One of the Australian Marine Complex’s largest landholders is building its service arm to generate a more sustainable revenue source.
THE staff and management at Matrix Composites & Engineering are eager to remind visitors their company has the second biggest landholding and shed at the Australian Marine Complex.
After all, waxing lyrical about the size of your shed is a very Australian thing to do.
If not for Civmec, a stone’s throw from the 85,000 square metre Quill Way site in Henderson, Matrix would be the biggest on both counts.
It is a long way from the tin shed out the back of Max Begley’s factory in Malaga, where he founded the company in 1999.
Max stepped down as non-executive director in 2012, but his son and Matrix chief executive, Aaron, remains with the business in a hands-on role.
“The business has been built on the foundation of materials technology, in particular a product called syntactic foam, which is a very lightweight, very strong foam used in deepwater applications,” Aaron Begley told Business News.
“We have done over one billion dollars of exports from the site over ten years.
“Most of the work we do is subsea, and almost all of it is export.”
Matrix’s niche is in the deepwater market, which is significantly larger in the Americas, West Africa and Asia than in Australia at present.
The company’s other two arms – advanced materials and corrosion materials – have a stronger local market.
Like many Western Australian industrial firms, Matrix has been something of a bellwether for the state economy.
It grew rapidly with the early noughties’ resources boom, at one point employing 660 people across nine sites in Malaga, Fremantle, and Welshpool.
“We had a central production facility in Malaga and then we had external facilities feeding to and from that facility,” Mr Begley said.
“It was a bit crazy [and] quite inefficient.”
A $920,000/year, 35-year lease signed in 2008 with the Australian Marine Complex smoothed out Matrix’s logistics web, and the company listed on the ASX at $1.31 a share the following year.
Matrix is now hovering around 35 cents a share, up from a low of 13 cents in 2021, and currently employs about 200 staff.
This reduced employee count reflected market conditions, Mr Begley said, while technological advancements also played a role.
Shareholders are eagerly awaiting Matrix’s financials for the 2024 financial year, which are normally reported in October.
There’s no hiding the fact it has been a lean decade for Matrix, which recorded seven straight annual losses, and until last year had turned a profit just twice since 2012.
The COVID years of 2020 and 2021 were particularly bruising and made clear a need to reduce exposure to the cyclical oil and gas sector.
Matrix lost $67.8 million and $27.9 million in those two years, respectively, due largely to a pandemic-induced reduction in capital expenditure in oil and gas.
The $8.7 million post-tax profit in financial year 2023, Matrix’s best result since 2011, suggested the pivot has paid off, with revenue this year expected to come in at around $85 million.
In a February ASX update, Matrix said $70 million worth of secured contracts and an $84 million order book underpinned its forecast.
Italian multinational Saipem, Saudi oil giant Aramco, and Fortescue – for which Matrix produced green hydrogen equipment parts – have been among its prominent customers in the past year.
That figure, if confirmed, could make the 2024 financial year the strongest for Matrix since that of 2016.
A resurgent offshore oil and gas sector has played a big role in that turnaround, but so has a pivot into the services industry, civil construction, and a focus on local opportunities.
“We are finding new markets in WA in the resources industry, in renewables, and other areas that we historically haven’t catered for,” Mr Begley said.
“That has been very good for us.
“We have gone from ninety-five per cent of our work being subsea and export to probably about eighty being export, but the other twenty per cent generated by local markets.
“We are seeking to build a much larger component of our business around sustainable revenues, as opposed to project-based revenues.”
The latest addition to Matrix’s services arm is a pair of hyperbaric testing chambers it co-funded alongside US energy services firm Baker Hughes and the state government.
Intended initially for use in the production of Matrix’s foundational syntactic foam, the chambers have undergone a retrofit inside the company’s Henderson shed.
They are now the only hyperbaric chambers in Australia capable of monitoring with lights and cameras, and operating equipment at depths of up to 3,000 metres using electronic, hydraulic and fibre-optic gear.
That means WA companies will no longer have to send equipment overseas to be pressure tested; an exercise that can take four months or more.
“One of the key reasons we did the chamber upgrade is we recognise the fact that we need more sustainable revenue in our business,” Mr Begley said.
“Being able to service local markets and having a service component brings some sustainability into the income stream.”
Oil and gas is the obvious market, but like many businesses in the Cockburn Sound area at the moment, Matrix senses opportunity in the defence sector.
AUKUS is an appealing prospect, and Matrix wants its slice of the pie.
“As we see Henderson playing an increasing role in operational and sustainment support for both the surface and subsurface aspects of AUKUS, we will see an increased demand for that type of equipment,” Mr Begley said.
“The fact it is here and ready to go will mean it is more likely that equipment will be serviced from Henderson, because it will be quicker to turn around.”
Mr Begley is confident the two hyperbaric chambers will be kept busy as companies in other states become aware of the testing facility.
The Meg and The Kraken – the names given to the two chambers – are the latest piece of the sustainable income puzzle Matrix is trying to navigate.
If demand meets the KPIs, a third hyperbaric chamber of even greater proportions could be on the way.
If that materialises, the Matrix team will need to decide an even larger mythical sea monster to name it after.
