Executive Summary

Revenue was $211.9M, up 28% YoY and above S&P Global consensus of $206.7M*; GAAP EPS was -$0.13 while adjusted EPS was -$0.01 vs consensus +$0.02* (top-line beat, EPS miss). Management reaffirmed FY26 revenue guidance of $875–$925M and highlighted best quarterly gross margin in 2+ years .
Book-to-bill was 0.9x; backlog ended at $1.2B after removing $197M from two projects for client-driven commercial changes (no FY26 impact). >90% of FY26 revenue (at guidance midpoint) is now booked, increasing visibility .
Segment performance: Storage & Terminal Solutions revenue +40% YoY to $109.5M; Utility & Power Infrastructure revenue +33% to $74.5M with gross margin improving to 9.1% (from 2.3%); Process & Industrial Facilities revenue $27.9M, margin 5.1% due to mix .
Strategic posture: pipeline of $6.7B with mid-sized awards near term and anticipated re-acceleration in large multi-year projects in late FY26/FY27; discipline on risk/reward and improved cost structure lowered breakeven revenue to $210–$215M per quarter (from ~$225M) .
Potential stock catalysts: sustained margin improvement and award cadence in Storage/Utility segments, execution of DRP balance-of-plant award, and confirmation of larger multi-year wins into late FY26/ FY27 .

What Went Well and What Went Wrong

What Went Well
- Gross margin reached 6.7%, the best in over two years, reflecting mix and execution discipline; adjusted EBITDA positive at $2.5M .
- Utility & Power Infrastructure delivered 9.1% gross margin (from 2.3% YoY) on higher volume and better overhead absorption .
- Opportunity pipeline of $6.7B and reaffirmed FY26 revenue guidance ($875–$925M) support continued growth visibility .
What Went Wrong
- EPS missed S&P Global consensus as adjusted EPS was -$0.01 vs +$0.02*, and adjusted EBITDA ($2.5M) trailed consensus ($4.5M)* .
- Backlog declined to $1.2B after removing $197M (client strategy change and rescinded award on unacceptable terms), though management emphasized no FY26 impact .
- Process & Industrial Facilities margins fell to 5.1% (from 6.4% YoY) on unfavorable mix and overhead under-recovery .

Financial Results

Overall performance (oldest → newest):

Metric	Q3 FY2025	Q4 FY2025	Q1 FY2026
Revenue ($)	$200.161M	$216.377M	$211.884M
GAAP EPS ($)	-$0.12	-$0.40	-$0.13
Adjusted EPS ($)	—	-$0.28	-$0.01
Gross Margin %	6.4%	3.8%	6.7%

Q1 FY2026 actual vs S&P Global consensus:

Metric	Consensus*	Actual	Beat/Miss
Revenue ($)	$206.6565M*	$211.884M	Beat
Primary EPS ($)	$0.02*	Adjusted EPS -$0.01	Miss
EBITDA ($)	$4.50M*	Adjusted EBITDA $2.5M	Miss

Segment breakdown:

Segment	Q1 FY2025 Revenue ($)	Q1 FY2026 Revenue ($)	Q1 FY2025 GM %	Q1 FY2026 GM %
Storage & Terminal Solutions	$78.2M	$109.5M	6.0%	5.9%
Utility & Power Infrastructure	$55.9M	$74.5M	2.3%	9.1%
Process & Industrial Facilities	$31.4M	$27.9M	6.4%	5.1%

KPIs and balance sheet:

KPI	Q1 FY2026
Backlog	$1.2B
Awards / Book-to-bill	$187.8M / 0.9x
Storage awards book-to-bill	1.2x
Backlog adjustments	-$197.0M (two projects removed)
Liquidity	$248.9M
Cash (unrestricted)	$192.3M
Debt	No outstanding debt
FY26 revenue booked at midpoint	>90%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2026	$875–$925M (9/9/25)	$875–$925M (11/5/25)	Maintained
Quarterly break-even revenue (operational target)	FY2026	~ $225M (prior year reference)	$210–$215M	Improved
Full OH recovery revenue level (operational target)	FY2026	n/a	~ $250M	New disclosure

No formal guidance provided on margins, OpEx, OI&E, tax rate, or dividends beyond commentary above .

Earnings Call Themes & Trends

Topic	Q3 FY2025	Q4 FY2025	Q1 FY2026	Trend
Backlog & awards	Backlog $1.412B; awards $301M; book-to-bill 1.5x	Backlog $1.382B; awards $186M; book-to-bill 0.9x	Backlog $1.2B after -$197M removals; awards $188M; book-to-bill 0.9x; >90% FY26 rev booked	Visibility stable; backlog lower after removals but coverage higher
Margin trajectory	GM 6.4%	GM 3.8% (discrete items)	GM 6.7% (best in 2+ years)	Improving
Project mix	Storage/Utility momentum; storage awards	Macro uncertainty affects large FIDs	Mid-sized near-term; large multi-year expected late FY26/FY27	Mid-sized now; large later
Restructuring/cost	Efficiency actions underway	Restructuring charges; charges on legacy items	Breakeven cut to $210–$215M; OH full recovery at ~$250M	Leaner cost base
Power demand & data centers	—	—	Growth in power demand; gas power/LNG peak shaving opportunities	Emerging growth vector
Risk discipline	—	—	Removed two projects for risk/commercial reasons; no FY26 impact	Tighter risk filters
Legal/legacy issues	—	$14.9M net negative from four issues	None noted in Q1	Headwinds easing

Management Commentary

“We begin fiscal 2026 with strong execution, resulting in double-digit revenue growth and our highest quarterly gross margin in over two years… we are reiterating our full-year revenue guidance of $875–$925 million” .
“Our total opportunity pipeline currently sits at $6.7 billion… investments in LNG, NGLs, ammonia, and power infrastructure support significant project opportunities” .
“We removed approximately $197 million from backlog… these removals do not reflect a reduction in demand… and do not impact our Q1 results or full-year guidance” .
“Adjusted EPS was nearly break-even at a loss of $0.01… consistent with our expectation to achieve break-even on a GAAP basis at quarterly revenue of $210–$215 million” .
“Utility and Power Infrastructure… gross margin increased to 9.1% compared to 2.3%… due to strong execution and overhead recovery” .

Q&A Highlights

Backlog removals context: CEO emphasized decisions were not competitive losses; one project rebid due to owner execution strategy; the other rescinded after client attempted to increase contractor risk without compensation .
Project cadence: Expect many mid-sized 12–18 month projects to bridge until larger projects accelerate late FY26/FY27 .
Cost structure: Restructuring lowered quarterly break-even to $210–$215M (from ~$225M) and reduced revenue required for full OH/SG&A leverage to ~$250M .
Gas power projects: Company has legacy combined-cycle capabilities and sees expanding opportunities tied to reliability, LNG peak shaving, and backup fueling as data centers and manufacturing increase load .

Estimates Context

Q1 FY2026 vs consensus (S&P Global): Revenue $206.66M* vs actual $211.88M (beat); Primary EPS +$0.02* vs adjusted EPS -$0.01 (miss); EBITDA $4.50M* vs adjusted EBITDA $2.5M (miss). Coverage remains thin (2 estimates for EPS and revenue)*. Company reaffirmed FY26 revenue guidance .
Q4 FY2025 vs consensus: Revenue $232.25M* vs $216.38M (miss); Primary EPS +$0.015* vs adjusted EPS -$0.28 (miss) .
Q3 FY2025 vs consensus: Revenue $215.06M* vs $200.16M (miss); Primary EPS -$0.05* vs GAAP EPS -$0.12 (miss) .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Revenue outperformed consensus and margins rebounded; continued improvement hinges on execution and mix in Storage and Utility segments (watch gross margin trajectory) .
Reaffirmed FY26 revenue guidance with >90% of midpoint booked reduces downside risk to the topline; monitor award cadence to sustain/expand backlog after the $197M removals .
Cost actions have structurally lowered the break-even to $210–$215M/quarter and improved operating leverage potential at ~$250M revenue pace (OH/SG&A full recovery) .
Utility & Power Infrastructure margin expansion to 9.1% is a bright spot; sustained double-digit margins here would be a positive re-rating catalyst .
Project pipeline ($6.7B) and growing power demand (data centers/backup fuel/LNG peak shaving) support mid-term growth; near-term upside tied to mid-sized project flow and DRP execution .
Risk discipline (backlog curation) is positive for returns; near-term headline risk if large-project timing slips—watch late FY26/FY27 award conversions .
For trading: focus on beats/misses vs consensus and gross margin trends; for medium term, track incremental awards, book-to-bill, and confirmation of larger multi-year wins.

Appendix: Additional Items for Q1 FY2026

Delaware River Partners award: balance-of-plant work supporting a 100,000 m³ dual-service full containment tank (ammonia/LPG) at Repauno; taken into Q1 backlog .
Liquidity remained strong at $248.9M with no debt; cash used in operations tied to progress on prepaid-position projects .

Notes: Company figures and commentary from press release/8‑K and earnings call . Consensus estimates marked with * are from S&P Global.

MATRIX SERVICE CO (MTRX)·Q1 2026 Earnings Summary