MTRX 10-K & 10-Q changes, risk factors and insider trading

The uncertainty associated with the timing of contract awards, and the commencement and progress of work for those awards, may reduce our short-term profitability as we balance our current capacity with expectations of future contract awards. If an expected contract award is delayed or not received, we could incur costs to maintain an idle workforce that may have a material adverse effect on our results of operations. Alternatively, we may decide that our long-term interests are best served by reducing our workforce and incurring increased costs associated with severancethose and termination benefits,separations, which also could have a material adverse effect on our results of operations in the period incurred. Reducing our workforce could also impact our results of operations if we are unable to adequately staff projects that are awarded subsequent to a workforce reduction.

The availability of engineering and construction projects is dependent upon economic conditions and the outlook for renewable energy, hydrogen, natural gas, electrical infrastructure and power, mining and minerals, oil, petrochemical, industrial, renewable energy, and powerhydrogen industries, and specifically, the level of capital expenditures on energy infrastructure. Our failure to obtain projects, the delay of project awards, the cancellation of projects or delays in the execution of contracts has resulted and may continue to result in under-utilization of our resources, which could adversely impact our revenue, margins, operating results and cash flow. There are numerous factors beyond our control that influence the level of maintenance and capital expenditures of our customers, including:

The extent to which we utilize our workforce affects our profitability. If we under utilizeunder-utilize our workforce, our gross margins and overall profitability suffer in the short-term. If we over utilizeover-utilize our workforce, we may negatively impact safety, employee satisfaction and project execution. The utilization of our workforce is impacted by numerous factors including:

An inability to attract and retain qualified personnel, and in particular, engineers, project estimators, project managers, and skilled craft workers, could impact our ability to perform on our contracts, which could harm our business and impair our future revenue and profitability.

Our ability to attract and retain qualified engineers, project estimators, project managers, skilled craftsmencraft workers and other experienced professionals in accordance with our need is an important factor in our ability to maintain profitability and grow our business. Competent and experienced engineers, project estimators, project managers, and craft workers are especially critical to the profitable performance of our contracts, particularly on our fixed-price contracts where superior design and execution of the project can result in profits greater than originally estimated or where inferior design and project execution can reduce or eliminate estimated profits or even result in a loss. The market for these professionals is competitive, particularly during periods of economic growth when the supply is limited. WeWhile we continue to invest in attracting and retaining qualified personnel, we cannot provide any assuranceguarantee that wethese efforts will be successfulsufficient into meet our effortsevolving toworkforce retain or attract qualified personnel when needed.needs. Therefore, when we anticipate or experience growing demand for our services, we may incur additional cost to maintain a professional staff in excess of our current contract needs in an effort to have sufficient qualified personnel available to address this anticipated demand. If we do incur additional compensation and benefit costs, our customer contracts may not allow us to pass through these costs.

One or more customers have in the past and may in the future contribute a material portion of our revenue in any one year. One customer accounted for $133.9$176.4 million or 17.4%20.1% of our consolidated revenue in fiscal 2025,2026, which was primarily included in the UtilitiesStorage and Terminal Solutions segment. Another customer accounted for $153.1 million or 17.5% of our consolidated revenue in fiscal 2026, which was primarily included in the Utility and Power Infrastructure segment. Another customer accounted for $80.8$88.1 million or 10.5%10.0% of our consolidated revenue in fiscal 2025,2026, which was primarily included in the Storage and Terminal Solutions segment. Because these significant customers generally contract with us for specific projects or for specific periods of time, we may lose these customers from year to year as the projects or maintenance contracts are completed. The loss of business from any one of these customers could have a material adverse effect on our business or results of operations.

Backlog may not be a reliable indicator of our future performance. We cannot guarantee that the revenue projected in our backlog will be realized or profitable.profitable, and, to the extent backlog includes estimates for long-term maintenance, master service or similar arrangements, customers may have no obligation to purchase or release a particular volume of work. Projects may remain in our backlog for an extended period of time. In addition, projectmany of our contracts have termination rights. Project cancellations or scope adjustments may occur from time to time with respect to contracts included in our backlog that could reduce the dollar amount of our backlog and the revenue and profits that we actually earn. Many of our contracts have termination rights. Therefore, project adjustments may occur from time to time to contracts in our backlog.

A significant amount of our work is performed under fixed-price contracts. Under fixed-price contracts, we agree to perform the contract for a fixed price and, as a result, can improve our expected profit by superior execution, productivity, workplace safety and other factors resulting in cost savings. However, we could incur cost overruns above the approved contract price, which may not be recoverable. Under certain incentive fixed-price contracts, we may agree to share with a customer a portion of any savings we generate while the customer agrees to bear a portion of any increased costs we may incur up to a negotiated ceiling. To the extent costs exceed the negotiated ceiling price, we may be required to absorb some or all of the cost overruns.

A failure to obtain adequate and prompt compensation for these matters could require us to record in the current period an adjustment to revenue and profit recognized in prior periods under the percentage-of-completion accounting method. Any such adjustments, if substantial, could have a material adverse effect on our results of operations and financial condition, particularly for the period in which such adjustments are made. We can provide no assurance that we will be successful in obtaining, through negotiation, arbitration, litigation or otherwise, approved change orders in an amount adequate to compensate us for our additional work or expenses. While change orders or claims are unresolved, we may be required to use significant working capital to fund cost overruns, which could adversely affect our liquidity and cash flows.

We perform our work under a variety of conditions, including, but not limited to,including difficult terrain, difficult site conditionsconditions, remote locations and busy urban centers where delivery of materials and availability of labor may be impacted. Performing work under these conditions can slow our progress, potentially causing us to incur contractual liability to our customers. These difficult conditions may also cause us to incur additional, unanticipated costs that we might not be able to pass on to our customers.

Our business may be adversely affected by severe weather in areas where we or our customers have significant operations. Repercussions of severe weather conditions may include:

Our business has been affected by inflation, supply chain disruptions anddisruptions, shortages of materialsmaterials, labor or equipment, and labor.performance issues involving suppliers and subcontractors.

We may experience increases in construction costs, including increases in the costs of materialsmaterials, components, equipment, subcontractor services and labor due to inflation orinflation, supply chain challenges.challenges, geopolitical conflicts, disruptions in global energy markets and related trade restrictions. Recent geopolitical developments and disruptions to shipping have caused increases in oil prices and disruptions to shipping routes, which could adversely affect global energy markets and the availability, cost and timing of the equipment, materials and services required for our projects. To the extent we can, we mitigate these risks primarily by procuring materials upon contract execution to ensure that our purchase price approximates the costs included in the project estimate, and also by contract provisions that mitigate our exposure to fluctuations in material costs. However, suppliers, subcontractors or equipment providers may fail to perform, fail to meet quality, safety, legal or schedule requirements, experience financial difficulties, or be unable to provide materials, components, equipment or services in the quantities, at the prices or within the lead times that we require. Shortages or extended lead times for key materials or components, or the unavailability or increased cost of equipment, could delay projects, require us to source replacements at higher prices, reduce productivity, damage customer relationships or reduce project profitability. We may be unable to pass through some or all of these increases in costs to our customers which may materially affect our results of operations. Additionally, our clients' interest in approving new projects, budgets for capital expenditures and need for our services have in the past been, and may in the future be, adversely affected by, among other things, poor economic conditions, including inflation, slow growth or recession, changes to governments' fiscal or monetary policy and higher interest rates. These factors could materially and adversely affect the demand for our services.

The new U.S. presidential administration has announced tariffs on U.S. imports generally, with higher rates for select U.S. trade partners. Certain foreign governments have also announced retaliatory tariffs. The tariff policy environment has been and is expected to continue to be dynamic, and we cannot predict what additional actions may ultimately be taken by the United States or other governments with respect to tariffs or trade relations.

Unsatisfactory safety performance may subject us to penalties,fines, impact our ability to win work, affect customer relationships, result in higher operating costs, negatively impact employee morale and result in higher employee turnover.

Although we have taken what we believe are appropriate precautions to adequately train and equip our employees, we have experienced serious accidents, including fatalities, in the past and may experience additional accidents in the future. Serious accidents may subject us to penalties,fines, civil litigation or criminal prosecution. Claims for damages to persons, including claims for bodily injury or loss of life, could result in costs and liabilities, which could materially and adversely affect our financial condition, results of operations or cash flows. Poor safety performance could also jeopardize our relationships with our customerscustomers, impact our ability to win future awards, and increase our insurance premiums.

We contribute to several multiemployer pension plans for employees covered by collective bargaining agreements. These plans are not administered by us and contributions are determined in accordance with provisions of negotiated labor contracts. Our collective bargaining agreements may require specified wages and benefits. Renegotiation of these agreements, changes in union work rules, labor disputes, wage or benefit increases, unionization of additional workforces or work stoppages could increase our costs, impair customer relationships, delay projects or adversely affect our ability to perform work. The Employee Retirement Income Security Act of 1974, as amended by the Multiemployer Pension Plan Amendments Act of 1980, imposes certain liabilities upon employers who are contributors to a multiemployer plan in the event of the employer’s withdrawal from, or upon termination of, such plan. If we terminate, withdraw, or partially withdraw from other multiemployer pension plans, we could be required to make significant cash contributions to fund that plan's unfunded vested benefit, which could materially and adversely affect our financial condition and results of operations; however, we are not currently able to determine the net assets and actuarial present value of the multiemployer pension plans’ unfunded vested benefits allocable to us, if any, and we are not presently aware of the amounts, if any, for which we may be contingently liable if we were to withdraw from any of these plans. In addition, if the funding level of any of these multiemployer plans becomes classified as “critical status” under the Pension Protection Act of 2006, we could be required to make significant additional contributions to those plans.

A failure or outage in our operational systemssystems, including cybersecurity incidents and disruptions involving third-party software or cyberAI securitytools attacks on any of our systems, or those of third parties,, may adversely affect our business and financial results.

We relyuse on internally and externally developednumerous software applications and systems including third-party systems, to support critical operating and administrative functions includingsuch as project management, estimating, scheduling, human resources, accounting,accounting and financial reporting. Any sudden loss, disruptiondisruption, cyber-attack, discontinuation of vendor support or unexpected costscost to maintainmaintain, integrate or replace these systems could significantly increase our operationaloperating expenseexpenses, asdelay wellor asprevent critical business operations, disrupt the management of our businessbusiness, operations.and adversely affect our financial results.

Our borrowing capacity under our CreditABL AgreementFacility is determined by the size of our borrowing base and if the size of our borrowing base combined with our unrestricted cash does not provide adequate liquidity, then we may need to raise additional capital in the future for working capital, letters of credit, capital expenditures and/or acquisitions, and we may not be able to do so on favorable terms or at all, which would impair our ability to operate our business or achieve our strategic plan.

Management believes it has sufficient cash on hand and will generate sufficient cash from operations to fund the business. However, should we require additional liquidity, there is risk that we will be unable to access the amount of additional liquidity needed from our CreditABL AgreementFacility if the level of assets included in the borrowing base is insufficient. The borrowing base includes restricted cash plus a percentage of the value of certain accounts receivable, inventory and equipment, reduced for certain reserves. Accounts receivable eligible to be included in the borrowing base are generally limited to receivables associated with time and materials and other cost reimbursable contracts. While receivables associated with fixed price work generally do not increase the borrowing base, such work often has upfront billings, which help support the liquidity needs of the business.

To the extent that cash on hand, cash flow from operations, and borrowing availability under the CreditABL AgreementFacility are insufficient to make future investments, or provide needed working capital or letters of credit, we may require additional financing from other sources. Our ability to obtain such additional financing in the future will depend in part upon prevailing capital market conditions, as well as conditions in our business and our operating results; and those factors may affect our efforts to arrange additional financing on terms that are satisfactory to us. If adequate funds are not available, or are not available on acceptable terms, we may not be able to make future investments or respond to competitive challenges.

Our CreditABL AgreementFacility imposes restrictions that may limit business alternatives.

Our CreditABL AgreementFacility prohibits or limits us from making acquisitions, repurchasing equity, incurring additional debt, acquiring or disposing of assets, or making other distributions, including cash dividends. In addition, our CreditABL AgreementFacility requires that we comply with a Fixed Charge Coverage Ratio financial covenant under certain conditions. These covenants and restrictions may impact our ability to effectively execute operating and strategic plans and our operating performance may not be sufficient to comply with the required covenants.

Our failure to comply with one or more of the covenants in our CreditABL AgreementFacility could result in an event of default. We can provide no assurance that a default could be remedied, or that our creditors would grant a waiver or further amend the terms of the CreditABL Agreement.Facility.

Customers may require us to provide forms of performance security, including letters of credit, or surety bonds. We are often required to provide performance security to customers to indemnify the customer should we fail to perform our obligations under the contract. Failure to provide the required performance security on terms required by a customer may result in an inability to bid, win or comply with the contract. Historically, we have had adequate letters of credit capacity but such capacity beyond our Senior CreditABL Facility is generally at the provider’s sole discretion. Due to events that affect the banking and insurance markets, letters of credit or surety bonds may be difficult to obtain or may only be available at significant cost. In addition, future projects may require us to obtain letters of credit that extend beyond the term of our Senior CreditABL Facility. Any inability to bid for or win new contracts due to the failure of obtaining adequate letters of credit, surety bonds or other customary forms of performance security could have a material adverse effect on our business prospects and future revenues.

Revenue for fixed-price contracts is recognized using the percentage-of-completion method of accounting. Under percentage-of-completion accounting, contract revenue and earnings are recognized ratably over the contract term based on the proportion of actual costs incurred to total estimated costs. We review our estimates of contract revenue, costs and profitability on a monthly basis. As a result, we may adjust our estimates on one or more occasions as a result of changes in cost estimates, change orders to the original contract, or claims against the customer for increased costs incurred by us due to customer-induced delays and other factors. See "Revenue Recognition" within Note 1 - Business, Basis of Presentation and Significant Accounting Policies, for more discussion onof our percentage-of-completion revenue recognition.

As a result of the requirements of the percentage-of-completion method of accounting, the possibility exists that we could have estimated and reported a profit on a contract over several prior periods and later determine, as a result of additional information, that all or a portion of such previously estimated and reported profits were overstated. Further, many of our contracts contain various cost and performance incentives and penalties that impact the earnings we realize from our contracts, and adjustments related to these incentives and penalties are recorded on a percentage of completion basis in the period when estimable and probable. If this occurs, the full aggregate amount of the overstatement will be recognized in the period in which such change in estimate occurs. No restatements are made to prior periods. Additionally, if estimates of costs to complete fixed-price contracts indicate a loss, a provision is made to accrue the total loss anticipated in the period the loss is determined.

Because we have grown in part through acquisitions, goodwill and other acquired intangible assets representrepresents a substantial portion of our assets. We perform annual goodwill impairment reviews in the fourth quarter of every fiscal year. In addition, we perform an impairment review whenever events or changes in circumstances indicate the fair value of a goodwill reporting unit may be less than its carrying value or the carrying value of ana intangible or fixedlong-lived asset grouping may not be recoverable. As of June 30, 2025,2026, we had $29.0$28.9 million of non-amortizing goodwill representing 4.8% of our total assets.

We perform engineering, construction and maintenance services at large industrial facilities where accidents or system failures can be disastrous and costly. Any catastrophic occurrence in excess of our insurance limits at locations engineered or constructed by us or where our products are installed or services performed could result in significant professional liability, product liability, warranty and other claims against us by our customers, including claims for cost overruns and the failure of the project to meet contractually specified milestones or performance standards. Further, the rendering of our services on these projects could expose us to risks and claims by third parties and governmental agencies for personal injuries, property damage and environmental matters, among others. Any claim, regardless of its merit or eventual outcome, could result in substantial costs, divert management’s attention and create negative publicity, particularly for claims relating to environmental matters where the amount of the claim could be extremely large. We may not be able to or may choose not to obtain or maintain insurance coverage for the types of claims described above. If we are unable to obtain insurance at an acceptable cost or otherwise protect against the claims described above, we will be exposed to significant liabilities, which may materially and adversely affect our financial condition and results of operations. Typically, our contracts require us to indemnify our customers for injury, damage or loss arising from the performance of our services and provide warranties for materials.

In addition, under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), and comparable state and foreign laws, we may be required to investigate and remediate regulatedthe materials.release or threatened release of hazardous substances. CERCLA and the comparable state laws typically impose liability without regard to whether a company knew of or caused the release, and liability for the entire cost of clean-up can be imposed upon any responsible party.

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 - SummaryBusiness, 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. The following is a discussion of our most critical accounting policies, estimates, judgments and uncertainties that are inherent in our application of GAAP.

Significant period to period changes in revenue, gross profits and operating results between fiscal 20252026 and fiscal 20242025 are discussed below on a consolidated basis and for each segment. A discussion of results of operations changes between fiscal 20242025 and fiscal 20232024 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, 2024,2025, which was filed with the SEC on September 10, 2024.2025.

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 ishas high.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.

In the Storage and Terminal Solutions segment, we booked $337.7$329.4 million of project awards during fiscal 2025.2026. Project awards included a projectlarge award for the engineeringconstruction of the balance of plant supporting a dual service full containment storage tank, and an award for the construction of largean refrigeratedLNG propane and butane tanks as well as spheres for related NGL products.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 LNGLNG, NGLs and ammonia projects in particular will be key growth drivers for this segment. Bidding activity onin LNGthese and ammonia projectsmarkets has been strong and we expect that to continue.

In the Utility and Power Infrastructure segment, we booked $215.4$127.0 million of project awards in fiscal 2025.2026. Our opportunity pipeline for LNG peak shaving projects continues to be promising;promising, howeverwith thoseboth awards,greenfield whilefacility significant,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 lessextended frequent.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.requirements associated with data centers and other demands. Project opportunities and bidding activity are strong for bothacross the power delivery portion of the business and LNG peak shaving.segment.

Revenue - The increase in overall revenue of $41.1$104.3 million, or 6%,14%, was primarily attributable to higher revenue volumes in our Storage and Terminal Solutions and Utility and Power Infrastructure segments, partially offset by reducedlower revenue volumes in our Process and Industrial Facilities.Facilities segment.

Gross profit - Gross profit during fiscal 20252026 decreasedincreased by $(0.8)$24.3 million, or (2)%,61%, compared to fiscal 2024.2025. Gross margin of 7.3% for fiscal 2026 increased compared with gross margin of 5.2% for fiscal 2025 decreased compared with gross margin of 5.6% for fiscal 2024.2025. The decreaseincrease in gross margin for the year is attributable to lowerhigher gross margins in our Storage and Terminal Solutions and Utility and Power Infrastructure segments, partially offset by lower margins in our Process and Industrial segment,Facilities partiallysegment. offset by higherOverall, gross margins induring ourthe Utilityyear benefitted from strong project execution and Powerimproved Infrastructureoverhead segment.recovery.

Restructuring costs and other - The Company incurred $3.6$10.0 million of restructuring costs during fiscal 20252026 related to organizational restructuring.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 StatementStatements and Supplementary Data, Note 14 - Restructuring Costs,Costs and Other, for more information about our organizational restructuring plan.

Interest income - The increase in interest income of $5.3$1.1 million is primarily due to an increase in our average cash balance.balance during the year.

Provision for income taxes - Our effectiveIncome tax ratesexpense for theboth fiscal years2026 and 2025 andwas 2024 were (1.6)% and 0.1%, respectively.insignificant. The effective tax rates during both periods were impacted by changes in valuation allowances of $6.5($1.3) million and $8.5$6.5 million, respectively, placed on deferred tax assetsasset generatedchanges during the fiscal year.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.

Storage and Terminal Solutions revenues increased by $89.1$92.4 million, or 32%,25%, in fiscal 20252026 compared to fiscal 2024,2025, driven by an increased volume of work for specialty vessel and LNG storage projects, partially offset by decreases in tank repair and maintenance work. In addition, we lowered our recovery expectations on a legacy project completed in fiscal 2021 that is currently in arbitration which resulted in a $6.4 million decrease to revenue during fiscal 2025.projects.

Utility and Power Infrastructure revenues increased by $64.8$34.7 million, or 35%,14%, in fiscal 20252026 compared to fiscal 2024.2025. The increase is primarily attributable to higher volumes of work for LNG peak shaving projects,projects partially offset by decreases inand power delivery work.

Utility and Power Infrastructure gross profit increased by $7.7$14.7 million, or 83%,87%, in fiscal 20252026 compared to fiscal 2024.2025. The segment gross margin was 6.8%11.1% for fiscal 20252026 compared to 5.0%6.8% in fiscal 2024,2025, an increase of 1.8%4.3% due to mixstrong project execution and improved construction overhead cost absorption as a result of work.higher revenues.

Process and Industrial Facilities revenues decreased by $111.6$22.8 million, or 42%,15%, in fiscal 20252026 compared to fiscal 2024.2025. The decrease is primarily attributable to lower revenue volumes for a now completed large renewable diesel project and lower revenue volumes forrefineries, thermal vacuum chambers.chambers, Weand believeindustrial this reduction in revenue is temporary given our strong backlog, including a significant gas processing construction project that is expected to commence in fiscal 2026.facilities.

Process and Industrial Facilities gross profit decreased by $12.9$4.4 million, or 59%49% in fiscal 20252026 compared to fiscal 2024.2025. The segment gross margin was 3.4% for fiscal 2026 compared to 5.8% for fiscal 20252025. comparedGross tomargins 8.2%decreased for fiscal 2024. The segment gross margin in fiscal 2025 was impacted by increased under-recovery of construction overhead costsprimarily due to lowermix revenueof volumes.work.

Unallocated corporate gross profit (loss) was $0.8$0.03 million during fiscal 20252026 compared to a loss of $1.9$0.8 million in fiscal 2024,2025, an increase of $1.1$0.8 million primarily due to lowera legalreduction costsin associatedcost withfor certain support functions as a juryresult trial in fiscal 2024 that resulted in a verdict inof our favor.organizational See Note 7 - Commitments and Contingencies, Litigation, for more information.restructuring.

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, 20252026 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 StatementStatements 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, 20252026 totaled $224.6$223.0 million and availability under the ABL Facility totaled $59.8$60.9 million, resulting in total liquidity of $284.5$283.9 million. During fiscal 2025,2026, liquidity increased $114.9 million, primarily as a result of cash provideddecreased by operations.$0.6 million.

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

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

The borrowing base is recalculated on a monthly basis and at June 30, 2025,2026, our borrowing base was $64.6$65.4 million. We had no borrowings outstanding and $4.8$4.5 million in letters of credit outstanding, which resulted in availability of $59.8$60.9 million under the ABL Facility. Our borrowing base availability has ranged from $57.8$55.6 million to $73.8$65.0 million during fiscal 2025.2026. 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 I8. of Part I, "Financial Statements -and Supplementary Data, Note 5 - Debt."

The significant components of the $127.8$8.8 million cash effect of changes in operating assets and liabilities for the fiscal year ended June 30, 20252026 includeare thesummarized followingas follows:

•Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased $12.1$11.3 million from fiscal 2023,2025, which decreased cash flows from operating activities. The increaseincreases isare primarily attributable to the timing of billingbillings and collections,collections. The increase in accounts receivable was partially offset by $16.8the collection of $19.5 million we received as full payment for the favorable resolution of aaccounts legalreceivable matter.associated with matters that had been in litigation.

•Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") decreased $11.0$0.5 million from fiscal 2023,2025, which increased cash flows from operating activities. Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") increaseddecreased $85.9$23.6 million from fiscal 2023,2025, which increaseddecreased 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.near-term.

•Accounts payable decreasedincreased $10.4by $27.7 million from fiscal 2023,2025, which decreasedincreased 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; business volumes; and other timing differences.

•our ability to comply with the covenants in ourthe creditABL agreementFacility;

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

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

•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.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.

The following table provides a summary of changes in our backlog for the three months ended DecemberMarch 31, 20252026:

The following table provides a summary of changes in our backlog for the sixnine months ended DecemberMarch 31, 20252026:

In the Storage and Terminal Solutions segment, we booked $124.5$37.5 million of project awards during the secondthird quarter of fiscal 2026, including an award for the construction of an LNG tank.2026. During the sixnine months ended DecemberMarch 31, 2025,2026, we booked $260.6$298.2 million of project awards, including a large award for the construction for the balance of plant supporting a dual service full containment storage tank.awards. This segment includes significant opportunities for storage infrastructure projects related to natural gas, LNG, ammonia, NGLs and other forms of low carbon energy. We believe LNG, NGLS and ammonia projects in particular will be key growth drivers for this segment. Bidding activity in these markets has been strong and we expect that to continue.

In the Utility and Power Infrastructure segment, we booked $15.8$46.6 million of project awards during the secondthird quarter of fiscal 2026. During the sixnine months ended DecemberMarch 31, 2025,2026, we booked $50.5$97.2 million of project awards. Our opportunity pipeline for LNG peak shaving projects continues to be promising, with both greenfield facility projects as well as the projects for the upgrade, maintenance, and repair to existing infrastructure. The timing between the major greenfield awards can be extended due to the client activity and bidding diligence, but their addition to backlog is significant and will drive long-term sustainable growth in the segment. The smaller upgrade projects are key measures of our brand power and strength in the market, keeping key resources active while creating opportunities to strengthen execution and engineering teams. Power generation and delivery infrastructure opportunities are expected to be driven over the long-term by increasing electrical demand and the related electrical grid requirements. Project opportunities and bidding activity are strong across the segment.

In the Process and Industrial Facilities segment, we booked $36.2$24.1 million of project awards during the secondthird quarter of fiscal 2026. During the sixnine months ended DecemberMarch 31, 2025,2026, we booked $53.2$77.3 million of project awards. We continue to see increasing opportunities in mining and minerals, chemicals, renewable fuels, and refinery maintenance and turnarounds,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 thermalhigher vacuumgold chambersprices, inas thiswell segment.as policy initiatives related to critical minerals.

During the first quarter of fiscal 2026, backlog was adjusted to reflect the removal of two projects. Backlog in the Utility and Power Infrastructure segment was impacted by the removal of an award originally added to backlog in the fourth quarter of fiscal 2025. 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 thisan modifiedincreased 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.

Three months ended DecemberMarch 31, 20252026 Compared to the Three months ended DecemberMarch 31, 20242025

The information below is an analysis of our consolidated results for the three months ended DecemberMarch 31, 2025,2026, compared to the three months ended DecemberMarch 31, 2024.2025. See Results of Operations by Business Segment below for additional information describing the performance of each of our reportable segments.

Revenue - The increase in consolidated revenue of $23.3$6.5 million, or 12%,3%, was attributable to higher revenue volumes in eachour ofStorage and Terminal Solutions segment, partially offset by lower revenue volumes in our segments.Processing and Industrial Facilities segment.

Gross profit - Gross profit in the secondthird quarter of fiscal 2026 increased $2.2$4.3 million, or 21%,33%, compared to the secondthird quarter of fiscal 2025. Gross margin was 6.2%8.3% for the secondthird quarter of fiscal 2026 compared to gross margin of 5.8%6.4% for the secondthird quarter of fiscal 2025. The increase in gross margin was due to higher revenuesgross which resultedmargins in improvedthe recoveryStorage ofand overheadTerminal costs,Solutions asand wellUtility asand 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 throughout the majority of the business. However, costs associated with warranty-type items and withimproved third-partyoverhead commercial matters arising during commissioning of specialty tank work resulted in a $3.6 million reduction of gross profit during the quarter.recovery.

Selling, general and administrative expenses - The decrease in selling, general and administrative expenses ("SG&A") of $2.2$2.5 million, or 13%, is14%, primarily due to cost reductions resulting from our organizational realignment,restructuring including a decrease in salaries and wages of $0.8 million, year over year.plan. Additionally, SG&Astock compensation expense decreased $0.7by $1.0 million associated with the variable accounting for cash-settled stock-based compensationprimarily as a result of fluctuationsexecutive inseparations ourduring stockthe price.period.

Interest income - Interest income increased $0.7 million during the secondthird quarter of fiscal 20262026, wascompared consistent withto the secondthird quarter of fiscal 2025.2025, primarily due to an increase in our cash balance.

Other income (expense) - Other income (expense) increaseddecreased $0.6$0.4 million due primarily to aan reductionincrease in foreign currency transactiontranslation losses associated with our Australian and South Korean subsidiaries.

Provision for income taxes - Income tax expense for both periods was insignificant. The effective tax rates during both periods were impacted by valuation allowances of $(0.7)$0.2 million and $1.8$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.

Storage and Terminal Solutions revenues increased by $4.3$15.6 million, or 5%,16%, in the three months ended DecemberMarch 31, 20252026 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.

Storage and Terminal Solutions gross profit decreasedincreased by $2.5$4.0 million, or (35)%,108%, in the three months ended DecemberMarch 31, 20252026 compared to the same period last year. The segment gross margin of 4.8%7.0% for the three months ended DecemberMarch 31, 20252026 was lowerhigher than segment gross margin of 7.6%3.9% in the same period last year. DuringMargin theimprovement secondwas 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 impacteddriven by under-recoveryimproved ofproject overheadexecution costs.overall Weas believewell as an improvement in overhead cost absorption will improve as activity on awards currently in backlog increases through the remainder of fiscal 2026.absorption.

Utility and Power Infrastructure revenues increasedwere largely consistent with prior year, increasing by $14.3$1.3 million, or 23%,2%, in the three months ended DecemberMarch 31, 20252026 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.

Utility and Power Infrastructure gross profit increased by $3.8$2.6 million, or 112%,47%, in the three months ended DecemberMarch 31, 20252026 compared to the same period last year. The segment gross margin was 9.6%13.6% for the three months ended DecemberMarch 31, 20252026 compared to 5.6%9.4% in the same period last year, an increase of 4.0%4.2% due to strong project execution andthroughout improvedthe construction overhead cost absorption as a result of higher revenues.segment.

Process and Industrial Facilities revenues increaseddecreased by $4.7$10.3 million, or 15%,23%, in the three months ended DecemberMarch 31, 20252026 compared to the same period last year. The increasedecrease is primarily attributable to higherlower revenue volumes for thermal vacuum chambers, refinery turnaroundswork, and maintenanceindustrial work.facilities.

Process and Industrial Facilities gross profit increaseddecreased by $0.8$2.9 million, or 229%,76%, in the three months ended DecemberMarch 31, 20252026 compared to the same period last year. The segment gross margin was 3.5%2.5% for the three months ended DecemberMarch 31, 20252026 compared to 1.2%8.3% in the same period last year. The increasedecrease is primarily attributable to improvedmix constructionof overheadwork costand absorptionthe assettlement of a resultlegal ofmatter, higherwhich revenues.reduced gross margin by $1.1 million. See Part I, Item 1. Financial Statements (Unaudited), Note 6 - Commitments and Contingencies, for more details.

SixNine months ended DecemberMarch 31, 20252026 Compared to the SixNine months ended DecemberMarch 31, 20242025

The information below is an analysis of our consolidated results for the sixnine months ended DecemberMarch 31, 2025,2026, compared to the sixnine months ended DecemberMarch 31, 2024.2025. See Results of Operations by Business Segment below for additional information describing the performance of each of our reportable segments.

Gross profit - Gross profit in the sixnine months ended DecemberMarch 31, 20252026 increased $8.6$12.9 million, or 46%,41%, compared to the same period in the prior year. Gross margin increased to 6.5%7.1% for the sixnine months ended DecemberMarch 31, 20252026 compared to 5.3%5.7% for the same period prior year. The increase in gross margin for the quarternine months is attributable to higher gross margins in our Storage and Terminal Solutions and Utility and Power Infrastructure and Process and Industrial Facilities segments, partially offset by lower margins in our StorageProcess and TerminalIndustrial SolutionsFacilities segment. Overall, gross margins during the period benefited from strong project execution and improved overhead recovery.

Selling, general and administrative expenses - The decrease in SG&A expenses of $4.4$6.9 million, or 12%,13%, is due in part to cost reductions resulting from our organizational realignment,restructuring includingplan. aStock decreasecompensation also decreased by $1.5 million, due in salariespart andto wagesexecutive separations occurring during the third quarter of $1.3fiscal million.2026. Additionally, facilities costs decreased $1.2 million, and SG&A decreased $1.0$1.7 million associated with the variable accounting for cash-settled stock-based compensationcompensation, primarily as a result of fluctuations in our stock price.

Interest income - The increase in interest income of $0.2$0.9 million is primarily due to an increase in our cash balance, partially offset by lower average interest rates.balance.

Other income (expense) - Other income increased $0.7$0.4 million in the sixnine months ended DecemberMarch 31, 20252026 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.

Storage and Terminal Solutions revenues increased by $35.6$51.1 million, or 20%,19%, in the sixnine months ended DecemberMarch 31, 20252026 compared to the same period last year, driven by increased volume of work for LNGspecialty peakstorage shaving, partially offset by decreases in tanks and terminal work.projects.

Storage and Terminal Solutions gross profit decreasedincreased by $0.7$3.3 million, or 6%,21%, in the sixnine months ended DecemberMarch 31, 20252026 compared to the same period last year. The segment gross margin was 5.4%5.9% for the sixnine months ended DecemberMarch 31, 20252026 compared to segment gross margin of 6.9%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.profit, Additionally,respectively. grossThe marginsimpact forof this segmentwork continuewas to be primarily impactedoffset by under-recoverystrong ofproject overheadexecution costs. We believe overhead cost absorption will improve as activity on awards currently in backlog increases throughacross the remainder of fiscalthe 2026.segment.

Utility and Power Infrastructure revenues increased by $32.9$34.2 million, or 28%,19%, in the sixnine months ended DecemberMarch 31, 20252026 compared to the same period last year. The increase is primarily attributable to higher volumes of work for LNG peak shaving projects and power delivery work.

Utility and Power Infrastructure gross profit increased by $9.3$11.9 million, or 197%,116%, in the sixnine months ended DecemberMarch 31, 20252026 compared to the same period last year. The segment gross margin was 9.3%10.6% for the sixnine months ended DecemberMarch 31, 20252026 compared to 4.0%5.8% in the same period last year due to strong project execution and improved construction overhead cost absorption as a result of higher revenues.

Process and Industrial Facilities revenues increaseddecreased by $1.2$9.1 million, or 2%,9%, in the sixnine months ended DecemberMarch 31, 20252026 compared to the same period last year. The increasedecrease is primarily attributable to higherlower revenue volumes for refinerythermal work,vacuum chambers and industrial facilities, partially offset by lowerhigher volumes of workrefinery for thermal vacuum chambers.work.

Process and Industrial gross profit increaseddecreased by $0.3$2.6 million, or 12%,42%, in the sixnine months ended DecemberMarch 31, 20252026 compared to the same period last year. The segment gross margin was 4.2%3.6% for the sixnine months ended DecemberMarch 31, 20252026 compared to segment gross margin of 3.8%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.

We assess liquidity based on the ongoing ability to pay our liabilities as they become due, fund business operations and meet all monetary contractual obligations. Our primary sources of liquidity at DecemberMarch 31, 20252026 were unrestricted cash and cash equivalents on hand, capacity under our ABL Facility, and cash generated from operations. Our primary operational uses of capital are expenditures required to execute our projects, fund business operations and fulfill our contractual obligations. We believe that for at least the next 12 months, our cash position, anticipated cash generated by operating activities, along with our availability under the ABL Facility, is sufficient to support our operating requirements.

Unrestricted cash and cash equivalents at DecemberMarch 31, 20252026 totaled $199.0$233.0 million and availability under the ABL Facility totaled $58.6$64.2 million, resulting in total liquidity of $257.6$297.2 million. During the secondthird quarter of fiscal 2026, liquidity increased $8.7$39.6 million primarily as a result of changes in working capital. During the sixnine months ended DecemberMarch 31, 2025,2026, liquidity decreasedincreased by $26.9$12.7 million primarily as a result of changes in working capital, as well as payments made for tax withholdings for stock compensation and capital expenditures.capital.

The following table provides a summary of changes in our liquidity for the three months ended DecemberMarch 31, 20252026 (in thousands):

The following table provides a summary of changes in our liquidity for the sixnine months ended DecemberMarch 31, 20252026 (in thousands):

The borrowing base is recalculated on a monthly basis and at DecemberMarch 31, 2025,2026, our borrowing base was $63.1$68.6 million. We had no borrowings outstanding and $4.5$4.4 million in letters of credit outstanding, which resulted in availability of $58.6$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."

The significant components of the $50.8$5.1 million change in operating assets and liabilities for the sixnine months ended DecemberMarch 31, 20242026 are summarized as follows: