Matrix Service Company (MTRX) Earnings Call Transcript & Summary

On behalf of major service company and our employees, I would like to welcome you to 2021 Annual Shareholders Meeting, which I now call to order. We're excited to be hosting our virtual meeting, which allows us to reach a greater number of our shareholders while protecting the health and well-being of our shareholders and employees. Prior to proceeding with our meeting, I want to inform you that various remarks that we may make about future expectations, plans and prospects for Matrix Service Company 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 last fiscal year, which is available to you today and in subsequent filings made by us with the SEC. To the extent the company utilizes non-GAAP measures, reconciliations will be provided in various press releases SEC filings and on the company's website. We will now start our meeting with a safety moment by our CEO, Mr. John Hewitt.

Thank you, Jim. At Matrix, we are first and foremost a equal business. And as such, everything we do begins and ends with a focus on the health and safety of our employees and everyone within our sphere of influence. In a way our engineers design our clients' infrastructure technology and other project elements we procure through construction and commissioning in our offices, on our project sites and even while we're away from work, we work hard to put health and safety front and center to ensure that no one gets hurt. We know achieving a 0 incident safety culture is possible. In fiscal 2021, we achieved a total reportable incident rate of 0.28, which represents the best safety performance in the company's history. The safety performance is world-class and only served to strengthen our resolve and to achieve and maintain a 0 incident safety performance throughout our operations. Even with the added protocols related to COVID-19, our employees have remained focused through their strong performance, have proven that we can complete our work with 0 injuries. I'd like to thank and congratulate our employees for watching out for one another and achieving this important goal.

Thank you very much, John. I'd like to take a few minutes to introduce our currently serving directors. A detailed description of the backgrounds of all of our directors standing for election is included in the proxy statement for this meeting. I am Jim Mogg, and I have served as a Director of the company since August 2013. I am currently the Chairman of the Board of Directors. Martha Carnes, has served as a Director of the company since July 2017. Ms. Carnes is the Chair of the Audit Committee and is a member of the Compensation and Nominating and Corporate Governance Committee. Mr. John Chandler, has served as Director of the company since June 2017. Mr. Chandler is Chair of the Compensation Committee and is a member of the Audit and Nominating and Corporate Governance Committees. Mr. Carlin Conner has served as the Director of the company since August 2020. Mr. Connor, who's a member of the Audit, Compensation and Nominating and Corporate Governance Committees. Mr. John Hewitt has served as a director since his appointment as President and Chief Executive Officer of the company in May of 2011. As Leanne Henrik has served -- Heidricks has served as a Director of the company since June 2018. Ms. Hendricks is Chair of the Nominating and Corporate Governance Committee who is a member of the Audit and Compensation Committees. Mr. Jim Miller has served as a Director of the company since May 2014. Mr. Miller is a member of the Audit, Compensation and Nominating and Corporate Governance Committees. We'd also like to introduce Greg Foster, Audit Partner and our independent audit firm, Deloitte & Touche LLP. Mr. Foster will be here throughout this meeting should you have any questions. I will now turn the meeting over to Justin Sheets, Matrix Service Company Vice President, General Counsel and Corporate Secretary.

Thank you, Mr. Mag. Voting portion of the shareholders' meeting will now come to Board. Board of Directors established September 3, 2021, as the record date for the determination of shareholders entitled to notice and to vote at this meeting. The company has appointed Bob Johnson of the firm Broadridge Financial to served as Inspector of Election. He has previously signed an oath of office, which has been filed with the Secretary of the meeting. The inspector of election is in charge of deciding upon the qualifications of persons voting as well as collecting and tabulating proxies. Mr. Chairman, we have been informed by the inspector of election that holders of more than 91% of the shares of the company's $0.01 par value common stock are present in person or by proxy. Since this represents more than a majority of the voting power of all issued and outstanding stock entitled to vote on the record date, I declare that a quorum is present, and this meeting is duly constituted and convened and is confident to proceed with the transaction of business. Now I will present the matters to be voted upon. Please note that we will give shareholders an opportunity to comment on the proposals themselves after all proposals have been presented. Proposals to be voted on are summarized as follows: Proposal #1, to elect directors for the upcoming year, the nominees for director are as follows: Ms. Martha Z. Carnes; Mr. John D. Chandler; Mr. Carlin G. Conner; Mr. John R. Hewitt; Ms. Liane K. Henry; Mr. James H. Miller; and Mr. Jim W. Mogg. Proposal #2, to ratify the Audit Committee's appointment of Deloitte & Touche as the company's independent registered public accounting firm for the 2022 fiscal year. Proposal #3, to approve on an advisory basis, the compensation of our named executive officers as disclosed in our proxy. Any shareholder would like to make a comment regarding any of the proposals, you may submit your comment through the web portal. It is now 11:07 a.m. Central Time on November 2, 2021, and the polls are now open. Shareholder who hasn't voted yet or wishes to change their vote may do so by clicking on the voting button on the web portal and following the instructions there. Shareholders who have sent in proxies or voted via telephone or Internet and do not want to change their vote, not need to take any action. I'll now pause for a few moments to allow for voting. [Voting]

Now that everyone has had the opportunity to vote, I now declare the polls for the 2021 Matrix Service Company Annual Meeting closed at 11:08 a.m. Central Time on November 2, 2021. We have been informed by the Inspector of Elections that the preliminary vote report shows that the nominees for election to the Board have been duly elected selection of Deloitte & Touche as our independent registered public accounting firm for fiscal 2022 has been ratified and the compensation of the named executive officers has been approved by advisory vote. We will be reporting the final results in an SEC filing within 4 business days. There being no further business, the 2021 Matrix Service Company Annual Meeting of Shareholders now adjourned. I will now turn the floor over to Mr. John Hewitt, CEO of Matrix Service Company.

Thank you, Justin. I want to begin by thanking the Board of Directors, our shareholders for your guidance and support as our leadership teams have managed against what has continued to be an extremely challenging period and market environment. Our financial results in fiscal 2021 were dramatically impacted by continued delays in project awards and starts and reduced maintenance volumes brought about by the global pandemic, the year also brought several notable achievements among them, as mentioned earlier, a record safety performance with a total recordable incident rate of 0.28. This achievement was made while adhering to additional rigorous COVID-19 protocols and represents world-class safety as we strive to attain and maintain 0 incident safety performance throughout our operations. Continued our transformation to support the changing needs of our clients as they accelerate their transition to our clean energy. We did so by leveraging our industry-leading storage and project infrastructure expertise provide solutions relating to bridging fuels, such as natural gas and LNG, development of standardized hydrogen solutions for liquefaction plants, [ salt range ], fueling stations plant and storage expansion, spaceship fueling and other hydrogen facilities, renewable energy infrastructure, including conversion of fossil fuel plants, renewable fuels. Mine and minerals infrastructure with a focus on metals and copper, lithium, nickel and cobalt for growing demand for storage batteries and renewable power, and electrification of everything investments supported by our electrical and structure offering. We also maintained our conservative approach to capital allocation, resulting in a strong balance sheet that has enabled us to successfully manage these challenging markets. Just as our employees, clients and companies have faced unprecedented challenges in fiscal 2021, so of our communities. Throughout the pandemic, our company and our employees have continued their work for [ improve ] communities where we live and work. We continued efforts to embed diversity, equity and inclusion in our culture through a fully learning, commitment to pay equity, establishment of employee resource groups framework and use of our social media channels all the stand against racism, reinforce our zero-tolerance policy. We also established our DEI employee demographics baseline, which will be used to identify areas for improvement to help shape our recruiting efforts, succession planning and professional development. We advanced our work across the 3 pillars of environmental, social and governance, published our first sustainability report in September of this year. This report has been well received by our stakeholders and has created a significant improvement in the understanding of our commitment and action of these 3 areas of ESG. That said, our ESG journey, and our 0 incident safety performance is one that will not end. This has been an enterprise-wide effort undertaken by our employees and leadership, showcase our accomplishments, identify areas of continuous improvement set the stage for transparent annual reporting on all areas of ESG. I'm extremely proud of the work completed by our ESG team and look forward to reporting on our progress annually. Finally, in addition to having previously reduced our cost structure by nearly $70 million in response to the pandemic. We have launched a 12-week organization review with the help of a third-party business consultants to explore expanding use of shared service centers and operation centers of excellence as well as streamlining our management structure, deploying lean procurement strategies and reviewing our operating model and organization structure. As we complete this organization redesign, we expect to see positive benefits that will result in a more competitive business, improve bottom line performance and a strong foundation of growth. Turning now towards market outlook. As reported on our fourth quarter and full year investor call, I'm pleased to affirm the sharp uptick in awards as we complete our first quarter of fiscal 2022, and I'm confident that we'll report a book-to-bill above [ above one ]. These contracts span many of our key markets, including thermal vacuum chambers, LNG storage tanks and terminals, biofuel, API 650 tanks, electrical infrastructure, midstream gas and various other industrial projects and master services agreements, including new chemical clients. This acceleration in awards represents a long-awaited important sign of client confidence returning to our markets and the beginning of a strong award cycle that we believe will deliver improving bookings and results in the back half of fiscal 2022. The opportunity pipeline is strong environment across our segments is extremely active. As supported by our newly consolidated centralized business development team, our strategy to protect our core markets, expand in existing end markets and grow into new markets generating increasing opportunities for the business. In closing, we continue to actively manage the health and safety of our employees as a first order of business. Award activity is accelerating with a strong start to fiscal 2022. Our strategy supports of all of our clients' existing business needs as well as the critical infrastructure investments to be made as the world transitions to a lower carbon future. Our opportunity pipeline is strong and supports both near-term revenue and long-term growth objectives. And finally, as we focus on continuous improvement, our organization redesign will create more consistent performance on the top and bottom line, and support our long-term vision for the company. I'm extremely proud of our leadership team and our employees whose commitment and resolve to fulfilling our purpose and vision and delivering our core values is commendable. I would also like to thank our shareholders, clients and Board of Directors for your continued trust, confidence and support. I would like to open things up for shareholder questions and comments. Now I'll turn the call back to Mr. Mogg.

Thank you, John. This concludes the meeting agenda. Thank you for attending our 2021 annual meeting.