MATRIX SERVICE CO Q2 FY2025 earnings call

• Safety Focus: Emphasized the importance of a safety culture to keep employees safe, starting with caring for mental and physical health.
• Business Performance: Successfully executed project portfolio with organic revenue growth, but delay in major energy project award and project mobilization led to revised revenue guidance. Continued work on backlog of large multiyear projects.
• Market Conditions: Supportive policy environment for energy infrastructure, favorable demand for LNG, NGL, and ammonia storage, and growing power demand.
• Strategic Pillars: Five pillars including safety, capability expansion, bidding discipline, margin optimization, and capital allocation.
• Segment Details: Storage and terminal growth due to increased work with specialty vessels and LNG storage; utility and power growth from LNG peak shaving projects; process and industrial down due to completion of a large renewable diesel project.
• Backlog and Balance Sheet: Backlog at $1.3 billion, strong liquidity with $211.7 million total liquidity including $156.8 million in cash equivalents and $54.9 million borrowing availability.

Storage and terminal solutions: Revenue increased 53% to $95.5 million in the second quarter of fiscal 2025 compared to $62.4 million in the prior year. Gross margin was 7.6% in Q2 2025 vs. 2.9% last year. Utility and power infrastructure: Revenue rose 52% to $61.1 million in Q2 2025 from $40.1 million prior year, with gross margin at 5.6% vs. 3.5% last year. Process and industrial facilities: Revenue decreased to $30.6 million in Q2 2025 from $71.3 million prior year, and gross margin was 1.2% vs. 9.4% last year.

• Revised fiscal 2025 revenue guidance from $900–$950 million to $850–$900 million (midpoint down ~5%).
• Expect organic revenue growth >40% in the second half of fiscal 2025, return to profitability in the second half of fiscal 2025, and full-year book to bill at or greater than 1.0.
• Opportunity pipeline increased to $7 billion from $5.7 billion at the end of the second quarter of 2025.

• Delay in award of a major energy project negatively impacted book to bill.
• Planned mobilization to site for a major project moved to the second half of the year, affecting revenue timing.
• Fluctuations in project execution and construction overhead recovery could impact margins.

Q: With the guidance reduction, which business or business segments does the $50 million revenue adjustment reflect this push out?

A: Primarily in the storage and terminal solutions segment.

Q: How confident are you guys in reaching profitability in the second half of 2025?

A: Feel pretty good about revenue growth leading to overhead absorption and profitability, more so in the fourth quarter due to revenue ramp.

Q: Just two points of clarification on deferred revenue. It was a singular job, and you expect that to be realized early on in fiscal 2026, or is it spread out maybe more so in the fiscal year?

A: Likely spread into Q1 and Q2 of fiscal 2026.

Q: You talked about the opportunity pipeline jumping intra-quarter to $7 billion from $5.7 billion at the end of last quarter. Are these a few large jobs that are being built into the pipeline, or is it a plethora of smaller jobs?

A: Mix of large LNG peak shaving projects and smaller projects in areas like ammonia, power generation, and mining.

Q: You mentioned inorganic growth opportunities sometime in the future. Can you put a timeline to that?

A: Principally focused on organic growth first, then consider inorganic opportunities in infrastructure spending areas related to energy, power, and industrial infrastructure