Matrix Service pany(MTRX) - 2023 Q2 - Quarterly Report

Financial Performance - Revenue for Q2 FY2023 was $193.8 million, down from $208.4 million in Q1 FY2023, attributed to ongoing project work and delays in new project awards[94] - Adjusted net loss for Q2 FY2023 was $14.4 million, compared to a loss of $10.2 million in Q2 FY2022, with adjusted loss per share at $(0.53)[97] - Consolidated revenue increased to $193.8 million in Q2 FY2023 from $162.0 million in Q2 FY2022, driven by growth in Process and Industrial Facilities and Storage and Terminal Solutions segments[103] - Adjusted EBITDA for Q2 FY2023 was $(13.1) million, compared to $(7.1) million in Q2 FY2022, indicating ongoing operational challenges[102] - The company recorded a net loss of $32.8 million, or $1.22 per fully diluted share, for the three months ended December 31, 2022, compared to a net loss of $24.9 million, or $0.93 per fully diluted share, in the same period last year[109] Project Awards and Backlog - Project award volumes improved, with $318.7 million in project awards during Q2 FY2023, the highest since Q1 FY2020[93] - Backlog increased by $124.8 million or 20.3% in Q2 fiscal 2023, with project awards totaling $318.7 million and a book-to-bill ratio of 1.6[141] - In the Utility and Power Infrastructure segment, backlog rose by 47.6% due to $98.0 million in project awards, primarily for LNG peak shaving facility upgrades[142] - The Process and Industrial Facilities segment saw a 9.2% backlog increase with $105.2 million in project awards, driven by strong client spending on refinery maintenance[143] - Backlog in the Storage and Terminal Solutions segment increased by 21.2% with $115.5 million in project awards, highlighting significant opportunities in LNG and hydrogen projects[144] Revenue Segmentation - Revenue for the Utility and Power Infrastructure segment was $50.5 million for the three months ended December 31, 2022, down from $54.8 million in the same period last year, primarily due to lower volumes of LNG peak shaving work[110] - The Process and Industrial Facilities segment revenue increased to $80.8 million for the three months ended December 31, 2022, compared to $50.3 million in the same period last year, driven by higher volumes of midstream gas processing capital work[113] - The Storage and Terminal Solutions segment revenue was $62.5 million for the three months ended December 31, 2022, up from $56.9 million in the same period last year, attributed to higher volumes of specialty vessel capital projects[117] - Consolidated revenue for the six months ended December 31, 2022 was $402.3 million, compared to $330.1 million in the same period last year, with increases in the Process and Industrial Facilities and Storage and Terminal Solutions segments[121] Costs and Expenses - Gross margin was (0.7%) in Q2 FY2023, significantly lower than 6.2% in Q1 FY2023, impacted by a $9.6 million project adjustment and under recovery of construction overhead costs[95] - SG&A expenses rose to $17.5 million in Q2 FY2023 from $15.9 million in Q2 FY2022, primarily due to higher project pursuit costs[105] - The company recorded restructuring costs of $2.6 million for the six months ended December 31, 2022, compared to $1.3 million in the same period last year[124] - Interest expense was $1.3 million for the six months ended December 31, 2022, down from $2.5 million in the same period last year[126] Goodwill and Impairments - Goodwill impairment recorded was $12.3 million in Q2 FY2023, reflecting challenges in project execution and market conditions[105] - Goodwill impairment of $12.3 million was recorded during the reporting period[159] - The company utilizes a discounted cash flow analysis and market multiples to determine the estimated fair value of reporting units for goodwill impairment testing[181] Liquidity and Cash Flow - Total liquidity as of December 31, 2022, was $80.5 million, comprising $31.5 million in cash and cash equivalents and $49.0 million available under the ABL Facility[150] - Cash and cash equivalents increased from $14.3 million on September 30, 2022, to $31.5 million by December 31, 2022[151] - The company expects liquidity to improve due to anticipated better operating results and approximately $13 million in tax refunds expected in Q3 fiscal 2023[152] - Cash used by operating activities for the six months ended December 31, 2022 totaled $17.6 million, with a net loss of $39.3 million[159] - Accounts receivable increased by $28.1 million during the six months ended December 31, 2022, negatively impacting cash flows from operating activities[164] Compliance and Controls - The company maintains effective disclosure controls and procedures as of December 31, 2022, ensuring timely reporting in compliance with SEC rules[187] - There have been no changes in internal controls over financial reporting that materially affected the company's reporting during the quarter ended December 31, 2022[188]