mtrx-20250331

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 March 31, 2025


☐			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 May 7, 2025 there were 27,610,499 shares of the Company's common stock, $0.01 par value per share, outstanding.

Table of Contents

TABLE OF CONTENTS


		PAGE
PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Income for the Three and Nine Months Ended March 31, 2025 and 2024	1

	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended March 31, 202 5 and 202 4	2

	Condensed Consolidated Balance Sheets as of March 3 1, 2025 and June 30, 2024	3

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2025 and 202 4	5

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended March 31, 2025 and 2024	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Mine Safety Disclosures	33

Item 5.	Other Information	33

Item 6.	Exhibits	33

Signature		34

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Matrix Service Company

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(unaudited)


	Three Months Ended				Nine Months Ended
	March 31, 2025		March 31, 2024		March 31, 2025		March 31, 2024
Revenue	$	200,161	$	166,013	$	552,909	$	538,714
Cost of revenue	187,311		160,435		521,354		510,688
Gross profit	12,850		5,578		31,555		28,026
Selling, general and administrative expenses	17,726		19,948		53,592		52,792

Restructuring costs	124		—		124		—
Operating loss	(5,000)		(14,370)		(22,161)		(24,766)
Other income (expense):
Interest expense	(134)		(143)		(368)		(787)
Interest income	1,518		165		4,668		477
Other (Note 3)	182		(235)		(313)		4,481
Loss before income tax expense	(3,434)		(14,583)		(18,174)		(20,595)
Provision (benefit) for federal, state and foreign income taxes	—		(2)		16		4
Net loss	$	(3,434)	$	(14,581)	$	(18,190)	$	(20,599)

Basic loss per common share	$	(0.12)	$	(0.53)	$	(0.66)	$	(0.75)
Diluted loss per common share	$	(0.12)	$	(0.53)	$	(0.66)	$	(0.75)
Weighted average common shares outstanding:
Basic	27,836		27,443		27,731		27,357
Diluted	27,836		27,443		27,731		27,357

See accompanying notes.

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Matrix Service Company

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(unaudited)


	Three Months Ended				Nine Months Ended
	March 31, 2025		March 31, 2024		March 31, 2025		March 31, 2024
Net loss	$	(3,434)	$	(14,581)	$	(18,190)	$	(20,599)
Other comprehensive income (loss), net of tax:
Foreign currency translation loss	(23)		(548)		(950)		(524)
Comprehensive loss	$	(3,457)	$	(15,129)	$	(19,140)	$	(21,123)

See accompanying notes.

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Matrix Service Company

Condensed Consolidated Balance Sheets

(In thousands)

(unaudited)


	March 31, 2025		June 30, 2024
Assets
Current assets:
Cash and cash equivalents	$	185,541	$	115,615
Accounts receivable, net of allowance for credit losses	205,291		138,987
Costs and estimated earnings in excess of billings on uncompleted contracts	38,567		33,893
Inventories	6,389		8,839
Income taxes receivable	204		180
Prepaid expenses and other current assets	7,816		4,077
Total current assets	443,808		301,591
Restricted cash	25,000		25,000
Property, plant and equipment, net	42,307		43,498
Operating lease right-of-use assets	17,740		19,150
Goodwill	28,885		29,023
Other intangible assets, net of accumulated amortization	829		1,651

Other assets, non-current (Note 2)	55,171		31,438
Total assets	$	613,740	$	451,351

See accompanying notes.

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Matrix Service Company

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(unaudited)


	March 31, 2025		June 30, 2024
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	79,048	$	65,629
Billings on uncompleted contracts in excess of costs and estimated earnings	332,657		171,308
Accrued wages and benefits	19,009		15,878

Accrued insurance	4,660		4,605
Operating lease liabilities	3,914		3,739

Other accrued expenses	2,936		3,956
Total current liabilities	442,224		265,115
Deferred income taxes	23		25
Operating lease liabilities	17,559		19,156

Other liabilities, non-current	3,224		2,873
Total liabilities	463,030		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 March 31, 2025 and June 30, 2024, respectively; 27,606,852 and 27,308,795 shares outstanding as of March 31, 2025 and June 30, 2024, respectively;	279		279
Additional paid-in capital	147,805		145,580
Retained earnings	15,751		33,941
Accumulated other comprehensive loss	(10,485)		(9,535)
Treasury stock, at cost — 281,365 and 579,422 shares as of March 31, 2025 and June 30, 2024, respectively;	(2,640)		(6,083)
Total stockholders' equity	150,710		164,182
Total liabilities and stockholders’ equity	$	613,740	$	451,351

See accompanying notes.

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Matrix Service Company

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)


	Nine Months Ended
	March 31, 2025		March 31, 2024
Operating activities:
Net loss	$	(18,190)	$	(20,599)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	7,538		8,337

Stock-based compensation expense	6,754		5,765

Gain on disposal of property, plant and equipment (Note 3)	(122)		(4,530)

Other	108		202
Changes in operating assets and liabilities increasing (decreasing) cash:
Accounts receivable, net of allowance for credit losses	(88,802)		(43,113)
Costs and estimated earnings in excess of billings on uncompleted contracts	(4,674)		10,288
Inventories	2,450		(1,620)
Other assets and liabilities	(5,120)		1,653
Accounts payable	12,955		(20,923)
Billings on uncompleted contracts in excess of costs and estimated earnings	161,349		82,221
Accrued expenses	2,517		7,886
Net cash provided by operating activities	76,763		25,567
Investing activities:
Capital expenditures	(5,425)		(5,689)
Proceeds from sale of property, plant and equipment (Note 3)	237		5,535
Net cash used by investing activities	(5,188)		(154)
Financing activities:
Advances under asset-backed credit facility	—		10,000
Repayments of advances under asset-backed credit facility	—		(20,000)




Proceeds from issuance of common stock under employee stock purchase plan	149		132
Repurchase of common stock for payment of statutory taxes due on equity-based compensation	(1,235)		(456)

Net cash used by financing activities	(1,086)		(10,324)
Effect of exchange rate changes on cash	(563)		(243)
Net increase in cash and cash equivalents	69,926		14,846
Cash, cash equivalents and restricted cash, beginning of period	140,615		79,812
Cash, cash equivalents and restricted cash, end of period	$	210,541	$	94,658
Supplemental disclosure of cash flow information:
Cash paid (received) during the period for:
Income taxes	$	39	$	(148)
Interest	$	316	$	776

Non-cash investing and financing activities:
Purchases of property, plant and equipment on account	$	603	$	39

See accompanying notes.

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Matrix Service Company

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except share data)

(unaudited)


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock
	Shares	Amount								Shares	Amount		Total
December 31, 2024	27,888,217	$	279	$	145,608	$	19,185	$	(10,462)	285,392	$	(2,676)	$	151,934
Net loss	—	—		—		(3,434)		—		—	—		(3,434)
Other comprehensive loss	—	—		—		—		(23)		—	—		(23)

Treasury shares sold to Employee Stock Purchase Plan	—	—		12		—		—		(4,027)	36		48

Stock-based compensation expense	—	—		2,185		—		—		—	—		2,185
March 31, 2025	27,888,217	$	279	$	147,805	$	15,751	$	(10,485)	281,365	$	(2,640)	$	150,710

December 31, 2023	27,888,217	$	279	$	140,668	$	52,899	$	(8,745)	587,732	$	(6,191)	$	178,910
Net loss	—	—		—		(14,581)		—		—	—		(14,581)
Other comprehensive loss	—	—		—		—		(548)		—	—		(548)

Treasury shares sold to Employee Stock Purchase Plan	—	—		(14)		—		—		(4,249)	55		41

Stock-based compensation expense	—	—		1,980		—		—		—	—		1,980
March 31, 2024	27,888,217	$	279	$	142,634	$	38,318	$	(9,293)	583,483	$	(6,136)	$	165,802

	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock
	Shares	Amount								Shares	Amount		Total
June 30, 2024	27,888,217	$	279	$	145,580	$	33,941	$	(9,535)	579,422	$	(6,083)	$	164,182
Net loss	—	—		—		(18,190)		—		—	—		(18,190)
Other comprehensive loss	—	—		—		—		(950)		—	—		(950)
Issuance of restricted stock	—	—		(4,537)		—		—		(408,406)	4,537		—
Treasury shares sold to Employee Stock Purchase Plan	—	—		8		—		—		(13,501)	140		148
Treasury shares purchased to satisfy tax withholding obligations	—	—		—		—		—		123,850	(1,234)		(1,234)
Stock-based compensation expense	—	—		6,754		—		—		—	—		6,754
March 31, 2025	27,888,217	$	279	$	147,805	$	15,751	$	(10,485)	281,365	$	(2,640)	$	150,710

June 30, 2023	27,888,217	$	279	$	140,810	$	58,917	$	(8,769)	840,899	$	(9,753)	$	181,484
Net loss	—	—		—		(20,599)		—		—	—		(20,599)
Other comprehensive loss	—	—		—		—		(524)		—	—		(524)
Issuance of restricted stock	—	—		(3,868)		—		—		(297,026)	3,868		—
Treasury shares sold to Employee Stock Purchase Plan	—	—		(73)		—		—		(15,714)	205		132
Treasury shares purchased to satisfy tax withholding obligations	—	—		—		—		—		55,324	(456)		(456)
Stock-based compensation expense	—	—		5,765		—		—		—	—		5,765
March 31, 2024	27,888,217	$	279	$	142,634	$	38,318	$	(9,293)	583,483	$	(6,136)	$	165,802

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Matrix Service Company

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1 – Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements include the accounts of Matrix Service Company and its subsidiaries (“Matrix”, “we”, “our”, “us”, “its” or the “Company”), unless otherwise indicated. Intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission and do not include all information and footnotes required by U.S. generally accepted accounting principles ("GAAP") for complete financial statements. The information furnished reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair statement of the results of operations, cash flows and financial position for the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended June 30, 2024, included in our Annual Report on Form 10-K. The results of operations for the three and nine month periods ended March 31, 2025 may not necessarily be indicative of the results of operations for the full year ending June 30, 2025.

Significant Accounting Policies

Our significant accounting policies are detailed in “Note 1 - Basis of Presentation and Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended June 30, 2024.

Accounting Standards Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands disclosures about a public entity’s reportable segments and requires enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources. The update will be effective for annual periods beginning after December 15, 2023 (fiscal 2025). Adoption of this ASU will result in additional disclosure, but will not impact the Company's consolidated financial position, results of operations or cash flows.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024 (fiscal 2026). Adoption of this ASU will result in additional disclosure, but will not impact the Company's consolidated financial position, results of operations or cash flows.

In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring companies to provide more detailed and organized disclosures of their expenses. Disclosures will include disaggregation of expense captions presented on the face of the income statement into specific categories, such as purchases of inventory, employee compensation, and costs related to depreciation and amortization. The new requirements will take effect for annual reporting periods beginning after December 15, 2026 (fiscal 2028) and for interim periods within fiscal years beginning after December 15, 2027 (fiscal 2029), with early adoption permitted. Adoption of this ASU will result in additional disclosure, but will not impact the Company's consolidated financial position, results of operations or cash flows.

Other accounting pronouncements issued but not effective until after March 31, 2025 are not expected to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

Note 2 – Revenue

Remaining Performance Obligations

We had $1.1 billion of remaining performance obligations yet to be satisfied as of March 31, 2025. We expect to recognize $606.5 million of our remaining performance obligations as revenue within the next twelve months.

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Contract Balances

Contract terms with customers include the timing of billing and payments, which usually differs from the timing of revenue recognition. As a result, we carry contract assets and liabilities in our balance sheet. These contract assets and liabilities are calculated on a contract-by-contract basis and are classified as current. We present our contract assets in the balance sheet as Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts ("CIE"). CIE consists of revenue recognized in excess of billings. We present our contract liabilities in the balance sheet as Billings on Uncompleted Contracts in Excess of Costs and Estimated Earnings ("BIE"). BIE consists of billings in excess of revenue recognized. The following table provides information about CIE and BIE:


	March 31, 2025		June 30, 2024		Change
	(In thousands)
Costs and estimated earnings in excess of billings on uncompleted contracts	$	38,567	$	33,893	$	4,674
Billings on uncompleted contracts in excess of costs and estimated earnings	(332,657)		(171,308)		(161,349)
Net contract liabilities	$	(294,090)	$	(137,415)	$	(156,675)

The difference between the beginning and ending balances of our CIE and BIE primarily results from the timing of revenue recognized relative to the billings on the associated contracts. The amount of revenue recognized during the nine months ended March 31, 2025 that was included in the June 30, 2024 BIE balance was $162.5 million.

Progress billings in accounts receivable at March 31, 2025 and June 30, 2024 included retentions to be collected within one year of $30.2 million and $11.6 million, respectively. Contract retentions collectible beyond one year are included in Other assets, non-current in the Condensed Consolidated Balance Sheets and totaled $51.3 million as of March 31, 2025 and $28.6 million as of June 30, 2024, respectively.

Unpriced Change Orders and Claims

Net contract liabilities included revenues for unpriced change orders and claims of $11.8 million at March 31, 2025 and $9.9 million at June 30, 2024. The amounts ultimately realized may be different than the recorded amounts resulting in adjustments to future earnings. Generally, we expect collection of amounts related to unpriced change orders and claims within twelve months. However, customers may not pay these amounts until final resolution of related claims, and therefore collection of these amounts may extend beyond one year.

Disaggregated Revenue

Revenue disaggregated by reportable segment is presented in Note 8 - Segment Information. The following series of tables presents revenue disaggregated by geographic area where the work was performed and by contract type:

Geographic Disaggregation:


	Three Months Ended				Nine Months Ended
	March 31, 2025		March 31, 2024		March 31, 2025		March 31, 2024
	(In thousands)
United States	$	188,256	$	153,181	$	516,967	$	487,140
Canada	8,048		11,998		28,864		43,419
Other international	3,857		834		7,078		8,155
Total Revenue	$	200,161	$	166,013	$	552,909	$	538,714

Contract Type Disaggregation:

Three Months Ended

Nine Months Ended

March 31,
2025

March 31,
2024

March 31,
2025

March 31,
2024

(In thousands)

SEC Form 10-Q filed by Matrix Service Company