Matrix Service pany(MTRX) - 2025 Q4 - Annual Results

Executive Summary & Key Highlights Fiscal Year 2025 Performance Overview Matrix Service Company reported its Q4 and full-year fiscal 2025 results, highlighting a 14% year-over-year revenue growth in Q4 and improved fixed cost absorption, alongside a total backlog of $1.4 billion Q4 and Full-Year Fiscal 2025 Key Financials | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :-------------------------- | :-------- | :-------- | :------- | :------- | | Revenue | $216.4M | $189.5M | $769.3M | $728.2M | | Net loss per share | $(0.40) | $(0.16) | $(1.06) | $(0.91) | | Adjusted net loss per share | $(0.28) | $(0.14) | $(0.93) | $(1.06) | | Adjusted EBITDA | $(4.8)M | $0.2M | $(12.9)M | $(10.5)M | | Cash flow from operations | $40.7M | N/A | $117.5M | N/A | | Project awards | $186.3M | N/A | $726.0M | N/A | | Book-to-bill ratio | 0.9x | N/A | 0.9x | N/A | | Total backlog (as of June 30, 2025) | N/A | N/A | N/A | $1.4B | | Liquidity (as of June 30, 2025) | N/A | N/A | N/A | $284.5M | | Outstanding debt | N/A | N/A | N/A | $0 | Fiscal Year 2026 Revenue Guidance Matrix Service Company issued revenue guidance for fiscal year 2026, projecting significant year-over-year growth Fiscal Year 2026 Revenue Guidance | Metric | Guidance Range | | :----- | :------------- | | Revenue | $875 - $925 million | | Implied Growth (midpoint) | 17% YoY | Management Commentary & Strategic Outlook Management highlighted continued momentum in Q4 FY2025, driven by large projects and strong demand in Utility and Power Infrastructure. Despite macroeconomic uncertainties, the company secured multiple project awards and is focused on sustained profitable growth through organizational realignment, streamlined business, and disciplined capital allocation - Q4 momentum from large projects drove 14% YoY revenue growth and improved fixed cost absorption[3] - Project awards grew 6% YoY, primarily from the Utility and Power Infrastructure segment[3] - Net income in Q4 was negatively impacted by $14.9 million due to labor cost overruns, a contract dispute reserve, an unfavorable court decision, and restructuring costs[5] - FY2026 is expected to be a year of sustained growth and earnings improvement, with revenue growth of approximately 17% at the midpoint of guidance, supported by robust backlog (85% of midpoint)[6] - Strategic focus on building a strong foundation for sustained profitable growth in specialty E&C markets, including organizational flattening, streamlining, and prioritizing high-growth market opportunities[7] Fourth Quarter Fiscal 2025 Financial Review Consolidated Financial Summary The company's Q4 FY2025 saw revenue growth driven by Storage and Terminal Solutions and Utility and Power Infrastructure, but gross margin declined due to project-specific issues and a legacy project adjustment. Net loss widened, and Adjusted EBITDA turned negative, significantly impacted by discrete items Revenue and Gross Margin Q4 FY2025 revenue increased by 14% YoY to $216.4 million, primarily from Storage and Terminal Solutions and Utility and Power Infrastructure. However, gross margin decreased to 3.8% from 6.6% YoY, impacted by lower labor productivity on a crude terminal project and a $6.4 million adjustment for a legacy project in arbitration Q4 FY2025 Revenue and Gross Margin | Metric | Q4 FY2025 | Q4 FY2024 | Change (YoY) | | :---------------- | :-------- | :-------- | :----------- | | Revenue | $216.4M | $189.5M | +14% | | Gross Margin | $8.1M (3.8%) | $12.4M (6.6%) | -2.8 percentage points | - Revenue increase attributed to higher volumes in Storage and Terminal Solutions and Utility and Power Infrastructure, partially offset by Process and Industrial Facilities[8] - Revenue negatively impacted by $6.4 million (3.0%) due to lowered recovery expectations on a legacy project[8] - Gross margin negatively impacted by a $6.4 million adjustment for a legacy project and lower labor productivity on a crude terminal project[9] Operating Expenses SG&A expenses remained relatively stable in Q4 FY2025, with an increase in cash-settled stock compensation offset by lower overhead. Restructuring costs of $3.4 million were incurred as part of ongoing business streamlining efforts Q4 FY2025 Operating Expenses | Metric | Q4 FY2025 | Q4 FY2024 | | :-------------------- | :-------- | :-------- | | SG&A expenses | $17.6M | $17.3M | | Restructuring expenses | $3.4M | N/A | - Cash-settled stock compensation increased by $1.7 million due to stock price increase[10] Net Loss and Adjusted EBITDA The company reported a wider net loss and negative Adjusted EBITDA in Q4 FY2025 compared to the prior year, with discrete items significantly impacting both metrics Q4 FY2025 Net Loss and Adjusted EBITDA | Metric | Q4 FY2025 | Q4 FY2024 | | :-------------------------- | :-------- | :-------- | | Net Loss | $(11.3)M | $(4.4)M | | Net Loss per share | $(0.40) | $(0.16) | | Adjusted Net Loss | $(7.8)M | $(3.9)M | | Adjusted Net Loss per share | $(0.28) | $(0.14) | | Adjusted EBITDA | $(4.8)M | $0.2M | - Discrete items negatively impacted net income by $14.9 million and Adjusted EBITDA by $11.5 million[11] Segment Performance Segment performance in Q4 FY2025 showed mixed results: Storage and Terminal Solutions saw strong revenue growth but negative gross margin due to project issues; Utility and Power Infrastructure achieved revenue growth and improved gross margin; Process and Industrial Facilities experienced revenue and gross margin declines due to project completions and mix of work Storage and Terminal Solutions This segment's revenue increased significantly by 37% in Q4 FY2025, driven by specialty vessel and LNG storage projects. However, gross margin turned negative due to lower labor productivity on a crude terminal project and a $6.4 million reduction from a legacy project in arbitration Q4 FY2025 Storage and Terminal Solutions Performance | Metric | Q4 FY2025 | Q4 FY2024 | Change (YoY) | | :---------------- | :-------- | :-------- | :----------- | | Revenue | $96.1M | $70.0M | +37% | | Gross Margin | (1.1)% | 3.1% | -4.2 percentage points | - Revenue increase due to increased volume of work for specialty vessel and LNG storage projects[12] - Gross margin impacted by $3.8 million reduction from lower labor productivity on a crude terminal project and $6.4 million decrease from a legacy project[13] Utility and Power Infrastructure The Utility and Power Infrastructure segment reported a 12% revenue increase in Q4 FY2025, benefiting from natural gas peak shaving projects. Gross margin significantly improved to 9.1% due to strong project execution and better overhead absorption, despite a charge from an unfavorable court decision Q4 FY2025 Utility and Power Infrastructure Performance | Metric | Q4 FY2025 | Q4 FY2024 | Change (YoY) | | :---------------- | :-------- | :-------- | :----------- | | Revenue | $73.0M | $65.3M | +12% | | Gross Margin | 9.1% | 4.2% | +4.9 percentage points | - Revenue increase from higher volume of work associated with natural gas peak shaving projects[14] - Gross margin improvement due to strong project execution and improved construction overhead cost absorption[14] - Gross margin impacted by a $1.3 million charge related to an unfavorable court decision[14] Process and Industrial Facilities This segment experienced a revenue decrease in Q4 FY2025, primarily due to the completion of a large renewable diesel project and lower volumes for thermal vacuum chambers. Gross margin also declined significantly due to changes in work mix Q4 FY2025 Process and Industrial Facilities Performance | Metric | Q4 FY2025 | Q4 FY2024 | Change (YoY) | | :---------------- | :-------- | :-------- | :----------- | | Revenue | $47.3M | $54.2M | -12.7% | | Gross Margin | 5.9% | 15.4% | -9.5 percentage points | - Revenue decrease due to completion of a large renewable diesel project and lower thermal vacuum chamber volumes, partially offset by refinery work[15] - Gross margin decrease attributed to mix of work[15] Backlog and Project Awards As of June 30, 2025, the company's total backlog stood at $1.4 billion. Q4 FY2025 project awards totaled $186.3 million, resulting in a book-to-bill ratio of 0.9x for both the quarter and the trailing twelve months, with the Utility and Power Infrastructure segment showing strong award activity Backlog and Project Awards (as of June 30, 2025) | Metric | Value | | :-------------------------- | :---------- | | Total backlog | $1.4 billion | | Q4 FY2025 Project awards | $186.3 million | | Q4 FY2025 Book-to-bill ratio | 0.9x | | Trailing twelve-month book-to-bill ratio | 0.9x | | Utility and Power Infrastructure Q4 book-to-bill ratio | 1.7x | Awards, Book-to-Bill, and Backlog by Segment (Q4 and FY2025) | Segment | Q4 FY2025 Awards | Q4 FY2025 Book-to-Bill | FY2025 Awards | FY2025 Book-to-Bill | Backlog as of June 30, 2025 | | :------------------------------ | :----------------- | :--------------------- | :---------------- | :-------------------- | :-------------------------- | | Storage and Terminal Solutions | $18,415 | 0.2x | $337,731 | 0.9x | $770,095 | | Utility and Power Infrastructure | $121,885 | 1.7x | $215,378 | 0.9x | $346,384 | | Process and Industrial Facilities | $46,020 | 1.0x | $172,918 | 1.1x | $265,629 | | Total | $186,320 | 0.9x | $726,027 | 0.9x | $1,382,108 | Financial Position and Liquidity Matrix Service Company generated $40.7 million in net cash from operating activities in Q4 FY2025. The company's liquidity improved to $284.5 million as of June 30, 2025, comprising unrestricted cash and credit facility availability, with no outstanding debt Financial Position Highlights (as of June 30, 2025) | Metric | Value | | :------------------------------------ | :---------- | | Net cash provided by operating activities (Q4 FY2025) | $40.7 million | | Total liquidity | $284.5 million | | Unrestricted cash and cash equivalents | $224.6 million | | Borrowing availability under credit facility | $59.8 million | | Outstanding debt | $0 | Fiscal Year 2026 Financial Outlook Revenue Guidance Matrix Service Company provided its revenue guidance for fiscal year 2026, projecting revenue between $875 million and $925 million, representing a 14% to 20% increase from fiscal year 2025. This guidance is subject to various market and policy factors Fiscal Year 2026 Revenue Guidance | Metric | FY2025 Actual | FY2026 Guidance | % Increase | | :----- | :------------ | :-------------- | :--------- | | Revenue | $769.3 million | $875 - $925 million | 14% - 20% | - Guidance reflects current expectations and beliefs, subject to factors like project award timing, market fundamentals, client decision-making, and federal trade/environmental policy uncertainty[19] Corporate Information Conference Call Details Matrix Service Company will host a conference call on September 10, 2025, to discuss earnings, with live audio-visual webcast and dial-in options available for investors, and a replay accessible afterward - Conference call date: Wednesday, September 10, 2025, at 10:30 a.m. (Eastern) / 9:30 a.m. (Central)[21] - Webcast link: https://edge.media-server.com/mmc/p/kpvqqb4d and Company's website[22] - Dial-in registration: https://register-conf.media-server.com/register/BI698998b7627243029abf6987cd1d9aa8. Replay available on Investor Relations page[23][24] About Matrix Service Company Matrix Service Company is a leading specialty engineering and construction firm providing infrastructure solutions to energy and industrial markets, known for safety, quality, and integrity. Headquartered in Tulsa, Oklahoma, it operates globally and reports financial results across three key segments: Utility and Power Infrastructure, Process and Industrial Facilities, and Storage and Terminal Solutions - Leading specialty engineering and construction company providing infrastructure solutions to energy and industrial markets[25] - Headquartered in Tulsa, Oklahoma, with offices in the US, Canada, Australia, and South Korea[26] - Operates in three key segments: Utility and Power Infrastructure, Process and Industrial Facilities, and Storage and Terminal Solutions[26] Forward-Looking Statements The release contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ materially from current expectations. The company undertakes no obligation to update this information, except as required by law - Statements are made in reliance upon safe harbor provisions of the Private Securities Litigation Reform Act of 1995[27] - Future events involve risks and uncertainties that may cause actual results to differ materially[27] - Company undertakes no obligation to update information, except as required by law[27] Investor Relations Contact Contact information for investor relations is provided for inquiries - Contact: Kellie Smythe, Senior Director, Investor Relations, Marketing, Communications & Sustainability[28][29] - Email: ksmythe@matrixservicecompany.com[29] Consolidated Financial Statements Consolidated Statements of Income This section presents the consolidated statements of income for the three months and fiscal years ended June 30, 2025, and 2024, detailing revenue, cost of revenue, gross profit, operating expenses, and net loss Consolidated Statements of Income (In thousands, except per share data) | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :----------------------------------- | :-------- | :-------- | :------- | :------- | | Revenue | $216,377 | $189,499 | $769,286 | $728,213 | | Cost of revenue | $208,255 | $177,052 | $729,609 | $687,740 | | Gross profit | $8,122 | $12,447 | $39,677 | $40,473 | | Selling, general and administrative expenses | $17,581 | $17,293 | $71,173 | $70,085 | | Restructuring costs | $3,448 | $501 | $3,572 | $501 | | Operating loss | $(12,907) | $(5,347) | $(35,068) | $(30,113) | | Net loss | $(11,272) | $(4,377) | $(29,462) | $(24,976) | | Basic loss per common share | $(0.40) | $(0.16) | $(1.06) | $(0.91) | | Diluted loss per common share | $(0.40) | $(0.16) | $(1.06) | $(0.91) | Consolidated Balance Sheets This section provides the consolidated balance sheets as of June 30, 2025, and 2024, detailing assets, liabilities, and stockholders' equity Consolidated Balance Sheets (In thousands) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------------------------------- | :-------------- | :-------------- | | Assets: | | | | Cash and cash equivalents | $224,641 | $115,615 | | Accounts receivable, net of allowance for credit losses | $154,994 | $138,987 | | Costs and estimated earnings in excess of billings on uncompleted contracts | $29,764 | $33,893 | | Inventories | $5,917 | $8,839 | | Income taxes receivable | $110 | $180 | | Prepaid expenses and other current assets | $4,347 | $4,077 | | Total current assets | $419,773 | $301,591 | | Restricted cash | $25,000 | $25,000 | | Property, plant and equipment, net | $42,097 | $43,498 | | Operating lease right-of-use assets | $17,827 | $19,150 | | Goodwill | $29,047 | $29,023 | | Other intangible assets, net of accumulated amortization | $555 | $1,651 | | Other assets, non-current | $65,957 | $31,438 | | Total assets | $600,256 | $451,351 | | Liabilities and stockholders' equity: | | | | Accounts payable | $80,453 | $65,629 | | Billings on uncompleted contracts in excess of costs and estimated earnings | $323,593 | $171,308 | | Accrued wages and benefits | $18,961 | $15,878 | | Accrued insurance | $5,310 | $4,605 | | Operating lease liabilities (current) | $4,441 | $3,739 | | Other accrued expenses | $3,617 | $3,956 | | Total current liabilities | $436,375 | $265,115 | | Deferred income taxes | $25 | $25 | | Operating lease liabilities (non-current) | $16,986 | $19,156 | | Other liabilities, non-current | $4,154 | $2,873 | | Total liabilities | $457,540 | $287,169 | | Total stockholders' equity | $142,716 | $164,182 | | Total liabilities and stockholders' equity | $600,256 | $451,351 | Condensed Consolidated Statements of Cash Flows This section presents the condensed consolidated statements of cash flows for the three months and fiscal years ended June 30, 2025, and 2024, outlining cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (In thousands) | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :------------------------------------------ | :-------- | :-------- | :------- | :------- | | Net cash provided by operating activities | $40,708 | $47,004 | $117,471 | $72,571 | | Net cash used by investing activities | $(2,257) | $(791) | $(7,445) | $(945) | | Net cash provided (used) by financing activities | $46 | $(48) | $(1,040) | $(10,372) | | Net increase in cash and cash equivalents | $39,100 | $45,957 | $109,026 | $60,803 | | Cash, cash equivalents and restricted cash, end of period | $249,641 | $140,615 | $249,641 | $140,615 | Supplemental Financial Data Segment Results of Operations (Detailed) This section provides a detailed breakdown of revenue, cost of revenue, gross profit/loss, SG&A, restructuring costs, and operating income/loss for each of the three operating segments (Storage and Terminal Solutions, Utility and Power Infrastructure, Process and Industrial Facilities) and Corporate for both the three months and fiscal years ended June 30, 2025, and 2024 Segment Results of Operations (Three Months Ended June 30, 2025, In thousands) | Segment | Total Revenue | Gross Profit (Loss) | Operating Income (Loss) | | :------------------------------ | :------------ | :------------------ | :---------------------- | | Storage and Terminal Solutions | $96,091 | $(1,045) | $(7,426) | | Utility and Power Infrastructure | $73,027 | $6,662 | $3,778 | | Process and Industrial Facilities | $47,259 | $2,784 | $(62) | | Corporate | $— | $(279) | $(9,197) | | Total | $216,377 | $8,122 | $(12,907) | Segment Results of Operations (Fiscal Year Ended June 30, 2025, In thousands) | Segment | Total Revenue | Gross Profit (Loss) | Operating Income (Loss) | | :------------------------------ | :------------ | :------------------ | :---------------------- | | Storage and Terminal Solutions | $365,891 | $14,655 | $(9,206) | | Utility and Power Infrastructure | $248,691 | $16,915 | $3,834 | | Process and Industrial Facilities | $154,704 | $8,910 | $479 | | Corporate | $— | $(803) | $(30,175) | | Total | $769,286 | $39,677 | $(35,068) | Backlog Changes (Detailed) This section defines backlog and provides detailed tables summarizing changes in backlog by segment for the three months and fiscal year ended June 30, 2025, including project awards and revenue recognized - Backlog is defined as the total dollar amount of revenue expected from awarded work (signed contract, limited notice to proceed, or other firm assurance)[41] Backlog Changes (Three Months Ended June 30, 2025, In thousands) | Segment | Backlog as of March 31, 2025 | Project Awards | Revenue Recognized | Backlog as of June 30, 2025 | Book-to-Bill Ratio | | :------------------------------ | :--------------------------- | :------------- | :----------------- | :-------------------------- | :----------------- | | Storage and Terminal Solutions | $847,771 | $18,415 | $(96,091) | $770,095 | 0.2x | | Utility and Power Infrastructure | $297,526 | $121,885 | $(73,027) | $346,384 | 1.7x | | Process and Industrial Facilities | $266,868 | $46,020 | $(47,259) | $265,629 | 1.0x | | Total | $1,412,165 | $186,320 | $(216,377) | $1,382,108 | 0.9x | Backlog Changes (Fiscal Year Ended June 30, 2025, In thousands) | Segment | Backlog as of June 30, 2024 | Project Awards | Other Adjustment | Revenue Recognized | Backlog as of June 30, 2025 | Book-to-Bill Ratio | | :------------------------------ | :-------------------------- | :------------- | :--------------- | :----------------- | :-------------------------- | :----------------- | | Storage and Terminal Solutions | $798,255 | $337,731 | $— | $(365,891) | $770,095 | 0.9x | | Utility and Power Infrastructure | $379,697 | $215,378 | $— | $(248,691) | $346,384 | 0.9x | | Process and Industrial Facilities | $251,521 | $172,918 | $(4,106) | $(154,704) | $265,629 | 1.1x | | Total | $1,429,473 | $726,027 | $(4,106) | $(769,286) | $1,382,108 | 0.9x | - Backlog was reduced by $4.1 million due to the closure of a customer's facility in the Process and Industrial Facilities segment[43][44] Non-GAAP Financial Measures This section defines and reconciles non-GAAP financial measures, Adjusted Net Loss and Adjusted EBITDA, to their most directly comparable GAAP measures. It also outlines the limitations of these non-GAAP metrics Adjusted Net Loss Reconciliation Adjusted Net Loss is presented as Net loss before gain on sale of assets and the tax impact of these adjustments, aiming to better depict core operating results. The reconciliation shows the adjustments made for restructuring costs and gain on sale of assets - Adjusted Net Loss is defined as Net loss before gain on sale of assets and the tax impact of these adjustments, used to better depict core operating results[46] Reconciliation of Net Loss to Adjusted Net Loss (In thousands, except per share data) | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :---------------------------------- | :-------- | :-------- | :------- | :------- | | Net loss, as reported | $(11,272) | $(4,377) | $(29,462) | $(24,976) | | Restructuring costs | $3,448 | $501 | $3,572 | $501 | | Gain on sale of assets | $— | $— | $— | $(4,542) | | Tax impact of adjustments and other net tax items | $— | $— | $— | $— | | Adjusted net loss | $(7,824) | $(3,876) | $(25,890) | $(29,017) | | Loss per fully diluted share, as reported | $(0.40) | $(0.16) | $(1.06) | $(0.91) | | Adjusted loss per fully diluted share | $(0.28) | $(0.14) | $(0.93) | $(1.06) | - Limitations include the exclusion of gain on sale of assets (material cash inflow) and restructuring costs (material, often cash expenses)[50] Adjusted EBITDA Reconciliation Adjusted EBITDA is defined as net loss before gain on sale of assets, stock-based compensation, interest expense, interest income, income taxes, and depreciation and amortization. It is used by the financial community to measure performance and evaluate market value, with a detailed reconciliation provided - Adjusted EBITDA is defined as net loss before gain on sale of assets, stock-based compensation, interest expense, interest income, income taxes, and depreciation and amortization[51] Reconciliation of Net Loss to Adjusted EBITDA (In thousands) | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :-------------------------------------------------- | :-------- | :-------- | :------- | :------- | | Net loss | $(11,272) | $(4,377) | $(29,462) | $(24,976) | | Interest expense | $150 | $343 | $518 | $1,130 | | Interest income | $(1,984) | $(862) | $(6,652) | $(1,339) | | Provision (benefit) for federal, state and foreign income taxes | $448 | $(40) | $464 | $(36) | | Depreciation and amortization | $2,474 | $2,686 | $10,012 | $11,023 | | Gain on sale of assets | $— | $— | $— | $(4,542) | | Restructuring costs | $3,217 | $501 | $3,341 | $501 | | Stock-based compensation | $2,150 | $1,980 | $8,904 | $7,745 | | Adjusted EBITDA | $(4,817) | $231 | $(12,875) | $(10,494) | - Limitations include the exclusion of interest expense, interest income, income taxes, depreciation/amortization, gain on asset sales, restructuring costs, and equity-settled stock-based compensation[52]