Matrix Service Company (MTRX) is a leading North American industrial engineering, construction, and maintenance contractor, with a diverse portfolio spanning the energy, power, and industrial sectors. The company's unwavering commitment to excellence, safety, and innovation has propelled it to the forefront of its industry, making it a trusted partner for a wide range of clients.
A Storied History of Growth and Adaptation Founded in 1984 in Tulsa, Oklahoma, Matrix Service Company has weathered the ups and downs of the energy and industrial markets, emerging as a resilient and adaptable player. The company began as a specialized provider of storage tanks and terminals for the energy industry, focusing on engineering, fabrication, and construction of cryogenic and specialty storage tanks and terminals for the liquefied natural gas (LNG), natural gas liquids (NGLs), and petroleum industries. This early specialization allowed Matrix to establish a strong reputation for high-quality work in these areas.
As the company grew, it strategically expanded its capabilities and service offerings. Around the mid-2000s, Matrix Service began diversifying its business beyond storage solutions, entering the utility and power infrastructure market. This expansion included providing engineering, procurement, and construction services for LNG utility peak shaving facilities, electrical substations, and power generation facilities. This diversification strategy helped reduce the company's reliance on any single end market and set the stage for future growth.
The past decade has presented significant challenges for Matrix Service, including a major downturn in the energy industry in the mid-2010s. However, the company's resilience and adaptability shone through as it responded by further diversifying its service offerings, investing in talent and safety programs, and maintaining a disciplined approach to capital allocation. These efforts allowed Matrix Service to weather the downturn and emerge as a stronger, more resilient organization.
Today, Matrix Service Company operates through three main business segments: Storage and Terminal Solutions, Utility and Power Infrastructure, and Process and Industrial Facilities. This segmentation reflects the company's evolution from its roots in storage solutions to a comprehensive provider of engineering, construction, and maintenance services across multiple industries.
Diverse Revenue Streams and a Robust Backlog Matrix Service Company's diversified business model has been a significant advantage in navigating the dynamic market landscape. The company operates through three reportable segments: Storage and Terminal Solutions, Utility and Power Infrastructure, and Process and Industrial Facilities. This segmentation allows Matrix to cater to a wide range of client needs, mitigating the impact of fluctuations in any single market.
The Storage and Terminal Solutions segment primarily focuses on engineering, procurement, fabrication, and construction services related to cryogenic and other specialty tanks and terminals for LNG, NGLs, hydrogen, ammonia, propane, butane, liquid nitrogen/liquid oxygen, and liquid petroleum. This segment also handles traditional aboveground crude oil and refined product storage tanks and terminals, as well as terminal balance of plant work, truck and rail loading/offloading facilities, and marine structures. Additionally, it manufactures and sells precision engineered specialty tank products, including geodesic domes, aluminum internal floating roofs, floating suction and skimmer systems, roof drain systems, and floating roof seals.
The Utility and Power Infrastructure segment primarily provides engineering, procurement, fabrication, and construction services to support the growing demand for LNG utility peak shaving facilities. It also performs traditional electrical work for public and private utilities, including construction of new substations, upgrades of existing substations, transmission and distribution line installations, and upgrades and maintenance, including live wire work. This segment may also include emergency and storm restoration services and provides construction services to various power generation facilities, including natural gas-fired facilities in simple or combined cycle configurations.
The Process and Industrial Facilities segment focuses on plant maintenance, repair, and turnarounds in the downstream and midstream markets for energy clients, including refining and processing of crude oil, fractionating, and marketing of natural gas and natural gas liquids. It performs engineering, procurement, fabrication, and construction for refinery upgrades and retrofits for renewable fuels, including hydrogen processing, production, loading, and distribution facilities. This segment also constructs thermal vacuum test chambers for aerospace and defense industries and other infrastructure for industries including petrochemical, sulfur, mining and minerals, cement, agriculture, wastewater treatment facilities, and other industrial customers.
As of the latest reporting period, the company's backlog stood at an impressive $1.4 billion, providing a strong foundation for future growth. This near-record backlog reflects the robust demand for Matrix's specialized services, with project awards totaling $148 million in the first quarter of fiscal 2025. The company's book-to-bill ratio of 0.9x for the quarter, combined with a trailing twelve-month book-to-bill of 1.1x, further underscores the strength of its order pipeline.
Navigating Challenges with Strategic Focus Despite the headwinds faced in the first quarter of fiscal 2025, which resulted in a year-over-year revenue decline, Matrix Service Company remained steadfast in its commitment to long-term value creation. The company's revenue of $165.6 million in the quarter was impacted by the completion of a large renewable diesel project, which created a challenging comparison to the prior-year period. This decline was primarily driven by a 58% year-over-year decrease in revenue in the Process and Industrial Facilities segment. However, the Utility and Power Infrastructure segment saw a 73% increase in revenue, partially offsetting the decline.
The company's gross margin decreased from 6% in Q1 2024 to 4.7% in Q1 2025, primarily due to under-recovery of construction overhead costs on the lower revenues. Despite these challenges, Matrix's strategic focus on higher-margin specialty engineering and construction opportunities, coupled with its lean operating model and disciplined approach to capital allocation, has positioned the company well for the future.
Matrix Service Company expects to see a return to profitability in fiscal 2025 as it capitalizes on the growing demand for LNG, NGL, and ammonia storage and terminal infrastructure, as well as the increasing need for power delivery and generation solutions. The company is also seeing strong demand in the storage and terminal solutions and utility and power infrastructure segments, driven by the increasing need for LNG, NGL, and ammonia storage, as well as power generation reliability and resilience.
Financials Matrix Service Company's financial position remains strong, with a debt-free balance sheet and ample liquidity. As of the end of the first quarter of fiscal 2025, the company had $124.61 million in cash and cash equivalents, along with $56.64 million in availability under its asset-based lending facility. This robust liquidity, combined with the company's disciplined approach to capital allocation, provides a solid foundation for weathering market volatility and pursuing strategic growth opportunities.
For the most recent fiscal year (2024), Matrix Service Company reported revenue of $728.21 million, with a net loss of $24.98 million. Operating cash flow stood at $72.57 million, while free cash flow was $65.58 million. In the most recent quarter (Q1 2025), the company reported revenue of $165.58 million, a net loss of $9.22 million, operating cash flow of $11.92 million, and free cash flow of $9.97 million.
The company's debt-to-equity ratio as of September 30, 2024, was 0.024, indicating a low level of debt relative to equity. The current ratio of 1.06 and quick ratio of 1.03 demonstrate the company's ability to meet its short-term obligations.
Guidance and Future Outlook Matrix Service Company has reaffirmed its revenue guidance for fiscal year 2025, projecting revenue in the range of $900 million to $950 million. This represents a year-over-year increase of 24% to 30%, consistent with the guidance provided in the previous fiscal year. The company expects to return to profitability in fiscal year 2025, aligning with its focus on long-term value creation.
The strong backlog of $1.4 billion at the end of the first quarter of fiscal 2025 provides good visibility into the current year and beyond. Matrix Service Company expects its book-to-bill ratio to be 1.0 or greater on an annual basis, indicating that it anticipates booking new orders at least equal to its revenue for the year.
Liquidity The company's strong liquidity position is a key advantage in the current market environment. With $124.61 million in cash and cash equivalents and $56.64 million available under its asset-based lending facility, Matrix Service Company has the financial flexibility to navigate challenges and capitalize on growth opportunities as they arise. The company's debt-free status further enhances its financial stability and provides additional resources for strategic investments and potential acquisitions.
Positioning for Long-Term Success Looking ahead, Matrix Service Company is well-poised to capitalize on the megatrends driving demand for its services. The growing focus on energy transition and infrastructure modernization, coupled with the increasing need for power generation and delivery solutions, present significant long-term opportunities for the company.
The company's reputation for quality, safety, and execution excellence, along with its strong customer relationships and diverse service offerings, position it as a trusted partner for clients across a wide range of industries. As Matrix Service Company navigates the evolving market landscape, its strategic focus, financial discipline, and operational excellence will be key drivers of its continued success.
The company expects improvement in the Process and Industrial Facilities segment in the second half of the fiscal year, despite the recent decline in revenue due to the completion of a large renewable diesel project. This, combined with the strong performance in the Utility and Power Infrastructure segment and the ongoing demand in the Storage and Terminal Solutions segment, provides a solid foundation for future growth.
Conclusion Matrix Service Company's impressive history, diversified business model, and unwavering commitment to innovation have solidified its position as a leader in the energy and industrial construction and maintenance sectors. As the company navigates the challenges of the current market environment, its resilience, financial strength, and strategic vision give investors confidence in its ability to capitalize on the significant growth opportunities ahead. With a strong backlog, robust liquidity, and a clear focus on high-growth areas such as LNG infrastructure and power delivery solutions, Matrix Service Company is well-positioned to deliver long-term value to its shareholders and customers alike.