Core Insights - Matrix Service Company reported a 14% year-over-year revenue growth in the fourth quarter of fiscal 2025, driven by strong performance in its Utility and Power Infrastructure segment [3][8] - The company anticipates fiscal 2026 revenue growth guidance between $875 million and $925 million, implying a 17% increase at the midpoint compared to fiscal 2025 [2][19] - The total backlog as of June 30, 2025, was $1.4 billion, with project awards totaling $186.3 million in the fourth quarter, resulting in a book-to-bill ratio of 0.9x [15][18] Financial Performance - Fourth quarter fiscal 2025 revenue was $216.4 million, up from $189.5 million in the same quarter of the previous year [8][11] - The company reported a net loss of $(11.3) million, or $(0.40) per share, compared to a net loss of $(4.4) million, or $(0.16) per share, in the fourth quarter of fiscal 2024 [11][26] - Adjusted EBITDA for the fourth quarter was $(4.8) million, down from $0.2 million in the prior year [11][26] Segment Performance - The Storage and Terminal Solutions segment saw a revenue increase of 37% to $96.1 million, while the Utility and Power Infrastructure segment revenue increased by 12% to $73.0 million [12][13] - The Process and Industrial Facilities segment revenue decreased to $47.3 million, primarily due to lower volumes from a completed renewable diesel project [14] Management Commentary - The CEO highlighted continued momentum across large projects and a strong demand in the Utility and Power Infrastructure segment, despite macroeconomic uncertainties affecting project decisions [3][5] - The company is focused on building a foundation for sustained profitable growth in specialty engineering and construction markets, with ongoing organizational alignment efforts [6][8] Cash Flow and Liquidity - Cash flow from operations for the fourth quarter was $40.7 million, with total liquidity improving to $284.5 million as of June 30, 2025, and no outstanding debt [16][17] - The company had $224.6 million in unrestricted cash and cash equivalents, along with $59.8 million available under its credit facility [17] Future Outlook - The company expects fiscal 2026 to be a year of sustained growth and earnings improvement, supported by a robust backlog of multi-year projects [5][18] - The bidding environment remains strong, with a focus on market opportunities that align with the company's core strengths [5][6]

Core Insights - Matrix Service Company will release its fourth quarter and full-year Fiscal 2025 results on September 9, 2025, after market close [1] - A conference call to discuss the financial results and forward outlook is scheduled for September 10, 2025, at 10:30 a.m. Eastern time [2] Company Overview - Matrix Service Company is a leading North American industrial engineering, construction, and maintenance contractor, headquartered in Tulsa, Oklahoma, with offices across the United States, Canada, Australia, and South Korea [4] - The company operates in three key segments: Utility and Power Infrastructure, Process and Industrial Facilities, and Storage and Terminal Solutions [5] Sustainability and Recognition - The company emphasizes sustainability and strong Environment, Social, and Governance (ESG) practices, ranking among the Top Contractors by Engineering-News Record and recognized for Board diversification [6]

Core Insights - The article highlights Matrix Service Company (NASDAQ: MTRX) as a small-cap construction and engineering firm that has seen its stock decline nearly 20% from its highs in mid-February [1]. Group 1: Company Overview - Matrix Service Company is being spotlighted for the first time, indicating a potential investment opportunity in the small-cap sector [1]. - The company is part of a portfolio managed by The Insiders Forum, which focuses on small and mid-cap stocks with significant insider purchases [1]. Group 2: Performance Metrics - The Insiders Forum portfolio has outperformed the Russell 2000 since its launch, suggesting a strong track record in selecting attractive stocks [1]. - The article mentions that the stock is currently off nearly 20% from its highs, which may indicate a buying opportunity for investors [1].

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].

Financial Data and Key Metrics Changes - Revenue growth in Q3 increased by 21% to $200.2 million compared to $166 million in the same quarter last year [21] - 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 Q3 of the previous year [23] - Adjusted EBITDA improved to breakeven in the quarter compared to a loss of $10 million in the same quarter last year [23] - Gross margin increased to $12.9 million or 6.4% in Q3, up from $5.6 million or 3.4% in the prior year [21] Business Line Data and Key Metrics Changes - Storage and Thermal Solutions segment revenue increased by 77% to $96.1 million compared to $54.3 million in the same quarter last year [24] - Utility and Power Infrastructure segment revenue rose by 27% to $58.7 million, benefiting from increased work volume [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’s backlog grew by nearly 8% sequentially to over $1.4 billion, with a book-to-bill ratio of 1.5 [18] - The U.S. LNG export demand is projected to increase by 45%, supporting elevated infrastructure spending [16] - The company has a $7 billion pipeline of project opportunities, indicating strong future growth potential [17] Company Strategy and Development Direction - The company is restructuring to create a more efficient organization, including eliminating senior-level positions and decentralizing business development [8][9] - The decision to exit the Northeast transmission and distribution service line was made due to competitive disadvantages and insufficient project awards [11] - The focus remains on delivering sustainable long-term shareholder value by building a resilient growth-oriented platform [12] Management Comments on Operating Environment and Future Outlook - Management noted that while macroeconomic uncertainties exist, the underlying demand environment remains strong [13] - The company revised its fiscal 2025 revenue guidance down by 10% to $770 million to $800 million, reflecting the impact of exiting the transmission and distribution business [15][31] - Management expressed confidence in achieving a sustainable and profitable growth trajectory moving into fiscal 2026 and beyond [17] Other Important Information - The company is actively collaborating with customers to find cost optimization opportunities and is optimizing its supply chain [14] - The company’s liquidity increased to $247.1 million, with zero debt, providing financial strength to support backlog execution [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 [35][36] Question: What are the potential cost savings from exiting that business? - The exit will result in cost savings and reallocation of resources to other segments, as the transmission and distribution business was operating at a loss [38] Question: Are the revenue adjustments due to deferrals or cancellations? - Management clarified that some revenue was deferred due to delays in contract awards, while some projects were still expected to move forward [39][40] 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 renewed focus on these foundational elements [42][43] Question: How might the geopolitical macroeconomic environment influence customer spending? - Management believes that despite uncertainties, the demand for energy infrastructure will continue to rise, supporting future business growth [50][52]

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]

Business Overview - Matrix Service Company is a specialty engineering and construction company focused on providing engineering, fabrication, construction, and maintenance services[6] - The company has a backlog of $1.4 billion as of March 31, 2025[8] - Approximately 90% of the company's revenue is with recurring customers[6] Financial Performance - Q3 FY25 revenue was $200.2 million, a 21% increase compared to Q3 FY24[54, 63] - The company reported a net loss per share of $(0.12) in Q3 FY25, compared to $(0.53) in Q3 FY24[54, 63] - The company's Q3 FY25 book-to-bill ratio was 1.5x, with project awards totaling $301.2 million[31, 53] Market and Growth Opportunities - The company sees a ~$7 billion opportunity pipeline as of March 31, 2025, with 60% in Storage & Terminal Solutions, 17% in Utility & Power Infrastructure, and 23% in Process & Industrial Facilities[36] - The company anticipates a book-to-bill ratio at or near 1.0x for full-year FY25[39] - The company is targeting a long-term Return on Invested Capital (ROIC) of greater than 12%[46, 61]

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]