Q4 2024 Matrix Service Co Earnings Call
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Speaker Change: Good morning and welcome to the Matrix Service Company Conference call that the success results from the fourth quarter of fiscal 2024.
Speaker Change: Currently all participants are in a listen-only mode.
Speaker Change: Later we conduct the question in the answers session and instructions will be given at that time. As Ramanna, this conference call is being recorded, I would not like to turn the conference over to today's host, Miss Kellie Smythe, seeing your director of investor relations for Make Two Service Company.
Kellie Smythe: Thank you, Justin. Good morning and welcome to Matrix Service Company's 4th quarter, fiscal 2020-24 earnings call. Participants on today's call into the John Hewitt, President and Chief Executive Officer and Kevin Cavanah, Vice President and Chief Financial Officer.
Speaker Change: The presentation materials referred to during the webcast today can be found under events and presentations on the investor relation section of matrixservicecompany.com
Speaker Change: As a reminder, on today's call, we may make various remarks about future expectations, plans and prospects for a major service company that constitute forward-looking statements for the purposes of the private security, certification, reform act of 1995.
Speaker Change: Actual results may differ, materialists and those indicated by these forward-looking statements because of various factors, including those discussed in our most recent annual report on form 10K and in subsequent violence made by the company with the SEC.
Speaker Change: To the extent we utilize non-gant measure, its reconciliation still be provided in various press releases, periodic SEC-B filings, and on our website.
Speaker Change: Related to investor conferences and corporate access opportunity, Matrix will be participating at the Upcoming DA Davidson 23rd annual diversified industrial and service conference in Nashville, Tennessee, September 18th through the 20th.
Speaker Change: If you would like additional information on this event, or would like to have a conversation with the management, and buy to you to contact nature and make sure to serve its company and bestow relations website.
Speaker Change: Before I turn a call over to John, I want to acknowledge that tomorrow marks the 23rd anniversary of 9-11 and the carousth attacks that took place in New York at the U.S. Pentagon and on Flight 93.
Speaker Change: 2,977 people die because of those acts and thousands more were injured. Among them, the first responders who sacrificed their own safety to save others.
Speaker Change: As we begin our call today, I'd like for us to remember them and our veterans who because of this event actively engaged in the war on terrorism that we still fight today.
Speaker Change: is through their actions and sacrifice that all of us are kept state.
Speaker Change: As we remember them, I also asked the each of us contemplate the fact that except for extraordinary events like 9-11.
Speaker Change: For our own behaviors and actions, we have the ability and the responsibility to protect the physical and mental safety of ourselves and those around us. I will now turn up all of the children.
Speaker Change: Thank you, Kellie, for this important message about sacrifice, safety, and of leadership to keep others safe.
Speaker Change: Iraqians and Behaviors Matter. Please choose to own safety for yourself as well as those around you. I'd also like to personally thank our nation's military and first responders, past and present for their unwavering commitment and service to protecting all of us.
Speaker Change: As we close off the fiscal 2024, our fourth quarter represented an important inflection point for our business. We advanced work, our multiple large projects during the quarter, which contributed to meaningful cash generation to close out the fiscal year.
Speaker Change: As we have seen through the course of fiscal 2024, Project Performance in the fourth quarter continued to be strong. We will be fully expect that as revenue and revenues improve into fiscal 2025. So we will be absorption and construction overhead costs.
Speaker Change: Backlock has increased by more than 30% on a year of year basis. We added 176 million in new project awards in the fourth quarter, bringing total awards for the year to 1.1 billion, and a book to bill of 1.5.
Speaker Change: and our opportunity pipeline continues to have significant strength, particularly in storage and storage related to facilities, which we expect to continue adding the backlog in the new fiscal year.
Speaker Change: These factors, combined with our strategic changes to the organization, and I'll already book multi-year projects which are beginning to ramp up, give us visibility and a revenue growth and a approved profitability in 2025 and beyond.
Speaker Change: The key MACA trends that are driving a demand for our services provide healthy long-term tailwinds for our business.
Speaker Change: and continue to be a catalyst for infrastructure investment for L.N.G. and G.L.s, ammonia, hydrogen and other renewable fuels providing significant opportunity across each of our reported segments.
Speaker Change: As we enter fiscal 2025, in our storage and thermal solution segment, activity was robust in the quarter, as we advanced the work on a large backup fuel supply facility and a boil-off gas compressor project at an LNG storage facility in the southeast.
Speaker Change: We also added another golf course NGL storage project to backlog where we are already X-Q, several other NGL storage projects.
Speaker Change: In addition, our teams are currently pursuing an approximately 3.2 billion of near-term projects supporting LNG, NGL, ammonia hydrogen and other products.
Speaker Change: and our utility and power infrastructure segment to need for system reliability and resilience as driving investments in utility generation and electrical infrastructure to meet power demand during peak periods as well as transmission.
Speaker Change: and Distribution Substation and other system upgrades to support the energy load growth, including energy and transit data centers.
Speaker Change: Again, our expertise in all things LNG, terminals, and related infrastructure at position matrix as a leader in needing demand for LNG peak shaving.
Speaker Change: Specifically in the fourth quarter, we continued work on two LNG peak-shaving facilities on his coast, one of which is well underway, while on the other we've broken down and are beginning civil work.
Speaker Change: Our team is also pursuing more than 1.2 billion in near-term projects in the utility and power infrastructure space in support of system reliability and resilience including an additional LNG peak-shavor and multiple upgrades as well as substations transmission distribution systems and other infrastructure.
Speaker Change: with an on-processed industrial facility segment, the Clean Energy Transition, the Supporting Project Investment, along with continued demand for traditional hydrocarbon and other industrial infrastructure.
Speaker Change: On those in the quarter, we completed work on a two-year refinery retrofit project on the West Coast, for renewable diesel, that grew the scope through the life of the project through the quality of work of our team.
Speaker Change: We advanced work on a new state-of-the-art thermal vacuum chamber, and existing refinery extended our multi-year contract to provide an embedded turnaround and plant services maintenance and repair work. And we were awarded a refinery turnaround for another long-standing client.
Speaker Change: We are currently pursuing 1.7 billion in near-term projects in this segment in multiple end markets, including natural gas, chemicals, petrochemicals, and mining minerals.
Speaker Change: Overall, our opportunity pipeline remains strong, a 6.1 billion, a key indicator of the strength across end markets and the ability to continue our long-term trend of backlog growth. As we have previously communicated, we expect to trend in our backlog.
Speaker Change: Hope to be able to continue at a ratio of 10 or greater on an annual basis.
Speaker Change: We keep this opportunity list which contains projects we have bid, arbedied, and will bid updated monthly. While there can be movement in and out of this pipeline for various reasons, the long-term volume of opportunities has been stable and we expect that to continue.
Speaker Change: In general, your opportunities we are currently pursuing are expected to be bid and awarded within the next 12 to 18 months.
Speaker Change: Once awarded, many of these projects will require an 18 to 30-month time frame to complete. As a reminder, this does not include smaller capital projects and maintenance activities performed on our MSAs or individual contracts.
Speaker Change: The lay-to-foundation from many parts of the business, while supporting our strong customer relationships. There's our profitability and free cash flow conversion in Peru, we will continue to prioritize maintaining that lean balance sheet and a strong liquidity position to support the growth of our business.
Speaker Change: Matrix is indeed at a critical turning point following several years of low revenue that began with the energy demand destruction during the pandemic and was followed by a protracted period with an limited number of projects available in a form markets were bid in a highly competitive environment.
Speaker Change: During this time, we've meaningfully transformed the company to focus on the in-markets that present the best opportunities, sit our unique capabilities and a support of our strong, back-alignomic industrial drivers.
Speaker Change: We screen-line the organization for the focus on reducing costs and enhancing project execution and building backlog. We began fiscal, we began fiscal 2025 with a backlog of 1.4 billion, and as noted as 6.1 billion opportunity pipeline.
Speaker Change: Finding continued strong project execution with excel in the celebrating revenues.
Speaker Change: The version of backlog, we believe the company is now a trajectory of upper growth and profitability. Our visibility into this upward trajectory is significantly clearer today, given the schedule status of our portfolio of projects.
Speaker Change: And that said, the business will always be impacted by the timing of awards on starch which is dependent upon market fundamentals or clients decision making and the regulatory environment which they operate.
Speaker Change: and consideration of all these factors are revenue guidance for fiscal 2025, it's between 900 and 950 million. It represents a year over your increase of 24 to 30%.
Speaker Change: As I mentioned, the project has supported our outlook for 2025 or early stages and will continue to ramp up as we progress through the year. Given the estimated change in the project activity during year, we expect to recognize improved profitability as revenue increases.
Speaker Change: The year will have a slow start with the impact of the summer months, as well as the recent completion of the large renewable diesel project noted earlier. Once we get past the first quarter, revenue growth should accelerate through the remainder of the year along with the associated operating salts.
Speaker Change: is entering many of these projects. We'll contribute to revenue for up to three years and a strong opportunity to pipeline the company. It's positioned for improved operating performance to extend into fiscal year 2026 and beyond.
Speaker Change: During this period of growth, we are committed to upholding the highest standards of safety, quality, and service. We will stay focused on our strategy, maintain a strong balance sheet, and deliver outstanding quality service to our customers.
Speaker Change: Doing so, while we'll take advantage of the opportunities we see in the market and support a long-term growth objectives. With that, I'll turn the color we cut it. Thank you, John.
Speaker Change: The results for the fourth quarter were in line with our expectations as anticipated revenue improved from the third quarter, increasing 14% to 189 million.
Speaker Change: We have previously discussed that the growth in our backlog has been fueled by long-term construction projects, which happened in heart lag between the time of our project is awarded and when it begins to translate to revenue. These contracts make up a significant portion of our backlog, and are just now beginning to benefit revenue.
Speaker Change: We expect that trend to continue in fiscal 2025. As John mentioned, the year will have a slow start once we get past the first quarter. Governor Groves should accelerate through the remainder of the year, driven by the storage and terminal solutions, and utility and power infrastructure segments.
Speaker Change: I will discuss revenue transfer that will get to the segment discussion.
Speaker Change: Project Execution was strong in the quarter, particularly in the process and industrial facility segment.
Speaker Change: Awken Solidade Revenue Increase, the company still has under recovered construction overheads, which impacted the gross margin by over 400 basis points resulting in a gross margin of 6.6%.
Speaker Change: Moving down the income statement, SGNA was 17.3 million in the corner, which is in line with our targeted levels. For the fourth quarter of fiscal 2024, we had a net loss of 4.4 million or 16 cents for a fully diluted share. Now for the operating segments.
Speaker Change: In the storage and thermal solution segment revenue increased 30% to 70 million as work began on previously awarded, especially vessel projects, compared to 54 million in the third quarter.
Speaker Change: We expect this trend to continue as we move through fiscal 2025, resulting in significant revenue growth.
Speaker Change: Gross margin was 3.1% in the quarter, as margins were impacted by under-recovered construction overhead costs as a result of the low revenue and allocation of more construction resources to this segment to support the large path log.
Speaker Change: We expect revenue growth will eliminate the negative impact of this issue as we move through fiscal 2020-25.
Speaker Change: and the Utility and Power Infrastructure segment, fourth quarter revenue increased over 40% to 65 million has compared to the third quarter. The growth was driven by increased activity on previously awarded peak-shabler projects.
Speaker Change: As we get through the seasonally slow first quarter we expect to grow, trying to continue through the remainder of the fiscal 2025. Overall we are expecting significant revenue revenue growth, the utility and power infrastructure segment in fiscal 2025.
Speaker Change: That growth will be driven by high-peach shareable projects. We also continue to focus on the power delivery business, which is experienced a softer market in the Northeastern geographic areas we serve.
Speaker Change: Our operations and business development leadership is expanding the footprint and client base to address this substance with the goal of improving revenues in this market over the next few quarters.
Speaker Change: First margin was 4.2% in the fourth quarter, as margins were impacted by under-recovered construction over-head costs due to the low revenue and the power delivery business and allocation of additional resources to support the large peak-shavor backlog.
Speaker Change: As you move through fiscal 2025, we expect higher revenue levels to allow for full recovery of construction or red cost.
Speaker Change: in the process of industrial facility segment for quarter revenue decrease 17% to 54 million as compared to third quarter. As John noted during the fourth quarter, the company successfully completed a large renewable diesel project.
Speaker Change: Disproject, highlights the application of our traditional energy capabilities to renewable projects.
Speaker Change: The prospects in the process of the industrial facility segment are strong and including refining natural gas, chemicals and petrochemicals and mining in minerals.
Speaker Change: We expect substantially lower revenue for this segment over the next couple of quarters due to the combination of seasonality, timing on the kickoff or previously awarded projects and the award cycle for new projects.
Speaker Change: We believe this reduction in revenue is temporary given a strong opportunity pipeline and back log of 250 to 2 million, including a significant gas processing construction project that is expected to commence in late fiscal 2025.
Speaker Change: The segment gross margin in the fourth quarter was significantly higher than normal expectations at 15.4% due to overall strong project execution across the entire portfolio projects.
Speaker Change: Alice discussed the balance sheet and liquidity. Our balance sheet continued to strengthen during the fourth quarter as we generated 47 million in cash from operations. Increasing our year in cash balance 48% in the quarter to 141 million.
Speaker Change: This cash increase also drove a 26% increase in liquidity to 170 million
Speaker Change: Our debt position remains to zero. We will continue to proactively manage the balance sheet and have the financial strength and liquidity needed to support the significant revenue growth. We are anticipating in fiscal 2025.
Speaker Change: Before I turn the call back to John, I want to take a minute for a high level recap.
Speaker Change: First, our backlog increased 31% on 1.1 billion in awards. This is the second consecutive year that the company has seen as 1 billion in project awards.
Speaker Change: This current backlog of 1.4 billion supports are 10 to 12% consolidated gross margin range.
Speaker Change: Welcome, we also continue to have a robust funnel of future opportunities.
Speaker Change: Our revenue was 728 million of fiscal 2024, and impacted primarily by delays and converting project awards into active projects.
Speaker Change: With many of those projects now having commenced, we believe the backlog and opportunity funnel we have supports significant revenue growth in fiscal 2025 and beyond.
Speaker Change: The County successfully improved project execution during fiscal 2024 with all three segments producing direct growth margins, approaching our consolidated target range of 10 to 12 percent.
Speaker Change: Issue for margin performance in fiscal 2024, was related to the recovery of construction overhead, which impacted gross margins by almost 400 basis points.
Speaker Change: My Marlias result of the time in a baffle conversion revenue.
Speaker Change: Our visibility and a higher future revenue provides to company confidence. The overhead recovery issue will be significantly diminished in fiscal 2025.
Speaker Change: The company continues.
Speaker Change: Discipline cost structure management with the goal of limiting cost growth to the capture and execution of projects to the extent possible.
Speaker Change: This will allow for the leverage of the cost structure. Finally, the company's balance sheet and liquidity is strong and supports the anticipated revenue growth.
Speaker Change: in summary, the company expects a revenue of 900 to 915 million in fiscal 2025.
Speaker Change: We believe the combination of revenue growth together with continued focus on execution excellence and the leverage of our cost structure will allow us to return the profitability in the fiscal year and make significant progress towards the achievement of our long term financial targets.
Speaker Change: will now throw the call back to John. Thank you, Kevin. As mentioned, our fourth quarter represented in a important turning point, what has been a challenging period for the company.
Speaker Change: of Clear Visibility and the revenue growth and approved profitability in 2025 and beyond, we continue to advance our growth strategies for creating a long-term, shareholder value. In closing, I've given you grateful for the hard work, innovation and commitment of our employees.
Speaker Change: for their continued confidence placed in us by our clients whose loyalty inspires us to push to boundaries of excellence in every critical infrastructure project we undertake. And for you, our shareholders, who are made committed to major service companies, with that, a little bit of all for questions.
Speaker Change: and thank you. As a reminder to ask the question, please press star 1-1 on your telephone and wave your name to be announced. So, a draw your question, please press star 1-1 again. Please stand by when we compile the Q&A roster. One moment for our first question.
Speaker Change: And our first question comes from John, friend, rap from Sedonian Company, you live now open.
Speaker Change: Good morning everyone, and thanks for taking the questions.
Speaker Change: I'd like to start.
Speaker Change: Start with the gross margins that you've reported in the quarter. I guess I want to start with the good. Can talk a little bit about why the process goes from margin was so outstanding at 15.4% in the quarter and how does that look like on a gold-forward basis?
Speaker Change: So the fourth quarter performance in the process in industrial facility seven was was a extremely strong and and what we saw was
Speaker Change: Just about every operating unit in that segment, significantly exceed normal, normal performance, so that's the result of strong execution.
Speaker Change: throughout all phases of projects from the starter projects, through the close-out of projects, normally you know that.
Speaker Change: That's not the case where everything just is working on like clockwork. I think the long term, our expectations for that segment are to get to...
Speaker Change: Consistently 9 to 9 to 11 percent gross margins. Remember this segment includes a lot of reimbursable activity.
Speaker Change: and so the mix of work in the core of the reimbursed will refinery maintenance activity. One of the lessons I has it normally is so that also contributed to the higher margins in the core.
Speaker Change: Got it. And I go forward with basis, I'm going to think about the gross margin profile, are the jobs that we're executing now on? Are they back to normalized gross margins, or are they still some jobs that you'll be...
Speaker Change: Delivering that or still on the recovery of Absorb course.
Speaker Change: Now, so if you look at the portfolio projects we've got today, we're past those issues where we had.
Speaker Change: You know, unusually competitively bid margins, you know, the projects we've been adding in the last 18-24 months are in that historical range for the most part of that historical 10-12% range. Now there'll be certainly be projects we...
Speaker Change: We strategically did a little more aggressively to, you know, to get either win that project for various reasons, including, you know, maybe it's we want to expand our relationship with the client. And then there's there's always a mix of projects you get into smaller projects.
Speaker Change: There may be a higher level of competition, more people that are capable of doing that work, and so you may have to be a little more aggressive on that type of work versus...
Speaker Change: versus larger projects but I would say we're back to a normal, overall normal mix of work that supports the margins we expect.
Speaker Change: And as we think about the cadence of revenue recognition in the coming year, it seems two things to me. One, we're looking at a sizable optic in the storage business.
Speaker Change: is that the case and is that completely weighted.
Speaker Change: in the second half of the year and secondly that it looks like the process is going to probably be at a lower diminished level for the back of too much of 2025. Am I really not right?
Speaker Change: A significant project that we talked about a couple of times on the in the script.
Speaker Change: <unk>.
Speaker Change: We were in a traditionally summer months, which are slower for refinery and then we've got backlog projects that don't start till later in fiscal 'twenty five so the first couple of quarters of this but that segment are going to be pretty low. So we expect a substantial decrease in the first half of the year and then you'll see it start to <unk>.
Speaker Change: Pick up again in the third and fourth quarters.
Speaker Change: Okay.
Speaker Change: Got it.
Speaker Change: I'll give it up and get back into queue. Thank you guys.
Speaker Change: Thank you and if you have a question that is star one again, if you have a question that is star one one.
Speaker Change: One moment for our next question.
Speaker Change: And our next question comes from Brent Thielman from D. A Davidson your line is now open.
Speaker Change: Hi, Thanks, good morning.
Speaker Change: Just wanted to follow up just thinking hey, good morning, just wanted to follow up on just kind of the sequencing of that revenue as we work through fiscal 2025 I appreciate that.
Speaker Change: Our revenue guidance by the way but.
Speaker Change: It sounds like maybe you're expecting still some more difficult.
Speaker Change: Challenging kind of year on year compares in the first fiscal quarter, but your revenue did grow.
Speaker Change: In this fourth quarter relative to the third quarter. So it seems like things are picking up for you would you expect some sequential revenue growth into the first fiscal quarter.
Speaker Change: No I think it's there's a couple of things working against that from happening.
Speaker Change: First of all you got summer month activity for both the power delivery business and the refining business and then secondly, we've got the the completion of the large project that we have in the patent process industrial facility segment.
Speaker Change: Surely that's offset somewhat by growth in storage.
Speaker Change: Particularly in the first quarter, but I think overall I wouldn't expect growth.
Speaker Change: Maybe a little bit lower in the first quarter.
Speaker Change: Got it.
Speaker Change: And then.
Speaker Change: John I guess, I mean, just back to the electrical delivery business I mean, all we hear is about investment and what needs to happen to the grid.
Speaker Change: A bit surprising still to hear some some challenges in that business.
Speaker Change: Maybe if you could just talk through that what's the what's with the challenge there with those particular customers and then.
Speaker Change: How quickly do you think that can get this business back on a better footing just with some of the actions you are taking a very focused with some new customers.
Speaker Change: Yes.
Speaker Change: Our electrical infrastructure business.
Speaker Change: Fairly tight geography, as you prepare that data the entire.
Speaker Change: At this stage.
Speaker Change: So we've got some long term clients that we work for and they're both on and.
Speaker Change: Contract, our choice of Raymond James arrangements, Msas and projects that we bid and I think what we're seeing by some of those principal principal clients as their spend.
Spending patterns, which happens it seems to happen in cycles.
Speaker Change: For a lot of our clients.
Speaker Change: Is down a little bit on the size of the projects are smaller.
Speaker Change: The competitive set continues to be challenging that we deal with so so our teams over the last six months. We've seen this seen this trend start restarting again.
Speaker Change: And so if we're continuing we continue to.
Speaker Change: To focus in the northeast, but expand our footprint in the northeast and other areas into other.
Speaker Change: Client geographies.
Speaker Change: And where we're seeing larger capital spend and transmission distribution substation work and so we've been in a process there where we're working on.
Speaker Change: And.
Speaker Change: Developing those relationships and getting into that bidding cycle with those clients. So that work is ongoing we're seeing some great fruit there on the opportunities that are that are afford themselves to our business. In addition, there is.
Speaker Change: A lot of industrial electrical work.
Speaker Change: In that region that we work in weather.
Speaker Change: Whether those are in power generating facilities or data centers.
Speaker Change: Midstream work.
Speaker Change: LNG.
Speaker Change: Facility upgrades and so we're actively attacking those markets as well.
Speaker Change: Our work to expand and expand our business. So it's going.
Speaker Change: It takes some time, but I think over the next two to three quarters, we're going to see.
Speaker Change: Some more strength return into our electrical infrastructure business.
Speaker Change: And we're continuing to look at new geographies for that business, we have been.
Speaker Change: Evan active and the higher valley, but I think there's opportunities for us there to expand that footprint enter into that region of the country as well. So we think long term electrical piece of our business as a growth element.
Speaker Change: <unk>.
It's an important part of our business moving out into the future. We're going to continue to work from a business development and a resource standpoint to find avenues of growth at those.
Speaker Change: Yes understood.
Speaker Change: John maybe just one more.
Speaker Change: A lot of conversations obviously about.
Speaker Change: The demand consumption of data centers.
Speaker Change: Power grid on power in general.
Speaker Change: As Youre looking at your pipeline of prospects six plus billion dollars are you starting to identify projects that may be associated with meeting those needs, particularly serving the power center.
Speaker Change: Yeah, absolutely so I mean.
Speaker Change: Our initial.
Speaker Change: Work related to data centers will certainly be in a transmission distribution work in the <unk>.
Speaker Change: <unk> day.
Speaker Change: Data center into the local grid system, we did a fairly sizable project for a client in Pennsylvania, a couple of years ago. We finished where we built the connected it put the put the.
Speaker Change: Substation.
Speaker Change: Did all of the grid interconnect and so there continues to be some opportunities out there thats driving some of our opportunity pipeline I think the other thing we're seeing there is the.
Speaker Change: With this demand this huge demand the data centers themselves are creating four on.
Speaker Change: For power.
Speaker Change: These data centers need.
Continuous guaranteed power they need to be able to they need to be able to guarantee to their clients that theyre going to be able to have their systems up and run.
Speaker Change: No matter, what and so the other thing we're starting to see is more small scale.
Speaker Change: Power generation turbines put in at data center sites LNG <unk> hydrogen backup fuel for their individual power generation on those aero derivative turbines. So all of that work is work there that fits within our skill sets whether its installation of those turbines.
<unk> certainly all the electrical work certainly anything related with LNG and hydrogen infrastructure that needs to put into service that backup power supply for those data centers. So there's more there than just building the data center and connecting to the grid and so we think those opportunities are going to be growing out into the future and we are.
Speaker Change: We're really well situated to take advantage of that.
Speaker Change: Okay.
Speaker Change: Excellent. Thank you guys.
Speaker Change: And thank you.
And we have a follow up question one moment please.
Speaker Change #100: And a follow up question comes from John <unk> from Sidoti <unk> Company. Your line is now open.
Speaker Change #101: Yes, I got a question about.
Speaker Change #102: You called out the opportunity pipeline doesn't include service revenue on or jobs less than $5 million I'm. Just curious what percentage of say fiscal 2024 is revenue is that service component and smaller maybe we would characterize is book and turn business and.
Speaker Change #103: Is that a normal run rate or is that abnormally higher than low just wanted to.
Speaker Change #104: Put that in context.
Speaker Change #105: I mean, we traditionally our business runs in the 40% book and burn maintenance activity, 60% lump sum projects and those can be lump sum projects from anywhere from.
Speaker Change #106: $5 million to $10 million up to $300 million, so that mix in that portfolio generally runs in the 40 60 kind of range I would say today because of the size of our lump sum portfolio spread across our storage business and spread across our Upi business.
Speaker Change #107: Probably more like 30, 70 to what that looks like and so good news for that is as more sustainable revenue for us long term and it helps to drive better consolidated margins.
Got it and I also noticed in the.
Speaker Change #107: Presentation and this might be just me I don't know.
Speaker Change #108: Nitpicking, but you changed the.
Speaker Change #108: The characterization of the opportunity pipeline.
Speaker Change #109: Reported it on a segment basis as opposed to more Greg.
Speaker Change #110: Granular breakdown by end markets.
Speaker Change #111: Any particular reason why.
Speaker Change #112: Well, we report the business in our segments and we were trying to provide some over the past couple of years is trying to provide some color on our.
Speaker Change #113: The work that we're doing that in this energy transition mode to give investors the opportunity to see what our impact was there and so we kind of just generally felt that hey, maybe this is time to go back to our how we report are the rest of the business in our segments.
And so that was really the really the may our main thinking.
Speaker Change #113: When we did that nothing nothing subversive John.
Speaker Change #113: Fair enough.
Speaker Change #113: And can you just talk a little bit about the competitive landscape I seeing any changes in the pricing environment, either one way or the other.
Speaker Change #114: No I think competitive landscape still lays itself out like it normally does for us the smaller projects to Reimbursable staff.
There continues to be continues to be a highly competitive market out there I wouldnt say, its gotten better or worse sort of I'd say back to normal.
Speaker Change #114: But as the project sizes get larger as the as the type of projects in storage with our specialty vessel.
Speaker Change #115: We're connected into full facilities, the competitive set dropped significantly as those projects.
Speaker Change #115: Get get not only get larger but the fact that those are the kind of projects that are out there where you've got a mix up.
Speaker Change #115: Specialty storage with.
Speaker Change #115: Facility infrastructure wrapped around it.
Speaker Change #115: And I think thats.
That's an important point for us that those projects are back and they allow those projects allow a much better.
Speaker Change #115: Margins at our risk profile journey that the people we compete against in those projects, which is.
Speaker Change #115: Probably less than a handful they don't they don't do stupid stuff and so.
Drive the risk on those jobs outside or something to that any one of us think we control. So it's just a better.
Speaker Change #115: A better landscape I think as those projects spec.
Speaker Change #115: The story JM Upi projects.
Okay.
Speaker Change #115: Question.
Speaker Change #115: Just wondering because I recently heard this on this topic hasnt come up in a while.
Speaker Change #115: Could you give us update on your thoughts to the hydrogen market.
Speaker Change #116: Only because I just recently heard it come back in Vogue, a little bit.
Speaker Change #117: Hearing there John.
Speaker Change #118: Yes, I think I mean for me I still think hydrogen is going to be out into the future is going to be part of the global fuel mix.
Speaker Change #118: I think it could be.
Speaker Change #118: As most things is most things across to the social media I don't think we're going to be 100% hydrogen economy.
Speaker Change #119: In the future, but I think it's going to be part of the fuel mix and I think that we're going to have we have an opportunity to play a role in building that infrastructure with our specialty vessel capabilities, our cryogenic capabilities ability to rapidly infrastructure around that.
Speaker Change #119: We're continuing to see.
Speaker Change #119: Opportunities in feed studies preliminary engineering work for various hydrogen projects I think.
Speaker Change #119: I think to some extent a little bit about slowdown with how the.
Speaker Change #119: The Federal Infrastructure Act was.
Legislated related too.
Speaker Change #119: The credits that were coming out of out of that act and the need for renewable fuel to power the hydrogen facilities.
Speaker Change #119: And so I think.
Speaker Change #119: That's kind of set back some of the people that were that were focused on that.
Speaker Change #119: Also related to Pedro Jane and the other work we do.
Speaker Change #119: One of the changes that we made when we reorganized our business development group and our focus on our markets was to be cautious about developers developer led projects and so where we're much more focused on long term clients blue chip clients clients that have balance sheets.
Whether those utilities are energy companies or industrial companies and so.
Speaker Change #120: There's been a fair amount of activity here over the last couple of years of developer type hydrogen projects and we're pretty cautious about today about our interaction with developers.
Speaker Change #120: Got it understood. Thanks for the clarity and then any additional color.
Speaker Change #120: Welcome.
Thank you.
Speaker Change #120: And I am showing no further questions I would now like to turn the call back over to Kellie Smythe Senior director of Investor Relations for closing remarks.
Kellie Smythe: Thank you as a reminder, matrix will be participating at the upcoming da Davidson Conference September 18th through the 20th in Nashville.
Kellie Smythe: Additional information on our attendance at that conference our conversation with management. Please contact me through Matrix Service Company Investor Relations website. Thank you for your time.
Kellie Smythe: This concludes today's conference call. Thank you for participating you may now disconnect.
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