Matrix Service (NASDAQ:MTRX) reported its third consecutive profitable quarter as higher revenue, improved gross margins and lower operating expenses helped the infrastructure contractor reverse a year-earlier loss in the first quarter of fiscal 2027.
Revenue rose 4% to $219.4 million from $211.9 million a year earlier, despite revenue from several booked projects shifting into future quarters, Interim Chief Financial Officer AJ Smith said. Earnings were $0.22 per share, compared with a loss of $0.13 per share in the prior-year quarter.
Chief Executive Officer Shawn Payne said the company’s opportunity pipeline increased to approximately $8.2 billion from $7.4 billion since its previous report, with growth across LNG, power generation, electrical infrastructure, and mining and minerals. Matrix also won a power generation project supporting data center infrastructure during the quarter.
Margins Improve as Expenses Decline
Gross profit increased to $18.1 million, or 8.2% of revenue, from $14.2 million, or 6.7% of revenue, a year earlier. Smith attributed the improvement to strong project execution and better overhead cost recovery.
Selling, general and administrative expenses fell by $3 million year over year to $13.3 million, or 6% of revenue. Smith said the decline reflected, in part, lower salary, wage and stock compensation expenses following an organizational restructuring. Variable accounting for cash-settled stock-based compensation also reduced the expense by $1.9 million year over year, he said.
Adjusted earnings were $0.23 per share, compared with an adjusted loss of $0.01 per share a year earlier. Adjusted EBITDA rose to $7.7 million from $2.5 million.
Dominic Savarino, who is scheduled to become chief financial officer on Nov. 6, said during the question-and-answer session that a reasonable SG&A run rate would be approximately $15.5 million to $16 million per quarter, depending on activity levels and variable compensation. He noted that cash-settled stock compensation can cause variability.
Storage and Mining Work Support Growth
Storage and Terminal Solutions revenue rose 12% to $122.9 million, driven by more specialty tank and associated balance-of-plant work. The segment’s gross margin increased to 9% from 5.9%, reflecting improved execution and overhead cost absorption.
Utility and Power Infrastructure revenue fell 21% to $59.1 million as lower natural gas peak-shaving work more than offset an increase in power generation work. Its gross margin slipped to 8.6% from 9.1%, primarily because of the mix of work.
Process and Industrial Facilities revenue increased to $37.4 million from $27.9 million, primarily because of higher mining and minerals activity. Its gross margin declined to 3.7% from 5.1%, partly because of the resolution of a subcontractor dispute on a project completed in fiscal 2023. Smith said the resolution was a net positive for the business when anticipated fiscal 2027 legal cost savings were considered.
Backlog and Award Outlook
Matrix recorded $138.8 million in project awards during the quarter, producing a book-to-bill ratio of 0.6. Backlog stood at $873 million as of Sept. 30. Smith said the company expects quarterly revenue for the rest of the fiscal year to be higher, on average, than in the first quarter.
Payne said Matrix had expected lighter award activity in the first half of fiscal 2027 and anticipates several large opportunities reaching customer decision points later in the year. Some are storage projects, particularly LNG-related work. He cautioned that the timing of customer decisions is outside the company’s control and said larger awards are not expected to contribute meaningfully to fiscal 2027 revenue, instead positioning the business for fiscal 2028.
Matrix is also pursuing smaller, quicker-turn construction, repair and maintenance projects to provide a more consistent base of activity between larger projects, Payne said. In addition to the data center-related award, he said the company secured several mining and minerals awards during the quarter.
Liquidity and Buybacks
Matrix reported $222 million in total liquidity, including $182 million in unrestricted cash and $39 million of borrowing availability under its credit facility. The company repurchased $2.5 million of shares during the quarter.
Smith said Matrix amended its credit facility to expand its annual stock repurchase limit, and its board approved a new $25 million buyback program that expires in two years. Repurchases will depend on market conditions and the company’s liquidity position, he said.
About Matrix Service (NASDAQ:MTRX)
Matrix Service Company (NASDAQ:MTRX) is an engineering, construction, and maintenance services provider serving the energy and industrial markets. Based in Tulsa, Oklahoma, the company supports the development, operation, and maintenance of critical infrastructure for customers across North America.
Through its operating businesses, Matrix Service provides engineering, procurement, fabrication, construction, commissioning, maintenance, and repair services. Its capabilities include aboveground storage tanks, terminals, pipelines, process facilities, power infrastructure, and other energy-related assets.
