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Table of Contents




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, 2021
or
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.)
5100 East Skelly Drive, Suite 500, Tulsa, Oklahoma 74135
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (918838-8822
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 shareMTRXNASDAQ 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 8, 2021 there were 27,888,217 shares of the Company’s common stock, $0.01 par value per share, issued and 26,765,025 shares outstanding.



Table of Contents




TABLE OF CONTENTS
PAGE
FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



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
September 30,
2021
September 30,
2020
Revenue$168,093 $182,771 
Cost of revenue171,601 168,421 
Gross profit (loss)(3,508)14,350 
Selling, general and administrative expenses16,629 18,128 
Restructuring costs605 (320)
Operating loss(20,742)(3,458)
Other income (expense):
Interest expense (Note 5)(1,999)(375)
Interest income21 33 
Other(83)1,033 
Loss before income tax benefit(22,803)(2,767)
Provision (benefit) from federal, state and foreign income taxes(5,265)270 
Net loss$(17,538)$(3,037)
Basic loss per common share$(0.66)$(0.12)
Diluted loss per common share$(0.66)$(0.12)
Weighted average common shares outstanding:
Basic26,611 26,265 
Diluted26,611 26,265 
See accompanying notes.










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Matrix Service Company
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(unaudited)
 
 Three Months Ended
September 30,
2021
September 30,
2020
Net loss$(17,538)$(3,037)
Other comprehensive income (loss), net of tax:
Foreign currency translation gain (loss) (net of tax expense of $54 and $12 for the three months ended September 30, 2021 and 2020, respectively(795)404 
Comprehensive loss$(18,333)$(2,633)
See accompanying notes.



















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Matrix Service Company
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
September 30,
2021
June 30,
2021
Assets
Current assets:
Cash and cash equivalents (Note 1)$34,678 $83,878 
Restricted cash (Note 1)2,600  
Accounts receivable, less allowances (September 30, 2021—$586 and June 30, 2021—$898)144,892 148,030 
Costs and estimated earnings in excess of billings on uncompleted contracts33,766 30,774 
Inventories6,314 7,342 
Income taxes receivable16,845 16,965 
Other current assets11,180 4,230 
Total current assets250,275 291,219 
Property, plant and equipment at cost:
Land and buildings41,556 41,633 
Construction equipment94,209 94,453 
Transportation equipment50,068 50,510 
Office equipment and software43,010 42,706 
Construction in progress126 493 
Total property, plant and equipment - at cost228,969 229,795 
Accumulated depreciation(163,171)(160,388)
Property, plant and equipment - net65,798 69,407 
Restricted cash, non-current (Note 1)25,000  
Operating lease right-of-use assets21,515 22,412 
Goodwill60,540 60,636 
Other intangible assets, net of accumulated amortization6,094 6,614 
Deferred income taxes10,687 5,295 
Other assets, non-current10,368 11,973 
Total assets$450,277 $467,556 
See accompanying notes.









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Matrix Service Company
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(unaudited)
September 30,
2021
June 30,
2021
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$65,973 $60,920 
Billings on uncompleted contracts in excess of costs and estimated earnings50,973 53,832 
Accrued wages and benefits20,216 21,008 
Accrued insurance6,627 6,568 
Operating lease liabilities5,570 5,747 
Other accrued expenses4,918 5,327 
Total current liabilities154,277 153,402 
Deferred income taxes29 34 
Operating lease liabilities19,951 20,771 
Other liabilities, non-current7,722 7,810 
Total liabilities181,979 182,017 
Commitments and contingencies
Stockholders’ equity:
Common stock—$.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of September 30, 2021 and June 30, 2021; 26,697,028 and 26,549,438 shares outstanding as of September 30, 2021 and June 30, 2021279 279 
Additional paid-in capital135,308 137,575 
Retained earnings157,640 175,178 
Accumulated other comprehensive loss(7,544)(6,749)
285,683 306,283 
Less: Treasury stock, at cost — 1,191,189 shares as of September 30, 2021, and 1,338,779 shares as of June 30, 2021(17,385)(20,744)
Total stockholders' equity268,298 285,539 
Total liabilities and stockholders’ equity$450,277 $467,556 
See accompanying notes.








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Matrix Service Company
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
 Three Months Ended
September 30,
2021
September 30,
2020
Operating activities:
Net loss$(17,538)$(3,037)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization4,052 4,639 
Stock-based compensation expense1,869 2,218 
Operating lease impairment due to restructuring 150 
Deferred income tax(5,343)289 
Gain on sale of property, plant and equipment(101)(941)
Provision for uncollectible accounts4 (64)
Accelerated amortization of deferred debt amendment fees (Note 5)1,518  
Other 101 
Changes in operating assets and liabilities increasing (decreasing) cash:
Accounts receivable3,134 (10,769)
Costs and estimated earnings in excess of billings on uncompleted contracts(2,992)1,854 
Inventories1,028 (291)
Other assets and liabilities(5,921)(8,018)
Accounts payable5,108 (4,431)
Billings on uncompleted contracts in excess of costs and estimated earnings(2,859)(366)
Accrued expenses(1,112)3,646 
Net cash used by operating activities(19,153)(15,020)
Investing activities:
Capital expenditures(219)(2,777)
Proceeds from asset sales103 1,074 
Net cash used by investing activities$(116)$(1,703)

 See accompanying notes.

















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Matrix Service Company
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Three Months Ended
September 30,
2021
September 30,
2020
Financing activities:
Payment of debt amendment fees$(922)$ 
Proceeds from issuance of common stock under employee stock purchase plan76 82 
Repurchase of common stock for payment of statutory taxes due on equity-based compensation(853)(1,536)
Other(118) 
Net cash used by financing activities(1,817)(1,454)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(514)316 
Decrease in cash, cash equivalents and restricted cash(21,600)(17,861)
Cash, cash equivalents and restricted cash, beginning of period (Note 1)83,878 100,036 
Cash, cash equivalents and restricted cash, end of period (Note 1)$62,278 $82,175 
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes$ $122 
Interest, including payment of debt amendment fees$1,603 $470 
Non-cash investing and financing activities:
Purchases of property, plant and equipment on account$51 $ 

 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
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
Balances, July 1, 2021$279 $137,575 $175,178 $(20,744)$(6,749)$285,539 
Net loss  (17,538)  (17,538)
Other comprehensive loss    (795)(795)
Issuance of deferred shares (217,084 shares) (4,084) 4,084   
Treasury shares sold to Employee Stock Purchase Plan (7,209 shares) (52) 128  76 
Treasury shares purchased to satisfy tax withholding obligations (76,703 shares)   (853) (853)
Stock-based compensation expense 1,869    1,869 
Balances, September 30, 2021$279 $135,308 $157,640 $(17,385)$(7,544)$268,298 
Balances, July 1, 2020$279 $138,966 $206,402 $(29,385)$(8,373)$307,889 
Net loss  (3,037)  (3,037)
Other comprehensive income    404 404 
Issuance of deferred shares (478,703 shares) (8,435) 8,435   
Treasury shares sold to Employee Stock Purchase Plan (8,730 shares) (62) 144  82 
Treasury shares purchased to satisfy tax withholding obligations (168,765 shares)   (1,536) (1,536)
Stock-based compensation expense 2,218    2,218 
Balances, September 30, 2020$279 $132,687 $203,365 $(22,342)$(7,969)$306,020 






















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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, 2021, included in our Annual Report on Form 10-K for the year then ended. The results of operations for the three month period ended September 30, 2021 may not necessarily be indicative of the results of operations for the full year ending June 30, 2022.
Significant Accounting Policies
We updated our significant accounting policies as a result of entering into an asset-backed credit agreement (the "ABL Facility"), which requires us to maintain a restricted cash balance (See Note 5 - Debt for more information about the ABL Facility). Our other significant accounting policies are detailed in “Note 1 - Summary of Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended June 30, 2021.
Cash, Cash Equivalents and Restricted Cash
The ABL Facility requires us to maintain a minimum of $25.0 million of restricted cash at all times. Since this cash must be restricted through the maturity date of the ABL Facility, which is beyond one year, we have classified this restricted cash as non-current in our Condensed Consolidated Balance Sheets. In addition, we must maintain a restricted cash balance of $2.6 million in support of the purchase card program that is associated with our prior card administrator. We have included this restricted cash in current assets in our Condensed Consolidated Balance Sheets since we expect to dissolve the prior purchase card program during fiscal 2022.
The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Condensed Consolidated Balance Sheets to the total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows (in thousands):
September 30,
2021
June 30,
2021
Cash and cash equivalents$34,678 $83,878 
Restricted cash, current2,600  
Restricted cash, non-current25,000  
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows$62,278 $83,878 
Note 2 – Revenue
Remaining Performance Obligations
We had $365.4 million of remaining performance obligations yet to be satisfied as of September 30, 2021. We expect to recognize $302.2 million of our remaining performance obligations as revenue within the next twelve months.
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Matrix Service Company
Notes to Condensed Consolidated Financial Statements
(unaudited)

Contract Balances
Contract terms with customers include the timing of billing and payment, 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 reported on a net basis at the end of each period 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:
September 30,
2021
June 30,
2021
Change
 (in thousands)
Costs and estimated earnings in excess of billings on uncompleted contracts$33,766 $30,774 $2,992 
Billings on uncompleted contracts in excess of costs and estimated earnings(50,973)(53,832)2,859 
Net contract liabilities$(17,207)$(23,058)$5,851 
The difference between the beginning and ending balances of our CIE and BIE primarily results from the timing of revenue recognized relative to its billings. The amount of revenue recognized during the three months ended September 30, 2021 that was included in the June 30, 2021 BIE balance was $44.3 million. This revenue consists primarily of work performed during the period on contracts with customers that had advance billings.
Progress billings in accounts receivable at September 30, 2021 and June 30, 2021 included retentions to be collected within one year of $12.8 million and $19.9 million, respectively. Contract retentions collectible beyond one year are included in other assets, non-current in the Condensed Consolidated Balance Sheet and totaled $2.6 million as of September 30, 2021 and $3.1 million as of June 30, 2021.
Disaggregated Revenue
Revenue disaggregated by reportable segment is presented in Note 9 - 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
 September 30,
2021
September 30,
2020
 (In thousands)
United States$153,284 $161,377 
Canada13,510 19,611 
Other international1,299 1,783 
Total Revenue$168,093 $182,771 

Contract Type Disaggregation:
 Three Months Ended
 September 30,
2021
September 30,
2020
 (In thousands)
Fixed-price contracts$102,065 $133,356 
Time and materials and other cost reimbursable contracts66,028 49,415 
Total Revenue$168,093 $182,771 

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Matrix Service Company
Notes to Condensed Consolidated Financial Statements
(unaudited)

Typically, we assume more risk with fixed-price contracts since increases in costs to perform the work may not be recoverable. However, these types of contracts typically offer higher profits than time and materials and other cost reimbursable contracts when completed at or below the costs originally estimated. The profitability of time and materials and other cost reimbursable contracts is typically lower than fixed-price contracts and is usually less volatile than fixed-price contracts since the profit component is factored into the rates charged for labor, equipment and materials, or is expressed in the contract as a percentage of the reimbursable costs incurred.
Other
Our results of operations were materially impacted by an increase in the forecasted costs to complete a large capital project in the Utility and Power Infrastructure segment, which resulted in a decrease in gross profit of $5.9 million in the three months ended September 30, 2021. The change in estimate was principally due to unexpected equipment repairs during commissioning that delayed the scheduled completion and increased the estimated costs to complete. We achieved a critical performance milestone in the second quarter of fiscal 2022, which significantly reduced our financial exposure.
Note 3 – Leases
We enter into lease arrangements for real estate, construction equipment and information technology equipment in the normal course of business. Real estate leases accounted for approximately 93% of all right-of-use assets as of September 30, 2021. Most real estate and information technology equipment leases generally have fixed payments that follow an agreed upon payment schedule and have remaining lease terms ranging from less than a year to 14 years. Construction equipment leases generally have "month-to-month" lease terms that automatically renew as long as the equipment remains in use.
The components of lease expense in the Condensed Consolidated Statements of Income are as follows:
Three Months Ended
September 30, 2021September 30, 2020
Lease expenseLocation of Expense(in thousands)
Operating lease expenseCost of revenue and Selling, general and administrative expenses$2,092 $2,488 
Short-term lease expense(1)
Cost of revenue5,571 5,975 
Total lease expense$7,663 $8,463 
(1)Primarily represents the lease expense of construction equipment that is subject to month-to-month rental agreements with expected rental durations of less than one year.

The future undiscounted lease payments, as reconciled to the discounted operating lease liabilities presented in our Condensed Consolidated Balance Sheets, were as follows:

September 30, 2021
Maturity Analysis:(in thousands)
Remainder of Fiscal 2022$5,412 
Fiscal 20234,752 
Fiscal 20243,608 
Fiscal 20253,160 
Fiscal 20262,882 
Thereafter11,220 
Total future operating lease payments31,034 
Imputed interest (5,513)
Net present value of future lease payments25,521 
Less: current portion of operating lease liabilities5,570 
Non-current operating lease liabilities$19,951 
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Matrix Service Company
Notes to Condensed Consolidated Financial Statements
(unaudited)

The following is a summary of the weighted average remaining operating lease term and weighted average discount rate as of September 30, 2021:
Weighted-average remaining lease term (in years)7.2 years
Weighted-average discount rate5.2 %

Supplemental cash flow information related to leases is as follows:
Three Months Ended
September 30, 2021
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating lease payments$2,188 
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases$882 

Note 4 – Intangible Assets Including Goodwill
Goodwill
The changes in the carrying value of goodwill by segment are as follows:
Utility and Power InfrastructureProcess and Industrial FacilitiesStorage and Terminal SolutionsTotal
 (In thousands)
Net balance at June 30, 2021$6,984 $26,878 $26,774 $60,636 
Translation adjustment(1)
(30)(8)(58)(96)
Net balance at September 30, 2021$6,954 $26,870 $26,716 $60,540 
(1)The translation adjustments relate to the periodic translation of Canadian Dollar and South Korean Won denominated goodwill recorded as a part of prior acquisitions in Canada and South Korea, in which the local currency was determined to be the functional currency.
We test our goodwill for impairment annually as of May 31st. While there continues to be uncertainty around the near-term level of spending by some of our customers due to the impacts of the COVID-19 pandemic and the timing of the economic recovery in certain energy markets, we concluded, that based on the totality of both positive and negative factors, no impairment indicators existed at September 30, 2021. However, if customer spending levels do not improve or if the outlook in certain key markets deteriorates, we may need to perform an interim goodwill impairment test, which could result in an impairment.
Other Intangible Assets
Information on the carrying value of other intangible assets is as follows:
  At September 30, 2021
  
Useful LifeGross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
 (Years)(In thousands)
Intellectual property10 to 15$2,483 $(2,074)$409 
Customer-based6 to 1517,260 (11,575)5,685 
Total amortizing intangible assets$19,743 $(13,649)$6,094 
 
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Matrix Service Company
Notes to Condensed Consolidated Financial Statements
(unaudited)

  At June 30, 2021
 Useful LifeGross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
 (Years)(In thousands)
Intellectual property10 to 15$2,483 $(2,031)$452 
Customer-based6 to 1517,354 (11,192)6,162 
Total amortizing intangible assets$19,837 $(13,223)$6,614 
Amortization expense totaled $0.5 million and $0.6 million during the three months ended September 30, 2021 and September 30, 2020, respectively.
We estimate that the remaining amortization expense related to September 30, 2021 amortizing intangible assets will be as follows (in thousands):
Period ending:
Remainder of Fiscal 2022$1,297 
Fiscal 20231,729 
Fiscal 20241,416 
Fiscal 20251,097 
Fiscal 2026555 
Total estimated remaining amortization expense at September 30, 2021$6,094 
Note 5 – Debt
ABL Credit Facility
On September 9, 2021, we and our primary U.S. and Canada operating subsidiaries entered into an asset-backed credit agreement (the "ABL Facility") as borrowers with Bank of Montreal, as Administrative Agent, Swing-Line Lender, a Letter of Credit Issuer and a Lender. The ABL Facility is guaranteed by substantially all of our remaining U.S. and Canadian subsidiaries. The ABL Facility provides for available borrowings of up to $100.0 million, which may be increased further 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 secured by a first lien on all our assets and the assets of our co-borrowers and guarantors under the ABL Facility.
The maximum amount that we may borrow under the ABL Facility is subject to a borrowing base, which is based on restricted cash plus a percentage of the value of certain accounts receivable, inventory and equipment, reduced for certain reserves. We are required to maintain a minimum of $25.0 million of restricted cash at all times, but such amounts are also included in the borrowing base. At September 30, 2021, availability under the ABL Facility was $32.1 million and there were $43.1 million in letters of credit outstanding. The ABL Facility matures and any outstanding amounts become due and payable on September 9, 2026.
Borrowings under the ABL Facility bear interest through maturity at a variable rate based upon, at our option, an annual rate equal to any of a base rate (“Base Rate”), Canadian prime rate, CDOR rate or a LIBOR rate, plus an applicable margin. The Base Rate is defined as a fluctuating interest rate equal to the greatest of (i) rate of interest announced by Bank of Montreal from time to time as its prime rate; (ii) the U.S. federal funds rate plus 0.50%; (iii) LIBOR rate for one month period plus 1.00%; and (iv) 1.00%. Depending on the amount of average availability, the applicable margin is between 1.00% to 1.50% for either U.S. Base Rate Loans or Canadian prime rate, and between 2.00% and 2.50% for CDOR and LIBOR rate borrowings. Interest is payable either (i) monthly for Base Rate borrowings or (ii) the last day of the interest period for LIBOR or CDOR rate borrowings, as set forth in the Credit Agreement. The fee for undrawn amounts is 0.25% per annum and is due quarterly.
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Matrix Service Company
Notes to Condensed Consolidated Financial Statements
(unaudited)

The ABL Facility contains customary conditions to borrowings, events of default and covenants, including, but not limited to, covenants that restrict our ability to sell assets, engage in mergers and acquisitions, incur, assume or permit to exist additional indebtedness and guarantees, create or permit to exist liens, pay cash dividends, issue equity instruments, make distribution or redeem or repurchase capital stock. In the event that our availability is less than the greater of (i) $15.0 million and (ii) 15.00% of the lesser of (1) the current borrowing base and (2) the commitments under the ABL Facility then in effect, a consolidated Fixed Charge Coverage Ratio of at least 1.00 to 1.00 must be maintained.
Senior Secured Revolving Credit Facility
The ABL Facility replaced the Fifth Amended and Restated Credit Agreement (the "Prior Credit Agreement"), that was entered into on November 2, 2020, and subsequently amended on May 4, 2021, by and among us and certain foreign subsidiaries, as Borrowers, various subsidiaries of ours, as Guarantors, JPMorgan Chase Bank, N.A., as Administrative Agent, Sole Lead Arranger and Sole Book Runner, and the other Lenders party thereto. The Prior Credit Agreement provided for a three-year senior secured revolving credit facility of $200.0 million that expired November 2, 2023.
We had no borrowings and $41.3 million of letters of credit outstanding under the Prior Credit Agreement as of the date we commenced the ABL Facility. Interest expense during the three months ended September 30, 2021 included $1.5 million of accelerated amortization of deferred debt amendment fees associated with the Prior Credit Agreement.
Note 6 – Income Taxes
Effective Tax Rate
Our effective tax rates were 23.1% and (9.8)% for the three months ended September 30, 2021 and September 30, 2020, respectively. The effective tax rate for the three months ended September 30, 2020 was negatively impacted by a $1.0 million deferred tax asset adjustment.
Net Operating Loss Carryback and Refund of Prior Years Overpayment
Through provisions in the CARES Act, we had income tax benefits of $5.2 million during fiscal 2021 and $0.3 million during the three months ended September 30, 2021 from the ability to carryback the fiscal 2021 federal net operating loss to a period with a higher statutory federal income tax rate. We estimate that we will receive a $13.6 million tax refund in connection with this carryback, which is included in income taxes receivable in the Condensed Consolidated Balance Sheets.
In addition, we expect to receive a $2.4 million tax refund in connection with overpayments from prior years, which is included in income taxes receivable in the Condensed Consolidated Balance Sheets.
Deferred Payroll Taxes
We have deferred $11.1 million of U.S. payroll tax as of September 30, 2021 through provisions of CARES Act. We must repay half of the deferred payroll tax by December 31, 2021 and the remainder by December 31, 2022. The current portion of deferred payroll taxes is included within accrued wages and benefits and the non-current portion is included within other liabilities, non-current in the Condensed Consolidated Balance Sheets.
Note 7 – Commitments and Contingencies
Insurance Reserves
We maintain insurance coverage for various aspects of its operations. However, exposure to potential losses is retained through the use of deductibles, self-insured retentions and coverage limits.
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Matrix Service Company
Notes to Condensed Consolidated Financial Statements
(unaudited)

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 and workmanship. We may also be required to name the customer as an additional insured up to the limits of insurance available, or we may be required to purchase special insurance policies or surety bonds for specific customers or provide letters of credit in lieu of bonds to satisfy performance and financial guarantees on some projects. We maintain a performance and payment bonding line sufficient to support the business. We generally require our subcontractors to indemnify us and our customer and name us as an additional insured for activities arising out of the subcontractors’ work. We also require certain subcontractors to provide additional insurance policies, including surety bonds in favor of us, to secure the subcontractors’ work or as required by the subcontract.
There can be no assurance that our insurance and the additional insurance coverage provided by our subcontractors will fully protect us against a valid claim or loss under the contracts with our customers.
Unpriced Change Orders and Claims
Costs and estimated earnings in excess of billings on uncompleted contracts included revenues for unpriced change orders and claims of $15.3 million at September 30, 2021 and $14.6 million at June 30, 2021. Generally, collection of amounts related to unpriced change orders and claims is expected within twelve months. However, since customers may not pay these amounts until final resolution of related claims, collection of these amounts may extend beyond one year.
Other
During the third quarter of fiscal 2020, we commenced litigation in an effort to collect accounts receivable from an iron and steel customer following the deterioration of the relationship in the second quarter of fiscal 2020. The unpaid receivable balance at September 30, 2021 was $17.0 million. Litigation is unpredictable, however, based on the terms of the contract with this customer, we believe we are entitled to collect the full amount owed under the contract.
We and our subsidiaries are participants in various legal actions. It is the opinion of management that none of the other known legal actions, including a contract dispute with a customer involving the construction of a crude terminal, will have a material impact on our financial position, results of operations or liquidity.
Note 8 – Earnings per Common Share
Basic earnings per share (“Basic EPS”) is calculated based on the weighted average shares outstanding during the period. Diluted earnings per share (“Diluted EPS”) includes the dilutive effect of stock options and nonvested deferred shares. In the event we report a loss, stock options and nonvested deferred shares are not included since they are anti-dilutive.
The computation of basic and diluted earnings per share is as follows:
 Three Months Ended
September 30,
2021
September 30,
2020
 (In thousands, except per share data)
Basic EPS:
Net loss$(17,538)$(3,037)
Weighted average shares outstanding26,611 26,265 
Basic loss per share$(0.66)$(0.12)
Diluted EPS:
Diluted weighted average shares26,611 26,265 
Diluted loss per share$(0.66)$(0.12)

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Matrix Service Company
Notes to Condensed Consolidated Financial Statements
(unaudited)

Note 9 – Segment Information
We report our results of operations through three reportable segments: Utility and Power Infrastructure, Process and Industrial Facilities, and Storage and Terminal Solutions.
Utility and Power Infrastructure: consists of power delivery services provided to investor owned utilities, including construction of new substations, upgrades of existing substations, transmission and distribution line installations, upgrades and maintenance, as well as emergency and storm restoration services. We also provide construction and maintenance services to a variety of power generation facilities, including natural gas fired facilities in simple or combined cycle configuration, and provide engineering, fabrication, and construction services for LNG utility peak shaving facilities.
Process and Industrial Facilities: primarily serves customers in the downstream and midstream petroleum industries who are engaged in refining crude oil and processing, fractionating, and marketing of natural gas and natural gas liquids. We also serve customers in various other industries such as petrochemical, sulfur, mining and minerals companies engaged primarily in the extraction of non-ferrous metals, aerospace and defense, cement, agriculture, and other industrial customers. Our services include plant maintenance, turnarounds, industrial cleaning services, engineering, fabrication, and capital construction.
Storage and Terminal Solutions: consists of work related to aboveground storage tanks and terminals. We also include work related to cryogenic and other specialty storage tanks and terminals, including LNG, liquid nitrogen/liquid oxygen, liquid petroleum, hydrogen and other specialty vessels such as spheres in this segment, as well as work related to marine structures and truck and rail loading/offloading facilities. Our services include engineering, fabrication, construction, and maintenance and repair, which includes planned and emergency services for both tanks and full terminals. Finally, we offer tank products, including geodesic domes, aluminum internal floating roofs, floating suction and skimmer systems, roof drain systems and floating roof seals.

We evaluate performance and allocate resources based on operating income. We record intersegment sales and transfers at cost; therefore, no intercompany profit or loss is recognized. In addition, corporate selling, general and administrative expenses are reported separately from the three reportable segments.
Segment assets consist primarily of accounts receivable, costs and estimated earnings in excess of billings on uncompleted contracts, property, plant and equipment, right-of-use lease assets, goodwill and other intangible assets.

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Matrix Service Company
Notes to Condensed Consolidated Financial Statements
(unaudited)

Results of Operations
(In thousands)
 Three Months Ended
 September 30,
2021
September 30,
2020
Gross revenue
Utility and Power Infrastructure$57,204 $60,671 
Process and Industrial Facilities45,210 46,728 
Storage and Terminal Solutions68,312 77,596 
Total gross revenue$170,726 $184,995 
Less: Inter-segment revenue
Process and Industrial Facilities$1,305 $797 
Storage and Terminal Solutions1,328 1,427 
Total inter-segment revenue$2,633 $2,224 
Consolidated revenue
Utility and Power Infrastructure$57,204 $60,671 
Process and Industrial Facilities43,905 45,931 
Storage and Terminal Solutions66,984 76,169 
Total consolidated revenue$168,093 $182,771 
Gross profit (loss)
Utility and Power Infrastructure$(6,107)$6,913 
Process and Industrial Facilities2,871 3,659 
Storage and Terminal Solutions413 3,778 
Corporate(685) 
Total gross profit (loss)$(3,508)$14,350 
Selling, general and administrative expenses
Utility and Power Infrastructure$3,050 $2,222 
Process and Industrial Facilities2,762 4,050 
Storage and Terminal Solutions4,506 5,143 
Corporate6,311 6,713 
Total selling, general and administrative expenses$16,629 $18,128 
Restructuring costs
Utility and Power Infrastructure$9 $11 
Process and Industrial Facilities7 (500)
Storage and Terminal Solutions(33)13 
Corporate622 156 
Total restructuring costs$605 $(320)
Operating income (loss)
Utility and Power Infrastructure$(9,166)$4,680 
Process and Industrial Facilities102 109 
Storage and Terminal Solutions(4,060)(1,378)
Corporate(7,618)(6,869)
Total operating loss$(20,742)$(3,458)
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Matrix Service Company
Notes to Condensed Consolidated Financial Statements
(unaudited)

Total assets by segment were as follows:

September 30,
2021
June 30,
2021
Utility and Power Infrastructure$107,077 $81,717 
Process and Industrial Facilities80,315 106,619 
Storage and Terminal Solutions155,730 160,782 
Corporate107,155 118,438 
Total segment assets$450,277 $467,556 

Note 10 – Restructuring Costs
In fiscal 2020, we initiated a business improvement plan to increase profitability and reduce our cost structure due to our strategic initiative to exit the domestic iron and steel industry and the decline in revenue caused by the ongoing effects of the COVID-19 pandemic and related market disruptions.
The business improvement plan consists of discretionary cost reductions, workforce reductions, reduction of capital expenditures and the reduction in size or closure of certain offices in order to increase the utilization of our staff and bring the cost structure of the business in line with revenue volumes. We incurred $0.6 million of restructuring costs during the three months ended September 30, 2021 and $21.4 million of restructuring costs since inception of the plan. The restructuring costs consist primarily of severance costs, facility closure costs, and other liabilities as a result of exiting certain operations. We expect to substantially complete this initiative in fiscal 2022.






















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Matrix Service Company
Notes to Condensed Consolidated Financial Statements
(unaudited)


Restructuring costs under our business improvement plan are classified as follows:
Three Months EndedSince Inception of Business Improvement Plan
September 30, 2021September 30, 2020
(In thousands)
Utility and Power Infrastructure
Severance and other personnel-related costs$9 $7 $2,548 
Facility costs 4 349 
Other intangible asset impairments  1,150 
Total Utility and Power Infrastructure$9 $11 $4,047 
Process and Industrial Facilities
Severance and other personnel-related costs$5 $(492)$9,123 
Facility costs (119)3,187 
Other intangible asset impairments  375 
Other costs2 111 428 
Total Process and Industrial Facilities$7 $(500)$13,113 
Storage and Terminal Solutions
Severance and other personnel-related costs$(33)$13 $1,544 
Facility costs  879 
Total Storage and Terminal Solutions$(33)$13 $2,423 
Corporate
Severance and other personnel-related costs$44 $6 $1,128 
Facility costs16 150 98 
Other costs562  562 
Total Corporate$622 $156 $1,788 
Restructuring Costs by Type:
Severance and other personnel-related costs$25 $(466)$14,343 
Facility costs16 35 4,513 
Other intangible asset impairments  1,525 
Other costs564 111 990 
Total restructuring costs$605 $(320)$21,371 

The restructuring reserve is included in other accrued expenses and other liabilities in the Condensed Consolidated Balance Sheets. The table below is a reconciliation of the beginning and ending restructuring reserve balance under the business improvement plan (in thousands):

Balance as of June 30, 2021$2,435 
Cash payments(272)
Other29 
Balance as of September 30, 2021$2,192 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
This Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this Form 10-Q which address activities, events or developments which we expect, believe or anticipate will or may occur in the future are forward-looking statements. The words “believes,” “intends,” “expects,” “anticipates,” “projects,” “estimates,” “predicts” and similar expressions are also intended to identify forward-looking statements.
These forward-looking statements include, among others, such things as:
the impact to our business of the COVID-19 pandemic;
amounts and nature of future project awards, revenue and margins from each of our segments;
our ability to generate sufficient cash from operations, access our credit facility, or raise cash in order to meet our short and long-term capital requirements;
our ability to comply with the covenants in our Credit Agreement;
the impact to our business of changes in crude oil, natural gas and other commodity prices;
the likely impact of new or existing regulations or market forces on the demand for our services;
our expectations with respect to the likelihood of a future impairment; and
expansion and other trends of the industries we serve.

These statements are based on certain assumptions and analyses we made in light of our experience and our historical trends, current conditions and expected future developments as well as other factors we believe are appropriate. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties which could cause actual results to differ materially from our expectations, including:

the risk factors discussed in our Form 10-K for the fiscal year ended June 30, 2021 and listed from time to time in our filings with the Securities and Exchange Commission;
economic, market or business conditions in general (including the length and severity of the COVID-19 pandemic) and in the oil, natural gas, power, petrochemical, agricultural and mining industries in particular;
the transition to renewable energy sources and its impact on our current customer base;
the under- or over-utilization of our work force;
delays in the commencement or progression of major projects, whether due to COVID-19 concerns, permitting issues or other factors;
reduced creditworthiness of our customer base and the higher risk of non-payment of receivables due to volatility of crude oil, natural gas, and other commodity prices which affect our customers' businesses;
the inherently uncertain outcome of current and future litigation;
the adequacy of our reserves for claims and contingencies; and
changes in laws or regulations, including the imposition, cancellation or delay of tariffs on imported goods.
Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business operations. We assume no obligation to update publicly, except as required by law, any such forward-looking statements, whether as a result of new information, future events or otherwise.
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RESULTS OF OPERATIONS
Operational Update
Throughout the course of the COVID-19 pandemic, our top priority has been to maintain a safe working environment for all employees, customers and business partners. Our project teams, in coordination with our clients, are monitoring the impact of new variants of COVID-19 and continue to operate under enhanced work processes to protect the health and safety of everyone on our job sites.
Since the beginning of the pandemic we have reduced our cost structure by more than $70 million, or approximately 27%, with one-third of those reductions related to SG&A and the rest related to construction overhead, which is included in cost of revenue in the Consolidated Statements of Income. These cost savings were primarily the result of the business improvement plan that began in fiscal 2020 and continues to evolve based on our markets, organizational structure and outlook. We expect to complete the plan in fiscal 2022. See Item 1. Financial Statements, Note 10 - Restructuring Costs, for more information. Despite these significant reductions in construction overhead, our low revenue volume still has not allowed for the complete recovery of construction overhead or leveraging of SG&A costs. As we move through fiscal 2022, we expect the business improvement plan along with improving revenue volumes to positively impact earnings.
Overview
We report our results of operations through three reportable segments: Utility and Power Infrastructure, Process and Industrial Facilities, and Storage and Terminal Solutions.
Utility and Power Infrastructure: consists of power delivery services provided to investor owned utilities, including construction of new substations, upgrades of existing substations, transmission and distribution line installations, upgrades and maintenance, as well as emergency and storm restoration services. We also provide construction and maintenance services to a variety of power generation facilities, including natural gas fired facilities in simple or combined cycle configuration and provide engineering, fabrication, and construction services for LNG utility peak shaving facilities.
Process and Industrial Facilities: primarily serves customers in the downstream and midstream petroleum industries who are engaged in refining crude oil and processing, fractionating, and marketing of natural gas and natural gas liquids. We also serve customers in various other industries such as petrochemical, sulfur, mining and minerals companies engaged primarily in the extraction of non-ferrous metals, aerospace and defense, cement, agriculture, and other industrial customers. Our services include plant maintenance, turnarounds, industrial cleaning services, engineering, fabrication, and capital construction.
Storage and Terminal Solutions: consists of work related to aboveground storage tanks and terminals. We also include work related to cryogenic and other specialty storage tanks and terminals, including LNG, liquid nitrogen/liquid oxygen, liquid petroleum, hydrogen and other specialty vessels such as spheres in this segment, as well work related to marine structures and truck and rail loading/offloading facilities. Our services include engineering, fabrication, construction, and maintenance and repair, which includes planned and emergency services for both tanks and full terminals. Finally, we offer tank products, including geodesic domes, aluminum internal floating roofs, floating suction and skimmer systems, roof drain systems and floating roof seals.

We evaluate performance and allocate resources based on operating income. We record intersegment sales and transfers at cost; therefore, no intercompany profit or loss is recognized. In addition, corporate selling, general and administrative expenses are reported separately from the three reportable segments.

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Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020
Consolidated
Consolidated revenue was $168.1 million for the three months ended September 30, 2021, compared to $182.8 million in the same period last year. On a segment basis, revenue decreased in the Storage and Terminal Solutions, Utility and Power Infrastructure, and Process and Industrial Facilities segments by $9.2 million, $3.5 million and $2.0 million, respectively.
Consolidated gross profit (loss) decreased to $(3.5) million in the three months ended September 30, 2021 compared to $14.4 million in the same period last year. Gross margin (loss) decreased to (2.1)% in the three months ended September 30, 2021 compared to 7.9% in the same period last year. Gross margins in fiscal 2022 were negatively impacted by a lower than previously forecasted margin on a large capital project and an unfavorable settlement of a claim with a customer, both in the Utility and Power Infrastructure segment, and by lower than previously forecasted margins on a limited number of projects in the Storage and Terminal Solutions segment. In addition, gross margins were also negatively impacted by lower than forecasted volumes, which led to under recovery of construction overhead costs.
Consolidated SG&A expenses were $16.6 million in the three months ended September 30, 2021 compared to $18.1 million in the same period a year earlier. The decrease is primarily attributable to implemented cost reductions.
As a result of restructuring activities, we recorded $0.6 million of restructuring costs in the three months ended September 30, 2021. See Item 1. Financial Statements, Note 10 - Restructuring Costs, for more information.
Interest expense was $2.0 million in the three months ended September 30, 2021 compared to $0.4 million in the three months ended September 30, 2020. Interest expense in fiscal 2022 included $1.5 million of accelerated amortization of deferred debt amendment fees associated with the Prior Credit Agreement (see Item 1. Financial Statements, Note 5 - Debt, for more information).
Our effective tax rates for the three months ended September 30, 2021 and September 30, 2020 were 23.1% and (9.8)%, respectively. The effective tax rate for the three months ended September 30, 2020 was negatively impacted by a $1.0 million deferred tax asset adjustment.
For the three months ended September 30, 2021, we had a net loss of $17.5 million, or $0.66 per fully diluted share, compared to a net loss of $3.0 million, or $0.12 per fully diluted share, in the three months ended September 30, 2020.
Utility and Power Infrastructure
Revenue for the Utility and Power Infrastructure segment was $57.2 million in the three months ended September 30, 2021 compared to $60.7 million in the same period last year. The decrease is primarily due to lower volumes of power delivery and natural gas utility peak shaving work, partially offset by higher volumes of storm response service work.
The segment gross margin (loss) was (10.7)% in fiscal 2022 compared to 11.4% in fiscal 2021. The fiscal 2022 segment gross margin was negatively impacted by an increase in the forecasted costs to complete a large capital project, which resulted in a decrease in gross profit of $5.9 million. The change in estimate was principally due to unexpected equipment repairs during commissioning that delayed the scheduled completion and increased the estimated costs to complete. We achieved a critical performance milestone in the second quarter of fiscal 2022, which significantly reduced our financial exposure. In addition, segment gross margin was negatively impacted by an unfavorable settlement of a claim with a customer, and low volumes, which led to the under recovery of construction overhead costs.
Process and Industrial Facilities
Revenue for the Process and Industrial Facilities segment was $43.9 million in the three months ended September 30, 2021 compared to $45.9 million in the same period last year. The decrease is primarily due to lower volumes of thermal vacuum chamber and capital work, largely offset by an increase in refinery turnaround and maintenance work.
The segment gross margin was 6.5% for the three months ended September 30, 2021 compared to 8.0% in the same period last year. Project execution in fiscal 2021 was strong, but gross margin was negatively impacted by lower volumes, which led to the under recovery of construction overhead costs. The lower segment gross margin in fiscal 2022 was the result of lower direct margins largely offset by improved recovery of construction overhead costs.

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Storage and Terminal Solutions
Revenue for the Storage and Terminal Solutions segment was $67.0 million in the three months ended September 30, 2021 compared to $76.2 million in the same period last year. The decrease in segment revenue is primarily a result of lower volumes of crude oil tank and terminal capital work, partially offset by an increase in tank repair and maintenance work.
The segment gross margin was 0.6% for the three months ended September 30, 2021 compared to 5.0% in the same period last year. The fiscal 2022 segment gross margin was negatively impacted by lower than previously forecasted margins on a limited number of projects and a higher percentage of lower margin maintenance work. While recovery of construction overhead costs improved in fiscal 2022, revenue volumes were still not sufficient to allow full recovery. The fiscal 2021 segment gross margin was negatively impacted by the under recovery of construction overhead costs and a lower than previously forecasted margin on a crude oil storage terminal capital project that reached substantial completion in fiscal 2021.
Corporate
Unallocated corporate expenses were $7.6 million during the three months ended September 30, 2021 compared to $6.9 million in the same period last year. The increase is primarily attributable to an increase in legal costs for outstanding litigation (see Item 1. Financial Statements, Note 7 - Commitment and Contingencies, for more information) and third party consulting services related to restructuring activities (see "Operational Update" in this Results of Operations section), partially offset by cost reductions we implemented.
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 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

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 limited notice to proceed ("LNTP"), we include the entire scope of work in our backlog if we conclude that the likelihood of the full project proceeding as high. For all other arrangements, we calculate backlog as the estimated contract amount less revenue recognized as of the reporting date.
The following table provides a summary of changes in our backlog for the three months ended September 30, 2021:

Utility and Power InfrastructureProcess and Industrial FacilitiesStorage and Terminal SolutionsTotal
 (In thousands)
Backlog as of June 30, 2021$170,043 $134,777 $157,741 $462,561 
Project awards64,037 94,562 108,288 266,887 
Revenue recognized(57,204)(43,905)(66,984)(168,093)
Backlog as of September 30, 2021$176,876 $185,434 $199,045 $561,355 
Book-to-bill ratio(1)
1.1 2.2 1.6 1.6 
(1)Calculated by dividing project awards by revenue recognized during the period.

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In the Utility and Power Infrastructure segment, bidding activity is strong in the power delivery portion of the business. During the first quarter of fiscal 2022, we received several key contracts for electrical infrastructure services including substation rebuilds, relay upgrades, and fiber installation. Similarly, our opportunity pipeline for LNG peak shaving projects is building, however those awards, while significant, can be less frequent. In addition, we expect the new $1.2 trillion Infrastructure Investment and Jobs Act recently passed by congress will lead to increased opportunities in this segment.
In the Process and Industrial Facilities segment, client spending related to refinery maintenance operations has returned to near-normal levels. During the first quarter of fiscal 2022, we received a key award for the construction of a thermal vacuum chamber. We continue to see strong demand for thermal vacuum chambers in the coming quarters, as well as increasing opportunities in mining and minerals and chemicals. In addition, we are seeing more opportunities for midstream gas work, including some larger scale projects.
In the Storage and Terminal Solutions segment, oil and natural gas producers have remained cautious with capital spending, which has limited new production volumes and opportunities in crude oil tanks and terminals. However, we received key capital construction contracts for an LNG tank and a storage tank package consisting of seven biodiesel tanks, in the first quarter of fiscal 2022. This segment also includes significant opportunities for storage infrastructure projects related to natural gas, LNG, ammonia, hydrogen, NGLs and other forms of renewable energy.
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 volatility may increase for some segments from time to time when individual project awards are less frequent, but more significant. The level of awards presented above only represents an interim period and may not be indicative of full year awards.
Seasonality and Other Factors
Our operating results can exhibit seasonal fluctuations, especially in our Process and Industrial Facilities segment, for a variety of reasons. Turnarounds and planned outages at customer facilities are typically scheduled in the spring and the fall when the demand for energy is lower. Within the Utility and Power Infrastructure segment, transmission and distribution work is generally scheduled by the public utilities when the demand for electricity is at its lowest. Therefore, revenue volume in the summer months is typically lower than in other periods throughout the year.
Our operations are also impacted by the COVID-19 pandemic, which has led to the loss of productivity, among other issues. Our business can also be affected, both positively and negatively, by seasonal factors such as energy demand or weather conditions including hurricanes, snowstorms, and abnormally low or high temperatures. Some of these seasonal factors may cause some of our offices and projects to close or reduce activities temporarily. In addition to the above noted factors, the general timing of project starts and completions could exhibit significant fluctuations. Accordingly, results for any interim period may not necessarily be indicative of operating results for the full year.
Other factors impacting operating results in all segments come from decreased work volume during holidays, work site permitting delays or customers accelerating or postponing work. The differing types, sizes, and durations of our contracts, combined with their geographic diversity and stages of completion, often results in fluctuations in our operating results.
Our overhead cost structure is generally fixed. Significant fluctuations in revenue usually leads to over or under recovery of fixed overhead costs, which can have a material impact on our gross margin and profitability.

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Table of Contents

Non-GAAP Financial Measures

Adjusted Net Loss

In order to more clearly depict our core profitability, the following tables present our operating results after certain adjustments:

Reconciliation of Adjusted Net Loss and Diluted Loss per Common Share(1)
(In thousands, except per share data)

Three Months Ended
September 30, 2021September 30, 2020
Net loss, as reported$(17,538)$(3,037)
Restructuring costs incurred605 (320)
Accelerated amortization of deferred debt amendment fees1,518 — 
Tax impact of adjustments(546)82 
Adjusted net loss$(15,961)$(3,275)
Loss per fully diluted share, as reported$(0.66)$(0.12)
Adjusted loss per fully diluted share$(0.60)$(0.12)
(1)This table presents non-GAAP financial measures of our adjusted net loss and adjusted diluted loss per common share for the three months ended September 30, 2021 and 2020. The most directly comparable financial measures are net loss and net loss per diluted share, respectively, presented in the Condensed Consolidated Statements of Income. We have presented these non-GAAP financial measures because we believe they more clearly depict our core operating results during the periods presented and provide a more comparable measure of our operating results to other companies considered to be in similar businesses. Since adjusted net loss and adjusted diluted loss per common share are not measures of performance calculated in accordance with GAAP, they should be considered in addition to, rather than as a substitute for, the most directly comparable GAAP financial measures.