- Revenue: $187.2 million in Q2, a 7% increase over the prior year and a 13% increase over Q1 of fiscal 2025.
- Gross Margin: $10.9 million or 5.8% in Q2 compared to $10.6 million or 6% in the prior year period.
- Net Loss: $5.5 million or $0.20 per share in Q2, compared to a net loss of $2.9 million or $0.10 per share in the prior year.
- Storage and Terminal Solutions Revenue: Increased 53% to $95.5 million in Q2.
- Utility and Power Infrastructure Revenue: Increased 52% to $61.1 million in Q2.
- Process and Industrial Facilities Revenue: Decreased to $30.6 million in Q2 from $71.3 million in the prior year.
- Backlog: $1.3 billion as of December 31, 2024.
- Net Cash Provided by Operating Activities: $45.5 million in the first half of fiscal 2025.
- Total Liquidity: $211.7 million, including $156.8 million of unrestricted cash and $54.9 million of borrowing availability.
- Warning! GuruFocus has detected 5 Warning Sign with MTRX.
Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Matrix Service Co (NASDAQ:MTRX) reported strong organic revenue growth in the second quarter, driven by Storage and Terminal Solutions and Utility and Power Infrastructure segments.
- The company's opportunity pipeline increased significantly from $5.7 billion to $7 billion, indicating a strong potential for future growth.
- Matrix Service Co (NASDAQ:MTRX) expects to generate organic revenue growth of over 40% in the second half of fiscal 2025 compared to the same period in fiscal 2024.
- The company anticipates returning to profitability in the second half of fiscal 2025 due to improved fixed cost absorption and operating leverage.
- Matrix Service Co (NASDAQ:MTRX) maintains a strong balance sheet with a liquidity position of $211.7 million and no debt, supporting future growth initiatives.
Negative Points
- The delay in the award of a major energy project negatively impacted the book-to-bill ratio for the quarter.
- Planned mobilization for a major project was postponed to the second half of the year, leading to a reduction in the full-year revenue forecast by approximately 5%.
- The company reported a net loss of $5.5 million for the second quarter, compared to a net loss of $2.9 million in the prior year.
- Gross margins continue to be impacted by the under-recovery of construction overhead costs, although the impact is decreasing.
- The Process and Industrial Facilities segment experienced a significant revenue decrease due to the completion of a large project and lower revenue volumes.
Q & A Highlights
Q: With the guidance reduction, which business segments does the $50 million revenue adjustment reflect this push out? A: That was primarily in the storage and terminal solutions segment.
Q: How confident are you in reaching profitability in the second half of 2025? Do you expect any other work delays to affect revenue growth? A: We feel confident about growing our revenue quarter over quarter, which will support overhead absorption and return to profitability. We believe the organization can achieve a profitable run rate in the back half of the year.
Q: Regarding the energy project expected to move to the third quarter, how do you see backlog growth through the second half given the decrease from $1.4 billion to $1.3 billion? A: Our book-to-bill ratio should be viewed long-term. We have a strong opportunity pipeline, which increased to over $7 billion. Our backlog remains strong, and we expect to maintain and build it as we move through subsequent quarters.
Q: Can you provide more color on the type of conversations you're having with clients in the current environment? A: Our energy clients feel positive about the regulatory environment and global demand for their products. While the presidential election cycle might have influenced decision-making, our clients are optimistic about their businesses and capital investments.
Q: Regarding expectations to return to profitability in the second half, is your comfort level more in the fourth quarter than the third? A: Yes, the fourth quarter is expected to have higher revenue and more profit due to the ramp-up in revenue throughout the year.
Q: Are you seeing any better margins in new jobs, particularly in storage, compared to process? A: The demand for our services and project size, which limits competition, should allow us to maintain a strong margin profile. We are entering a market where we can win the right jobs with the right financial profile.
Q: The opportunity pipeline increased to $7 billion from $5.7 billion. Is this due to a few large jobs or many smaller ones? A: The increase is primarily due to more LNG peak shaving projects, where we have a strong market position. There are also smaller projects in ammonia and mining, as well as power generation opportunities.
Q: Can you provide more details on inorganic growth opportunities and potential timelines? A: Our focus is on returning to profitability and building a strong backlog. We aim to strengthen our business and position as a specialized E&C provider, taking advantage of infrastructure spending. Specific details are not available at this time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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