Good morning, and welcome to the Matrix Service Company conference call to discuss the results for the fourth quarter of fiscal 2025. As a reminder, this conference call is being recorded. I'll now turn the conference over to today's host, Ms. Kellie Smythe, Senior Director of Investor Relations for Matrix Service Company.

Thank you. Good morning, and welcome to Matrix Service Company's Fourth Quarter Fiscal 2025 Earnings Call. Participants on today's call include John Hewitt, President and Chief Executive Officer; and Kevin Cavanah, Vice President and Chief Financial Officer. Following our prepared remarks, we will open the call up for questions. The presentation materials referred to during the webcast today can be found under Events and Presentations on the Investor Relations section of matrixservicecompany.com. As a reminder, on today's call, we may make various remarks about future expectations, plans and prospects for Matrix Service Company that constitute forward-looking statements for the purposes of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements because of various factors, including those discussed in our most recent annual report on Form 10-K and in subsequent filings made by the company with the SEC. The forward-looking statements made today are effective only as of today. To the extent we utilize non-GAAP measures, reconciliations will be provided in various press releases, periodic SEC filings and on our website. Finally, all comparisons today are for the same period of the prior year, unless specifically stated. Related to investor conferences and corporate access opportunities, we will be participating in the D.A. Davidson 24th Annual Diversified Industrials & Services Conference in Nashville, Tennessee, September 17th through the 19th. If you would like additional information on this event, or would like to have a conversation with management, I invite you to contact me through the Matrix Service Company Investor Relations website. I will now turn the call over to John.

Thank you, Kellie. Starting with safety at Matrix, the physical and mental safety of our employees as well as that of anyone on our project sites or in our offices is core to who we are, an expectation for all employees and a commitment we uphold for all stakeholders. Today, I want to emphasize that similar to airport security, if you see something that does not look right, that could create a hazard for yourself or fellow employees, then please say something. At Matrix, this is not only a right that our employees have when they come to work for us, but it is an obligation and expectation for everyone, and we expect our leaders to listen and act without retribution. This authority is a critical part of our culture and creates a safer work environment. We find many times in near misses and incidents that the use of Stop Work Authority or the honoring of that authority by leadership could have prevented an incident. In fiscal 2025, we made significant improvements in both our total recordable incident rate (TRIR) and our DART rate, which is a measure of injury severity and stands for days away, restricted, or transferred due to an injury. Our TRIR improved from 0.91 in fiscal 2024 to 0.51 in fiscal 2025, and our DART rate improved from 0.28 to 0.21 for the same period. While we are proud of these achievements, we understand that achieving and maintaining a zero incident safety performance is a relentless journey, and we will continue to prioritize safety in everything we do as we work towards this goal. As we conclude fiscal 2025, on behalf of the company's leadership team, I would like to thank everyone at Matrix as well as our subcontractors and others on our project sites and offices for your unwavering commitment to our safety journey and building the kind of culture that we expect. The effort you invest in fostering a safe work environment at work and at home makes a profound difference. Together, we can achieve our goal of zero incidents. To our team members, remember, Stop Work Authority is a right, an obligation, and an expectation for everyone. Reflecting on fiscal 2025, the financial results certainly did not meet the expectations we had at the start of the year nor do they accurately portray the positive underlying performance of the business. It is essential to look behind the numbers to recognize the progress achieved and the fundamental strength in the business. It is important to understand that the impact from a single isolated event alongside a couple of legacy legal issues from 2021 and restructuring costs incurred to improve the organization does not reflect the company's underlying performance or its future potential. Kevin will provide more detail on these impacts in his remarks. But before he does, I want to highlight a few key takeaways. First, our project teams are executing well and producing strong consolidated results on our projects and maintenance activities across the enterprise, as evidenced by above-plan direct gross profit levels, even including the labor productivity issues from a crude storage project noted in our earnings release. In short, we are executing on the backlog and new awards above plan on a consolidated basis. Second, while the full year's revenue was below our expectations, over half of the revenue shortfall was related to the late start on previously booked work, which is now in full motion, along with significant weakness in the planned growth for our T&D business, which led us to exit that service line in the back half of the fiscal year. The trend of growing revenue did occur as expected quarter-over-quarter, just not to the level we anticipated, and we expect revenue to continue to grow in fiscal 2026. Third, the awards in the year of $726 million allowed us to maintain a near-record backlog of approximately $1.4 billion. As a result, we are entering fiscal 2026 with approximately 85% of the planned revenue already booked, with nearly all of that underway. Additionally, this year's awards support our core market objectives in specialty storage, LNG facilities, and electrical infrastructure, some of which are directly associated with the East Coast data center build-out and its demand for reliable power. These new awards and performance on existing backlog are creating new and reinforcing existing client relationships, which will lead to more award opportunities as the demand for energy, power, and industrial infrastructure continues to grow. Many of our clients are looking to commit to contractors that they trust and have high-performing teams to ensure their work gets built. Finally, as the year unfolded, we took steps to ensure the business is prepared for what we see as a strong future—a future of opportunities and growth in our target markets. We looked at the business's core strategic pillars of win, execute, and deliver to ensure that every part of the business, from sales to operations to shared services to administrative support, is properly aligned. In the end, we flattened the organization, closed underperforming offices, consolidated operational support services, restructured business development to better align with core market and growth objectives, and integrated our engineering and construction operations to improve competitiveness, market alignment, and delivery. While we did incur some costs associated with these initiatives, the changes are crucial to ensuring Matrix can capitalize on the significant opportunities ahead. As these efforts begin to bear fruit, they will serve as key catalysts for our continued strategic growth and solid execution in 2026 and beyond.

Thank you, John. Yesterday, we released our results for the fourth quarter of fiscal 2025. Those results included revenue of $216.4 million, EPS of a $0.40 loss, and adjusted EBITDA of a $4.8 million loss. These results included four items that affected the ongoing business. First, we lowered our recovery expectations on a legacy project currently in a dispute resolution process, which resulted in a $6.4 million reduction of revenue and operating income. This was related to a crude terminal project we completed back in calendar 2021. The project was impacted by the COVID pandemic and incurred significant project scope changes directed by the owner. We've been pursuing our outstanding contract balance from the customer since that time. Arbitration proceedings occurred last month, and we are awaiting the final decision in fiscal 2026. While the outcome of legal proceedings is uncertain, we believe we have appropriately reserved for our exposure on this issue and expect a positive cash inflow upon resolution. Second, we incurred an additional $3.8 million charge on a crude project impacted by lower-than-anticipated labor productivity. You may recall we discussed this project last quarter when we began to incur productivity issues. While we work hard to avoid any issues during our projects, issues occur from time to time. When they do, our focus is on reducing any financial impact and maintaining our strong relationship with our customer. We are pleased to report that the team worked through the issues, completed the project earlier this quarter as planned, and did so in a manner that further solidified our relationship with an important customer. Third, we incurred a $1.3 million charge related to an unexpected court decision on a project completed in calendar 2021. In this case, a subcontractor of ours failed to pay certain vendors even though we had paid the subcontractor. The court ruled, that we had to make good on the amounts owed to the vendors, effectively requiring us to pay the obligations twice. Finally, we incurred $3.4 million in restructuring costs related to the organizational improvement actions John previously discussed. As those actions continue into fiscal 2026, we expect to incur a similar amount of restructuring costs in the first quarter. These actions were mainly designed to improve operational efficiencies, but they also reduced our annual overhead cost structure by approximately $12 million, considering the higher inflation we've experienced over the past couple of years and other cost pressures. These changes will allow us to keep our annual cost structure flat during a period of strong revenue growth. The combined impact of these items was significant to the quarter. It decreased our revenue by $6.4 million to the reported $216.4 million, which was just below our implied fourth quarter guidance range. It negatively impacted EPS by $0.53, resulting in the $0.40 loss I previously referenced, and it decreased our adjusted EBITDA by $11.5 million to a $4.8 million loss. We believe discussing the results in this manner is necessary to demonstrate the fundamental performance and improvement in the underlying business. Our fiscal 2025 focus was to improve operating results and return to profitable performance due to growth in our revenue run rate, effective project execution, and leveraging our overhead cost structure. Revenue grew each quarter of the year as large projects ramped. That growth continued in the fourth quarter with revenue being 31% higher than the start of the year. The revenue run rate has now reached a level that supports positive earnings. As previously mentioned, our project execution was strong enterprise-wide, as the underlying business produced double-digit direct margins excluding the items discussed. We have a quality backlog, and we'll continue to focus on effective project execution. The leverage of our cost structure improved throughout the year, with the under-recovered construction overhead reducing from 620 basis points in the first quarter to 160 basis points in the fourth. Finally, SG&A leverage also improved from 11.2% of revenue in the first quarter to 8.1% in the fourth. As we move through fiscal 2026, additional revenue growth combined with the efficiency actions taken will allow us to materially eliminate the under-recovery of construction overhead to further leverage SG&A towards our 6.5% target. Moving on to the segments. Storage and Terminal Solutions segment revenue increased by 37% to $96.1 million in the fourth quarter of fiscal 2025 compared to $70 million last year due to increased volume of work for specialty vessel and LNG storage projects. Gross margin in the fourth quarter of fiscal 2025 reflects improved operating leverage resulting from higher revenue. However, gross margin was a negative 1.1% in the fourth quarter compared to a positive 3.1% last year as a result of labor productivity issues on the crude terminal project and lower recovery expectations on the legacy project, both of which were discussed previously. The Utility and Power Infrastructure segment revenue increased by 12% to $73 million in the fourth quarter compared to $65.3 million in the same period a year ago, benefiting from a higher volume of work associated with natural gas peak-shaving projects. Gross margin was 9.1% in the fourth quarter compared to 4.2% last year, an increase of 4.9% due to strong project execution and improved construction overhead cost absorption. The fourth quarter gross margin was also impacted by a $1.3 million charge related to the unfavorable court decision discussed previously. Process and Industrial Facilities segment revenue decreased to $47.3 million in the fourth quarter compared to $54.2 million last year, primarily due to lower revenue from the completion of a large renewable diesel project last year. In addition, we have lower revenue from thermal vacuum chambers, which was partially offset by higher revenue volumes for refinery work. Due to the change in the mix of work, the gross margin was 5.9% in the fourth quarter of fiscal 2025 compared to 15.4% last year. Now let's discuss backlog, which stands at almost $1.4 billion as of June 30, 2025. Project awards totaled $186.3 million in the fourth quarter resulting in a book-to-bill ratio of 0.9. While economic uncertainty has impacted the timing of project awards overall, the Utility and Power Infrastructure segment had a strong quarter with $121.9 million in awards and a book-to-bill of 1.7. These awards were related to LNG peak-shaving projects and substations. The year-end backlog level is supportive of strong revenue growth in fiscal 2026. Moving to the balance sheet, our cash increased an additional $39.1 million in the fourth quarter related primarily to working capital changes. For the year, our cash balances increased by $109 million to $249.6 million as of June 30, 2025. Available liquidity has increased to $284.5 million, comprised of $224.6 million of unrestricted cash and $59.8 million of borrowing availability under the credit facility. The company also has $25 million of restricted cash to support the credit facility, and our debt position remains at zero. Subsequent to year-end, the company executed an amendment to the credit facility, extending its term until September of 2029. The company entered fiscal 2026 in a strong financial position, providing liquidity needed to support the execution of our backlog and to deploy capital towards growth.

Thank you, Kevin. In closing, I'd like to reiterate the following takeaways: First, despite some legacy legal issues and other noise during the fourth quarter, our team grew revenue consistently quarter after quarter through the year and is executing above plan from a direct gross profit perspective on the work at hand. Second, our strategy is working. We are winning work in our key focus areas, maintaining our near-record backlog even in the face of the uncertain macroeconomic environment. Our organizational realignment is strengthening our platform and positioning the company for sustained profitable growth, both organically and inorganically. Third, our momentum into fiscal 2026 is strong with robust backlog and a strong opportunity pipeline. We're guiding to 70% revenue growth next year with 85% of that revenue coming from backlog that is already in progress. With this tremendous momentum across the business, we believe we are entering a prolonged period of growth. Above all, we remain committed to delivering sustainable shareholder value by building a platform capable of consistent profitability, backlog growth, and cash generation. I am proud of what our team accomplished in fiscal 2025 and even more excited about the road ahead. By remaining disciplined, focusing on safety and quality, and continuing to improve our operations, we are confident in our ability to drive growth and create long-term value for our shareholders as we successfully win, execute, and deliver. With that, we'll open the call for questions.

Operator Instructions. And our first question comes from the line of John Franzreb of Sidoti & Co.

John, last quarter, you referenced that some jobs are being pushed to the right due to economic uncertainty. Are you still seeing that?

Yes. I would say there is an overhang across our industry. However, I would point out that we're really only able to attribute delays to a couple of projects on our sites that you could say are directly impacted by what's going on with tariffs and some global events. Most of those projects are related to things that have more global involvement—specifically exporting some type of energy product. The internal projects, such as the LNG peak-shaving and backup fuel supply, continue to show a lot of activity. We are still seeing a lot of smaller projects coming through the pipeline. The major projects are just timing issues that come and go and take a while to develop. However, we have some large LNG peak-shaving projects in our sites, and while they take time to mature, we feel positive about the domestic opportunity for rewards. Moreover, there is more attention from our clients around material escalation from tariffs, which impacts how we price and negotiate contracts. Nevertheless, we've been fairly successful in managing those risks with both our new and existing clients.

Got it. And when you look at the opportunity profile, do you expect to exit fiscal 2026 at a near 1.0 book-to-bill, or is that too much to ask?

I certainly think that opportunity is out there. You've been with us long enough to know that the timing of those awards significantly affects how things can slide if they take an extra month or two. However, based on what we see in our pipeline, there is a good opportunity for us to book inside our revenue guidance range. Those major upticks in our backlog typically come from significant projects in the $300 million to $400 million range, and we have a couple of those in our backlog today. We're looking for opportunities to replace them and build on them as we move forward. So, while this year we expect our award cycle to consist mainly of smaller, routine projects in the $50 million to $150 million range, we do believe the opportunity for reaching a book-to-bill of 1 is very much available to us.

That's good to hear. Just what's your confidence level of returning to profitability and how does that timeline progress through the year?

I would say our confidence is high. We feel good about the quality of the backlog we have and the progression of that backlog. The high-quality backlog is in flight and is scheduled to roll out over the course of the year. The backlog we've added in fiscal '25 helps to fill some gaps in fiscal '26 already, so I think we feel confident about the projected revenue levels.

One last question; I'll get back in the queue. The cash position is building. Could you discuss how much of that is from advance payments from customers and how much is Matrix?

So I'll take that. The cash position has built considerably this year. We've got a lot of long-term projects where we have seen some upfront payments, but the balance sheet remains strong. We'll definitely use a substantial portion of that $250 million cash for the projects. We have built up cash for normal operations, roughly $50 million to $70 million, which can support business operations and growth activity. Overall, we feel good about our balance sheet.

And our next question comes from the line of Brent Thielman of D.A. Davidson.

First question just would be back to some of the moving pieces of the quarter. Are you able to comment on other potential COVID-era legacy jobs that you're in dispute that we need to keep in mind? Or do we feel like we're beyond this at this point?

I think we're beyond anything of materiality. Particularly, this one specific project that relates to the $6.4 million charge that Kevin noted has been an ongoing dispute since we reached mechanical completion in early '21. We've attempted numerous times to resolve this matter and ended up in arbitration last month. So yes, this is essentially the final material legacy pandemic issue we have.

Then, a two-part question regarding the restructuring actions you're taking. First, Kevin, if you don't mind, can you share your expectations for the cost savings impact? And second, any early indications or evidence showing how these changes are helping you win more work?

We made significant changes over the last five months. As we've reshuffled positions and eliminated some roles, it has created opportunities for people in the organization to step up into new leadership roles. We can really feel the energy within the organization. Our streamlining has improved our decision-making process, and we've aligned strategies and objectives across the board. Just recently, we met with the Board to review our strategy and plans. I believe we are already seeing improved alignment between different business elements and are better positioned to support one another in our efforts to win work.

As I mentioned, we've reduced around $12 million with these recent actions. This reduction is approximately 50-50 between construction overhead and SG&A. Our SG&A was running just under $18 million per quarter in fiscal 2025, but we anticipate it will be in the $16.5 million range per quarter in fiscal 2026. The construction overhead impact will help us reduce our overall cost structure while allowing for increased revenues. We plan to continue focusing on eliminating under-recovery of construction overhead.

My last question is more about the bigger picture. Given recent significant announcements related to the data center theme, could you explain Matrix's role in this—whether directly or indirectly—and how does your pipeline inform you about your opportunities there?

Good question. We are not the ones who will build the data center itself; this market is notably competitive. The significant role we can play relates to the growing demand for additional power generation, backup power, and the fuel supply needed for data centers, which is directly related to advancements in AI computing and manufacturing. We see notable opportunities there. Previously, our construction focused on gas-fired turbine markets for power generation. The increasing demand for power is unlikely to cease. Therefore, with the ongoing electrification trend and the expected retirements of coal plants, we anticipate viable opportunities for our work related to substation development, interconnections, and upgrading existing LNG facilities.

I'm showing no further questions at this time. I would now like to turn it back to Kellie Smythe for closing remarks.

Thank you, Kevin. Just a reminder that we will be participating in the D.A. Davidson 24th Annual Diversified Industrial & Services Conference in Nashville next week, September 17 through the 19. If you're attending, we look forward to seeing you there. Additionally, if you'd like to have a conversation with management, please contact me through the Matrix Service Company Investor Relations website. You may also sign up to receive MTRX news by scanning the QR code on your screen. Thank you so much for your time.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.