Matrix Service Company

Good morning and welcome to the Matrix Surface Company conference call to discuss results for the first quarter of fiscal 2025. Currently, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will be given at that time. If you require assistance at any time, please press star zero on your telephone. As a reminder, this conference's call is being recorded. I would now like to turn the conference over to today's host, Ms. Kelly Smyth, Senior Director of Investor Relations for Matrix Service Company.

Thank you, Stephen. Good morning, and welcome to Matrix Service Company's first quarter fiscal 2025 earnings call. Participants on today's call include John Hewitt, President and Chief Executive Officer, and Kevin Kavanaugh, Vice President and Chief Financial Officer. The presentation materials referred to during the webcast today can be found under Events, Presentations, on the investor relations section of MatrixServiceCompany.com. As a reminder, on today's call, we may make various remarks about future expectations, plans, and prospects for Matrix Service Company 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 because of various factors. including those discussed in our most recent annual report on Form 10-K 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. Related to investor corporate access opportunities, if you would like to have a conversation with management, I invite you to contact me through the Matrix Service Company Investor Relations website. You may also sign up to receive MTRX news by scanning the QR code on the screen. Turning now to our safety moment. At Matrix, our safety culture is at the forefront of all the work we do. And while we work in challenging environments and markets, we believe a zero-incident workplace is achievable. As we have seen our end markets improve, employee headcounts rise, and workloads increase, we must also be mindful of the fact that in our business, nothing is more important than the safety and the health of our employees and those around us. It's also important to remember that safety extends far beyond just occupational safety. It means making sure that people around us are safe from discrimination and harassment of any form and feel safe sharing ideas, or speaking up about issues or concerns. In every instance, our focus on safety has to be unwavering, regardless of any background noise. So as we look forward to a much stronger fiscal 2025, we must all remember the individual choices we make can and do make a difference. Please own safety for yourself, your loved ones, your coworkers, and the community. In doing so, you can make an impact. I'm going to call over to John now.

Thank you, Kelly, and good morning, everyone. As communicated on our last call, we began fiscal 2025 with backlog of $1.4 billion, providing us with a strong degree of visibility into the current year and beyond. We expected the current year to have a slow start comparatively due to the impact of the summer months, as well as completion of a large renewable diesel project in fiscal 2024, and as we begin to ramp up our large capital work. Our first quarter results reflect those expectations. On strong project execution, we exited the first quarter maintaining our near record backlog and expect our conversion of backlog to revenue to increase as we move through fiscal 2025. As backlog conversion accelerates and revenue improves, we will realize improved fixed cost absorption, operating leverage, and margins. we continue to anticipate a return to profitability in fiscal 2025. The company's cash and borrowing position remains strong, consistent with our disciplined approach to balance sheet management. Our strategic focus is on higher-margin specialty engineering and construction opportunities, the lean operating model, and returns-driven approach toward capital allocation. This focus provides Matrix a foundation for long-term value creation as we enter this next chapter for our business. Overall, there remain multiple variables that can affect the timing of awards and project starts, including the current presidential election, the legislative and regulatory environment, and the timing of customer investment decisions. Given both the strength of our backlog and opportunity pipeline, we are reaffirming our revenue guidance for fiscal 2025 at between $900 and $950 million, which is a year-over-year increase of 24% to 30%. Looking forward, the key megatrends driving the demand for our services provide significant long-term advantages and support our overall growth strategy. Our teams continue to see robust, increasing demand for LNG, NGL, and ammonia storage and terminal infrastructure. This demand encompasses a variety of projects, including greenfield facilities, expansions, upgrades, and retrofits, all aimed at supporting lower carbon initiatives enhancing system reliability and resilience, ensuring energy supply assurance, and meeting the growing global demand for low-cost feedstocks. During the quarter and in partnership with another contractor, we were awarded the engineering and construction of a dual-service specialty vessel storage tank by Delaware River Partners. This tank, when completed in 2026, will provide service to LPG and ammonia markets on a global basis. The surge in demand for electric power to support data centers, AI, electrification of everything, as well as on-shoring and upgrading of industrial facilities and advanced manufacturing supports a diverse mix of client project opportunities for Matrix over the coming decade. First, our traditional electrical work, which includes not only short-haul transmission and distribution, and substations and interconnects, but also industrial electrical construction services, which all create growth opportunities beyond our traditional clients and geographies. Second, our legacy experience in gas-fired generation can be applied to the construction of baseload, peaking, and backup generating facilities. Third, our market-leading specialty vessel and balance of plant capability for the use of LNG, ammonia, and hydrogen as backup and peak shaving fuel storage provides us with project opportunities where Matrix is clearly differentiated from the competition. All of these substantial demands require the enterprise-wide expertise for which Matrix is known and are represented in our opportunity pipeline, which remains strong at approximately $6 billion. Given the strength of this pipeline, while book-to-bill may vary quarter to quarter, we expect to continue our book-to-bill trend at a ratio of 1-0 or greater on an annual basis. As a reminder, many of the opportunities we are currently pursuing are expected to be bid and awarded within the next 12 to 18 months. Once awarded, many of these projects will require an 18 to 30-month timeframe to complete, providing continued long-term visibility into revenue. This does not include smaller capital projects and maintenance activities performed under master service agreements and individual contracts that lay the foundation for many parts of the business and play a key role in leveraging SG&A and construction overhead costs. This, too, is an area where we are seeing increasing interest and opportunity for process facility turnarounds and plant maintenance, including nested services, all based on our reputation for quality and safety and our focus on building long-term relationships with our clients. In summary, with exceptional project execution, we started the year on a strong note Backlog remains near record levels, and we are maintaining our fiscal 2025 financial guidance, which includes the return to profitability of this fiscal year, consistent with our focus on long-term value creation for our shareholders. With that, I'll turn the call over to Kevin.