0000318833-26-000024
SEC filingRevenue grew 8.3% to $215.1M, but operating loss and negative free cash flow persist, though significantly improved year-over-year.
Revenue for the first quarter of fiscal 2026 increased 8.3% to $215.1 million compared to $198.7 million in the prior year period. The growth was primarily driven by higher demand in the Inspection and Heat Treating (IHT) segment, which benefited from increased U.S. turnaround and capital project activity. The Mechanical Services (MS) segment also contributed to the revenue increase.
Operating loss improved 43.8% to -$3.4 million from -$6.0 million in the prior year. The improvement was driven by the higher revenue and effective cost management, partially offset by increased selling, general and administrative expenses. Gross profit increased 6.1% to $50.2 million, with gross margin of 23.3%.
Net cash used in operating activities improved to -$9.1 million from -$28.7 million in the prior year, driven by working capital improvements. Capital expenditures were $2.4 million, resulting in free cash flow of -$11.5 million. The company continues to manage its liquidity needs for working capital, capital expenditures, and operations.
The company expects that any further insurance claims will be fully funded by its insurance policies. The effective tax rate decreased due to the mix of pretax income in non-valuation allowance jurisdictions and pretax losses in valuation allowance jurisdictions, along with changes in permanent differences.