Matrix Service Announces Results for the Second Quarter Ended December 31, 2010
TULSA, Okla., Feb. 7, 2011 /PRNewswire/ – Matrix Service Co. (Nasdaq: MTRX) today reported its financial results for the three and six months ended December 31, 2010.
Second Quarter of Fiscal 2011 Results
Revenues for the second quarter ended December 31, 2010 were $175.3 million, an increase of $24.9 million, or 16.6%, from consolidated revenues of $150.4 million in the same period a year earlier. Net income for the second quarter of fiscal 2011 was $5.3 million, or $0.20 per fully diluted share. Net income was $4.5 million, or $0.17 per fully diluted share, in the comparable period a year earlier.
Michael J. Hall, Chairman of the Board of Directors of Matrix Service Company, said, “We are pleased with the results for the quarter and the first half of fiscal 2011. We are also encouraged by the volume of bid activity and improving market conditions in both the Construction Services and Repair and Maintenance Services segments.”
Consolidated gross profit was $19.8 million in the second quarter of fiscal 2011 compared to $18.4 million in the second quarter of fiscal 2010. The increase of $1.4 million was due to higher revenues, partially offset by lower gross margins which decreased to 11.3% in the second quarter of fiscal 2011 compared to 12.3% in the comparable period a year earlier. The decrease in gross margins was due to lower direct margins partially offset by the favorable effect of improved recovery of construction overhead costs in the second quarter of fiscal 2011. Selling, general and administrative expenses for the second quarter of fiscal 2011 were $11.1 million compared to $11.4 million in the second quarter of fiscal 2010.
Six Month Fiscal 2011 Results
Revenues for the six months ended December 31, 2010 were $327.1 million, an increase of $39.0 million, or 13.5%, from consolidated revenues of $288.1 million in the same period a year earlier. Net income for the six months ended December 31, 2010 was $8.4 million, or $0.32 per fully diluted share. Net income was $9.0 million, or $0.34 per fully diluted share, in the comparable period a year earlier.
Consolidated gross profit was $35.5 million for the six months ended December 31, 2010 compared to $35.9 million in the prior fiscal year period. The decrease of $0.4 million was due to lower gross margins which decreased to 10.8% in the six months ended December 31, 2010 compared to 12.4% in the same period a year earlier. The decrease in gross margins was due to lower direct margins partially offset by the favorable effect of improved recovery of construction overhead costs. Selling, general and administrative expenses for the six months ended December 31, 2010 were $21.7 million compared to $21.5 million for the six months ended December 31, 2009.
Financial Position
At December 31, 2010, Matrix Service’s cash balance was $43.7 million. The Company did not borrow under its revolving credit facility during the six months ended December 31, 2010.
Backlog
Consolidated backlog decreased $29.2 million, or 7.4%, to $366.0 million as of December 31, 2010 compared to $395.2 million as of September 30, 2010. The December 31, 2010 backlog remains above the fiscal 2010 year end backlog of $353.2 million.
Earnings Guidance
Matrix Service expects the second half of fiscal 2011 to be consistent with the first half of the fiscal year, with the fourth quarter being much stronger than the third quarter. Further, the Company expects gross margins to increase slightly in the last half of the fiscal year. As a result, Matrix Service is narrowing the range of fiscal 2011 earnings guidance to $0.60 to $0.75 per fully diluted share as compared to its previous earnings guidance of $0.60 to $0.80 per fully diluted share.
Conference Call Details
In conjunction with the press release, Matrix Service will host a conference call with Michael J. Hall, Chairman of the Board of Directors, Kevin S. Cavanah, vice president and CFO, and Joseph F. Montalbano, vice president and COO. 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
Kevin Cavanah
Vice President and CFO
T: 918-838-8822
E: kcavanah@matrixservice.com
Matrix Service Company
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
December December December December
31, 31, 31, 31,
--------- --------- --------- ---------
2010 2009 2010 2009
---- ---- ---- ----
Revenues $175,252 $150,425 $327,090 $288,075
Cost of revenues 155,484 131,983 291,620 252,215
------- ------- ------- -------
Gross profit 19,768 18,442 35,470 35,860
Selling, general and
administrative expenses 11,136 11,376 21,725 21,463
------ ------ ------ ------
Operating income 8,632 7,066 13,745 14,397
Other income (expense):
Interest expense (197) (188) (367) (362)
Interest income 9 17 22 60
Other 83 461 110 544
--- --- --- ---
Income before income tax
expense 8,527 7,356 13,510 14,639
Provision for federal, state
and foreign income taxes 3,240 2,823 5,134 5,597
----- ----- ----- -----
Net income $5,287 $4,533 $8,376 $9,042
====== ====== ====== ======
Basic earnings per common
share $0.20 $0.17 $0.32 $0.34
Diluted earnings per common
share $0.20 $0.17 $0.32 $0.34
Weighted average common
shares outstanding:
Basic 26,400 26,273 26,372 26,234
Diluted 26,628 26,459 26,584 26,449
Matrix Service Company
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
December
31, June 30,
2010 2010
---- ----
Assets
Current assets:
Cash and cash equivalents $43,684 $50,899
Accounts receivable, less allowances
(December 31, 2010 -$1,574 and June 30,
2010 -$1,404) 109,949 87,327
Costs and estimated earnings in excess of
billings on uncompleted contracts 36,952 40,920
Inventories 2,401 3,451
Income taxes receivable 655 1,779
Deferred income taxes 5,648 8,073
Prepaid expenses 3,220 4,557
Other current assets 1,096 1,519
----- -----
Total current assets 203,605 198,525
Property, plant and equipment at cost:
Land and buildings 27,801 27,859
Construction equipment 52,556 52,086
Transportation equipment 19,558 19,192
Office equipment and software 14,758 14,358
Construction in progress 4,292 1,251
----- -----
118,965 114,746
Accumulated depreciation (65,371) (61,817)
------- -------
53,594 52,929
Goodwill 27,384 27,216
Other intangible assets 4,024 4,141
Other assets 2,338 1,997
----- -----
Total assets $290,945 $284,808
======== ========
Matrix Service Company
Condensed Consolidated Balance Sheets (continued)
(In thousands, except share data)
(unaudited)
December 31, June 30,
2010 2010
---- ----
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $35,804 $44,769
Billings on uncompleted contracts in
excess of costs and 39,601 28,877
estimated earnings
Accrued insurance 7,754 8,257
Accrued wages and benefits 12,786 13,538
Current capital lease obligation 522 772
Other accrued expenses 2,821 6,572
----- -----
Total current liabilities 99,288 102,785
Long-term capital lease obligation 96 259
Deferred income taxes 4,150 4,179
----- -----
Total liabilities 103,534 107,223
Commitments and contingencies - -
Stockholders' equity:
Common stock -$.01 par value; 60,000,000 279 279
shares authorized; 27,888,217 shares
issued
as of December 31, 2010, and June 30,
2010
Additional paid-in capital 112,328 111,637
Retained earnings 89,625 81,252
Accumulated other comprehensive income 1,251 495
----- ---
203,483 193,663
Less: Treasury stock, at cost -
1,469,578 (16,072) (16,078)
shares as of December 31, 2010, and
1,546,512 ------- -------
shares as of June 30, 2010
Total stockholders' equity 187,411 177,585
------- -------
Total liabilities and stockholders'
equity $290,945 $284,808
======== ========
Results of Operations
(in thousands)
Repair and
----------
Construction Maintenance
------------ -----------
Services Services Other Total
-------- -------- ----- -----
Three Months Ended December
31, 2010
Gross revenues $107,886 $69,855 $- $177,741
Less: Inter-segment revenues 2,282 207 - 2,489
----- --- --- -----
Consolidated revenues 105,604 69,648 - 175,252
Gross profit 12,815 6,953 - 19,768
Operating income 6,144 2,488 - 8,632
Segment assets 141,477 101,964 47,504 290,945
Capital expenditures 1,286 93 891 2,270
Depreciation and
amortization expense 1,516 1,209 - 2,725
Three Months Ended December
31, 2009
Gross revenues $84,511 $69,849 $- $154,360
Less: Inter-segment revenues 3,929 6 - 3,935
----- --- --- -----
Consolidated revenues 80,582 69,843 - 150,425
Gross profit 11,894 6,548 - 18,442
Operating income 5,006 2,060 - 7,066
Segment assets 120,697 88,760 68,806 278,263
Capital expenditures 234 719 863 1,816
Depreciation and
amortization expense 1,647 1,300 - 2,947
Six Months Ended December
31, 2010
Gross revenues $207,506 $124,286 $- $331,792
Less: Inter-segment revenues 4,388 314 - 4,702
----- --- --- -----
Consolidated revenues 203,118 123,972 - 327,090
Gross profit 24,159 11,311 - 35,470
Operating income 10,923 2,822 - 13,745
Segment assets 141,477 101,964 47,504 290,945
Capital expenditures 2,158 331 2,040 4,529
Depreciation and
amortization expense 3,065 2,458 - 5,523
Six Months Ended December
31, 2009
Gross revenues $165,090 $130,025 $- $295,115
Less: Inter-segment revenues 6,837 203 - 7,040
----- --- --- -----
Consolidated revenues 158,253 129,822 - 288,075
Gross profit 22,990 12,870 - 35,860
Operating income 10,272 4,125 - 14,397
Segment assets 120,697 88,760 68,806 278,263
Capital expenditures 502 806 1,541 2,849
Depreciation and
amortization expense 3,330 2,636 - 5,966
Segment revenue from external customers by market is as follows:
Repair and
----------
Construction Maintenance
------------ -----------
Services Services Total
-------- -------- -----
(In thousands)
Three Months Ended December
31, 2010
Aboveground Storage Tanks $49,545 $21,868 $71,413
Downstream Petroleum 22,648 28,386 51,034
Electrical and
Instrumentation 27,385 19,394 46,779
Specialty 6,026 - 6,026
----- --- -----
Total $105,604 $69,648 $175,252
======== ======= ========
Three Months Ended December
31, 2009
Aboveground Storage Tanks $36,037 $25,076 $61,113
Downstream Petroleum 20,531 39,526 60,057
Electrical and
Instrumentation 15,988 5,241 21,229
Specialty 8,026 - 8,026
----- --- -----
Total $80,582 $69,843 $150,425
======= ======= ========
Six Months Ended December
31, 2010
Aboveground Storage Tanks $90,325 $43,100 $133,425
Downstream Petroleum 43,575 50,792 94,367
Electrical and
Instrumentation 57,307 30,080 87,387
Specialty 11,911 - 11,911
------ --- ------
Total $203,118 $123,972 $327,090
======== ======== ========
Six Months Ended December
31, 2009
Aboveground Storage Tanks $67,431 $51,867 $119,298
Downstream Petroleum 44,964 67,207 112,171
Electrical and
Instrumentation 29,475 10,748 40,223
Specialty 16,383 - 16,383
------ --- ------
Total $158,253 $129,822 $288,075
======== ======== ========
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.
Three Months Ended December 31, 2010
The following table provides a summary of changes in our backlog for the three months ended December 31, 2010:
Repair
Construction and Total
------------ ------ -----
Services Maintenance
-------- -----------
Services
--------
(In thousands)
Backlog as of September
30, 2010 $224,964 $170,263 $395,227
New backlog awarded 85,108 60,884 145,992
Revenue recognized on
contracts in backlog (105,604) (69,648) (175,252)
Backlog as of December 31,
2010 $204,468 $161,499 $365,967
======== ======== ========
Six Months Ended December 31, 2010
The following table provides a summary of changes in our backlog for the six months ended December 31, 2010:
Repair
Construction and Total
------------ ------ -----
Services Maintenance
-------- -----------
Services
--------
(In thousands)
Backlog as of June 30,
2010 $197,675 $155,541 $353,216
New backlog awarded 209,911 129,930 339,841
Revenue recognized on
contracts in backlog (203,118) (123,972) (327,090)
Backlog as of December 31,
2010 $204,468 $161,499 $365,967
======== ======== ========
SOURCE Matrix Service Co.