Matrix Service (NASDAQ:MTRX) reported improved fourth-quarter fiscal 2026 results, including higher revenue, stronger gross margins and a return to adjusted profitability, as the engineering and construction contractor advances a strategic plan aimed at improving project selection, execution and cost discipline.
Fourth-quarter revenue increased 13% to $244.5 million from $216.4 million in the prior-year period. Gross profit rose to $19.5 million from $8.1 million, while gross margin expanded to 8.0% from 3.8% a year earlier.
Fiscal-Year Progress and Cost Actions
Chief Executive Officer Shawn Payne, who recently took on the role of president and CEO, said the company has been implementing an enterprise strategy called “Win, Execute, Deliver.” The framework is intended to support profitable growth, revenue diversification, operational performance, accountability and organizational effectiveness.
Payne said Matrix has streamlined and flattened its organization after determining its overhead structure had been built for a larger anticipated revenue base. The company also adjusted its commercial organization through strengthened strategic account management, more rigorous opportunity qualification and a focus on projects with favorable risk-and-reward characteristics.
“Our progress is tangible, evidenced by our return to profitability in the third and fourth quarters of fiscal 2026,” Payne said.
For the full fiscal year, Chief Financial Officer Kevin Cavanah said revenue rose 14% and gross margin improved by 210 basis points. Selling, general and administrative expenses declined by $7.6 million from fiscal 2025, while the company reported full-year adjusted EPS of $0.26, an improvement of $1.19 from the prior year.
Fourth-quarter SG&A expense decreased to $16.9 million from $17.6 million, despite higher variable compensation costs tied to the return to profitability. SG&A represented 6.9% of revenue, down from 8.1% in the prior-year quarter.
The company recorded $3.4 million in fourth-quarter restructuring costs related to executive transitions and a previously announced corporate realignment. Including those costs, Matrix posted an operating loss of $0.9 million, compared with an operating loss of $12.9 million a year earlier.
During the question-and-answer session, Payne said he believes the organization is now appropriately sized for current work and anticipated growth plans. Cavanah said the company does not expect restructuring costs in fiscal 2027 to approach fiscal 2026 levels, though limited costs related to further adjustments could occur.
Segment Results
- Storage & Terminal Solutions: Revenue increased 43% to $137.4 million, driven by increased specialty-vessel and LNG-storage project activity. Gross margin improved to 6.4% from negative 1.1% in the prior-year period. Cavanah said the prior-year result was affected by lower recovery expectations associated with a legacy project completed in fiscal 2021 that had been in arbitration; the matter was fully resolved in fiscal 2026.
- Utility and Power Infrastructure: Revenue was $73.5 million, compared with $73 million a year earlier. Gross margin improved to 12.8% from 9.1%, which Cavanah attributed to strong project execution.
- Process and Industrial Facilities: Revenue declined to $33.6 million from $47.3 million, primarily reflecting lower refinery-related work. Gross margin declined to 2.9% from 5.9% due to a change in work mix.
Backlog, Pipeline and Market Opportunities
Matrix received $169 million in fourth-quarter awards, producing a 0.7 book-to-bill ratio, and ended the year with $953 million in backlog. The Process and Industrial Facilities segment accounted for $108 million of awards, including a significant mining-related project, and recorded a 3.2 book-to-bill ratio.
Management said 70% to 80% of year-end backlog is expected to be worked off during fiscal 2027. Payne said the company expects to replace backlog with new awards as projects in its opportunity funnel advance. The opportunity funnel exceeded $7 billion at year-end.
Payne said more than 40% of the company’s pipeline consists of LNG and NGL infrastructure opportunities, including peak-shaving facilities, backup-fuel terminals and related projects. The company is also pursuing power-generation and power-infrastructure opportunities tied to data-center growth, aging power assets and rising electricity demand.
Matrix recently completed two substation projects serving Northern Virginia’s data-center market and is currently constructing additional substations in Northern Virginia and eastern Pennsylvania, Payne said. The company has also committed additional capital and resources to its Southwest operation to support mining and minerals activity.
Subsequent to the quarter, Matrix announced it had been selected for front-end engineering and design work on the storage-tank farm for the America First Refining facility in Brownsville, Texas. Payne said the FEED work is scheduled for completion by the end of the company’s fiscal second quarter. A potential larger award, subject to the client’s final investment decision, could be converted to backlog in late fiscal 2027’s third quarter or early in the fourth quarter.
Payne said the margin profile of the backlog supports double-digit performance, adding that projects are currently delivering near that level and the company seeks to expand margins above 10% over time.
Liquidity and Finance Leadership Transition
Matrix ended fiscal 2026 with total liquidity of $283.9 million, including $223 million in unrestricted cash and cash equivalents and $60.9 million of borrowing availability under its credit facility. The company had $25 million of restricted cash supporting the facility and no outstanding debt.
Cavanah said Matrix expects to use cash during the first half of fiscal 2027 to support ongoing project activity, but management described the balance sheet as sufficient to execute backlog and deploy capital for growth. The company is also actively evaluating a stock repurchase program following its return to profitability.
The company will not provide guidance while it completes its search for a permanent CFO. Cavanah will transition from the CFO role at the end of the week, and AJ Smith, senior director of accounting and treasury, will become interim CFO effective Sept. 10, 2026.
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.
