Matrix Service (NASDAQ:MTRX) reported second-quarter fiscal 2026 results that management said reflected “continued positive execution” across the business, including 12% revenue growth year over year, while also recording a project-related charge tied to commissioning items on a specialty storage tank project.
Leadership transition and succession plan
President and CEO John Hewitt opened the call by highlighting succession planning updates announced the prior day. The company elevated Shawn Payne—previously promoted to president of E&C in May 2025—to chief operating officer. Hewitt said he will step down as president and CEO on June 30, 2026, and Payne will assume the CEO role at that time. Hewitt said Payne has been instrumental in backlog growth, the company’s turnaround efforts, organizational streamlining, and strategic planning, and noted that Payne will participate in future investor engagements during the transition.
Quarterly results: revenue growth with a project charge
Consolidated gross profit increased 21% to $13.1 million, and gross margin improved to 6.2% from 5.8% a year earlier. Cavanah attributed the improvement to higher revenue supporting better overhead recovery and generally strong project execution. However, he said costs related to “items arising during commissioning” of a specialty tank project in the storage and thermal solutions segment reduced gross profit by $3.6 million, which management quantified as about a $0.13 per-share impact. Hewitt described the issue as an unfavorable adjustment related to warranty responsibilities and miscellaneous subcontractor and vendor commercial items on a substantially complete storage project.
On profitability, the company posted a net loss of $0.9 million versus a $5.5 million loss in the same quarter last year. EPS was a loss of $0.03 compared with a $0.20 loss a year ago. Adjusted EBITDA improved to a positive $2.4 million from a loss of $2.2 million in the prior-year quarter.
Guidance and backlog: reiteration, but awards described as “muted”
Management reiterated full-year revenue guidance of $875 million to $925 million and said it expects to be profitable in the second half of the fiscal year. Cavanah said the company expects to achieve its revenue target on strong second-half growth—particularly in the fourth quarter—driven by large LNG and NGL projects already underway in the storage and thermal solutions segment.
Backlog was cited at $1.1 billion. During the quarter, project awards were approximately $177 million, producing a book-to-bill ratio of 0.8. Hewitt said award volumes have been tempered by uncertainty around trade policy, permitting, and a government shutdown that occurred in late 2025, which he said delayed final investment decisions and award progression for many projects in the company’s pipeline. He said the uncertainty could persist through the end of the fiscal year, but he did not characterize it as a fundamental slowdown in end-market demand.
Management said the opportunity pipeline expanded to $7.3 billion by the end of the fiscal second quarter. In response to an analyst question about the increase, Hewitt said he believed growth was likely driven by LNG and NGL, with additional activity in mining and minerals and electrical projects. He also noted that some smaller and maintenance-type work is not included in the opportunity pipeline and described a “baseline” of awards that can move in and out each quarter.
Asked whether delayed awards were likely to shift into the second half of fiscal 2026 or into fiscal 2027, Hewitt said the “big chunk projects” that can drive outsized quarterly book-to-bill results were more likely to fall into fiscal 2027, which begins July 1. He said the company could see smaller, strategic awards in the next two quarters, but he did not expect the company to exit the year with a collective book-to-bill above 1.0 across the entire business.
Segment performance details
- Storage and Thermal Solutions: Represented 47% of consolidated revenue. Segment revenue was $99.9 million versus $95.5 million a year ago, driven by increased LNG and NGL activity, partially offset by lower crude oil volumes. Segment gross profit was $4.8 million, down $2.5 million year over year, and margin declined to 4.8% from 7.6%, primarily due to the $3.6 million charge. Cavanah said the company expects significant margin improvement in the remainder of the year based on execution of its “high-quality backlog” and improved overhead recovery as revenue increases.
- Utility and Power Infrastructure: Represented 36% of consolidated revenue. Segment revenue increased 23% to $75.4 million, supported by LNG peak shaving and power delivery projects. Segment gross profit rose to $7.2 million from $3.4 million, while margin expanded to 9.6% from 5.6% on strong execution and better overhead recovery.
- Process and Industrial Facilities: Represented 17% of consolidated revenue. Segment revenue was $35.3 million compared to $30.6 million a year ago. Cavanah said the company expects similar revenue levels until it captures additional opportunities tied to market strength and expansion efforts. Segment gross profit improved to $1.2 million (3.5% margin) from $0.4 million (1.2% margin), though Cavanah said margins remain pressured by a mix skewed toward lower-margin reimbursable activity and under-recovery of overhead at current revenue levels.
Market themes: power demand, data centers, and minerals
Hewitt devoted a portion of his remarks to the broader demand environment, citing what he called a “once-in-a-generation surge” in energy, power, rare earth, and industrial infrastructure. He tied increased electricity demand to AI data centers and onshoring, and described natural gas as a “bridge fuel.” He also discussed a “compelling multiyear opportunity” in mining and minerals, linking investment to efforts to secure critical and rare earth supply chains in the U.S.
Addressing data centers specifically, Hewitt said Matrix does not build data centers or advanced manufacturing facilities, but instead builds “the required critical energy infrastructure needed to power them,” including power generation work, substations, grid interconnects, and LNG peak shaving and backup fuel facilities. He said the company has been focused on the market for roughly the past 12 months and is building relationships with new clients while ensuring projects fit its risk and financial profile. Hewitt said Matrix is already bidding electrical infrastructure work tied to data center power needs and expects a “small degree” of impact on awards in the second half of fiscal 2026, with greater growth as the company moves into fiscal 2027.
On the midstream market, Hewitt said crude activity was “muted,” with more focus internally on complex “specialty vessel” work that he said carries better margins and less competition. On natural gas, he described activity as strong and “getting stronger,” while also pointing to permitting challenges that can delay customer spending decisions and project timing.
In the Q&A, management also addressed the specialty tank project charge, saying it did not expect the issue to “bleed” into the third quarter and that it did not see similar issues elsewhere. Hewitt said overall booked work is within targeted margin ranges, adding that the environment was not like three years ago when contractors chased work and drove margins down, though he noted some work types—particularly certain maintenance activities—can sit at the lower end of margin ranges.
On capital allocation, Hewitt said the company remains focused on returning to profitability and noted potential uses of cash could include internal investment “catch-up,” inorganic opportunities, and, if such opportunities are not found, potentially share repurchases.
Matrix ended the quarter with $224 million in cash as of December 31, 2025, with total liquidity of $258 million and no outstanding debt. Cavanah said the company expects to maintain a strong cash balance through fiscal 2026 and has the liquidity needed to support growth.
About Matrix Service (NASDAQ:MTRX)
Matrix Service Company (NASDAQ: MTRX) is a provider of engineered construction, fabrication and maintenance services to the energy, industrial and power markets. The firm offers a full suite of engineering, procurement and construction (EPC) solutions for clients in the oil and gas, petrochemical, refining, mining, fertilizer and power generation industries. Its capabilities span from front-end engineering design through plant commissioning, with specializations in modular process skid fabrication, structural steel erection and complex piping systems.
The company’s service portfolio includes onshore and offshore pipe fabrication, equipment setting, industrial maintenance and shutdown services, electrical and instrumentation installation, and skid-mount and modular construction.
