Matrix Service Company

Ladies and gentlemen, thank you for standing by, and welcome to the Matrix Service Company conference call to discuss results for the third quarter fiscal 2022. At this time, all participants are on the listen-only mode. After this speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press the star, then the one key on your touch-tone telephone. If you require offer assistance, please press star, then zero. I would now like to hand the conference over to your speaker host, Kelly Smythe.

Good morning and welcome to Matrix Service Company's third quarter of fiscal 2022 earnings call. Participants on today's call will include John Hewitt, President and Chief Executive Officer, and Kevin Cavanaugh, Vice President and Chief Financial Officer. The presentation materials we will be referring to during the webcast today can be found under Events and Presentations on the Investor Relations section of MatrixServiceCompany.com. Before we begin, please let me remind you that on today's call, we may make various remarks about future expectations, plans, and prospects for major service companies that constitute forward-looking statements for the purposes of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various factors. including those discussed in our annual report on Form 10-K for our fiscal year ended June 30, 2021, and in subsequent filings made by the company with the SEC. To the extent we utilize non-GAAP measures, reconciliations will be provided in various press releases, periodic SEC filings, and on our website. I will now turn the call over to John Hewitt, President and CEO of Matrix Service Companies.

Thank you, Kelly, and good morning, everyone, and thank you for joining us. I've been reflecting on the business challenges our customers and Matrix have experienced over the last couple of years and how important it is in times like these not to lose focus on the safety of our workforce. With our end markets improving comes increasing workloads and project activity. Our focus, leadership, and expectations in driving a zero-incident safety outcome must be even greater as activity increases. I want to remind all of us at Matrix that zero-incident performance is possible. and it is a level of performance that we have demonstrated can be delivered on for our employees and ourselves. If we act, or better said, are accountable for our outcomes, communicate the expectations, and train with passion, I am confident we can achieve our safety vision. Now, before I turn the call to Kevin to discuss results, I want to briefly comment on our performance during the quarter, which is not yet reflective of the strong momentum growing in our end markets or the organizational changes that are underway at Matrix. Our revenues grew by nearly 20% in a quarter compared to the same quarter last year. Revenues are clearly trending up, but at a slower pace than we anticipated, impacted in part by delayed starts on previously awarded work. Our revenue in a quarter was driven by smaller project activity, a higher percentage of lower margin reimbursable work, and the execution of low-margin projects won during the competitive market environment which we have experienced over the last few years. This growth in revenue is an encouraging indicator of returning market strength, but it currently does not fulfill our historical gross margin expectations. Limits complete recovery of overheads and leave little room for error. While this growing revenue environment has not yet created the bottom line improvement we expect, we are optimistic that given the significant tailwinds across all our markets, the award strength we are experiencing, and the near-term booking opportunities, bottom line improvement is on the horizon. I do want to highlight that this was our third consecutive quarter with a book-to-bill greater than one. And through the first nine months of the year, we have achieved a book-to-bill of 1.3 on awards of nearly 640 million. To put this in context, year-to-date awards are 81 percent higher than awards in the first nine months of fiscal 2021. Our backlog now stands at 594 million, 20 percent higher than our backlog at the start of the fiscal year. This acceleration in awards has primarily come from projects with individual values of less than 25 million. So while we expect the volume of smaller awards to continue, there is a clear path to larger project awards beginning in the next two quarters. We therefore anticipate a material increase in the size of our backlog as we move through the remainder of the calendar year. During the quarter, we also continue to work on organizational improvements that will result in a company that is more competitive, efficient, and produces better bottom line results. Let me hand the call over to Kevin to discuss our segment and consolidated results, and I'll be back to share our outlook and give you some of the organizational improvements taking place within Matrix.