Matrix Service pany(MTRX) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The fourth quarter revenue was $53 million for the Utility and Power Infrastructure segment, up almost 18% over the third quarter, but gross profit was a negative $6.3 million due to project charges and under-recovery of overheads [10][11] - Consolidated revenue for the fourth quarter was up 18% over the third quarter, but overall revenue levels were about $30 million short of expectations, resulting in a gross profit of $1.5 million or 0.9% [15][18] - The EPS loss for the quarter was $0.40, compared to expectations of near breakeven performance, impacted by project charges and lower-than-expected revenue [15][18] Business Line Data and Key Metrics Changes - The Process and Industrial Facilities segment had revenue of $60 million, up almost 40% over the third quarter, with gross profit of $6.3 million and operating income of $2.7 million [12] - The Storage and Terminal Solutions segment reported revenue of $62 million, impacted by a $2.9 million charge from a project settlement, resulting in a gross profit of $1.6 million and an operating loss of just over $3 million [13][14] Market Data and Key Metrics Changes - The company ended fiscal 2021 with a backlog of $463 million, negatively impacted by the pandemic and reduced spending by customers [17] - Award activity has accelerated in the first 60 days of fiscal 2022, with approximately $180 million in new contracts booked, the highest award level since the fourth quarter of fiscal 2020 [33] Company Strategy and Development Direction - The company’s strategy focuses on four key areas: safety, people and communication, clients and growth, and execution excellence [23] - The company aims to strengthen its core markets, expand within existing end markets, and grow into new markets, particularly in renewable energy infrastructure and hydrogen [24][26] - The organization is undergoing a redesign to improve efficiency and effectiveness across all reporting segments [29][30] Management's Comments on Operating Environment and Future Outlook - The management noted that fiscal 2021 was challenging due to uncertainty around economic recovery and client spending, but the bidding environment is now strong with a significant uptick in awards [21][22] - The company expects to see improved revenue and earnings as project awards increase and the backlog grows [17][33] Other Important Information - The company has implemented nearly $70 million in cost reductions, resulting in a 27% decrease in overhead costs, which positions it for significant earnings improvement as revenue volumes improve [16] - The company ended fiscal 2021 with cash of $84 million and zero debt, having paid off $10 million of debt during the year [18] Q&A Session Summary Question: Utility and Power Group revenue pressure - Management explained that revenue development is influenced by electrical infrastructure work and LNG-related peak shaving terminals, with opportunities in the pipeline for upgrades and maintenance [41][42] Question: Crude storage market competitiveness - Management assessed that the crude storage market remains competitive, with smaller awards currently being pursued, but larger opportunities are expected to emerge in the coming months [44] Question: Hydrogen-related work progress - Management indicated that hydrogen project opportunities are still 6 to 12 months out, with ongoing discussions with clients for potential infrastructure expansions [45][46] Question: M&A versus liquidity considerations - Management emphasized a focus on organic growth in the near term, with potential for acquisitions considered later as market conditions improve [47] Question: Process and Industrial Facilities gross margin assumptions - Management raised margin expectations for this segment due to a diverse mix of projects and anticipated recovery in revenue volumes [52] Question: Timing of recent awards - Management noted that most of the $180 million in awards will impact revenue starting in the second quarter, with a mix of short-term and multi-year projects [63]