Matrix Service Company

Good morning, and welcome to the Matrix Service Company conference call to discuss results for the first quarter of fiscal 2026. Currently, all participants are in 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 11 on your telephone. As a reminder, this conference call is being recorded. I'd like to turn the conference over to today's host, Ms. Kelly Smyth, Senior Director of Investor Relations for Matrix Service Company.

Thank you, Marvin. Good morning, and welcome to Matrix Service Company's first quarter fiscal 2026 earnings call. Participants on today's call include John Hewitt, President and Chief Executive Officer, and Kevin Cavanaugh, Vice President and Chief Financial Officer. Following our prepared remarks, we will open the call up for questions. The presentation materials referred to during the webcast today can be found under Events and 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, They constitute forward-looking statements for the purposes of the Private Security 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. The forward-looking statements made today are effective only as of today. To the extent we utilize non-GAAP measures, reconciliations will be provided in various press releases, periodic SEC filings, and on our website. Finally, all comparisons today are for the same period of the prior year unless specifically stated. Related to investor conferences and corporate access opportunities, we will be participating in the Sidoti and Company year-end Virtual Investor Conference on December 10th and 11th, 2025. We will also be participating in the Northland Capital Markets Growth Conference on December 16th. This conference is also virtual. If you would like additional information on this event or would like to have a conversation with management, I invite you to contact me through Matrix Service Company Investor Relations website. As we shift our focus to safety, I want to underscore its vital importance to our business. At Matrix, safety stands as our foremost core value. And as Mr. Hewitt frequently emphasizes, nothing outweighs the physical and mental well-being of our employees, subcontractors, clients, and others who may be present at our job sites or in our offices. This is not simply about compliance. It's about continuously cultivating an environment where safety is ingrained in our culture. Every one of us deserves to feel safe at work and return to home to our families and loved ones at the end of the day. And while safety is always the right thing to do, it's also a business imperative. It strengthens our competitive edge, enabling us to bid on and secure vital projects, foster lasting client relationships, and attract and retain top talent. Our clients trust us to execute their projects safely and with unrivaled quality. This trust is something we value, and we hold ourselves accountable to the highest standards. By maintaining our unwavering commitment to safety, we position Matrix not just as a leader in engineering and construction, but as a dependable partner dedicated to excellence and care. I will now turn the call over to John.

Thank you, Kathleen. Good morning, everyone. We begin fiscal 2026 with strong execution, resulting in double-digit revenue growth and our highest quarterly gross margin in over two years. This performance reflects the continued maturation of our backlog, and a disciplined approach we've taken to project bidding and delivery. Bidding activity remains healthy across our segments, and we saw a solid level of new awards. Our opportunity pipeline also remains robust for not only near-term projects, but several large multi-year projects with anticipated award dates beginning in late fiscal 2026 and into fiscal 2027. Based on our first quarter performance, our strong backlog, and the visibility we have today, we are reiterating our full-year revenue guidance of $875 to $925 million. Typically, the first quarter reflects a seasonal slowdown in demand for maintenance and repair services. This year, that was largely offset by increased activity on larger projects. Our mix of project work drove gross margin improvement, representing our best quarterly gross margin in more than two years. We expect continued margin improvement as we move through fiscal 2026, supported by a conversion of backlog to revenue. Award activity in the quarter was stable, resulting in a book to bill of 0.9, and we ended the quarter with a total backlog of 1.2 billion. During the first quarter, we removed approximately 197 million from backlog related to two projects. While Kevin will provide more detail in his remarks, These removals do not reflect a reduction in demand, changes in the market, or business performance issues. In both cases, the clients changed their commercial strategy and neither project had mobilized. Importantly, the removal of these projects from our backlog does not impact our Q1 results or full-year guidance. We continue to be disciplined in our bidding and contracting efforts to ensure our project risk and financial return profile meets our standards. Now let's talk about our markets and what we see in the organic opportunities that will drive the business. First, our total opportunity pipeline currently sits at $6.7 billion, with the majority of those opportunities in storage and related facilities for LNG, NGLs, and ammonia, which feed our storage solutions and utility and power infrastructure segments. We continue to see a steady level of incremental bidding opportunities supported by strong investment and domestic infrastructure and a favorable regulatory environment. Growing demand for sustainable and reliable power is creating significant project opportunities upstream from the massive investment in data centers and advanced manufacturing, among other expanding electrical consumers. So whether it is LNG for backup fuel or peak shaving, upgrades to existing LNG facilities, new base load or backup power generation, or substation upgrades and new construction, our business will benefit from these investments in this critical infrastructure. And while the timing of awards can be fluid over the coming quarters, we expect that the level of awards will be similar to what we saw during the first quarter. This award portfolio will be made up of mid-sized projects on top of our normal cadence of small projects and maintenance. These projects will reinforce our strong backlog, continue to provide more predictable revenue flow, and build our resource base as the business grows. One recent example is the award of a balance of plant construction at the Delaware River Partners multi-use port facility in Gibstown, New Jersey, that will support growing export demand for NGLs, including propane and butane. This award, which was taken into backlog in the first quarter of fiscal 2026, follows a fiscal 2025 award associated with the construction of a large full containment dual-server storage tank at the same facility. These two projects represent our ability to provide integrated delivery for complex storage facilities, which is a key differentiator for the business. As we move into late fiscal 2026 and into fiscal 2027, we anticipate a reacceleration in award activity for larger multi-year projects, which we are currently in the process of pursuing. In our process and industrial facility segment, Our strategic focus is to expand our markets, client base, and footprint to build backlog and revenue while executing safely with high quality and financial outcomes. Actions include strengthening our position in core geographic markets, realigning our business development resources with our growth priorities, and leveraging our strong customer relationships to expand organically. Focus areas include repair, maintenance, turnarounds, and small cap projects in various process industries, including refining, chemicals and renewable fuels, mining and minerals in support of the demand for non-ferrous metals and rare earth minerals, thermal vacuum chambers where we hold a dominant position, as well as various natural gas value chain opportunities. We are positioned to capture opportunities in this segment and deliver improved results over the long term. With projectivity continuing to build due to the steady conversion and replacement of we are highly focused on ensuring that we deliver consistent performance for our customers in the highest level of quality and safety. The recent changes to our organization structure, which we have talked about on previous calls, has enhanced our agility, competitiveness, and performance. These changes, along with strategic actions we have taken over the last few years, are already strong service offering. Position us to deliver on current commitments and complete effectively with substantial opportunities within a robust pipeline. We remain committed to disciplined capital allocation. Our strong balance sheet supports the working capital needs of active projects as these jobs progress through key execution phases. As we return to sustained profitability in the coming quarters, we'll deploy capital thoughtfully, targeting growth opportunities that expand our market share and drive long-term shareholder value. In summary, I'm proud of the team's continued execution as we proceed through this critical chapter of growth for Matrix. We have plenty of opportunities ahead of us, which will not only support this fiscal year, but will continue to create growth in fiscal 2027 and beyond. I am confident that our focus on our core pillars of win, execute, and deliver will serve to drive compounding profitable growth and long-term value for our shareholders and customers alike. So with that, I'll turn the call over to Kevin.