- Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by. Welcome to the Matrix Service Company Conference Call to discuss results for the First Quarter Fiscal 2023. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. to Kellie conference Smythe, like speaker to now today, for you would hand over the your I may begin.

Kellie Smythe

morning section the Financial Presentations be can found XXXX on Good Events and first Chief Officer. Chief Executive John you. we and Kevin and Matrix today and to presentation President Thank materials Cavanah, and be Service Hewitt, quarter President fiscal call earnings today’s webcast will Participants the Officer; call. will of Investor Relations include welcome on Vice The referring www.matrixservicecompany.com. to during under Company’s

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

John Hewitt

thank us. you Kellie. holding joining is elections. And you, day morning, States for everyone. the is midterm Thank its And good the Today United

make Day Remembrance It’s the Regardless get a also like good. elsewhere. day sacrifice honor so the voting November commit This not to safe. people many Canada, the for the and elsewhere to out your our keeping of Day in military for of and the common willingness Veterans all coming heard. party First been world. Australia is and men right to to Friday, their aside your the thank and remember voice XX set affiliation, for U.S. War the in is us and vote, give Let’s to in our end women and that I’d since military the World dedication of veterans thanks their has afforded

update. our business to Now

spent key our our well pipeline reviewing and last substantial our macro-drivers in time the and to we project markets as outlook the future. call, earnings confidence as our strategy During for opportunity

it the book-to-bill on Solutions X.X, expectations that stated near-term received quarters we long-standing resulted expected and in was also awards for quarter is is for $XXX in book-to-bill which have in in uptick on of pleased majority see opportunities, been I’m seeing of Utility the work. Infrastructure the our X.X X.X were In reflected quarter, which our as Power large-scale in Project the we significant first $XXX two awards these of are in Included and in the Storage awards. October, was of has of our We our second vessel a infrastructure last backlog awards in years. in where segment, million, individual quarter a eight $XX specialty our and of a book-to-bill over In are electrical achieved to first million. highest and month $XXX awards Terminals largest we client. already to first report project is million. we highest unfolding a awards the have that awards the million of

first large second backlog vessel received million. our October, scope received second two Process in X.X large-scale our month that and Industrial be in large the of capital of quarter awards specialty are of in the which size projects as the was a include during and will awards, these Among a only our for awards the facility region upgrade facilities, margins, on foundational and Shaving quarter Finally, Peak portion in book-to-bill These a projects, LNG similar $XX which projects was release. included expected located of announced public in backlog. types support second these of particularly long-term utility flow projects, better press cash which provide the are and by Mid-Atlantic the are encouraging existing very since the recently an of quarter to

renewables our strong concerns clients action in to of discussed spending drive we call spending. driver to As Also, energy and about forefront last of have for globally forms energy security of domestically decisions. our to the the come is call, and a reliability cleaner many

to our continue see pipeline, opportunity We September pipeline billion. and to in of $X.X increased project increases this has as XX,

electric gas operating From first and will the continue midstream equipped all that support. projects in These projects, evident LNG, as objectives that infrastructure our to renewable clients include well to perspective, investment increased projects Matrix comprise in infrastructure are our other ammonia, infrastructure most which is Our and of business. carbon well hydrogen which the types fuels of momentum pipeline. further, underscore low results discuss quarter as opportunity an supporting increasing Kevin

questions. We in and expect will momentum organization performance will quality of commitment pipeline, year over to for to we our increasing and then discuss and by Based the our now to our turn to through in in people the backlog fiscal And ability volume attention are their the deliver. projects move streamlined our this quality, opportunity the reflected both Kevin as provided the of improving we we and open on confident be beyond. will results. I benefits call

Kevin Cavanah

John. Thanks,

I want the Before everyone results our by I start two impacted three about the prior fiscal quarter, to years. reminding in first the that issues review

margin awarded temporary reduction First, the the couple of the competitive last in environment of work. resulted years opportunity a in

conditions. Second, which only us, We awards the recover in pipeline supply pandemic increased three by our of And its fiscal created negatively revenue impacted overhead margins. our third, opportunity on cost has these profitability. construction executed right-sized fully have but front during with insufficient to gross very level. the volume overhead, of timing up competitively our of gross impacted XXXX, issues fit now those to disruption which business and the catching projected forecasted and to negatively the then being revenue is projects certain difficult were other margins and and a during All resulting environment won chain

go As first discuss issues. are the these how on we will of each through quarter I results, I progressing

quarter the year. revenue $XXX which to first been in The growth of increased XX% past work. has to-date primarily revenue reimbursable Our up million is result increased the

As from we fiscal in awards. and expect revenue then and XXXX, second pending we the expect similar move through quarter level of a growth the recent

in margins improved outlined. gross X.X% to more margin strong previously As has three The I issues backlog the quarter, higher the which The highest an improvement bookings expected, related directly resulting project in in in gross drivers our two are years. been it is to are profile. than improved the to

recovered project increase We significantly an average of Storage improved, and in X.X% overhead, the recovery revenue XXXX, overhead Solutions has costs impact improved especially of under negative reduced continue gross fiscal to under of compared impacting in margins by outcomes construction volume, segment. the X.X%, to which Terminal as have and

$XX.X was worked in negative hold quarter despite to SG&A continue the low, the overhead as to impact costs Our million inflation. of

incurred $X.X and the we of efficiency also increasing support our our efforts office of transformation toward continue We as effectiveness costs services. back million restructuring

level expect incur in quarter. We the of similar costs a second to

of expenses $X.X Finally, we other million with fluctuations. incurred currency associated

quarter, is zero in As projection was full the year. the for tax our fiscal rate expected, which our effective

bottom periods. results continued significantly line better than Our revenue prior margins improved produced growth and

was an share. quarter basis, loss loss million EPS for per and our adjusted $X.X million loss was net the or On was of Our $X.XX a net $X.XX. $X.X

EBITDA adjusted positive our Finally, improved to million. $X.X a

quarters Peak than $XX.X couple Now previous that which revenue of our are Infrastructure, as we completion In final projects a the Shaving was segments. turning was carrying million stages to margins. Utility lower Power low are in and of

expect ramp in XXXX as modest improvement this in We fiscal volume revenue capital new projects up. segment

an from improving was backlog T&D previous quarters gross which and X.X%, quarter first portfolio execution an due on improvement work. electrical was The margin strong and to

was a almost breakeven execution of the facilities, refinery, level. segment for to produced minerals million to and gas finally, positive. Terminal which capital quarter, operating partially at income strongest increased The In that Gross strong LNG diesel, the to and million a offset chamber to improved level. and on industrial $XX.X income projects. Storage X% by $XX.X Solutions, renewable work, related As mining the vacuum revenue produced due operating And strong on other process and result, work and a to results segment revenue thermal slightly processing. continued margin in returned

further X.X% improving by overhead strong segment the this see recovery of in based second on in quarter. expect and was better improved portfolio awards. costs. We year construction revenue significantly This expected and The gross and increase project driven in the execution, the of half to new mix margin to

third in strong tank quarter revenue a margins since the which quarter. addition, is record X.X% the fiscal produced products operating resulted increased income In the highest XXXX. The the and in a quarter, of positive business of

$XX.X total cash million to Now in million Liquidity equivalents to ABL million and of we of facility. and $XX XX, and turning The the comprised cash September $XX.X facility. XXXX, the of At has under had of restricted company unrestricted $XX.X $XX of million million support cash availability liquidity. borrowing debt. ABL liquidity also is

XXXX, rising As a first since especially of temporary for driver cost during decrease working the which XX, revenue and work, type a the maintenance liquidity increased fiscal our in volumes, result of quarter has June of capital XXXX. reimbursable investment is in primary

we work the mix the expect to of upon its in communicated fiscal improvement the project first quarter flows. the move be fiscal the demands a will and through forecasted we see position level at and of timing capital that we is we remainder On company of the expects increased based consolidated a experience year. liquidity Overall, see including pleased the a through the to why significant quarter. cash to achieved we the first improvements in sheet. second balance as and basis, to revenue work, strive to maintain to conservative are similar Based improve have quarter year. previously fluctuation This the We working profitability of additional capital expect mix and on projects,

second project profitability. the should through move additional revenue fiscal see awards anticipated the and as result as margins recent in half strong from we will improving As that year, benefit well growth of we and

questions. open now will for We

Operator

Thank you. [Operator Instructions].

Our of John from comes Sidoti. question Franzreb line with the first

Your is line open.

John Franzreb

the Good morning, for taking thanks questions. and everyone,

John Hewitt

John! Hi

John Franzreb

like pipeline. the opportunity quarter. I pipeline nearly a driving sequential billion previous Kevin, increase? start to opportunity guess I’d what’s with from It’s $X the significant such up

Kevin Cavanah

activity in we’re So a lot seeing storage. vessel specialty of

projects, knew a LNG in with we’re that’s in so works for of our our were our of lot projects decline. so and out segments clients in-house opportunity seeing reason a portfolio. core now projects that hydrogen-related to interested just that lot in seeing in projects they as starting shaving, of related those activity are of around so some the a as some and majority would and are of across and activity peak projects the we’re come clients We’re engineering pricing general, they into ready-to-go are come I more in, And request adding for of our seeing we departments

John Franzreb

utility the Okay. Since what’s a the business? the to that set brought near it is sweating that outlook you be still side tough Is the term? to of improve going up, bit in or little on

John Hewitt

said perspective, comments, segment a utility we shavers. now, infrastructure we’re commissioning think volume is from as I No, start-up going that’s peak that wrapping Kevin in electrical but also both well. We’ve in that got up. work It’s and his do, in job X

smaller revenues we’re press year albeit had in We going so as peak by there of said booked the the past. just little the know those substantially – facility, diminished. to so release shaving in complete you the that’s booked a another know ones and the we You be we end than calendar are

the us some on then the And for quarters. our flowing revenues to engineering into that over here, segment to materials third there’s and starting next quarter, probably booking start fourth. other the expect from we opportunity you here peak facilities so shaving know start two And that into

segment, lot the two a certainly have next the three are look expectation the next more majority in to going we that quarters. the the out be so of the revenues Electrical of Infrastructure near here And over over term an – least in But revenues or work. we at as

see to revenues. and going there We’re improve backlog

John Franzreb

they case? lower priced give business out credit worked through be during the in. we’re they And to they that all in the talk are this of And you to? booked about that the the supposed and were end or largely currently I Infrastructure Power are when quarter the jobs you still more than of by some Utility spread Is downturn, that

John Hewitt

Utility, – about were the Facilities. they the we segment in Industrial most Process had projects concern and in the the No, that and were UPI

in those substantially And continuing complete so, here work know through the you will one quarter, third it be we’re to in really the projects, quarter. of third complete but

John Franzreb

just it And capital this balance correctly, be one I if Did quarter, working I requirements third quarter and of question, the If troughing during were last understand I on this kind year. it. of for improving finished In properly? got the you will guess heard Kevin the should note. that

Kevin Cavanah

Yes, you got right. that

during So a quarter, lot of we’ve work normal. revenue reimbursable activity. is – than higher percentage a first the Reimbursable of

From think of I cash going it, a I forward, this the work. it’s we’ve moving got look all back the activity. fiscal revenue in think different will be year, all the forward I reimbursable that’s and flow growth point the than reimbursable first you capital to curve the is think ‘XX if So the stuff. of type and know, growth bulk of far had so be part what so That in you

cash result in QX. positive beginning have you correct, So I see and – that think in will so mix cash you to in are change

John Franzreb

in get the Okay, perfect! guys. Thanks queue. I’ll back

Operator

Please question. by stand next for you. Thank our

of Our D.A. with the Thielman Davidson. next question comes line Brent from

open. line is Your

Brent Thielman

Great! sort pipeline better to or had I things you I’m the seen you of into the project of an Hey have the last One just absence that couple could of morning. versus you maybe opportunities, the years what you it I was good compare workforce. larger of prospects call kind remember today leverage those types Thanks, if you the of John! XX visibility about previously. allow you months you of spoke wondering know know guess and

John Hewitt

last the and XX I months, quality pipeline clients of think – of over the the in say I’d the through the – projects increased of size accelerated the readiness those those probably course average of and opportunity the the has clients and have the improved.

And longer-term I a all start a together it’s of it’s good for at us scale, think backlog. some larger so of combination those to things, quality time adding coming and

Kevin Cavanah

this numerically, ‘XX or year two and the are got if fiscal that projects you ‘XX. fiscal than fiscal in we’ve already it I in any at award just larger think Yes, look – awarded either

Brent Thielman

what helpful. that’s like pretty the how you sounds And know to Yes, a if and shed light remember pursuing were good of could kind prospects ago LNG up you yes, then opportunities of know, It historically for kind any previously opening seem of peak you? now. been XX of versus you you’re shaving just you opportunities potentially have got I selected. you host those many Maybe saw on months

John Hewitt

kind – last Yes, probably today at a our was that probably months were peak of shaving I so XX at a scale think large and gap in least a opportunities it opportunity the in and combination. full it of there’s any pipeline, you look there’s

in opportunity full So to and there’s a small facility, and upgrade or lot that there’s the then out of those. a there’s peak of repair And handful probably projects shaving facility of are market. a scale LNG there the an upgrade

many ‘XXs XXX those in of know think upgraded. ‘XXs a I past, in group, peak about around the utility or important the as is storage lot the about said those shaving know becoming and things more cryogenic one the utilities that You and it’s And a built engineering fleet, are our specialty which were it is we’ve in of existing it facilities current to fortunate a to you has facilities. of designed of in the lot local operate, those needed now built that

up ranging be and to $XX million million, of that projects $XX they’re you’ve million know a from benefit come with them will million necessarily They then a could it there’s not facility. directly to range. the in competitive projects the us, the their they $XXX projects. bit a kind gives So of million because $XX range, associated to legacy because our clients got $X of huge handful are that And range,

Brent Thielman

But any of know project starting LNG, crude And towards any Okay. there. curious if like side hydrogen, up the business NGL, on of evolved that. things I just shoots sort prospects there’s sort and pop to green are whether and

John Hewitt

Yes, we in crude for have prospects some system our storage.

little hurting crude market now bit pretty I that kind think of that’s cheap. things of a storage right is one is the for

minutes Cushing the – of and look majority flowing minutes XX we’re office – and here very Cushing, and crude’s know in our a flowing there’s storage out office in at the you You retention. from or in from empty, what’s is our little XX

new And bidding. network near nowhere got you the know storage storage to be. We’ve expanding clients is that logistic it’s crude we out either but used couple a into occasional But the there talking with makes are there the tanks as backlog, certainly so there some it in it have that or volume that building are connect we new probably our sense. either been storage their about, to

to clients Europe what’s there to there’s them, on on trying are Europe. based a of that going couple out of in Some Eastern connection crude, create for a

there significant some there, out activity talk, this nothing near is So there but some term. is

Brent Thielman

theme chain starting been can Yes, are a yourselves industry okay. of as talk like of other John, going the season work, shield you the one delays all I I’m moving you’re in to wondering, is more schedules around. of to this what supply up things earnings equipment, just stuff pick you assume from sort of lot to And repeating kind the on. kind then just continue the protect yourselves, project in just seems about has in doing

John Hewitt

Yes, sure.

know like the feel it and – impacted last caught sort So of over we so we our certainly – XX we’re business you months. here

the with issues, think know know global a we come you the that economy caught curve to back of starting contractually I caught so of That curve. got pandemic, of is and lot upturn top we supply You and when chain the at rebounded that sort and from caught that, we’re down.

you with continues kind to We know Delivery, start content or particularly seeing delayed. of some that. to be alloy metal are components down. know high around come electrical We prices anything

we’re our a cases our with of able risk schedules and in work our and ability with on in project our commitment. to business. that We’re clients including protecting We’ve been that lot to meet uncomfortable pricing to that

Brent Thielman

the I of appreciate Best all okay. comments. Okay, luck!

John Hewitt

Sure.

Operator

Thank the the questions queue. you. back John would remarks. I’m showing in closing Hewitt over to to now turn call further no I like for

John Hewitt

further us appreciate to look for Company. continued joining to move Service appreciate through everybody Thank and today’s Matrix Well, I year. we I and call, you. We you support forward talking of certainly your the commitment as

Operator

concludes this your gentlemen, participation. you for conference and call. Ladies Thank today’s

now may You disconnect.

Matrix Service (MTRX) 12 Nov 222023 Q1 Earnings call transcript