Matrix Service Company Stock price
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $280.09m | Revenue (TTM) = $845.48m
Market Cap = $280.09m | Estimated Revenue = $893.67m
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $47.07m | Revenue (TTM) = $845.48m
Enterprise Value = $47.07m | Forward Revenue = $893.67m
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Matrix Service Company Stock Analysis
Analyst Opinions
7 Analysts have issued a Matrix Service Company forecast:
Analyst Opinions
7 Analysts have issued a Matrix Service Company forecast:
Matrix Service Company Events
Past Events
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SEP
3
Q4 2026 Earnings Call
14 days ago
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MAY
7
Q3 2026 Earnings Call
4 months ago
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FEB
5
Q2 2026 Earnings Call
7 months ago
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NOV
6
Q1 2026 Earnings Call
11 months ago
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SEP
10
Q4 2025 Earnings Call
about one year ago
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StocksGuide Free
Matrix Service Company — Q4 2026 Earnings Call
1. Management Discussion
Thank you. I'm sorry. Thank you.
Patrick Roberts, Director of Corporate Development and Investor Relations for Matrix Service Company. Please go ahead.
Welcome to Matrix Service Company's Fourth Quarter Fiscal 2026 Earnings Call. Participants on today's call include Chief Executive Officer Shawn Payne and Chief Financial Officer Kevin Cavanah. Following our prepared remarks, we will open the call up for questions. The presentation materials referred to during the webcast today can be found under Events and Presentations on the Investor Relations section of matrixservicecompany.com. As a reminder, on today's call we may make various remarks about future expectations, plans, and prospects for Matrix Service Company that constitute forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements because of various factors, including those discussed in our most recent annual report on Form 10-K, and in subsequent filings made by the company with the SEC. The forward-looking statements made today are effective only as of today.
To the extent we utilize non-GAAP measures, reconciliations will be provided in various press releases, periodic SEC filings, and on our website. Before we get started, I want to share a project highlight that also illustrates our commitment to safety and quality. This is 1 of 4 air raises that Matrix has safely completed in the last 4 months, each supporting infrastructure for different fuels and feedstocks, including LNG, ethane, liquid propane gas, ammonia, and butane. An air raise is a complex process that uses air pressure to safely lift and position a large steel dome roof. The weight of which can be well over 1 million pounds. This is a pivotal step in the construction of the storage tank. The project being highlighted here is for Dominion Energy's Brunswick-Greensville storage facility, which is a greenfield project for Matrix and supports the Brunswick County and Greensville County power stations. The project features a 25 million gallon full containment LNG storage tank, providing backup fuel supply for 700,000 businesses and homes.
Logics like these are core to our mission of supporting major energy companies, advancing American infrastructure, and connecting U.S. energy to the world. The successful execution of these consecutive air raises on complex high-profile projects highlights Matrix's technical expertise, commitment to safety, and dedication to delivering exceptional outcomes for our clients and the communities that rely on these critical assets. I now turn the call over to Shawn.
Thank you, Patrick.
It is a privilege to address you as President and Chief Executive Officer of Matrix Service Company. I am grateful for the confidence of our Board of Directors and excited to lead the company into its next chapter. As I begin, I also want to recognize and thank our dedicated employees in the field and across our offices. Your commitment to safety, quality, and execution is the foundation of everything we do and the driving force behind our success. Throughout my 30-year career in the industrial engineering and construction industry, I have had the privilege of leading high-performing operations, project controls, and finance teams, helping deliver complex projects, improving organizational performance, and creating lasting value for customers and stakeholders. Those experiences have given me a genuine understanding of what good looks like and a deep appreciation for the characteristics required to achieve it. They have reinforced my belief that sustainable success is built on exceptional people, a strong culture, operational excellence, customer focus, and an unwavering commitment to the safety and well-being of everyone involved.
These are the very same characteristics that have defined Matrix for decades and helped establish our reputation as a leading heavy industrial contractor that engineers, constructs, and maintains the critical infrastructure that supports industries and communities across North America. While those characteristics have shaped our history, they are equally important to our future and provide the foundation from which we will continue to grow and evolve. As the needs of our clients continue to develop, we are evolving alongside them, expanding our capabilities, strengthening our expertise, and reinforcing our position as a trusted partner in the markets we serve. Today, our expertise, brand, and reputation provide a distinct advantage as many of our core and emerging markets are experiencing generational levels of investment. But I want to recognize that while Matrix has long been well positioned to benefit from these opportunities, our past performance has not always reflected the strength of our capabilities or the opportunities before us. The company has yet to unlock its full potential, and we have more work to do. In 2025, the Board and Executive Leadership tasked me with bringing a fresh perspective to the organization, first as President of Engineering and Construction and then as Chief Operating Officer.
Together, with an enterprise-wide team, we established a strategic framework: Win, Execute, Deliver. This comprehensive business strategy addresses growth, revenue diversification, operational excellence, accountability, and organizational effectiveness, ultimately delivering sustainable profitability and value to our shareholders. More than just a list of goals or business as usual, this framework represents a deliberate shift towards a culture of consistent performance, excellence, and value creation. While we still have work to do, we have accomplished a lot in a relatively short period of time. Once our strategy was defined, we ensured the organization was properly sized and structured to support its successful execution. Recognizing our overhead had been built to support a larger anticipated revenue base, we took decisive action to streamline and flatten the organization, establishing a more sustainable cost structure that increased our speed to market while preserving our ability to capitalize on future growth opportunities. At Parallel, we transformed our commercial organization by strengthening strategic account management, improving opportunity qualifications, aligning our business development operational resources around targeted markets and focusing on opportunities that provide the best risk and reward profile for our business.
With a clear strategy guiding our decisions, a transformed commercial focus, and an optimized cost structure, we built a stronger, more agile organization, positioned to deliver consistent execution, profitable growth, and long-term value creation. Today, every role and resource is aligned around our Win, Execute, and Deliver strategic framework. Our progress is tangible, evidenced by our return to profitability in the third and fourth quarters of fiscal 2026. Looking forward, our strategy is straightforward. Win the right work, execute with excellence, and deliver the results expected by our customers, employees, and shareholders. Each pillar plays a critical role in strengthening our business and creating long-term value. To provide greater context around our progress, I would like to highlight several key initiatives within each pillar.
First, our WIN strategy is centered on pursuing opportunities that align with our capabilities, our risk parameters and create the greatest potential for profitable growth. This includes expanding our presence in both legacy and selected new and re-emerging markets, growing our geographic reach, expanding our construction-only services, and strengthening our relationships with existing customers, as well as increasing new customer acquisitions. Market intelligence and client insight continue to support strong demand across our traditional LNG and NGL infrastructure markets, particularly for peak shaving facilities, backup fuel terminals, and related infrastructure. In fact, over 40% of our current opportunity pipeline is comprised of LNG and NGL projects. Another example of our Win strategy at work and our legacy markets is a project for which we have been selected subsequent to the quarter, which we announced by press release after market closed yesterday. This project is for the Front End Engineering and Design of the storage tank farm for the America First Refining facility in Brownsville, Texas, the first new major refinery to be constructed in the U.S. in more than 50 years. We are extremely proud to have been selected to complete this major step for AFR in reaching financial investment decision.
At the same time, we are actively pursuing opportunities being driven by new and re-emerging markets, such as power generation and related infrastructure investments that is driven by the rapid growth of data centers, aging power infrastructure, and the increasing domestic electricity demand. Specific to data centers, our ability to deliver power infrastructure and substation solutions that support our customers' expanding energy requirements is critical. Evidence of our Win strategy at work in this end market includes 2 recently completed substation projects to bring more power to the Northern Virginia Data Center Alley. We are currently on site constructing additional substations in the same geographical area as well as the Eastern Pennsylvania region. Another example of us leveraging our experience to participate in a re-emerging market is our focus on the mining and mineral sector, where increased commodity pricing and the demand for critical minerals essential to energy, technology, defense, and AI infrastructure continues to grow. To support our position in this market, we have invested additional capital and resources into our existing Southwest operation. As a result, we have received and have mobilized on a significant award, which was taken into backlog in the fourth quarter.
Beyond our market focus, we are also heavily focused on expanding our geographic reach across key strategic regions and pursuing more construction-only opportunities. As a result of our construction-only initiatives, we have also been able to we have received several balance plan awards across the organization in the fourth quarter. At the same time, our improved strategic account management approach enables us to strengthen relationships with key customers while expanding our presence among new clients. This reinforces our position as a trusted long-term partner across multiple service offerings and project life cycles. Collectively, these initiatives with our improved speed to market and lower cost structure will strengthen our backlog, expand our market share, diversify our revenue stream, and drive sustainable, profitable organic growth. The Execution pillar is where our reputation is earned and trust is built. That trust depends on our ability to deliver high-quality projects safely, on time, and on budget.
Like our Win strategy, our Execute strategy is built around many initiatives, 45 in this case. These initiatives were developed to strengthen project delivery and drive consistent operational excellence across the organization. Each initiative is supported by dedicated teams with clear accountability for solution development, implementation, and results. These initiatives focus on improving proposal and contracting discipline, enhancing engineering and construction processes, strengthening our safety culture and protocols, advancing change management practices, and reinforcing quality management systems. Collectively, these efforts are intended to improve project outcomes and reduce execution risk. During the year, we also completed the final phase of our enterprise services transformation by transitioning project controls and proposal delivery into the organization. These were the last remaining service-related functions that had not yet been centralized. With this transformation now complete, our shared services organization, operating under dedicated leadership, is focused on delivering consistent support, improving resource efficiency, and driving continuous improvement across the company.
By bringing greater discipline and standardization to critical business processes, this structure allows our operations teams to concentrate on what they do best, winning the right work, executing projects with excellence, and delivering successful outcomes for our customers. The function is exact. Our entire enterprise is focused on execution and measurable results. Moving on to the third pillar, Deliver. We are committed to delivering consistent results and sustainable value. Our operational strategies and focused capital deployment create a resilient, future-ready enterprise. Already, we have reduced SG&A expenses by 11% year-over-year and driven improvements in operating performance. These are not isolated actions, they are evidence of a company committed to change, discipline, and results. Overall, our strategic framework ensures we are aligned around a common purpose, focused on both organic and targeted acquisitive growth and executing consistently across the enterprise.
As we enter this next phase, we do so from a position of financial strength, supported by a healthy balance sheet, robust liquidity, and no debt. The actions we have taken have strengthened our foundation, enhanced our ability to pursue profitable growth, and positioned Matrix to create sustainable long-term value for our shareholders, customers, employees, and the communities we serve. On behalf of the entire Matrix team, we look forward to earning your trust and support as we build on our legacy and pursue the opportunities ahead. I will now turn the call over to Kevin Cavanah.
Before I get into the fourth quarter, I want to highlight a few ways this strategic framework is already having a positive impact. Successful execution of our backlog allowed us to achieve 14% revenue growth and a 210 basis point gross margin improvement in fiscal 2026. We have successfully leveraged our experience and reputation to re-enter the mining and mineral space as demonstrated by significant project taken into backlog this quarter. Our focus on flattening our organizational structure to achieve greater efficiency and effectiveness contributed to a decrease in SG&A expenses, which fell by $7.6 million in fiscal 2026 compared to fiscal 2025. As a result of these efforts, we returned to profitability this year with full year adjusted EPS of $0.26 and an increase of $1.19 compared to last year. Now to the quarter. Our results represented a good finish to fiscal 2026, as well as positive indicators of the opportunity ahead. In the fourth quarter, our revenue increased 13% to $244.5 million compared to $216.4 million in the fourth quarter of fiscal 2025.
The increase in the quarter was expected and driven by the Storage and Terminal Solutions segment, partially offset by lower revenue in the Process and Industrial Facilities segment. Gross profit increased 140% to $19.5 million compared to $8.1 million in the prior year quarter. The quarter gross margin was 8% compared to 3.8% in the prior year. While SG&A in the fourth quarter was impacted by higher variable compensation costs related to returning to profitable performance, SG&A still decreased to $16.9 million in the fourth quarter versus $17.6 million last year. The lower SG&A cost combined with the higher revenue allowed SG&A as a percent of revenue to decrease to 6.9% compared to 8.1% in the same period last year. The company also incurred $3.4 million of restructuring costs in the fourth quarter associated with executive transitions and previously announced corporate realignment. Including the restructuring costs, the company produced an operating loss of $0.9 million in the recent quarter compared to an operating loss of $12.9 million in the prior year fourth quarter. The company continues to generate interest income.
On the company's strong cash position, interest income was $2.2 million in the quarter compared to $2 million in the prior year quarter. Bottom line, the company produced EPS of $0.04 in the quarter compared to a $0.40 loss in the prior year. Adjusted EPS, which excludes restructuring, was a positive $0.16 in the fourth quarter versus a $0.28 loss in the prior year quarter. Adjusted EBITDA was also improved to $6.3 million in the fourth quarter compared to a $4.8 million loss in the prior year fourth quarter. Moving to the segments, Storage and Terminal Solutions segment revenue increased 43% to $137.4 million in the fourth quarter of fiscal 2026 compared to $96.1 million last year due to increased volume of work for specialty vessel and LNG storage projects. Gross margin in the fourth quarter of fiscal 2026, which was 6.4% compared to a negative 1.1% in the prior year quarter, which was impacted by lowered recovery expectations on a legacy project completed in fiscal 2021 that was in arbitration. The matter was fully resolved in fiscal 2026. In Utility and Power Infrastructure, segment revenue was $73.5 million in the fourth quarter compared to $73 million in the same period a year ago. Gross margin improved to 12.8% in the fourth quarter compared to 9.1% last year.
The increase was due to strong project execution, and Process Industrial Facility segment revenue decreased to $33.6 million in the fourth quarter compared to $47.3 million last year, primarily due to lower revenue from refinery work, due to a change in mix of work. Gross margin was 2.9% in the fourth quarter of fiscal 2026 compared to 5.9% last year. Now let's discuss backlog. Project award activity was mixed in the fourth quarter with total awards of $169 million for 0.7x book-to-bill. The Process and Industrial Facility segment had a strong fourth quarter with awards of $108 million, including a significant mining related project, resulting 3.2x book-to-bill. Fourth quarter award activity in the other 2 segments was modest. The company entered the quarter with backlog of $953 million. The year-end backlog level is supportive of strong revenue performance as we move into fiscal 2027 and we are heavily focused on the awards that are required to maintain strong revenue through the back half of fiscal 2027 and to build a strong foundation for fiscal 2028.
As previously mentioned, our markets are strong throughout the business as evidenced by the opportunity funnel, which is over $7 billion. Moving to the balance sheet, we ended the quarter with total liquidity of $283.9 million. Liquidity is comprised of $223 million of unrestricted cash and cash equivalents and $60.9 million of borrowing availability under the credit facility. The contribution is $2.3 million. The company continues to have $25 million of restricted cash to support the credit facility and has no outstanding debt as of the end of the quarter. While the company expects to utilize cash in the first half of fiscal 2027 to support current project activities. We enter the year in a strong financial position that provides the liquidity needed to support the execution of our backlog and to deploy capital toward growth. Based on the strength of our balance sheet and our return to profitability, we are actively evaluating a stock buyback.
With that, I will turn the call back to Shawn for additional comments. Thank you, Kevin. Before we open the call for questions, I would like to take a moment to recognize Kevin Cavanah, who will be transitioning from his role as Chief Financial Officer at the end of the week. Kevin joined Matrix in 2003 and has been an integral part of our success for more than 23 years, including the last 15 years as our Chief Financial Officer. Throughout his tenure, Kevin helped guide Matrix through significant industry cycles, evolving regulatory requirements, and major strategic initiatives. His leadership played an important role in strengthening our financial discipline, enhancing our reporting and control processes, and helping position the company for long-term success. On behalf of the Board of Directors and everyone at Matrix, I want to thank Kevin for his many contributions to the company. On a personal level, I am grateful for his partnership and support over the years and have always valued his expertise, thoughtful perspective, and commitment to Matrix. We wish Kevin and his family all the best in the next chapter. We have been selecting a thorough process over the past several months to identify the right long-term financial leader for Matrix.
We continue to make good progress and remain committed to finding the best candidate to join me in Houston to drive the company's next phase of growth. While we are being deliberate and patient in that process, A.J. Smith has been appointed as the Interim Chief Financial Officer effective September 10, 2026. A.J. has been serving as Senior Director of Accounting and Treasury overseeing our accounting, SEC reporting, and Treasury functions. His deep knowledge of the business and strong leadership make him well positioned to support the organization during this transition. As we search for our next Chief Financial Officer, we believe it is important that the successful candidate have the opportunity to become familiar with the business and our strategy. As a result, we will not be providing guidance at this time.
Once our next CFO is onboarded and has had the opportunity to assess the business, we will evaluate our approach going forward. With that, I would like to open the call for questions.
Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered and you wish to remove yourself from the queue, please press star 1-1 again. We will pause for a moment while we compile our Q&A roster. Our first question comes from John Franzreb with Sidoti & Company. Your line is open.
2. Question Answer
Good morning everyone and Shawn, welcome aboard and Kevin. It has been a pleasure working with you over the years. Shawn, I would like to start with your perspective in the firm. Can you talk a little about the current cost structure? You have been there for a while. You had a chance to evaluate. Are you satisfied with the way the company is currently constructed, or do you still envision additional restructuring charges in the year ahead?
Yes, John, in the last 18 months we have made measurable progress, right, getting that to where we think it needed to be, not just from a cost perspective, but also from an efficiency and a focus perspective. So today I feel like we really got it where we need to be. There could be some future tweaking. But right now I am satisfied that we have got the right organization, the right size to do the work that we have today as well as what we have got in our growth plans.
So, how should we think about the nearly $10 million of restructuring actions in 2026? How much will continue to flow through the P&L in fiscal 2027?
John, this is Kevin. Enjoyed working with you too. I think when you look at the restructuring, you are not going to see anywhere near that level. There may be a few things, but it would be relatively insignificant. And as Shawn said, there may be some tweaks with the organization, but over the last 18 months we have implemented the majority of the changes we plan on doing right now. So I would not expect that restructuring to be significant. There will be some time, but it will not be major.
Okay. I guess when I think about the $950 million in backlog, I guess 2 things. Can we kind of walk through why the diminishing order book we have seen in the past 4 quarters has been the case. And maybe on that $950 million backlog, how much is deliverable in the coming 12 months?
Yes, so I would say this, John. So 1, we are not surprised by the latter of bookings and the activity over the last few years. Certainly don't want that to overshadow the opportunities that we have in the pipeline. All of these projects have their different time to wind up going from the early process of a FEED or a permitting process. Good news is a lot of that has not changed for us. We knew this was going to look that way for a while. As far as the exact numbers on the backlog that we have in hand, certainly in the first quarter, second quarter, and third quarter, we will be getting through a fair share of the larger projects that we have been carrying.
But, again, we have got our outlook is to start replacing that with new projects.
Yes, I do not have the exact number in front of me, but I think 70-80% of that backlog will be worked off during fiscal 2027.
Got it. And just 1 last question on the backlog. Is the margin profile, is it heading north from the fourth quarter or is that a stable kind of level? How should we think about that?
Well, so the margin profile of our backlog is in line with our, you know, with double-digit level performance. I think you will, you know, we made a big move in revenue in 4Q, and that helped under recovery. There is still a little bit more work to do there. But our projects are delivering close to that double-digit level now and I think when you look at the quality of the backlog plus the quality of opportunities in the funnel, I think that will continue to support that. And obviously we want to continue to grow that backlog margin above 10%. As we move forward, I think we have probably got the markets to do that.
Great.
1 moment for our next question. Our next question comes from Ted Jackson with Northland. Your line is open.
Thanks very much. So, Shawn, I had like a list of a half-dozen questions and in the course of your presentation you took almost all of them out. So you clearly did a good job in preparing your presentation. I have 2 questions for you. I would like to start out with, the, America First Refining. Can you provide a little more color with regards to, you know, like the size of the initial work you are doing on the front end and what it could mean in terms of just like the actual size of this project as it moves forward. How much of some of this stuff is in your project pipeline, is it what drove big jump that we saw in your project pipeline with regard to this quarter and then kind of what is the timeline for the family's board and then I have a follow-up.
Sure. Yes, I guess first, Ted, I will say I probably will not want to talk too much about the specifics of the dollar value. This has not gone through FID yet. Obviously, it is a very large project on any scale. Just give you a little bit background on kind of what we are doing there in the timeline. So we have been awarded, we have been contracted the FEED, and that is due at the end of our fiscal Q2, at which point when we turn that over to the client, they will look to finalize FID. At that time, we will work to convert that FEED estimate to a lump sum price utilized in an open book process with the client. We anticipate that the award will be in late fiscal Q3 or early Q4. But I think it is worth mentioning here that it is possible that we could start some early purchasing and/or site work prior to the calendar year-end to support the client's desired schedule.
And then when you move forward with some of the early purchasing and such, is that part of what would drive you to some, I guess you would say, call cash use in the first half. I believe that was referenced in your presentation that the first half of '27 would be kind of digging into your cash position and then flip over, I assume, in the second half. Is that what drove that? Yes.
The utilization for the cash is primarily going to be the projects that are being executed in the field that we have got advanced payments on. This cash here, we have not worked out exactly what that will look like, but we always look to maintain a net positive cash position on any of the work that we are doing, and we will certainly do that for this. Okay.
So, in summary then, America First Refining, a very large project. It is not, it is really not in your project pipeline at this point because you are in the process of defining it and we would see that, you know, kind of move through in second half of fiscal '27 and then potentially, you know, once you get the product and then move into your bookings sometime in the second half of '27 that cover basically America First Refining.
Yes, so just to be clear, it is in our opportunity pipeline. We have been pursuing this effort and working closely with a client for for for several years on this developing this but to your point, yes, we do not have anything outside of the FEED work booked right now and within our backlog and that would be something we would be looking to convert again late Q3 or early Q4 to backlog.
Okay. And then shifting over to pipeline and backlog, you know, in the past, as a management team, I think that the message has been pretty consistent. That you did expect to see the backlog work down, you know, you know. You know, as it has been through, you know, kind of we pull up mid-fiscal '27, and then some of the opportunity pipeline should be converting into bookings and rebuild back. That scenario still holds and. You know, we should be viewing this America First Refining in the last line as an indication of the kind of things that drive your backlog north as we get to the second half of fiscal '27.
Yes, that is accurate. That is what we see happening.
Okay. And then my final question, which was kind of touched on, but just to make sure I am right, is that essentially as we roll through '27, that we should not be expecting to see any large-scale restructuring line items, expenses, in the numbers. It will be, anything in there will be in the numbers, correct?
That is correct. You would not expect anything significant. I mean, you might have a quarter that has a couple hundred thousand. But no, the big changes have been implemented in in fiscal 2025 and in fiscal 2026. Okay.
But hey, I appreciate it. That is it for me. Congrats on the quarter. Thank you. Appreciate it.
And I am not showing any further questions at this time. I would like to turn the call back over to Patrick for any further remarks.
Great. Thank you everyone for your participation. Before we close the call, I wanted to mention that we will be presenting at the upcoming 25th Annual Diversified Industrials and Services Conference in Nashville, Tennessee. If you will be attending, we would welcome the opportunity to connect with you. Additionally, if you would like to have a conversation with management, please contact me through the Matrix Service Company Investor Relations website. You may also sign up to receive MTRX news by scanning the QR code on your screen. Again, thank you for your time today, and have a good rest of your week.
Thank you, ladies and gentlemen. That will conclude today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day.
This live transcript is auto-generated without human intervention or review.
Matrix Service Company — Q4 2026 Earnings Call
Matrix Service Company — Q3 2026 Earnings Call
1. Management Discussion
Good morning, and welcome to the Matrix Service Company conference call to discuss results for the third quarter of fiscal 2026. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Mr. John Hewitt, President and CEO for Matrix Service Company.
Good morning, everyone. Before we get started, I want to take the opportunity to introduce 2 individuals joining our call today for the first time. First is Patrick Roberts, who has added Investor Relations to his current role, which also includes corporate development and strategic planning. Next is Shawn Payne, currently Chief Operating Officer, who, as you know, will take to reins as President and CEO on July 1. Shawn is currently at a major project kickoff in Houston. It will not be with us for the Q&A portion of this earnings call but will be joining us at upcoming investor conferences and on other scheduled calls.
With that, I'll turn the call over to Patrick.
Thank you, John, and good morning, everyone. Welcome to Matrix Service Company's Third Quarter Fiscal 2026 Earnings Call. As John mentioned, participants on today's call include Chief Executive Officer, John Hewitt; Chief Operating Officer, Shawn Payne; and Chief Financial Officer, Kevin Cavanah. Following our prepared remarks, we will open the call up for questions. The presentation materials referred to during the webcast today can be found under Events and Presentations on the Investor Relations section of matrixservicecompany.com.
As a reminder, on today's call, we may make various remarks about future expectations, plans and prospects for Matrix Service Company that constitute forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements because of various factors, including those discussed in our most recent annual report on Form 10-K and in subsequent filings made by the company with the SEC. The forward-looking statements made today are effective only as of today. To the extent we utilize non-GAAP measures, reconciliations will be provided in various press releases, periodic SEC filings and on our website.
Related to investor conferences and corporate access opportunities, Matrix will be participating in the Sidoti Microcap Virtual Conference on May 20 and 21 and will also be participating in the Stifel Cross Sector Insights Conference on June 2 and 3 in Boston and the Northland Growth Virtual Conference on June 23. If you take additional information on these events or would like to have a conversation with management, I invite you to contact me through the Matrix Service Company Investor Relations website.
Turning now to safety. As we begin our earnings call, I want to take a moment to recognize that May is Mental Health Awareness Month. At Matrix, we believe that safety goes beyond physical well-being, mental health is just as important. In our industry, the pressures of strenuous work and extended periods away from home can take a significant toll. Unfortunately, the construction industry faces some of the highest rates of suicide, making it critical for us to address these challenges directly. But quite honestly, whether you work in the construction industry or elsewhere, each of us face challenges in life that can put our mental health at risk, and we need to know that resources are available. And it's okay to ask for help.
Matrix is committed to reducing the stigma surrounding mental health. We strive to foster an environment where everyone feels comfortable seeking support, and we provide resources to help our employees take care of themselves and each other. By prioritizing both physical and mental safety, we reaffirm that every aspect of our team's well-being is paramount. We encourage each of you to do the same. Together, we can make a difference and ensure that no one feels alone.
I will now turn the call over to John.
Thank you, Patrick, and good morning, again, everyone, and thank you for joining us. I want to highlight many of the key events that have happened in the quarter that will provide clarity on the progress we are making on our Win, Execute & Deliver strategy.
First, the business returned to profitability in the quarter as we earned $0.13 per fully diluted share on an adjusted basis despite revenue levels being impacted by client-related delays and weather during the quarter. We expect revenues to climb in Q4 and profitable performance to continue. The lower revenues in Q3 principally came in our booked work caused by abnormal and unforeseeable weather events and late client deliverables. These delayed revenues are moving into later quarters. This profitable outcome was driven by the quality backlog, good operating performance against that backlog and organization streamlining that has occurred over the past 12 months.
As it relates to our revenue guidance, the revenue movement I mentioned does contribute to a 2.2% reduction in the midpoint of our guidance range from what was $900 million to a new midpoint of $880 million. Even with the slight reduction in the midpoint of the guidance range, the revenue in the fourth quarter is expected to turn upwards and supports our continued profitability.
During the quarter, we reached positive resolution on 2 legacy legal issues. The first was a collection issue from an industrial client working toward commercial viability and the other, a contract dispute with a midstream company for whom we built a crude terminal during the COVID outbreak. The collective result was in line with our balance sheet position, will increase our cash balance by nearly $20 million and will allow us to reduce our legal spend in the future. These 2 items present final closure to the remaining significant legacy disputes that have distracted the organization for these past few years.
Our opportunity pipeline remains strong at $6.9 billion, which represents not only our traditional LNG business, but the addition of more opportunities in mining minerals, power generation and data center-related activities. The awards in the quarter were below our expectations affected mostly by timing of client decision-making.
Activity in the quarter and the month of April do contain some key strategic wins for the company. First, following the close of the quarter, we received a limited notice to proceed for a major mining construction project for a client in the Western United States. Second, over $30 million of our electrical-related awards received in the quarter are directly related to the build-out of data centers and enhanced power demand. The book-to-bill in our electrical business for the quarter was well over 1.0. We expect to see continued growth in both of these markets.
The impact of the Iran conflict on our business has been minimal to date. However, we believe it will only serve to emphasize that as countries around the world look to find secure, reliable oil, gas, LNG and NGLs, the United States can play a major role in filling that need. This will continue to support the infrastructure designed and constructed by Matrix.
Finally, in the quarter, we continued our organizational realignment that started nearly 12 months ago. As previously disclosed, Shawn Payne, our Chief Operating Officer, will succeed me as CEO on July 1. I've had the privilege of working with Shawn in various capacities and companies for more than 30 years. He is a seasoned strategic leader with strong values, a deep operations and finance background that position him well to lead the company forward. Last week, we announced that Kevin Cavanah, our Chief Financial Officer, will depart the company in September. Kevin has been with Matrix for more than 23 years, 15 of which have been as our CFO. Kevin has built a strong and experienced finance organization with a deep bench of talent and well-established financial and control processes. The company has begun a comprehensive internal and external search for our next CFO, and Kevin will ensure a smooth and seamless transition through the completion of our fiscal year-end reporting.
In addition, while not a public-facing role, Nancy Austin, who has served as our Chief Administrative Officer and has been with Matrix for 26 years, will also be departing the company. Nancy has been instrumental in establishing a strong foundation for key support services, most importantly, those focused on ensuring that we can attract and retain the needed labor resources. Nancy's responsibilities are being redistributed and the position will not be backfilled, reflecting the company's commitment to flattening our organizational structure while ensuring we remain efficient and responsive to the needs of our customers and partners.
Before moving on, I want to thank them both for their many years of dedication, hard work and leadership. The transition to Shawn's leadership of the business, including these changes as well as his vision on organizational structure and operational priorities has already commenced and the core elements of our Win, Execute & Deliver strategy for which he has the principal architect contain guiding principles for the company that are already positively impacting the bottom line and will be the focus moving into 2027.
Most of the executive leadership will soon be operating out of our Houston office, which has the added benefit of putting us closer to many of our top energy clients. The organization is now better prepared for growth, enhanced focus on our priority markets is more competitive and will have a more consistent execution approach. I'm excited for this new group of leaders to continue our journey and drive continued success and value creation across the business.
I want to turn the call over to Shawn for a few words on the recent mining award and his focus areas.
Thank you, John. Good morning, everyone. As John mentioned, our profitable third quarter results show the progress we are making with our Win, Execute, Deliver strategy. These results demonstrate that the execution improvement initiatives related to the execute pillar of our strategy, are driving clear, measurable gains in profitability. We are bringing the same disciplined approach to the Win pillar of our strategy, where we are continuing to strengthen our leading EPC position for critical LNG and NGL infrastructure as well as expanding into new and reemerging markets across North America.
This approach is building real momentum in our sales pipeline and has already led to early successes across several areas. One example is the limited notice to proceed that we received for an important mining sector project that we are kicking off today, which John mentioned earlier. The project is expected to start in Q4 and continue throughout fiscal '27.
After nearly a decade of limited capital spending, increases in demand and rising nonferrous metal prices are starting to support new development activity. And as a result, our project opportunity pipeline in this sector has grown significantly. We have a strong history in mining and reestablishing our presence as the market rebounds is a key part of our strategy. Moving forward, as I get ready to assume the CEO role, I've taken several early steps this quarter to continue shaping how the organization operates. These changes are intended to create a more efficient and operationally focused organization that can make decisions faster and respond more quickly to market opportunities and our clients.
Examples of recent changes include streamlining as well as the decision not to add a COO back into the organization once I've become CEO. With operations reporting directly to me, we eliminate unnecessary handoffs and sharpen our organizational alignment around what matters most, our clients, our projects and the safety of our workforce. Over my first 100 days, my focus will be on implementing a clear road map for how we drive higher growth and continue improving profitability. I'll provide additional insight into those priorities on our fourth quarter earnings call.
Before I turn the call over to Kevin to review our third quarter results, I want to say how grateful I am for the opportunity to build on our strong foundation and lead this organization into the future. Kevin?
Thank you, Shawn. Revenue increased to $206.7 million in the quarter as compared to $200.2 million in the third quarter last year. The growth was driven by the Storage and Terminal Solutions segment, partially offset by reduced revenue in the Process and Industrial Facilities segment. Gross margin was $17.2 million or 8.3% in the quarter compared to $12.9 million or 6.4% for the third quarter of fiscal 2025. I will discuss specific drivers for that improvement when I get into the segment results. But on an overall basis, gross margin improved for both higher direct project margins and lower under-recovered overhead.
Moving on to SG&A, which was $15.2 million in the third quarter compared to $17.7 million for the prior year. The decrease is due in part to lower compensation-related expenses resulting from continued efforts to improve organizational efficiency. Additionally, stock compensation expense was lower as a result of executive separations during the quarter.
For the third quarter of fiscal 2026, the company produced net income of $0.8 million or $0.03 per diluted share compared to a net loss of $3.4 million or $0.12 per diluted share in the third quarter of fiscal 2025. The company incurred restructuring charges of $3 million in the quarter. Excluding those restructuring charges, adjusted earnings were a positive $0.13. Adjusted EBITDA improved to $4.9 million in the quarter compared to breakeven performance in the prior year third quarter.
Moving to the segments. Storage and Terminal Solutions segment revenue increased 16% to $111.6 million in the third quarter compared to $96.1 million in the third quarter of fiscal 2025. This is the highest quarterly revenue level for the Storage and Terminal Solutions segment in 6 years. We expect this growth trend to continue driven specific by specialty vessel storage projects, including projects for LNG, ethane and butane. The growth is also reflected in the segment gross margin, which increased to 7% in the third quarter of fiscal 2026 compared to 3.9% in the third quarter of fiscal 2025.
Utility and Power Infrastructure segment third quarter revenue was $60 million compared to $58.7 million last year. Project execution was strong throughout the segment, including peak shaving and electrical, producing a 13.6% gross margin in the quarter compared to 9.4% in the third quarter last year. Process and Industrial Facilities segment revenue decreased to $35.1 million in the third quarter compared to $45.4 million last year. Gross margin was 2.5% in the third quarter of fiscal 2026 compared to 8.3% for the third quarter of fiscal 2025, a decrease of 5.8%, primarily due to mix of work and the settlement of a legacy legal matter discussed earlier. We expect revenue and margins in this segment to rebound in fiscal 2027 due in a large part to the mining project previously mentioned.
Moving to the balance sheet. Our cash balance increased $34 million in the quarter. We ended the quarter with cash of $258 million, which also drove an increase in liquidity, which was $297 million at the end of the quarter. The growth in cash and liquidity was primarily due to the timing of cash flows on projects as well as positive earnings. While we expect to the timing of cash flows on projects will utilize some cash as we complete fiscal 2026 and move into fiscal 2027, the financial position of the company remains strong.
I'll now turn the call back over to John Hewitt.
Thank you, Kevin. Before taking questions, here are the 5 critical takeaways from this call. First, our return to profitability in Q3 demonstrates the strength and credibility of our operating model and strategy even on lower revenue. Second, the Q3 revenue shortfall is due to timing issues from customer and weather-related delays that moved book work out of the period. Third, our balance sheet is strong and supports our financial growth and strategic objectives. Fourth, our book-to-bill was driven by timing, with a strong backlog at over $1 billion. We expect awards in key sectors like mining, minerals and LNG infrastructure to drive book-to-bill higher in fiscal 2027 and support continued profitability. And fifth, the leadership and organization transition currently underway is planned, deliberate and controlled ensuring strong continuity. The CFO search is a motion, and you can expect Shawn to share his first 100-day road map as Matrix Service Company's CEO on the next earnings call.
That concludes our prepared remarks, so we will now open for questions.
[Operator Instructions] Our first question comes from John Franzreb from Sidoti.
2. Question Answer
Congratulations on the return to profitability.
Thanks, John.
I guess I want to start with the just reported quarter itself. There was a drop sequentially in the revenue in the utilities segment, but there's a sizable increase in the gross margin of that business on a sequential basis. Can you kind of walk us through the puts and takes on what's going on there?
Yes. So first of all, if you look at the profitability, there was really good performance throughout the segment. Power delivery business outperformed what we expected from a margin expectation. And you also -- we saw the same in the peak shaving work, there's really good performance there. So really it kind of shows when you have good performance throughout a segment, what that can do to the gross margin.
Now the revenue level did come down, and we expected that. We've been doing some work on peak shaver project for well over 2 years now that still got some more work to do, but it's kind of the manpower required for that project is coming down a bit, and that's driving the revenue down. I think if you look at the funnel for the company, peak shaving opportunities, we still think are going to be something that provides a lot of revenue into the future. We see a good piece of that in the funnel. I think it will take us a little bit of time to book the next one. So you'll probably see the revenue for the utility segment kind of level out here for a while until that next peak shaver project is booked.
Got it. And you mentioned, and I might have missed this, the restructuring charges that you incurred in the quarter, what was that for?
Related to a couple of primary things. One is our CEO transition. And then we also had a lease that we've tried to become more efficient in what offices we had, and we have a lease that we we're getting out of. We thought we were going to be able to sublease, but the market has not been as strong for a sublease on that facility as we had planned. And so we had to take a charge related to the lease, like a lease impairment charge.
Got it, Kevin. And just on the backlog, I mean, we had 2 years of elevated bookings and backlog in the last 4 quarters, it's been drifting lower. What's the confidence level that the new projects you've been writing are sufficient profitability to maintain profitability through 2027, fiscal 2027?
I'll hit that one, John. So the backlog level still at the billions. It contains solid margin work in that. You got to recall, when we booked 2 pretty major projects fairly close together, that really drove that backlog up. And then it took a while for those projects to get started to really start burning revenue. So -- but we still feel pretty -- really good about our opportunity pipeline, our ability to the award cadence that we see here over the next couple of quarters as well as the award momentum that we're going to see, we think, build as we move through calendar year -- I'm sorry, fiscal year '27, our expectation is we're going to be able to maintain a nice strong revenue level and profitability on that revenue.
Our next question comes from Ted Jackson from Northland.
Okay. A couple of questions. Let's start out with just some of the restructuring and what's going on. I mean I know there's so many moving parts in the company right now. And you've been working for a long time to kind of make it more efficient, improve its margin. When we think about this company at a steady state and the management team in place and all the restructuring efforts behind. What is the pro forma business model? Where do you see with this restructuring, the kind of like a standard gross margin, a standard operating margin, a standard net margin for Matrix, when you're done with all your restructuring and the business is kind of, I mean, mid-cycle?
So I'll give you a preliminary answer. And then -- because I would expect that we're going to get a new CFO in and the new team will probably take a fresh assessment. John and I have published long-term metrics that we've been striving to achieve. And I would imagine that the new team will kind of reevaluate that and put their own out there.
But if we just carry it on from the current metrics, I would expect that, first of all, the changes we're making to streamline the business are going to allow us to achieve the SG&A target that we've got out there but at a much lower revenue level. I think that you'll see that we'll be somewhere around that 6.5% SG&A in fiscal '27 would be my expectation. I think the gross margin target that we have out there is proven to be viable. The direct margins we've seen out here in the business have -- are meeting or have beaten at times the 10% or better level. And we're seeing improvement in the recovery of overheads, which has been something that's been a big drag on earnings the past few years. So as we take cost out, continue to grow the business, that will continue to get better.
So I think we're tracking to achieve those targets that we had previously put out and that the organization changes that we've put in place here are just helping us get there. I think it lowers the breakeven level that we've talked about in the past. It lowers the level of revenue required to get to full recovery. So in effect, these changes are going to increase the earnings power of the business.
Okay. My next question is going back into backlog and the declines you've seen in the pipeline, which does remain robust. Maybe you could talk a little bit about -- your commentary suggests that you expect to see a turnaround in terms of bookings and backlog and a growth -- and a regrowth of backlog as we kind of get into 2027. Previously, you've indicated that you'd see that kind of starting to turn around mid-fiscal year. Is that indeed -- does that scenario still hold? And given the size of projects that you see in the funnel, like what kind of bookings reacceleration could we anticipate?
Yes. So the -- our current backlog and what we see as the award cadence, I think what we've said in the past is we expect our awards to be kind of wrapped around our normal day-to-day business plus some smaller midsized projects and that's going to help us -- will continue -- allow us to continue to burn backlog and maintain a revenue level, as Kevin said, that's going to sustain our profitability as we move into and through fiscal '27.
Our expectations on the big project awards, the big chunk projects, those -- they're going to be entering into our proposal pipeline sometime probably in mid-fiscal '27 and will become and be awards sometime in later on in '27. And so -- but we feel good about where our backlog is and where our opportunities are. We think the award cadence and award momentum, not only for the big projects, but for some of these smaller ones that we see out there is going to help us maintain a good quality backlog level, good margins in it and it will allow us to maintain a revenue level that's going to support improved profitability. And as some of those bigger projects enter our backlog and then we start to burn that revenue, that's going to start to expand our margins.
I would add, if you think about it, peak shaving opportunities and specialty storage is really what drove the backlog growth. And those opportunities are still there. And now we've got other emerging markets that we can add to that. We've got the mining that we talked about some on the call. That's a big one. There's construction-only opportunities that we're pursuing. There's opportunities related to the continued expansion of the electrical infrastructure. So there's a number of areas that are going to be add-ons to what we currently have from -- as far as the markets that are going to drive backlog. So we feel good about the position of the company.
And the whole power gen thing, we didn't really touch on that strongly, but there's a lot of opportunity for us in the power generation market, even if it is working as a construction partner with some of the bigger EPC firms. And we've got a pretty deep resume entire generation that's kind of been on the shelf for the last 5 to 7 years because of what's going on in the market, but the return of power demand across gas power generation, whether it's in backup or peak shaving or simple cycle or combined cycle, our resume really applies strongly there. And so that's going to continue to drive more opportunities into our pipeline. And we certainly expect some time in fiscal '27 for us to be adding that -- those kind of projects into our backlog and will be supportive of driving revenue.
Okay. My next question. Just kind of switching over to kind of the oil and gas market, which is of interest to have this small war going on in the Middle East and oil is basically $100 a barrel, [ talk points to ] more drilling coming into the states. There was actually just an article in the Wall Street Journal today on fracking and how maybe you're not going to see it go back to its glory days, but the view seems to be that oil prices will be higher for longer and there will be some incremental spend in terms of bringing production up in this country. Could you talk a little bit about how you see that benefiting Matrix and if you're starting to see any pickup in dialogue because of this changed global environment as it relates to oil and gas?
Certainly, you have client dialogue that goes on. Our view of the future there would tell us that -- and we said it in our prepared remarks that we believe countries around the world are -- so it's not only what's going on in the Persian Gulf, but also what's going on in the Ukraine. I think countries around the world are looking to find a way to make sure they've got a secure and safe and reliable place to get their needed energy supplies. And so whether that's natural gas in the form of LNG or that's NGLs for chemical production like ethane or ethylene, I think that's going to create more investment in the U.S. for that kind of export and for the production of those energy assets. And those are things that fit right within our wheelhouse, right? So the construction of obviously of LNG facilities and natural gas liquids facilities are things that we do day in and day out. And so I think those macroeconomic and global issues are that is going to drive continued and increased investment in the United States for those energy assets and Matrix is in a great place to take advantage of that.
And then my final question, which is a little nitpick. But Kevin, in your discussion about some of the legal things and the collections and contract disputes and stuff. You made a statement that you would see reduced legal spend going forward because of those settlements. Is that something that's material enough for us to notice within the financial statements? How much were you spending on kind of an annual or quarterly basis? And what kind of expense is being removed with these resolutions?
Yes. So those disputes were contract related, project related. So that expense is hitting up in what we call construction overhead. And so it was one of the things that was driving some under-recovery of overheads. So it should be -- makes us more efficient in fully recovering our overheads. But we haven't disclosed the dollar amount of legal expenses, but lawyers aren't cheap.
[Operator Instructions] Our next question comes from John Franzreb from Sidoti.
Yes. I got a question about the deferred jobs. Do you expect them to fall into Q4? Or are they deferred into fiscal 2027?
Both, frankly. When we're waiting for permits or engineering, you're just pushing your -- for instance, on the labor, you're pushing your hiring levels and manpower levels just kind of down the road. So where we might have had in the quarter on a job, I'm making numbers up, 100 craftspeople on the -- and then maybe that would have ramped up to 200 in the fourth quarter. Now that 100 is happening in the fourth quarter and the 200 is happening in Q1, right?
So I'm just trying to give you a sense of the -- so that movement, we're not going to make up for all of those delays in 1 quarter because it just sort of pushes the whole job down the path. And so we certainly do expect -- as we said, and based on our guidance that we've provided here, we expect revenues to climb in Q4 and the business to stay profitable in Q4 because of the quality of the work and the quality of our execution and the level of the revenues. And so I guess part of the messages here is that Q4 revenues are going to increase, and this pushes more revenue into fiscal '27.
Got it. And John, how much revenue was actually deferred out of Q3?
I would say it was probably $20 million, $25 million between the probably the biggest piece of the weather, I could have, but it's -- there were some permitting issues, too.
Right.
Got it. And then if I understood your commentary to one of my questions earlier, Kevin, do you think at least it sounds like near term that the utility segment will be kind of flattish with potential to recover in 2027 for the reasons I think John outlined. But that -- to hit your midpoint, that might suggest that the storage business is going to have a strong Q4. Am I interpreting that properly? Or there are other puts and takes that I'm not thinking about?
You're 100% right. I would expect the Process and Industrial Facilities segment and the utility segment to be relatively flat, 3Q to 4Q. The growth is going to come in storage.
I'm showing no further questions at this time. I would now like to turn it back over to Patrick for closing remarks.
Thank you. As a reminder, we will be participating in the Sidoti Microcap Virtual Conference on May 20 and 21, and we'll also be attending the Stifel Cross Sector Insights Conference on June 2 and 3 in Boston and the Northland Growth Virtual Conference on June 23. Additionally, if you'd like to have a conversation with management, please contact me through the Matrix Service Company Investor Relations website. You may also sign up to receive MTRX news by scanning the QR code on your screen. Thank you for your time.
Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.
Matrix Service Company — Q3 2026 Earnings Call
Matrix Service Company — Q2 2026 Earnings Call
1. Management Discussion
Good morning, and welcome to the Matrix Service Company conference call to discuss results for the second quarter of fiscal 2026. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to today's host, Ms. Kellie Smythe, Senior Director of Investor Relations for Matrix Service Company.
Thank you, Victor. Good morning, and welcome to Matrix Service Company's Second Quarter Fiscal 2026 Earnings Call. Participants on today's call include John Hewitt, President and Chief Executive Officer; and Kevin Cavanah, Vice President and Chief Financial Officer. Following our prepared remarks, we will open up the call for questions. The presentation materials referred to during the webcast today can be found under Events and Presentations on the Investor Relations section of matrixserviccompany.com.
As a reminder, on today's call, we may make various remarks about future expectations, plans and prospects for Matrix Service Company that constitute forward-looking statements for the purposes of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking results because of various factors, including those discussed in our most recent annual report on Form 10-K and in subsequent filings made by the company with the SEC.
The forward-looking statements made today are effective only as of today. To the extent we utilize non-GAAP measures, reconciliations will be provided in various press releases, periodic SEC filings and on our website. Finally, all comparisons today are for the same period as the prior year, unless specifically stated.
As we open today's earnings call, let's take a brief moment to focus on what matters most, keeping ourselves and each other safe. With about 6 weeks to go before the official start of spring, this winter has already brought a range of extreme weather across the country from blizzard and ice storms to record-breaking cold snaps and heavy rainfall. These conditions disrupt daily life and create serious safety challenges for everyone, especially those working outdoors.
But the challenges go beyond just physical safety, shorter days and colder temperatures take this toll, not just physically, but mentally and emotionally. Challenges to mental health are as real and as important as physical risk. This is especially true for those in construction and field work, where teams often face harsh outdoor working conditions and are also far from home and their personal support networks, all of which can lead to increased stress, fatigue and isolation.
That said, regardless of where we work, it's important to take time to check in with ourselves and those around us. Watch for signs of stress, start a conversation, listen and offer support. When we look out for one another and use the resources available, we help keep our teams and workplaces safe, healthy and strong. If you or a colleague needs help, reach out to someone you trust or use the support resources available.
Let's keep safety, both physical and mental, at the forefront, especially during challenging times. Together, we can make sure everyone goes home safe every day.
I will now turn the call over to John.
Thank you, Kellie, and good morning, everyone. Before we address our second quarter results, I want to highlight important developments announced yesterday regarding our succession planning at Matrix. Over the past year, Matrix is focused on actively advancing our strategic objectives and our leadership succession plan while continuing to evolve our organizational structure to support long-term growth and success.
As you might recall, as part of this effort, Sean Payne was promoted to President of E&C in May of 2025. Yesterday, in our leadership transition release, we announced that Sean has now been elevated to the Chief Operating Officer of Matrix. And then per our succession plan, I will step down as President and Chief Executive Officer on June 30, 2026.
At that time, Sean will assume the role of Chief Executive Officer, ensuring a seamless leadership transition. I've worked alongside Sean for nearly 30 years, first at a previous employer and later by recruiting him to Matrix in 2012. Sean is a proven leader with exceptional operational expertise and unwavering commitment to our people and our stakeholders.
He has been instrumental in the growth of our backlog, our business turnaround, organizational streamlining and strategic planning, and he will actively participate in future calls and investor meetings throughout this transition period. I'm confident in Sean's leadership, and I'm excited about the future of Matrix as well as our market strength and the unprecedented generational infrastructure investment underway across the country.
Now moving on to second quarter results, which reflect continued positive execution across our business and culminated in revenue growth of 12% compared to the second quarter of last year. And while our underlying results for the quarter reflect strong growth and solid execution, we did record an unfavorable adjustment related to warranty responsibilities and miscellaneous subcontractor and vendor commercial items we are working to resolve on a substantially complete storage project. EPS was a $0.03 loss for the quarter, which included the negative $0.13 impact from this issue.
Kevin will discuss this in more detail during his comments. That said, given our overall positive execution, current backlog of $1.1 billion and projects already in flight, we are reiterating our full year revenue guidance of $875 million to $925 million and we will achieve profitability in the second half of the year.
Turning to awards. Project awards during the second quarter were approximately $177 million, resulting in a book-to-bill of $0.8. The overall volume of project awards has been tempered due to uncertainty around trade policy, permitting and the government shutdown that occurred in late 2025. This uncertainty has delayed FIDs and award progression on many projects in our specific market pipeline. While this will likely persist through the end of this fiscal year, it does not represent a fundamental slowdown in our end market demand.
In fact, our overall opportunity pipeline continues to expand, increasing to $7.3 billion at the end of the fiscal second quarter. As we gain more brand recognition and momentum in the power and data center infrastructure market, this will add to the pipeline in future quarters.
Now I want to step back and provide a clear overview of the macro environment we are operating in, our strategic response and our outlook for the future. Matrix and our entire sector has experienced a once-in-a-generation surge in demand for critical energy, power, rare earth and industrial infrastructure.
Companies like Matrix with proven expertise in safely delivering complex projects on time and on budget that are essential to addressing the nation's vast infrastructure needs. We firmly believe we are still in the early stages of this transformative build-out. The shortage of reliable, cost-effective power generation has steadily intensified nationwide and the surge in demand from AI data centers, which require continuous and substantial power has only compounded this issue.
Demand for natural gas widely recognized as the essential bridge fuel for a cleaner energy future has soared by over 100%, while pipeline capacity has grown by only 50%. At the same time, the onshoring of manufacturing, electrification of devices, transportation and equipment are increasing electricity needs. The United States is now critically short of affordable, reliable electric generation, most of which depends on natural gas and abundant energy source in North America.
Crucially, the global race for AI dominance hinges on electricity availability. Governments increasingly recognize that this is not merely a matter of business efficiency or quality of life, but at its core, a national security imperative. Today, the urgent need for affordable, reliable power and connectivity and the fuels that enable them has ignited an unprecedented investment cycle backed by strong political resolve.
In addition to power generation and electrical infrastructure, we're seeing a compelling multiyear opportunity in mining and minerals. The push to onshore and secure critical and rare earth material supply chains in the U.S. is accelerating investment in mining, processing and associated infrastructure, signaling the early stages of a new multiyear upcycle in project demand.
This generational investment cycle has not only had a direct impact on wages, productivity and a growing domestic manufacturing base that combined with federal fiscal and tax policy changes as well as private and public investment will continue to drive a positive economic environment and GDP growth, all of which will create positive tailwinds for our industry.
Against that backdrop, Matrix is especially well positioned as a leading end-to-end EPC general industrial contractor that designs, builds and maintains critical energy, mining and industrial infrastructure. We possess market expertise, specialized capabilities, resources, relationships and a proven track record to deliver comprehensive, high-quality services safely.
Matrix meets these standards and is exceptionally well positioned to benefit from this opportunity. Over the past 5 years, Matrix has proactively transformed our organization to meet these challenges and capitalize on the opportunities ahead. We have strategically exited non-core businesses, invested in our people, systems and processes to strengthen our core expertise in energy, power and industrial projects.
We have streamlined our operations to deliver on our purpose and value proposition to all stakeholders. And as a result, we have built a business positioned at the intersection of powerful macro growth drivers, one that will deliver sustainable and profitable growth for years to come. Our recent project awards, including those secured this quarter and a robust pipeline in LNG facilities, power generation, electrical connectivity, substation, mining and minerals underscore the strategic evolution of our business. While we continue to serve traditional energy and industrial clients, our future growth and sustainable performance are firmly anchored in this generational investment cycle.
This quarter, for example, we secured the LNG storage component for the first phase of a peak shaving facility in the Virginia AI corridor, additional storage to support 2 gas-fired generating facilities in the Southeast and multiple smaller strategic electrical connectivity projects in the Northeast, which is ground zero for this huge data center investment cycle.
Subsequent to the end of the quarter, we were awarded the FEED study and are currently developing the full scope of work for a Midwestern utility to provide them the ability to run dual fuel on 2 of their gas-fired power facilities. We are frequently asked about our role in power generation and delivery and more specifically about our role in supporting data centers and advanced manufacturing facilities. So I want to take a few minutes to share with you at a high-level overview of the work we do supporting these critical growth markets.
Matrix has a strong legacy in power generation and power delivery. This includes simple and combined cycle plant construction, centerline erection, HRSG erection, balance of plant mechanical and electrical as well as construction of greenfield substations, brownfield substation upgrades, including grid interconnects. This, together with our expertise in both LNG peak shaving and backup fuel facilities, provides our clients with the integrated solutions needed to meet existing and increasing demand for electricity to power homes and businesses, including data centers, stabilize the grid during peak periods and ensure reliable operation during emergencies.
This same expertise is needed by data center developers, OEMs, owners and others who are pursuing their own energy infrastructure to ensure reliability and redundancy in their operations. In short, Matrix does not build the data center or advanced manufacturing facility.
However, we do build the required critical energy infrastructure needed to power them. Through both organic and inorganic growth, Matrix is positioned to accelerate its momentum as a critical provider of the services demanded by this massive infrastructure build-out. Our momentum was fueled by the steady conversion of opportunities into awards and those awards into revenue, all executed by the business we have purposely built for this moment.
In summary, I'm proud of the team's continued execution as we proceed through this critical chapter of growth for Matrix. We have plenty of opportunities ahead, and I'm confident that our focus on our core pillars of win, execute and deliver will drive compounding profitable growth and long-term value for our shareholders and customers alike.
I'll now turn the call over to Kevin.
Thank you, John. Let's start with the results for the second quarter of fiscal 2026. Revenue was $210.5 million, an increase of $23.3 million or 12% over the second quarter of last year, driven by growth in all 3 segments with utility and power infrastructure accounting for over 60% of the increase.
We expect to achieve our full year revenue guidance of $875 million to $925 million on strong growth in the second half of the fiscal year, particularly in the fourth quarter. This growth will be driven by large LNG and NGL projects already underway in the Storage and Terminal Solutions segment.
Consolidated gross profit increased 21% to $13.1 million in the second quarter compared to $10.9 million in the prior year. Second quarter gross margin was 6.2% as compared to 5.8% for the second quarter of fiscal 2025. Higher revenues resulted in improved recovery of overhead costs and project execution was generally strong throughout the business.
That said, costs associated with items arising during commissioning of a specialty tank project in the Storage and Terminal Solutions segment resulted in a $3.6 million reduction of gross profit during the quarter or about $0.13 per share. Adjustments to project cost estimates and therefore, direct margin, both positive and negative, are a normal aspect of our business, especially as we work to close out a project.
During the course of the year, these variations generally net to a positive and improved direct margin across the portfolio, which we expect to occur this year as well. Year-to-date, the direct margin performance, including this issue is above plan. As backlog converts to revenue and activity levels continue to ramp, if these types of project level dynamics occur, we expect them to be absorbed more efficiently across the P&L, reducing quarter-to-quarter variability.
Moving down the income statement. SG&A expenses decreased to $15.1 million in the second quarter compared to $17.3 million in the prior year. The 13% decrease is primarily due to cost reductions resulting from our organizational realignment and lower stock-based compensation expense, which decreased $0.7 million associated with the variable accounting for cash-settled awards as a result of fluctuations in our stock price.
As we previously discussed, our ongoing SG&A quarterly run rate is about $16.5 million. As we return to profitable performance, that will be impacted by variable compensation expense tied to earnings. We also incurred restructuring costs of $0.2 million in the second quarter, primarily facility-related costs. We will incur additional expenses in the second half of the fiscal year related to the CEO transition. Details of that CEO transition are included in Item 5 of the Form 10-Q, which will be filed this afternoon.
The company generated $1.5 million of interest income in the quarter from a strong balance sheet that has been built up through effective working capital and contract management. For the quarter, the company had a net loss of $0.9 million compared to a $5.5 million net loss in the second quarter of last year. EPS was a loss of $0.03 compared to a $0.20 loss in the prior year. And then adjusted EBITDA in the second quarter improved $4.6 million to a positive $2.4 million compared to a loss of $2.2 million in the second quarter last year.
Now moving to the operating segments, starting with Storage and Terminal Solutions, which represented 47% of consolidated revenue. Second quarter revenue was $99.9 million compared to $95.5 million last year. The growth was a result of an increased volume of work for LNG and NGL projects, partially offset by lower volumes for crude oil projects. We expect specialty storage projects, including LNG and NGL to drive robust growth for the Storage and Terminal Solutions segment as we move through the remainder of fiscal 2026.
Storage and Terminal Solutions segment gross profit of $4.8 million represented a $2.5 million decrease in the quarter compared to the same period last year. The segment gross margin of 4.8% was lower than segment gross margin of 7.6% last year. The decrease occurred due to the $3.6 million charge we previously discussed. We expect to see significant margin improvement in the remainder of the year based on expected project execution on our high-quality backlog and improved overhead cost recovery resulting from increased revenue levels.
Moving on to the Utility and Power Infrastructure segment, which accounted for 36% of consolidated revenues. Second quarter segment revenue increased $14.3 million or 23% to $75.4 million compared to $61.1 million in the second quarter of fiscal 2025, benefiting from higher volumes of work associated with LNG peak shaving and power delivery projects.
Segment gross profit of $7.2 million increased by $3.8 million or 112% in the second quarter compared to $3.4 million in the same quarter last year. The increase resulted from higher revenue and an improved gross margin, which increased to 9.6% compared to 5.6% in the same period last year. The margin increased due to strong project execution and improved construction overhead cost recovery as a result of higher revenues.
Finally, the Process and Industrial Facilities segment accounted for 17% of consolidated revenue or $35.3 million in the second quarter compared to $30.6 million last year. We expect similar revenue levels until we capture additional project opportunities from the strong market and our expansion efforts.
Segment gross profit was $1.2 million or 3.5% in the second quarter compared to $0.4 million or 1.2% last year. The current margin level is due to the mix of work, which is primarily lower margin reimbursable activity and the low revenue level, which results in under recovery of construction overhead costs. Both issues should improve as the company captures additional revenue opportunities.
Moving to the balance sheet and cash flow. Cash increased $7 million in the quarter, ending at $224 million as of December 31, 2025. The balance sheet and liquidity remain in a strong position, with liquidity of $258 million and no outstanding debt. We also expect to maintain our strong cash balance through the remainder of fiscal 2026 and have the financial strength and liquidity needed to support and grow the business.
As we stated previously, the improvement in our consolidated revenue, combined with continued focus on execution excellence and leverage of our construction overhead and SG&A cost structures will allow us to return to profitability in the fiscal year and make significant progress towards the achievement of our long-term financial target.
That concludes our prepared remarks. So we'll now open the call up for questions.
[Operator Instructions] Our first question will come from the line of John Franzreb from Sidoti.
2. Question Answer
I'd like to start with that onetime issue or the issue you called out, the $3.6 million in storage. I'm curious, is that bleeding into the current quarter? And is there any other large issues similar to that, that we should be cognizant about?
No. I mean we think we've captured the issues associated there and that we would not expect anything leading, as you said, leading over into the third quarter. We think we've got our hands around what the issues are and a path to get them resolved.
And is there anything similar...
Nothing similar hanging around someplace else.
Okay. Good to know. You also called out in your prepared remarks the opportunity pipeline. It looks like it's up roughly 10% or $600 million from last quarter. What's driving that growth?
I think probably -- I don't have the statistics in front of me, John. I think a lot of it is -- a lot of it is in the LNG market space and NGL space, but we're also seeing more activity in mining and minerals, and we're seeing more activity in, I think, in electrical. And while those projects aren't necessarily as big, but they're strategically significant for the business.
Okay. Got it. And again, you did reference this in your prepared remarks about the backlog. I'm kind of curious, not only in aggregate, has the backlog kind of been weak the last couple of quarters, but also notably in utility, which I really thought would have been stronger. Can you kind of talk about what's going on in the overall marketplace?
Yes. I think the award cycle, obviously, we feel as though it's been a little muted. And I think some of the uncertainty in energy markets and permitting, the process of permitting is difficult. I think some of those things is just taking a little bit longer for a lot of those projects to get from our opportunity pipeline into a situation of FID and award.
We think all the projects in there are good solid projects that we're going to have an opportunity to bid and win our fair share of them. There has not been -- so we track what comes in and out of our opportunity pipeline on a monthly basis. And so if you go look at that, that isn't a lot of those things are getting won by someone. It's not a high percentage of them that are getting won by competitors, right? They're either moving out of our opportunity pipeline back into our prospects because of some permitting delay or a client's investment decision. And then we have projects moving in out of prospects into opportunities. But I can't tell you, we're looking at our statistics every month, every quarter and it's saying, oh, wow, we're not winning any of this work.
The stuff is just kind of moving around on us. And you got to remember, too, a decent chunk, and I think we've said in the past, probably $70 million to $100 million worth of stuff happens for us every quarter. It's just small projects and maintenance activity and all that. It just -- it's not in that opportunity pipeline. Because we don't think it's relevant to have mixed in with all that other stuff. So we have this baseline of awards and work that comes in and out of -- can come in and out in the quarter, not in that opportunity pipeline. And so it makes it sort of -- it almost makes it sort of invisible. And -- but that stuff is continuing to happen for us. And we're focused to continue to expand our maintenance operations and maintenance work, and we're geographically looking into new areas to expand our refinery maintenance and some of the other maintenance activities we have.
So while we certainly would like to have big book-to-bills every quarter, but I think we've communicated to you guys in the past that we're going to have a quarter with a big book-to-bill and then we could have 2, 3, 4 quarters where it's going to be below one. So I think it's okay. I think we're in a good spot. I would say, if you look at the details, the book-to-bill for the year, the book-to-bill in storage is above one. So we're continuing to have a strong bookings in that, and it represents a big chunk of the business.
So John, just a follow-up. Do you expect these awards to be moved to the right such that they're going to be awarded in the second half of the fiscal year? Or they move to the right that they're going to be a fiscal 2027 award? I'm just kind of curious about maybe the exit velocity of backlog in fiscal 2026. Because we kind of talked about it being around 1.0 overall and maybe if that dynamic has changed at all.
Right. I think what we've said and what we've communicated in the past and I'll use an NFL term chunk place, so like chunk projects, right? So the big chunk projects that drive -- really drive a big book-to-bill in the quarter, they're out there. We're positioned for them. Those big chunk projects are the ones that I think are going to be -- we're going to see in our award cycle in fiscal '27, which starts July 1. And -- but we're going to see some -- probably some strategic awards, some smaller awards that are going to be in the next 2 quarters, but it probably isn't likely that we're going to exit the quarter over 1.0 collectively across the business. But you continue to see a strong book-to-bill in any one of the segments.
Our next question will come from the line of Brent Thielman from D.A. Davidson.
John, maybe just to follow up on the conversation about all the things you can do around data centers, I sort of bundle things you can do directly on those sites with the power component of that as well, which just seems to be sort of feverish demand here. Why wouldn't that be more influential to your bookings here in the next few quarters, just given the appetite and the fact that you have these capabilities that seem to be in the sweet spot of that.
Yes. So I think it's a good question. We're -- we've been focused on that market here. It didn't just start yesterday, right? So we've been working on it probably over the last 12 months and we recognize like everybody else that there's a significant amount of spend there. But you got to remember, a lot of those clients are new clients to us.
Yes, we've got a power generation capability in-house. We've built some significant power plants that's on our resume. And obviously, the electrical connectivity issues that our electrical connectivity capabilities that's principally in the Northeast and then all the backup fuel and all that stuff. So -- but we're kind of entering that market, and we've got to sell our resume. We've got to build relationships with those clients. We have got to want to make sure we're positioning ourselves for work that's fits our risk profile and our financial profile. We need to appreciate how we compete and how we win in that market. And so all that stuff is going on. And I think we're starting to see some fruits of that work by our business development and operations people. And so as we said in the prepared remarks, my thoughts are that we're going to start to see some growth in the opportunity pipeline as some of this stuff gets to -- hits where we can -- are going to be choose deciding to bid or being invited to bid on certain projects.
But we're already bidding projects from an electrical infrastructure standpoint on new substations that are directly connected to a data center power needs. And so we have several of those that we're bidding now, and I would hope that we're going to be able to put some of those into backlog in this second half of the year. And so we're also working with EPC power plant constructors where we can come in and provide our services and any one of the things that I mentioned there, whether it's putting the turbines in or doing the mechanical work or electrical work or erecting the boilers or whatever that is, all those things we've got capabilities and skills for.
And so we're -- so we're -- I think we're doing a good job. We're working into those markets. And I think we're going to see here over the -- we're going to start to see some impact to that effort in our opportunity pipeline and to a small degree into our award cycle this fiscal year, but it's going to really start to grow, I think, as we move into '27.
Appreciate that, John. Any thoughts on the midstream side? I mean, as you talk about all the demand around gas power coming, I mean it's becoming pretty evident with some other companies. Is there -- are there things that you're starting to see in the midstream arena pop up for you that could also be an opportunity?
So when you say midstream, are you talking about crude oil or are you talking about gas?
Yes.
Yes.
Yes to both.
Yes.
Yes. So I think the crude market is fairly muted. There's some new tanks getting built. There's certainly tank maintenance repair works going on all the time. We do that work. But I think a lot of our storage resources have been a little more focused on the specialty vessel stuff we're doing, where it's more complex construction, better margins for us, less competition. And so while we're still doing -- we continue to offer services on the crude storage and midstream side of the company, it's become a smaller and smaller piece of the revenue of the business.
So there's activity out there. On the natural gas side, certainly, we've got a great position in gas storage in LNG and in NGLs, both from a storage perspective, but also the balance of plant construction for those facilities and whether they're utility connection or there for fueling or whatever.
So I think we're -- the activity level there, I think, related to gas is strong, getting stronger. A lot of permitting issues around that. As we said in the prepared remarks, there's a lot of pipeline issues out there in the marketplace because of permitting challenges. And so you have companies that are unsure about tying up dollars when they're uncertain about the ability to get a permit pushed through.
So one of the projects that we announced an award last quarter, we're building the balance of plant for NGL facility, which we're also building the storage tank for. And we had expected more revenues in Q2 on that project, but the permitting delays have kind of pushed has slid the [indiscernible] our ability to go burn revenue into the back half of this fiscal year. The project is in flight. We're starting to get permits. We're starting to work through it. But that's certainly one of the issues, I think that's impacting probably a lot of people in the midstream market.
Okay. And then you did mention minerals and mining. Obviously, critical materials become more topical here lately. your positioning there and kind of maybe waited for us to size the opportunity for you?
Yes. So we've got a legacy history in mining and minerals. We used to -- we had -- when that market was stronger, we had an operation in Arizona and did work for some of the big miners down there. And then that market kind of fell apart. And so we've kind of kept our hand in there from a sales perspective, but really haven't done any work.
That market is coming back strongly, copper, rare earth minerals, gold. And so we're seeing a lot more opportunities finally get off the drawing board. And we've got a couple of really nice projects that we're bidding now in the mining and minerals market. And again, we're -- we think our brands continues to be strong there. And so we're kind of rebuilding those relationships and I think there's a real opportunity for us here. Plus you got the -- besides the demand for those kind of nonferrous metals related to what's going on with all this infrastructure build-out, you've also got the federal government now that is -- again, from a national security issue is investing money in rare earth minerals to make sure that from a national security issue that we've got those minerals here in this country.
So I think there's a lot of good tailwinds associated with that market. And I think we've got a resume and the relationships to be able to take advantage of it.
Okay. And just last one, guys. I appreciate you taking all these. I think about the outlook for the rest of the year, the return to profitability you're anticipating and what seems to me like a lot of green shoots here in the business, notwithstanding some of the uncertainty in some of your markets here in the short term. And you got a lot of cash on the balance sheet. I mean, John, just to refresh on buybacks, why wouldn't they make sense here? It just seems like business is heading in the right direction. You've got some good things coming for you. Maybe just update on your thoughts there?
I think as we've always said, I think our -- as we want to -- as we return to profitability, yes, we have cash on the balance sheet. We're going to be focused on -- we've been pretty lean as an organization on how we spend our capital internally for our operations. And so there's some catch-up for us to do there.
We are going to be looking for inorganic opportunities that round out our business offering. And certainly, the inability to find inorganic opportunities to add to the business could result in us making the decision that maybe we buy back shares. So I would say all that stuff is on the table. And so we're -- as we've said in previous calls, we're waiting -- we're driving the business to return to profitability to win, execute and deliver. And as that happens, then we're going to be looking for more expanded things to do with the cash on the balance sheet.
We have a follow-up question from John Franzreb from Sidoti.
Yes. I'm just actually curious about the competitive landscape. Are new jobs being written at target margins? Or is there pressure in certain end markets versus others? And I guess on the flip side of that, are some being written at above target? Can you just kind of talk a little bit about that?
Yes. I mean the work that we're booking on a collective basis is falling within our targeted margin ranges. So I would say we're not -- it's not the same as it was 3 years ago where contractors are out chasing projects and driving margins to the bottom. That's -- we're not experiencing that.
And any of the markets above target margins at all?
Yes. I mean it depends on which piece of our business. Some pieces will get a higher margin. Some of the bigger the job, sometimes we're able to get a higher margin. So I think we've talked about a margin range of 10% to 12%. Some pieces of our business are in the high end of that range, some are a little bit above. And -- but some more of the maintenance activities and those things are certainly at the lower end of those margin range or even below. So -- but the portfolio overall, I think the margin ranges there in the backlog is well within our expected range.
I'm not showing any further questions in the queue. I'd like to turn it back over to Kellie for any closing remarks.
Thank you. As always, our approach is to be open and transparent with our investors. And as such, I would like to invite you if you'd like to have a conversation with management to contact me through Matrix Service Company Investor Relations website. You can also sign up for MTRX News by scanning the QR code on your screen. Thank you so much for your time.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.
Matrix Service Company — Q2 2026 Earnings Call
Matrix Service Company — Q1 2026 Earnings Call
1. Management Discussion
Good morning, and welcome to the Matrix Service Company conference call to discuss results for the first quarter of fiscal 2026. [Operator Instructions] As a reminder, this conference call is being recorded. I would like to turn the conference over to today's host, Ms. Kellie Smythe, Senior Director, Investor Relations for Matrix Service Company.
Thank you, Marvin. Good morning, and welcome to Matrix Service Company's First Quarter Fiscal 2026 Earnings Call. Participants on today's call include John Hewitt, President and Chief Executive Officer; and Kevin Cavanah, Vice President and Chief Financial Officer.
Following our prepared remarks, we will open the call up for questions. The presentation materials referred to during the webcast today can be found under Events and Presentations on the Investor Relations section of matrixservicecompany.com. As a reminder, on today's call, we may make various remarks about future expectations, plans and prospects for Matrix Service Company that constitute forward-looking statements for the purposes of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements because of various factors, including those discussed in our most recent annual report on Form 10-K and in subsequent filings made by the company with the SEC. The forward-looking statements made today are effective only as of today. To the extent we utilize non-GAAP measures, reconciliations will be provided in various press releases, periodic SEC filings and on our website.
Finally, all comparisons today are for the same period of the prior year, unless specifically stated. Related to investor conferences and corporate access opportunities, we will be participating in the Sidoti & Company Year-end Virtual Investor Conference on December 10th and 11th, 2025. We will also be participating in the Northland Capital Markets Growth Conference on December 16th. This conference is also virtual. If you would like additional information on this event and would like to have a conversation with management. I invite you to contact me through Matrix Service Company Investor Relations website.
As we shift our focus to safety, I want to underscore its vital importance to our business. At Matrix, safety stands as our foremost core value, and as Mr. Hewitt frequently emphasizes nothing outweighs the physical and mental well-being of our employees, subcontractors, clients and others who may be present at our job sites or in our offices. This is simply -- this is not simply about compliance. It's about continuously cultivating an environment where safety is ingrained in our culture. Every one of us deserves to feel safe at work and return to home to our families and loved ones at the end of the day.
And while safety is always the right thing to do, it's also a business imperative. It strengthens our competitive edge, enabling us to bid on and secure vital projects, foster lasting client relationships and attract and retain top talent. Our clients trust us to execute the project safely and with unrivaled quality. This trust is something we value and we hold ourselves accountable to the highest standards. By maintaining our unwavering commitment to safety, we position Matrix not just as a leader in engineering and construction, but as a dependable partner dedicated to excellence and care.
I will now turn the call over to John.
Thank you, Kellie, and good morning, everyone. We begin fiscal 2026 with strong execution, resulting in double-digit revenue growth and our highest quarterly gross margin in over 2 years. This performance reflects the continued maturation of our backlog and the disciplined approach we've taken to project bidding and delivery. Bidding activity remains healthy across our segments, and we saw a solid level of new awards. Our opportunity pipeline also remains robust for not only near-term projects, but several large multiyear projects with anticipated award dates beginning in late fiscal 2026 and into fiscal 2027.
Based on our first quarter performance, our strong backlog and the visibility we have today, we are reiterating our full year revenue guidance of $875 million to $925 million. Typically, the first quarter reflects a seasonal slowdown in demand for maintenance and repair services. This year, that was largely offset by increased activity on larger projects. Our mix of project work drove gross margin improvement representing our best quarterly gross margin in more than 2 years. We expect continued margin improvement as we move through fiscal 2026 supported by conversion of backlog to revenue. Award activity in the quarter was stable, resulting in a book-to-bill of 0.9, and we ended the quarter with a total backlog of $1.2 billion.
During the first quarter, we removed approximately $197 million from backlog related to 2 projects. While Kevin will provide more detail in his remarks, these removals do not reflect the reduction in demand, changes in the market or business performance issues. In both cases, the clients change their commercial strategy and neither project had mobilized. Importantly, the removal of these projects from our backlog does not impact our Q1 results or full year guidance. We continue to be disciplined in our bidding and contracting efforts to ensure our project risk and financial return profile meets our standards.
Now let's talk about our markets and what we see in the organic opportunities that will drive the business. First, our total opportunity pipeline currently sits at $6.7 billion, with the majority of those opportunities in storage and related facilities for LNG, NGLs and ammonia, which feed our Storage Solutions and Utility and Power Infrastructure segments. We continue to see a steady level of incremental bidding opportunities supported by strong investment in domestic infrastructure and a favorable regulatory environment. Growing demand for sustainable and reliable power is creating significant project opportunities upstream from the massive investment in data centers and advanced manufacturing, among other expanding electrical consumers.
So whether it's LNG for backup fuel or peak shaving, upgrades to existing LNG facilities, new base load or backup power generation or substation upgrades and new construction our business will benefit from these investments in this critical infrastructure. And while the timing of awards can be fluid over the coming quarters, we expect that the level of awards will be similar to what we saw during the fourth quarter. This award portfolio will be made up of midsized projects on top of our normal cadence of small projects and maintenance. These projects will reinforce our strong backlog, continue to provide more predictable revenue flow and build our resource base as the business grows.
One recent example is the award of a balance of plant construction at the Delaware River Partners multiuse port facility in Givestown, New Jersey that will support growing export demand for NGLs, including propane and butane. This award, which was taken into backlog in the first quarter of fiscal 2026 files a fiscal 2025 award associated with the construction of our large full containment dual server storage tank at the same facility. These 2 projects represent our ability to provide integrated delivery for complex storage facilities, which is a key differentiator for the business.
As we move into late fiscal 2026 and into fiscal 2027, we anticipate a reacceleration in award activity for larger multiyear projects, which we are currently in the process of pursuing. In our Process and Industrial Facilities segment, our strategic focus is to expand our markets, client base and footprint to build backlog and revenue while executing safely with high quality and financial outcomes. [ Actions ] include strengthening our position in core geographic markets, realigning our business development resources with our growth priorities and leveraging our strong customer relationships to expand organically. Focus areas include repair, maintenance, turnarounds and small cap projects in various process industries, including refining, chemicals and renewable fuels.
Mining and minerals in support of the demand for nonferrous metals and rare earth minerals thermal vacuum chambers where we hold a dominant position as well as various natural gas value chain opportunities. We are positioned to capture opportunities in this segment and deliver improved results over the long term. With productivity continuing to build due to the steady conversion and replacement of our backlog, we are highly focused on ensuring that we deliver consistent performance for our customers and the highest level of quality and safety.
The recent changes to our organization structure, which we have talked about in our previous calls, has enhanced our agility, competitiveness and performance. These changes, along with strategic actions we have taken over the last few years, our already strong service offering position us to deliver on current commitments and compete effectively for the substantial opportunities within our robust pipeline. We remain committed to disciplined capital allocation. Our strong balance sheet supports the working capital needs of active projects as these jobs progress through key execution phases.
As we return to sustained profitability in the coming quarters, we'll deploy capital thoughtfully, targeting growth opportunities that expand our market share and drive long-term shareholder value. In summary, I'm proud of the team's continued execution as we proceed through this critical chapter of growth for Matrix. We have plenty of opportunities ahead of us, which will not only support this fiscal year, but will continue to create growth in fiscal 2027 and beyond. I am confident that our focus on our core pillars are win, execute and deliver will serve to drive compounding profitable growth and long-term value for our shareholders and customers alike.
So with that, I'll turn the call over to Kevin.
Thank you, John. The first quarter of the year went about as we anticipated from an operating results, balance sheet, cash flow and project award perspective. Revenue of $211.9 million represented a 28% increase compared to $165.6 million in the first quarter of fiscal 2025. This is mainly due to growth driven by larger new construction projects, in the Storage and Terminal Solutions and Utility and Power Infrastructure segments. We expect this revenue growth to continue as we move through the rest of the fiscal year. Consolidated gross profit increased 82% to $14.2 million in the first quarter compared to $7.8 million in the prior year. With strong project execution in both periods, the gross profit increase was the result of revenue growth as well as improved construction overhead recovery.
Consolidated gross margin improved to 6.7% versus 4.7% in the first quarter of fiscal 2025. SG&A expenses were 7.7% of revenue or $16.3 million compared to 11.3% or $18.6 million in the same quarter last year. The $2.2 million decrease is primarily the result of the efficiency improvement changes implemented by the company over the last 2 quarters. The company will continue to work to leverage SG&A to a 6.5% target as revenue grows, while also investing in resources when needed to support strong market demand and growth in our business.
As expected, the company incurred $3.3 million of restructuring costs in the first quarter related to the efficiency efforts mentioned, the company has completed the bulk of restructuring activities and expects minimal restructuring costs during the remainder of fiscal 2026. For the first quarter of fiscal 2026, the company had a net loss of $3.7 million which includes a $3.3 million of restructuring costs as compared to a $9.2 million net loss in the first quarter last year. GAAP EPS was a loss of $0.13 compared to a $0.33 loss in the prior year. Excluding the restructuring costs, adjusted EPS was nearly breakeven at a loss of $0.01 in the first quarter.
This performance reflects the operating leverage inherent in our business model and is consistent with the expectations we have previously communicated, which is that we expect to achieve breakeven on a GAAP net income basis at a quarterly revenue level of $210 million to $215 million. Adjusted EBITDA in the first quarter was a positive $2.5 million compared to a loss of $5.9 million in the first quarter of last year.
Moving to the operating segments. Let's start with Storage and Terminal Solutions, which represented 52% of consolidated revenue. First quarter revenue in this segment was $109.5 million compared to $78.2 million last year. The $31.2 million or 40% increase continues to trend, which began in fiscal 2025 and was driven by LNG storage and specialty vessel projects. We expect this growth trend for Storage and Terminal Solutions segment to continue as we move through fiscal 2026.
Segment gross profit increased by $1.8 million or 38% in the 3 months ended September 30, 2025, compared to the same period last year due to higher revenue volume. The segment gross margin of 5.9% for the quarter was consistent with the segment gross margin of 6% in the same period last year. Gross margins for the segment continued to be primarily impacted by under-recovery of construction overhead costs, which we expect to improve as activity on projects currently in backlog increases through the remainder of fiscal 2026.
Moving on to the Utility and Power Infrastructure segment, which accounted for 35% of consolidated revenue. First quarter segment revenue increased 33% to $74.5 million compared to $55.9 million in the first quarter of fiscal 2025, benefiting from higher volume of work associated with LNG peak shaving and power delivery projects. Segment gross profit increased by $5.5 million or 419% in the first quarter compared to $1.3 million in the same period last year. The growth resulted from the revenue increase and an improved gross margin, which increased to 9.1% compared to 2.3% in the same period last year. The margin improved due to strong project execution and construction overhead cost recovery as a result of higher revenues.
Finally, the Process and Industrial Facilities segment accounted for 13% of consolidated revenue or $27.9 million in the first quarter of fiscal 2026 compared to $31.4 million in the first quarter last year. As John discussed, the market presents good opportunities in this segment to improve the revenue level. Segment gross profit decreased to $5.6 million or 28% in the 3 months ended September 30, 2025 compared to the same period last year. The segment gross margin was 5.1% for the quarter compared to 6.4% in the same period last year. The decrease is primarily attributable to an unfavorable change in the mix of work. Segment gross margin in both periods were impacted by under-recovery of construction overhead costs due to low revenue volumes.
Moving to the balance sheet and cash flow. As expected, cash decreased in the first quarter ending at $217 million, down $32 million from the start of the quarter as the company continues to make progress on the large projects and backlog that were in a prepaid position. Exiting the quarter, balance sheet and liquidity remains in a strong position with liquidity of $249 million and no outstanding debt. We will continue to proactively manage the balance sheet. We have the financial strength and liquidity needed to support the positive earnings inflection we anticipate as we progress through fiscal 2026.
Now let's discuss project awards and backlog. Project awards in the first quarter were consistent with what we anticipated. They totaled $187.8 million for a 0.9 book-to-bill with the Storage and Terminal Solutions segment accounting for $136.1 million of the awards. As John mentioned, during the first quarter, we made the decision to remove 2 projects totaling $197 million from backlog. Neither of them impacting our fiscal 2026 revenue guidance. Each project reflected a different situation.
The first and largest was within our Process and Industrial Facilities segment and was formally awarded to us in late fiscal 2023. Our scope of work on this project was construction only and the start of field work had been -- had already been delayed by over a year due to slow progress on scoping, design development and engineering, which is outside our responsibility. Just recently, the owner decided to adjust its execution and contracting structure, which resulted in their decision to rebid the construction portion of the project. The project will be rebid and packages later this year and we intend to submit bids on certain aspects of our original scope. That said, due to this change, we removed the original awarded project from our backlog, consistent with our backlog recognition policy.
The second project was in our Utility and Power Infrastructure segment. In this case, the project was formally awarded in the fourth quarter of fiscal 2025. Subsequently, the client sought to modify the terms and conditions of this agreement in a way that significantly increased our risk on the project. This change was inconsistent with both the as bid basis of our proposal and our commercial policies. As a result, the award was rescinded, and we removed it from backlog.
After removal of these 2 projects, backlog remains strong at $1.2 billion and is supportive of our revenue guidance of $875 million to $925 million. When we started the year, we mentioned that we were going into the year with 85% of our revenue booked at the midpoint of our guidance range as a result of awards during the first quarter, this percentage has decreased to more than 90% -- I'm sorry, the percentage has increased to more than 90%, and we continue to be confident in our ability to achieve our revenue guidance. The improvement in our consolidated revenue, combined with continued focus on execution excellence and leverage of our construction overhead and SG&A cost structures will allow us to return to profitability as the fiscal year and make us -- and makes [ indoor ] progress towards the achievement of our long-term financial targets.
This concludes our prepared remarks. We'll now open for questions.
[Operator Instructions] And our first question comes from the line of John Franzreb of Sidoti & Co.
2. Question Answer
I just want to start with where you finished about these 2 projects. It doesn't seem like there's much in common with them and it seems like the start dates will probably do in 2027, if not later. But I'm curious if that suggests that the competitive landscape as one was rebid and when the terms were changed a bit, the competitive landscape we're getting a little bit tougher for larger projects out there?
I don't think so. I don't think both those situations were really not associated with as you pointed, the competitive landscape, I think it's just the way the the one -- the larger project, as Kevin had said, it's been in our backlog for almost 2 years, and there was a lot of scope and design changes that were going on between the owner of the project and our clients. And I think the ultimate client, the owner decided that they were going to just change our execution strategy and try and do it in a different way. .
And so -- and then the other project, really, frankly, applaud our teams for not being stuck into taking a job that had a much higher risk component, certainly one that we were not given additional remuneration for to take on that risk. And I think we're able to make that decision to do that because there's a significant amount of opportunities in the marketplace for that kind of work, where we've got a very strong brand position. We've got a very strong position in those markets. And I think at the end of the day, it was a positive thing, particularly when either one of those projects really impact our fiscal 2026.
Got it. And John, I might be reading too much into this. But I think in the prepared remarks, you mentioned that midsized projects are growing. But later in your prepared remarks, you said that you look for a reacceleration of large project work. Did I hear that properly? And if so, what's the timing of when you expect large jobs to be led out again?
Yes. I mean we put some pretty large projects into our backlog 18 months ago. And so it's just the timing, the development of the bigger energy facilities, certainly around LNG and NGLs ammonia jobs it takes us -- takes longer to get those things through our proposal process and development process. And so there's a number of those projects out there that we are tracking. We may be providing upfront feed work for, so maybe some engineering development, scheduling, budgeting, helping some of our core clients in those markets that are continuing to add more infrastructure or planning to add more infrastructure. And so it's just a timing thing.
And so we're really comfortable about our positioning there. the number of opportunities that are out there that we're going to be able to play a role in. And so -- but in my commentary is over through this fiscal year, there continues to be a lot of what would call mid-scale projects available to us. I think the -- we announced the DRP project this morning, which is -- went into backlog in our first quarter, typical kind of projects that we see out there in our pipeline that we're currently bidding on or have bid and that we're working through details with the clients on that. So each of those projects individually, they're not short-term projects. They may not be a 3-year project, but they could be 12 to 18 months. They allow us to continue to maintain a strong backlog, to really build our teams as the bigger projects come down through the opportunity pipeline. And so I feel really good about, a, our ability to continue to maintain a solid backlog and to continue to strengthen the company's operations through a lot of these. What you'd call smaller projects, and these projects are certainly aren't tiny, but they're not the kind of the mega stuff for us to make the stuff that we put in the backlog 18 months ago.
Understood. Just a question on the restructuring. I'm wondering how that changes the breakeven dynamics and there -- if there's any other things that you're thinking about as far as the year ahead, any kind of actions?
Yes. So it does have a good impact on our cost structure, decreases that, which does lower our breakeven point. At this time last year, we were talking about it took us $225 million quarterly revenue to get to breakeven. That's decreased somewhere between $210 million and $215 million to get to breakeven. It's that those changes also decreased the level of revenue required for us to reach full construction overhead cost recovery, that's now around $250 million and it decreased the amount of revenue we need to get our SG&A down to our 6.5% target. That's also down to $250 million. So that definitely had a positive impact on the earnings power of the company.
As we mentioned, we're substantially complete with the restructuring items that would have a cost impact. So there may be some minimal costs to flow through the rest of the year, but it's not much as expected there. With that said, we're continuing to focus on improving the business and have actions and plans in place to address all the issues within the business to continue to focus on returning to profitability and producing the strong bottom line on a quarter-over-quarter basis.
Our next question comes from the line of [ Abe Smith ] of D.A. Davidson.
To begin, can you guys touch a bit more on kind of what projects you're targeting within the gas power project space. In previous conversations, you had mentioned you're looking at some gas power plant work. But kind of more specifically, what are your capabilities there and how do you see that playing out moving forward? And then is this something we should be considering for fiscal '26?
Yes. So if you've been around us for a while, when there was a lot more activity in the late '90s, early 2000s we, as a company and part of our legacy members of our company, we're involved in a number of the larger combined cycle gas-fired power plant build out across the country. California, Ohio, into Pennsylvania. So a variety of different areas. So not only as acting as a general contractor on those projects, but in some cases, we would provide the centerline erection, boiler erection, the mechanical piping systems. And so we have those skill sets reside in the organization. We have those capabilities. .
Over the last -- certainly the last few years as that market flattened out pre-COVID, those resources were applied into other industries and other markets that were maybe gaining strength. So we can see in the current market for power generation and a combination of increased demand for generation, looking for more sustainability, more reliability and maybe a cleaner generation moving from coal to natural gas. So it plays very well for us. So we have those -- all those construction skill sets to not only have a role in the construction of new power generation but also to do all the backup fueling natural gas and LNG as well as peak shaving terminals. So we have a very strong brand position there.
And so if you think about upstream from the new major demand for generation, back up into existing power suppliers. They need to expand their generation resources. They need to make sure they had reliable generation, backup fuel for that generation and so all those things are creating project opportunities for us. And frankly, in our opportunity pipeline, I would expect that to grow here over the next year as more power generating related projects come in to move from our prospects phase into our opportunity pipeline.
Okay. Awesome. And then kind of shifting gears again back to the backlog. So obviously, backlog was impacted this quarter by the removal of those 2 awards. But kind of moving forward, should we continue to view backlog in the $1 billion-plus range. And then kind of more specifically, you guys mentioned that the Process and Industrial Facilities project that was removed was because the client wanted to split it up into multiple bids. Do you guys envision this kind of becoming a pattern with other clients as well? Or do you guys think of this as more of a one-off?
Yes. I think that's a one-off situation for at least for the projects that we're involved in. I would say what we're seeing more of a turn is clients that are trying to lock up resources and construction -- engineering and construction capabilities. And so in some cases, they are looking at alliances, looking at partnering agreements, looking at more better risk sharing through reimbursable kind of contracts. So I think we're in that place in the market right now where it's becoming -- I hate to use the term, it's becoming a seller's market.
But certainly, I think that pendulum has moved in a little bit in some areas and some regions of the country where you're going to see more contractors getting locked up with owners to get their infrastructure put in place. So I think right now, it's a pretty good place to be in, a, to have the kind of brand strength that we have and capabilities in the markets we can perform in and -- but not just for us, certainly for some of our peers as well.
I'm showing no further questions at this time. I'd now like to turn it back to Kellie Smythe for closing remarks.
Thank you. As a reminder, the Sidoti & Company Year-end Virtual Investor Conference is scheduled for December 10th and 11th. We will also be participating for the first time in the Northland Capital Markets Virtual Growth Conference on December 16, 2025. If you're participating, we look forward to speaking with you.
Additionally, if you'd like to have a conversation with management, please contact me through the Matrix Service Company Investor Relations website. You may also sign up to receive MTRX news by scanning the QR code on your screen. Thank you for your time.
Thank you for your participation in today's conference. This concludes the program. You may now disconnect.
Matrix Service Company — Q1 2026 Earnings Call
Matrix Service Company — Q4 2025 Earnings Call
1. Management Discussion
Good morning, and welcome to the Matrix Service Company conference call to discuss the results for the fourth quarter of fiscal 2025.
[Operator Instructions]
As a reminder, this conference call is being recorded. I'll now like to turn the conference over to today's host, Ms. Kellie Smythe, Senior Director of Investor Relations for Matrix Service Company.
Thank you. Good morning, and welcome to Matrix Service Company's Fourth Quarter Fiscal 2025 Earnings Call. Participants on today's call include John Hewitt, President and Chief Executive Officer; and Kevin Cavanah, Vice President and Chief Financial Officer.
Following our prepared remarks, we will open the call up for questions. The presentation materials referred to during the webcast today can be found under Events and Presentations on the Investor Relations section of matrixservicecompany.com. As a reminder, on today's call, we may make various remarks about future expectations, plans and prospects for Matrix Service Company that constitute forward-looking statements for the purposes of Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements because of various factors, including those discussed in our most recent annual report on Form 10-K and in subsequent filings made by the company with the SEC.
The forward-looking statements made today are effective only as of today. To the extent we utilize non-GAAP measures, reconciliations will be provided in various press releases, periodic SEC filings and on our website.
Finally, all comparisons today are for the same period of the prior year, unless specifically stated. Related to investor conferences and corporate access opportunities, we will be participating in the D.A. Davidson 24th Annual Diversified Industrials & Services Conference in Nashville, Tennessee, September 17th through the 19th. If you would like additional information on this event, I would like to have a conversation with management, I invite you to contact me through the Matrix Service Company Investor Relations website. I will now turn the call over to John.
Thank you, Kellie. Starting with safety at Matrix, the physical and mental safety of our employees as well as that of anyone on our project sites or in our offices is core to who we are, an expectation for all employees and a commitment we uphold for all stakeholders. Today, I want to talk [Technical Difficulty] similar to airport security today, if you see something that does not look right, that could create a hazard for yourself or fellow employees, then please say something.
At Matrix, this is not only a right our employees have when they come to work for us, but it is an obligation and expectation for everyone, and we expect our leaders to listen and act without retribution. This authority is a critical part of our culture and creates a safer work environment. And we find many times in near misses and incidents that the use of Stop Work Authority or the honoring of that authority by leadership could have been avoided an incident.
In fiscal 2025, we made significant improvements in both our total recordable incident rate, or TRIR, and our DART rate, which is a measure of injury severity and stands for days away, restricted or transferred due to an injury.
Our TRIR improved from 0.91 in fiscal 2024 to 0.51 in fiscal 2025, and our DART rate improved from 0.28 to 0.21 for the same period. And while we are proud of these achievements, we understand that achieving and maintaining a 0 incident safety performance is a relentless journey, and we will continue to prioritize safety in everything we do as we work towards this goal. So as we conclude fiscal 2025, on behalf of the company's leadership team, I would like to thank everyone at Matrix as well as our subcontractors and others on our project sites and offices for your unwavering commitment to our safety journey and building the kind of culture that we expect. The effort you invest in fostering a safe work environment at work and at home makes a profound difference. And together, we can achieve our goal of 0 incidents.
And to our team members, remember, Stop Work authority is a right, an obligation and an expectation for everyone. As I reflect on fiscal 2025, the financial results certainly did not meet the expectations we had at the start of the year nor does it accurately portray the positive underlying performance of the business. It is essential to look behind the numbers to recognize the progress achieved and the fundamental strength in the business.
It is important to understand that the impact from a single isolated event alongside a couple of legacy legal issues from 2021 and restructuring costs incurred to improve the organization does not reflect the company's underlying performance or its future potential. Kevin will provide more detail on these impacts in his remarks.
But before he does, I want to highlight a few key takeaways. First, our project teams are executing well and producing strong consolidated results on our projects and maintenance activities across the enterprise, as evidenced by an above-plan DGP level, even including the labor productivity issues from a crude storage project that was noted in our earnings release. In short, we are executing on the backlog and new awards above plan on a consolidated basis.
Second, while the full year's revenue was below our expectations, over half of the revenue shortfall was related to the late start on previously booked work, which is now in full flight and significant weakness in the planned growth for our T&D business, which led us to exit that service line in the back half of the fiscal year. The trend of growing revenue did occur as expected [Technical Difficulty] quarter-over-quarter, just not to the level we anticipated, and we expect revenue to continue to grow in fiscal 2026.
Third, awards in the year of $726 million allowed us to maintain a near record backlog of approximately $1.4 billion. As a result, we are entering fiscal 2026 with approximately 85% of the planned revenue booked with nearly all of that underway. Additionally, this year's awards support our core market objectives in specialty storage, LNG facilities and electrical infrastructure, some of which are directly associated with the East Coast data center build-out and its demand for reliable power. These new awards and performance on existing backlog are creating new and reinforcing existing client relationships, which will lead to more award opportunities as the demand for energy, power and industrial infrastructure continues to heat up. Many of our clients are looking to commit to contractors that they trust and have high-performing teams to ensure their work gets built.
Finally, as the year unfolded, we took steps to make sure the business is prepared for what we see as a strong future, a future of opportunities and growth in our target markets. We looked at the business core strategic pillars of win, execute and deliver to assure that every part of the business, from sales to operations to shared services to administrative support is properly aligned.
In the end, we flattened the organization, closed underperforming offices, consolidated operational support services, restructured business development to better align with core market and growth objectives and integrated our engineering and construction operations to improve competitiveness, market alignment and delivery.
While we did incur some costs associated with these initiatives, the changes are crucial to ensuring Matrix can capitalize on the significant opportunities ahead. As these efforts begin to bear fruit, they will serve as a key catalyst for our continued strategic growth and solid execution in 2026 and beyond.
Now let's talk about strategy. Our strategy begins with our people, our purpose and the core values of who we are as a company to deliver on this purpose, we must ensure a culture of safety, both physical and mental and imperative to our business, maintain our Great Place to Work environment, especially considering the demand for talent for professional and craft, remain growth focus to gain scale and durability, achieve consistent performance, excellence in all aspects of our operations, including safety, quality, timeliness and margin outcomes, innovate and lead in the application of technology, including AI and face change with a positive attitude, and finally, create value for all of our stakeholders.
These objectives are central to how we lead, set expectations and create value and are embedded in the pillars of when, execute and deliver which underpins our strategy. Our win pillar is not only about awards, building backlog and growing organically, but also making sure we pursue awards with the right risk and financial profile aligned to our strategic market focus areas. In addition, win also means hiring the best talent, having an industry-leading brand and building strong client relationships.
Our strategic market focus can be broken into 2 categories: our current business with the opportunities for consistent and stable revenue combined with specific growth opportunities that are available in markets that fit our brand profile, skill sets and leadership, in engineering, construction and maintenance for LNG, NGS, ammonia, midstream and downstream energy products, mining and minerals, aerospace and electrical and new high-growth markets where our presence is currently limited, but opportunities are significant.
Our experience and skill sets overlap for baseload and backup power generation, fuel storage, electrical interconnects and mechanical systems that are being driven by growth in power demand from fleet retirements, electrification of everything, expansion of AI and data centers and advanced manufacturing.
Our opportunity pipeline of $5.9 billion is largely made up of our current business market focus areas. Over time, we will add to this pipeline with new high-growth markets, which will provide further strength. Both our current and new high-growth markets are supported by numerous multiyear megatrends in line with our long-term financial targets and provide the expectation for organic and inorganic growth of the business in 2026 and beyond.
Moving on to our execute pillar. We must take the work that we win and execute it with 0 safety incidents, high quality, in line or better than budget on time and with overall outcomes that strengthen our brand and client relationships. The realignment and streamlining of our organization, which has been strategic and intentional has been key to ensuring we continue to win and execute at a high level.
Finally, the deliver pillar of our strategy is really the culmination of the first 2 winning and executing our work and a consistent and high-quality manner that allows us to deliver value to all of our stakeholders, invest in our company, our people and fixed assets, providing a fuel for inorganic growth, growth opportunities for our people, supports the community and a return to our shareholders. As it relates to inorganic growth, we have said previously that our focus has been on returning to profitability. We are at that inflection point now.
Looking forward, our priorities to ensure durable return-focused growth through organic, supplemented with focused M&A. As we move through the year, we will become more intentional and active in the search for inorganic opportunities that meet the strategic needs of the business to support our market objectives. We expect fiscal year 2026 full year revenue to be between $875 million to $925 million, representing year-over-year growth of 17% at the midpoint of the range. This outlook is underpinned by the strength of our current business, a healthy bidding environment and a robust backlog.
As mentioned earlier, at the midpoint of our guidance, approximately 85% of expected fiscal 2026 revenue is supported by backlog already in hand and nearly all that backlog is related to projects that have already broken ground or risk of delay is minimal. 2026 will be a crucial year in our strategic journey marked by revenue growth, a return to profitability and continued execution against our strategic priorities. We are forecasting the first quarter of the year to be similar revenue level to the fourth quarter of fiscal 2025 with a steady improvement in revenue and profitability through the course of the year.
With our strong financial position, our realigned organizational structure, backlog and robust opportunity pipeline, we are confident in our ability to leverage the significant ongoing infrastructure investment cycle to continue our transformation into a scalable and resilient growth platform. Kevin will now provide more details on the numbers.
Thank you, John. Yesterday, we released our results for the fourth quarter of fiscal 2025. Those results were revenue of $216.4 million, EPS of a $0.40 loss and adjusted EBITDA of a $4.8 million loss. Those results included 4 items that masked the continued improvement in the ongoing business. First, we lowered our recovery expectations on a legacy project that is currently in a dispute resolution process, which resulted in a $6.4 million reduction of revenue and operating income. This was related to a crude terminal project that we completed back in calendar 2021. The project was impacted by the COVID pandemic and incurred significant project scope changes directed by the owner. We've been pursuing our outstanding contract balance from the customer since that time. Arbitration proceedings occurred last month, and we are awaiting that final decision in fiscal 2026. While the outcome of legal proceedings is uncertain, we believe we have appropriately reserved for our exposure on this issue and expect a positive cash inflow upon resolution.
Second, we incurred an additional $3.8 million charge on a crude project impacted by lower-than-anticipated labor productivity. You may recall we discussed this project last quarter when we began to incur productivity issues. While we work hard to avoid any issues during our projects and our industry, issues will occur from time to time. When they do, our focus is on reducing any financial impact and maintaining our strong relationship with our customer.
We are pleased to report that the team worked through the issues, completed the project earlier this quarter as planned and did so in a manner that further solidified our relationship with an important customer.
Third, we incurred a $1.3 million charge related to an unexpected court decision on a project completed in calendar 2021. In this case, a subcontractor of ours failed to pay certain vendors even though he had been paid by -- even though we had paid the subcontractor. As a subcontractor is no longer able to pay their obligations. The court ruled, we had to make good on the amounts owed to the vendors, effectively requiring us to pay the obligations twice.
Finally, we incurred $3.4 million in restructuring costs related to the organizational improvement actions John previously discussed. As those actions continue to fiscal 2026, we expect to incur a similar amount of restructuring costs in the first quarter. These actions were mainly designed to improve operational efficiencies, but they also reduced our annual overhead cost structure by approximately $12 million as we have experienced higher inflation for the past couple of years and other cost pressures, these changes will allow us to keep our annual cost structure flat during a period of strong revenue growth. The combined impact of these items was significant to the quarter. It decreased our revenue by $6.4 million to the reported $216.4 million, which was just below our implied fourth quarter guidance range. It negatively impacted EPS by $0.53, which resulted in the $0.40 loss I previously referenced, and it decreased our adjusted EBITDA by $11.5 million to a $4.8 million loss.
We believe discussing the results in this manner is necessary to demonstrate the fundamental performance and improvement in the underlying business. We have previously discussed our fiscal 2025 focus was to improve operating results and return to profitable performance due to the growth in our revenue run rate, effective project execution, and leverage of our overhead cost structure.
The revenue grew each quarter of the year as large projects ramped. That growth continued in the fourth quarter with revenue being 31% higher than the start of the year. The revenue run rate has now reached a level that supports positive earnings. As previously mentioned, our project execution was strong enterprise-wide as the underlying business produced double-digit direct margins, excluding the items discussed. We have a quality backlog, and we'll continue to focus on effective project execution. The leverage of our cost structure improved throughout the year but the impact of the under-recovered construction overhead reducing from 620 basis points in the first quarter to 160 basis points in the fourth quarter. Finally, SG&A leverage also improved from 11.2% of revenue in the first quarter to 8.1% in the fourth.
As we move through fiscal 2026, additional revenue growth combined with the efficiency actions taken will allow us to materially eliminate the under-recovery of construction overhead to further leverage SG&A toward our 6.5% target.
Moving to the segments. Storage and Terminal Solutions segment revenue increased 37% to $96.1 million in the fourth quarter of fiscal 2025 compared to $70 million last year due to increased volume of work for specialty vessel and LNG storage projects. Gross margin in the fourth quarter of fiscal 2025 reflects improved operating leverage resulting from higher revenue. However, gross margin was a negative 1.1% in the fourth quarter compared to a positive 3.1% last year as a result of labor productivity issues on crude terminal project and lower recovery expectation on the legacy project, both of which were discussed previously.
Utility and Power Infrastructure segment revenue increased 12% to $73 million in the fourth quarter compared to $65.3 million in the same period a year ago, benefiting from a higher volume of work associated with natural gas peak-shaving projects. Gross margin was 9.1% in the fourth quarter compared to 4.2% last year, an increase of 4.9% due to strong project execution and improved construction overhead cost absorption.
The fourth quarter gross margin was also impacted by a $1.3 million charge related to the unfavorable court decision discussed previously. Process and Industrial Facilities segment revenue decreased to $47.3 million in the fourth quarter compared to $54.2 million last year, primarily due to lower revenue resulting from the completion of a large renewable diesel project last year. In addition, we have lower revenue from thermal vacuum chambers, partially offset by higher revenue volumes or refinery work. Due to the change in mix of work, gross margin was 5.9% in the fourth quarter of fiscal 2025 compared to 15.4% last year.
Now let's discuss backlog, which stands at almost $1.4 billion as of June 30, 2025. Project awards totaled $186.3 million in the fourth quarter resulting in a book-to-bill ratio of 0.9. While economic uncertainty has impacted the timing of project awards overall, the Utility and Power Infrastructure segment had a strong quarter with $121.9 million in awards and a book-to-bill of 1.7. These awards were related to LNG peak-shaving projects and substations. The year-end backlog level is supportive of strong revenue growth in fiscal 2026.
And moving to the balance sheet. Our cash increased an additional $39.1 million in the fourth quarter related primarily to working capital changes. For the year, our cash balances increased $109 million to $249.6 million as of June 30, 2025. Available liquidity has increased to $284.5 million and is comprised of $224.6 million of unrestricted cash and $59.8 million of borrowing availability under the credit facility.
The company also has $25 million of restricted cash to support the credit facility, and our debt position remains at 0. Subsequent to year-end, the company executed an amendment to the credit facility, which extends its term until September of 2029. The company entered fiscal 2026 in a strong financial position, that provides liquidity needed to support the execution of our backlog and to deploy capital towards growth.
With that, I would like to turn the call over to John for some final remarks.
Thank you, Kevin. In closing, I'd like to reiterate the following takeaways: First, despite some legacy legal issues and other noise during the fourth quarter, our team grew revenue consistently quarter after quarter, through the year and is executing above plan from a direct gross profit perspective on the work on hand.
Second, our strategy is working. We are winning work in our key focus areas, maintaining our near-record backlog even in the face of the uncertain macroeconomic environment, our organizational realignment is strengthening our platform and positioning the company for sustained profitable growth, both organically and inorganically.
And third, our momentum into fiscal 2026 is strong with robust backlog and a strong opportunity pipeline. We're guiding to 70% revenue growth next year with 85% of that revenue from backlog that is already in progress. So with the tremendous momentum that exists across the business, we believe we are entering a prolonged period of growth. Above all, we remain committed to delivering sustainable shareholder value by building a platform capable of consistent profitability, backlog growth and cash generation.
I'm proud of what our team accomplished in fiscal 2025 and even more excited about the road ahead. By remaining disciplined, focusing on safety and quality and continuing to improve our operations, we are confident in our ability to drive growth, create long-term value for our shareholders as we successfully win, execute and deliver.
With that, we'll open the call for questions.
[Operator Instructions]
And our first question comes from the line of John Franzreb of Sidoti & Co.
2. Question Answer
John, last quarter, you kind of referenced the fact that some of the jobs are being pushed to the right due to economic uncertainty. Are you still seeing that?
Yes. I mean it's -- I would say there's kind of an overhang across our industry. And -- but we're only really -- I say we're really only able to point a finger at a couple of projects that were in our sites that you could say we're directly impacted by what's going on with tariffs and some of the global events and I think it just sort of feels like there's an overhang. And most of those projects are probably really related to things that have more of a global involvement, meaning things that are exporting some kind of energy product, let's say, the internal stuff, the LNG peak-shaving and backup fuel supply, there continues to be a lot of energy around those, no pun intended, and that I think the large -- we're still seeing a lot of smaller projects kind of come through the pipeline, the major projects.
Those are just timing things, and they come and go and they take a while for those to germinate. But we have some of the larger LNG peak-shaving projects in our sites. And it just takes some time for those projects to develop. So from a domestic standpoint, I think we see -- we feel pretty good about the timing of an opportunity for rewards there. Certainly, there's more attention from our clients around material escalation from tariffs and those kinds of things become part of how we price and how we negotiate our contracts with various clients. But we've been fairly successful working through those risks with our new and existing clients.
Got it. And when you look at the opportunity profile and you just referenced some larger jobs that are out there maybe, do you expect to exit fiscal 2026 at a near 1.0 book-to-bill or is that too much to ask?
No, I think -- I certainly think that opportunity is out there. You've been around us long enough that you know the timing of those awards certainly have a major impact if things can slip a month here or there. And -- but certainly, what we see in our pipeline, the opportunity for us to book inside the, let's just say, our guidance range -- revenue guidance range. I think those projects are out there. And the thing -- when we have these big upticks in our backlog, they come from a major project that we booked that's in the $300 million, $400 million kind of range where we have a couple of those in our backlog today, and we're looking for opportunities to replace those and build on those moving forward.
So this year, I think our award cycle is going to be made up of smaller kind of -- or normal sort of bread-and-butter projects, but smaller projects that are in $50 million to $150 million kind of range. But we think those are out there and the opportunity for us to windows and hit a book-to-bill of 1 is certainly available to us.
That's good to hear. And -- just what's your confidence level of returning to profitability and that kind of time line? How does that play out as the year progresses?
I would say our confidence is high. We feel good about the quality of the backlog we have and the fact that the high-quality backlog is in flight and that how that backlog is going to roll out over the course of the year plus even some of the backlog that we added in fiscal '25 helps to fill some of the holes in fiscal '26 already. And so I think we feel pretty good about our revenue levels and after revenue levels we're projecting, we're going to be in a position to be able to return to profitability.
And one last question, I'll get back in the queue. The cash position is building. Just could you just talk a little bit about how much is that advance payment from customers and how much is Matrix?
So I'll take that. The cash position has built considerably this year. We've got a lot of long-term projects where we have seen some upfront money, but the balance sheet is strong. So we'll definitely use a good portion of that $250 million of cash for the projects. But we probably have cash available for just a normal level. If you look at what the working capital investment is currently what the cash level is of $50 million to $70 million that's kind of built up cash for just operating the business and it could also support growth activity. So we feel good about where we've got this balance sheet.
And our next question comes from the line of Brent Thielman of D.A. Davidson.
I guess first question just would be kind of back to some of the moving pieces of the quarter. Are you able to comment on other potential COVID era legacy jobs that you're in dispute that we need to keep in the back of our minds? Or do we feel like we're kind of beyond this at this point?
I think we're -- I think anything of any materiality works pretty much beyond. This one -- Particularly this one particular project that we're talking about that took the $6 million charge as Kevin had noted, we've been fighting that. We reached mechanical completion on the job back in early '21. And we've been in a dispute with a client since then. And we have attempted numerous occasions to get that settled and was unable to do that and ended up in, as Kevin said, in arbitration last month, but yes, that's really kind of the final material legacy pandemic issue that we've got.
And then maybe a 2-parter to the restructuring actions you're taking would be, one, Kevin, if you don't mind just your expectations for the cost savings impact you should get from this and I guess, two, any early indications or evidence of some of the things that you're doing that's allowing you to win more work. Where are you seeing the positives of what you've been doing here to potentially, I guess, the bookings or any other measure we can look at?
So I'll hit the second part of your question, and Kevin can hit the first part. So we made a lot of significant changes over the last 5 months. And right now, we are kind of settling in -- so we moved people around in the seats and got rid of some of the seats and so it created opportunities for some of the people in the organization to step up and take some different new leadership roles. So I think we've created a lot of energy in the organization. You can feel a lot of energy in the organization.
Like we said, we've flattened and streamlined the decision-making process and so we are still kind of settling in the key strategies and objectives with the organization. We just met with the Board 2 weeks ago and reviewed our strategy and our plans with them. And so -- but I think we're already seeing an improved alignment between different elements of the business and what we need to do to support each other, what we need to do to win work, what our real focus areas are from a market perspective.
And so I think this change and as recalling a realignment in the organization is really going to bear some fruit for not only on how we win work but our ability to execute work, particularly around work that's EPC-related where we've got the critical engineering deliverables and then the -- our ability to execute that work on our projects.
And when you look at the cost, we -- as I mentioned, we've cut out about $12 million with these most recent actions. That's split about 50-50 between construction overhead and SG&A. So it will -- we -- our SG&A has been running just under $18 million a quarter in fiscal 2025. I think you'll see it in the $16.5 million range per quarter in fiscal '26. The construction overhead impact will help us address the construction overhead, combine a little bit lower cost structure with the increasing revenues. We'll continue to focus on eliminating the COH. So I think we made the right steps in the last couple of quarters.
Okay. I guess my last question is a little bigger picture, John. There's been some fairly significant announcements here over the last few days and then related to the data center theme. And I guess the question for me would be, maybe if you could just elaborate. Where does Matrix play into this, whether directly or kind of second derivative of the things that are happening in that market that only seem to be getting bigger and bigger as we look out over the next few years. Where do your cards deploy? And how does that pipeline that you have? What is it -- how does it inform you about your opportunity there?
Yes. Good question. So I mean, we are not going to be the person who builds the data center, right? That's just not -- that's not who we are. We don't envision being out there doing that. That's a fairly highly competitive light industrial kind of market. And so to make that step would be a pretty big leap. But where we are going to play a role in both directly and indirectly is the demand for additional power generation everywhere and the demand for backup power and the fuel for that power related -- directly related to data centers the AI computing, advanced manufacturing. So we see significant opportunities there. And if you recall, you've been around us long enough, I mean, we had a position in the gas-fired turbine construction market, both for in simple cycle mode and in combined cycle for baseload generation. So we have those skill sets.
We turned our focus to other areas of construction as that market 5, 6 years ago kind of went in hibernation. But this growing demand for power, which we don't see as something that's going to stop. And so it's related not only to the increased demand related to what we talked about here in data centers and AI. But just in general, the general electrification of everything, it's just requiring more power generation, you've got more -- in spite of some of the rhetoric coming out of Washington, we're still probably going to be retiring coal fleets and moving more to our gas-based power generation economy. So -- and then you got the opportunity for interconnect, for substation work, we've done -- for a couple of data centers, we've done the substation work and the interconnect work for them. A lot of those data centers have high demand for cooling. And so some of that is more of a -- more complex process installation than what you might normally have in a light industrial facility, which could create opportunities for us.
So our opportunities and our work around there will be a little bit more on the fringe. And then just the demand for generation, not only the installation of baseload generation and backup generation, but also the gas required to fuel it, pushing that back into the utilities with the work that we're doing and peak-shaving facilities, the work that we're doing in and backup fuel supply for utilities, the upgrading -- a couple of our awards in the quarter here were related to existing LNG peak shaving facilities that hadn't been updated for 30 years. And so we're going in and doing -- in some cases, the full EPC to update the process equipment and not even necessarily the storage, but the process equipment of those existing LNG [Technical Difficulty].
I'm showing no further questions at this time. I would now like to turn it back to Kellie Smythe for closing remarks.
[Technical Difficulty]
Please standby. Your call will begin momentarily. And I see you are back in line. You may begin.
Marvin, this is Matrix. Can you hear us okay?
Yes. You're back.
Okay. We think you have dropped off the call.
Okay. No closing remarks?
Yes, we do. We were still answering our question. Kevin was still answering our question. We're going to finish the answer to that question.
Okay. You're back on that.
Well, so I think we're back online. Sorry about that. We had some technical difficulties. Brent, I was going to follow up on if you're still there, a follow-up on the cost question you had. An important aspect of what those actions do it is also decreases our breakeven point. The amount of revenue we need in order to get to breakeven performance. In the past, we've talked about that. It was around $225 million per quarter with these reductions. Now it's down to $210 million to $215 million per quarter and so that's definitely a benefit to us increasing the earnings power of the business as we move forward. So I just want to follow up with that and turn it over to Kellie for closing remarks.
Thank you, Kevin. As a reminder, we will be participating in the D.A. Davidson 24th Annual Diversified Industrial & Services Conference in Nashville next week, September 17 through the 19. If you are attending, we look forward to seeing you there. Additionally, if you'd like to have a conversation with management, please contact me through Matrix Service Company Investor Relations website. You may also sign up to receive MTRX news by scanning the QR code on your screen. Thank you so much for your time.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Matrix Service Company — Q4 2025 Earnings Call
Financial data from Matrix Service Company
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Mar '26 |
+/-
%
|
||
| Revenue | 845 845 |
14%
14%
100%
|
|
| - Direct Costs | 793 793 |
14%
14%
94%
|
|
| Gross Profit | 53 53 |
20%
20%
6%
|
|
| - Selling and Administrative Expenses | 64 64 |
9%
9%
8%
|
|
| - Research and Development Expense | - - |
-
-
|
|
| EBITDA | -2.47 -2.47 |
85%
85%
0%
|
|
| - Depreciation and Amortization | 9.18 9.18 |
10%
10%
1%
|
|
| EBIT (Operating Income) EBIT | -12 -12 |
57%
57%
-1%
|
|
| Net Profit | -15 -15 |
34%
34%
-2%
|
|
In millions USD.
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Matrix Service Company Stock News
Company Profile
Matrix Service Co. engages in the provision of engineering, fabrication, infrastructure, construction, and maintenance services. It operates through the following segments: Electrical Infrastructure; Oil, Gas and Chemical; Storage Solutions; and Industrial. The Electrical Infrastructure segment includes the construction of new substations, upgrades of existing substations, short-run transmission line installations, distribution upgrades and maintenance, as well as emergency and storm restoration services. The Oil, Gas and Chemical segment serves customers primarily in the downstream and midstream petroleum industries who are engaged in refining crude oil and processing, fractionating, and marketing of natural gas and natural gas liquids. The Storage Solutions segment consists of work related to aboveground storage tanks, and terminals. The Industrial segment comprises of work for integrated iron and steel companies, major mining, and minerals companies. The company was founded on April 4, 1984 and is headquartered in Tulsa, OK.
StocksGuide Premium
| Head office | United States |
| CEO | Mr. Hewitt |
| Employees | 2,239 |
| Founded | 1984 |
| Website | www.matrixservicecompany.com |
