Executive Summary
Matrix Service Company reported a cautious start to FY2025 QQ1 with revenue of $165.6 million, down 16.3% year over year (YoY) from $197.7 million in QQ1 2024, largely reflecting the prior-year wind-down of a large renewable diesel project. Backlog remained robust at approximately $1.4 billion, supporting visibility into revenue progression as major capital projects commence in subsequent quarters. Management reaffirmed full-year revenue guidance of $900–$950 million, a 24%–30% YoY increase, and signaled an expected return to profitability within fiscal 2025 as backlog conversion accelerates and fixed-cost absorption improves with higher volumes. The quarter featured a gross margin of 4.7% and an operating margin of -6.5%, pressured by under-recovery of construction overhead costs in a lighter-revenue quarter; management expects overhead absorption to improve as revenue ramps through the year.
Segment results were mixed: Storage and Terminal Solutions delivered $78.2 million in revenue (vs. $90.1 million a year ago), Utility and Power Infrastructure rose over 70% to $55.9 million (vs. $32.4 million), and Process and Industrial Facilities declined to $31.0 million (vs. $75.1 million) driven by the completion of a large renewable diesel project in 2024. Importantly, the company maintains a very strong liquidity position with cash of about $150 million and zero debt, reinforcing its capacity to fund a stepped-up workload as major projects come on line. The management tone emphasizes a lean operating model, high-margin specialty work, and a focus on improving SG&A leverage as revenue builds. These factors collectively underpin a constructive, albeit cautious, investment case for the turnaround in profitability during FY2025, supported by a robust opportunity pipeline and a backlog-to-revenue conversion path that is expected to strengthen through the year.
Key Performance Indicators
QoQ: -12.62% | YoY:-16.23%
QoQ: -37.23% | YoY:-34.12%
QoQ: -122.18% | YoY:-104.93%
QoQ: -110.72% | YoY:-191.22%
QoQ: -106.25% | YoY:-175.00%
Key Insights
Revenue: $165.6M (QQ1 2025) vs $197.7M QQ1 2024; YoY change: -16.3% (per company metrics). QoQ change: -12.6% (vs Q4 2024). Gross margin: 4.7% vs 6.0% prior year; Operating income: -$10.77M; Net income: -$9.22M; EPS: -$0.33; Book-to-bill (quarterly): 0.9; Trailing twelve-month book-to-bill: 1.1; Backlog: ~$1.4B; SG&A: $18.58M; Operating cash flow: $11.92M; Free cash flow: $9.97M; Cash at end of period: $149.61M; Debt: $22.93M (net debt: -$101.68M). Backlog conversion anticipated to rise with...
Financial Highlights
Revenue: $165.6M (QQ1 2025) vs $197.7M QQ1 2024; YoY change: -16.3% (per company metrics). QoQ change: -12.6% (vs Q4 2024). Gross margin: 4.7% vs 6.0% prior year; Operating income: -$10.77M; Net income: -$9.22M; EPS: -$0.33; Book-to-bill (quarterly): 0.9; Trailing twelve-month book-to-bill: 1.1; Backlog: ~$1.4B; SG&A: $18.58M; Operating cash flow: $11.92M; Free cash flow: $9.97M; Cash at end of period: $149.61M; Debt: $22.93M (net debt: -$101.68M). Backlog conversion anticipated to rise with major capital projects and turnaround activity.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
165.58M |
-16.23% |
-12.62% |
| Gross Profit |
7.81M |
-34.12% |
-37.23% |
| Operating Income |
-10.77M |
-104.93% |
-122.18% |
| Net Income |
-9.22M |
-191.22% |
-110.72% |
| EPS |
-0.33 |
-175.00% |
-106.25% |
Key Financial Ratios
operatingProfitMargin
-6.5%
operatingCashFlowPerShare
$0.43
freeCashFlowPerShare
$0.36
Management Commentary
- Strategic focus and backlog: Management underscored a backlog near record levels (~$1.4B) and a commitment to returning to profitability in fiscal 2025, aided by higher-margin, specialty engineering and construction opportunities and a leaner operating model. The firm reiterated revenue guidance of $900–$950M for FY2025, implying 24%–30% YoY growth as backlog converts to revenue. (John Hewitt)
- Margin dynamics and overhead absorption: Management cited under-recovery of construction overhead as a primary factor depressing gross margin to 4.7% in QQ1 2025, with a quarterly margin headwind of roughly 600 basis points; they expect this to ease as revenue grows and overhead costs become more effectively absorbed. SG&A rose modestly to $18.6M, driven in part by long-term incentive compensation linked to stock price. (Kevin Cavanah)
- Market and project timing: The call highlighted megatrends in LNG/NGL/ammonia storage and terminal infrastructure, data-center and AI-driven power demand, and the broader shift toward lower-carbon fuels. Management noted several projects in backlog and a robust opportunity funnel, with awards anticipated over the next 12–18 months and project durations of 18–30 months. They also cited permitting and scheduling dynamics as a near-term timing risk. (John Hewitt)
- Near-term catalysts and risks: The executives pointed to a near-term ramp in major capital work, improved project execution, and stronger fixed-cost absorption; however, they acknowledged timing risks from elections and regulatory environments, potential project delays, and client decision timelines that could modulate quarterly results. (John Hewitt)
Backlog remains near record levels, and we are maintaining our fiscal 2025 financial guidance, which includes the return to profitability this fiscal year.
— John Hewitt
The near-term opportunity may be a couple hundred million dollars for LNG export-related storage and related work; we expect revenues to ramp as projects advance and approvals occur.
— John Hewitt
Forward Guidance
Matrix reaffirmed FY2025 revenue guidance of $900–$950 million, signaling confidence in a rebound from an outsized Q1 drag due to a completed renewable diesel project in Process and Industrial Facilities. The company expects revenue progression to accelerate through the remainder of fiscal 2025 as backlog converts to revenue, driving improved fixed-cost absorption and operating leverage. Key growth drivers cited by management include LNG/NGL/ammonia storage and terminal infrastructure, continued demand for power generation capacity (data centers, AI, industrial reshoring), and a ramp in specialty vessel/storage work.
Risk factors to watch include: (i) timing of awards and project starts (12–18 months bidding window; 18–30 months to completion), (ii) macro/policy shifts affecting infrastructure investment (electoral/regulatory cycles, energy policies, and LNG export permitting), and (iii) continued overhead cost discipline as revenue grows. Investors should monitor quarterly book-to-bill trends, backlog progression, and the rate at which gross margins improve as higher-volume activity is realized. Overall, the outlook is cautiously constructive, with profitability expected to return in FY2025 as the revenue ramp gains momentum and overhead absorption improves.