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Good morning, and welcome to the Matrix Service Company conference call to discuss results for the first quarter of fiscal 2025. Currently, all participants are in a 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. As a reminder, this conference call is being recorded. Now, I would like to turn the conference over to today's host, Kellie Smythe, Senior Director of Investor Relations for Matrix Service Company.

Thank you, Steven. Good morning, and welcome to Matrix Service Company's first quarter fiscal 2025 earnings call. Participants on today's call include John Hewitt, President and Chief Executive Officer, and Kevin Cavanah, Vice President and Chief Financial Officer. The presentation materials referred to during the webcast today can be found under the presentation section on the Investor Relations page at matrixservicecompany.com. As a reminder, on today's call, we may make various remarks about future expectations, plans, and prospects for Matrix Service Company that constitute forward-looking statements for the purpose of the Private Securities 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. To the extent we utilize non-GAAP measures, reconciliations will be provided in various press releases, periodic SEC filings, and on our website. Related to investor corporate access opportunities, if you would like to have a conversation with management, I invite you to contact me through the Matrix Service Company Investor Relations website. You may also sign up to receive MTRX news by scanning the QR code on the screen. Turning now to our safety moment. At Matrix, our safety culture is at the forefront of all the work we do. While we work in challenging environments and markets, we believe a zero-incident workplace is achievable.

As we have seen our end markets improve, employee headcounts rise, and workloads increase, we must also be mindful of the fact that in our business, nothing is more important than the safety and health of our employees and those around us. It is also important to remember that safety extends far beyond just occupational safety. It means making sure the people around us are safe from discrimination and harassment of any form and feel safe sharing ideas or speaking up about issues or concerns.

In every instance, our focus on safety has to be unwavering regardless of any background noise. As we look forward to a much stronger fiscal 2025, we must all remember the individual choices we make can and do make a difference. Please own safety for yourself, your loved ones, your coworkers, and the community. In doing so, you can make an impact. I am going to turn the call over to John now.

Thank you, Kellie, and good morning, everyone. As communicated on our last call, we began fiscal 2025 with a backlog of $1.4 billion, providing us with a strong degree of visibility into the current year and beyond. We expected the current year to have a slow start comparatively due to the impact of the summer months, as well as the completion of a large renewable diesel project in fiscal 2024. As we begin to ramp up our large capital work, first-quarter results reflect those expectations. On strong project execution, we exited the first quarter maintaining our near-record backlog and expect our conversion of backlog to revenue to increase as we move through fiscal 2025. As backlog conversion accelerates and revenue improves, we will realize improved fixed cost absorption, operating leverage, and margins. We continue to anticipate a return to profitability in fiscal 2025. The company's cash and borrowing position remains strong, consistent with our disciplined approach to balance sheet management. Our strategic focus is on higher-margin specialty engineering and construction opportunities, the lean operating model, and a returns-driven approach toward capital allocation. This focus provides Matrix a foundation for long-term value creation as we enter this next chapter for our business. Overall, there remain multiple variables that can affect the timing of awards and project starts, including the current presidential election, the legislative and regulatory environment, and the timing of customer investment decisions. Given both the strength of our backlog and opportunity pipeline, we are reaffirming our revenue guidance for fiscal 2025 at between $900 million and $950 million, which is a year-over-year increase of 24% to 30%. Looking forward, the key megatrends driving the demand for our services provide significant long-term advantages and support our overall growth strategy. Our teams continue to see robust increasing demand for LNG, NGL, and ammonia storage and terminal infrastructure. This demand encompasses a variety of projects, including greenfield facilities, expansions, upgrades, and retrofits, all aimed at supporting lower carbon initiatives, enhancing system reliability and resilience, ensuring energy supply assurance, and meeting the growing global demand for low-cost feedstocks. During the quarter, in partnership with another contractor, we were awarded the engineering and construction of a dual-service specialty vessel storage tank by Delaware River Partners. This tank, completed in 2026, will provide service to LPG and ammonia markets on a global basis. The surge in demand for electric power to support data centers, AI, electrification of everything, as well as onshoring and upgrading industrial facilities and advanced manufacturing, supports a diverse mix of client project opportunities for Matrix over the coming decade. First, our traditional electrical work, which includes not only short-haul transmission and distribution, substations, and interconnects, but also industrial electrical construction services, which all create growth opportunities beyond our traditional clients and geographies. Second, our legacy experience in gas-fired generation can be applied to the construction of baseload, peaking, and backup generating facilities. Third, our market-leading specialty vessel and balance of plant capability for the use of LNG, ammonia, and hydrogen as backup and peak shaving fuel storage provides us with project opportunities where Matrix is clearly differentiated from its competition. All of these substantial demands require the enterprise-wide expertise for which Matrix is known and are represented in our opportunity pipeline, which remains strong at approximately six. The strength of this pipeline, while book-to-bill may vary quarter to quarter, we expect to continue our book-to-bill trend at a ratio of 1.0 or greater on an annual basis. As a reminder, many of the opportunities we are currently pursuing are expected to be bid and awarded within the next twelve to eighteen months. Once awarded, many of these projects will require an eighteen to thirty-month time frame to complete, providing continued long-term visibility into revenue. This does not include smaller capital projects and maintenance activities performed under master service agreements and individual contracts that lay a foundation for many parts of the business and play a key role in leveraging SG&A and construction overhead costs. This too is an area where we are seeing increasing interest and opportunity for process facility turnarounds and plant maintenance, including nested services. All based on our reputation for quality and safety, and our focus on building long-term relationships. In summary, with exceptional project execution, we started the year on a strong note. Backlog remains near record levels, and we are maintaining our fiscal 2025 financial guidance, which includes the return to profitability this fiscal year, consistent with our focus on long-term value creation for our shareholders. With that, I will turn the call over to Kevin.

Thank you, John. The first quarter of the year went about as we anticipated from an operating results, backlog, and balance sheet perspective. Revenue of $165.6 million was lower compared to the $197.7 million in the first quarter of fiscal 2024. This is due mainly to the completion of a large renewable diesel project, which made for a challenging prior year comparison. Excluding this project, revenue declined 3% when compared to the prior year period. We expect this trend to reverse itself as our major capital projects provide increasing revenue over the next few quarters. Storage and Terminal Solutions segment revenue was $78.2 million in the first quarter compared to $90.1 million in the first quarter of fiscal 2024, due to reduced volumes of work for flat-bottom tank new build and repair and maintenance, partially offset by increases in LNG storage and specialty vessel projects. Utility and Power Infrastructure segment revenue increased over 70% to $55.9 million in the first quarter of fiscal 2025 compared to $32.4 million in the first quarter of fiscal 2024, benefiting from higher volumes of work associated with LNG peak shaving projects. Process and Industrial Facilities segment revenue was $31 million compared to $75.1 million in the first quarter of fiscal 2024. A large two-year renewable diesel project reached completion in the fourth quarter of fiscal 2024, resulting in a significant year-over-year revenue decline in our first quarter. The company believes this reduction is temporary given our strong backlog and opportunity funnel. Consolidated gross margin was $7.8 million or 4.7% in the first quarter of fiscal 2025 compared to $11.9 million or 6% in the first quarter of fiscal 2024. While project execution remained strong in all three segments, gross margins were negatively impacted by the under-recovery of construction overhead costs. The quarterly impact was over 600 basis points as a result of the lower revenue. Construction overhead resources for the enterprise have been structured to support the heavy proposal environment and anticipated revenue growth in each of our segments created by the strong market demand. We remain focused on continued high-quality project execution and efficient utilization of the cost structure. The negative construction overhead impact is expected to diminish quarter over quarter as revenue increases throughout the year. SG&A expenses were $18.6 million in the first quarter of fiscal 2025, compared to $17.1 million in the first quarter of fiscal 2024. The company continues to leverage its overhead cost structure well while also investing in new and existing talent to support strong market demand and growth in our business. For the first quarter of fiscal 2025, the company had a net loss of $9.2 million or $0.33 per share compared to an adjusted net loss of $5.7 million or $0.21 per share for the first quarter of fiscal 2024. Now let's discuss backlog. The company's backlog remained at near-record levels in the first quarter of fiscal 2025, ending at $1.4 billion. Project awards totaled $148 million in the first quarter, in part due to continued strength in the storage and terminal solutions segment, resulting in a consolidated book-to-bill ratio of 0.9 for the quarter and a trailing twelve-month book-to-bill of 1.1. This backlog also includes first-year revenue from a recently renewed five-year contract at a Northwestern refinery where our teams have been on-site for more than forty years. This long-term refinery maintenance customer had previously reduced labor demand and turnaround services in fiscal 2024. This contract, which benefits our process and industrial facilities segment, solidifies our on-site position for the coming years. It also provides Matrix with additional opportunities for capital construction projects related to the refinery's sustainable energy program focused on producing sustainable aviation fuel. As John mentioned earlier, the importance of MSAs and individual contracts like this play a key role in allowing us to leverage SG&A and construction overhead costs. Exiting the quarter, the balance sheet and liquidity remained in a strong position. We generated $12 million in cash from operations, increasing our quarter-end cash balance to $150 million and our liquidity to $181 million. Our debt position remains at zero. We will continue to proactively manage the balance sheet to have the financial strength and liquidity needed to support the revenue inflection we anticipate as we progress through fiscal 2025. We also utilize a disciplined approach to capital allocation, one that seeks to maximize our return on invested capital over time while minimizing business risk.

Finally, I want to take a minute to expand on our outlook. As John mentioned, we are maintaining our revenue guidance of $900 to $950 million. In storage and terminal solutions, we expect revenue to increase each quarter as we move through the remainder of fiscal 2025, driven by projects already in backlog, as well as the strong opportunity funnel. This activity is driven primarily by LNG, NGL, and ammonia storage and terminal infrastructure. As John mentioned, it encompasses a variety of projects, including greenfield facilities, expansions, upgrades, and retrofits. In utility and power infrastructure, we expect the growth trend to continue as we move through fiscal 2025, driven by LNG peak shaving projects as customers continue to prioritize investment in power generation reliability, resilience, and load growth. The segment will also benefit from the increasing demand for power to support a diverse mix of projects for end markets that include data centers, AI, advanced manufacturing, and industrial reshoring. In process and industrial facilities, we expect to improve primarily in the second half of the year as we enter turnaround season, begin work on projects already in backlog, and continue to pursue and capture additional project opportunities. The improvement in our consolidated revenue, combined with continued focus on execution excellence, the leverage of our construction overhead, and execution of the cost structures, allow us to return to profitability in the fiscal year and make significant progress towards the achievement of our long-term financial targets. This concludes our prepared remarks, and we will now open for questions.

Thank you. At this time, we will conduct a question and answer session. To ask a question, you will need to press star one one on your telephone and wait for your name to be announced. Our first question comes from the line of John Franzreb of Sidoti. Your line is now open.

Good morning, everyone. Thanks for taking the questions. I would like to start with the quarter. I was a little surprised, I guess, with the lower revenue that you have gotten in the utility business. Was there anything unusual in the business, especially when compared to the fourth quarter tracking?

In the utility segment, no. It is really around timing on the new projects that are starting. We thought it would be down a little bit in the first quarter, but from this point forward, those projects are underway, and we would expect a trend of increasing revenues quarter over quarter for the rest of the year.

Okay. And also on the quarter, the SG&A line jumped up sequentially by a noticeable amount of $18.5 million versus close to $17 million in Q4. Can you just touch on that a bit?

Overall, I think that the cost structure will continue to try to manage that. The only additions we would expect to the cost structure are really going to be around what we need to do to support growth. When you look at the fourth quarter to first quarter, we did not have to add a lot of resources. The difference primarily was related to LTI, which is our long-term incentive compensation, which is stock compensation tied to the price of the stock. Our stock price increased from the fourth quarter to the first quarter, which increased our compensation expense. That was the primary driver. I would expect SG&A to be in that $18 million range for the rest of the year.

Thanks, Kevin. And, John, I think in your prepared remarks, you said something along the lines that small project demand is maybe improving. Can you just talk to that? Because from what I recall, small projects were where it was most price competitive. Maybe just an overview of what is going on there.

I think the maintenance work that we do, the smaller project work we do, in general, I do not know that the demand is increasing there. I just think we are at a stable demand level. One of the things we are trying to message here is that in fiscal 2024, we had some lower demand in some of our refinery maintenance work. While those refiners were going through some contract changes with their suppliers, we are through that now. We have better visibility into this year and from a long-term basis with specifically one of our clients in the refinery maintenance business. That has stabilized as well, and we expect to see some opportunities on some capital work to add to that maintenance activity that we carry on for them on a weekly, monthly basis.

Got it. Understood. And just one last question. I will get back into the queue. Just your general thoughts on the changeover in the administration. It would be nice to hear your thoughts about the puts and takes, both positives and negatives, as you see it on a go-forward basis.

It is difficult to handicap between what each side says about what they are planning to do, both economically and from a global trade perspective. My sense is that the change in administrations will be net positive for us from a business perspective. I think a reduced regulatory environment will be good for our clients, opening up more opportunities for infrastructure investment. It is yet to be seen what will happen from a tax perspective and how the Inflation Reduction Act, which supports a lot of renewable and hydrogen projects, will be affected. There will be a lot of give and take across the markets. An immediate impact for us will be the canceling of the pause on new FERC permits for LNG export. We have a couple of projects in our queue that have been lingering and waiting for that to happen. We expect soon after the inauguration, that will be one of the first things that gets canceled. On a long-term basis, that will be good for us.

Oh, great. That is good to hear. Okay. I will get back to you. Thanks for taking the questions.

Thank you.

Our next question comes from the line of Brent Thielman of DA Davidson. Your line is now open.

Hey. Thanks. Good morning. Hey, John. I was a little surprised the book-to-bill was not a little stronger this quarter, especially given the lower revenue levels. I am just wondering if maybe there is a little bit of hesitation in moving things forward due to the election, or is it just simply timing here?

It is timing. We have a couple of large projects going on, but the bigger ones that create more momentum in the quarterly award cycle, we had anticipated at least one of those to hit the first quarter. More than likely now to be in the second quarter. To some extent, it is just the timing of the awards that we live with. As it relates to the whole election cycle, there are mixed opinions from our clients. Some specifically said they are waiting to see what happens, and we had a couple of other clients that were pretty agnostic to whoever won from a business standpoint. It is hard to say. I am sure it is reflected a little bit in some of the decision-making.

Yeah. Understood. Just given the revenue start here, you know, in the context of what you are expecting for the full year, which you are retaining, which is great. Is there anything else you can speak to in terms of this big ramp that you are projecting? What sort of progress you are really starting to see on projects picking up, John or Kevin? Anything you can relay there would be helpful and just give us more confidence around that range.

Our major capital projects that we had handicapped would start sooner, some of that was tied up with some permitting issues from our clients that they were trying to get completed. Those permitting issues held up a full notice to proceed to us. While we are working on engineering and procurement, getting onto the job sites was certainly delayed longer than we had expected. One of the positive things in the quarter was a lot of that got resolved. We now have more clarity as we look out over the next couple of years, certainly this year, about our ability to ramp the work up on those projects. For us, the big chunks of our backlog that are going to drive higher revenues, the things that were holding up our ability to really get rolling there, for the most part, are pretty much out of the way. That is why we feel better about seeing a consistent increase in revenues through the succeeding quarters here, through the course of this fiscal year and frankly into 2026. On top of that, we have a strong opportunity pipeline. We see more opportunities to book more work across all of our segments. That is a timing thing, which is normal for our business, but that is also going to support increased revenues.

Okay. John, maybe just one more. You did speak to a lot of things to try and predict here with election results, but certainly, the moratorium being lifted on LNG terminals might be a consensus view there if that is going to happen. Is there any way to frame how much work you have tied up in that opportunity relative to some of the other things that you are pursuing out there?

From an opportunity perspective, on a near-term basis, there is probably a couple hundred million dollars worth of work for us. Long-term, it could be quite a bit more. As we have consistently said, these larger-scale LNG export terminals, our role in those projects is going to be around the storage tank. As those projects get funded and released to start, we would expect to be providing pricing to larger EPC contractors for the storage and potentially, in some cases, for maybe some of the other disciplined work on those job sites, whether that could be mechanical work or structural work or whatever. As those projects get released, the opportunity for us will grow in our pipeline. The near-term opportunity may be a couple hundred million bucks.

Very good. Thanks, guys.

Thank you.

As a reminder, to ask a question, you need to press star one one. Please stand by while we wait for additional questions. I am showing no further questions at this time. I would now like to turn it back to Kellie Smythe for closing remarks.

Thank you. As a reminder, if you would like to have a conversation with management, please contact me through the Matrix Service Company Investor Relations website. You may also sign up to receive the MTRX news by scanning the QR code on your screen. Thank you very much for your time.