Good day and thank you for standing by. Welcome to the Matrix Service Company Conference Call to discuss Results for the First Quarter Fiscal 2022. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I’d now like to hand the conference over to Kellie Smythe, Senior Director, Investor Relations. Please go ahead.

Thank you, Liz. Good morning. And welcome to Matrix Service Company’s first quarter of fiscal 2022 earnings call. Participants on today’s call will include John Hewitt, President and Chief Executive Officer; and Kevin Cavanah, Vice President and Chief Financial Officer. The presentation materials we will be referring to during the webcast today can be found under Events and Presentations on the Investor Relations section of matrixservicecompany.com Before we begin, please let me remind you that on today’s call, the company 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 as a result of various factors, including those discussed in our annual report on Form 10-K for our fiscal year ended June 30, 2021, and in subsequent filings made by the company with the SEC. To the extent the company utilizes non-GAAP measures, reconciliations will be provided in various press releases, periodic SEC filings and on the company’s website. I will now turn the call over to John Hewitt, President and CEO of Matrix Service Company.

Thank you, Kellie, and good morning, everyone, and thank you for joining us. With Veterans’ Day in the U.S. and Remembrance Day in Canada just two days away, I want to take a moment to thank all veterans, the men and women in military branches and reserve units, who have put themselves in harm’s way and stand ready to protect our freedom and way of life. To our veteran employees, I want you to know that I am extremely proud to have you as part of the Matrix team and appreciate all you do for our company. Before I turn the call to Kevin to provide more detail on first quarter results, I want to give you some perspective on the operations and business. The bidding environment remains extremely active across all our segments to the extent we have had to add resources to handle the increase in activity. Our centralized business development organization is creating an even stronger opportunity pipeline with our more focused approach to the markets and our broader outreach to our core clients. This quarter, we saw a positive increase in awards, many of which were projects we’ve been working on for the past six months. As noted in our earnings release, our quarterly book-to-bill of 1.6 on awards of $267 million is the best quarterly awards cycle since the first quarter of fiscal 2020. As far as revenues in the first quarter, they fell in line with our expectations on how the first half of the year would begin. But at this revenue level, we continue to under absorb construction overhead. From an operations perspective, continuing commissioning and startup challenges on the capital project in our Utility and Power Infrastructure segment that we referenced on last quarter’s call resulted in increased costs to complete. We’ve…

Thanks, John. The highlight of the quarter was project awards of $267 million that resulted in a quarterly book-to-bill of 1.6 and a 21% increase to our backlog, which ended the quarter at $561 million. Project awards were spread across all three segments with Process and Industrial Facilities producing a 2.2 book-to-bill, Storage and Terminal Solutions 1.6, and Utility and Power Infrastructure 1.1. Moving to segment results, revenue for the Utility and Power Infrastructure segment was $57 million in the first quarter, producing a negative segment gross margin of $6.1 million. The segment results were affected by three issues. First, we incurred an increase in the forecasted cost to complete a large capital project, which resulted in a decrease in gross profit of $5.9 million. The change in the estimate was due to increased costs from delays in commissioning the facility, as well as higher estimated costs related to achieving final completion. Second, we incurred a $2.1 million charge related to the collection of an outstanding receivable on a project completed in 2019 that was tied up in litigation. Third, segment gross margin was negatively impacted by low rev -- low volumes, which led to under recovery of construction overhead costs. These items overshadowed another good quarter for electrical service work, which was bolstered by storm recovery work and produced direct gross margins above the normal 10% to 12% range. We expect improving operating results in this segment as we move through the fiscal year as the project issues are behind us. We also expect revenue volume and overhead recovery to improve. Revenue for the Process and Industrial Facilities segment was $44 million in the quarter, as revenue volume was impacted by typically slow summer quarter. The quarterly segment gross margin was 6.5%. Project execution was within the normal expected…

Thank you, Kevin. Turning now to our market outlook, as I said in my opening remarks, we recorded a significant increase in project awards, achieving a book-to-bill of 1.6 on project awards of $267 million and with diversified projects across all three segments, including a thermal vacuum chamber, LNG and renewable fuel storage, Electrical Infrastructure, midstream gas and chemicals, to name a few. These awards support our strategic focus and expectations of improving revenue and results in the second half of the year. This activity also represents a long awaited important sign of an award cycle that will strengthen as we move into the new calendar year. Bidding remains extremely robust across all segments and while the competition for work remains healthy, we believe the volume of opportunities available and our market differentiation will allow us to build backlog. In addition, the new $1 trillion Federal Infrastructure Legislation, Infrastructure Investment and Jobs Act recently passed will have a positive and direct impact on many parts of our business. Its direct impact will be on our Electrical Infrastructure work, including grid repairs, enhancements and expansion to broadband internet, fiber, electric vehicle infrastructure build-out, as well as other transportation improvements and upgrades. In addition, our mining clients will see a continuation of demand growth for their metals and rare earth minerals to support not only the electrification aspects, but also other focus areas the electrification aspects, but also other focused areas of the bill. This demand will increase spending to expand and maintain their facilities. Overall, spending increases from this infrastructure bill will take some time to work through the system. However, some businesses may accelerate projects in anticipation of the demand for their products and services. We also are encouraged by recent reports that the energy super majors are set to…

[Operator Instructions] And your first question comes from John Franzreb from Sidoti & Company. Your line is now open.

Good morning, John and Kevin.

Good morning.

Good morning.

Congratulations on the turnaround and new award profile. And that’s actually where I want to start, John, how would you characterize the new awards, was it more of deferred jobs coming to market or was this new work coming to the market that is kind of reflective of the better commodity cost profile?

I think there’s a mix in the awards. There’s some of the projects we’ve been entertaining for maybe the past six months, but a few of them are projects that have come up, and probably, what I’d say, kind of a normal bidding cycle, within the two months or three months or maybe right before the beginning of the quarter. I think what you’re seeing is more confidence by our client base on making the capital investments that they’re planning for the future.

And what’s the margin profile in the current backlog relative to historic margin, say, two years or three years ago or how much would be covered from, say, the lows?

So, like, what’s causing the awards, it’s mixed. There’s certain projects that are more competitively bid that are smaller projects and then there’s other projects that are in the historical norms that we talk about of generating 10% to 12%.

And in light of what you said about the tight labor market, how should we think about cost coming back to you as the revenue profile improves?

I think the labor market mix and the escalating materials is going to have a tendency to drive up prices, I think, on our projects and really probably across the -- across all of our segments.

Okay. And I guess one last question on the slide on page 14. Can you talk a little bit about how big this opportunity profile is compared to maybe historic norms? And maybe a little bit more about the hydrogen opportunity and maybe some of the timing you expect to get on those awards coming through your pipeline?

Yeah. So, our overall opportunity pipeline and we’ve defined that in the past, is projects that we have bid, are bidding or are planning to bid. So they’re not they’re not projects that are -- that we’re watching, but that the clients have not started moving forward on. So they’re -- the opportunity pipeline represents legitimate projects there. I would say, they’re in a range, because of whether this awards cycle or projects maybe moving in or out of that opportunity pipeline or is -- has been in the $4 billion to $6 billion range for the past probably 18 months. I think we’ve said on previous calls that the bidding environment has been very, very strong and the opportunity pipeline has been the same. And what we’re seeing differently now is that there are projects now in that opportunity pipeline that are being awarded and so that’s a really positive change for what we’ve seen in the past. As it relates to hydrogen, we’re continuing to bid storage-only kind of projects. We are looking at hydrogen projects that are liquefaction distribution centers to feed local transportation needs. Some of those projects are on an EPC environment. Some of them we’re bidding only the feed portion, the upfront engineering portion, as companies think about putting the project in place. And so there is a mixed bag and there are some projects getting awarded. We did bid a couple of storage spheres here in the last six months that we were not successful on, but that’s probably kind of getting back to a normal sort of cadence in our business for wins and losses. And so we feel pretty good about our position in hydrogen, our capabilities, our relationship with Chart, we’re working together with them to look for combined EPC opportunities where they can bring their technology and we can bring our storage and terminal capabilities.

Okay. And what, I will stop there and I will get back in the queue. Thanks for taking my questions, John.

Thank you.

Thank you. Your next question comes from the line of Zane Karimi from D.A. Davidson. Your line is now open.

Hey. Good morning and thank you for taking my questions.

Good morning, Zane.

Hey. I joined in a little late. So if you already referenced this, apologies for that. But in the last quarter, your maintenance and turnaround services businesses recovered nicely, what are you seeing and is that momentum look sustainable going forward?

So, yeah, I mean, we’re starting to see continued strength in our maintenance businesses and our maintenance businesses go across a lot of different segments. So, obviously, we do maintenance work and turnarounds and refineries. Our nested maintenance operations have been doing very well, as a lot of our -- a lot of those clients try to, kind of, keep that work in-house. Our other refinery maintenance and turnarounds have been kind of muted, because of refiners out there today or they’re making a lot of money based on the demand and the price for refined products. We also do maintenance repair on storage tanks of all varieties, whether there -- it could be crude or refined products or even cryogenic applications. That market has been fairly strong for us and but pretty competitive. And so, but we continue to see more opportunities there. And I think, well, one of the things we’re going to see is a lot more opportunity for us in the cryogenic tank space for, like, LNG tanks that are being anticipated to be used more heavily and they’re going to need to be inspected and repaired. And once that -- and when that starts to build up, that really start to diminish the competitive set to the people that got that capability.

Okay. Thank you for that. And thinking about natural gas and the relative prices there, but how are the natural gas prices rising going to affect your business from a short-term, medium-term standpoint?

So, right now, I mean, our -- what we see in our opportunity pipeline is a growing demand in opportunities. We haven’t -- we’re seeing continue -- continuing to seeing more opportunities in LNG storage, LNG small, LNG export, LNG pit shaling opportunities. I think in the midstream gas market, we’re starting to see a rebound there for gas processing and compression. One of the things we said in our prepared remarks here was -- one of the interesting things is, we have some clients that are looking at how they can reduce their carbon footprint on existing compression stations along their pipeline systems by putting in more efficient pieces of equipment, maybe changing the fuel mix, and so, there’s a lot of I think that activity going on as well.

Okay. Thank you for that and I will jump back in queue.

Thank you. And that concludes our Q&A session for today. I will hand back over to John Hewitt, President and CEO for any closing remarks.

I want to thank everybody for attending today and remind you about three key points. First, our markets are changing and we are changing with those markets, and we are confident in our strategy and positioning. Second, with the improvement in award cycle experienced this quarter, we expect improving awards as we move through the year positively impacting revenue and earnings. And third, our transformation is in progress with the result being a more efficient and economical business platform, a revitalized growth trajectory, supported by our adjusted market focus areas, and ultimately, better and more sustainable bottomline results. To all of our employees, I want to thank you for your efforts and patience in these challenging times for leading to best-in-class safety and for bringing the many opportunities in front of us to reality.

Ladies and gentlemen, that concludes our call for today. Thank you for your participation. You may now disconnect.