Matrix Service Company (Nasdaq: MTRX), a leading
North American industrial engineering, construction, and
maintenance contractor, today announced results for the fourth
quarter and year ended June 30, 2024.
FOURTH QUARTER FISCAL 2024
RESULTS(all comparisons versus the prior year quarter
unless otherwise noted)
-
Total backlog of $1.4 billion, +31% on a year-over-year basis
-
Total project awards in the quarter of $175.9 million, resulting in
a book-to-bill ratio of 0.9x
-
Revenue of $189.5 million
-
Net loss per share of $(0.16) versus $(0.01); adjusted net loss per
share of $(0.14)(1) versus $(0.11)
-
Adjusted EBITDA of $0.2 million(1) versus $2.2 million
- Cash flow from
operations of $47.0 million
- Liquidity at June
30, 2024 of $169.6 million with no outstanding debt
FULL-YEAR FISCAL 2024 RESULTS(all comparisons
versus the prior year unless otherwise noted)
-
Total project awards of $1.1 billion, resulting in a book-to-bill
ratio of 1.5x
-
Revenue of $728.2 million
-
Net loss per share of $(0.91) versus $(1.94); adjusted net loss per
share of $(1.03) versus $(1.48)
-
Adjusted EBITDA of $(10.5) million versus $(18.0) million
-
Cash flow from operations of $72.6 million
FULL-YEAR FISCAL 2025 REVENUE
GUIDANCE
-
Revenue between $900 and $950 million
_______________(1) Adjusted net loss and
adjusted loss per share are non-GAAP financial measures which
exclude restructuring costs and gain on sale of non-core assets,
Adjusted EBITDA is a non-GAAP financial measure which excludes
interest expense, interest income, income taxes, depreciation and
amortization expense, impairments to goodwill, gain on asset sales,
restructuring costs, and stock-based compensation. See the Non-GAAP
Financial Measures section included at the end of this release for
a reconciliation to net loss and net loss per share.
“We advanced work on multiple large projects
during the quarter, which contributed to meaningful cash generation
to close-out the fiscal year,” said John Hewitt, President and
Chief Executive Officer. “As a reminder, we are still in the early
phases of these multi-year projects.
“Demand within our core markets remains robust
and bidding activity continues to be strong. We ended the year with
a book to bill of 1.5x which drove backlog growth of 31% on a
year-over-year basis.
“As we enter fiscal 2025, Matrix is
well-positioned to achieve significant improvement in revenue, a
return to historical margins, and improved earnings. The Company
begins the year with a backlog of $1.4 billion, an opportunity
pipeline of over $6 billion, and a streamlined organization that
will efficiently leverage the Company’s cost structure as it
continues to grow.
“We have reached an inflection point and, as we
move through the year, we believe revenues from strong project
execution and conversion of backlog put the company on a trajectory
of upward growth and profitability.
“Based on the activity in our business, we are
providing full-year revenue guidance that reflects the strength of
the business and our expectations for growth.”
Financial SummaryFiscal fourth
quarter revenue was $189.5 million, compared to $205.9 million in
the fiscal fourth quarter of 2023. The decline was due to lower
revenues from refinery maintenance and turnarounds, and midstream
gas processing projects, offset by increases in revenues from peak
shaver projects and LNG storage projects.
Gross margin was $12.4 million, or 6.6%, in the fourth quarter
of fiscal 2024 compared to $14.7 million, or 7.1% for fourth
quarter fiscal 2023. Strong project execution in the fiscal fourth
quarter was partly offset by lower revenue volumes due to slower
than expected project start-ups.
SG&A expenses were $17.3 million in the
fourth quarter of fiscal 2024 compared to $17.0 million in the
fourth quarter of fiscal 2023.
The Company's effective tax rate for the fourth
quarter of fiscal 2024 was 0.9%, compared to the fourth quarter
fiscal 2023 rate of 9.9%, impacted by the valuation allowance
placed on all our deferred tax assets due to the existence of a
cumulative loss over a three-year period. The Company's effective
tax rate for fiscal 2024 was 0.1%, compared to 0.8% for fiscal
2023.
For the fourth quarter of fiscal 2024, the
Company had a net loss of $4.4 million, or $(0.16) per share,
compared to a net loss of $0.3 million, or $(0.01) per share, in
the fourth quarter of fiscal 2023. Net loss for the full year
fiscal 2024 was $25.0 million, or $(0.91) per share, compared to a
net loss of $52.4 million, or $(1.94) per share for fiscal year
2023. Adjusted net loss for the fourth quarter fiscal 2024 was $3.9
million, or $(0.14) per share compared to $3.0 million, or $(0.11)
per share for the fourth quarter fiscal 2023. Adjusted net loss for
fiscal 2024 was $29.0 million, or $(1.06) per share, compared to
$39.8 million, or $(1.48) per share for fiscal 2023.
Segment ResultsStorage and
Terminals Solutions segment revenue increased to $70.0 million in
the fourth quarter compared to $64.1 million in the fourth quarter
of fiscal 2023, due to increased activity on NGL storage projects.
Gross margin was 3.1% in the fourth quarter of fiscal 2024,
compared to 3.2% in the fourth quarter fiscal 2023.
Utility and Power Infrastructure segment revenue
increased to $65.3 million in the fourth quarter of fiscal 2024
compared to $39.1 million in the fourth quarter of fiscal 2023,
benefiting from higher volumes of work associated with LNG peak
shaving projects. Gross margin decreased to 4.2% in the fourth
quarter fiscal 2024, compared to 9.6% for the fourth quarter fiscal
2023, due to lower margins on power delivery work for competitively
bid projects. Margins were also impacted during the period by the
under-recovery of construction overhead costs due to the allocation
of resources to this segment in support of early-stage activity on
large construction projects.
Process and Industrial Facilities segment
revenue decreased to $54.2 million in the fourth quarter of fiscal
2024 compared to $102.7 million in the fourth quarter of fiscal
2023, primarily due to lower revenue for midstream gas processing
projects, refinery maintenance and turnarounds, and a recently
completed large renewable diesel project. Fourth quarter gross
margin increased to 15.4%, compared to 8.2% for the fourth quarter
fiscal 2023 due to overall strong project execution across the
entire portfolio of projects.
Outlook
The following forward-looking guidance reflects
the Company’s current expectations and beliefs as of
September 9, 2024. Various factors outside of the Company's
control may impact the Company's revenue and business. This
includes the timing of project awards and starts which may be
impacted by market fundamentals, client decision-making, and the
regulatory environment in which they operate. The following
statements apply only as of the date of this disclosure and are
expressly qualified in their entirety by the cautionary statements
included elsewhere in this document:
|
Fiscal Year 2024 |
|
Fiscal Year 2025 |
|
|
|
Actual |
|
Guidance |
|
% Change |
Revenue |
$728.2 million |
|
$900 - $950 million |
|
24% - 30% |
|
|
|
|
|
|
On an overall basis, the quality of the
Company’s backlog remains strong, and its revenue is expected to
increase in fiscal 2025 as the current backlog converts to
revenue.
On a segment basis:
- In Storage and Terminal Solutions
segment, the Company expects revenue to increase as the level of
work increases on specialty vessel and related facility projects
currently in backlog.
- In the Utility and Power
Infrastructure segment, the Company expects revenue to increase as
the level of work accelerates on LNG peak shaving projects
currently in backlog.
- In the Process and
Industrial Facilities segment, the Company expects revenue to
decrease on a year over year basis as existing projects near
completion and we await the start of new projects both in backlog
and in our opportunity pipeline.
Backlog
The Company’s backlog remained at near record
levels in the fourth quarter of fiscal 2024, ending at $1.4 billion
as of June 30, 2024. Project awards totaled $175.9 million in
the fourth quarter of fiscal 2024, resulting in a full year
book-to-bill ratio of 1.5x. Project awards in the quarter included
a significant butane storage project. The table below summarizes
our awards, book-to-bill ratios and backlog by segment for our
fourth fiscal quarter (amounts are in thousands, except for
book-to-bill ratios):
|
Three Months Ended |
|
Fiscal Year Ended |
|
|
|
June 30, 2024 |
|
June 30, 2024 |
|
Backlog as of |
Segment: |
Awards |
|
|
Book-to-Bill(1) |
|
|
Awards |
|
|
Book-to-Bill(1) |
|
|
June 30, 2024 |
Storage and Terminal Solutions |
$ |
129,911 |
|
|
|
1.9x |
|
|
$ |
804,396 |
|
|
|
2.9x |
|
|
$ |
798,255 |
|
Utility and Power Infrastructure |
|
12,543 |
|
|
|
0.2x |
|
|
|
104,099 |
|
|
|
0.6x |
|
|
|
379,697 |
|
Process and Industrial Facilities |
|
33,432 |
|
|
|
0.6x |
|
|
|
182,382 |
|
|
|
0.7x |
|
|
$ |
251,521 |
|
Total |
$ |
175,886 |
|
|
|
0.9x |
|
|
$ |
1,090,877 |
|
|
|
1.5x |
|
|
$ |
1,429,473 |
|
_______________(1) Calculated by dividing project awards by
revenue recognized during the period.
Financial Position
Net cash provided by operating activities during fiscal 2024 was
$72.6 million, compared to $10.2 million during fiscal 2023. Net
cash provided by operating activities during the year primarily
reflect scheduled payments from customers associated with project
awards in backlog.
As of June 30, 2024, Matrix had total
liquidity of $169.6 million. Liquidity is comprised of $115.6
million of unrestricted cash and cash equivalents and $54.0 million
of borrowing availability under the credit facility. The Company
also has $25.0 million of restricted cash to support the facility.
As of June 30, 2024, we had no outstanding borrowings under
the facility.
Conference Call Details
In conjunction with the earnings release, Matrix
Service Company will host a conference call with John R. Hewitt,
President and CEO, and Kevin S. Cavanah, Vice President and CFO.
The call will take place at 10:30 a.m. (Eastern) / 9:30 a.m.
(Central) on Tuesday, September 10, 2024.
Investors and other interested parties can
access a live audio-visual webcast using this webcast link:
https://edge.media-server.com/mmc/p/9dfxb3ch, or
through the Company’s website at www.matrixservicecompany.com on
the Investors Relations page under Events & Presentations.
If you would like to dial in to the conference call, please
register at
https://register.vevent.com/register/BI896f05552b1f480eac6c6f77492cc225 at
least 10 minutes prior to the start time. Upon registration,
participants will receive a dial-in number and unique PIN to join
the call as well as an e-mail confirmation with the details.
For those unable to participate in the
conference call, a replay of the webcast will be available on the
Investor Relations page of the Company's website.
The conference call will be recorded and will be
available for replay within one hour of completion of the live call
and can be accessed following the same link as the live call.
About Matrix Service Company
Matrix Service Company (Nasdaq: MTRX), through
its subsidiaries, is a leading North American industrial
engineering, construction, and maintenance contractor headquartered
in Tulsa, Oklahoma with offices located throughout the United
States and Canada, as well as Sydney, Australia and Seoul, South
Korea.
The Company reports its financial results in
three key operating segments: Storage and Terminal Solutions,
Utility and Power Infrastructure, and Process and Industrial
Facilities.
With a focus on sustainability, building strong
Environment, Social and Governance (ESG) practices, and living our
core values, Matrix ranks among the Top Contractors by
Engineering-News Record, was recognized for its Board
diversification by 2020 Women on Boards, is an active signatory to
CEO Action for Diversity and Inclusion, and is consistently
recognized as a Great Place to Work®. To learn more
about Matrix Service Company, visit matrixservicecompany.com
This release contains forward-looking statements
that are made in reliance upon the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These statements
are generally accompanied by words such as “anticipate,”
“continues,” “expect,” “forecast,” “outlook,” “believe,”
“estimate,” “should” and “will” and words of similar effect that
convey future meaning, concerning the Company’s operations,
economic performance and management’s best judgment as to what may
occur in the future. Future events involve risks and uncertainties
that may cause actual results to differ materially from those we
currently anticipate. The actual results for the current and future
periods and other corporate developments will depend upon a number
of economic, competitive and other influences, including the
successful implementation of the Company's business improvement
plan and the factors discussed in the “Risk Factors” and “Forward
Looking Statements” sections and elsewhere in the Company’s reports
and filings made from time to time with the Securities and Exchange
Commission. Many of these risks and uncertainties are beyond the
control of the Company, and any one of which, or a combination of
which, could materially and adversely affect the results of the
Company's operations and its financial condition. We undertake no
obligation to update information contained in this release, except
as required by law.
For more information, please contact:
Kellie SmytheSenior Director, Investor
RelationsT: 918-359-8267Email: ksmythe@matrixservicecompany.com
Matrix Service CompanyConsolidated
Statements of Income(In thousands, except per
share data) |
|
|
Three Months Ended |
|
Fiscal Years Ended |
|
June 30,2024 |
|
June 30,2023 |
|
June 30,2024 |
|
June 30,2023 |
Revenue |
$ |
189,499 |
|
|
$ |
205,854 |
|
|
$ |
728,213 |
|
|
$ |
795,020 |
|
Cost of
revenue |
|
177,052 |
|
|
|
191,159 |
|
|
|
687,740 |
|
|
|
764,200 |
|
Gross
profit |
|
12,447 |
|
|
|
14,695 |
|
|
|
40,473 |
|
|
|
30,820 |
|
Selling,
general and administrative expenses |
|
17,293 |
|
|
|
17,031 |
|
|
|
70,085 |
|
|
|
68,249 |
|
Goodwill
impairment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,316 |
|
Restructuring costs |
|
501 |
|
|
|
261 |
|
|
|
501 |
|
|
|
3,142 |
|
Operating loss |
|
(5,347 |
) |
|
|
(2,597 |
) |
|
|
(30,113 |
) |
|
|
(52,887 |
) |
Other
income (expense): |
|
|
|
|
|
|
|
Interest expense |
|
(343 |
) |
|
|
(468 |
) |
|
|
(1,130 |
) |
|
|
(2,024 |
) |
Interest income |
|
862 |
|
|
|
126 |
|
|
|
1,339 |
|
|
|
290 |
|
Other |
|
411 |
|
|
|
2,566 |
|
|
|
4,892 |
|
|
|
1,860 |
|
Loss
before income tax expense (benefit) |
|
(4,417 |
) |
|
|
(373 |
) |
|
|
(25,012 |
) |
|
|
(52,761 |
) |
Provision (benefit) for federal, state and foreign income
taxes |
|
(40 |
) |
|
|
(37 |
) |
|
|
(36 |
) |
|
|
(400 |
) |
Net
loss |
$ |
(4,377 |
) |
|
$ |
(336 |
) |
|
$ |
(24,976 |
) |
|
$ |
(52,361 |
) |
Basic
loss per common share |
$ |
(0.16 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.91 |
) |
|
$ |
(1.94 |
) |
Diluted
loss per common share |
$ |
(0.16 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.91 |
) |
|
$ |
(1.94 |
) |
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
27,447 |
|
|
|
27,047 |
|
|
|
27,379 |
|
|
|
26,988 |
|
Diluted |
|
27,447 |
|
|
|
27,047 |
|
|
|
27,379 |
|
|
|
26,988 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matrix Service CompanyConsolidated Balance
Sheets(In thousands) |
|
|
June 30,2024 |
|
June 30,2023 |
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
115,615 |
|
|
$ |
54,812 |
|
Accounts receivable, net of allowance for credit losses |
|
138,987 |
|
|
|
145,764 |
|
Costs and estimated earnings in excess of billings on uncompleted
contracts |
|
33,893 |
|
|
|
44,888 |
|
Inventories |
|
8,839 |
|
|
|
7,437 |
|
Income taxes receivable |
|
180 |
|
|
|
496 |
|
Prepaid expenses |
|
4,065 |
|
|
|
5,741 |
|
Other current assets |
|
12 |
|
|
|
3,118 |
|
Total
current assets |
|
301,591 |
|
|
|
262,256 |
|
Restricted cash |
|
25,000 |
|
|
|
25,000 |
|
Property, plant and equipment - net |
|
43,498 |
|
|
|
47,545 |
|
Operating lease right-of-use assets |
|
19,150 |
|
|
|
21,799 |
|
Goodwill |
|
29,023 |
|
|
|
29,120 |
|
Other
intangible assets, net of accumulated amortization |
|
1,651 |
|
|
|
3,066 |
|
Other
assets, non-current |
|
31,438 |
|
|
|
11,718 |
|
Total
assets |
$ |
451,351 |
|
|
$ |
400,504 |
|
|
|
|
|
|
|
|
|
Matrix Service CompanyConsolidated Balance
Sheets (continued)(In thousands, except share
data) |
|
|
June 30,2024 |
|
June 30,2023 |
Liabilities and stockholders’ equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
65,629 |
|
|
$ |
76,365 |
|
Billings on uncompleted contracts in excess of costs and estimated
earnings |
|
171,308 |
|
|
|
85,436 |
|
Accrued wages and benefits |
|
15,878 |
|
|
|
13,679 |
|
Accrued insurance |
|
4,605 |
|
|
|
5,579 |
|
Operating lease liabilities |
|
3,739 |
|
|
|
4,661 |
|
Other accrued expenses |
|
3,956 |
|
|
|
1,815 |
|
Total
current liabilities |
|
265,115 |
|
|
|
187,535 |
|
Deferred income taxes |
|
25 |
|
|
|
26 |
|
Operating lease liabilities |
|
19,156 |
|
|
|
20,660 |
|
Borrowings under asset-backed credit facility |
|
— |
|
|
|
10,000 |
|
Other liabilities, non-current |
|
2,873 |
|
|
|
799 |
|
Total
liabilities |
|
287,169 |
|
|
|
219,020 |
|
Commitments and contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Common stock—$.01 par value; 60,000,000 shares authorized;
27,888,217 shares issued as of June 30, 2024 and June 30,
2023; 27,308,795 and 27,047,318 shares outstanding as of June 30,
2024 and June 30, 2023, respectively |
|
279 |
|
|
|
279 |
|
Additional paid-in capital |
|
145,580 |
|
|
|
140,810 |
|
Retained earnings |
|
33,941 |
|
|
|
58,917 |
|
Accumulated other comprehensive loss |
|
(9,535 |
) |
|
|
(8,769 |
) |
Treasury stock, at cost — 579,422 and 840,899 shares as of
June 30, 2024 and June 30, 2023, respectively |
|
(6,083 |
) |
|
|
(9,753 |
) |
Total
stockholders' equity |
|
164,182 |
|
|
|
181,484 |
|
Total
liabilities and stockholders’ equity |
$ |
451,351 |
|
|
$ |
400,504 |
|
|
|
|
|
|
|
|
|
Matrix Service CompanyCondensed
Consolidated Statements of Cash Flows(In
thousands) |
|
|
Three Months Ended |
|
Fiscal Years Ended |
|
June 30,2024 |
|
June 30,2023 |
|
June 30,2024 |
|
June 30,2023 |
Operating
activities: |
|
|
|
|
|
|
|
Net loss |
$ |
(4,377 |
) |
|
$ |
(336 |
) |
|
$ |
(24,976 |
) |
|
$ |
(52,361 |
) |
Adjustments to reconcile net
loss to net cash provided (used) by operating activities |
|
|
|
|
|
|
|
Depreciation and amortization |
|
2,686 |
|
|
|
3,195 |
|
|
|
11,023 |
|
|
|
13,694 |
|
Goodwill impairment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,316 |
|
Stock-based compensation expense |
|
1,980 |
|
|
|
1,637 |
|
|
|
7,745 |
|
|
|
6,791 |
|
Gain on sale of property, plant and equipment |
|
(393 |
) |
|
|
(2,820 |
) |
|
|
(4,923 |
) |
|
|
(2,841 |
) |
Other |
|
1,193 |
|
|
|
21 |
|
|
|
1,362 |
|
|
|
147 |
|
Changes in operating assets
and liabilities increasing (decreasing) cash: |
|
|
|
|
|
|
|
Accounts receivable, net of allowance for credit losses |
|
31,003 |
|
|
|
18,147 |
|
|
|
(12,077 |
) |
|
|
8,663 |
|
Costs and estimated earnings in excess of billings on uncompleted
contracts |
|
707 |
|
|
|
8,510 |
|
|
|
10,995 |
|
|
|
(136 |
) |
Inventories |
|
218 |
|
|
|
559 |
|
|
|
(1,402 |
) |
|
|
2,506 |
|
Other assets and liabilities |
|
2,244 |
|
|
|
137 |
|
|
|
3,897 |
|
|
|
10,538 |
|
Accounts payable |
|
10,538 |
|
|
|
10,554 |
|
|
|
(10,385 |
) |
|
|
1,210 |
|
Billings on uncompleted contracts in excess of costs and estimated
earnings |
|
3,651 |
|
|
|
(29,293 |
) |
|
|
85,872 |
|
|
|
20,330 |
|
Accrued expenses |
|
(2,446 |
) |
|
|
(2,467 |
) |
|
|
5,440 |
|
|
|
(10,610 |
) |
Net cash provided by operating
activities |
|
47,004 |
|
|
|
7,844 |
|
|
|
72,571 |
|
|
|
10,247 |
|
Investing
activities: |
|
|
|
|
|
|
|
Capital expenditures |
|
(1,305 |
) |
|
|
(2,797 |
) |
|
|
(6,994 |
) |
|
|
(9,009 |
) |
Proceeds from asset sales |
|
514 |
|
|
|
6,356 |
|
|
|
6,049 |
|
|
|
6,466 |
|
Net cash provided (used) by
investing activities |
|
(791 |
) |
|
|
3,559 |
|
|
|
(945 |
) |
|
|
(2,543 |
) |
Financing
activities: |
|
|
|
|
|
|
|
Advances under asset-backed
credit facility |
|
— |
|
|
|
— |
|
|
|
10,000 |
|
|
|
10,000 |
|
Repayments of advances under
asset-backed credit facility |
|
— |
|
|
|
(5,000 |
) |
|
|
(20,000 |
) |
|
|
(15,000 |
) |
Payment of debt amendment
fees |
|
(100 |
) |
|
|
— |
|
|
|
(100 |
) |
|
|
— |
|
Proceeds from issuance of
common stock under employee stock purchase plan |
|
52 |
|
|
|
52 |
|
|
|
184 |
|
|
|
252 |
|
Repurchase of common stock for
payment of statutory taxes due on equity-based compensation |
|
— |
|
|
|
— |
|
|
|
(456 |
) |
|
|
(310 |
) |
Net cash used by financing
activities |
|
(48 |
) |
|
|
(4,948 |
) |
|
|
(10,372 |
) |
|
|
(5,058 |
) |
Effect of exchange rate
changes on cash |
|
(208 |
) |
|
|
153 |
|
|
|
(451 |
) |
|
|
(205 |
) |
Net increase in cash and cash
equivalents |
|
45,957 |
|
|
|
6,608 |
|
|
|
60,803 |
|
|
|
2,441 |
|
Cash, cash equivalents, and
restricted cash, beginning of period |
|
94,658 |
|
|
|
73,204 |
|
|
|
79,812 |
|
|
|
77,371 |
|
Cash, cash equivalents, and
restricted cash, end of period |
$ |
140,615 |
|
|
$ |
79,812 |
|
|
$ |
140,615 |
|
|
$ |
79,812 |
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
|
|
|
Cash paid (received) during
the period for: |
|
|
|
|
|
|
|
Income taxes |
$ |
(17 |
) |
|
$ |
(51 |
) |
|
$ |
(165 |
) |
|
$ |
(13,337 |
) |
Interest |
$ |
104 |
|
|
$ |
418 |
|
|
$ |
880 |
|
|
$ |
2,093 |
|
Non-cash investing and
financing activities: |
|
|
|
|
|
|
|
Purchases of property, plant and equipment on account |
$ |
101 |
|
|
$ |
74 |
|
|
$ |
140 |
|
|
$ |
104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matrix Service CompanyResults of
Operations(In thousands) |
|
|
Storage and Terminal Solutions |
|
Utility and Power Infrastructure |
|
Process and Industrial Facilities |
|
Corporate |
|
Total |
|
Three Months Ended June 30, 2024 |
Total revenue (1) |
$ |
69,992 |
|
|
$ |
65,261 |
|
|
$ |
54,246 |
|
|
$ |
— |
|
|
$ |
189,499 |
|
Cost of revenue |
|
(67,799 |
) |
|
|
(62,549 |
) |
|
|
(45,910 |
) |
|
|
(794 |
) |
|
|
(177,052 |
) |
Gross profit (loss) |
|
2,193 |
|
|
|
2,712 |
|
|
|
8,336 |
|
|
|
(794 |
) |
|
|
12,447 |
|
Selling, general and
administrative expenses |
|
5,461 |
|
|
|
2,585 |
|
|
|
2,470 |
|
|
|
6,777 |
|
|
|
17,293 |
|
Restructuring costs |
|
— |
|
|
|
52 |
|
|
|
215 |
|
|
|
234 |
|
|
$ |
501 |
|
Operating income (loss) |
$ |
(3,268 |
) |
|
$ |
75 |
|
|
$ |
5,651 |
|
|
$ |
(7,805 |
) |
|
$ |
(5,347 |
) |
(1) Total revenues
are net of inter-segment revenues which are primarily Process and
Industrial Facilities and were $0.4 million for the three months
ended June 30, 2024. |
|
|
Storage and Terminal Solutions |
|
Utility and Power Infrastructure |
|
Process and Industrial Facilities |
|
Corporate |
|
Total |
|
Three Months Ended June 30, 2023 |
Total revenue (1) |
$ |
64,079 |
|
|
$ |
39,075 |
|
|
$ |
102,700 |
|
|
$ |
— |
|
|
$ |
205,854 |
|
Cost of revenue |
|
(62,012 |
) |
|
|
(35,305 |
) |
|
|
(94,303 |
) |
|
|
461 |
|
|
|
(191,159 |
) |
Gross profit |
|
2,067 |
|
|
|
3,770 |
|
|
|
8,397 |
|
|
|
461 |
|
|
|
14,695 |
|
Selling, general and
administrative expenses |
|
4,712 |
|
|
|
1,651 |
|
|
|
3,601 |
|
|
|
7,067 |
|
|
|
17,031 |
|
Restructuring costs |
|
(15 |
) |
|
|
— |
|
|
|
169 |
|
|
|
107 |
|
|
|
261 |
|
Operating income (loss) |
$ |
(2,630 |
) |
|
$ |
2,119 |
|
|
$ |
4,627 |
|
|
$ |
(6,713 |
) |
|
$ |
(2,597 |
) |
(1) Total revenues
are net of inter-segment revenues which are primarily Storage and
Terminal Solutions and were $2.8 million for the three months ended
June 30, 2023. |
|
|
Storage and Terminal Solutions |
|
Utility and Power Infrastructure |
|
Process and Industrial Facilities |
|
Corporate |
|
Total |
|
Fiscal Year Ended June 30, 2024 |
Total revenue (1) |
$ |
276,800 |
|
|
$ |
183,920 |
|
|
$ |
266,260 |
|
|
$ |
1,233 |
|
|
$ |
728,213 |
|
Cost of revenue |
|
(265,503 |
) |
|
|
(174,688 |
) |
|
|
(244,408 |
) |
|
|
(3,141 |
) |
|
|
(687,740 |
) |
Gross profit (loss) |
|
11,297 |
|
|
|
9,232 |
|
|
|
21,852 |
|
|
|
(1,908 |
) |
|
|
40,473 |
|
Selling, general and
administrative expenses |
|
19,823 |
|
|
|
8,844 |
|
|
|
10,354 |
|
|
|
31,064 |
|
|
|
70,085 |
|
Restructuring costs |
|
— |
|
|
|
52 |
|
|
|
215 |
|
|
|
234 |
|
|
|
501 |
|
Operating income (loss) |
$ |
(8,526 |
) |
|
$ |
336 |
|
|
$ |
11,283 |
|
|
$ |
(33,206 |
) |
|
$ |
(30,113 |
) |
(1) Total revenues
are net of inter-segment revenues which are primarily Storage and
Terminal Solutions and were $2.4 million for the year ended June
30, 2024. |
|
|
Storage and Terminal Solutions |
|
Utility and Power Infrastructure |
|
Process and Industrial Facilities |
|
Corporate |
|
Total |
|
Fiscal Year Ended June 30, 2023 |
Total revenue (1) |
$ |
255,693 |
|
|
$ |
169,504 |
|
|
$ |
369,823 |
|
|
$ |
— |
|
|
$ |
795,020 |
|
Cost of revenue |
|
(245,223 |
) |
|
|
(158,805 |
) |
|
|
(359,067 |
) |
|
|
(1,105 |
) |
|
|
(764,200 |
) |
Gross profit (loss) |
|
10,470 |
|
|
|
10,699 |
|
|
|
10,756 |
|
|
|
(1,105 |
) |
|
|
30,820 |
|
Selling, general and
administrative expenses |
|
20,054 |
|
|
|
7,045 |
|
|
|
14,909 |
|
|
|
26,241 |
|
|
|
68,249 |
|
Goodwill impairment |
|
— |
|
|
|
— |
|
|
|
12,316 |
|
|
|
— |
|
|
|
12,316 |
|
Restructuring costs |
|
969 |
|
|
|
37 |
|
|
|
972 |
|
|
|
1,164 |
|
|
|
3,142 |
|
Operating income (loss) |
$ |
(10,553 |
) |
|
$ |
3,617 |
|
|
$ |
(17,441 |
) |
|
$ |
(28,510 |
) |
|
$ |
(52,887 |
) |
(1) Total revenues
are net of inter-segment revenues which are primarily Storage and
Terminal Solutions and were $5.6 million for the year ended June
30, 2023. |
|
Backlog
We define backlog as the total dollar amount of
revenue that we expect to recognize as a result of performing work
that has been awarded to us through a signed contract, limited
notice to proceed or other type of assurance that we consider firm.
The following arrangements are considered firm:
- fixed-price awards;
- minimum customer commitments on cost
plus arrangements; and
- certain time and material arrangements
in which the estimated value is firm or can be estimated with a
reasonable amount of certainty in both timing and amounts.
For long-term maintenance contracts with no
minimum commitments and other established customer agreements, we
include only the amounts that we expect to recognize as revenue
over the next 12 months. For arrangements in which we have received
a limited notice to proceed, we include the entire scope of work in
our backlog if we conclude that the likelihood of the full project
proceeding as high. For all other arrangements, we calculate
backlog as the estimated contract amount less revenue recognized as
of the reporting date.
Three Months Ended June 30,
2024
The following table provides a summary of changes in our backlog
for the three months ended June 30, 2024:
|
Storage and
TerminalSolutions |
|
Utility and Power Infrastructure |
|
Process and Industrial Facilities |
|
Total |
|
(In thousands) |
Backlog as of March 31, 2024 |
$ |
738,337 |
|
|
$ |
432,415 |
|
|
$ |
279,486 |
|
|
$ |
1,450,238 |
|
Project awards |
|
129,911 |
|
|
|
12,543 |
|
|
|
33,432 |
|
|
|
175,886 |
|
Other adjustment |
|
— |
|
|
|
— |
|
|
|
(7,152 |
) |
|
|
(7,152 |
) |
Revenue recognized |
|
(69,993 |
) |
|
|
(65,261 |
) |
|
|
(54,245 |
) |
|
|
(189,499 |
) |
Backlog as of June 30, 2024 |
$ |
798,255 |
|
|
$ |
379,697 |
|
|
$ |
251,521 |
|
|
$ |
1,429,473 |
|
Book-to-bill ratio (1) |
|
1.9x |
|
|
|
0.2x |
|
|
|
0.6x |
|
|
|
0.9x |
|
_______________(1) Calculated by dividing project awards by
revenue recognized.
Fiscal Year Ended June 30,
2024
The following table provides a summary of changes in our backlog
for the fiscal year ended June 30, 2024:
|
Storage and
TerminalSolutions |
|
Utility and Power Infrastructure |
|
Process and Industrial Facilities |
|
Total |
|
(In thousands) |
Backlog as of June 30, 2023 |
$ |
270,659 |
|
|
$ |
459,518 |
|
|
$ |
359,921 |
|
|
$ |
1,090,098 |
|
Project awards |
|
804,396 |
|
|
|
104,099 |
|
|
|
182,382 |
|
|
|
1,090,877 |
|
Other adjustment (2) |
|
— |
|
|
|
— |
|
|
|
(24,522 |
) |
|
|
(24,522 |
) |
Revenue recognized |
|
(276,800 |
) |
|
|
(183,920 |
) |
|
|
(266,260 |
) |
|
|
(726,980 |
) |
Backlog as of June 30, 2024 |
$ |
798,255 |
|
|
$ |
379,697 |
|
|
$ |
251,521 |
|
|
$ |
1,429,473 |
|
Book-to-bill ratio (1) |
|
2.9x |
|
|
|
0.6x |
|
|
|
0.7x |
|
|
|
1.5x |
|
_______________(1) Calculated by dividing
project awards by revenue recognized.(2) Backlog was reduced
primarily to account for a reduction of work available to us under
an existing refinery maintenance program.
Non-GAAP Financial Measures
Adjusted Net Loss
We have presented Adjusted net loss, which we
define as Net loss before restructuring costs, goodwill and
intangible asset impairments, and gain on sale of assets, and the
tax impact of these adjustments, because we believe it better
depicts our core operating results. We believe that the line item
on our Consolidated Statements of Income entitled “Net loss” is the
most directly comparable GAAP measure to Adjusted net loss. Since
Adjusted net loss is not a measure of performance calculated in
accordance with GAAP, it should not be considered in isolation of,
or as a substitute for, Net loss as an indicator of operating
performance. Adjusted net loss, as we calculate it, may not be
comparable to similarly titled measures employed by other
companies. In addition, this measure is not a measure of our
ability to fund our cash needs. As Adjusted net loss excludes
certain financial information compared with Net loss, the most
directly comparable GAAP financial measure, users of this financial
information should consider the type of events and transactions
that are excluded. Our non-GAAP performance measure, Adjusted net
loss, has certain material limitations as follows:
- It does not include
impairments to goodwill. While impairments to intangible assets
including goodwill are non-cash expenses in the period recognized,
cash or other consideration was still transferred in exchange for
the intangible assets in the period of the acquisition. Any measure
that excludes impairments to intangible assets has material
limitations since these expenses represent the loss of an asset
that was acquired in exchange for cash or other assets.
- It does not include
restructuring costs. Restructuring costs represent material costs
that were incurred and are oftentimes cash expenses. Therefore, any
measure that excludes restructuring costs has material
limitations.
- It does not include
gain on the sale of assets. While these sales occurred outside the
normal course of business, any measure that excludes this gain has
inherent limitations since the sales resulted in material inflows
of cash.
A reconciliation of Net loss to Adjusted net loss follows:
Reconciliation of Net Loss to Adjusted Net
Loss(1)(In
thousands, except per share data) |
|
|
Three Months Ended |
|
Fiscal Years Ended |
|
June 30, 2024 |
|
June 30, 2023 |
|
June 30, 2024 |
|
June 30, 2023 |
Net loss, as reported |
$ |
(4,377 |
) |
|
$ |
(336 |
) |
|
$ |
(24,976 |
) |
|
$ |
(52,361 |
) |
Restructuring costs |
|
501 |
|
|
|
261 |
|
|
|
501 |
|
|
|
3,142 |
|
Goodwill impairment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,316 |
|
Gain on sale of assets(2) |
|
— |
|
|
|
(2,905 |
) |
|
|
(4,542 |
) |
|
|
(2,905 |
) |
Tax impact of adjustments and other net tax items(3) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Adjusted net loss |
$ |
(3,876 |
) |
|
$ |
(2,980 |
) |
|
$ |
(29,017 |
) |
|
$ |
(39,808 |
) |
|
|
|
|
|
|
|
|
Loss per fully diluted share,
as reported |
$ |
(0.16 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.91 |
) |
|
$ |
(1.94 |
) |
Adjusted loss per fully
diluted share |
$ |
(0.14 |
) |
|
$ |
(0.11 |
) |
|
$ |
(1.06 |
) |
|
$ |
(1.48 |
) |
_______________(1) Beginning with fiscal 2024,
the definition of Adjusted net loss and Adjusted loss per share was
updated to no longer include changes in the valuation allowance of
deferred tax assets. Prior period information has been adjusted to
conform to the updated definition of Adjusted net loss and Adjusted
loss per share. (2) In fiscal 2024, we sold our Burlington, ON
office in the first quarter and recorded a gain of $2.5 million. In
the second quarter of fiscal 2024 we sold our Catoosa, OK facility
and recorded a gain of $2.0 million. In fiscal 2023, we recorded a
$2.9 million gain on the sale of our industrial cleaning
business in the fourth quarter of fiscal 2023. (3) Represents the
tax impact of the adjustments to Net loss, calculated using the
applicable effective tax rate of the adjustment. Due to the
existence of valuation allowances on our deferred tax assets and
net operating losses, there was no tax impact of any of the
adjustments in any period presented.
Adjusted EBITDA
We have presented Adjusted EBITDA, which we
define as net loss before goodwill impairments, gain on sale of
assets, restructuring costs, stock-based compensation, interest
expense, interest income, income taxes, and depreciation and
amortization, because it is used by the financial community as a
method of measuring our performance and of evaluating the market
value of companies considered to be in similar businesses. We
believe that the line item on our Consolidated Statements of Income
entitled “Net loss” is the most directly comparable GAAP measure to
Adjusted EBITDA. Since Adjusted EBITDA is not a measure of
performance calculated in accordance with GAAP, it should not be
considered in isolation of, or as a substitute for, net earnings as
an indicator of operating performance. Adjusted EBITDA, as we
calculate it, may not be comparable to similarly titled measures
employed by other companies. In addition, this measure is not a
measure of our ability to fund our cash needs. As Adjusted EBITDA
excludes certain financial information compared with net loss, the
most directly comparable GAAP financial measure, users of this
financial information should consider the type of events and
transactions that are excluded. Our non-GAAP performance measure,
Adjusted EBITDA, has certain material limitations as follows:
- It does not include interest
expense. Because we have borrowed money to finance our operations
and to acquire businesses, pay commitment fees to maintain our
senior secured revolving credit facility, and incur fees to issue
letters of credit under the senior secured revolving credit
facility, interest expense is a necessary and ongoing part of our
costs and has assisted us in generating revenue. Therefore, any
measure that excludes interest expense has material
limitations.
- It does not include interest
income. Because we have money invested in money market depository
accounts and we will have earned interest income on these
investments, any measure that excludes interest income has material
limitations.
- It does not include income taxes.
Because the payment of income taxes is a necessary and ongoing part
of our operations, any measure that excludes income taxes has
material limitations.
- It does not include depreciation or
amortization expense. Because we use capital and intangible assets
to generate revenue, depreciation and amortization expense is a
necessary element of our cost structure. Therefore, any measure
that excludes depreciation or amortization expense has material
limitations.
- It does not include impairments to
goodwill. While impairments to intangible assets including goodwill
are non-cash expenses in the period recognized, cash or other
consideration was still transferred in exchange for the intangible
assets in the period of the acquisition. Any measure that excludes
impairments to intangible assets has material limitations since
these expenses represent the loss of an asset that was acquired in
exchange for cash or other assets.
- It does not include gain on asset
sales. While these sales occurred outside the normal course of
business and are not expected to be recurring, any measure that
excludes this gain has inherent limitations since the sale resulted
in a material inflow of cash.
- It does not include restructuring
costs. Restructuring costs represent material costs that we
incurred and are oftentimes cash expenses. Therefore, any measure
that excludes restructuring costs has material limitations.
- It does not include equity-settled
stock-based compensation expense. Stock-based compensation
represents material amounts of equity that are awarded to our
employees and directors for services rendered. While the expense is
non-cash, we historically release vested shares out of our treasury
stock, which has been replenished by using cash to periodically
repurchase our stock. Therefore, any measure that excludes
stock-based compensation has material limitations.
A reconciliation of Net loss to Adjusted EBITDA
follows:
Reconciliation of Net Loss to Adjusted
EBITDA(In thousands)
|
Three Months Ended |
|
Fiscal Years Ended |
|
June 30,2024 |
|
June 30,2023 |
|
June 30,2024 |
|
June 30,2023 |
Net loss |
$ |
(4,377 |
) |
|
$ |
(336 |
) |
|
$ |
(24,976 |
) |
|
$ |
(52,361 |
) |
Interest expense |
|
343 |
|
|
|
468 |
|
|
|
1,130 |
|
|
|
2,024 |
|
Interest income(1) |
|
(862 |
) |
|
|
(126 |
) |
|
|
(1,339 |
) |
|
|
(290 |
) |
Provision (benefit) for
federal, state and foreign income taxes |
|
(40 |
) |
|
|
(37 |
) |
|
|
(36 |
) |
|
|
(400 |
) |
Depreciation and
amortization |
|
2,686 |
|
|
|
3,195 |
|
|
|
11,023 |
|
|
|
13,694 |
|
Goodwill impairment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,316 |
|
Gain on sale of assets(2) |
|
— |
|
|
|
(2,905 |
) |
|
|
(4,542 |
) |
|
|
(2,905 |
) |
Restructuring costs |
|
501 |
|
|
|
261 |
|
|
|
501 |
|
|
|
3,142 |
|
Stock-based
compensation(3) |
|
1,980 |
|
|
|
1,637 |
|
|
|
7,745 |
|
|
|
6,791 |
|
Adjusted EBITDA |
$ |
231 |
|
|
$ |
2,157 |
|
|
$ |
(10,494 |
) |
|
$ |
(17,989 |
) |
_______________(1) Beginning with fiscal 2024,
to be more consistent with our peers, we updated our calculation
methodology of adjusted EBITDA to include interest income, prior
periods have been adjusted to the new methodology.(2) In fiscal
2024, we sold our Burlington, ON office in the first quarter and
recorded a gain of $2.5 million. In the second quarter of fiscal
2024 we sold our Catoosa, OK facility and recorded a gain of $2.0
million. In fiscal 2023, we booked a $2.9 million gain on the
sale of our industrial cleaning business in the fourth quarter of
fiscal 2023. (3) Represents only the equity-settled portion of our
stock-based compensation expense.
Matrix Service (NASDAQ:MTRX)
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Matrix Service (NASDAQ:MTRX)
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