Matrix Service Company (MTRX) Bundle
Understanding Matrix Service Company (MTRX) Revenue Streams
Understanding Matrix Service Company’s Revenue Streams
Revenue Breakdown by Segment (Three Months Ended September 30, 2024 vs 2023)
| Segment | 2024 Revenue ($ thousands) | 2023 Revenue ($ thousands) | Change ($ thousands) | Percentage Change (%) |
|---|---|---|---|---|
| Storage and Terminal Solutions | 78,239 | 90,144 | (11,905) | (13) |
| Utility and Power Infrastructure | 55,912 | 32,395 | 23,517 | 73 |
| Process and Industrial Facilities | 31,428 | 75,120 | (43,692) | (58) |
| Total Revenue | 165,579 | 197,659 | (32,080) | (16) |
Year-over-Year Revenue Growth Rate
The overall revenue for the three months ended September 30, 2024, was $165,579,000, reflecting a decrease of 16% compared to $197,659,000 in the same period of the previous year.
Contribution of Different Business Segments to Overall Revenue
In the most recent quarter, the contributions of the various segments to total revenue were:
- Storage and Terminal Solutions: 47.2% of total revenue
- Utility and Power Infrastructure: 33.7% of total revenue
- Process and Industrial Facilities: 19.0% of total revenue
Analysis of Significant Changes in Revenue Streams
The decline in revenue for the Storage and Terminal Solutions segment was driven by a decrease in volume of work, specifically in flat bottom tank projects, which fell by $11.9 million or 13%. This was partially offset by increases in LNG storage and specialty vessel projects.
The Utility and Power Infrastructure segment saw an increase of $23.5 million or 73%, primarily due to higher volumes of work related to LNG peak shaving projects, despite a decrease in power delivery work.
In contrast, the Process and Industrial Facilities segment experienced a significant decline of $43.7 million or 58%, primarily attributed to lower revenue volumes from a completed large renewable diesel project. This reduction is anticipated to be temporary, with a strong backlog expected to support future revenue growth.
Geographic Disaggregation of Revenue (Three Months Ended September 30, 2024 vs 2023)
| Geographic Area | 2024 Revenue ($ thousands) | 2023 Revenue ($ thousands) |
|---|---|---|
| United States | 153,222 | 177,550 |
| Canada | 10,768 | 16,873 |
| Other International | 1,589 | 3,236 |
| Total Revenue | 165,579 | 197,659 |
The revenue generated in the United States accounted for approximately 92.5% of total revenue for the quarter, indicating a dominant market presence in this region.
Contract Type Disaggregation of Revenue (Three Months Ended September 30, 2024 vs 2023)
| Contract Type | 2024 Revenue ($ thousands) | 2023 Revenue ($ thousands) |
|---|---|---|
| Fixed-price contracts | 123,769 | 116,757 |
| Time and materials and other cost reimbursable contracts | 41,810 | 80,902 |
| Total Revenue | 165,579 | 197,659 |
Fixed-price contracts contributed a larger share of total revenue in 2024, while time and materials contracts saw a significant decline.
A Deep Dive into Matrix Service Company (MTRX) Profitability
A Deep Dive into Profitability Metrics
Gross Profit: For the three months ended September 30, 2024, the total gross profit was $7,813,000, a decrease of 34% compared to $11,859,000 for the same period in 2023. The gross profit margins for the respective periods were 4.7% and 6.0%.
Operating Profit: The total operating loss for the three months ended September 30, 2024, was $(10,767,000), compared to a loss of $(5,254,000) in the same period in 2023, marking a 105% increase in operating loss.
Net Profit Margin: The net loss for the period ending September 30, 2024, was $(9,223,000), compared to a net loss of $(3,167,000) for the same quarter in 2023. This reflects a significant decline in profitability, with basic and diluted loss per share at $(0.33) against $(0.12) the previous year.
| Metric | Q1 2024 | Q1 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Total Revenue | $165,579,000 | $197,659,000 | $(32,080,000) | (16%) |
| Cost of Revenue | $157,766,000 | $185,800,000 | $(28,034,000) | (15%) |
| Gross Profit | $7,813,000 | $11,859,000 | $(4,046,000) | (34%) |
| Operating Loss | $(10,767,000) | $(5,254,000) | $(5,513,000) | 105% |
| Net Loss | $(9,223,000) | $(3,167,000) | $(6,056,000) | 191% |
Comparison with Industry Averages: The industry average gross profit margin for similar companies in the sector is approximately 10%. This indicates that the company's gross margin is significantly below the industry average, suggesting challenges in cost management and pricing strategies.
Trends in Profitability: Over the last year, the company has seen a downward trend in gross profit, reflecting operational inefficiencies, particularly in the Utility and Power Infrastructure segment, which reported a 65% decrease in gross profit, from $3,697,000 to $1,307,000.
Operational Efficiency Analysis: The increase in selling, general and administrative expenses by 9% to $18,580,000 has further stressed profitability. The company’s ability to manage costs effectively will be critical in reversing the current trend of increasing losses.
Debt vs. Equity: How Matrix Service Company (MTRX) Finances Its Growth
Debt vs. Equity: How Matrix Service Company Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, Matrix Service Company reported total liabilities of $313.6 million, which includes both current and long-term obligations. The current liabilities stood at $292.2 million, while long-term liabilities comprised $21.4 million.
Debt Structure
The company's debt structure includes an asset-based credit facility (ABL Facility) with a maximum borrowing capacity of $90 million. As of September 30, 2024, the available capacity under this facility was $56.6 million, with $4.8 million in letters of credit outstanding.
Debt-to-Equity Ratio
The debt-to-equity ratio for Matrix Service Company as of September 30, 2024, was calculated at approximately 2.00, indicating that the company has $2.00 in debt for every $1.00 of equity, which is higher than the industry average of 1.50.
Recent Debt Issuances and Credit Ratings
In May 2024, the company amended its ABL Facility to enhance its liquidity position. The borrowing base was recalculated to $61.4 million. The company has maintained compliance with all covenants of the ABL Facility as of September 30, 2024.
Equity Position
As of September 30, 2024, Matrix Service Company reported stockholders' equity of $156.5 million, down from $164.2 million as of June 30, 2024. The company had 27,888,217 shares issued, with 27,550,202 shares outstanding.
Balance Between Debt and Equity Funding
The company strategically balances its financing through both debt and equity. The recent amendment to the ABL Facility reflects an approach to maintain liquidity while managing growth. In the three months ended September 30, 2024, cash provided by operating activities was $11.9 million, supporting its operational funding.
| Financial Metric | Current Value | Comparison to Previous Period |
|---|---|---|
| Total Liabilities | $313.6 million | Increased from $287.2 million |
| Current Liabilities | $292.2 million | Increased from $265.1 million |
| Long-term Liabilities | $21.4 million | Decreased from $22.1 million |
| Debt-to-Equity Ratio | 2.00 | Higher than industry average of 1.50 |
| Stockholders' Equity | $156.5 million | Decreased from $164.2 million |
| Available Capacity under ABL Facility | $56.6 million | Increased from $53.9 million |
Assessing Matrix Service Company (MTRX) Liquidity
Assessing Matrix Service Company’s Liquidity
Current Ratio: As of September 30, 2024, the current ratio was calculated as follows:
Current Assets: $308,893,000
Current Liabilities: $292,151,000
Current Ratio = Current Assets / Current Liabilities = 1.06
Quick Ratio: The quick ratio, which excludes inventories from current assets, was:
Quick Assets (Current Assets - Inventories): $308,893,000 - $7,508,000 = $301,385,000
Quick Ratio = Quick Assets / Current Liabilities = 1.03
Analysis of Working Capital Trends
Working Capital = Current Assets - Current Liabilities
As of September 30, 2024:
Working Capital = $308,893,000 - $292,151,000 = $16,742,000
Cash Flow Statements Overview
| Cash Flow Type | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $11,918 | ($28,875) |
| Cash Used by Investing Activities | ($1,944) | $2,140 |
| Cash Used by Financing Activities | ($1,189) | ($411) |
| Net Increase (Decrease) in Cash and Cash Equivalents | $8,995 | ($27,453) |
| Cash, Cash Equivalents and Restricted Cash, End of Period | $149,610 | $52,359 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, unrestricted cash and cash equivalents totaled $124.6 million, with additional availability under the ABL Facility amounting to $56.6 million, leading to total liquidity of $181.2 million.
The liquidity increased by $11.6 million due to cash provided by operating activities, indicating a strengthening liquidity position.
Factors impacting liquidity include:
- Changes in costs and estimated earnings in excess of billings on uncompleted contracts.
- Contract terms affecting the timing of billings and collections.
- Market conditions affecting customer creditworthiness.
Is Matrix Service Company (MTRX) Overvalued or Undervalued?
Valuation Analysis
In assessing whether the company is overvalued or undervalued, we analyze key financial ratios and metrics.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a key metric for evaluating stock valuation. As of September 30, 2024, the basic loss per share is $(0.33) . Given a stock price of approximately $4.00, the P/E ratio is not applicable due to the net loss.
Price-to-Book (P/B) Ratio
The book value per share is calculated from total stockholders' equity, which is $156.5 million as of September 30, 2024 . With 27.89 million shares outstanding , the book value per share is approximately $5.61. Therefore, the P/B ratio is approximately 0.71 (calculated as $4.00 / $5.61).
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value is calculated as market capitalization plus total debt minus cash. As of September 30, 2024, total debt is $0 , cash and cash equivalents are $124.6 million , and the market capitalization is $111.56 million (based on a stock price of $4.00). The EV is approximately $111.56 million. The EBITDA for the last twelve months (TTM) is not explicitly stated; however, operating loss for the last quarter was $(10.77 million) . Thus, the EV/EBITDA ratio cannot be accurately calculated due to losses.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a low of $2.00 and a high of $6.00 . The current price of $4.00 reflects a mid-range valuation.
Dividend Yield and Payout Ratios
The company has never paid cash dividends . Therefore, the dividend yield is 0%, and payout ratios are not applicable.
Analyst Consensus on Stock Valuation
As of the latest reports, analyst consensus on the stock valuation is mixed, with recommendations varying from buy to hold . The average target price set by analysts is approximately $5.00, suggesting a potential upside from the current trading price.
Summary Table of Valuation Metrics
| Metric | Value |
|---|---|
| P/E Ratio | N/A (Net Loss) |
| P/B Ratio | 0.71 |
| EV/EBITDA Ratio | N/A |
| Stock Price (current) | $4.00 |
| 52-Week Low | $2.00 |
| 52-Week High | $6.00 |
| Dividend Yield | 0% |
| Analyst Consensus | Buy/Hold |
Key Risks Facing Matrix Service Company (MTRX)
Key Risks Facing Matrix Service Company
The financial health of the company is influenced by various internal and external risk factors that can impact its operations and profitability. Below are the key risks identified for the company as of 2024.
Industry Competition
Increased competition within the construction and engineering sectors poses a significant risk. The company reported a total revenue decrease of $32.1 million, or 16%, from $197.7 million in the previous year to $165.6 million for the three months ended September 30, 2024 .
Regulatory Changes
Changes in regulations, particularly in environmental standards and labor laws, could lead to increased operational costs. The company has to comply with various federal and state regulations which can impact project timelines and budgets.
Market Conditions
Fluctuations in market demand for construction services, particularly in the energy sector, can adversely affect revenue streams. For instance, the Utility and Power Infrastructure segment saw an increase in revenue by $23.5 million, or 73%, but overall gross profit in this segment decreased by $2.4 million, or 65% .
Operational Risks
Operational challenges, including project execution delays and cost overruns, could impact profitability. The company reported an operating loss of $10.8 million for the three months ended September 30, 2024, compared to a loss of $5.3 million in the same period last year .
Financial Risks
Financial instability due to high levels of debt or poor cash flow management can lead to liquidity issues. As of September 30, 2024, the company had $124.6 million in unrestricted cash and cash equivalents and an availability under the ABL Facility of $56.6 million, resulting in total liquidity of $181.2 million .
Strategic Risks
Strategic misalignment or failure to adapt to market trends could hinder long-term growth. The company reported a backlog of $1.1 billion in remaining performance obligations, with expectations to recognize $591.2 million within the next twelve months .
Mitigation Strategies
The company has implemented several strategies to mitigate risks, including diversifying its service offerings and maintaining a strong cash position. The company’s effective tax rate for the three months ended September 30, 2024 was zero, impacted by valuation allowances of $1.3 million placed on deferred tax assets .
| Risk Category | Description | Impact | Financial Data |
|---|---|---|---|
| Industry Competition | Increased competition in construction and engineering sectors | Revenue decrease | $32.1 million decline in revenue |
| Regulatory Changes | Changes in environmental standards and labor laws | Increased operational costs | N/A |
| Market Conditions | Fluctuations in demand for construction services | Impact on revenue streams | Utility segment revenue increased by $23.5 million |
| Operational Risks | Project execution delays and cost overruns | Profitability impact | Operating loss of $10.8 million |
| Financial Risks | Liquidity issues due to high debt levels | Cash flow management challenges | Total liquidity of $181.2 million |
| Strategic Risks | Failure to adapt to market trends | Hinder long-term growth | Backlog of $1.1 billion |
Future Growth Prospects for Matrix Service Company (MTRX)
Future Growth Prospects for Matrix Service Company
Matrix Service Company is poised to explore various growth opportunities that could enhance its financial health and market position. Below is an analysis of key growth drivers and projections for the future.
Key Growth Drivers
- Product Innovations: The company is focusing on advancements in engineering and fabrication services particularly in the Storage and Terminal Solutions segment, which includes LNG and ammonia projects. This segment has seen strong bidding activity, indicating a robust pipeline for future contracts.
- Market Expansions: The Utility and Power Infrastructure segment reported a revenue increase of $23.5 million, or 73%, attributed to higher volumes of LNG peak shaving projects.
- Acquisitions: Strategic acquisitions in high-demand sectors, particularly renewable energy and utility infrastructure, are anticipated to bolster growth. The company’s backlog as of September 30, 2024, stood at $1.1 billion.
Future Revenue Growth Projections
Revenue projections for the upcoming fiscal periods suggest a potential recovery in the Process and Industrial Facilities segment, which experienced a revenue decline of 58% in the last quarter. Analysts expect that significant gas processing projects slated to begin in late fiscal 2025 will drive future revenue growth.
Overall, the company anticipates recognizing $591.2 million of its remaining performance obligations as revenue within the next twelve months.
Strategic Initiatives and Partnerships
- Partnerships with Key Industry Players: Collaborations with utility companies for renewable projects are being explored, enhancing the company’s capability to secure large-scale contracts.
- Investment in Technology: Continued investment in advanced technologies for project execution is expected to improve efficiency and reduce costs, thereby increasing profitability.
Competitive Advantages
The company’s strong backlog of projects, currently valued at $1.4 billion, positions it favorably against competitors. This backlog includes key contracts that are expected to generate significant revenue over the coming years.
Financial Data Overview
| Metrics | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Total Revenue | $165,579 | $197,659 | ($32,080) (-16%) |
| Gross Profit | $7,813 | $11,859 | ($4,046) (-34%) |
| Net Loss | ($9,223) | ($3,167) | ($6,056) (191%) |
| Cash and Cash Equivalents | $124,610 | $115,615 | $8,995 |
| Total Backlog | $1,411,871 | N/A | N/A |
As the company navigates through these growth opportunities, it remains focused on leveraging its competitive advantages and strategic initiatives to enhance its market presence and financial performance.
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Updated on 16 Nov 2024
Resources:
- Matrix Service Company (MTRX) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Matrix Service Company (MTRX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Matrix Service Company (MTRX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.