Matrix Service pany(US:MTRX)2022-11-12 08:12Financial Data and Key Metrics Changes - The company's revenue for Q1 2023 increased to $208 million, representing a 24% year-over-year growth, primarily driven by increased reimbursable work [20] - Gross margins improved to 6.2%, the highest in over two years, due to better project bookings and backlog profile [21][22] - The net loss for the quarter was $6.5 million, or $0.24 per share, while the adjusted net loss was $4.2 million, with an adjusted EPS loss of $0.15 [25] Business Line Data and Key Metrics Changes - In the Storage and Terminal Solutions segment, revenue increased to $76.9 million, with a gross margin of 9.8%, driven by strong execution and a better portfolio mix [28][29] - The Utility and Power Infrastructure segment reported revenue of $44.9 million, with a gross margin of 3.8%, showing improvement due to strong execution on electrical and T&D work [25][26] - The Process and Industrial Facilities segment maintained strong revenue at $86.6 million, with a gross margin of 5% [27] Market Data and Key Metrics Changes - The project opportunity pipeline increased to $6.5 billion as of September 30, 2022, reflecting a significant uptick in project awards [13] - The company received project awards totaling $235 million in Q1, resulting in a book-to-bill ratio of 1.1, with an additional $150 million in awards received in October [10] Company Strategy and Development Direction - The company is focusing on infrastructure projects related to low carbon objectives, including LNG, ammonia, hydrogen, and renewable fuels [14] - Management expressed confidence in the ability to deliver improved performance through fiscal 2023, supported by a streamlined organization and increasing project volume [15] Management's Comments on Operating Environment and Future Outlook - Management noted that concerns about energy security and the push for cleaner energy are driving client spending decisions [13] - The company expects liquidity to improve through the remainder of the fiscal year, despite temporary decreases due to increased working capital demands [33] Other Important Information - The company incurred $1.3 million in restructuring costs as part of its transformation efforts [23] - Total liquidity at September 30, 2022, was $56.6 million, with $15 million in debt [30] Q&A Session Summary Question: What is driving the significant increase in the opportunity pipeline? - Management indicated that increased activity in specialty vessel storage, hydrogen-related projects, and LNG projects are contributing to the pipeline growth [39] Question: What is the outlook for the utility side of the business? - Management expects modest revenue improvement in the Utility and Power Infrastructure segment as new capital projects ramp up [41][43] Question: Are the lower-priced jobs from the downturn being worked through as expected? - Management confirmed that the projects of concern were primarily in the Utility and Power Infrastructure segment and are expected to be completed by the third quarter [44][45] Question: Will working capital requirements improve for the balance of the year? - Management confirmed that working capital requirements are expected to improve as the mix of work shifts towards capital projects [46][47] Question: How does the visibility of larger project opportunities compare to previous years? - Management noted that the average size of projects in the opportunity pipeline has increased, with a higher quality of clients and readiness [51][52] Question: Are there any prospects in the crude storage market? - Management acknowledged some prospects for crude storage but noted that the market is currently weak due to low storage prices [57][59] Question: What measures are being taken to mitigate supply chain issues? - Management is including potential supply chain delays in project pricing and schedules and is working with clients to manage risks [61][62]