Here at Sidoti & Company. Our next presentation of the day is Matrix Service Company, ticker MTRX. For those who are not familiar with the company, Matrix is an engineering and construction supplier to the oil and gas, utility, and industrial marketplaces. We are fortunate to have with us today CEO John Hewitt, CFO Kevin Cavanah, and Director of Investor Relations Kellie Smythe. Following the presentation, there will be time for Q&A. Please utilize the Q&A icon to submit your questions, and I will present them to management. With that said, thank you everybody for being here. The floor is yours.
Good afternoon, and thank you for having us, John. I have John Hewitt here with me in the room, as well as Kevin Cavanah. I'm going to go through the slides, tell you a little bit about Matrix Service Company in case you're new to the story. I'll share some of the financial highlights of our most recent quarter-end Q3 fiscal 2025. Following this, we'll open up for questions. At Matrix, our core values are the foundation of who we are, and our most critical core value is safety. We start all of our meetings with a safety or related topic. Today is no different. Today's topic is simple: if you see something, say something. Be your brother's keeper. We often see something but don't want to get involved. Be that person that speaks up. You can make a difference.
As we approach Memorial Day weekend, this is a time of remembrance. Being sensitive to veterans' emotional state, if appropriate, thank them for their service and keeping us all safe. Before I get into the meat of the presentation, there are a few key messages that are important takeaways. John mentioned we are an experienced specialty engineering and construction company. We provide end-to-end services across the entire asset life cycle. We are uniquely positioned to capitalize on multi-year spending cycles within our markets. We are entering a transformational multi-year backlog to revenue conversion. Our increased revenue supports expectations for operating leverage and margin realization, and we have a lean balance sheet and a disciplined capital allocation strategy. A little bit about who we are. Engineering and construction company, we serve the energy and industrial markets. We are a leading provider of infrastructure solutions across multiple end markets.
We focus on complex infrastructure projects that require integrated solutions expertise, and our clients are mainly large energy companies and blue-chip clients in North America and international markets. Approximately 90% of our revenue is with our recurring customers. If I bring your attention to the right side of this slide, we report our financial results in three operating segments: storage and terminal solutions, which over the last 12 months has represented 20%, 46% of our revenue; utility and power infrastructure, representing 32% of our revenue over the last 12 months; and process and industrial facilities at 22%. Some metrics across the bottom of the slide. We've been in business for more than 40 years, and we have over 2,000 employees. In fiscal 2024, we generated $728 million in revenue and are guiding the street to $770 million-$800 million in revenue in fiscal 2025.
We have $1.4 billion in backlog, and I'll talk a little bit about that in a few minutes. In terms of the work that we do, in storage and terminal solutions, we provide services for liquid storage tanks and terminals. These services include specialty vessels, including complex cryogenic infrastructure. This can include LNG bunkering, ammonia, NGLs, renewable fuels, carbon capture, and refined products. We also engineer and construct flat-bottom tanks and provide maintenance and repair services. Projects can be full life cycle, from feasibility and field feed studies through ongoing maintenance, repair, and upgrades, or can just be the engineering or construction only projects. In our utility and power infrastructure, we kind of break down our revenues in two specific areas: LNG peak shaving storage facilities.
This is a storage facility similar to what we would do in a storage and terminal solution sector, but this is work for utility companies and specific to LNG peak shaving. The other part of the revenue in this segment is in traditional electrical substations, facility electrical and instrumentation, and can include work for data centers and electrical interconnect for renewable power generation. Last, process and industrial facilities. We work in upstream, midstream, and downstream oil and gas. We provide services to support refinery maintenance, repair, and turnarounds, upgrades and retrofits for renewable fuels, natural gas facilities. We also leverage our cryogenic specialty vessel work within the aerospace industry, where we have a leadership position in engineering and constructing thermal vacuum chambers. Lastly, we work in mining and minerals.
Regarding our track record, we're committed to building and fostering safe and reliable operations that deliver optimal outcomes for our clients and employees. We're focused on expanding our services into higher margin, high growth, and markets. We're growing our backlog and long—we have longer-term business visibility across a diverse base of high-value projects both in the short and the long- term. Our growth in the backlog has been strong, and our opportunity pipeline suggests there's ample opportunity to continue to grow good quality backlog that's clearly in our sweet spot. We're committed to delivering on our backlog through quality project execution, resulting in strong, consistent margin realization and hitting our long-term gross margins, and it's key to our success. We prioritize capital allocation strategies within our returns-focused framework to maximize shareholders' shareholder returns as we return to profitability. Across the end markets we serve, spending remains elevated.
There are multi-industry tailwinds driving sustainable growth, and Matrix has a key part to play in each of these areas, whether it's in the data center energy demand, low carbon infrastructure, oil and gas demand, low-cost feedstock, industrial manufacturing resurgence, or grid reliability and supply assurance. Matrix is one of a few contractors with the deep experience required to design, construct, integrate, and maintain this complex infrastructure. Let's talk about backlog. In Q3, our backlog is at $1.4 billion. We had project awards of $301 million, resulting in a book-to-bill of 1.5 for the quarter. We've continued to grow our backlog, as you can see in this. In fiscal 2022, we were at $708 million, so we've doubled that since fiscal 2022, and our gross margin targets are in the range of 10%-12%.
Our significant backlog is supported by robust infrastructure investment, including the utility info investments in peak shavers and corresponding LNG storage infrastructure, as well as energy infrastructure investment driven by demand for low carbon fuels. A little bit more about backlog. Storage and terminal solutions accounted for $205 million of quarterly awards, which increased our backlog to almost $850 million in storage. This is the highest level in the company's history. The quarter activity included a project for engineering and construction of multiple storage vessels for propane, butane, and related NGL projects. We're also seeing strength in process and industrial facilities, which had $59 million in awards, primarily in the refinery services business. Our longstanding customers, as I mentioned before, account for approximately 90% of our revenue, and the $1.4 billion in backlog provides multi-year visibility for profitable growth. This is our opportunity pipeline.
We've had a consistent and strong opportunity pipeline across our core operating segments. This $7 billion pipeline of project opportunities gives us confidence in achieving a sustainable and profitable growth trajectory as we move into fiscal 2026 and beyond. The opportunity pipeline consists of projects that are squarely in our wheelhouse. Many of these projects we are currently pursuing are expected to be bid and awarded in the next 12-18 months. Once awarded, they will unfold over multi-year construction timelines, providing us with long-term revenue visibility and improved earnings consistency. Overall, our strategy remains anchored in three pillars: win, execute, and deliver.
Through this framework, we will continue to focus on project discipline with the right clients, commercial structure, and timing of delivery, apply our resume and brand leadership to not only our core markets and industrial and power infrastructure, but also expand into new high-value verticals. We'll deliver projects safely, on time, and on budget, and we'll enhance our operating leverage to drive strong profitability, cash generation, and disciplined capital deployment. Let's talk about Q3 performance. Revenue growth continued in the third quarter, increasing 21% to $200 million compared to $166 million in the third quarter last year. The growth is driven in by the storage and terminal solutions and utility and power infrastructure segments. Our gross margin was $12.9 million or 6.4%. Sorry, our gross margin was $12.9 million or 6.4% in the quarter compared to $5.6 million or 3.4% in third quarter of fiscal 2024.
As a result of the revenue growth in the quarter, the impact of under-recovered overhead decreased and is at its lowest level in two years. As the revenue ramp continues, construction overhead will become fully recovered, and the negative impact on margins will be eliminated. For the third quarter of fiscal 2025, the company had a net loss of $3.4 million or $0.12 per share compared to a net loss of $14.6 million or $0.53 per share last year, and adjusted EBITDA improved to break even in the quarter compared to a loss of $10 million in the third quarter last year. Our discipline approach to capital allocation remains a cornerstone of our strategy. Working capital management has been strong throughout fiscal 2025.
Net cash provided by operating activities was $31.2 million during the third quarter, during the third fiscal quarter, and $76.8 million year-t o- date. Cash flow activity during the year has further strengthened our balance sheet. Available liquidity has increased to $247 million, and as at the end of the quarter, our debt position remains at zero. We'll continue to proactively manage the balance sheet and have the financial strength and the liquidity needed to support the execution of our backlog and to deploy capital toward opportunistic organic growth. To summarize, Matrix is a proven specialty E&C service provider. We have a track record of excellence with strong relationships and recurring clients. We have a well-capitalized balance sheet, strong backlog poised for conversion to revenue, and are in a multi-year infrastructure investment cycle and have a focused strategy.
The takeaways to achieve our long-term targets: revenue level is critical to our earnings. Revenue growth started in the second quarter and continued in the third, and we anticipate revenue growth to continue. Project execution has been strong, producing overall direct margins that are approaching our target range. Our margin opportunity within our $1.4 billion backlog and our $7 billion opportunity funnel continues to support a long-term consolidated gross margin target of 10%-12%. The company continues to proactively manage its cost structure and is taking additional steps to improve our operating effectiveness. Construction overhead recovery has been a significant issue but is improving and will be eliminated based on anticipated revenue growth. The leverage of SG&A will improve due to flattening of the organization as well as revenue growth, driving toward our target of 6.5% of revenue.
Finally, the combination of these items will drive the improved performance towards our long-term objectives. With that, I'll open up the question.
Thank you, Kellie. If you have a question, please utilize the Q&A icon box on the bottom of the page and submit it, and I'll present it to management. I'd like to start with the elevated backlog profile. It's been that way for quite some time. I wonder if you could discuss how that composition of that backlog has changed in recent years, both on a margin profile and a mixed profile.
I mean, I'll hit the mix a little bit, and Kevin can talk about the margins. I think what you're seeing, and it might be a little bit longer than over the last couple of years, but certainly over the last five years, I think you're seeing less crude-related storage, and more specialty vessel-related storage and the infrastructure around that. You know, a lot more LNG-related work, ammonia, NGLs. We're seeing, which I think ties into what's going on overall with energy infrastructure demands, both domestically and internationally. Those opportunities continue to be very strong for us out into the future and have provided a lot of strong growth into our, for what's in our backlog.
If you look at the—that backlog, and Kellie had a slide earlier that kind of showed the progression of backlog. Back in 2022, when our backlog was half the size it is now, I'd say the weighted average margin opportunity within backlog was in the 6%-8% range. Mm-hmm, because that was during the pandemic or right after the pandemic, and there were not large projects available to us, and anything that we were bidding, we had to get really competitive in order to win it. So it was not much margin. In 2023 and 2024, backlog's growing, and we're seeing the shift to these, to larger projects that supported our long-term 10%-12% margin expectations. During that period, we're also working off that backlog that was in 2022. Now we're sitting here today with a billion-four of backlog, and I'd say the weighted average margin of that backlog is above 10%.
It supports the 10%-12% range that we've talked about from a margin profile. Interesting.
That lends to the question. Can you talk a little bit about the competitive environment and the process to win new awards and how long that's taken and how aggressive the pricing has been in new jobs?
I think, you know, particularly for the larger projects that really drive the backlog growth, the competitive environment there has been favorable. Fewer, fewer contractors of size and with the capabilities around specialty vessels and the infrastructure around that are available to address that market. You know, when we go into that situation, and in some cases, the projects are sole-sourced. In other cases, the competition might be one or two other pretty high-level E&C companies.
I think as it relates to this sole specialty vessel concept and that growth in our backlog, that competitive environment has been fairly favorable.
Question from the audience. What targets do you need to hit, or in which end markets do you need to see grow in order to hit your long-term margin goals, and what do you define as long-term?
When we put those long-term goals out there, we were anticipating that we would be at those levels in the next 12- 18 months. You know, what we need to see happen is to get our quarterly revenue up higher. Kelly mentioned good growth in revenue from 2Q- 3Q and got up to $200 million. We need to see that revenue get to $250 million a quarter or so.
At that point, we probably got pretty good leverage of our construction overhead, pretty good leverage of SG&A. As I mentioned, the margin profile and backlog is there. Continue to execute and fill the pipeline, but at that point, we ought to be approaching those long-term targets.
Regarding your opportunity pipeline, what is your typical hit rate on these new jobs? Are some end markets more favorable than others? Do you have more success in certain markets?
Yeah, I'd say we have more, we have more success in the specialty vessel market, both for the storage individually, plus the infrastructure around it. I'd say that success rate is, you know, in the 30%-40% range. In the projects that are probably smaller and touch a bunch of different industries, you know, that success rate's probably closer to the 15%-20% range.
Fair enough. Question about your balance sheet. You have a clean balance sheet. What do you think the optimal way to leverage that balance sheet will be in the coming years?
We do have a strong balance sheet, and the reason we have that balance sheet is our focus on, actually two things. We're conservative in the way we manage it, but then secondly is our approach on cash flows on projects. We're trying to work on our customers' money on these new construction projects. We've got a lot of upfront payments over the past 12-18 months on these projects from our customers. It shows you how firm that backlog is. You know, these projects, you know, 30-36 month projects. Some of those balances will be working down over time.
Our focus on managing this balance sheet has been first to return to profitable performance. I started thinking about, what's the other right things to do with the cash generated from the business? Is that acquisitions to support the strategic plan, or is it some other action with excess cash, a stock buyback or something else? Right now, and then probably the rest of fiscal or calendar 2025, it's really focused on continuing the progression that we've started on the improvement in operating results.
Question about how firm is your backlog? What's the typical cancellation rate that you suffer in any given year?
For something to hit our backlog, it's got to be firm. I have been with the company 22 years or so. In that time, I've seen maybe three projects of size, largest probably being $60 million or $70 million that came out of backlog once it was in it. Of those three, one of those that came out is now back in the backlog, and we're executing that project. That's a long story, but really we've only had a couple. We don't put projects in backlog unless they're firm.
Got it. Question about your overhead structure. Is it at an optimal level given the backlog profile and the current delivery cycle?
Some of the work that we're doing right now with our, kind of the overhead structure, not just SG&A, but our construction overhead, is to make sure that we're being effective and fine-tuning the business to how we see the revenue ramp and the opportunities out in front of us. You know, I think we're, you know, some of the recent changes we've made, some of the other things that, you know, that we're doing, I think we're tuning our overhead structure to how we see the revenue ramp, to continue for the business here as we move into fiscal 2026.
Question about the new administration. Has that been a net positive or negative to the order profile?
Depends on what day it is, John. Like everybody else. No, but I think long-term we see it, at least long-term over the next four years, we see that as a positive. I think certainly the macroeconomic environment and uncertainty around this tariff issues is creating some short-term uncertainty and pause, with some of our clients on some of their bigger infrastructure. I think they're still going to build it. I think it's still necessary infrastructure build. I think some of them either because they're trying to get an offtake, an international offtake agreement done, and the tariffs are getting in the way of that, or they want to make sure they appreciate what the end result could be from a material supply standpoint.
We have had a number of our major clients, clients that we're doing business with today, tell us that their intentions are over the next four years to put as much infrastructure in place in what they perceive as a better, more favorable regulatory and financial environment.
Okay. With that said, I see no further questions. If anyone has a final question, please type it in now. If not, any closing comments?
I appreciate everybody's time today to listen to our story. And, you know, we, I think overall feel very good about the business. We're continuing to work the business to improve our bottom line results and to continue to grow our backlog and our revenues. And feel very comfortable that the market is out there in front of us to be able to achieve those goals. I wish everybody have a safe and happy Memorial Day.
Same to you, John. Thank you, Kelly and Kevin. Everybody have a great day. Bye now.