Matrix Service Company (MTRX) Conference Call Summary Company Overview - **Company Name**: Matrix Service Company (MTRX) - **Industry**: Engineering and construction services for the oil and gas, utility, and industrial markets - **Key Executives Present**: CEO John Hewitt, CFO Kevin Cavanaugh, Director of Investor Relations Kelly Smythe - **Core Values**: Emphasis on safety and operational excellence [1][4] Financial Highlights - **Recent Performance**: - Q3 fiscal 2025 revenue increased by 21% to $200 million compared to $166 million in Q3 fiscal 2024 [17] - Gross margin improved to 6.4% from 3.4% year-over-year [17] - Net loss reduced to $3.4 million ($0.12 per share) from $14.6 million ($0.53 per share) in the previous year [18] - Adjusted EBITDA reached breakeven compared to a loss of $10 million in the prior year [18] - **Revenue Guidance**: Projected revenue for fiscal 2025 is between $770 million and $800 million, up from $728 million in fiscal 2024 [8] Backlog and Growth Opportunities - **Backlog**: - Current backlog stands at $1.4 billion, with project awards of $301 million in Q3, resulting in a book-to-bill ratio of 1.5 [13] - Backlog has doubled since fiscal 2022, with a significant portion attributed to storage and terminal solutions [13][14] - **Opportunity Pipeline**: - A robust $7 billion pipeline of project opportunities, with many expected to be bid and awarded in the next 12 to 18 months [15] - Approximately 90% of revenue comes from recurring customers, providing long-term visibility for growth [15] Market Position and Strategy - **Market Focus**: - Specializes in complex infrastructure projects, particularly in LNG, ammonia, and renewable fuels [9][24] - Positioned to capitalize on multiyear spending cycles in energy and industrial markets [5][12] - **Competitive Environment**: - Favorable conditions for larger projects with fewer competitors capable of handling specialty vessel work [28] - Shift from crude-related storage to specialty vessel-related storage has been noted [24] Financial Management and Capital Allocation - **Balance Sheet Strength**: - Zero debt with available liquidity of $247 million [19] - Focus on managing working capital effectively, with net cash provided by operating activities of $31.2 million in Q3 [19] - **Capital Allocation Strategy**: - Emphasis on returning to profitability and considering strategic acquisitions or stock buybacks in the future [34] Long-term Goals and Margin Expectations - **Margin Targets**: - Long-term gross margin targets remain in the range of 10% to 12% [21] - Weighted average margin of current backlog is above 10%, supporting long-term margin expectations [26][27] - **Revenue Growth**: - Anticipated revenue growth to continue, with a target of reaching $250 million per quarter to leverage construction overhead effectively [29][30] Conclusion - **Outlook**: - Matrix Service Company is well-positioned for growth with a strong backlog, disciplined capital allocation, and a focus on high-margin projects [20][21] - **Market Confidence**: - Executives express confidence in the company's ability to achieve long-term targets and navigate the evolving market landscape [41]

Core Viewpoint - Matrix Service experienced a significant decline in stock price following disappointing quarterly earnings, with a nearly 9% drop on a day when the broader market remained relatively flat [1] Financial Performance - For fiscal Q3 2025, Matrix Service reported a 21% year-over-year revenue growth, reaching slightly over $200 million [2] - The company narrowed its non-GAAP adjusted net loss to $3.3 million, or $0.12 per share, compared to a loss of $14.6 million in the same quarter last year [2] Revenue Drivers - The revenue increase was attributed to strong performance in storage and terminal solutions, as well as utility and power infrastructure segments, driven by large-scale project execution [3] - Analysts had higher expectations, with a consensus estimate of over $247 million in revenue and a net loss of $0.05 for the quarter [3] Project Backlog - Matrix Service reported a nearly 8% year-over-year growth in project backlog, now totaling $1.4 billion [3] Revenue Guidance - The company lowered its revenue guidance for fiscal 2025 to a range of $770 million to $800 million, down from the previous estimate of $850 million to $900 million [4] - The new guidance, while above fiscal 2024's revenue of $728 million, falls short of the average analyst estimate of $854 million [4] Market Sentiment - The gap between expected performance and actual results raises concerns, leading to a cautious outlook on the stock until stronger improvement is demonstrated [5]

Revenue and Profitability - Revenue increased by $34.1 million, or 21%, to $200.2 million for the three months ended March 31, 2025, driven by higher volumes in the Storage and Terminal Solutions and Utility and Power Infrastructure segments [81]. - Gross profit rose by $7.3 million, or 130%, with a gross margin of 6.4% for Q3 fiscal 2025, compared to 3.4% in Q3 fiscal 2024 [82]. - Total revenue for the three months ended March 31, 2025, increased by $34.1 million, or 21%, to $200.2 million compared to $166.0 million in the same period last year [85]. - Storage and Terminal Solutions revenue rose by $41.8 million, or 77%, driven by increased work volume for specialty vessel and LNG storage projects [86]. - Utility and Power Infrastructure revenue increased by $12.6 million, or 27%, primarily due to higher work volume for natural gas peak shaving projects [88]. - Process and Industrial Facilities revenue decreased by $20.2 million, or 31%, attributed to lower revenue volumes from the completion of a large renewable diesel project [90]. - Gross profit for the nine months ended March 31, 2025, increased by $3.5 million, or 13%, with a gross margin of 5.7% compared to 5.2% in the same period last year [94]. - Utility and Power Infrastructure gross profit surged by $4.1 million, or 293%, with a gross margin of 9.4% for the three months ended March 31, 2025, compared to 3.1% in the same period last year [89]. - Storage and Terminal Solutions gross profit increased by $6.6 million, or 72%, with a gross margin of 5.8% for the nine months ended March 31, 2025, compared to 4.4% in the same period last year [102]. - Total operating loss for the nine months ended March 31, 2025, improved by $2.6 million, or 11%, to $22.2 million compared to $24.8 million in the same period last year [93]. - Process and Industrial gross profit decreased by $7.4 million, or 55%, for the nine months ended March 31, 2025, with a segment gross margin of 5.7% compared to 6.4% in the same period last year [106]. Project Awards and Backlog - Project awards totaled $301.2 million in the current quarter, resulting in a book-to-bill ratio of 1.5x, indicating strong demand across segments [68]. - Backlog increased to $1.41 billion as of March 31, 2025, up from $1.31 billion at the end of the previous quarter [72]. - The Storage and Terminal Solutions segment booked $204.8 million in project awards during Q3 fiscal 2025, with significant opportunities in LNG and ammonia projects [76]. - The Utility and Power Infrastructure segment secured $37.7 million in project awards during the same period, with a promising pipeline for LNG peak shaving projects [77]. - The Process and Industrial Facilities segment achieved $58.7 million in project awards, including a five-year renewal of a refinery maintenance contract [78]. Cash Flow and Liquidity - Unrestricted cash and cash equivalents totaled $185.5 million as of March 31, 2025, with total liquidity of $247.1 million, an increase of $35.4 million during the third quarter of fiscal 2025 [108]. - Cash flows provided by operating activities were $76.8 million for the nine months ended March 31, 2025, compared to $25.6 million for the same period last year [115]. - Cash flows used in investing activities were $5.2 million for the nine months ended March 31, 2025, primarily for capital expenditures related to a fabrication facility and construction equipment [118]. - Financing activities used $1.1 million of cash in the nine months ended March 31, 2025, mainly for the repurchase of common stock for tax payments on equity-based compensation [120]. Interest Income and Expenses - Interest income surged by 820% to $1.5 million, reflecting improved cash management strategies [81]. - Interest income increased by $4.2 million, or 879%, primarily due to an increase in cash balance [96]. - Selling, general and administrative expenses increased by $0.8 million, or 2%, primarily due to an increase in salaries and wages [95]. Business Strategy and Market Conditions - The company is consolidating certain business aspects to enhance performance and align with market needs, focusing on long-term shareholder value [69]. - There have been no material changes in critical accounting policies and estimates from the fiscal 2024 Annual Report [125]. - The company reported no material changes in market risk compared to the fiscal year ended June 30, 2024 [126]. Shareholder Information - The company has an asset-based credit agreement with a maximum loan amount of $90.0 million under the ABL Facility, which matures on September 9, 2026 [113]. - As of March 31, 2025, the borrowing base under the ABL Facility was $66.3 million, with no borrowings outstanding and $4.8 million in letters of credit [114]. - The company has never paid cash dividends on common stock, and future dividend payments will depend on financial conditions and terms of the ABL Facility [122]. - As of March 31, 2025, the company had 281,365 treasury shares, which will be utilized for equity awards and the Employee Stock Purchase Plan [124].

Matrix Service Company (MTRX) Q3 2025 Earnings Call May 08, 2025 10:30 AM ET Company Participants Kellie Smythe - Senior Director of Investor RelationsJohn Hewitt - CEO, President & DirectorKevin Cavanah - VP of Finance, CFO & Treasurer Conference Call Participants John Franzreb - Senior Equity AnalystBrent Thielman - MD & Senior Research Analyst Operator Good morning, and welcome to the Matrix Service Company Conference Call to discuss Results for the Third Quarter of Fiscal twenty twenty five. Currently, ...

Financial Data and Key Metrics Changes - Revenue for Q3 2025 increased by 21% to $200.2 million compared to $166 million in Q3 2024, driven by growth in storage and utility segments [21][31] - Gross margin improved to $12.9 million or 6.4% in Q3 2025 from $5.6 million or 3.4% in Q3 2024 [21][22] - The company reported a net loss of $3.4 million or $0.12 per share, an improvement from a net loss of $14.6 million or $0.53 per share in the same quarter last year [23] Business Line Data and Key Metrics Changes - Storage and Thermal Solutions segment revenue surged by 77% to $96.1 million in Q3 2025 from $54.3 million in Q3 2024, driven by specialty vessel projects [23][24] - Utility and Power Infrastructure segment revenue rose by 27% to $58.7 million compared to $46.1 million in the prior year, benefiting from natural gas peak shaving projects [25] - Process and Industrial Facilities segment revenue decreased to $45.4 million from $65.6 million, primarily due to the completion of a large renewable diesel project [26] Market Data and Key Metrics Changes - The company anticipates a 45% increase in U.S. LNG export demand, supporting elevated energy infrastructure spending [16] - The EIA projects an 8% increase in natural gas demand over the next six years, indicating strong growth potential in the electrical infrastructure market [17] Company Strategy and Development Direction - The company is restructuring to create a more efficient organization, including eliminating senior positions and decentralizing business development [8][11] - Matrix is winding down its Northeast transmission and distribution service line due to competitive disadvantages, while continuing to focus on electrical infrastructure services [12][13] - The strategic focus remains on delivering sustainable long-term shareholder value through a resilient growth-oriented platform [13] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic uncertainties due to U.S. trade and environmental policies, but believes the underlying demand environment remains strong [14] - The company revised its fiscal 2025 revenue guidance down by 10% to $770 million to $800 million, while still expecting strong year-over-year growth [15][31] - Management expressed confidence in achieving a sustainable and profitable growth trajectory, supported by a $7 billion pipeline of project opportunities [17] Other Important Information - The company reported a backlog increase of nearly 8% sequentially to over $1.4 billion, with a book-to-bill ratio of 1.5 [18] - Cash flow from operating activities was $31.2 million for Q3 and $76.8 million year-to-date, with available liquidity increasing to $247.1 million [30] Q&A Session Summary Question: Can you walk us through the decision-making process to exit the transmission and distribution business? - Management indicated that competitive dynamics made it difficult to win work at acceptable margins, leading to the decision to wind down the business without a positive backlog [35][36] Question: What are the potential cost savings from exiting the business? - The exit will result in cost savings and reallocation of resources to the electrical instrumentation business, with the business operating at a loss previously [38] Question: Are the revenue guidance adjustments due to deferrals or cancellations? - Management clarified that some revenue was deferred due to delays in contract negotiations and project awards, but they expect strong spending on energy infrastructure in the coming years [39][42] Question: What is the opportunity profile for smaller projects as the company reengages in them? - Management emphasized the importance of smaller projects for building client relationships and strengthening execution teams, indicating a need to pursue these opportunities more effectively [43][44] Question: How might the geopolitical macroeconomic environment influence customer spending? - Management expressed confidence that despite uncertainties, the global demand for energy will continue to rise, supporting infrastructure investments [51][53]

INVESTOR PRESENTATION Q3 FY25 Results | May 2025 Safe Harbor Statement This presentation contains certain forward-looking statements concerning Matrix Service Company's operations, economic performance and management's best judgment as to what may occur in the future. The actual results for the current and future periods and other corporate developments will depend upon a number of economic, competitive and other influences, many of which are beyond the control of the Company, and any one of which, or a com ...

Core Viewpoint - Matrix Service (MTRX) reported a quarterly loss of $0.12 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.05, marking an earnings surprise of -140% [1][2] Financial Performance - The company posted revenues of $200.16 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 9.06%, compared to year-ago revenues of $166.01 million [2] - Over the last four quarters, Matrix Service has surpassed consensus EPS estimates two times [2] Stock Performance - Matrix Service shares have increased by approximately 0.9% since the beginning of the year, while the S&P 500 has declined by -4.7% [3] - The current consensus EPS estimate for the upcoming quarter is $0.28 on revenues of $287.6 million, and for the current fiscal year, it is -$0.26 on revenues of $860.4 million [7] Industry Outlook - The Oil and Gas - Mechanical and Equipment industry, to which Matrix Service belongs, is currently ranked in the bottom 15% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Matrix Service's stock performance [5][6]

Financial Performance - Total revenue for Q3 fiscal 2025 was $200.2 million, a 21% increase from $166.0 million in Q3 fiscal 2024[6] - The company reported a net loss of $(3.4) million, or $(0.12) per share, compared to a net loss of $(14.6) million, or $(0.53) per share in the prior year[9] - Adjusted EBITDA was break-even in Q3 fiscal 2025, an improvement from $(10.0) million in Q3 fiscal 2024[9] - Total revenue for the three months ended March 31, 2025, was $200,161,000, a 20.5% increase from $166,013,000 in the same period of 2024[37] - Operating income for the three months ended March 31, 2025, was a loss of $5,000,000, an improvement from a loss of $14,370,000 in the same period of 2024[37] - Adjusted net loss for the nine months ended March 31, 2025, was $18.066 million, compared to $25.141 million for the same period in 2024[49] - The company reported a net loss of $18.190 million for the nine months ended March 31, 2025, an improvement from a net loss of $20.599 million for the same period in 2024[49] Revenue Segments - Revenue from the Storage and Terminal Solutions segment increased 77% to $96.1 million, while the Utility and Power Infrastructure segment revenue rose 27% to $58.7 million[10][11] Backlog and Project Awards - Total backlog increased to $1.4 billion, up 7.7% from the previous quarter, with project awards totaling $301.2 million in Q3 fiscal 2025[5] - The backlog as of March 31, 2025, increased to $1.412 billion, up from $1.311 billion as of December 31, 2024[42] - The book-to-bill ratio for the quarter was 1.5x, bringing the year-to-date ratio to 1.0x[5] - The book-to-bill ratio for the total backlog was 1.5x for the three months ended March 31, 2025, indicating strong project awards relative to revenue recognized[42] - Project awards for the nine months ended March 31, 2025, totaled $539.707 million, contributing to the increase in backlog[43] Liquidity and Debt - As of March 31, 2025, the company had total liquidity of $247.1 million with no outstanding debt[16] - Cash and cash equivalents increased to $178,374,000 as of March 31, 2025, from $74,857,000 at the end of March 2024, marking a 138% increase[34] Expenses and Margins - SG&A expenses decreased to $17.7 million in Q3 fiscal 2025 from $19.9 million in Q3 fiscal 2024[8] - Gross margin improved to $12.9 million, or 6.4%, compared to $5.6 million, or 3.4% in the prior year[7] - The company reported a gross profit margin of approximately 6.4% for the three months ended March 31, 2025, compared to 3.4% for the same period in 2024[37] Assets and Liabilities - Total assets increased to $613,740,000 as of March 31, 2025, compared to $451,351,000 on June 30, 2024, representing a growth of 36%[30] - Current liabilities rose to $442,224,000 as of March 31, 2025, up from $265,115,000 on June 30, 2024, indicating a 67% increase[32] - Total stockholders' equity decreased to $150,710,000 as of March 31, 2025, down from $164,182,000 on June 30, 2024, a decline of 8.2%[32] - The company experienced a significant increase in accounts receivable, net of allowance for credit losses, which rose to $205,291,000 as of March 31, 2025, compared to $138,987,000 on June 30, 2024, a 47.5% increase[30] Restructuring and Interest Expense - The company incurred restructuring costs of $124,000 during the three months ended March 31, 2025[54] - Interest expense for the nine months ended March 31, 2025, was $368,000, compared to $787,000 for the same period in 2024[54]

Core Insights - Matrix Service Company reported strong revenue growth in the third quarter of fiscal 2025, driven by increased activity in its Storage & Terminal Solutions and Utility & Power Infrastructure segments, achieving a revenue of $200.2 million, up 21% from $166.0 million in the same quarter of the previous year [5][9] - The company experienced a book-to-bill ratio of 1.5x for the quarter, indicating strong demand in core energy and industrial markets, with total project awards of $301.2 million [7][13] - Despite a reduction in fiscal year revenue guidance by 10% due to macroeconomic uncertainties, the company maintains a robust backlog of $1.4 billion and a project pipeline valued at $7 billion, suggesting continued growth potential [3][4][18] Financial Summary - Revenue for the third quarter of fiscal 2025 was $200.2 million, a 21% increase from $166.0 million in the prior year [5] - Gross margin improved to $12.9 million (6.4%) compared to $5.6 million (3.4%) in the same quarter of fiscal 2024, attributed to better performance in Utility and Power Infrastructure and Process and Industrial Facilities segments [6] - The company reported a net loss of $(3.4) million or $(0.12) per share, an improvement from a net loss of $(14.6) million or $(0.53) per share in the prior year [9] Segment Performance - The Storage and Terminal Solutions segment saw revenue increase by 77% to $96.1 million, driven by higher volumes in specialty vessel and LNG storage projects, although gross margin slightly decreased to 3.9% [10] - The Utility and Power Infrastructure segment's revenue rose 27% to $58.7 million, with gross margin improving significantly to 9.4% due to effective project execution [11] - The Process and Industrial Facilities segment experienced a revenue decline to $45.4 million, primarily due to the completion of a large renewable diesel project, but gross margin improved to 8.3% [12] Backlog and Project Awards - The total backlog increased by 7.7% to $1.4 billion as of March 31, 2025, with project awards totaling $301.2 million for the quarter [7][13] - The book-to-bill ratio for the quarter was 1.5x, with significant contributions from the Storage and Terminal Solutions segment, which had a book-to-bill ratio of 2.1x [13][42] Financial Position - As of March 31, 2025, the company had total liquidity of $247.1 million, consisting of $185.5 million in unrestricted cash and cash equivalents, with no outstanding debt [16] - Cash flow from operations for the quarter was $31.2 million, reflecting strong scheduled payments from customers [14] Fiscal Year 2025 Guidance - The company updated its fiscal year 2025 revenue guidance to a range of $770 million to $800 million, down from the previous guidance of $850 million to $900 million, due to external uncertainties affecting project timelines [18]

Core Viewpoint - Matrix Service Company will release its third quarter Fiscal 2025 results on May 7, 2025, and will host a conference call on May 8, 2025, to discuss the financial results and future outlook [1]. Company Overview - Matrix Service Company (Nasdaq: MTRX) is a leading provider of engineering and construction services focused on the energy and industrial markets, emphasizing safety, quality, and integrity [3]. - The company operates in three key segments: Utility and Power Infrastructure, Process and Industrial Facilities, and Storage and Terminal Solutions [4]. - Matrix Service Company is headquartered in Tulsa, Oklahoma, with additional offices in the United States, Canada, Australia, and South Korea [4]. Conference Call Details - Investors can access the live audio-visual webcast of the conference call through the company's website, and a replay will be available within one hour after the call [2].