],["","","(In thousands)"],["Backlog as of June 30, 2025","","$","770,095","","","$","346,384","","","$","265,629","","","$","1,382,108"],["Project awards","","329,360","","","126,977","","","185,324","","","641,661"],["Other adjustment(2)","","\u2014","","","(44,239)","","","(152,720)","","","(196,959)"],["Revenue recognized","","(458,296)","","","(283,390)","","","(131,946)","","","(873,632)"],["Backlog as of June 30, 2026","","$","641,159","","","$","145,732","","","$","166,287","","","$","953,178"],["Book-to-bill ratio(1)","","0.7x","","0.4x","","1.4x","","0.7x"]]
[[/GREPCENT_TABLE]]

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

(2)Previous project awards removed from backlog. 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.

In the Storage and Terminal Solutions segment, we booked $329.4 million of project awards during fiscal 2026. Project awards included a large award for the construction of the balance of plant supporting a dual service full containment storage tank, and an award for the construction of an LNG 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.

In the Utility and Power Infrastructure segment, we booked $127.0 million of project awards in fiscal 2026. 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, expansion, maintenance, and repair to existing infrastructure. The timing between the major greenfield and expansion awards can be extended due to client activity and bidding diligence. However, their addition to backlog is significant and we expect it to 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 associated with data centers and other demands. Project opportunities and bidding activity are strong across the segment.

In the Process and Industrial Facilities segment, we booked $185.3 million of project awards in fiscal 2026, including a major mining construction project in the western United States. 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 increased significantly, supported by demand growth in copper and higher gold prices, as well as policy initiatives related to critical minerals.

Project awards in all segments are cyclical and are typically the result of a sales process that can take several months or years to complete. It is common for awards to shift from one period to another as the timing of awards is dependent upon a number of factors including changes in market conditions, permitting, off take agreements, project financing and other factors. Backlog

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volatility may increase for some segments from time to time when individual project awards are less frequent, but more significant. There is an inherent lag between the time a project is awarded and when it begins to have a material impact on revenue. This lag can vary and can extend up to six months or longer in unique circumstances, depending on finalization of scopes, contracts, permits, and facility process requirements. Additionally, awards for larger construction projects may be recognized as revenue over a multi-year period as the projects may take a few years to complete. We expect to recognize approximately 79% of our total backlog reported as of June 30, 2026 as revenue within fiscal 2027.

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Fiscal 2026 Versus Fiscal 2025

Consolidated Results of Operations

[[GREPCENT_TABLE]]
[["","Fiscal Years Ended June 30,","","2026 v 2025"],["","2026","","2025","","Change","","%"],["","(In thousands)"],["Revenue","$","873,632","","","$","769,286","","","$","104,346","","","14","%"],["Cost of revenue","809,680","","","729,609","","","80,071","","","11","%"],["Gross profit","63,952","","","39,677","","","24,275","","","61","%"],["Selling, general and administrative expenses","63,607","","","71,173","","","(7,566)","","","(11)","%"],["Restructuring costs and other","9,963","","","3,572","","","6,391","","","179","%"],["Operating loss","(9,618)","","","(35,068)","","","25,450","","","73","%"],["Other income (expense):"],["Interest expense","(437)","","","(518)","","","81","","","16","%"],["Interest income","7,717","","","6,652","","","1,065","","","16","%"],["Other","114","","","(64)","","","178","","","(278)","%"],["Loss before income tax expense","(2,224)","","","(28,998)","","","26,774","","","92","%"],["Provision (benefit) for federal, state and foreign income taxes","356","","","464","","","(108)","","","23","%"],["Net loss","$","(2,580)","","","$","(29,462)","","","$","26,882","","","91","%"]]
[[/GREPCENT_TABLE]]

Revenue - The increase in overall revenue of $104.3 million, or 14%, was attributable to higher revenue volumes in our Storage and Terminal Solutions and Utility and Power Infrastructure segments, partially offset by lower revenue volumes in our Process and Industrial Facilities segment.

Gross profit - Gross profit during fiscal 2026 increased by $24.3 million, or 61%, compared to fiscal 2025. Gross margin of 7.3% for fiscal 2026 increased compared with gross margin of 5.2% for fiscal 2025. The increase in gross margin for the year 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 year benefitted from strong project execution and improved overhead recovery.

Selling, general and administrative expenses - The decrease in selling, general and administrative ("SG&A") expenses of $7.6 million, or 11%, is due in part to cost reductions resulting from our organizational restructuring plan, which decreased salaries and wages expense as well as facilities costs. Stock compensation also decreased by $1.8 million, due in part to certain executive separations occurring during the third quarter of fiscal 2026. Additionally, SG&A decreased $1.8 million associated with the variable accounting for cash-settled stock-based compensation, primarily as a result of declines in our stock price.

Restructuring costs and other - The Company incurred $10.0 million of costs during fiscal 2026 related to organizational restructuring and other related costs. This included $3.6 million of expense related to the CEO and CFO transitions, as well as severance for other personnel and lease impairments for exited leases. See Part II, Item 8. Financial Statements and Supplementary Data, Note 14 - Restructuring Costs and Other, for more information about our organizational restructuring plan.

Interest income - The increase in interest income of $1.1 million is primarily due to an increase in our average cash balance during the year.

Provision for income taxes - Income tax expense for both fiscal 2026 and 2025 was insignificant. The effective tax rates during both periods were impacted by changes in valuation allowances of ($1.3) million and $6.5 million, respectively, placed on deferred tax asset changes during the fiscal years. We placed a valuation allowance on our deferred tax assets due to the existence of a cumulative loss over a three-year period. Currently, we place valuation allowances on newly generated deferred tax assets. We will realize the benefit associated with the deferred tax assets for which the valuation allowance has been provided as we generate taxable income.

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Results of Operations by Business Segment

[[GREPCENT_TABLE]]
[["","Fiscal Years Ended June 30,","","2026 v 2025"],["","2026","","2025","","Change","","%"],["Revenue","(In thousands)"],["Storage and Terminal Solutions","$","458,296","","","$","365,891","","","$","92,405","","","25","%"],["Utility and Power Infrastructure","283,390","","","248,691","","","34,699","","","14","%"],["Process and Industrial Facilities","131,946","","","154,704","","","(22,758)","","","(15)","%"],["Total Revenue (1)","$","873,632","","","$","769,286","","","$","104,346","","","14","%"],["(1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $3.1 million for the year ended June 30, 2026."],["Gross profit (loss)"],["Storage and Terminal Solutions","$","27,871","","","$","14,655","","","$","13,216","","","90","%"],["Utility and Power Infrastructure","31,592","","","16,915","","","14,677","","","87","%"],["Process and Industrial Facilities","4,515","","","8,910","","","(4,395)","","","(49)","%"],["Corporate","(26)","","","(803)","","","777","","","(97)","%"],["Total Gross Profit","$","63,952","","","$","39,677","","","$","24,275","","","61","%"],["Gross margin %"],["Storage and Terminal Solutions","6.1","%","","4.0","%","","2.1","%","","52.5","%"],["Utility and Power Infrastructure","11.1","%","","6.8","%","","4.3","%","","63.2","%"],["Process and Industrial Facilities","3.4","%","","5.8","%","","(2.4)","%","","(41)","%"],["Total gross margin %","7.3","%","","5.2","%","","2.1","%","","40.4","%"],["Operating income (loss)"],["Storage and Terminal Solutions","$","3,131","","","$","(9,206)","","","$","12,337","","","134","%"],["Utility and Power Infrastructure","20,348","","","3,834","","","16,514","","","431","%"],["Process and Industrial Facilities","(2,570)","","","479","","","(3,049)","","","(637)","%"],["Corporate","(30,527)","","","(30,175)","","","(352)","","","(1)","%"],["Total Operating Loss","$","(9,618)","","\u2014","","$","(35,068)","","","$","25,450","","","73","%"]]
[[/GREPCENT_TABLE]]

Storage and Terminal Solutions

Storage and Terminal Solutions revenues increased by $92.4 million, or 25%, in fiscal 2026 compared to fiscal 2025, driven by an increased volume of work for specialty storage projects.

Storage and Terminal Solutions gross profit increased by $13.2 million, or 90%, in fiscal 2026 compared to fiscal 2025. The segment gross margin was 6.1% for fiscal 2026 compared to 4.0% for fiscal 2025. Higher revenue volumes improved overhead recovery. In addition, in the fourth quarter of fiscal 2025, we lowered our recovery expectations on a legacy project completed in fiscal 2021 that was in arbitration which resulted in a $6.4 million decrease to gross margin. The matter was fully resolved in fiscal 2026.

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Utility and Power Infrastructure

Utility and Power Infrastructure revenues increased by $34.7 million, or 14%, in fiscal 2026 compared to fiscal 2025. The increase is primarily attributable to higher volumes of work for LNG peak shaving projects and power delivery work.

Utility and Power Infrastructure gross profit increased by $14.7 million, or 87%, in fiscal 2026 compared to fiscal 2025. The segment gross margin was 11.1% for fiscal 2026 compared to 6.8% in fiscal 2025, an increase of 4.3% due to strong project execution and improved construction overhead cost absorption as a result of higher revenues.

Process and Industrial Facilities

Process and Industrial Facilities revenues decreased by $22.8 million, or 15%, in fiscal 2026 compared to fiscal 2025. The decrease is primarily attributable to lower revenue volumes for refineries, thermal vacuum chambers, and industrial facilities.

Process and Industrial Facilities gross profit decreased by $4.4 million, or 49% in fiscal 2026 compared to fiscal 2025. The segment gross margin was 3.4% for fiscal 2026 compared to 5.8% for fiscal 2025. Gross margins decreased primarily due to mix of work.

Corporate

Unallocated corporate gross profit was $0.03 million during fiscal 2026 compared to a loss of $0.8 million in fiscal 2025, an increase of $0.8 million primarily due to a reduction in cost for certain support functions as a result of our organizational restructuring.

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. Our primary sources of liquidity at June 30, 2026 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 Statements and Supplementary Data, Note 5 - Debt, for more information), and cash generated from operations. Our primary operational uses of capital are expenditures to execute our projects, fund business operations and fulfill our contractual obligations. We believe that for at least the next 12 months, our cash position, anticipated cash generated by operating activities, along with our availability under the ABL Facility, is sufficient to support our operating requirements.

Unrestricted cash and cash equivalents at June 30, 2026 totaled $223.0 million and availability under the ABL Facility totaled $60.9 million, resulting in total liquidity of $283.9 million. During fiscal 2026, liquidity decreased by $0.6 million.

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):

[[GREPCENT_TABLE]]
[["","","June 30, 2026","","June 30, 2025"],["Total cash, cash equivalents and restricted cash","","$","247,966","","","$","249,641"],["Less: Restricted cash","","25,000","","","25,000"],["Unrestricted Cash","","222,966","","","224,641"],["Availability under ABL Facility","","60,910","","","59,815"],["Total Liquidity","","$","283,876","","","$","284,456"]]
[[/GREPCENT_TABLE]]

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The following table provides a summary of changes in our liquidity for the fiscal year ended June 30, 2026 (in thousands):

[[GREPCENT_TABLE]]
[["Liquidity at June 30, 2025","$","284,456"],["Cash provided by operating activities","6,907"],["Cash used by investing activities","(3,541)"],["Cash used by financing activities","(4,170)"],["Effect of exchange rate changes on cash","(871)"],["Increase in availability under ABL Facility","1,095"],["Liquidity at June 30, 2026","$","283,876"]]
[[/GREPCENT_TABLE]]

The following table provides a summary of changes in our liquidity for the fiscal year ended June 30, 2025 (in thousands):

[[GREPCENT_TABLE]]
[["Liquidity at June 30, 2024","$","169,603"],["Cash provided by operating activities","117,471"],["Cash used by investing activities","(7,445)"],["Cash used by financing activities","(1,040)"],["Effect of exchange rate changes on cash","40"],["Increase in availability under ABL Facility","5,827"],["Liquidity at June 30, 2025","$","284,456"]]
[[/GREPCENT_TABLE]]

Factors that routinely impact our short-term liquidity and may impact our long-term liquidity include:

•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 upfront billings at the beginning of a project, which increases liquidity near term;

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

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

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

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

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

•release of contract retentions; and

•capital expenditures.

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

•contract disputes;

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

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

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

•acquisitions and disposals of businesses or assets; and

•purchases of shares under our stock buyback program.

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ABL Credit Facility

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

The borrowing base is recalculated on a monthly basis and at June 30, 2026, our borrowing base was $65.4 million. We had no borrowings outstanding and $4.5 million in letters of credit outstanding, which resulted in availability of $60.9 million under the ABL Facility. Our borrowing base availability has ranged from $55.6 million to $65.0 million during fiscal 2026. Subsequent to June 30, 2026, we issued an additional $20.0 million project-related letter of credit. The letter of credit resulted in a release of $20.0 million of contract retention, which we collected in August 2026. For additional information regarding our ABL Facility, see Part II, Item 8. Financial Statements and Supplementary Data, Note 5 - Debt.

CASH FLOW ANALYSIS

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

[[GREPCENT_TABLE]]
[["","Fiscal Years Ended June 30,"],["","2026","","2025"],["Cash flows provided by operating activities","$","6,907","","","$","117,471"],["Cash flows used by investing activities","(3,541)","","","(7,445)"],["Cash flows used by financing activities","(4,170)","","","(1,040)"],["Effect of exchange rate changes on cash","(871)","","","40"],["Change in cash and cash equivalents","(1,675)","","","109,026"],["Cash and cash equivalents at beginning of period","249,641","","","140,615"],["Cash and cash equivalents at end of period","$","247,966","","","$","249,641"]]
[[/GREPCENT_TABLE]]

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):

[[GREPCENT_TABLE]]
[["","Fiscal Years Ended June 30,"],["","2026","","2025"],["Net loss","$","(2,580)","","","$","(29,462)"],["Loss (gain) on sale of property, plant and equipment","(606)","","","8"],["Depreciation and amortization","8,640","","","10,012"],["Stock-based compensation expense","7,145","","","8,904"],["Operating lease impairment due to restructuring","2,935","","","\u2014"],["Other non-cash expenses","146","","","234"],["Cash effect of changes in operating assets and liabilities","(8,773)","","","127,775"],["Net cash provided by operating activities","$","6,907","","","$","117,471"]]
[[/GREPCENT_TABLE]]

The significant components of the $8.8 million cash effect of changes in operating assets and liabilities for the fiscal year ended June 30, 2026 are summarized as follows:

•Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased $11.3 million from fiscal 2025, which decreased cash flows from operating activities. The increases are primarily attributable to the timing of billings and collections. The increase in accounts receivable was partially offset by the collection of $19.5 million of accounts receivable associated with matters that had been in litigation.

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•Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") decreased $0.5 million from fiscal 2025, which increased cash flows from operating activities. Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") decreased $23.6 million from fiscal 2025, which decreased 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. Some fixed-price customer contracts allow for significant upfront billings at the beginning of a project, which increases liquidity near-term.

•Accounts payable increased by $27.7 million from fiscal 2025, which increased cash flows from operating activities. These operating liabilities can fluctuate based on business volumes, the timing of vendor payments; accruals; and other timing differences.

•Changes in other operating assets and liabilities decreased cash flows from operating activities by $2.1 million. These operating assets and liabilities can fluctuate based on business volumes and timing of certain cash receipts and payments.

The significant components of the $127.8 million change in operating assets and liabilities for the fiscal year ended June 30, 2025 include the following:

•Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased $48.8 million from fiscal 2024, which decreased cash flows from operating activities. The increases are primarily attributable to the timing of billing and collections.

•Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") decreased $4.1 million from fiscal 2024, which increased 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. Some fixed-price customer contracts allow for significant upfront billings at the beginning of a project, which increases liquidity near term.

•Accounts payable increased by $14.8 million from fiscal 2024, which increased cash flows from operating activities. These operating liabilities can fluctuate based on business volumes, the timing of vendor payments; accruals; and other timing differences.

•Changes in other operating assets and liabilities increased cash flows from operating activities by $5.3 million. These operating assets and liabilities can fluctuate based on business volumes and timing of certain cash receipts and payments.

Cash Flows Used by Investing Activities

Investing activities used $3.5 million and $7.4 million of cash in fiscal 2026 and fiscal 2025, respectively. Capital expenditures were $5.5 million and $7.7 million in fiscal 2026 and fiscal 2025, respectively. During fiscal 2026, we also received $1.9 million of proceeds from the sale of property, plant and equipment, primarily associated with our transmission and distribution service line which we began winding down in the fourth quarter of fiscal 2025.

Cash Flows Used by Financing Activities

Financing activities used $4.2 million and $1.0 million of cash in fiscal 2026 and fiscal 2025, respectively, primarily due to payments of $4.2 million and $1.2 million respectively, to satisfy tax withholding obligations associated with stock-based compensation.

Dividend Policy

We have never paid cash dividends on our common stock and the terms of our ABL Facility 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.

Stock Repurchase Program

We may repurchase common stock pursuant to the Stock Buyback Program, which was approved by the board of directors in November 2018. Under the program, the aggregate number of shares repurchased may not exceed 2,707,175 shares. We may repurchase our stock from time to time in the open market at prevailing market prices or in privately negotiated transactions and

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are not obligated to purchase any shares. The program will continue unless and until it is modified or revoked by the Board of Directors. We made no repurchases under the program during fiscal 2026. As of June 30, 2026, there were 1,349,037 shares available for repurchase under the Stock Buyback Program. The terms of our ABL Facility limit share repurchases to $2.5 million per fiscal year provided that we meet certain availability thresholds.

Material Cash Requirements from Contractual and Other Obligations

As of June 30, 2026, 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. Future payments for such leases, excluding leases with initial terms of one year or less, were $22.9 million at June 30, 2026, with $5.4 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.

Off-Balance Sheet Arrangements and Other Commitments

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

•Surety bonds: The terms of our construction contracts frequently require that we obtain from surety companies, and provide to our customers, surety bonds as a condition to the award of such contracts. These surety bonds are issued in return for premiums, which vary depending on the size and type of the bond, and secure our payment and performance obligations under such contracts. We have agreed to indemnify the surety companies for amounts, if any, paid by them in respect of surety bonds issued on our behalf. Surety bonds expire at various times ranging from final completion of a project to a period extending beyond contract completion in certain circumstances. Such amounts can also fluctuate from period to period based upon the mix and level of our bonded operating activity. As of June 30, 2026, there were $237.2 million of surety bonds in force, of which we expect $226.3 million to expire within the next 12 months. Of the bonds in force, $214.5 million related to performance bonds for ongoing projects and the remainder related to contractor licensing, liens, and other bonds. We are not aware of any losses in connection with surety bonds that have been posted on our behalf, and we do not expect to incur significant losses in the foreseeable future.

•Multiemployer pension plans: We contribute to a number of multiemployer defined benefit pension plans in the U.S. and Canada under the terms of collective-bargaining agreements that cover our union-represented employees, who are represented by more than 100 local unions. The related collective-bargaining agreements between those organizations and us, which specify the rate at which we must contribute to the multi-employer defined pension plan, expire at different times between 2026 and 2029. Benefits under these plans are generally based on compensation levels and years of service. Under federal legislation regarding multiemployer pension plans, in the event of a withdrawal from a plan or plan termination, companies are required to continue funding their proportionate share of such plan’s unfunded vested benefits. Withdrawal liabilities or requirements for increased future contributions could negatively impact our results of operations and liquidity. 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. As of June 30, 2026, we had $4.5 million of letters of credit outstanding. The letters of credit that support our workers’ compensation programs are expected to renew annually through the term of our credit facility. Subsequent to June 30, 2026, we issued an additional $20.0 million project-related letter of credit. The letter of credit resulted in a release of $20.0 million of contract retention, which we collected in August 2026.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company’s accounting policies are more fully described in Note 1 of the Consolidated Financial Statements. As disclosed in Note 1, the preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ significantly from those estimates. The Company believes that the following discussion addresses the Company’s most critical accounting policies, which are those that are most important to the portrayal of the Company’s financial condition and results of operations and require management’s most difficult, subjective and complex judgments.

Revenue Recognition

Revenue for contracts that satisfy the criteria for over time recognition is recognized as the work progresses. The Company measures transfer of control of the performance obligation utilizing the percentage-of-completion method, which is based on costs incurred to date compared to the total estimated costs at completion, since it best depicts the transfer of control of assets being created or enhanced to the customer. Costs incurred may include direct labor, direct materials, subcontractor costs and indirect costs, such as salaries and benefits, supplies and tools, equipment costs and insurance costs. Indirect costs are charged to projects based upon direct costs and overhead allocation rates per dollar of direct costs incurred or direct labor hours worked.

Under the percentage-of-completion method, the use of estimated costs to complete each performance obligation is a significant variable in the process of determining recognized revenue and is a significant factor in the accounting for such performance obligations. Significant estimates that impact the cost to complete each performance obligation are materials, components, equipment, labor and subcontracts; labor productivity; schedule durations, including subcontractor or supplier progress; unpriced change orders; contract disputes including claims; achievement of contractual performance requirements; and contingencies, among others.

The cumulative impact of revisions in total cost estimates during the progress of work is reflected in the period in which these changes become known, including, to the extent required, the reversal of profit recognized in prior periods and the recognition of losses expected to be incurred on performance obligations in progress. 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 Statements and Supplementary Data, Note 2 - Revenue for further discussion.

Goodwill

Goodwill represents the excess of the purchase price of acquisitions over the acquisition date fair value of the net identifiable tangible and intangible assets acquired. In accordance with current accounting guidance, goodwill is not amortized and is tested at least annually for impairment at the reporting unit level, which is a level below our reportable segments.

We perform our annual impairment test in the fourth quarter of each fiscal year, or in between annual tests whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable, to determine whether an impairment exists and to determine the amount of headroom. We define "headroom" as the percentage difference between the fair value of a reporting unit and its carrying value excluding working capital. The goodwill impairment test involves comparing management’s estimate of the fair value of a reporting unit with its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, then goodwill is not impaired. If the fair value of a reporting unit is less than its carrying value, then goodwill is impaired to the extent of the difference, but the impairment may not exceed the balance of goodwill assigned to that reporting unit.

We utilize a discounted cash flow analysis, referred to as an income approach, and market multiples, referred to as a market approach, to determine the estimated fair value of our reporting units. For the income approach, significant judgments and assumptions including forecasted project awards, discount rate, anticipated revenue growth rate, gross margins, operating expenses, working capital needs and capital expenditures are inherent in the fair value estimates, which are based on our operating and capital budgets and on our strategic plan. As a result, actual results may differ from the estimates utilized in our income approach. For the market approach, significant judgments and assumptions include the selection of guideline companies, forecasted guideline company EBITDA (as defined in Note 4 - Goodwill and Other Intangible Assets) and our forecasted EBITDA (as defined in Note 4 - Goodwill and Other Intangible Assets). The use of alternate judgments and/or assumptions could result in a fair value that differs from our estimate and could result in the recognition of additional impairment charges in the financial statements. As a test for reasonableness, we also compare the combined fair values of our reporting units to our market capitalization.

We performed our annual goodwill impairment test as of May 31, 2026, which resulted in no impairment.

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We considered the amount of headroom for each reporting unit when determining whether an impairment existed. The amount of headroom varies by reporting unit. Our significant assumptions, including revenue growth rates, gross margins, discount rate and other factors may change in the future based on the changing economic and competitive environment in which we operate. 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:

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Deferred Income Tax Assets

The Company regularly evaluates the need for valuation allowances related to deferred tax assets for which future realization is uncertain. The Company performs this evaluation quarterly. In assessing the realizability of deferred tax assets, it must consider whether it is more likely than not some portion, or all, of the deferred tax assets will not be realized. The Company considers all available evidence, both positive and negative, in determining whether a valuation allowance is required. Such evidence includes the scheduled reversal of deferred tax liabilities, projected future taxable income, taxable income in prior carryback years and tax planning strategies in making this assessment, and judgment is required in considering the relative weight of negative and positive evidence.

Loss Contingencies

Various legal actions, claims and other contingencies arise in the normal course of our business. Contingencies are recorded in the consolidated financial statements, or are otherwise disclosed, in accordance with ASC 450-20, “Loss Contingencies”. We use a case-by-case evaluation of the underlying data and update our evaluation as further information becomes known. Specific reserves are provided for loss contingencies to the extent we conclude that a loss is both probable and estimable. 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.

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