Matrix Service Company (MTRX) AI Stock Analysis

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Matrix Service Company

(NASDAQ:MTRX)

52Neutral

Matrix Service Company's overall score reflects significant financial challenges, with declining revenues and persistent net losses. The technical indicators are mixed, showing no strong directional trend, while valuation remains unattractive due to negative earnings. However, the earnings call presents a potentially positive future with expected profitability and growth, slightly offsetting the current challenges.

Matrix Service Company (MTRX) vs. S&P 500 (SPY)

Market Cap

$300.91M

Dividend YieldN/A

Average Volume (3M)246.30K

Price to Earnings (P/E)―

Beta (1Y)1.28

Revenue Growth-7.47%

EPS Growth-74.28%

CountryUS

Employees2,064

SectorIndustrials

Sector Strength61

IndustryEngineering & Construction

Share Statistics

EPS (TTM)-1.22

Shares Outstanding27,606,852

10 Day Avg. Volume228,034

30 Day Avg. Volume246,302

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.49

Price to Cash Flow (P/CF)2.60

P/FCF Ratio2.60

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$20.00

Price Target Upside95.69% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Matrix Service Company Business Overview & Revenue Model

Company DescriptionMatrix Service Company (MTRX) is a leading provider of engineering, procurement, construction, and maintenance services to various sectors, including energy, power, and industrial markets. The company specializes in delivering comprehensive solutions in the areas of electrical infrastructure, oil, gas, and chemical industries, as well as storage solutions for liquid and gas products. With a focus on safety, quality, and customer satisfaction, Matrix Service Company serves clients across North America through a network of subsidiaries and strategic partnerships.

How the Company Makes MoneyMatrix Service Company generates revenue primarily through its diverse service offerings in engineering, procurement, construction, and maintenance. The company earns income by undertaking large-scale projects for clients in the energy and industrial sectors, providing specialized services such as construction of storage tanks, terminals, and refining facilities. Key revenue streams include contracts for designing and building complex infrastructure, as well as ongoing maintenance services to ensure operational efficiency and compliance with regulatory standards. Additionally, Matrix Service Company benefits from strategic partnerships and long-term relationships with major corporations in the oil, gas, and power industries, which contribute to a steady flow of project opportunities and recurring revenue streams.

Matrix Service Company Financial Statement Overview

Summary

Matrix Service Company faces challenges with declining revenues and persistent net losses. Despite improved cash flow metrics, the company's financial resilience is in question due to declining equity and ongoing profitability issues.

Income Statement

Neutral

Matrix Service Company shows declining revenue trends, with revenues decreasing from $795M in 2023 to $708M in the TTM period. The company has consistently reported negative net income, with the TTM net income at -$33.7M. Gross profit margin improved slightly to 5.2% in TTM, but overall profitability remains challenged due to negative EBIT and EBITDA margins. Revenue growth has been negative, indicating struggle in top-line expansion.

Balance Sheet

Neutral

The company's balance sheet reveals a moderate debt-to-equity ratio of 0.14 in the TTM, indicating manageable leverage. However, the declining stockholders' equity from $227M in 2022 to $151M in the TTM reflects financial strain. Total assets and equity have decreased, impacting the equity ratio. The firm's ability to sustain operations without significant equity erosion is a concern.

Cash Flow

Neutral

Cash flow analysis shows a positive trend with operating cash flow increasing to $117M in TTM, indicating improved cash generation capability. Free cash flow also increased significantly to $108M in TTM. The free cash flow to net income ratio is positive, suggesting better cash conversion, despite negative earnings. The company needs to continue focusing on cash flow stability to offset net losses.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
708.26M	728.21M	795.02M	707.78M	673.40M	1.10B
	Gross Profit
36.73M	40.47M	30.82M	-1.21M	32.77M	102.18M
	EBIT
-36.38M	-29.61M	-52.89M	-87.85M	-36.99M	-1.65M
	EBITDA
-22.66M	-12.86M	-37.04M	-40.08M	-23.85M	-15.92M
	Net Income Common Stockholders
-33.71M	-24.98M	-52.36M	-63.90M	-31.22M	-33.07M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
53.30M	115.61M	54.81M	52.37M	83.88M	100.04M
	Total Assets
269.70M	451.35M	400.50M	440.79M	467.56M	517.31M
	Total Debt
1.24M	22.89M	35.32M	40.62M	26.52M	36.77M
	Net Debt
-52.06M	-92.72M	-19.49M	-11.75M	-57.36M	-63.26M
	Total Liabilities
87.61M	287.17M	219.02M	213.09M	182.02M	209.42M
	Stockholders Equity
182.08M	164.18M	181.48M	227.71M	285.54M	307.89M
Cash Flow		Free Cash Flow
108.26M	65.58M	1.24M	-57.54M	-7.33M	25.55M
	Operating Cash Flow
117.26M	72.57M	10.25M	-54.20M	-2.97M	44.09M
	Investing Cash Flow
-5.59M	-945.00K	-2.54M	35.67M	-2.26M	-17.12M
	Financing Cash Flow
-1.04M	-10.37M	-5.06M	12.70M	-12.32M	-16.04M

Matrix Service Company Technical Analysis

Technical Analysis Sentiment

Negative

Last Price10.22

Price Trends

50DMA

12.91

Negative

100DMA

13.01

Negative

200DMA

11.75

Negative

Market Momentum

MACD

-0.18

Negative

RSI

45.59

Neutral

STOCH

19.31

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MTRX, the sentiment is Negative. The current price of 10.22 is below the 20-day moving average (MA) of 12.06, below the 50-day MA of 12.91, and below the 200-day MA of 11.75, indicating a bearish trend. The MACD of -0.18 indicates Negative momentum. The RSI at 45.59 is Neutral, neither overbought nor oversold. The STOCH value of 19.31 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MTRX.

Matrix Service Company Risk Analysis

Matrix Service Company disclosed 30 risk factors in its most recent earnings report. Matrix Service Company reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Matrix Service Company Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PRIM	75 Outperform	$3.16B	17.67	13.67%	0.52%	11.40%	42.51%
KBR	73 Outperform	$5.99B	16.55	26.45%	1.31%	11.30%	―
FLR	72 Outperform	$5.84B	2.84	72.85%	―	5.43%	2094.12%
Sector *	62 Neutral	$7.67B	13.25	3.04%	3.47%	3.63%	-13.99%
DY	61 Neutral	$4.52B	19.70	20.35%	―	12.61%	7.43%
MYRG	58 Neutral	$1.70B	55.02	4.84%	―	-7.73%	-65.81%
MTRX	52 Neutral	$300.91M	―	-20.38%	―	-7.47%	-74.28%

* Industrials Sector Average

Performance Comparison

MTRX

Matrix Service Company

10.90

-1.37

-11.17%

Dycom

155.96

17.23

12.42%

FLR

Fluor

34.73

-7.49

-17.74%

KBR

50.52

-12.48

-19.81%

MYRG

MYR Group

111.89

-59.28

-34.63%

PRIM

Primoris Services

56.42

10.48

22.81%

Matrix Service Company Earnings Call Summary

Earnings Call Date: Feb 5, 2025 | % Change Since: -27.21% | Next Earnings Date: May 7, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed outlook for Matrix Service Company. While there is significant revenue growth in key segments and an increased opportunity pipeline, challenges such as a revenue guidance reduction, under-recovery of construction overhead costs, and a net loss for the quarter weigh on the outlook. Market conditions are positive, and there is optimism for future profitability, but current financial challenges are evident.

Highlights

Revenue Growth in Key Segments

Second quarter revenue increased by 7% year-over-year to $187.2 million, with a 13% increase over the first quarter of fiscal 2025. Revenue growth was driven by the storage and terminal solutions and utility and power infrastructure segments.

Increased Opportunity Pipeline

Opportunity pipeline increased from $5.7 billion at the end of the second quarter to $7 billion by January 2025, driven by LNG peak shaving opportunities.

Strong Backlog and Future Prospects

Backlog remains at $1.3 billion, with expectations for strong future project awards, including a planned $1 billion in fiscal 2025 project awards.

Positive Market Conditions

Supportive policy environment for energy and industrial infrastructure projects, with domestic LNG export capacity expected to grow by 85% by 2028.

Return to Profitability Expected

Company expects to return to profitability in the second half of fiscal 2025 due to improved fixed cost absorption and margin realization.

Lowlights

Guidance Reduction

Full-year revenue guidance lowered by approximately 5%, from $900-$950 million to $850-$900 million, due to project award delays and mobilization timing.

Under-Recovery of Construction Overhead Costs

Gross margins impacted by under-recovery of construction overhead costs, though the impact is decreasing as revenue increases.

Reduced Book to Bill Ratio

Second quarter book to bill ratio at 0.5 times, with a trailing twelve-month ratio of 0.9 times, indicating softer bookings in the first half of fiscal 2025.

Net Loss for the Quarter

Net loss of $5.5 million or $0.20 per share in the second quarter, compared to a net loss of $2.9 million or $0.10 per share in the prior year.

Company Guidance

During the Matrix Service Company conference call for the second quarter of fiscal 2025, guidance included a downward revision of the full-year revenue forecast by approximately 5% at the midpoint, adjusting from a range of $900 to $950 million to a range of $850 to $900 million. This adjustment was primarily due to the delayed award of a major energy project and the postponed mobilization to site for another significant project. Despite these setbacks, the company's opportunity pipeline increased from $5.7 billion to $7 billion, with significant contributions from LNG peak shaving opportunities. Matrix anticipates organic revenue growth of over 40% in the second half of fiscal 2025 compared to the same period in fiscal 2024 and expects to return to profitability due to improved fixed cost absorption and margin realization. The full-year book to bill ratio is projected to be at or above 1.0. The company also highlighted its strong balance sheet, with a net cash position and total liquidity of $211.7 million, supporting future growth and strategic investments.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.