Executive Summary

Q4 FY2025 revenue rose 14% year over year to $216.38M, but reported EPS of $(0.40) and adjusted EPS of $(0.28) reflected discrete charges tied to legacy disputes, a court ruling, labor overruns, and restructuring; FY2026 revenue guided to $875–$925M (+17% midpoint) supported by ~$1.4B backlog and ~85% of FY2026 revenue already in hand .
Versus Wall Street consensus for Q4: revenue missed ($216.38M vs $232.25M), EPS missed (adjusted $(0.28) vs $0.02), and EBITDA missed (actual negative vs positive estimate) as discrete items reduced revenue ($6.4M), net income ($14.9M), and adjusted EBITDA ($11.5M) (S&P Global estimates; see tables) .
Backlog ended Q4 at $1.382B; book-to-bill 0.9x for the quarter, with Utility & Power Infrastructure strong at 1.7x; cash from operations was $40.7M and liquidity improved to $284.5M with no debt .
FY2025 guidance was reduced earlier (Q2 and Q3), then delivered $769.3M; management expects sequential revenue and profitability improvement through FY2026 as cost actions lower break-even to $210–$215M/quarter and SG&A run-rate to ~$16.5M/quarter .
Stock narrative catalysts: robust FY2026 growth, backlog quality and award momentum in Utility/LNG, plus operational realignment; headwinds include lingering legal/arbitration outcomes and project timing amid macro/tariff uncertainty .

What Went Well and What Went Wrong

What Went Well
- Utility & Power Infrastructure gross margin expanded to 9.1% (from 4.2%) on strong execution and better overhead absorption; awards were $121.9M with a 1.7x book-to-bill, indicating healthy demand in LNG peak shaving and substations .
- Backlog remained near-record at $1.382B, supporting FY2026 revenue guidance with ~85% already booked and underway; CFO cited strong liquidity and extended credit facility maturity to 2029 .
- CEO emphasized alignment and streamlining (“flatten the organization”) to improve win/execute/deliver, positioning for sustained profitable growth in specialty E&C, with targeted pursuit in storage/LNG, electrical infrastructure, and data-center-adjacent power needs .
What Went Wrong
- Discrete items: $6.4M legacy arbitration revenue reduction, $3.8M crude terminal labor productivity charge, $1.3M unfavorable court decision, and $3.4M restructuring costs drove adjusted EBITDA to $(4.8)M and masked underlying improvements .
- Storage & Terminal Solutions gross margin turned negative (−1.1%) despite revenue growth, reflecting the crude terminal productivity issues and legacy recovery shortfall; segment GM fell vs prior year .
- FY2025 revenue guidance was cut twice (Q2 and Q3) due to permitting/start delays, policy uncertainty, and exit of a small T&D service line; Q4 EPS missed consensus materially, highlighting estimate risk in quarters with discrete charges .

Financial Results

Metric	Q2 FY2025 (Dec 31, 2024)	Q3 FY2025 (Mar 31, 2025)	Q4 FY2025 (Jun 30, 2025)
Revenue ($USD Millions)	$187.17	$200.16	$216.38
Gross Margin %	5.8%	6.4%	3.8%
GAAP EPS ($)	$(0.20)	$(0.12)	$(0.40)
Adjusted EPS ($)	$(0.20)	$(0.12)	$(0.28)
Adjusted EBITDA ($USD Millions)	$(2.18)	$0.01	$(4.82)
SG&A ($USD Millions)	$17.29	$17.73	$17.58
Cash from Operations ($USD Millions)	$33.60	$31.25	$40.71
Backlog ($USD Billions)	$1.311	$1.412	$1.382

Segment breakdown (revenue and gross margin):

Segment	Q2 FY2025 Revenue ($M)	Q2 GM %	Q3 FY2025 Revenue ($M)	Q3 GM %	Q4 FY2025 Revenue ($M)	Q4 GM %
Storage & Terminal Solutions	$95.51	7.6%	$96.05	3.9%	$96.09	−1.1%
Utility & Power Infrastructure	$61.08	5.6%	$58.68	9.4%	$73.03	9.1%
Process & Industrial Facilities	$30.59	1.2%	$45.43	8.3%	$47.26	5.9%

KPIs:

KPI	Q2 FY2025	Q3 FY2025	Q4 FY2025
Project Awards ($USD Millions)	$90.54	$301.19	$186.32
Book-to-Bill (x)	0.5x	1.5x	0.9x
Liquidity ($USD Millions)	$211.7	$247.1	$284.5
Debt Outstanding	$0	$0	$0

Estimate vs actual (S&P Global; asterisks denote S&P data):

Metric	Q3 FY2025	Q4 FY2025	Q1 FY2026
Revenue Estimate ($USD)	$215.06M*	$232.25M*	$206.66M*
Revenue Actual ($USD)	$200.16M	$216.38M	$211.88M [7: not applicable—see note]
EPS Estimate ($)	$(0.05)*	$0.02*	$0.02*
EPS Actual ($)	$(0.12)	$(0.28) adj	$(0.01) [1: not applicable—see note]
EBITDA Estimate ($USD)	$0.33M*	$2.62M*	$4.50M*
EBITDA Actual ($USD)	$(4.82)M adj	$(4.82)M adj	$0.31M* actual from S&P

Notes: Latest quarter (Q1 FY2026) actuals are shown where available from S&P Global in the estimates tool; for company-reported actuals, refer to the company’s Q1 materials (not in scope of this Q4 recap). Values retrieved from S&P Global.

Q4 beats/misses vs consensus:

Revenue: $216.38M vs $232.25M → miss .
EPS: $(0.28) adjusted vs $0.02 → miss .
EBITDA: $(4.82)M adjusted vs $2.62M → miss .
Values retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2025	$900–$950M (Q2)	$850–$900M (Q2) ; then $770–$800M (Q3)	Lowered twice
Revenue (Actual)	FY2025	n/a	$769.3M	Delivered near low end
Revenue	FY2026	n/a	$875–$925M; +17% midpoint	Introduced; Raised vs FY2025 actual
SG&A Run-Rate	FY2026	n/a	~$16.5M per quarter	Initiated
Break-even Revenue	FY2026	~$225M/quarter (prior)	$210–$215M/quarter	Lowered
Restructuring Costs	Q1 FY2026	n/a	Similar to Q4 (~$3.4M)	Expect continued costs

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 FY2025)	Previous Mentions (Q3 FY2025)	Current Period (Q4 FY2025)	Trend
Macroe/policy uncertainty & project timing	Pre-election policy uncertainty; permitting/start delays; FY2025 guide cut	Heightened macro uncertainty impacting timing; FY2025 guide reduced again	Overhang persists; tariffs/material escalation addressed via pricing/contracting	Uncertainty moderating but persistent timing effects
LNG peak shaving & Utility strength	Utility revenue +52%; margin 5.6%	Utility revenue +27%; margin 9.4%	Utility revenue +12%; margin 9.1%; awards/book-to-bill strong	Structural demand; execution improving
Storage/LNG projects	Storage revenue +53%; margin 7.6%	Storage revenue +77%; margin 3.9%	Storage revenue +37%; margin −1.1% due to discrete items	Growth with margin volatility from discrete issues
Exit/realignment of T&D service line	Exit of small non-core T&D line	Continued consolidation & flattening structure	Organizational alignment; $12M overhead cuts; SG&A target	Cost structure improved
AI/data centers & power demand	n/a	n/a	Strategy to play in generation, backup fuel, substations, utility upgrades adjacent to data center growth	Emerging growth vector
Legal/arbitration legacy issues	n/a	n/a	Reserve on 2021 crude terminal arbitration ($6.4M) and court ruling ($1.3M)	Final material legacy issue; resolution expected FY2026

Management Commentary

“We expect revenue growth to be approximately 17% at the midpoint of our guided range in fiscal 2026 supported by our robust backlog of multi-year projects which represents 85% of this midpoint.” — John Hewitt, CEO .
“We incurred $3.4 million in restructuring costs…these actions…reduced our annual overhead cost structure by approximately $12 million.” — Kevin Cavanah, CFO .
“The revenue run rate has now reached a level that supports positive earnings…under-recovered construction overhead reducing from 620 bps in Q1 to 160 bps in Q4.” — Kevin Cavanah .
“Where we are going to play a role…is the demand for additional power generation everywhere, and the demand for backup power and the fuel for that power related directly to data centers, the AI computing, advanced manufacturing.” — John Hewitt .

Q&A Highlights

Project timing/macro: Management still sees an “overhang” but only a few projects directly affected; tariffs/material escalation handled in pricing/contracting .
Book-to-bill outlook: Management believes a ~1.0x book-to-bill is attainable, with awards likely skewed to $50–$150M “bread-and-butter” projects in FY2026 .
Profitability path: High confidence in return to profitability given quality backlog and projects underway; lower break-even ($210–$215M/quarter) enhances earnings power .
Cash/liquidity: Cash build supported by upfront payments on long-term projects; balance sheet can fund execution and growth .
Cost savings: ~$12M annual overhead reduction split ~50/50 between construction overhead and SG&A; SG&A expected ~$16.5M/quarter in FY2026 .

Estimates Context

Q4 FY2025 missed consensus on revenue and EPS due to discrete items and margin compression in Storage; Utility segment execution and backlog strength mitigate medium-term concerns (S&P Global estimates; see table).
Estimate revisions likely to reflect FY2026 revenue ramp and lower break-even/SG&A run-rate; however, arbitration outcome and potential restructuring costs in Q1 FY2026 are near-term variables .
Values retrieved from S&P Global.

Key Takeaways for Investors

Backlog and awards provide strong visibility: ~$1.382B backlog and ~85% of FY2026 revenue already in hand underpin guided growth; Utility/LNG tailwinds are intact .
Near-term earnings cadence: Expect similar revenue to Q4 in Q1 FY2026, improving through the year; lower break-even and SG&A run-rate support operating leverage as volume grows .
Discrete items transitory: Q4 charges from legacy disputes and a court ruling should not recur; arbitration decision expected FY2026 with anticipated positive cash inflow .
Segment mix matters: Utility margins are resilient; Storage margins should normalize as discrete impacts fade; Process margins vary with work mix .
Capital position supports execution and growth: $284.5M liquidity and no debt, plus credit facility extended to 2029, enable backlog delivery and potential inorganic opportunities .
Watch catalysts: LNG upgrades/peak shaving awards, substation/interconnect projects tied to data-center power demand, arbitration resolution, and quarterly margin progression .
Estimate risk: Consensus appears sensitive to discrete items; better transparency on non-GAAP adjustments and project timing should help reduce volatility (S&P Global estimates).

Bolded beats/misses and all quantitative comparisons are anchored to company filings and S&P Global consensus where available.

MATRIX SERVICE CO (MTRX)·Q4 2025 Earnings Summary