mtrx-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________________________

FORM 10-Q

_______________________________________

(Mark One)


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

For the quarterly period ended September 30, 2024


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

For the transition period from to

Commission File No. 1-15461

__________________________________________

MATRIX SERVICE COMPANY

(Exact name of registrant as specified in its charter)

__________________________________________


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

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

(Address of principal executive offices and zip code)

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

Not Applicable

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

___________________________

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


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

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

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

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

Large Accelerated Filer

☐

Accelerated Filer

☒

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

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

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

As of November 6, 2024 there were 27,554,879 shares of the Company's common stock, $0.01 par value per share, outstanding.


		PAGE
PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Income for the Three Months Ended September 30, 2024 and 2023	1

	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended September 30, 2024 and 2023	2

	Condensed Consolidated Balance Sheets as of September 30, 2024 and June 30, 2024	3

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2024 and 2023	5

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended September 30, 2024 and 2023	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 3.	Defaults Upon Senior Securities	26

Item 4.	Mine Safety Disclosures	26

Item 5.	Other Information	26

Item 6.	Exhibits	27

Signature		28


	Three Months Ended
	September 30, 2024		September 30, 2023
Revenue	$	165,579	$	197,659
Cost of revenue	157,766		185,800
Gross profit	7,813		11,859
Selling, general and administrative expenses	18,580		17,113


Operating loss	(10,767)		(5,254)
Other income (expense):
Interest expense	(89)		(325)
Interest income	1,572		150
Other (Note 3)	61		2,262
Loss before income tax expense	(9,223)		(3,167)
Provision for federal, state and foreign income taxes	—		—
Net loss	$	(9,223)	$	(3,167)

Basic loss per common share	$	(0.33)	$	(0.12)
Diluted loss per common share	$	(0.33)	$	(0.12)
Weighted average common shares outstanding:
Basic	27,559		27,113
Diluted	27,559		27,113


	September 30, 2024		June 30, 2024
Assets
Current assets:
Cash and cash equivalents	$	124,610	$	115,615
Accounts receivable, net of allowance for credit losses	132,541		138,987
Costs and estimated earnings in excess of billings on uncompleted contracts	31,818		33,893
Inventories	7,508		8,839
Income taxes receivable	180		180
Prepaid expenses and other current assets	12,236		4,077
Total current assets	308,893		301,591
Restricted cash	25,000		25,000
Property, plant and equipment, net	43,247		43,498
Operating lease right-of-use assets	19,155		19,150
Goodwill	29,077		29,023
Other intangible assets, net of accumulated amortization	1,377		1,651

Other assets, non-current (Note 2)	43,408		31,438
Total assets	$	470,157	$	451,351


	September 30, 2024		June 30, 2024
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	61,668	$	65,629
Billings on uncompleted contracts in excess of costs and estimated earnings	204,612		171,308
Accrued wages and benefits	13,910		15,878

Accrued insurance	4,932		4,605
Operating lease liabilities	3,782		3,739

Other accrued expenses	3,247		3,956
Total current liabilities	292,151		265,115
Deferred income taxes	25		25
Operating lease liabilities	19,149		19,156

Other liabilities, non-current	2,315		2,873
Total liabilities	313,640		287,169
Commitments and contingencies (Note 6)
Stockholders’ equity:
Common stock — $0.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued at September 30, 2024 and June 30, 2024, respectively; 27,550,202 and 27,308,795 shares outstanding as of September 30, 2024 and June 30, 2024, respectively;	279		279
Additional paid-in capital	143,765		145,580
Retained earnings	24,718		33,941
Accumulated other comprehensive loss	(9,099)		(9,535)
Treasury stock, at cost — 338,015 and 579,422 shares as of September 30, 2024 and June 30, 2024, respectively;	(3,146)		(6,083)
Total stockholders' equity	156,517		164,182
Total liabilities and stockholders’ equity	$	470,157	$	451,351


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock
	Shares	Amount								Shares	Amount		Total
Balances, June 30, 2024	27,888,217	$	279	$	145,580	$	33,941	$	(9,535)	579,422	$	(6,083)	$	164,182
Net loss	—	—		—		(9,223)		—		—	—		(9,223)
Other comprehensive income	—	—		—		—		436		—	—		436


Issuance of restricted stock	—	—		(4,109)		—		—		(360,460)	4,109		—
Treasury shares sold to Employee Stock Purchase Plan	—	—		(17)		—		—		(4,797)	63		46
Treasury shares purchased to satisfy tax withholding obligations	—	—		—		—		—		123,850	(1,235)		(1,235)
Stock-based compensation expense	—	—		2,311		—		—		—	—		2,311

Balances, September 30, 2024	27,888,217	$	279	$	143,765	$	24,718	$	(9,099)	338,015	$	(3,146)	$	156,517

Balances, June 30, 2023	27,888,217	$	279	$	140,810	$	58,917	$	(8,769)	840,899	$	(9,753)	$	181,484
Net loss	—	—		—		(3,167)		—		—	—		(3,167)
Other comprehensive loss	—	—		—		—		(538)		—	—		(538)
Issuance of restricted stock	—	—		(2,738)		—		—		(210,243)	2,738		—
Treasury shares sold to Employee Stock Purchase Plan	—	—		(54)		—		—		(7,601)	99		45

Treasury shares purchased to satisfy tax withholding obligations	—	—		—		—		—		55,324	(456)		(456)
Stock-based compensation expense	—	—		1,755		—		—		—	—		1,755
Balances, September 30, 2023	27,888,217	$	279	$	139,773	$	55,750	$	(9,307)	678,379	$	(7,372)	$	179,123


	September 30, 2024		June 30, 2024		Change
	(In thousands)
Costs and estimated earnings in excess of billings on uncompleted contracts	$	31,818	$	33,893	$	(2,075)
Billings on uncompleted contracts in excess of costs and estimated earnings	(204,612)		(171,308)		(33,304)
Net contract liabilities	$	(172,794)	$	(137,415)	$	(35,379)


	Storage and Terminal Solutions		Utility and Power Infrastructure		Process and Industrial Facilities		Corporate		Total
	Three Months Ended September 30, 2024
Total revenue (1)	$	78,239	$	55,912	$	31,428	$	—	$	165,579
Cost of revenue	(73,542)		(54,605)		(29,431)		(188)		(157,766)
Gross profit (loss)	4,697		1,307		1,997		(188)		7,813
Selling, general and administrative expenses	5,569		3,976		1,766		7,269		18,580
Operating income (loss)	$	(872)	$	(2,669)	$	231	$	(7,457)	$	(10,767)
(1) Total revenues are net of inter-segment revenues which are primarily Process and Industrial Facilities and Storage and Terminal Solutions and were $0.9 million for the three months ended September 30, 2024.

	Storage and Terminal Solutions		Utility and Power Infrastructure		Process and Industrial Facilities		Corporate		Total
	Three Months Ended September 30, 2023
Total revenue (1)	$	90,144	$	32,395	$	75,120	$	—	$	197,659
Cost of revenue	(85,191)		(28,698)		(70,042)		(1,869)		(185,800)
Gross profit (loss)	4,953		3,697		5,078		(1,869)		11,859
Selling, general and administrative expenses	4,629		1,548		3,087		7,849		17,113
Operating income (loss)	$	324	$	2,149	$	1,991	$	(9,718)	$	(5,254)
(1) Total revenues are net of inter-segment revenues which are primarily Storage and Terminal Solutions and were $0.8 million for the three months ended September 30, 2023.


Total assets by segment

	September 30, 2024		June 30, 2024
Storage and Terminal Solutions	$	159,049	$	138,529
Utility and Power Infrastructure	103,792		84,108
Process and Industrial Facilities	37,063		81,524
Corporate	170,253		147,190
Total Segment Assets	$	470,157	$	451,351


	Three Months Ended
	September 30,				2024 v 2023
	2024		2023		$		%
Revenue	$	165,579	$	197,659	$	(32,080)	(16)	%
Cost of revenue	157,766		185,800		(28,034)		(15)	%
Gross profit	7,813		11,859		(4,046)		(34)	%
Selling, general and administrative expenses	18,580		17,113		1,467		9	%
Operating loss	(10,767)		(5,254)		(5,513)		105	%
Other income (expense):
Interest expense	(89)		(325)		236		(73)	%
Interest income	1,572		150		1,422		948	%
Other	61		2,262		(2,201)		(97)	%


Net loss	$	(9,223)	$	(3,167)	$	(6,056)	191	%


	September 30, 2024		June 30, 2024
Total cash, cash equivalents and restricted cash	$	149,610	$	140,615
Less: Restricted cash	25,000		25,000
Unrestricted cash	124,610		115,615
Availability	56,642		53,988
Total Liquidity	$	181,252	$	169,603


	Storage and Terminal Solutions			Utility and Power Infrastructure			Process and Industrial Facilities			Total
	(In thousands)
Backlog as of June 30, 2024	$	798,255		$	379,697		$	251,521		$	1,429,473
Project awards	81,651			34,365			31,961			147,977


Revenue recognized	(78,239)			(55,912)			(31,428)			(165,579)
Backlog as of September 30, 2024	$	801,667		$	358,150		$	252,054		$	1,411,871
Book-to-bill ratio(1)	1.0		x	0.6		x	1.0		x	0.9		x


Liquidity at June 30, 2024	$	169,603
Cash provided by operating activities	11,918
Capital expenditures	(1,944)

Increase in availability under ABL Facility	2,654
Cash used by financing activities	(1,189)
Effect of exchange rate changes on cash	210
Liquidity at September 30, 2024	$	181,252


Exhibit No.						Description
Exhibit 31.1:						Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 – CEO.

Exhibit 31.2:						Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 – CFO.

Exhibit 32.1:						Certification Pursuant to 18 U.S.C. 1350 (section 906 of Sarbanes-Oxley Act of 2002) – CEO.

Exhibit 32.2:						Certification Pursuant to 18 U.S.C. 1350 (section 906 of Sarbanes-Oxley Act of 2002) – CFO.

Exhibit 95:						Mine Safety Disclosure.

Exhibit 101.INS:						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Exhibit 101.SCH:						XBRL Taxonomy Schema Document.

Exhibit 101.CAL:						XBRL Taxonomy Extension Calculation Linkbase Document.

Exhibit 101.DEF:						XBRL Taxonomy Extension Definition Linkbase Document.

Exhibit 101.LAB:						XBRL Taxonomy Extension Labels Linkbase Document.

Exhibit 101.PRE:						XBRL Taxonomy Extension Presentation Linkbase Document.

Exhibit 104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


		MATRIX SERVICE COMPANY

Date:	November 7, 2024	By: /s/ Kevin S. Cavanah
		Kevin S. Cavanah Vice President and Chief Financial Officer


Net loss	$	(9,223)
Loss on sale of property, plant and equipment	68
Depreciation and amortization	2,515
Stock-based compensation	2,311
Other non-cash expenses	38

Cash effect of changes in operating assets and liabilities	16,209

Net cash provided by operating activities	$	11,918

SEC Form 10-Q filed by Matrix Service Company