Matrix Service Co (NASDAQ:MTRX) misses earnings estimates in Q4

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Matrix Service Co (NASDAQ:MTRX) stock fell 7.43% (As on Sep 14, 10:11:35 AM UTC-4, Source: Google Finance) after the company posted mixed results for the fourth quarter of FY 21. The backlog as of June 30, 2021 was $462.6 million. Project awards in the fourth quarter of 2021 and fiscal 2021 were of total $99.1 million and $451.7 million, respectively, resulting in book-to-bill ratios of 0.6 and 0.7, respectively. The award activity in the first quarter of fiscal 2022 has accelerated and the company is expecting increasing awards and improving backlog as we move through the fiscal year. At June 30, 2021, the company had a cash balance of $83.9 million and no borrowings. In addition, on September 9, 2021 we entered into a $100 million asset-backed credit facility with Bank of Montreal. This new facility replaces the previous facility and provides more flexibility and support for the strategic direction while reducing the expected cost of borrowing.

MTRX in the fourth quarter of FY 21 has reported the adjusted loss per share of 40 cents, missing the analysts’ estimates for the adjusted loss per share of 3 cents. The company had reported the adjusted revenue growth of 18 percent to $174.9 million in the fourth quarter of FY 21, beating the analysts’ estimates for revenue of $177.2 million. Although revenue has increased, the COVID-19 pandemic and the resulting disruption to the energy and industrial markets continued to negatively impact the timing of project awards and the financial results.

Moreover, the fourth quarter included additional costs on a large capital project in the Utility and Power Infrastructure segment to achieve critical schedule completion milestones for the client. As a result, the expected outcome on the project resulted in a gross profit reduction of $6.6 million. The project is currently in start-up and commissioning, and while the company expects that the forecasted financial outcome of the project will remain positive, it is well below the company’s original expectations.

On the other hand, the company has settled a long-term dispute with a customer related to a crude terminal that was completed in 2018. As a result of the settlement, the company has recorded a reduction to gross margin of $2.9 million in the Storage and Terminal Solutions segment and received cash of $8.9 million in fiscal 2022. The settlement allowed the company to avoid future legal costs and eliminated any litigation risk.

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