TULSA, Okla., May 08, 2024 (GLOBE NEWSWIRE) -- Matrix Service Company (NASDAQ:MTRX), a leading North American industrial engineering, construction, and maintenance contractor, today announced results for the third quarter fiscal 2024 ended March 31, 2024. THIRD QUARTER FISCAL 2024 RESULTS (all comparisons versus the prior year period unless otherwise noted) Total backlog of $1.45 billion, +74% on a year-over-year basis, the highest level in 40-year company history Total project awards of $186.8 million, resulting in a book-to-bill ratio of 1.1x Revenue of $166.0 million, a decline of 11% on a year-over-year basis Adjusted EBITDA of ($9.8) million(1) versus ($7.7) million in the prior-year period Net loss per share of ($0.53); Cash flow from operations of $25 million, +25% on a year-over-year basis Cash and credit facility availability at March 31, 2024 of $135.0 million with no outstanding debt "Bidding activity remained strong across our end-markets during the third quarter, driven by multi-year tailwinds that continue to support backlog growth within our core storage, terminal, utility and power infrastructure markets," said John R. Hewitt, President and Chief Executive Officer. "Although the timing of project awards and starts impacted our third quarter revenue, project performance was strong. Our backlog increased nearly 75% on a year-over-year basis to an all-time high of $1.45 billion, driven by a diverse mix of higher value, multi-year projects that position us for improved profitability moving into fiscal 2025.   In our fourth quarter, we expect improvement in project activity versus third quarter results, positioning us to realize improved fixed cost absorption into our fiscal year-end. "We generated a book to bill of 1.9x on a trailing 12 month basis through the third quarter, an increase from 1.3x in the prior 12 month period. We continue to maintain strong bidding discipline consistent with our strategic focus on profitable growth.   As an increased volume of projects in backlog convert to revenue, we expect to drive improved fixed cost absorption and margin expansion. "Longer term, we're seeing significant additional opportunities in transmission and distribution and continued activity in specialty storage and terminals supporting natural gas-related demand including LNG and NGLs for the utility and power, and energy transition end-markets, as well as ammonia and hydrogen," said Hewitt. "Matrix has built a reputation for consistently delivering exceptional outcomes for our customers, given our emphasis on safety, quality, and efficiency.   As the current infrastructure investment cycle continues to gather momentum, we believe we are well-positioned to drive continued market share gains, while creating long-term value for our shareholders." Financial Summary Fiscal third quarter revenue was $166.0 million, compared to $175 million in the fiscal second quarter of 2024. The sequential decrease in total revenue reflects the timing of project awards and starts, as well as softness in the electrical and crude tank markets. Gross margin was 3.4% in the third quarter of fiscal 2024. While project execution remained strong, gross margins were negatively impacted by the under-recovery of construction overhead costs due to low revenue. Additionally, gross margin was impacted by reduced labor demand for turnaround and maintenance services in the final year of a three-year refinery maintenance contract which is currently up for renewal. The accounting for this change resulted in a cumulative catch-up adjustment over the life of the contract, which impacted gross margins during the period. SG&A expenses were $19.9 million in the third quarter of fiscal 2024 compared to $15.7 million in the second quarter of fiscal 2024. The increase was primarily attributable to a increase in expense associated with the variable accounting for cash-settled stock compensation, and increased project pursuit costs as we continue to actively pursue additional project opportunities. The Company's effective tax rate for the third quarter of fiscal 2024 was zero, 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. As a result, we expect the effective tax rate to be around zero throughout fiscal 2024. For the third quarter of fiscal 2024, the Company had a net loss of $14.6 million, or $(0.53) per share, compared to a net loss of $2.9 million, or $(0.10) per share, in the second quarter of fiscal 2024. Segment ResultsStorage and Terminals Solutions segment revenue decreased to $54.3 million in the third quarter of fiscal 2024 as compared to $62.4 million in the second quarter of fiscal 2024 as a result of lower volumes of work for flat-bottom tank repair and maintenance. Gross margin of 4.3% in the third quarter of fiscal 2024 benefited from strong project execution; however, margins were negatively impacted by under-recovery of construction overhead costs due to low revenue volumes. Utility and Power Infrastructure segment revenue increased to $46.1 million in the third quarter of fiscal 2024 compared to $40.1 million in the second quarter of fiscal 2024 due to higher volumes of work for LNG peak shaving projects, partially offset by lower volumes of work for power delivery and power generation. Gross margin of 3.1% was impacted by under-recovery of construction overhead costs due to low revenue volumes and the Company shifted resources to this segment to support large capital projects. Process and Industrial Facilities segment revenue decreased to $65.6 in the third quarter of fiscal 2024 compared to $71.3 million in the second quarter of fiscal 2024 primarily due to a large renewable energy facility nearing completion. The segment fully recovered construction overhead costs, however, third quarter gross margin of 2.7% declined compared to the prior quarter. Gross margin was impacted by reduced labor demand for turnaround and maintenance services in the final year of a three-year refinery maintenance contract which is currently up for renewal. The accounting for this change resulted in a cumulative catch-up adjustment over the life of the contract, which impacted gross margins during the period. Outlook The following forward-looking guidance reflects the Company's current expectations and beliefs as of May 8, 2024. 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: On an overall basis, the quality of the Company's backlog remains strong, and its revenue is expected to increase in the fourth quarter as the backlog converts to revenue. On a segment basis: In Storage and Terminal Solutions segment, the Company expects revenue to increase on both a year over year and sequential basis as the level of work increases on specialty vessel projects currently in backlog. In the Utility and Power Infrastructure segment, the Company expects revenue to increase on both a year over year and sequential basis as the level of work increases on LNG peak shaving projects currently in backlog. In the Process and Industrial Facilities segment, the Company expects revenue to decrease on both a year over year and sequential 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 increased from the end of the prior quarter, ending at $1.45 billion as of March 31, 2024. Project awards totaled $187 million in the third quarter of fiscal 2024, resulting in a book-to-bill ratio of 1.1. Project awards in the quarter included a significant ethane storage project. The Company also reduced backlog in the Process and Industrial Facilities segment by $17.4 million to account for a reduction of work available to us under an existing refinery maintenance program. The table below summarizes our awards, book-to-bill ratios and backlog by segment for our third fiscal quarter (amounts are in thousands, except for book-to-bill ratios):     Three Months Ended   Nine Months Ended         March 31, 2024   March 31, 2024   Backlog as of Segment:   Awards   Book-to-Bill(1)   Awards   Book-to-Bill(1)   March 31, 2024 Storage and Terminal Solutions   $ 134,592   2.5   $ 674,486   3.3   $ 738,337 Utility and Power Infrastructure     27,093   0.6     91,556   0.8     432,415 Process and Industrial Facilities     25,113   0.4     148,949   0.7     279,486 Total   $ 186,798   1.1   $ 914,991   1.7   $ 1,450,238           (1) Calculated by dividing project awards by revenue recognized during the period.Financial Position Net cash provided by operating activities during the fiscal third quarter of 2024 was $25 million, compared to $29.6 million during the fiscal second quarter of 2024. Net cash provided by operating activities during the quarter primarily reflect scheduled payments from customers associated with project awards in backlog that have yet to break-ground. As of March 31, 2024, Matrix had total liquidity of $135.0 million. Liquidity is comprised of $69.7 million of unrestricted cash and cash equivalents and $65.3 million of borrowing availability under the credit facility. The Company also has $25.0 million of restricted cash to support the facility. As of March 31, 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 Thursday, May 9, 2024. A live listen-only webcast of the conference call will be available on the Investor Relations page of the Company's website at matrixservicecompany.com under Events and Presentations. Investors and other interested parties can access a live audio-visual webcast using this webcast link: https://edge.media-server.com/mmc/p/9sodhwd8, 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/BI1e55487d357944dabdb8f2ab8bc52106 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 and construction 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, 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 and read our inaugural Sustainability Report. 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: Matrix Service CompanyCondensed Consolidated Statements of Income(unaudited)(In thousands, except per share data)      Three Months Ended   Nine Months Ended   March 31,2024   March 31,2023   March 31,2024   March 31,2023 Revenue $ 166,013     $ 186,895     $ 538,714     $ 589,166   Cost of revenue   160,435       182,476       510,688       573,041   Gross profit   5,578       4,419       28,026       16,125   Selling, general and administrative expenses   19,948       16,862       52,792       51,218   Goodwill impairment   —       —       —       12,316   Restructuring costs   —       316       —       2,881   Operating loss   (14,370 )     (12,759 )     (24,766 )     (50,290 ) Other income (expense):               Interest expense   (143 )     (268 )     (787 )     (1,556 ) Interest income   165       94       477       164   Other (Note 3)   (235 )     (116 )     4,481       (706 ) Loss before income tax expense   (14,583 )     (13,049 )     (20,595 )     (52,388 ) Provision for federal, state and foreign income taxes   (2 )     (363 )     4       (363 ) Net loss $ (14,581 )   $ (12,686 )   $ (20,599 )   $ (52,025 )                 Basic loss per common share $ (0.53 )   $ (0.47 )   $ (0.75 )   $ (1.93 ) Diluted loss per common share $ (0.53 )   $ (0.47 )   $ (0.75 )   $ (1.93 ) Weighted average common shares outstanding:               Basic   27,443       27,038       27,357       26,969   Diluted   27,443       27,038       27,357       26,969                                   Matrix Service CompanyCondensed Consolidated Balance Sheets(unaudited)(In thousands)      March 31,2024   June 30,2023 Assets       Current assets:       Cash and cash equivalents $ 69,658   $ 54,812 Accounts receivable, less allowances (March 31, 2024—$428 and June 30, 2023—$1,061)   172,924     145,764 Costs and estimated earnings in excess of billings on uncompleted contracts   34,600     44,888 Inventories   9,057     7,437 Income taxes receivable   325     496 Prepaid expenses   6,606     5,741 Other current assets   —     3,118 Total current assets   293,170     262,256 Restricted cash   25,000     25,000 Property, plant and equipment - net   44,711     47,545 Operating lease right-of-use assets   17,911     21,799 Goodwill   29,061     29,120 Other intangible assets, net of accumulated amortization   1,925     3,066 Other assets, non-current (Note 2)   28,227     11,718 Total assets $ 440,005   $ 400,504             Matrix Service CompanyCondensed Consolidated Balance Sheets (continued)(unaudited)(In thousands, except share data)     March 31,2024   June 30,2023 Liabilities and stockholders' equity       Current liabilities:       Accounts payable $ 55,192     $ 76,365   Billings on uncompleted contracts in excess of costs and estimated earnings   167,657       85,436   Accrued wages and benefits   18,068       13,679   Accrued insurance   5,699       5,579   Operating lease liabilities   3,624       4,661   Other accrued expenses   2,009       1,815   Total current liabilities   252,249       187,535   Deferred income taxes   25       26   Operating lease liabilities   17,947       20,660