Matrix Service Announces Results for the First Quarter Ended September 30, 2010
TULSA, Okla., Nov. 5, 2010 /PRNewswire-FirstCall/ — Matrix Service Co. (Nasdaq: MTRX) today reported its financial results for the first quarter of fiscal 2011 ended September 30, 2010.
Revenues for the first quarter were $151.8 million, an increase of $14.1 million, or 10.2%, from consolidated revenues of $137.7 million in fiscal 2010. Net income for the first quarter of fiscal 2011 was $3.1 million, or $0.12 per fully diluted share. Net income was $4.5 million, or $0.17 per fully diluted share, in the comparable period a year earlier.
Consolidated gross profit was $15.7 million in fiscal 2011 compared to $17.4 million in fiscal 2010. The decrease of $1.7 million was due to lower gross margins which decreased to 10.3% in fiscal 2011 compared to 12.7% a year earlier. Fiscal 2011 selling, general and administrative expenses were $10.6 million compared to $10.1 million in fiscal 2010.
“We are pleased with the improvements we are seeing in our core markets which are reflected in our revenue and backlog growth,” said Michael J. Bradley, President and CEO of Matrix Service Company. “As fiscal 2011 progresses, we remain encouraged that business activity will continue to improve and are reaffirming our previously announced earnings guidance range of $0.60 to $0.80 per fully diluted share.”
Backlog
Consolidated backlog increased $42.0 million, or 11.9%, to $395.2 million as of September 30, 2010 compared to $353.2 million as of June 30, 2010.
Financial Position
At September 30, 2010, Matrix Service’s cash balance was $43.3 million. The Company did not borrow under its revolving credit facility during the three months ended September 30, 2010.
Investigation Update
The Company recorded a charge, which is included in selling, general and administrative expenses, of $0.5 million in the first quarter of fiscal 2011 for the cost of the investigation. Since the internal investigation is complete and all significant costs have been identified, the Company does not believe this matter will significantly affect earnings in future periods.
Conference Call Details
In conjunction with the press release, Matrix Service will host a conference call with Michael J. Bradley, president and CEO, and Thomas E. Long, vice president and CFO. The call will take place at 11:00 a.m. (Eastern) / 10:00 a.m. (Central) today and will be simultaneously broadcast live over the Internet at www.matrixservice.com or www.vcall.com. Please allow extra time prior to the call to visit the site and download the streaming media software required to listen to the Internet broadcast. The online archive of the broadcast will be available within one hour of completion of the live call.
About Matrix Service Company
Matrix Service Company provides engineering, construction and repair and maintenance services principally to the petroleum, petrochemical, power, bulk storage terminal, pipeline and industrial gas industries.
The Company is headquartered in Tulsa, Oklahoma, with regional operating facilities located in California, Illinois, Michigan, New Jersey, Oklahoma, Pennsylvania, Texas, and Washington in the U.S. and in Canada.
This release contains forward-looking statements that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are generally accompanied by words such as “anticipate,” “continues,” “expect,” “forecast,” “outlook,” “believe,” “estimate,” “should” and “will” and words of similar effect that convey future meaning, concerning the Company’s operations, economic performance and management’s best judgment as to what may occur in the future. Future events involve risks and uncertainties that may cause actual results to differ materially from those we currently anticipate. The actual results for the current and future periods and other corporate developments will depend upon a number of economic, competitive and other influences, including those factors discussed in the “Risk Factors” and “Forward Looking Statements” sections and elsewhere in the Company’s reports and filings made from time to time with the Securities and Exchange Commission. Many of these risks and uncertainties are beyond the control of the Company, and any one of which, or a combination of which, could materially and adversely affect the results of the Company’s operations and its financial condition. We undertake no obligation to update information contained in this release.
For more information, please
contact:
Matrix Service Company
Tom Long
Vice President and CFO
T: 918-838-8822
E: telong@matrixservice.com
Matrix Service Company
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(unaudited)
Three Months Ended
------------------
September 30, September 30,
2010 2009
Revenues $151,838 $137,650
Cost of revenues 136,136 120,232
------- -------
Gross profit 15,702 17,418
Selling, general and administrative
expenses 10,589 10,087
------ ------
Operating income 5,113 7,331
Other income (expense):
Interest expense (170) (174)
Interest income 13 43
Other 27 83
--- ---
Income before income tax expense 4,983 7,283
Provision for federal, state and
foreign income taxes 1,894 2,774
----- -----
Net income $3,089 $4,509
====== ======
Basic earnings per common share $0.12 $0.17
Diluted earnings per common share $0.12 $0.17
Weighted average common shares
outstanding:
Basic 26,342 26,195
Diluted 26,549 26,437
Matrix Service Company
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
September
30, June 30,
2010 2010
---- ----
Assets
Current assets:
Cash and cash equivalents $43,270 $50,899
Accounts receivable, less allowances
(September 30, 2010 -$1,276 and
June 30, 2010 -$1,404) 102,719 87,327
Costs and estimated earnings in
excess of billings on uncompleted
contracts 44,137 40,920
Inventories 2,756 3,451
Income taxes receivable 276 1,779
Deferred income taxes 7,521 8,073
Prepaid expenses 4,062 4,557
Other current assets 100 1,519
--- -----
Total current assets 204,841 198,525
Property, plant and equipment at
cost:
Land and buildings 27,745 27,859
Construction equipment 52,326 52,086
Transportation equipment 19,763 19,192
Office equipment and software 14,449 14,358
Construction in progress 3,278 1,251
----- -----
117,561 114,746
Accumulated depreciation (64,358) (61,817)
------- -------
53,203 52,929
Goodwill 27,303 27,216
Other intangible assets 4,083 4,141
Other assets 3,150 1,997
----- -----
Total assets $292,580 $284,808
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Matrix Service Company
Condensed Consolidated Balance Sheets (continued)
(In thousands, except share data)
(unaudited)
September
30, June 30,
2010 2010
---- ----
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $38,010 $44,769
Billings on uncompleted contracts in excess
of costs and estimated earnings 37,034 28,877
Accrued insurance 7,937 8,257
Accrued wages and benefits 16,990 13,538
Current capital lease obligation 775 772
Other accrued expenses 6,353 6,572
----- -----
Total current liabilities 107,099 102,785
Long-term capital lease obligation 11 259
Deferred income taxes 3,846 4,179
----- -----
Total liabilities 110,956 107,223
Commitments and contingencies - -
Stockholders' equity:
Common stock -$.01 par value; 60,000,000
shares authorized; 27,888,217 shares issued
as of September 30, 2010, and June 30, 2010 279 279
Additional paid-in capital 112,201 111,637
Retained earnings 84,341 81,252
Accumulated other comprehensive income 882 495
--- ---
197,703 193,663
Less: Treasury stock, at cost -1,545,740
shares as of September 30, 2010, and
1,546,512 shares as of June 30, 2010 (16,079) (16,078)
------- -------
Total stockholders' equity 181,624 177,585
------- -------
Total liabilities and stockholders' equity $292,580 $284,808
======== ========
Results of Operations
(in thousands)
(unaudited)
Construction Repair and
------------ ----------
Services Maintenance
-------- -----------
Services
--------
Three Months Ended September
30, 2010
Gross revenues $99,620 $54,431
Less: Inter-segment revenues 2,106 107
----- ---
Consolidated revenues 97,514 54,324
Gross profit 11,344 4,358
Operating income 4,779 334
Segment assets 147,082 97,252
Capital expenditures 872 238
Depreciation and amortization
expense 1,549 1,249
Three Months Ended September
30, 2009
Gross revenues $80,579 $60,176
Less: Inter-segment revenues 2,908 197
----- ---
Consolidated revenues 77,671 59,979
Gross profit 11,096 6,322
Operating income 5,266 2,065
Segment assets 129,969 90,672
Capital expenditures 268 87
Depreciation and amortization
expense 1,683 1,336
Other Total
----- -----
Three Months Ended September
30, 2010
Gross revenues $- $154,051
Less: Inter-segment revenues - 2,213
--- -----
Consolidated revenues - 151,838
Gross profit - 15,702
Operating income - 5,113
Segment assets 48,246 292,580
Capital expenditures 1,149 2,259
Depreciation and amortization
expense - 2,798
Three Months Ended September
30, 2009
Gross revenues $- $140,755
Less: Inter-segment revenues - 3,105
--- -----
Consolidated revenues - 137,650
Gross profit - 17,418
Operating income - 7,331
Segment assets 62,417 283,058
Capital expenditures 678 1,033
Depreciation and amortization
expense - 3,019
Segment revenue from external customers by market is as follows:
Construction Repair and Total
------------ ---------- -----
Services Maintenance
-------- -----------
Services
--------
(In thousands)
Three Months Ended September
30, 2010
Aboveground Storage Tanks $40,780 $21,232 $62,012
Downstream Petroleum 20,927 22,406 43,333
Electrical and
Instrumentation 29,922 10,686 40,608
Specialty 5,885 - 5,885
----- --- -----
Total $97,514 $54,324 $151,838
======= ======= ========
Three Months Ended September
30, 2009
Aboveground Storage Tanks $31,394 $26,791 $58,185
Downstream Petroleum 24,433 27,681 52,114
Electrical and
Instrumentation 13,487 5,507 18,994
Specialty 8,357 - 8,357
----- --- -----
Total $77,671 $59,979 $137,650
======= ======= ========
Backlog
We define backlog as the total dollar amount of revenues that we expect to recognize as a result of performing work that has been awarded to us through a signed contract that we consider firm. The following contract types are considered firm:
- fixed-price arrangements;
- minimum customer commitments on cost plus arrangements; and
- certain time and material contracts in which the estimated contract value is firm or can be estimated with a reasonable amount of certainty in both timing and amounts.
For long-term maintenance contracts we include only the amounts that we expect to recognize into revenue over the next 12 months. For all other arrangements, we calculate backlog as the estimated contract amount less the revenue recognized as of the reporting date.
The following table provides a summary of changes in our backlog for the three months ended September 30, 2010:
Construction Repair and Total
------------ ---------- -----
Services Maintenance
-------- -----------
Services
--------
(In thousands)
Backlog as of June 30, 2010 $197,675 $155,541 $353,216
New backlog awarded 124,803 69,046 193,849
Revenue recognized on
contracts in backlog (97,514) (54,324) (151,838)
Backlog as of September 30,
2010 $224,964 $170,263 $395,227
======== ======== ========
SOURCE Matrix Service Company