Yahoo Finance Matrix Service Co Reports Challenging Q3 Fiscal 2024 Results, Misses Analyst Revenue and EPS ...
Revenue: Reported at $166.0 million, marking a decline of 11% year-over-year, falling short of the estimated $195.29 million.
Net Loss: Recorded at $14.6 million, with a loss per share of ($0.53), significantly above FALLING SIGNIFICANTLY BELOW the estimated net income of $2.56 million and EPS of -$0.13.
Backlog: Reached a record high of $1.45 billion, a 74% increase year-over-year, indicating strong future revenue potential.
Cash Flow from Operations: Amounted to $25 million, up 25% from the previous year, demonstrating improved operational efficiency.
Gross Margin: Stood at 3.4%, affected negatively by under-recovery of construction overhead costs due to lower revenue.
Book-to-Bill Ratio: Achieved a rate of 1.1x for the quarter, reflecting healthy order acquisition relative to revenue.
Liquidity: Total liquidity was strong at $135.0 million, with $69.7 million in cash and cash equivalents and $65.3 million available from credit facilities.
Matrix Service Co (NASDAQ:MTRX) disclosed its fiscal third-quarter results on May 8, 2024, revealing a challenging period with significant declines in revenue and earnings per share. The company, a prominent North American industrial engineering, construction, and maintenance contractor, reported these results in its 8-K filing.
Company Overview
Matrix Service Co operates primarily in the oil and gas, power, petrochemical, industrial, mining, and minerals markets. It offers a broad spectrum of services including engineering, fabrication, construction, and maintenance, segmented into three divisions: Utility and Power Infrastructure; Process and Industrial Facilities; and Storage and Terminal Solutions.
Financial Performance Summary
The third quarter saw Matrix Service Co experiencing a revenue of $166.0 million, marking an 11% decrease year-over-year, and significantly lower than the estimated $195.29 million. The net loss per share deepened to ($0.53), which was far below the anticipated ($0.13). This performance reflects ongoing challenges in project timing and market demand, particularly in the electrical and crude tank markets.
Operational Highlights and Challenges
Despite the revenue shortfall, Matrix Service Co achieved a record backlog of $1.45 billion, an increase of 74% from the previous year, signaling potential future growth. The total project awards for the quarter stood at $186.8 million with a book-to-bill ratio of 1.1x. However, the adjusted EBITDA was negative at ($9.8) million, compared to ($7.7) million in the prior-year period, impacted by under-recovered construction overhead costs and reduced labor demand for maintenance services.
Segment Performance
Detailed segment analysis revealed mixed results:- The Storage and Terminals Solutions segment saw a decrease in revenue to $54.3 million with a gross margin of 4.3%.- Utility and Power Infrastructure segment revenue rose to $46.1 million, driven by increased work on LNG peak shaving projects.- The Process and Industrial Facilities segment's revenue decreased to $65.6 million, with a gross margin decline influenced by the final year of a three-year refinery maintenance contract.
Strategic Outlook and Management Commentary
Looking forward, Matrix Service Co's management remains optimistic about converting its robust backlog into revenue, anticipating revenue growth in the fourth quarter. The company expects improvements in fixed cost absorption and margin expansion as project volumes increase.
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," stated John R. Hewitt, President and CEO.
Financial Position and Future Guidance
As of March 31, 2024, Matrix Service Co reported a strong liquidity position with $135.0 million available, comprising $69.7 million in cash and $65.3 million in credit facilities, with no outstanding debt. The company's effective tax rate for the quarter was zero, influenced by a valuation allowance on deferred tax assets due to cumulative losses.
In conclusion, while Matrix Service Co faces short-term challenges reflected in its Q3 fiscal 2024 performance, its record backlog and strategic positioning in various markets may provide pathways to recovery and profitability in the upcoming fiscal periods.
For detailed financial tables and further information, readers are encouraged to view the full earnings report and listen to the upcoming earnings call scheduled for May 9, 2024.
Explore the complete 8-K earnings release (here) from Matrix Service Co for further details.
This article first appeared on GuruFocus.
