Matrix Service Narrows Losses on Strong Revenue Growth

TL;DR

MTRX is showing signs of a turnaround with strong revenue growth and reduced losses, but cash burn is a concern.

AI Summary

MATRIX SERVICE CO (MTRX) reported a net loss of $3.663 million for the three months ended September 30, 2025, a significant improvement from the $9.223 million net loss in the same period last year. Revenue increased substantially to $211.884 million, up 28% from $165.579 million in Q1 2024. Despite the revenue growth, the company incurred restructuring costs of $3.348 million, which contributed to an operating loss of $5.500 million, though this was an improvement from the $10.767 million operating loss in Q1 2024. Gross profit more than doubled to $14.182 million from $7.813 million year-over-year. Cash and cash equivalents decreased to $192.307 million from $224.641 million at June 30, 2025, with net cash used in operating activities totaling $25.899 million. The company's remaining performance obligations stood at $958.3 million as of September 30, 2025, with $621.3 million expected to be recognized as revenue within the next twelve months, indicating a strong future revenue pipeline. The effective tax rate was (1.9)% due to valuation allowances of $1.4 million on deferred tax assets.

Why It Matters

For investors, MTRX's ability to significantly increase revenue by 28% to $211.884 million while nearly halving its net loss to $3.663 million suggests operational improvements and potential for future profitability, especially with $958.3 million in remaining performance obligations. The competitive landscape in industrial services is intense, and MTRX's improved gross profit of $14.182 million indicates better project execution or pricing power. Employees might see this as a sign of stabilizing business and job security, while customers could benefit from a more financially robust service provider. The broader market will watch if MTRX can sustain this revenue momentum and translate it into consistent net income, particularly given the $3.348 million in restructuring costs which could signal strategic shifts.

Risk Assessment

Risk Level: medium — The company reported a net loss of $3.663 million and used $25.899 million in cash from operating activities for the quarter, indicating ongoing cash burn despite revenue growth. Additionally, the effective tax rate of (1.9)% was impacted by $1.4 million in valuation allowances on deferred tax assets, suggesting uncertainty about future taxable income.

Analyst Insight

Investors should monitor MTRX's next few quarters closely for sustained revenue growth and, more importantly, a return to positive net income and cash flow from operations. The substantial remaining performance obligations of $958.3 million provide a strong backlog, but execution and margin improvement are critical for long-term value creation.

Financial Highlights

revenue

$211.884M

total Assets

$598.186M

net Income

$(3.663)M

eps

$(0.13)

gross Margin

6.7%

cash Position

$192.307M

revenue Growth

+28%

Key Numbers

• $211.884M — Revenue (Increased 28% from $165.579M in Q1 2024)
• $(3.663)M — Net Loss (Improved from $(9.223)M in Q1 2024)
• $14.182M — Gross Profit (More than doubled from $7.813M in Q1 2024)
• $(25.899)M — Net Cash from Operating Activities (Used cash, compared to $11.918M provided in Q1 2024)
• $192.307M — Cash and Cash Equivalents (Decreased from $224.641M at June 30, 2025)
• $958.3M — Remaining Performance Obligations (Strong backlog for future revenue recognition)
• $3.348M — Restructuring Costs (Incurred in Q1 2025, impacting operating loss)
• 28,124,527 — Shares Outstanding (As of November 5, 2025)
• $(0.13) — Basic Loss Per Share (Improved from $(0.33) in Q1 2024)
• $61.4M — Borrowing Base under ABL Facility (As of September 30, 2025, with $56.6M availability)

Key Players & Entities

• MATRIX SERVICE CO (company) — Registrant
• MTRX (company) — Ticker symbol
• Bank of Montreal (company) — Administrative Agent for ABL Facility
• NASDAQ Global Select Market (regulator) — Exchange where common stock is registered
• Securities and Exchange Commission (regulator) — Regulatory body for filing
• $211.884 million (dollar_amount) — Revenue for Q1 2025
• $165.579 million (dollar_amount) — Revenue for Q1 2024
• $3.663 million (dollar_amount) — Net loss for Q1 2025
• $9.223 million (dollar_amount) — Net loss for Q1 2024
• $958.3 million (dollar_amount) — Remaining performance obligations as of September 30, 2025

FAQ

Risk Factors

• Restructuring Costs Impacting Profitability [medium — operational]: The company incurred $3.348 million in restructuring costs during the three months ended September 30, 2025. These costs contributed to an operating loss of $5.500 million, although this represents an improvement from the $10.767 million operating loss in the prior year period. The presence of such costs highlights ongoing efforts to optimize operations which can temporarily depress earnings.
• Negative Cash Flow from Operations [high — financial]: For the three months ended September 30, 2025, Matrix Service Co. used $25.899 million in net cash from operating activities. This is a significant shift from the $11.918 million provided in the same period last year. The decrease in cash and cash equivalents from $224.641 million to $192.307 million underscores the immediate need to manage working capital effectively.
• Valuation Allowances on Deferred Tax Assets [medium — financial]: The company's effective tax rate was (1.9)% due to $1.4 million in valuation allowances on deferred tax assets. This indicates that the company does not expect to realize the full benefit of these future tax deductions, potentially due to historical losses or uncertainty about future profitability.

Industry Context

Matrix Service Co. operates in the industrial services sector, providing maintenance, construction, and industrial fabrication services. The sector is cyclical and dependent on capital expenditures by clients in industries like energy, power generation, and chemicals. Recent trends may include increased demand for infrastructure upgrades and maintenance, but also pressure on margins due to competition and project execution risks.

Regulatory Implications

The company must comply with various regulations related to environmental, health, and safety standards in its operating locations. Failure to adhere to these can result in fines, project delays, or reputational damage. The effective tax rate being impacted by valuation allowances also points to the importance of tax compliance and accurate forecasting.

What Investors Should Do

1. Monitor operating cash flow trends closely.
2. Analyze the impact and frequency of restructuring costs.
3. Evaluate the utilization and terms of the ABL facility.
4. Assess the drivers of gross profit improvement.

Key Dates

• 2025-09-30: End of Q1 2025 — Reporting period for the 10-Q, showing revenue growth but continued net loss, with significant restructuring costs and negative operating cash flow.
• 2025-11-05: Shares Outstanding Date — Reported 28,124,527 shares outstanding, relevant for per-share calculations and market capitalization.

Glossary

Remaining Performance Obligations

The total value of work to be performed on contracts that are not yet completed. This represents future revenue that the company has committed to deliver. (Indicates a strong future revenue pipeline for Matrix Service Co., with $958.3 million outstanding, $621.3 million expected within twelve months.)

Restructuring Costs

Expenses incurred as a result of a significant reorganization of a company's business operations, such as layoffs, facility closures, or business unit divestitures. (Matrix Service Co. incurred $3.348 million in these costs in Q1 2025, impacting operating results and highlighting ongoing operational adjustments.)

Valuation Allowances on Deferred Tax Assets

An account used to reduce the carrying value of deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. (Matrix Service Co. recorded a $1.4 million valuation allowance, leading to a negative effective tax rate of (1.9)% for the period.)

Borrowing Base

The maximum amount a lender is willing to advance against a pool of collateral, typically used in asset-based lending facilities. (Matrix Service Co. had a borrowing base of $61.4 million under its ABL facility with $56.6 million availability as of September 30, 2025, indicating liquidity headroom.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, Matrix Service Co. demonstrated significant revenue growth of 28%, reaching $211.884 million. While the net loss narrowed substantially from $9.223 million to $3.663 million, the company shifted from generating operating cash flow to using $25.899 million. Gross profit more than doubled, but this was offset by $3.348 million in restructuring costs, which were absent in the prior year. The cash position also declined from $224.641 million to $192.307 million.

Key Financial Figures

• $0.01 — ich registered Common Stock, par value $0.01 per share MTRX NASDAQ Global Select Mar
• $15.0 m — be increased by an amount not to exceed $15.0 million, subject to certain conditions, i

Filing Documents

• mtrx-20250930.htm (10-Q) — 735KB
• matrixservicecompany-def.htm (EX-10.1) — 18KB
• exhibit311-mtrxx2025x09x30x.htm (EX-31.1) — 10KB
• exhibit312-mtrxx2025x09x30x.htm (EX-31.2) — 10KB
• exhibit321-mtrxx2025x09x30x.htm (EX-32.1) — 5KB
• exhibit322-mtrxx2025x09x30x.htm (EX-32.2) — 5KB
• exhibit95-mtrxx2025x09x30x.htm (EX-95) — 17KB
• matrixservicecompany-def001.jpg (GRAPHIC) — 36KB
• matrixservicecompany-def002.jpg (GRAPHIC) — 198KB
• matrixservicecompany-def003.jpg (GRAPHIC) — 228KB
• matrixservicecompany-def004.jpg (GRAPHIC) — 260KB
• matrixservicecompany-def005.jpg (GRAPHIC) — 223KB
• matrixservicecompany-def006.jpg (GRAPHIC) — 290KB
• matrixservicecompany-def007.jpg (GRAPHIC) — 38KB
• 0000866273-25-000103.txt ( ) — 5123KB
• mtrx-20250930.xsd (EX-101.SCH) — 24KB
• mtrx-20250930_cal.xml (EX-101.CAL) — 41KB
• mtrx-20250930_def.xml (EX-101.DEF) — 51KB
• mtrx-20250930_lab.xml (EX-101.LAB) — 263KB
• mtrx-20250930_pre.xml (EX-101.PRE) — 183KB
• mtrx-20250930_htm.xml (XML) — 308KB

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) Condensed Consolidated Statements of Income for the Three Months Ended S eptember 30 , 2025 and 2024 1 Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended S eptember 30 , 2025 and 2024 2 Condensed Consolidated Balance Sheets as of September 30 , 2025 and June 30, 202 5 3 Condensed Consolidated Statements of Cash Flows for the Three Months Ended S eptember 3 0 , 2025 and 2024 5 Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three Months Ended September 30 , 2025 and 2024 6 Notes to Condensed Consolidated Financial Statements 7

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 15

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 28

Controls and Procedures

Item 4. Controls and Procedures 28 PART II OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 29

Risk Factors

Item 1A. Risk Factors 29

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 29

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 29

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 29

Other Information

Item 5. Other Information 29

Exhibits

Item 6. Exhibits 29 Signature 31 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Matrix Service Company Condensed Consolidated Statements of Income (In thousands, except per share data) (unaudited) Three Months Ended September 30, 2025 September 30, 2024 Revenue $ 211,884 $ 165,579 Cost of revenue 197,702 157,766 Gross profit 14,182 7,813 Selling, general and administrative expenses 16,334 18,580 Restructuring costs 3,348 — Operating loss ( 5,500 ) ( 10,767 ) Other income (expense): Interest expense ( 127 ) ( 89 ) Interest income 1,802 1,572 Other 231 61 Loss before income tax expense ( 3,594 ) ( 9,223 ) Provision for federal, state and foreign income taxes 69 — Net loss $ ( 3,663 ) $ ( 9,223 ) Basic loss per common share $ ( 0.13 ) $ ( 0.33 ) Diluted loss per common share $ ( 0.13 ) $ ( 0.33 ) Weighted average common shares outstanding: Basic 28,008 27,559 Diluted 28,008 27,559 See accompanying notes. -1- Table of Contents Matrix Service Company Condensed Consolidated Statements of Comprehensive Income (In thousands) (unaudited) Three Months Ended September 30, 2025 September 30, 2024 Net loss $ ( 3,663 ) $ ( 9,223 ) Other comprehensive income (loss), net of tax: Foreign currency translation gain (loss) ( 528 ) 436 Comprehensive loss $ ( 4,191 ) $ ( 8,787 ) See accompanying notes. -2- Table of Contents Matrix Service Company Condensed Consolidated Balance Sheets (In thousands) (unaudited) September 30, 2025 June 30, 2025 Assets Current assets: Cash and cash equivalents $ 192,307 $ 224,641 Accounts receivable, net of allowance for credit losses 160,344 154,994 Costs and estimated earnings in excess of billings on uncompleted contracts 37,912 29,764 Inventories 5,579 5,917 Income taxes receivable 75 110 Prepaid expenses and other current assets 14,195 4,347 Total current assets 410,412 419,773 Restricted cash 25,000 25,000 Property, plant and equipment, net 41,347 42,097 Operating lease right-of-use assets 15,827 17,827 Goodwill 28,978 29,047 Oth

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