Executive Summary
Matrix Service Company reported QQ2 2025 revenue of approximately $187.2 million, up 7% year-over-year and about 13% sequentially, led by strength in the Storage and Terminal Solutions (STS) and Utility & Power Infrastructure (UPI) segments. Backlog stood at roughly $1.3 billion at December 31, 2024, with an opportunity funnel refined to over $7.0 billion as of January 2025, underpinning a constructive multi-year outlook despite shorter-term execution timing. The quarterly gross margin was 5.8%, with project execution broadly solid, though gross margins continue to be pressured by under-recovery of construction overhead costs. Management signaled a strategic pathway to profitability in the second half of fiscal 2025 as revenue ramps and overhead absorption improve, though they trimmed 2025 revenue guidance to $850–$900 million from $900–$950 million. The company maintained a disciplined balance sheet with strong liquidity, net cash, and zero debt, supporting a constructive capex and capital allocation plan amid a favorable LNG/storage infrastructure cycle.
Key Performance Indicators
QoQ: 40.61% | YoY:-24.35%
QoQ: 40.01% | YoY:-94.07%
QoQ: 39.39% | YoY:-100.00%
Key Insights
Revenue: $187.169m (+YoY 6.93%, +QoQ 13.04%)
GrossProfit: $10.892m (Gross margin 5.82%)
OperatingIncome: -$6.394m (margin -3.42%)
NetIncome: -$5.533m (net margin -2.96%)
EPS: -$0.20
Backlog: $1.3b as of 12/31/2024
Book-to-Bill (quarter): 0.5x; Trailing 12-month: 0.9x
Segments: STS $95.5m (+53% YoY; GM 7.6%), UPI $61.1m (+52% YoY; GM 5.6%), PIF $30.6m (GM 1.2%)
Cash Flow: Operating cash flow $33.60m; Free cash flow $32.68m; Capex $-0.92m; Cash at end: $181.78m; Net debt: -$134.80m (cash footing);...
Financial Highlights
Revenue: $187.169m (+YoY 6.93%, +QoQ 13.04%)
GrossProfit: $10.892m (Gross margin 5.82%)
OperatingIncome: -$6.394m (margin -3.42%)
NetIncome: -$5.533m (net margin -2.96%)
EPS: -$0.20
Backlog: $1.3b as of 12/31/2024
Book-to-Bill (quarter): 0.5x; Trailing 12-month: 0.9x
Segments: STS $95.5m (+53% YoY; GM 7.6%), UPI $61.1m (+52% YoY; GM 5.6%), PIF $30.6m (GM 1.2%)
Cash Flow: Operating cash flow $33.60m; Free cash flow $32.68m; Capex $-0.92m; Cash at end: $181.78m; Net debt: -$134.80m (cash footing); Liquidity: $211.7m
Guidance: 2025 revenue guidance cut to $850–$900m; Book-to-bill target ≥1.0; Organic revenue growth in 2H25 expected to exceed 40% vs 2H24; Long-term gross margin target 10–12%
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
187.17M |
6.93% |
13.04% |
| Gross Profit |
10.89M |
2.86% |
39.41% |
| Operating Income |
-6.39M |
-24.35% |
40.61% |
| Net Income |
-5.53M |
-94.07% |
40.01% |
| EPS |
-0.20 |
-100.00% |
39.39% |
Key Financial Ratios
operatingProfitMargin
-3.42%
operatingCashFlowPerShare
$1.21
freeCashFlowPerShare
$1.18
priceEarningsRatio
-15.04
Management Commentary
Key themes from management call:
- Growth trajectory and backlog conversion: John Hewitt stated that organic revenue growth in 2H25 is expected to exceed 40% versus 2H24, with guidance for 2H25 revenue growth as the engine for margin improvement and profitability. He noted the backlog and opportunity pipeline support a stronger run rate in the back half of 2025 and beyond.
- Backlog and awards timing: The company cited a major energy project award timing delay that reduced near-term book-to-bill, with the expectation that this project will enter backlog in Q3 and be a driver of 2H25 bookings. The pipeline grew to over $7.0 billion by January 2025, led by LNG-related opportunities.
- Margin and overhead recovery: Kevin Cavanah emphasized that gross margins are being pressured by under-recovery of construction overhead, but the negative impact is diminishing as revenue ramps (approx. 40 bps in Q2 vs >600 bps prior year). The company expects full overhead recovery as revenue increases in 2H25.
- Market dynamics and strategy: John Hewitt highlighted favorable LNG/NGL/storage demand, supportive policy environment for energy/infrastructure, and Matrix’s cryogenic/storage leadership as a competitive moat. The five strategic pillars (safety, capabilities, backlog, margin discipline, capital allocation) underpin a win-execute-deliver framework aimed at profitable growth and market leadership.
“We expect Matrix will generate organic revenue growth in the second half of fiscal 2025, up greater than 40% when compared to the second half of fiscal 2024.”
— John Hewitt
“Because of this revenue growth, we expect to return to profitability in the second half of fiscal 2025, given improved fixed cost absorption, operating leverage, and margin realization.”
— John Hewitt
Forward Guidance
Management Guided Outlook and Assessment:
- Revenue: 2025 revenue guidance narrowed to $850–$900 million from the prior $900–$950 million range, reflecting project timing and a delay in mobilization on a large backlog project. Management remains confident in a robust second half, with 2H25 revenue growth expected to be materially above 2H24 (>40%).
- Profitability: Management expects a return to profitability in 2H25 as fixed-cost absorption improves with higher activity levels, supported by better operating leverage and margin realization.
- Book-to-bill: Company maintains a target of book-to-bill ≥1.0 for the full year, aided by a pipeline that has grown to over $7.0 billion and ongoing LNG/storage opportunities.
- Backlog visibility: Backlog stood at approximately $1.3 billion at 12/31/2024 and is expected to be aided by awards in Q3 and H2; the mix includes large complex projects where margins can realize attractive overhead recovery as execution proceeds.
- Key factors for investors to monitor: (1) award cadence in LNG peak shaving/storage projects, (2) onboarding and mobilization timing for large backlog assets, (3) progress on overhead recovery and fixed-cost absorption, (4) development of the opportunity funnel toward sustainable revenue visibility, (5) execution risk and cash conversion from backlog to revenue.
Assessment: Given the combination of a strong LNG/storage backlog pipeline, a 2H25 growth ramp, and a improving overhead recovery trajectory, the margin recovery trajectory appears achievable if awards proceed on plan and mobilization timing aligns with revenue realization. The main near-term risk relates to project scheduling and award timing, which can modulate quarterly book-to-bill and revenue.