TULSA, Okla., Sept. 11, 2023 (GLOBE NEWSWIRE) -- Matrix Service Company ( MTRX) today reported its financial results for the fourth quarter and year ended June 30, 2023.
Key highlights:
- Project awards of $463.6 million and a book-to-bill ratio of 2.3 for the quarter; full fiscal year awards of $1.3 billion and a book-to-bill ratio of 1.7; highest quarterly project awards in five years
- Backlog increased by 31% to $1.1 billion compared to the third quarter of fiscal 2023, and by 85% since the start of the fiscal year; highest backlog level since June 30, 2019
- Fourth quarter revenue of $205.9 million, an increase of 10% compared to the third quarter of fiscal 2023; full fiscal year revenue of $795.0 million
- Loss per fully diluted share of $0.01 in the fourth quarter; adjusted loss per fully diluted share of $0.11(1) excluding gain on the sale of non-core assets and other non-cash items
- Adjusted EBITDA of $2.3 million(1) for the fourth quarter of fiscal 2023 compared to $(7.7) million in the third quarter of fiscal 2023
“I am extremely pleased with the progress Matrix made over the last year and excited about the prospects for the company. We ended our fiscal year on a very strong note with backlog of $1.1 billion. In the fourth quarter alone, awards of nearly $464 million resulted in a book-to-bill ratio of 2.3. The company is positioned with high quality backlog which will generate significantly improved results in fiscal 2024 and the next several years,” said John R. Hewitt, president and CEO. “As we commence work on recently awarded large capital projects, we have strong visibility into our revenue and are focused on maximizing our profitability after undergoing an internal transformation that has optimized our cost structure. Our strategic approach to end markets supported by strong tailwinds will lead to continued backlog growth and strong performance for the foreseeable future.”
Earnings Summary
Revenue of $205.9 million during the fourth quarter of fiscal 2023 was higher than revenue of $186.9 million during the third quarter of fiscal 2023 as the contribution to revenue of newly awarded projects has begun to make an impact.
Gross margin was 7.1% in the fourth quarter of fiscal 2023 compared to a gross margin of 2.4% in the third quarter of fiscal 2023. Our margins improved sequentially due to strong project execution and improved construction overhead cost recovery.
In the Storage and Terminals Solutions segment, revenue increased to $64.1 million in the fourth quarter as compared to $52.2 million in the third quarter as a result of revenue contribution from recently awarded capital projects. Gross margin of 3.2% was negatively impacted by low revenue volume, which led to the under recovery of construction overhead costs.
In the Utility and Power Infrastructure segment, revenue increased to $39.1 million in the fourth quarter compared to $35.0 million in the third quarter. Fourth quarter gross margin was 9.6%, primarily driven by strong execution on power delivery projects and a peak shaver project added to backlog during the second quarter of fiscal 2023. This segment fully recovered construction overhead costs, which contributed to margin performance.
In the Process and Industrial Facilities segment, revenue increased to $102.7 million in the fourth quarter compared to $99.7 million in the third quarter. Fourth quarter gross margin of 8.2% was negatively impacted by continued work to close out a midstream gas processing project with a reduced margin profile. This project reached mechanical completion in line with our previous forecast, and we will be demobilized in the first quarter of fiscal 2024. Other work in the segment, including refinery turnaround and maintenance, aerospace, and a renewable diesel project, which amounted to approximately 80% of segment revenue, produced a gross margin of approximately 10% on strong project execution. This segment fully recovered construction overhead costs, which contributed to margin performance.
Consolidated SG&A expenses were $17.0 million in the fourth quarter, consistent with the first three quarters of the year. The company continues to focus on cost control and expects to leverage its optimized cost structure as revenue improves.
Our effective tax rate for the fourth quarter was 9.9% compared to 2.8% in third quarter. The effective tax rates for both periods were impacted by the valuation allowance placed on all our deferred tax assets due to the existence of a cumulative loss over a three-year period.
For the fourth quarter, we had a net loss of $0.3 million, or $0.01 per share, compared to a net loss of $12.7 million, or $0.47 per share, in the third quarter. For the fourth quarter, we had an adjusted net loss of $3.1 million, or $0.11 per share, which excluded the gain on the sale of non-core assets and other non-cash items. This compares to an adjusted net loss of $8.9 million, or $0.33 per share, in the third quarter(1).
Backlog
Our backlog of $1.1 billion as of June 30, 2023 represents an 85% year-over-year increase and the largest backlog since June 30, 2019. Project awards totaled $463.6 million and $1.3 billion during the three and twelve months ended June 30, 2023, respectively, leading to book-to-bill ratios of 2.3 and 1.7 for the three and twelve-month periods, respectively. Bidding activity remains strong, and while the timing of project awards can fluctuate, we expect the trend of improving backlog to continue.
The table below summarizes our awards, book-to-bill ratios and backlog by segment for our fourth fiscal quarter and full year (in thousands, except for book-to-bill ratios):
| Three Months Ended June 30, 2023 | Twelve Months Ended June 30, 2023 | Backlog as of June 30, 2023 | |||||||||||
| Segment: | Awards | Book-to-Bill(1) | Awards | Book-to-Bill(1) | |||||||||
| Storage and Terminal Solutions | $ | 41,359 | 0.6 | $ | 354,510 | 1.4 | $ | 270,659 | |||||
| Utility and Power Infrastructure | 360,714 | 9.2 | 526,963 | 3.1 | 459,518 | ||||||||
| Process and Industrial Facilities | 61,522 | 0.6 | 444,148 | 1.2 | 359,921 | ||||||||
| Total | $ | 463,595 | 2.3 | $ | 1,325,621 | 1.7 | $ | 1,090,098 | |||||
____________________
(1) Calculated by dividing project awards by revenue recognized.
Financial Position
At June 30, 2023, we had total liquidity of $92.5 million. Liquidity is comprised of $54.8 million of unrestricted cash and cash equivalents and $37.7 million of borrowing availability under the ABL Facility. At June 30, 2023, we also had $25.0 million of restricted cash to support the ABL Facility and have reduced borrowings under the facility from $15.0 million to $10.0 million.
(1)Non-GAAP Financial Measure
Adjusted loss per share is a non-GAAP financial measure that excludes restructuring costs, goodwill impairment, gain on sale of assets, the accelerated amortization of deferred debt amendment fees associated with the prior credit agreement, and the financial impact of a valuation allowance placed on our deferred tax assets. See the Non-GAAP Financial Measures section included at the end of this release for a reconciliation to earnings (loss) per share.
Conference Call Details
In conjunction with the earnings release, Matrix Service Company will host a conference call / webcast with John R. Hewitt, President and CEO, and Kevin S. Cavanah, Vice President and CFO. The call will take place at 10:30 a.m. (Eastern) / 9:30 a.m. (Central) on Tuesday, September 12, 2023, and will be simultaneously broadcast live over the Internet which can be accessed at our website at matrixservicecompany.com under Investor Relations, Events and Presentations or using this webcast link. Please allow extra time prior to the call to visit the site and download the streaming media software required to listen to the Internet broadcast. The conference call will be recorded and will be available for replay within one hour of completion of the live call and can be accessed following the same link as the live call.
About Matrix Service Company
Matrix Service Company ( MTRX), through its subsidiaries, is a leading North American industrial engineering, construction, and maintenance contractor headquartered in Tulsa, Oklahoma with offices located throughout the United States and Canada, as well as Sydney, Australia and Seoul, South Korea.
The Company reports its financial results in three key operating segments: Storage and Terminal Solutions, Utility and Power Infrastructure, and Process and Industrial Facilities.
With a focus on sustainability, building strong Environment, Social and Governance (ESG) practices, and living our core values, Matrix ranks among the Top Contractors by Engineering-News Record, was recognized for its Board diversification by 2020 Women on Boards, is an active signatory to CEO Action for Diversity and Inclusion, and is consistently recognized as a Great Place to Work®. To learn more about Matrix Service Company, visit matrixservicecompany.com
This release contains forward-looking statements that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are generally accompanied by words such as “anticipate,” “continues,” “expect,” “forecast,” “outlook,” “believe,” “estimate,” “should” and “will” and words of similar effect that convey future meaning, concerning the Company’s operations, economic performance and management’s best judgment as to what may occur in the future. Future events involve risks and uncertainties that may cause actual results to differ materially from those we currently anticipate. The actual results for the current and future periods and other corporate developments will depend upon a number of economic, competitive and other influences, including the successful implementation of the Company's business improvement plan and the factors discussed in the “Risk Factors” and “Forward Looking Statements” sections and elsewhere in the Company’s reports and filings made from time to time with the Securities and Exchange Commission. Many of these risks and uncertainties are beyond the control of the Company, and any one of which, or a combination of which, could materially and adversely affect the results of the Company's operations and its financial condition. We undertake no obligation to update information contained in this release, except as required by law.
For more information, please contact:
Kevin S. Cavanah
Vice President and CFO
T: 918-838-8822
Email:[email protected]
Kellie Smythe
Senior Director, Investor Relations
T: 918-359-8267
Email: [email protected]
| Matrix Service Company Consolidated Statements of Income (In thousands, except per share data) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||
| Revenue | $ | 205,854 | $ | 200,719 | $ | 795,020 | $ | 707,780 | ||||||||
| Cost of revenue | 191,159 | 199,861 | 764,200 | 708,986 | ||||||||||||
| Gross profit (loss) | 14,695 | 858 | 30,820 | (1,206 | ) | |||||||||||
| Selling, general and administrative expenses | 17,031 | 18,098 | 68,249 | 67,690 | ||||||||||||
| Goodwill impairment | — | — | 12,316 | 18,312 | ||||||||||||
| Restructuring costs | 261 | 924 | 3,142 | 646 | ||||||||||||
| Operating loss | (2,597 | ) | (18,164 | ) | (52,887 | ) | (87,854 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (468 | ) | (246 | ) | (2,024 | ) | (2,951 | ) | ||||||||
| Interest income | 126 | 21 | 290 | 90 | ||||||||||||
| Other | 2,566 | 31,898 | 1,860 | 32,432 | ||||||||||||
| Income (loss) before income tax expense (benefit) | (373 | ) | 13,509 | (52,761 | ) | (58,283 | ) | |||||||||
| Provision (benefit) for federal, state and foreign income taxes | (37 | ) | 53 | (400 | ) | 5,617 | ||||||||||
| Net income (loss) | $ | (336 | ) | $ | 13,456 | $ | (52,361 | ) | $ | (63,900 | ) | |||||
| Basic income (loss) per common share | $ | (0.01 | ) | $ | 0.50 | $ | (1.94 | ) | $ | (2.39 | ) | |||||
| Diluted income (loss) per common share | $ | (0.01 | ) | $ | 0.50 | $ | (1.94 | ) | $ | (2.39 | ) | |||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 27,047 | 26,791 | 26,988 | 26,733 | ||||||||||||
| Diluted | 27,047 | 26,870 | 26,988 | 26,733 | ||||||||||||
| Matrix Service Company Consolidated Balance Sheets (In thousands) | ||||||
| June 30, 2023 | June 30, 2022 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 54,812 | $ | 52,371 | ||
| Accounts receivable, less allowances (2023 - $1,061; 2022 - $1,320) | 145,764 | 153,879 | ||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | 44,888 | 44,752 | ||||
| Inventories | 7,437 | 9,974 | ||||
| Income taxes receivable | 496 | 13,547 | ||||
| Prepaid expenses | 5,741 | 4,024 | ||||
| Other current assets | 3,118 | 8,865 | ||||
| Total current assets | 262,256 | 287,412 | ||||
| Restricted cash | 25,000 | 25,000 | ||||
| Property, plant and equipment - net | 47,545 | 53,869 | ||||
| Operating lease right-of-use assets | 21,799 | 22,067 | ||||
| Goodwill | 29,120 | 42,135 | ||||
| Other intangible assets, net of accumulated amortization | 3,066 | 4,796 | ||||
| Other assets, non-current | 11,718 | 5,514 | ||||
| Total assets | $ | 400,504 | $ | 440,793 | ||
| Matrix Service Company Consolidated Balance Sheets (continued) (In thousands, except share data) | ||||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 76,365 | $ | 74,886 | ||||
| Billings on uncompleted contracts in excess of costs and estimated earnings | 85,436 | 65,106 | ||||||
| Accrued wages and benefits | 13,679 | 21,526 | ||||||
| Accrued insurance | 5,579 | 6,125 | ||||||
| Operating lease liabilities | 4,661 | 5,715 | ||||||
| Other accrued expenses | 1,815 | 4,427 | ||||||
| Total current liabilities | 187,535 | 177,785 | ||||||
| Deferred income taxes | 26 | 26 | ||||||
| Operating lease liabilities | 20,660 | 19,904 | ||||||
| Borrowings under asset-backed credit facility | 10,000 | 15,000 | ||||||
| Other liabilities, non-current | 799 | 372 | ||||||
| Total liabilities | 219,020 | 213,087 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock—$.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of June 30, 2023 and June 30, 2022; 27,047,318 and 26,790,514 shares outstanding as of June 30, 2023 and June 30, 2022, respectively | 279 | 279 | ||||||
| Additional paid-in capital | 140,810 | 139,854 | ||||||
| Retained earnings | 58,917 | 111,278 | ||||||
| Accumulated other comprehensive income | ||||||||
