Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Matrix Service Co (MTRX, Financial) began fiscal 2025 with a strong backlog of $1.4 billion, providing visibility into the current year and beyond.
- The company anticipates a return to profitability in fiscal 2025, supported by strong project execution and backlog conversion.
- Matrix Service Co (MTRX) has a strategic focus on higher-margin specialty engineering and construction opportunities, which is expected to drive long-term value creation.
- The demand for LNG, NGL, and ammonia storage and terminal infrastructure is robust, supporting the company's growth strategy.
- Matrix Service Co (MTRX) maintains a strong balance sheet with $150 million in cash and zero debt, ensuring financial stability and liquidity.
Negative Points
- Revenue for the first quarter of fiscal 2025 was $165.6 million, a decline from $197.7 million in the same period of fiscal 2024, primarily due to the completion of a large renewable diesel project.
- Gross margins were negatively impacted by the under-recovery of construction overhead costs, with a quarterly impact of over 600 basis points.
- The company reported a net loss of $9.2 million or 33 cents per share for the first quarter of fiscal 2025, compared to an adjusted net loss of $5.7 million or 21 cents per share in the prior year.
- The book-to-bill ratio for the first quarter was 0.9, indicating that new project awards were not keeping pace with revenue.
- There are multiple variables, such as the Presidential election and regulatory environment, that could affect the timing of project awards and starts.
Q & A Highlights
Q: I was surprised by the lower revenue in the utility business this quarter. Was there anything unusual compared to the fourth quarter?
A: Kevin Cavanah, CFO: The lower revenue in the utility segment was primarily due to timing on new projects starting. We anticipated a slight decline in the first quarter, but expect increasing revenues quarter over quarter for the rest of the year.
Q: The SG&A expenses increased noticeably this quarter. Can you explain why?
A: Kevin Cavanah, CFO: The increase in SG&A was mainly due to long-term incentive compensation tied to our stock price, which rose from the fourth to the first quarter. We expect SG&A to remain around $18 million for the rest of the year.
Q: Can you discuss the demand for small projects and how it affects your business?
A: John Hewitt, CEO: Demand for maintenance and smaller projects is stable. We have better visibility into this segment now, especially with refinery maintenance work, which has stabilized and presents opportunities for capital work.
Q: What are your thoughts on the impact of the change in administration on your business?
A: John Hewitt, CEO: A change in administration could be net positive, potentially reducing regulatory burdens and opening infrastructure investment opportunities. The immediate impact might include lifting the pause on new FERC permits for LNG exports, which could benefit us.
Q: Why wasn't the book-to-bill ratio stronger this quarter, given the lower revenue levels?
A: John Hewitt, CEO: It's mainly due to timing. Some larger projects expected in the first quarter are now likely to be awarded in the second quarter. The election cycle may also have influenced some client decisions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
