Earnings call transcript Q4 2023

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Operator

Good day, and thank you for standing by. Welcome to the Matrix Service Company Conference Call to discuss Results for the Fourth 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] Please be advised that today’s conference is being recorded.

to Smythe, conference Relations. Senior like speaker to now Kellie today, Director would hand over the your I of Investor

Kellie Smythe

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

me Before of we plans begin, you the Reform Act Private that constitute today’s please various Company future Service let call, make we Securities expectations, Litigation remarks forward-looking Matrix about XXXX. remind may of statements purposes on the for prospects and that for

and may recent reconciliations results result a in various and Actual by indicated will materially report periodic SEC. non-GAAP the those in press SEC To annual be statements extent, on website. releases, filings our differ on these we those filings measures, various the as forward-looking XX-K utilized our company with factors, subsequent discussed most made the including provided by of from Form

Hewitt, the access investor I’d turn to several to call I about over conferences share information Before opportunities. like corporate John upcoming and

which will be held at one-on-one Annual September the Conference, and meetings and be XXnd. Services will holding Diversified in We D .A. Industrial Davidson XXst Nashville,

Conference November the hold hosted Non-Deal finally, at XXth. Annual a And XXth have will Stockholder and & Sidoti meetings Virtual and Micro-CAP for Roadshow the one-on-one will virtual Rose Company XXth is October. present we Company Service We November by planned in Matrix Virtual On Meeting.

events, you on through like any contact If website. Company Service of information us you Investor I Relations additional invite these the Matrix to would

to over call the turn John. now will I

John Hewitt

years long-term Kelly, set growth, past performance, good working business and group over We've success. morning, up the been everyone. Thank few hard to you, and for the

work, at-risk a volume I an more of and want of maintain results new work project employees, performance of seen the of ,pX duty attention site and expanded rise it Recently, incidents in before begin number to the X:XX:XX.X overall safe see leadership. to bank's even this a footprint comes the demand our industry by everyone larger increased to will more hours, geographic an construction saw more activities. of kind a to the challenges operations, pandemic. we As the employee field and remind With occurrence safety of environment. This has even during job achieve increased

safety the safety including of extra injuries. enforced and our peers the Everyone the performance record processes height which prevent incidents spread Matrix in procedures, protocols and as significantly during disease. the health reduced and resulted the saw about vigilant became strictly industry pandemic on of focus to were everything,

As work the of normalized to most planning and and training culture, is are environment, industry all a decisions. returns as awareness, critical more situation individual

safe do Each every number on our every is every challenge provide our or a of themselves has every Matrix, to must the and and that at At have right, to level. to leadership important experience, to be others. and duty and better employee keep each right Safety environment not employee ourselves one is we a and day. company, stop core only work that value is feels value their activity industry unsafe. if but Equally expectations, accountability our to accountable can That I a other proposition. us, everyone

position today. And of the put strength, to in where in a forth from effort team would issued press get the moment, position years. the I'll we Matrix our release Turning XXst, to acknowledge us to recap a well our to the saw listeners includes highlights entire those the in today we all as August as the which afternoon. best I are Hopefully backlog earnings first is release on Matrix like quarter. releases four yesterday key for today,

and have core ensuring We expertise, strong markets. are aligned brand transformed more cost while our with our organization be efficient skills, our to

with to the We quality customers. deliver our operating processes on touch positioned like best-in-class safely improved for are execute while to the means some what projects and I'd our future continuing of accomplishments recent to for of that company.

resulting with fourth resulting announced amount of or of consecutive This annual $X.X book-to-bill ratio X.X. earlier, at total in the fiscal in we a book-to-bill million billion, four five year, fiscal generated to our eighth quarterly quarter, of As totaled our X.X. the X.X. a book quarter years, in awards in full highest is years, awards $XXX above of in awards With highest we bill a a

it the operating year, or above our at and our in X.X each was the reflecting strength momentum For segments, of business. of

the of a utility have traditional June expected year the segments, capital XXXX, we projects, to across on fourth not the billion. year X.X This year, While and only of end with backlog is power company XX% that of course capital We've backlog the maintenance book-to-bill cap with recording a large of an that billion, high and year-over-year a said strong over the and and backlog pleased work. and as and The the year. north been Earlier quality to small contains $X projects our for this recurring consistently project were report our a was each that ending quarter back of of represents X.X our XX, backlog positioned segment but the also awards. larger backlog we well I'm repair for increase. standout, $X.X long-term infrastructure building I

cap these average strategic to on small services, annual company's It and portfolio to revenue. represent that repair are the note XX% our projects, and is of important over maintenance

projects the fifth various EPC set facilities. peak of XXXX, leverage bunkering, storage Matrix for fuel plant and utility Matrix full Carolina. three North ship cryogenic combined While shaving with our us we power the awarded completed. for and gallon facility of December to strategy day growing most plant clients their the LNG will per our is detail award of will be XXXX Dominion small balance greater recent peak This a follows capabilities facility units, disclose facility peak to with relationship XXX,XXX them gallon premier permit client This LNG since offer we in LNG day at City with a to to with brand includes shaving out which medium-sized Energy so, deepening specific facility location. LNG Salt backup as clients our are fueling individual supply, solutions do exemplifies per rocket This Lake completed our export Dominion to the market into in XXX,XXX for peak in shaving market. shaving grade

teams as our new have market award. in Our with built clients has achieved repeat with lasting pipeline relationships is this like position opportunity and strong The in a recent market small both this Dominion. long evidenced performance to and the LNG dominant end mid-scale execution

already work into Given opportunities we of to and volume backlog the combined expect projects fitting this the these positioning to ongoing term continue proposed our types feed future. of and adding in study and out near with the the

very segments medium-scale small and in continue core Beyond LNG be to the we strong across our active market, to all the markets. position

brand ethane, clients. development of liquids. well for natural for industry-leading hydrogen and we vessels storage various extends to vessels and facilities, brand gas large-scale solutions for That as specialty other example, storage have For and an facilities ammonia, as

substations transmission, a choice and company. work electrical services and strong position for infrastructure contractor for the growth Our to distribution other from electrical potential presents

Carbon construction capture are growing. opportunities

in lower a on many be refinery process new terminals, carbon to of focused as fuel and energy crude maintenance storage continue such both traditional turnarounds, and We product repair in which and leading refining. renewable tanks build are remain and projects, refined contractor active maintenance. for and We repair, and improvements

projects an EPC compression, petrochemical, basis skills, E-only , and binding engineering chemical capabilities. our construction aerospace And experience, mid-stream leverage on full C-only, minerals, finally, gas and project and in or

our macroeconomic lay business drivers these positioning, and energy end grow be security, infrastructure Between will organization, commodity on diversified All the foundation to macro phase global drivers, which energy them, the reshoring, market demand and that renewables, sustainable assurance, the behind build during the XXXX. infrastructure support to future. energy to meaningfully calendar tailwinds our project supply and and investments markets will portfolio, domestic into industrial strong goals, federal including start have transition backlog of we flow clean to into year well will focus, for transformed our continue and

Kevin review results to call you now of and how the hand coming into I'll sense over quarters. will backlog revenue over to transition a give the our the

Kevin Cavanah

and pleased Thanks, we John. the improving are in Overall, the fiscal quarter the business XXXX. the during of results fourth we are seeing with trends

revenue decreased impacting backlog Two $XXX few the previously business $XXX as volume years of below million. limited have Revenue the the our result We our was talked years. and million, quarterly about dipped low project award activity. issues a ago, to past

outcomes resulting that period. by in during our very well of caused were that our construction issues our poor which levels addition, bid on during all range dominated awarded below a environment, limited revenue leverage under-recovered for historical SG&A, In opportunity results margin projects and the projects revenue to and was margin that competitive in overheads below combined account that were resulted of These expectations.

reduced line costs. We has in markets, overhead and improve performance, a focus We providing and tightly or business structure consistently results. continued improving future core transformed company consistent and closing manage We XX%, with to sustainability initially by focused bottom selling business ultimately been have these our non-core stakeholders. all working since and results for The to long-term to our assets. our more streamlined the increase the for on efficiency,

projects improvement a business The XXXX better have core the fourth business Finally, to more with for making with objectives. focused are marketing we backlog we our our markets, fiscal present of quarter development our that approach opportunity. toward progress demonstrate been the results growing in

look XXXX closer and and was continue. at significant Let's fiscal backlog. to trend take awards throughout expected award is a activity the project Project

long-term projects opportunity into fiscal revenue the These booked construction. year time, also expected and higher recover we $XXX the project to XXXX At transition from the through as construction revenue awards. drive more in just of level margins. as our XXXX and fully in our over backlog and in leverage XXXX will The capital with will with is of most million beyond awards per engineering benefit $XXX SG&A. During million is us awards the fiscal margin fiscal in line appropriately project averaged quarter. significant fiscal This increase we move in XXXX, historical second averaged we allow the overhead from under same half

make backlog quarter to from factors X.X%. The trends increased where prior results completed begun key we these XX% marks improved to revenue XX% provide quarter an historical which metrics. addition, business newly In consolidated margin of $XXX.X Gross of return to higher substantially I our gross margin mentioned quarter contribution range previously. year projects achieve to environment competitively these Revenue margin the a impact. X.X%, fourth highest and evidence Together, provide projects an can for quarter priced have good gross XX% occurring. significantly the to awarded the as of than are the of to the million and of third has we

overhead result to construction in We recovered the a construction storage XXX to Our XXX responsible impact under it in from and in XXXX executing tanks our as projects, improved capital improved basis view project margins fourth to quarter third and of point the terminals. fiscal XX% in investment recovery. the and increase approved divisions due overhead as The basis impact revenue. related a impact quarter including strong our a primarily as large sequentially execution from for under in future recovery overhead an the point

optimized in was our pipeline eliminate will through as opportunity million $XX which higher the Consolidated the and company the the the and this quarters leverage of were XXXX. in revenue prospects revenue the its first strength The to continues awards quarter, to on structure investment with drive expenses fiscal necessary expects and cost improves. SG&A and XXXX, consistent year. three recovery focus fiscal This fourth in the under of given control course cost

the net also the of share performance the quarter, The loss company share $XX.X to business or non-core quarter. with producing $X.X third business million a improved million the $X.X gain resulted in overall per We completed sale of $X.XX which million. in fourth a a small, of of net during or $X.XX loss the compared a of significantly per

the mentioned of $X.XX adjusted the loss quarter, from the had quarter we EBITDA Adjusted which of or fourth sale $X.X to positive loss excludes previously $X.X share, of the gain was compared million million in For an $X.X a the assets. the per non-core as quarter. third in million net a

third as million quickly fourth from as quarter quarter capital to compared and in revenue XX% the contribution recently Terminals revenue Turning to $XX.X million segments. projects. Solutions awarded increased the to of Storage a in the $XX.X result

volume, significant, schedules. margin due we of occur was overhead lower project was negatively costs. led execution revenue X.X% increase impacted expected to it in changes to was than construction can of under-recovery by which the that While Gross low the

the impacted basis negatively improved, While XXX by gross still over under-recovery margins points.

quarter, increased margins John market for during enhanced facilities The QX this in driven costs. primarily start Solutions As results LNG, NGLs, prospects opportunities the project recovery achieve revenue XXXX short and of to Power improve awarded awards and continue on the million during to such, issue the by expect million $XX.X that strong, and we are was the gross quarter. improved and to in beyond. Utility eliminate added power peak-shaver the fiscal and are to a quarter execution for backlog and drive LNG the And in mentioned, quarter to positive. begin projects, as Infrastructure in previously strong half full Terminals ammonia, to X.X%, the hydrogen in of increase. was $XX and the storage year revenues overhead under-recovery from project construction Storage and fiscal the from long-term the as operating segment, third of revenue peak-shaver In segment compared revenue delivery segment second fourth and will Fourth margin second

quarter discussed which and increasing $XX.X the margin a This million to quarter. level the line to completion and included project, forecast, we previous our in Finally, Industrial will project we the compared Process in fiscal X.X% quarters. in XXXX. be in have in previous of remains quarter processing immobilized fourth mechanical of the gas Facilities, third in Fourth reached $XXX.X million midstream quarter strong, revenue with first gross

gross segment to fully revenue and Other aerospace, amounted segment work and contributed recovered of and strong XX% construction project project, costs, of overhead on in including a approximately performance. a refinery margin to this renewable This margin XX% segment, diesel maintenance, turnaround which approximately produced execution.

non-core of completion this the as decrease assets, fiscal revenue With the the XXXX. processing well certain of as project, gas in will temporarily sale in segment

a markets is that drivers the well benefit to backlog However, scheduled in given for the fiscal early this to project by as large XXXX. segment, reverse revenue as is expected this served decrease capital various and

turning Now the balance to sheet.

$XX is of $X at of up leaving cash million facility, in to of is During and $XX.X credit the $XX.X the borrowings million of million $XX.X availability. slightly fourth quarter, our quarter $XX the comprised also to $X.X borrowing increased after of of million our million June Liquidity of paying back restricted on $XX.X cash million has balance unrestricted support credit million cash Company XX. total million facility. borrowings and

the conservative in of position Our business management in the the in a puts growth balance us to XXXX. fiscal support sheet

about are issues lies We what results and operating in three that the are improved for with believe our fourth have the excited years us Overall, we past past moving the the quarter expectations. line impacted we ahead.

be quarters or fiscal and the fiscal level show couple awards strong the of about the revenue expected a as half We second of will year growth awards XXXX in of as fiscal the as expect current first fiscal in in XXXX. XXXX our then well result in at

expect QX to similar We of levels QX award XXXX. to be

to expected line adjusted For of similar will half expected the a but the the this significantly as year-over-year second the pattern EBITDA fiscal year. of as near results breakeven results the positive fiscal the revenue first is income year, generate to create growth. bottom the The will XXXX, year, half stronger revenue across in follow result in full significant be fiscal net

targets. we through the toward our anticipate move financial fiscal we As longer-term accelerated movement year,

to John. call back the turn now I'll

John Hewitt

Thank you, Kevin.

spending markets Before some work awarded open meaningful to I'd commence questions, in our today. way key a like takeaways in beginning reiterate The for for recovery materialize we on end is capital projects. large to recently we as

transformation that we our the our have industrial that visibility has energy serve, maximizing approach foreseeable client will into opportunities markets the an internal and deep We the strong projects performance In in we optimized hold further We have lower tailwinds, after and global are to we for strong end carbon relationships and growth come. near-term energy lead push our the markets, backlog revenue believe and our on term, structure. reshoring to multiple resulted towards and future. the ongoing will focused long of that operating strategic supply security, industrial expect energy all activity, for strong reshaping the to business drive our create profitability years

about backlog talk price represented better size and business our to was like price and XXXX, its a don't of the generally potential. but a valuation in last had share on I this share the we June earnings time our of Finally, much of calls,

execute revenue a opportunities strong we path backlog our and on confident markets, generate on value see stockholders. we pursue to for our As I'm are we our in the end further

With that, I'd like questions. to call for

Operator

Instructions] [Operator

first question Our comes with Sidoti. Franzreb from John

John Franzreb

John, everybody, kind and bookings for that's on how if completed, results you on morning, update? job that not, gas Good hit the me of great weighing congratulations Can I'd quarters. past another been P&L? to the Is job start will processing the or some long with like quarter. to continue couple give

John Hewitt

night. the of victory on Yes, so first all, last congratulations Jets

John Franzreb

Thanks.

John Hewitt

It was painful.

John Franzreb

quarterback. I can find hope you another

John Hewitt

quarter. gas forecast do the that clients which a Facilities good, the in completion fourth process and change running, of completed of project, and up material and reached the quarter any expect will so with demobilizing, processing demobilizing are mechanical in be not we relationships we in Yes, job. the this in

Kevin Cavanah

it that with we so quarter. in last forecast the fourth line results the be had to basically clear, quarter, our And came in

John Franzreb

quarter Right. roughly. a has $X drag million or been It's per

you Is second. to that done and the be into I'm dragged the what continue quarter from hearing So largely guys? by first

Kevin Cavanah

in have smaller here. impact a quarter the It'll much No. first

John Franzreb

are going the like to in about expect fiscal exit And remarks, is above not? also, that awards XXXX. a your it. with looking you going to first fourth I be And think quarter. XXXX be a the prepared of to half $ the it's booking regards or billion Would threshold similar profile to of to in your Got you quarter X said half first comments good backlog Okay.

John Hewitt

Yes, as than exit where a backlog I proposal negotiations on would we position timing and that awards the entered we contract based our some and it. by in are think in script of seeing activity in what year always, is our fiscal but we everything's expectation the market, better we're

John Franzreb

bit Great. labor Great with talk going news. level Are have satisfied And given or profile? just a staffing little are you staffing? add you you and to backlog lastly, booking about can that profile, given to the personnel the current

John Hewitt

Yes, no, for I operations our level, into positions us think from there for projects. to opportunities key a our professional are add

we've so or over And the the in two saw been we pre-active was quarter recruiting that because coming. last work

I continue we'll think for to we've from able recruit and craft North to engineering craft labor our around get do that have And sites both being been of successful So job pretty America. in to opportunities resources our always that, standpoint, project and then and resources. labor a

one good business pretty where want we while that challenges we of people job work. certainly do is a the of our creating think to always peers, so, and kind our employer to choice And situation for come that of and

Kevin Cavanah

office have. the the do that trying I just is we're we add one back on to things of cost structure leverage

increases there mentioned where augment if areas should so, staffing. at And need you back our office potentially there. minimal look current we'll John be to But

Operator

with comes A from Chornous question D next Davidson. Our Oliver

Oliver Chornous

XXXX. was Thielman shield Hi, tax I'm losses wondering I for available if discuss have could your how you and net sitting today. for expense offering for should Thanks the Brent guys. that fiscal in you having me.

Kevin Cavanah

we're there do attributes to of so out utilize. have tax Yes, a we number that able

fiscal see ‘XX. an So rate to I extremely you're tax effective going low in think

our Somewhere ‘XX. will into in That digits fiscal estimate. also benefit current low the is single continue

around little than, tax estimate My guess an I be rate but low going think be will XX% be the right a to somewhere probably it's it'll probably now. still as compared higher is rates. historical to

Oliver Chornous

that improve the then talked versus XXXX? volume of year especially profitability, and industrial facility project XXXX Oh, anticipate but we a second, get through process talk could about so this And that you as we lower the just about? Should segment that's great. in Thanks much. we context work

Kevin Cavanah

until That's awarded exactly on the we of -- right. little was third got timing that segment, there. when got a We'll start. gap There issues had a very project dip a completed there some the in of we've and project benefit so that's that will And bit be that, capital the revenues have will quarter revenue in ‘XX. in now, first this a has fiscal projects projects meaningfully project

In assets. non-core addition, we sold some also

So and increases but be that will should when down, decreasing in about, that's think segment starting in benefiting be the projects backlog you well, I other the on fiscal year. think the profitability better. segments, this the will And ‘XX those be

revenue the basis, some from I a that for clear year. consolidated be growth expect So want to fiscal we good in

Oliver Chornous

on I That's capital last if as you're discuss Awesome. it can priorities? the great. I then, Could table see in. sneak allocation And you your the M&A stabilize? guess, to question, business Is starting

Kevin Cavanah

so focus to been has Yes, profitability. now, returning our right

-- putting Our be projects in our so related on will to is we're to these the ones and backlog. that put capital backlog priority executing in be going

could So be means capital, to be there. the may additional second manage M through we past that'll year. years, need the continue flows so working yes, positive spent going we'll include to could few expenditures Once the priority. return you're priority. the about &A. capital We've CapEx But a to then less there right expect next CapEx be make. to be And see cash steps as I on we That'll our think some which we'll we would profitability, that what's move that there definitely

Operator

[Operator Instructions]

with Our John comes from Franzreb Sidoti. next question

John Franzreb

hit that your would expectations that kind curious backlog I'm to about the just for of jobs expect would Inflation we thoughts related helpful? be Act. see any Yes, your profile, And Reduction about to when

John Hewitt

shovel-ready us is available. calendar a opportunities when running necessarily they'll for having we in start project I But our weren't think expectation think is dollars projects what impact became what into ‘XX. material that they those on

John Franzreb

the looking that turnaround gross a And is are going on it see segments, lag how called where to meaningful bit, going at the given we margin it And backlog but first in across segment recovery little the basis? slow a most to where it had it. you about profile, should the impact? meaningful think Got maybe

Kevin Cavanah

So the in benefit to storage. to biggest fiscal in is to start I going see think with ‘XX going be you're

And think going recovery that that, I segment. growth that's year. and in eliminate to coming revenues margin the is opportunity. to see under issue pretty present And that's you'll do increases projects going a of been move the top through significant be good that from that on

you of shaver performed expect in second really strong delivery, So last from work and good I would of to us the is teams power I the think can margin our those a growth we've margin peak company. that year going best for in that this utility combined pretty say from the the the the be with segment, some in good segment. got aspect extremely work segment, result

I'm So that. trying continue that's been good to see. sure to And they'll be

and think talked facilities. industrial process about I we

again, performed to but has throughout be rest lower the going on the well revenues, the is profitability business of better pretty think I the it year.

Now that's of capital work. work a and maintenance reimbursable mix

So heavily year. three see three it segments bit or to the But that project good see, margins, or I to margins bit different impact mix a a has think can the should in all of because weighted reimbursable. margins, all little forecast it's

think I happen until to second not, probably get the we half not would definitely the It XX%? will of the can. consolidated Now, year. we

John Franzreb

the helpful get very your arm And for was John, Thank Kevin. you. insight. ready. Great, That

John Hewitt

Okay.

trouble. in You're

Operator

Hewitt any like to call closing remarks. John to Thank you. for back the over turn I'd now

John Hewitt

Appreciate thank everybody of a Just Thank again. quarter And you. you attending everybody I we wish to call. to the your you continued safe company. have for until to support today's speak

Operator

call. participating. conference you for today's concludes This Thank

disconnect. now may You

Matrix Service (MTRX) 12 Sep 232023 Q4 Earnings call transcript