Matrix Service pany(US:MTRX)2022-02-08 21:33Financial Performance - Consolidated revenue for the three months ended December 31, 2021, was $162.0 million, a decrease from $167.5 million in the same period last year [110]. - Consolidated gross profit decreased to $3.2 million for the three months ended December 31, 2021, with a gross margin of 2.0%, down from 9.1% in the same period last year [111]. - Consolidated net loss for the three months ended December 31, 2021, was $24.9 million, or $0.93 per fully diluted share, compared to a net loss of $4.6 million, or $0.17 per fully diluted share, in the same period last year [115]. - Consolidated revenue for the six months ended December 31, 2021, was $330.1 million, compared to $350.2 million in the same period last year [123]. - For the six months ended December 31, 2021, the company reported a net loss of $42.5 million, or $1.59 per fully diluted share, compared to a net loss of $7.6 million, or $0.29 per fully diluted share in the same period of 2020 [128]. - Adjusted net loss for the six months ended December 31, 2021, was $26.2 million, with an adjusted loss per fully diluted share of $0.98, compared to an adjusted net loss of $4.1 million and $0.16 per share in the same period of 2020 [149]. - Adjusted EBITDA for the three months ended December 31, 2021, was $(7,091) thousand, compared to $6,229 thousand for the same period in 2020 [154]. - Net loss for the six months ended December 31, 2021, was $(42,457) thousand, an increase from $(7,628) thousand in the same period of 2020 [154]. Segment Performance - For the Utility and Power Infrastructure segment, revenue was $54.8 million for the three months ended December 31, 2021, compared to $52.0 million in the same period last year [116]. - The Process and Industrial Facilities segment reported revenue of $50.3 million for the three months ended December 31, 2021, with $210.4 million in project awards booked in the first half of fiscal 2022 [118]. - The Storage and Terminal Solutions segment revenue was $56.9 million for the three months ended December 31, 2021, down from $64.2 million in the same period last year [120]. - Revenue for the Utility and Power Infrastructure segment was $112.0 million, a slight decrease from $112.7 million in the same period last year, primarily due to lower volumes of power delivery [129]. - The segment gross margin for Utility and Power Infrastructure was (5.9)% in fiscal 2022, down from 11.1% in fiscal 2021, impacted by increased costs for a large capital project and low volumes [130]. - Revenue for the Process and Industrial Facilities segment was $94.2 million, down from $97.2 million in the same period last year, but the company booked $210.4 million in project awards in the first half of fiscal 2022 [131]. - The segment gross margin for Process and Industrial Facilities was 7.5%, down from 11.9% in the same period last year, due to low volumes leading to under recovery of construction overhead costs [132]. - Revenue for the Storage and Terminal Solutions segment was $123.9 million, down from $140.4 million in the same period last year, primarily due to lower volumes of crude oil tank and terminal capital work [133]. Cost Management - The company reduced its cost structure by approximately $80 million, or about 29%, with one-third related to SG&A and the rest to construction overhead [108]. - Consolidated SG&A expenses were $15.9 million for the three months ended December 31, 2021, down from $16.7 million in the same period last year [112]. - Interest expense increased to $0.5 million for the three months ended December 31, 2021, compared to $0.4 million in the same period last year [113]. Backlog and Project Awards - The backlog as of December 31, 2021, was $591.6 million, reflecting a 27.9% increase compared to the backlog at the beginning of the period [138]. - The company achieved project awards of $192.2 million and $459.1 million during the three and six months ended December 31, 2021, respectively, resulting in book-to-bill ratios of 1.2 and 1.4 [139]. - Backlog in the Utility and Power Infrastructure segment decreased by 15.0% during the three months ended December 31, 2021, while backlog in the Process and Industrial Facilities segment increased by 35.3% [140][141]. Liquidity and Capital Management - Total liquidity as of December 31, 2021, was $101.7 million, consisting of $65.0 million in unrestricted cash and cash equivalents and $36.7 million available under the ABL Facility [157]. - Cash provided by operating activities for the six months ended December 31, 2021, totaled $11.4 million, with a net cash effect from changes in operating assets and liabilities of $35.5 million [167]. - The company had $33.4 million in letters of credit outstanding under the ABL Facility as of December 31, 2021, which decreased to $23.6 million by January 31, 2022 [162]. - Capital expenditures for the six months ended December 31, 2021, were $0.6 million, with investing activities using $0.5 million of cash [170]. - The ABL Facility provides for available borrowings of up to $100.0 million, which may be increased by an additional $15.0 million under certain conditions [160]. - The company is required to maintain a minimum of $25.0 million of restricted cash at all times under the ABL Facility [161]. Stock and Equity Management - The company has never paid cash dividends on its common stock, with future payments dependent on the terms of the ABL Facility and financial conditions [172]. - The company has a Stock Buyback Program approved in November 2018, allowing repurchases up to 2,707,175 shares, with no repurchases made in the first half of fiscal 2022 [173]. - As of December 31, 2021, there were 1,349,037 shares available for repurchase under the Stock Buyback Program, and the company held 1,114,242 treasury shares [174]. - The company has not made any stock repurchases in the first half of fiscal 2022 and has no current plans to do so [173]. Revenue Recognition and Accounting - Costs and estimated earnings in excess of billings on uncompleted contracts included revenues for unpriced change orders and claims of $10.1 million at December 31, 2021, compared to $14.6 million at June 30, 2021 [189]. - The company recognizes revenue over time for fixed-price contracts using the percentage-of-completion method, based on costs incurred to date compared to total estimated costs [183]. - The company evaluates contracts for performance obligations and recognizes revenue as those obligations are satisfied, requiring significant judgment [179]. Goodwill and Tax Assets - Goodwill is tested annually for impairment, with the last test performed on May 31, and the company uses discounted cash flow analysis and market multiples to estimate fair value [192]. - The company has established valuation allowances for deferred tax assets based on judgments and estimates, believing realization of deferred tax assets in excess of the valuation allowance is more likely than not [193]. Market Risk - The company has no material changes in market risk from those reported in the previous fiscal year [195].