Matrix Service pany(MTRX) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for the fourth quarter of fiscal 2025 was $216.4 million, with an EPS loss of $0.40 and adjusted EBITDA loss of $4.8 million [18] - The revenue growth for the year was 31% compared to the start of fiscal 2025, but the overall revenue was below expectations due to delays and issues in certain service lines [23][9] - The company expects fiscal year 2026 revenue to be between $875 million to $925 million, representing a year-over-year growth of 17% at the midpoint of the range [16] Business Line Data and Key Metrics Changes - Storage and Terminal Solutions segment revenue increased 37% to $96.1 million, driven by higher volumes in specialty vessel and LNG storage projects [24] - Utility and Power Infrastructure segment revenue rose 12% to $73 million, benefiting from natural gas heat shaving projects, with gross margin improving to 9.1% [25] - Process and Industrial Facility segment revenue decreased to $47.3 million, primarily due to the completion of a large renewable diesel project last year, with gross margin dropping to 5.9% [26] Market Data and Key Metrics Changes - The company maintained a near-record backlog of approximately $1.4 billion, with project awards totaling $186.3 million in the fourth quarter, resulting in a book-to-bill ratio of 0.9 [26] - The utility and power infrastructure segment had a strong quarter with $121.9 million in awards and a book-to-bill of 1.7, indicating robust demand in that market [26] Company Strategy and Development Direction - The company is focused on a strategy built around three pillars: win, execute, and deliver, emphasizing safety, quality, and operational efficiency [11][12] - The strategic focus includes pursuing awards with the right risk profile, maintaining strong client relationships, and capitalizing on growth opportunities in LNG storage, electrical infrastructure, and advanced manufacturing [13][14] - The company aims to achieve durable, return-focused growth through organic means supplemented by targeted M&A activities [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that while fiscal 2025 results did not meet initial expectations, the underlying performance of the business remains strong, with a focus on improving operational efficiencies [8][29] - The company is optimistic about entering fiscal 2026 with a strong backlog and a healthy bidding environment, expecting continued revenue growth [16][29] - Management highlighted the importance of adapting to economic uncertainties and maintaining strong relationships with clients to navigate challenges [32][33] Other Important Information - The company reported significant improvements in safety metrics, with TRIR improving from 0.91 to 0.51 and DART rate from 0.28 to 0.21 in fiscal 2025 [5][6] - Cash balance increased by $109 million to $249.6 million as of June 30, 2025, with available liquidity rising to $284.5 million [27][28] Q&A Session Summary Question: Are there still delays in project timelines due to economic uncertainty? - Management noted an overhang in the industry but indicated that only a few projects were directly impacted, with ongoing energy-related projects remaining strong [32] Question: What is the outlook for the book-to-bill ratio by the end of fiscal 2026? - Management expressed confidence in achieving a near 1.0 book-to-bill ratio, with opportunities for smaller projects in the pipeline [34][35] Question: What is the timeline for returning to profitability? - Management is confident in returning to profitability, supported by a quality backlog and projected revenue levels [36] Question: How much of the cash position is from customer advances? - The cash position has built considerably, with a portion from upfront payments on long-term projects, and the balance sheet is strong [37] Question: Are there any remaining legacy COVID-era projects in dispute? - Management indicated that the current dispute is the final material legacy issue from the pandemic [44] Question: What are the expected cost savings from restructuring actions? - The restructuring is expected to yield about $12 million in annual savings, with SG&A costs projected to decrease in fiscal 2026 [48]