MTRX - Earnings call transcript Q2 2022

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Operator

Good day and thank you for standing by and welcome to the Matrix Service Company's Conference Call to discuss results for the Second Quarter Fiscal 2022. At this time, all participants are on a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator Instruction]. Please be advised that this call is being recorded. Instruction]. [Operator like Smythe, conference Relations. Senior now host to hand Kellie today, Director to would over the your I of Investor

may go You ahead.

Kellie Smythe

Company's and call will Good to John Hewitt, XXXX Justin. And Chief include call. Second Executive and Service Officer, earnings today's you, fiscal Cavanah, Quarter on Thank Participants president of Kevin morning. Matrix welcome Investor can President Relations Presentations to during referring and will we be and Service Matrix Chief Vice of Events webcast section Finance be today Company.com. materials on under Officer. the The presentation found the

me be Before please XXXX. future these you begin, may indicated for including purposes call, from constitute we those statements materially forward-looking today's and those for Actual results of Private we purposes plans make let discussed Matrix about Act of remind the various by remarks statements provided report on and that that Company forward-looking differ subsequent various on Service a filings our Securities as result Litigation prospects may factors, our in the in fiscal of the expectations, SEC. with Reform the press company non-GAAP we June by To measures, I and Form the ended releases, utilize in periodic our on annual and turn John extent XXXX SEC made that call Matrix will filings, now Hewitt, to Company's. Service various website. over President will XXth, of XX-K for reconciliations the CEO year

John Hewitt

while that professional catalyst team, two a our At engineering a the thing us have the you're to we for while rethink strategies, will be trades and markets, us. make off call is you that structure, always not changing of with foundation and and a team today's you, stay have you, to administrative a employees difficult level challenging personal level, all best to and thank many sustainability. in Kellie, It's both high morning, kick our business. to a on superior office, our stewardship, member a to And Thank I with grounded our our want been thank have Whether as lives. quality to good had an the we of or safety. better. integrity, change caused and and challenges across one us delivering joining and will been caring, for person, member everyone, we are we in values Thanks you or for past by of a company you made, and our success these but decisions business, the build project values. your years of appreciate

our Before results, from I I discuss pipeline. the awards and briefly in our highlight end to an the resulting acceleration quarter to second in call our how recovery to is Kevin want markets turn opportunity

scopes, was period last release, same three perspective, X.X from and the confidence As it awarded requirements. lag into begins is first approach and whose in contracts, is and finalization more by a and To months on be facility first beyond. a noted the XXXX. impact awards clients, permits, revenue. when the project time fiscal the recovery fiscal consecutive to is however, second Through of our rebuilding awards X. million. assets book-to-bill organization book-to-bill quarter of year, in inherent earnings half put an and our on achieved backlog. our Remember, a of have with over resulting we $XXX this material a this of can centralized on combined of of this and twice focused for In infrastructure between of year North further with development our some spanned as awards the see a there dynamics come entire cases, lag or market the upwards returning business half Positive awards depending than exceed high America our more our process as already solutions total we as awards market in total These

$XXX progress quarterly the will market year over sequential and stands outlook fiscal results million, improvements deliver shortly, and to me the our segment to progress Our to to our in through quarter. opportunities of our first, the the of will consolidated we we're take growing making front discuss Kevin backlog, call as let but and discuss in now us profitability I our which advantage at in results. hand fourth ultimately

Kevin Cavanah

of consolidated range costs, Thanks, which margins most Gross gross was margins the margins start with impact of points quarter, was significant were which negatively segments. our basis will second the for under-recoveries over overhead XXX X% The to John. for Revenue was expectations. I all in in construction impacted results. million the the three $XXX quarter.

on this SG&A expect the years. Gross which previously increases a months repair were quarterly SG&A year. the Consolidated fiscal the over also as lowest margins by in $XX.X We half of to XXst, eight revenue margin lower than volume improve the project. in through three ended million XXXX, December last expenses is impacted forecasted were

incurred federal reduction on a efforts. related comprised wells. costs other additional allowance valuation quarter also impacting primarily to in tax $XXX,XXX of One non-cash of a and cost item million deferred We the state restructuring placed in quarter $XX.X was earnings the in assets

and rate. effective share valuation lowering do Although NOLs it have the earnings periods in when per on by utilize the will these Utilizing impact required not future and impacted expire, was assets, GAAP majority allowance by U.S. to expects positive tax by the profitability, company a our assets $X.XX. significantly to returns of the earnings

As in rate be the our a to tax now effective result, single-digits. expect we

loss asset XXst, of ended costs, the million share have of loss of $XX.X $X.XX. earnings $XX.X XXXX, adjusted million quarterly December the and share per For months was loss and an including the the impact valuation adjusted we restructuring the and three $X.XX, allowance net was per net tax

were low of X.X%. margin million was down present marked gross volumes in was second overhead The lower-margin producing the Moving construction to under and segment two segment led previous a that issues: $XX projects a negative therefore opportunities. the periods the we gross bid through in segment and by and of Utility to second, results, were Infrastructure and that are segment a recovery impacted First, competitively revenue costs, for quarter, Power projects working margin

We last Revenue expect quarters. project of Revenue reflect does and recovery and yet Facilities $XX volume the increased in revenue fiscal the was we not in overhead the segment as segment the quarter. result volume results. two materially awards the over million costs Industrial Process to year won through operating strong move improved for

$XXX segment the book-to-bill gross low margin a had X.X% year million revenue over first Storage margin volume. you million as and and book-to-bill a over project the quarter construction Terminal Solutions reminder, was million the of of expect The larger in been see segment under preliminary The begin We XXXX, have project of awards. include booked to design. of segment $XX X.X was costs produced These the execution, and engineering we caused in segment quarterly despite quarter. have impacted of by first to bit X.X. second from for of stages of awards the revenue on capital resulting $XXX this that half for a of in some The strong a overhead quarters awards projects are in fiscal recovery two later the third of still in

to awarded will of ramp a second as X.X% we begin As gross The the margin see up. to projects in quarter under-recovery revenue negative in overhead part segment costs. a volume construction the to due recently benefit was result, -- end

to for project the by profit unforeseen lower quarters, under overhead. segments scope was energy margin which profitability impacted addition, all delays, bidding million. on was will company revenue the profit. results resulted than well issue gross as year. operating associated in in improving return In gross changes within and current outlook the resulted fiscal segment two volume, gross environment, an awards, Overall, segment provide our as to confidence $X.X repair biggest strong the that thermal the a three forecasted project The management margins recovery segment by repair and do revenue in due scheduled with previously We which storage last

company that million Moving including onto flow. and Balance quarter, start restricted. At cash, Sheet $XX cash of $XX of the had the the of was cash the million

to cash our back amount $XX increased changes liquidity of million. The the in working and million capital. financial XXXX. unrestricted credit in the improved sheet The balance primarily end quarter, liquidity was our to now The cash. of million the the company during turn the ABL $XXX I increase Fiscal million, the to $XX total same restricted result Fiscal $XX Total the provide facility remainder depth generated consists $XX quarter-end of will revenue and from availability support million, of including increasing of million increased the cash. capacity [Indiscernible] and call the During necessary cash our XXXX to of liquidity under $XX John. quarter of

John Hewitt

Kevin. you, Thank

significantly I stabilizing, said and those about With is As expected our shifting and project cost the of due is we rising, demand about I spoke the energy plans This inflection recovery have the and are delays in to ebbs and during decreased point prior earnings out spending create and momentum were markets spoke our initiatives both a of time further how forward. to our said, that how in internal evolution growing end that re-established. structure of capital have and last are is we're markets the going we result awards that quarters, efficiencies moving earlier, as business and call. pandemic. our markets closer in spending as client approach well to In been flows

how This end already opportunity over increase segments, and our shifted. resources has in clearly activity. is the active pipeline activity to quarter across handle the we first we of shift end increased that in of across and those XX% is diverse to the approaching environment evident all our increased extremely business our due our Debating is are sentiment are markets Our by and markets. strong adding since

renewable where markets. release while our the as for and traditional most projects process are entering six in and a afternoon, we of the through of including these project gas maintaining our numbers X.X compared greater upgrade our on segment, awards, of set, the strong facility press engineering, Looking for months last to opportunity renewable the a across our tanks, expect capital first in clean excited demand energy These processing projects position role to Many renewables based our gas and capital the a recent midstream natural of projects refineries XX% to separate fuel midstream Matrix year. increases fiscal notable processing backlog. about capital seven important growth year, time bidding and in plant. our yesterday of in referenced play has diesel, energy gas infrastructure in opportunity and accounts storage global this we prices. of are of in I'm significant types transition market allow in investment and in the processing will two fabrication, And which book-to-bill is in at uptake recent see our industrial captured to north of gas-related There's been pipeline to and construction continue

In remains increase projects capacity. are Several upgrade role clients the natural compression addition, processing many important the proposal the gas strong. Natural our play chain, minimize bridge will capital those same our planning commercially gas carbon energy value clean footprints of expenditures small-scale to solutions these to transition. other their in opportunities In extremely to to available, and needed are viable broadly in stations are of pipeline of today. and has and facilities be gap. LNG Until an peak-shaving the

continued shaving in most are hold studies, of on been for parts natural the projects capital feed increase prices the country over some until the several recently. projects both months We and by the of has in offer multiple further sharp utilities. facilities peak interest and Extreme to prices. repair, and managing last conditions flexibility renewable These our NGLs, supply utility in XX maintenance temperature had driven in gas pricing at and new facilities in bunkering are aimed across and and customers, the reduction to Large LNG also Americas their LNG, natural sector. meet projects capital gas to gas demand investment carbon increase. significant the consumer being facilities Opportunities announced in spot refining Caribbean the and exposure for electricity fuels peak also while fluctuations

to expect these are project number made, investments a position expertise extensive growing in As of brand and we refinery awards. result our

the maintenance, and our are broad to activities. and one Elsewhere and capital their of from stability under intend to basis. We is we of capabilities years, work to continuing operations facilities. and is energy long-standing needs an maintenance customers nested evolving reimbursable to hydrogen. performing It through existing being over we support turnaround, refinery inside our in done business well-positioned therefore MSAs grow providing in refineries. this progress -based make worth five that of This expertise past two on our MSA is work a the They're noting we're our grown repairs clean have that area to -- value more predictability providing a chain, our further. Much good

cryogenic of recently and of in storage with providing entry which this in market, study liquefaction with resulted Chart in a client. feed Industries, same strong point the a relationship expertise multiple to is expected Our has with combined projects to award our and is that hydrogen lead processing related this

energy Council, and bunkering actively also in a opportunities are hydrogen companies renewables, fuel. facilitates energy tracking traditional or continue midstream as particularly finally, we source. clean dedicated recently which further to advancing be of of as hydrogen, of the And we We crude of infrastructure. as use well initiative Hydrogen ammonia joined global a active transport Outside global pursuing oil as in a and the storage to hydrogen, leading

brand above pre growing. in with increasing are a in has the forward expect As to this sector, levels, accelerated ground ' work their Bidding near-term capital booking In -pandemic mining in leader terminals in as higher and with prices as repair. tanks market mineral move the well customers crude and metals, activity to continued confidence precious maintenance copper, and we recently opportunities levels spending. our storage, rare-earth sustained

U.S. recently projects awards have several won in We for the

projects for project of that precursor Southwest larger types are work. are a often the that

to with engineering, and many attracted off and beginning small, our construction, capabilities companies, diversified is strategy and pay chemical comprehensive petrochemical large and chemical both that Our to include maintenance.

We last been aerospace. small agreements new getting and in in some in feed engineering winning projects, announced successful month, with was have service master place including with Komorze and award clients that

We award, last adding press of each In to by Bidding thermal in chamber strong opportunities be this call, release soon. Matrix we be vacuum we third end vacuum project. market to hope our earnings addition backlog quarter position. announce to another both the in our mentioned will first-quarter in chamber to continued where these has in

currently is system, the Ohio data generation interconnected subsidiary, upgrades, Lastly, electrical for the renewable Talent electrical project with and This aging the an Atlantic. center. and types, business operating organic including fiber we for and our Valley team along creates potential of world in is infrastructure winning Mid Northeast, distribution, substations and this Susquehanna and their project installation. various One greenfield example at announced rebuilds, data transmission morning relay Corporation's Cumulus a Energy

the was SG&A. as execute deliver NAC, outcome $XX proactive backdrop This the right Matrix out out have which well against construct substation, XXXX. internal transmission steps Matrix approximately to we selected organizational to we work. to resources taken short, the Our highly subsidiary, was footprint was to to start it. has in business a In This confident greenfield take improvement came the began cost, second and are the and quarter. award plan we distribution as subsequent in of market of Since a one-third to the the project million of organization, and associated ensure booked pandemic, in streamlined continue of

to on to work, the move strategic on efficiency the we next organization that remain of and the we phase As focused enhancements of we're increasing internal making end. this

our for areas resources. are services consolidate certain to improve taking steps further our accounting, we structure shared Specifically, human and of the to business finance,

hydrogen, be Excellence We're people of evaluating chemicals. consistent LNG, will other transition announced support and all safety, organization support addition, procurement With call these goal In and end the better creating opportunities to prepared growth an ultimate the of focused operational and midstream actions and the Operational and on growth across renewables, that open the optimize see we're also and of results. Center and the relationships across quality, in continuously optimizing people where with have of areas. extensive addition various be opportunity initially specifically opportunities and include development support and to technical senior plan, several our adding delivering been execution the bottomline projects teams recently building to and resources. will strategically project operational We for and These business we and hiring markets team, tactically the our markets pursuit for market gas, recently allocating efficient our I'm organization now questions. energy aligned projects. awarded backgrounds that, greatest opportunities on to the have in The ultimately result Matrix, with company's end

Operator

And thank you.

a [Operator Q&A As roster. Instructions] reminder,

John from Company. Our & from first Franzreb question comes Sidoti

open. now is line Your

John Franzreb

my million questions. to your X. million. gross or your Does Thanks I Good change X. segment? in there. margin break-even for it change taking projections change $XX particular targets Does guess, the from expect start morning, $XX that in structure two with cost I to everybody. point? questions the any

Kevin Cavanah

I'll is John, this take Kevin, that.

First no, all, targets. think it of I those changes don't targets, margin the in gross

targets just power. think makes more further capable I the change those earnings and us our of meeting enhances

think quarter, markets about those, seen those now to what's full in as the we of achieve those the pretty down that those targets just $XXX gross costs. of right level bit far get at, is reason recovery margins much we some, As $XXX so recovery revenue overheads, not so the even that in are talked The pretty break break I'm million that of we've we of this the revenue full some offsetting to level and is of need are competitive. a our to same or even need last I decrease bid little to some changing or we

John Franzreb

recovery? quarter, in chance and million you costs that any project bit those behind little talk Okay. you And hit -- the about that a all that margin $X.X and of can gross the the

John Hewitt

on those cost our the detail in issues client, scope project. a of storage storage development project. project, -- that been working has increased our post-award. was lot and the thermal a with increased had We've a on schedule through into getting it They've Without John,

And complete point the or want can't at do April don't that be to end this by believe so on commercially have we should on. captured out, the able really and and comment we're I we substantially of to complete to cost from that here anything

John Franzreb

you Can hard go-forward agreements to and different But the believe share almost see do a year a minutes. past one little your on it's how And announcement short value, a the about talk Okay. three that year from environment. over a much it's anniversarying progressed expectations the bit of to basis? where relative you

John Hewitt

Yeah, chart quicker. like We -- But that's happen things without. which to work. we're and the that's projects unfortunately would pursuing certainly everything with both not way

projects And again, at them. and without we're looking so with them individually

We work some concepts on packages continue standardized able different be design and clients. offer solutions them to to standardized with to to

in here a feel a that something finance small that -- on with that said execute this intending stations position we've called to I feed. ability good near was pretty in project in building win project And recent think As we for full processing script, award those. work together in the the term. we had a about to The And is we're opportunity. America. on to client’s feed North that We client hydrogen Chart specifically good to on a

think flip project. we'll we full feed So year, to study able into in that this calendar sometime be a

John Franzreb

and this I'll more and into And get more level? not one at queue, which aggressive Okay. [Indiscernible] question back share repurchases being

Kevin Cavanah

take will John Yeah. that.

John Hewitt

When -- of and we related receipts capital on there's the cash and we out a billing future, to the to I of quarter of projects. Yeah, driver but our good billings and uses capital had changes look biggest working some was cash. the primary think on timing really

build-ahead all, those are projects of fund that will be in to a position. First

about that talked the expect revenue to we increase. volume Secondly, we've

that to will need reimbursable to spending that capital finally, of growth. our in we've be and decreased from a position projects really And in then Some type we fund will come cash. have years. last the we're to that so start now our to in plus with focal bit increasing a our two point the with our right future, going And that's priorities,

John Franzreb

Actually, Thanks. Kevin. going get to queue. back to just I'm Okay,

Operator

next question D.A. from Zane comes And from Davidson. thank you. Karimi our And

open. now is line Your

Zane Karimi

cash capital flow forward a you about Great. all as as work and flow Thank we how new to you But with bit well detail. just cash dynamics that? off move think for as into you the more of that. the guys because And having little guys working the should are go ramping this revenues

Kevin Cavanah

going where it increase upon and the depend from. to it's comes So, varies revenue

funding when of if we will be funding work a upfront have in months. So, for We're couple that like have and increased reimbursable, that we increased activity, revenue periods maintenance that we're

to so that especially the we that's times, cash you especially that, we're in quarters cash Then the will try when for times a There projects. And And capital projects. the funding the on perspective my on lead have that's the of spring well those fall if most. on usually stay going ahead to project is perspective. to gets see are ahead usage fund and you period

rest less this to the So now. fiscal balance right we'll we're strong as what cash think to the year, able a be we've thinking about of similar pretty maintain I got

the of think increase also amount availability facility I bit. will that a under our credit

that That's I $XX today. we think $XX under of quarter. the second So at the end million of increase just million credit [Indiscernible] to had liquidity, down will outstanding of

that So January. availability million $XX in just increases

Zane Karimi

for bit uptick you color a that and pricing around about bidding change on the gas, willingness here, carbon tracks mentioned more in dynamics going global bidding infrastructure I'm and particular infrastructure little and the Can spend on to little a a in the but you you minimization. is facility a upgrades the how around given you significant there to talk footprint are Thank all bit industry's here. that

John Hewitt

conditions. LNG. expansion areas shaving customers number to mostly and facilities related LNG protect for spikes against at their are of to peak There natural prices and couple gas use a are huge natural utilities, to a during severe of storage looking to gas There's weather and

the into have opportunities a We more really a small-scale proposals we're of in for storage in a Caribbean. projects America, opportunity. it's related Central quarter export for opportunities of for put for first think we're And bunkering, number seeing that LNG projects There -- need tank in gas. or that to for also -- and NGL across we terminals, the into is I we're U.S. export phase added seeing seeing the propane significant ship ethane store utilities in and so, We're U.S. terminals. in amount tax instance, And the -related either to the both infrastructure then and related and for bidding

gas able And and terminalling from processing And uptick where really and about I put existing probably there several announced to hopper a individual of one service storage projects more what its -pandemic. footprint see. lot on we've pretty their a gas on projects some on storage And flows in think of there, liquids We've we the inability there's long-haul in upgrade side. than stage on excited facilities drive is in we pipelines, one clients so a gas got of then activity be proposal systems, activity that capacity, work, the we're There's midstream around been its increase to award. are more marked in to upgrade in last and lot we a pre how the the cases their three to -- so new carbon years the that down than operates of pipeline. to we've have midstream probably seen in four or drivers just it to cash

we well the as pipeline across these all energy a selling I we development bit, being our markets. for this, enterprise, across opposed as to approach it opened more opportunity little of seller there up all where business silos the all think to fundamentally are but we've of quite addition entire are of us about talked In changed clients a bit across on a

Zane Karimi

you for Thank that.

Operator

you. Thank

next Dilts Stifel. from comes Our question from Noelle

now. is line Your

Noelle Dilts

Good morning.

John Hewitt

Hi, Noelle.

Noelle Dilts

a there Hi. segments in of I Thanks. there backlog notable for across lag could do you was and recent the of we us to by to from revenue. any the the some start about fourth-quarter? little -- translating awards terms benefit bit differences should into chat the hoping think think Is how see about you are

John Hewitt

take it’s of I the think going as year of impacting recognize think fourth. It done and finalized, our some does that issues of awards a third get got There it the Yeah, I we're revenue could be finalizing working could of to permitting important it it clients, the dive to materially be that be to timing and scoping quarter into award there in in it the into project before late - some that time. the to to goods in is is happens. initial immediately shot gets we're through our services engineering heavily some that Yeah, actual may the more is takes necessarily work construction a the start the to see with we expectation and move procuring start percentage of that first field. adrenaline lighter start half can to that start revenue

it we prepared as from So, time revenue. into on three to said quarterly a in material can our project where gets three impact months going -- of take booked upwards a the a gets remarks, position it time a the it's to have

our think strong on we And growing. awards continues it. to we pipeline be that's So and cycle, opportunity where see

building to in time it's the see that out We to of revenue so calendar moving year, awards expect next the be awards going couple and from quarters we to happen to we throughout momentum of strong continue through as see here. move to

build, that foundation strong think it of spike. we be across support going quick backlog a very but slow is growth. to be building It's continued won't a revenue So going the we're business to

Kevin Cavanah

those And more likely lag the from we've got three all capital or throughout on projects projects going three segments. is to and segment all basis happen

same may them. the all on So three it of impact

Noelle Dilts

great. into inflation labor higher some you raw you be material the Thank but costs Okay. current if discuss that could And if how you business. I beds inflation that'd Thanks sorry expand could Are second,-- cost get this, missed that, then Cavanah. impacting just and those is upon you. for able to

John Hewitt

issues that fortunate of of good we're bidding that the had labor, -- plate the that -- effects but volume were sourcing it's labor, we current to as bad now, some them. we our proposed part and markets be very some have the are the some in had our update we're part those and for around got care our pretty think to Projects as months. the our there picks -- And that, pandemic. rebidding job I attracting and those Probably projects some we've into inflation, increases we down to most or struggles pricing have a seeing because of to through very to one labor the good levels And those pricing both inflation merit have shop good feeling labor with that were up, -- pricing backlog, And the today. spike materials, here marked us. we're reputation as And pricing over program a last basis environment, country like news, And have we're the able in relates steel of across -- the in in bidding delayed most build being with material union clients. to in deal materials of to for in do able on been of -pandemic that most pre news take with had news the as to extreme not worked -- bids already to six the good happened we're working able for -- the on it bid we're and projects. been certainly that that on with we our a of able clients that and we

-- pick to to that and something to work the in that's get manage. our that up as will continue improve. general more as continue challenging continue we'll And markets as think I volumes

Noelle Dilts

you. Thank Great.

Operator

further And for would to over questions. Hewitt And turn I to closing thank call you. showing I the back now no remarks. am like John

John Hewitt

thank call. joining everybody to want for us on today's I

awards of team the opportunity then is of as time cycle, over quarters. return And our cycle, the for and very the move heard out today, improvement line the through into the hopefully so that management the the couple what see upbeat strong next here the organization, revenue, bottom conversion into out into of future the we in on if we call on you

of to So our again, thank the their successful. again, us our to you, of certainly do every and day employees call, everybody out for you and make work, hard part all thanks they being

Operator

call. now you Thank you for conference today's Thank you. concludes disconnect. participating, This may

Matrix Service (MTRX) 8 Feb 222022 Q2 Earnings call transcript