Matrix Service Q3 2025 Earnings Report

Matrix Service EPS Results

• Actual EPS: -$0.12
• Consensus EPS: -$0.05
• Beat/Miss: Missed by -$0.07
• One Year Ago EPS: N/A

Matrix Service Revenue Results

• Actual Revenue: $200.16 million
• Expected Revenue: $215.06 million
• Beat/Miss: Missed by -$14.90 million
• YoY Revenue Growth: N/A

Matrix Service Announcement Details

• Quarter: Q3 2025
• Date: 5/7/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 10:30AM ET

Matrix Service (NASDAQ:MTRX) Company provides engineering, fabrication, construction, and maintenance services to support critical energy infrastructure and industrial markets in the United States, Canada, and internationally. It operates through three segments: Utility and Power Infrastructure; Process and Industrial Facilities; and Storage and Terminal Solutions. The Utility and Power Infrastructure segment offers power delivery services, including construction of new substations, upgrades of existing substations, transmission and distribution line installations, and upgrades and maintenance, and emergency and storm restoration services. This segment also provides engineering, fabrication, and construction services for LNG utility peak shaving facilities; and construction and maintenance services to power generation facilities, including natural gas fired facilities. The Process and Industrial Facilities segment engages in the refining and processing of crude oil; fractionating and marketing of natural, gas and natural gas liquids; and offers plant maintenance, turnarounds, engineering, industrial cleaning services, and capital construction services. The Storage and Terminal Solutions segment undertakes work related to aboveground crude oil and refined product storage tanks and terminals; engineering, procurement, fabrication, and construction services related to cryogenic and other specialty tanks and terminals for LNG, NGLs, hydrogen, ammonia, propane, butane, liquid nitrogen/liquid oxygen, and liquid petroleum; and provides plant work, truck and rail loading/offloading facilities, and marine structures, as well as storage tank and terminal maintenance and repair. This segment also manufactures and sells precision engineered specialty tank products, including geodesic domes, aluminum internal floating roofs, floating suction and skimmer systems, roof drain systems, and floating roof seals. Matrix Service Company was founded in 1984 and is headquartered in Tulsa, Oklahoma.

Matrix Service Q3 2025 Earnings Call Transcript

Key Takeaways

• Matrix implemented a lean organizational structure, promoted Sean Payne as President of Engineering and Construction, decentralized business development, and exited its Northeast transmission & distribution service line to enhance efficiency and competitiveness.
• The company revised fiscal 2025 revenue guidance down 10% to $770–$800 million due to the T&D exit and macro uncertainties, while still targeting 20–25% growth in the second half and a return to profitability.
• In Q3, Matrix achieved its highest quarterly revenues in two years—up 21% to $200.2 million—grew backlog by 8% to $1.4 billion, and posted a book-to-bill ratio of 1.5.
• Segment highlights included a 77% increase in Storage & Thermal Solutions revenue, a 27% rise in Utility & Power Infrastructure, and significant margin improvements across all divisions.
• With a $1.4 billion backlog and a $7 billion opportunity pipeline underpinned by strong energy infrastructure demand (including a 45% rise in U.S. LNG export demand), Matrix sees multi-year revenue visibility and sustainable growth into fiscal 2026.

Presentation

[Operator]

Good morning, and welcome to the Matrix Service Company Conference Call to discuss Results for the Third Quarter of Fiscal twenty twenty five. 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. As a reminder, this conference call is being recorded. I would now like to turn the conference over to today's host, Ms.

[Operator]

Kelly Smythe, Senior Director of Investor Relations for Matrix Service Company. Please go ahead.

[Kellie Smythe, Senior Director of Investor Relations at Matrix Service Company]

Thank you, Didi. Good morning, and welcome to Matrix Service Company's Third Quarter Fiscal twenty twenty five Earnings Call. Participants on today's call include John Huet, President and Chief Executive Officer and Kevin Kavanaugh, Vice President and Chief Financial Officer. Following our prepared remarks, we will open up the call for questions. The presentation materials referred to during the webcast today can be found under Events and Presentations on the Investor Relations section of matrixservicecompany.com.

[Kellie Smythe, Senior Director of Investor Relations at Matrix Service Company]

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 purposes 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 ks and in subsequent filings made by the company with the SEC. The forward looking statements made today are effective only as of today. To the extent we use non GAAP measures, reconciliations will be provided in various press releases, periodic SEC filings, and on our website. Finally, all comparisons today are for the same period of the prior year, unless specifically stated.

[Kellie Smythe, Senior Director of Investor Relations at Matrix Service Company]

Related to investor conferences and corporate access opportunities, Matrix will be participating in the Sidoti MicroCap Virtual Conference on May 2122, and will also be participating in the Stifel Cross Sector Insights Conference on June in Boston. If you'd like additional information on these events or would like to have a conversation with management, I invite you to contact me through the Matrix Service Company Investor Relations website. Turning now to safety. At Matrix, our people take pride in the fact that our work shapes a brighter future, enhances quality of life, and generates lasting value for our employees, partners, shareholders, and the communities we serve. We do so by engineering, constructing, and maintaining energy and industrial infrastructure that elevates the standard of living, not just here, but around the globe.

[Kellie Smythe, Senior Director of Investor Relations at Matrix Service Company]

This infrastructure is essential for powering our homes, fueling transportation, supporting businesses, and providing the foundational elements for producing clothing, medicine, technology, recreational activities, among many other things. To fulfill our objectives on our sites and in our offices, We must maintain a steadfast commitment to the safety as our leading core value and prioritize quality execution in our work. This week, we join our clients and others in the construction industry for the Construction Safety Week twenty twenty five, marking the twelfth annual industry wide initiative dedicated to highlighting the importance of safety in the workplace. At Matrix, our safety culture is rooted in a genuine concern for the mental and physical well-being of our people. It shapes our expectations and forms our leadership and is vital to our ability to realize our mission.

[Kellie Smythe, Senior Director of Investor Relations at Matrix Service Company]

On behalf of the company's leadership team, I would like to express my gratitude to the employees for our commitment and responsibility in safely pursuing our mission. I turn the call over to John.

[John Hewitt, CEO, President & Director at Matrix Service Company]

Thank you, Kelly, and good morning, everyone. I want to begin by reviewing the organizational improvements we are making that represent a shift in the company's operational structure that will address several key business imperatives, among them creating a more efficient organization to ensure we deliver on the significant projects and opportunities in front of us, improving the competitiveness of our offering and strategic focus, and benefiting from the greater speed and agility through a leaner, flatter organization. First, we eliminated senior level positions to ensure we have a more efficient and effective organization. Second, from an operating perspective, we have streamlined our engineering and construction services to create a more seamless offering. Specifically, we recently promoted Sean Payne to the newly created position of President of Engineering and Construction.

[John Hewitt, CEO, President & Director at Matrix Service Company]

The new position will have oversight responsibility of the company's operating subsidiaries and client services. John joined Matrix in 2012 and most recently served as President of the company's non union construction subsidiary. John will report directly to me. Third, we are decentralizing elements of our business development organization to create a more integrated sales and operations function. The large EPC projects get a significant amount of attention across the enterprise during the proposal process.

[John Hewitt, CEO, President & Director at Matrix Service Company]

These projects are critical to our growth strategy, but the foundational services of our business in small capital construction, construction only, turnarounds, maintenance and repair are equally important to the baseload revenue for the company. Directly reconnecting the business development teams to the P and L leaders, you'll create more momentum, opportunities, and awards for this part of our revenue platform. These foundational services, deepen customer relationships, build bench strength, and keep us competitive. Overall, this reorientation of the business development function will improve capture rates, growth strategies, and ultimately revenue across the company. Finally, the company has begun the process of winding down our Northeast transmission and distribution service line.

[John Hewitt, CEO, President & Director at Matrix Service Company]

This piece of our ongoing electrical business was competitively disadvantaged due to a mismatch in scale and constrained geography. Growth in scale was highly dependent on capital and strategic investments that do not currently fit the company's direction. While this may seem sudden, the lack of sufficient awards throughout the year confirmed our decision to exit the service line. That said, Matrix has been in the electrical services business in the Northeast, Mid Atlantic, and Ohio Valley for over twenty years, and will continue to provide services to our utility, energy, and industrial customers as they face rising demand for electrical infrastructure. This infrastructure includes power generation, backup fuel supply, midstream energy infrastructure, manufacturing expansion, substations, and data centers to name a few.

[John Hewitt, CEO, President & Director at Matrix Service Company]

The electrical infrastructure market presents strong growth potential and as capital investment demand aligns better today with our long term business performance targets. As MATRIX continues its progress toward a return to profitability with marked improvement in its financial performance, we must continue to improve for the future. I am confident that this new structure will enhance communication, accountability, and collaboration throughout all levels of the organization. In line with our strategic priorities, we remain committed to delivering sustainable long term shareholder value by building a resilient growth oriented platform that meets the evolving needs of our customers. From a market outlook perspective, we are also closely monitoring the impacts of evolving U.

[John Hewitt, CEO, President & Director at Matrix Service Company]

S. Trade and environmental policies that have introduced a heightened level of macroeconomic uncertainty. And while the underlying demand environment remains strong, some clients may elect to delay final investment decisions and in turn project starts as they assess the potential impact of these policies on project economics, including offtake agreements with global partners, as well as supply chain and operational costs. However, we believe the this uncertainty to be temporary. Specific to existing projects and new awards, our contract formats and proposal discipline generally protect us from pricing risk created by the tariff activity.

[John Hewitt, CEO, President & Director at Matrix Service Company]

In addition, we are actively collaborating with our customers to find cost optimization opportunities. We're also optimizing our own supply chain by making advanced purchases where we can, working closely with our current suppliers, and exploring additional supplier options. This proactive strategy enables us to remain agile and responsive to market changes and ensures we continue to provide outstanding value to our customers. At the same time, several of our energy clients have stated that their intentions are to fund, start and complete as many infrastructure projects as possible over the next four years to take advantage of the more relaxed regulatory environment and higher demand for energy products both domestically and abroad. Considering the current macroeconomic environment and our decision to exit the transmission and distribution business, we believe it is prudent to revise our fiscal twenty twenty five revenue guidance by 10% to $770,000,000 to $800,000,000 which Kevin will discuss in more detail during his remarks.

[John Hewitt, CEO, President & Director at Matrix Service Company]

Please note, our revised guidance continues to reflect quarter over quarter growth as we finish the year, as demonstrated by the 20% to 25% growth in the second half of fiscal twenty twenty five compared to the first half. Across the energy and industrial markets we serve, energy related infrastructure spending remains elevated. The elevated level of spending is supported by an estimated 45% increase in U. S. LNG export demand as highlighted by the EIA in its recent annual energy outlook.

[John Hewitt, CEO, President & Director at Matrix Service Company]

Furthermore, the EIA outlook also projects an 8% increase in demand on the 38,000,000,000,000 cubic feet of natural gas over the next six years in response to rapidly growing domestic and international demand for LNG and other natural gas related products. This outlook underpins our $7,000,000,000 pipeline of project opportunities, which gives us confidence in achieving a sustainable and profitable growth trajectory as we move into fiscal twenty twenty six and beyond. As a reminder, many of the projects we are currently pursuing are expected to be bid and awarded within the next twelve to eighteen months. And once awarded, they will unfold over multi year construction timelines, providing us with long term revenue visibility and improved earnings consistency. Now turning to the quarter.

[John Hewitt, CEO, President & Director at Matrix Service Company]

Revenue volume continued to accelerate, culminating in our highest quarterly revenues in two years as project activity ramped up throughout the period. As typical for our fiscal third quarter, we also benefited from elevated activity in our refinery services business. The company grew backlog by nearly 8% sequentially to over $1,400,000,000 on $3.00 $1,000,000 of project awards, resulting in a book to bill of 1.5. This also increased our year to date book to bill to one point zero. Storage and terminal solutions accounted for $2.00 $5,000,000 of the quarterly awards, which increases backlog to $848,000,000 the highest level in the company's history.

[John Hewitt, CEO, President & Director at Matrix Service Company]

The quarter activity included a project for the engineering and construction of multiple storage vessels for propane, butane and related NGL products. We are also seeing strength in the process and industrial facilities segment, which had $59,000,000 in awards, primarily in our refinery services business. Overall, our strategy remains anchored around three pillars: the win, execute and deliver. Through this framework, we will continue to focus on project discipline with the right clients, commercial structure, and timing of delivery. Apply our resume and brand leadership to not only our core markets in energy, industrial, and power infrastructure, but also expanding into new high value verticals, delivering projects safely on time, on budget and with high quality, and enhancing operating leverage to drive strong profitability, cash generation and disciplined capital deployment.

[John Hewitt, CEO, President & Director at Matrix Service Company]

As we look ahead to the fourth quarter, we believe the momentum exiting the third quarter combined with the strategic actions I spoke of earlier will support improved fixed cost absorption, better operating leverage and resulting in positive adjusted EBITDA. Furthermore, we are confident that potential near term project awards, some of which are insulated from recent macroeconomic developments, will help us end the year with a full year book to bill ratio around one. With that, I'll now turn the call over to Kevin.

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

Thank you, John. Revenue growth continued in the third quarter, increasing 21% to $200,200,000 compared to $166,000,000 in the third quarter last year. The growth was driven by the storage internal solutions and utility and power infrastructure segments, partially offset by reduced revenue volumes in process and industrial facilities. Gross margin was $12,900,000 or 6.4% in the quarter compared to $5,600,000 or 3.4% for the third quarter of fiscal twenty twenty four. I will discuss drivers for that improvement when I get into the segment results, but want to provide an update here on the impact of under recovery of construction overhead costs.

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

As a result of the revenue growth in the quarter, the impact of under recovered overhead decreased to two eighty basis points. This compares to three seventy basis points last year and is the lowest level in two years. As the revenue ramp continues, construction overhead will become fully recovered and the negative impact on margins will be eliminated. SG and A expenses were $17,700,000 in the third quarter compared to $19,900,000 for the prior year. The decrease is primarily due to lower cash settled stock based compensation expense.

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

For the third quarter of fiscal twenty twenty five, the company had a net loss of $3,400,000 or $0.12 per share compared to a net loss of $14,600,000 or $0.53 per share in the third quarter of fiscal twenty twenty four. Adjusted EBITDA improved to breakeven in the quarter compared to a loss of $10,000,000 in the third quarter last year. Moving to the segments, Storage and Thermal Solutions segment revenue increased 77% to $96,100,000 in the third quarter compared to $54,300,000 in the third quarter of fiscal twenty twenty four. Higher revenue is being driven by an increased volume of work for specialty vessel projects. Gross margin was 3.9% in the third quarter of fiscal twenty twenty five compared to 4.3% in the third quarter of fiscal twenty twenty four.

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

Although higher revenue has resulted in improved leverage of our cost structure, Segment gross margin continues to be impacted by under recovery as we allocate more resources to this segment in anticipation of continuing revenue growth. Additionally, the third quarter of fiscal twenty twenty five was negatively impacted by lower than anticipated labor productivity on a crude terminal project that is nearing completion. Excluding the margin adjustment on this project, the year to date project execution for the Storage and Thermal Solutions segment would have been within our 10% to 12 target. As quarterly revenue continues to increase, the company expects to achieve full recovery of construction overheads and the targeted gross margin range. Utility and Power Infrastructure segment revenue increased 27% to $58,700,000 in the third quarter compared to $46,100,000 in the prior year period, benefiting from a higher volume of work associated with natural gas peak shaving projects.

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

Gross margin was 9.4% in the third quarter compared to 3.1% for the third quarter of fiscal twenty twenty four due to strong project execution and improved construction overhead cost absorption. Process and Industrial Facilities segment revenue decreased to $45,400,000 in the third quarter of fiscal twenty twenty five compared to $65,600,000 last year, primarily due to lower revenue volumes resulting from the completion of a large renewable diesel project. The company believes this reduction is temporary given our strong backlog and opportunity funnel. Gross margin was 8.3% in the third quarter compared to 2.7% for the third quarter of fiscal twenty twenty four. Last year's gross margin was impacted by an accounting adjustment on a refinery maintenance contract.

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

Last quarter, discussed some keys to our financial performance. Before we move away from operating results, I want to review those keys and our long term financial targets. First, revenue levels critical to our earnings. Revenue growth started in the second quarter and continued in the third. We anticipate revenue growth to continue reaching $250,000,000 and above.

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

Second, project execution has been strong producing overall direct project margins that are approaching our target range. Focus on project execution continues and the margin opportunity within our $1,400,000,000 backlog and our $7,000,000,000 opportunity funnel continues to support a long term consolidated gross margin target of 10% to 12%. Third, the company continues to proactively manage its cost structure and has taken additional steps to improve our operating effectiveness as John discussed. This will enhance our competitiveness and allow for continued improvement in the leverage of our cost structure. Construction overhead recovery has been a significant issue, but is improving and will be eliminated based on anticipated revenue growth.

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

Leverage of SG and A will also improve due to flattening of the organization as well as revenue growth, driving toward our target of 6.5% of revenue. Finally, the combination of these items will drive the improved performance toward our long term targets. Moving to the balance sheet, our disciplined approach to capital allocation remains a cornerstone of our strategy. Working capital management has been strong throughout fiscal twenty twenty five. Net cash provided by operating activities was 31,200,000.0 during the third fiscal quarter and 76,800,000.0 year to date.

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

Cash flow activity during the year has also further strengthened our balance sheet. Available liquidity has increased to 247,100,000.0 as of the end of the quarter. Liquidity is comprised of $185,500,000 of uninsured cash and $61,500,000 of borrowing availability under the credit facility. The company also has $25,000,000 of restricted cash to support the credit facility and our debt position remains at zero. We will continue to proactively manage the balance sheet and have the financial strength and liquidity needed to support the execution of our backlog and to deploy capital toward opportunistic organic growth.

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

Before we open the call for questions, I want to touch on outlook. As we noted in our press release, second half revenue levels have been impacted by the timing of awards in the third quarter, as well as the uncertainty around macroeconomic and environmental policy. In addition, full year revenue has been impacted by our transmission distribution business, which we are now exiting. The full year revenue impact of exiting this business is approximately $50,000,000 As a result, we reduced revenue guidance for fiscal twenty twenty five by 10 to $770,000,000 to 800,000,000 Even with this reduction, this implies continued strong year over year growth of over 20% in the fourth quarter and a return to profitable performance. Our backlog and revenue growth is coming from larger multi year projects.

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

As a result, we expect to operate at or above these levels, revenue levels for the foreseeable future. This combined with the changes we are making to improve operating effectiveness should lead to strong bottom line results and the achievement for long term funds. This concludes our prepared remarks, so we will open it up for questions.

[Operator]

Thank you. And our first question comes from John Franzreb of Sidoti and Company. Your line is open.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Good morning, everyone, and thanks for taking the questions. Guess I'd to start with the revenue guidance. Kevin, you just said $50,000,000 was baked into that business, I guess, for this fiscal year. Can you just walk us through the decision making process to exit the business? Is there a potential buyer out there?

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Will you just wind it down? And what's the relative cost savings from exiting that business?

[John Hewitt, CEO, President & Director at Matrix Service Company]

I'll give you some of

[John Hewitt, CEO, President & Director at Matrix Service Company]

the strategic stuff there, John. So going into the year, target for the business was higher than 50,000,000. But because of, you know, we're probably simply put, we're too big to be small and too small to be big. And so, you know, there are competitive dynamics in that business made it difficult for us to win work at acceptable margins. And plus the capital investment in that business would be dramatically higher than the rest of the company.

[John Hewitt, CEO, President & Director at Matrix Service Company]

So there was sort of on our watch list this year that if we were able to pick up good projects with acceptable commercial terms, then we would, it modify or at least would guide our decision on whether we thought there was an opportunity to continue to grow it, or that we needed to sell it, or that we needed to shut it, just shut it down. So as we moved into that, and what we saw was the opportunity for us to win some nice projects in the back half of the fiscal year, and we didn't win any. And so, we're trying to win those projects around the commercial framework that we think is acceptable to the business. So when we started to see that those projects were not going to come into our backlog, we made the decision that we're going to wind the business down, without any kind of a positive looking backlog, it'd be difficult to find a buyer for the business, or just they're picking up equipment and people. So so we made the decision that we just wind the business down and we'll eventually sell off some of the construction assets that are associated with that business.

[John Hewitt, CEO, President & Director at Matrix Service Company]

We still have some small contracts that we're going to be working on out into fiscal twenty six, but doesn't represent a lot of revenue and we're doing that with clients that we do other business with. So we just don't want to just walk away from those jobs, which you can't contractually anyway. But so we want to continue to support those clients, because again, because they have other work that our electrical business does. That's kind of how we got to where we are.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Understood. And the potential cost savings?

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

It's more about there are cost savings, there's also reallocation of some resources to the electrical instrumentation business that we're keeping. And then I think, you know, that business has operating at a loss. So that's probably the bigger savings than the cost structure. It was a relatively low overhead business than the equipment. And the reason for that is that this was a business that we grew organically, but this wasn't from an acquisition.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Okay, fair enough, Kevin. The other part of the adjustments of the revenue guidance was what you said was deferrals. I'm curious, is the entire balance deferrals or some cancellations? And the deferrals, what kind of timing are we talking about now versus three months ago?

[John Hewitt, CEO, President & Director at Matrix Service Company]

So some of it is a combination of a couple of things. One is that one of the major projects that was in the awards for the Q3, which was in storage. We had anticipated actually winning in Q2 and had started negotiating a contract for that project in Q2. And as we moved into Q3, you know, we thought that that project would get awarded in January, and that we'd be able to get engineering started, we'd be able to get our procurement for all the plate steel associated started and probably get on-site and start doing some of the civil work. So we expected, you know, a earlier award and revenue flowing from that project impacting this fiscal year's revenues.

[John Hewitt, CEO, President & Director at Matrix Service Company]

But we actually don't sign the contract to the very last day in March. And so basically what that did is pushed all of the majority of what we thought was going to be some revenue off that project into June and probably into fiscal twenty six. So that's one thing. And that's just about the how long it took to put the contract together, which is not always on, it's not necessarily unusual. And then we had, we got another project that we've been kind of verbally selected on that one of his off takers for that client is in the is on the other side of the ocean.

[John Hewitt, CEO, President & Director at Matrix Service Company]

And with some of the trade stuff that's going on, there's been a delay in getting that off take sold. We think that delays over with and are expecting, you know, that project to move forward here, you know, within the next, within this quarter or the first quarter of twenty six. So, other than that, I mean, I think it'd be unreasonable for us to assume that these uncertainties around this, the tariff issues and finalization of environmental policy and the regulatory environment isn't keeping clients a little bit hesitant in some cases on how they're going to spend their capital dollars. But I can tell you, we've had several of our core clients tell us very strongly that their intentions are over the next four years to spend as much money as possible on their energy infrastructure and what they perceive to be a much easier regulatory environment. And so we're excited about that, excited about us being able to take advantage of that opportunity because A, because of our strong relationships with these clients and two, because of the kind of services and strong brand position we have in those markets.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Got it, John. And one last question. You mentioned that you're targeting smaller jobs. Can you talk a little bit about what do you think the opportunity profile is as you reengage in some of those smaller projects? Maybe sizes for us and timeline when you expect to start hitting on them?

[John Hewitt, CEO, President & Director at Matrix Service Company]

Yeah, so we, I mean, we as an organization, our history in our organization has always been a mix in the portfolio of maintenance work, turnaround work, small capital projects, construction only projects mixed in with one or two large capital EPC jobs. So, and we continue to see the opportunity for these larger EPC projects to continue to enter the backlog. And probably for us in a more thoughtful way that they fit into our execution plans and our resource availability. But that doesn't minimize the need in our business for this smaller activity that I've laid out. And I think, you know, part of our change in the developed business development structure, as we sort of lost touch with that a little bit.

[John Hewitt, CEO, President & Director at Matrix Service Company]

I think these larger projects get a lot of attention from the organization. And and but we need those smaller projects, they build relationships with clients, they help us to build and strengthen our execution teams. They're great for brand recognition, they eat overhead. And so we just need to do a better job of pursuing and winning those smaller what I'm calling foundational elements of our business moving forward. And so some of the actions, strategic actions we've taken are directly related to our desire to be better at that than we have been over the past eighteen months.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Okay, well, luck with that. I'll get back into queue. Thank you, gentlemen.

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

Thank you.

[Operator]

Thank you. And our next question comes from Brent Thielman of D. A. Davidson. Your line is open.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Hey, thanks. Good morning. John, real big picture question here. I mean, you've been through your shared cycles in the past and so we value your perspective here. But look, the geopolitical macroeconomic environment today, take what you're seeing now, you look at prevailing commodity prices to some degree influence how your customers spend.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

I guess my question is, John, I mean, how is all of this stuff that we're seeing in the market? How do you think it might influence what your customers may end up doing here? Not necessarily in the short term, thinking medium term is all of this ultimately a positive driver for your business? Just love your perspective there.

[John Hewitt, CEO, President & Director at Matrix Service Company]

Well, I think,

[John Hewitt, CEO, President & Director at Matrix Service Company]

whether there's tariffs or no matter what it is we see in the media, there's a lot of rhetoric running around both out of the Washington DC and out of the media houses and across the globe. So I think it's difficult for all of us, whether you're a business leader or normal citizen to figure out what the future looks like. But for

[John Hewitt, CEO, President & Director at Matrix Service Company]

me,

[John Hewitt, CEO, President & Director at Matrix Service Company]

I think and what we hear from our clients, I think they're being, you know, adding some more thoughtfulness to what their, what their capital plans are. But I think overriding all of that is the not only domestically, but globally, the demand for energy is continuing to rise. That demand has got to be met. It is not necessarily going to be 100% met by renewable energy sources. You've got huge electrical infrastructure needs in The US alone to fuel the growth in power demand.

[John Hewitt, CEO, President & Director at Matrix Service Company]

And so I think irrespective of all the terrorist things settle out, which I personally think will get settled out here over the next three or four months. I think we're still going to see a lot of infrastructure put in place. We're going to see this huge demand globally for NGLs coming out of The US and for LNG Because the, I mean, face of the demand for energy is growing, like I said, and it supports a higher quality of life around the globe. And there's a lot of instability in the energy sources. And people are going be looking to The US to provide that stability.

[John Hewitt, CEO, President & Director at Matrix Service Company]

So I'm pretty bullish and confident in the markets that we're in with our brand position, particular around specialty vessels and specialty vessel storage and infrastructure that we're gonna play a strong role in that as we look out into the future.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Yep, appreciate that. And then I guess another one, Kevin, this might be more for you, but there's been an expectation for sort of a progressive ramp in volume and revenue as the fiscal year has played out. And I think maybe more specific to storage, I mean, you had terrific growth compared to last year, but the growth was somewhat muted relative to the previous quarter. So as you kind of look at the fourth fiscal quarter, is there enough confidence here that we should see that segment step up? I think that's sort of critical to support the outlook.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

I guess maybe the question is, are you seeing the critical jobs moving forward now in that segment that really should contribute here?

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

Yeah, so you're right. The revenue was, you know, in Q3 was pretty consistent with Q2. Part of that was just timing of procurement. Now when we're looking at 4Q, I'm expecting to see a really strong growth cycle in the storage and terminal solutions segment. So I think that is supportive of the outlook.

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

I think you'll also see some growth in utility and power infrastructure. Process and industrial facilities took a step up this third quarter. I would expect it to be somewhere close to that same level here in the fourth quarter. So the combined should have a strong upward move in revenue level for 4Q.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Got it.

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

I

[Kevin Cavanah, VP of Finance, CFO & Treasurer at Matrix Service Company]

think that'll benefit overhead recovery and the gross margin percentage in a significant way.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Perfect. Okay, that's all I had. Thank you.

[Operator]

Thank you. This concludes our question and answer session. I would now like to turn it back to Kelly Smythe, Senior Director of Investor Relations for closing remarks.

[Kellie Smythe, Senior Director of Investor Relations at Matrix Service Company]

Thank you. As a reminder, we will be participating in the Sidoti MicroCap Virtual Conference on May 2122. We'll also be attending the Stifel Cross Sector Insights Conference on June in Boston. Additionally, if you'd 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 Matrix News by scanning the QR code on your screen.

[Kellie Smythe, Senior Director of Investor Relations at Matrix Service Company]

Thank you for your time.

[Operator]

This concludes today's conference call. Thank you for participating and you may now disconnect.

Participants

Executives

• Kellie Smythe, Senior Director of Investor Relations
• John Hewitt, CEO, President & Director
• Kevin Cavanah, VP of Finance, CFO & Treasurer

Analysts

• John Franzreb, Senior Equity Analyst at Sidoti & Company
• Brent Thielman, MD & Senior Research Analyst at D.A. Davidson