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Dec 31, 2022
Matrix Service Q2 2023 Earnings Report
Reported financial results for the second quarter of fiscal 2023.
Key Takeaways
Matrix Service Company's second quarter revenue increased by 20% compared to the previous year, driven by a surge in project awards, the highest since Q1 2020, leading to a strong book-to-bill ratio. However, results were negatively impacted by a $9.6 million adjustment on a legacy project and a $12.3 million goodwill impairment, resulting in a loss per share of $1.22.
Second quarter revenue reached $193.8 million, a 20% increase year-over-year.
Project awards for the quarter totaled $318.7 million, the highest since Q1 2020, resulting in a book-to-bill ratio of 1.6.
Backlog increased by 25% to $740.5 million compared to the second quarter of fiscal 2022.
Loss per share was $1.22, with an adjusted loss per share of $0.53, impacted by a legacy project adjustment and goodwill impairment.
Forward Guidance
Matrix Service Company anticipates revenue volumes in the third quarter of fiscal 2023 to remain relatively unchanged from the second quarter, with a meaningful increase expected in the fourth quarter as newly awarded projects contribute to revenue. The company expects quarterly book-to-bill ratios to be at or above 1.0 for each of the last two fiscal quarters of 2023.
Positive Outlook
- Expected improved operating results in the fourth fiscal quarter.
- Receipt of approximately $13 million of tax refunds in the third fiscal quarter.
- Positive cash flow from newly-awarded capital projects.
- Quarterly book-to-bill ratios to be at or above 1.0 for each of the last two fiscal quarters of 2023.
- Meaningful increase expected in the fourth quarter as newly awarded projects contribute to revenue.
Challenges Ahead
- Legacy project awarded in calendar 2021 resulted in an unexpected negative adjustment in the quarter due to a breakdown in commercial negotiations over excessive scope changes, global supply chain issues and inflation.
- A large LNG project that was expected to be awarded in the first half of fiscal 2023 has not been awarded and award timing is unknown.
Historical Earnings Impact
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