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Matrix Service Company Announces Results for the First Quarter Ended September 30, 2012

Matrix Service Company Logo

First Quarter Highlights:

  • Backlog at record $534.6 million with project awards of $246.8 million
  • Quarterly revenues were $209.6 million, an increase of 23.8%
  • Fully diluted earnings per share increase 38.5% to $0.18
  • Company reaffirms fiscal 2013 earnings and revenue guidance

TULSA, Okla., Nov. 8, 2012 (GLOBE NEWSWIRE) -- Matrix Service Company (Nasdaq:MTRX) today reported its financial results for the first quarter ended September 30, 2012. In the quarter, the Company experienced strong growth in new contract awards resulting in record backlog of $534.6 million as of September 30, 2012. The Company's strategic investments and business development efforts have resulted in significant new transmission and distribution projects and emerging opportunities in the mining and minerals market. In addition to the strategic growth areas, our core business continues to perform well, resulting in record quarterly revenue of $209.6 million.

John R. Hewitt, President and CEO of Matrix Service Company, said: "Our performance in the quarter is consistent with our strategic focus and we are seeing significant business activity across all operating segments. Consistent with our vision, we continue to invest in strategic end markets, resulting in exciting new contract awards and greater diversity in our business."

Financial Results

Revenues for the first quarter ended September 30, 2012 were $209.6 million compared to $169.3 million in the same period a year earlier, an increase of $40.3 million, or 23.8%. Net income for the first quarter of fiscal 2013 was $4.7 million, or $0.18 per fully diluted share. In the same period a year earlier the Company earned $3.5 million, or $0.13 per fully diluted share.

Consolidated gross profit was $22.2 million in the first quarter of fiscal 2013 compared to $18.1 million in the same period a year earlier primarily due to higher revenues. Revenues increased in our Oil Gas & Chemical, Electrical Infrastructure and Storage Solutions segments by $21.3 million, $11.3 million and $9.3 million, respectively. Gross margins were 10.6% in the first quarter of fiscal 2013 versus 10.7% in the first quarter of fiscal 2012. In line with our plan, selling, general and administrative costs increased by $2.8 million, or 24.3%. This increase is primarily related to our planned investments in the branding initiative and strategic growth areas. In addition, the first quarter results include a bad debt charge of $0.7 million. SG&A expense as a percentage of revenue remained unchanged at 6.8%.

Backlog

Backlog at September 30, 2012 totaled $534.6 million, an increase of $37.1 million, or 7.5%, compared to the backlog at June 30, 2012 of $497.5 million. Project awards in the first quarter totaled $246.8 million.

Financial Position

At September 30, 2012, the Company's cash balance was $17.2 million. The cash balance along with availability under the senior credit facility gives the Company liquidity of $125.6 million. The cash balance at September 30, 2012, which has increased to approximately $50 million at the end of October, was lower than the previous quarter due to a high volume of time and material work and short-term maintenance projects at the end of the first quarter.

Stock Repurchase Program

On November 6, 2012 the Board of Directors approved an extension of the Company's Stock Repurchase Program which was set to expire on December 31, 2012. Under the extension, which expires at the end of calendar year 2014, the Company has authorization to purchase up to 2.1 million shares.

Earnings Guidance

The Company is reaffirming fiscal 2013 guidance of revenue between $800 million and $850 million and earnings between $0.83 and $0.98 per fully diluted share.

Conference Call Details

In conjunction with the earnings release, Matrix Service Company will host a conference call with John R. Hewitt, President and CEO, and Kevin S. Cavanah, Vice President and CFO. The call will take place at 11:00 a.m. (Eastern) / 10:00 a.m. (Central) on Friday, November 9, 2012 and will be simultaneously broadcast live over the Internet which can be accessed at the Company's website at www.matrixservicecompany.com on the Investors' page under Conference Calls/Events. 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 conference call will be recorded and will be available for replay within one hour of completion of the live call and can be accessed following the same link as the live call.

About Matrix Service Company

Matrix Service Company provides engineering, fabrication, construction and repair and maintenance services to the Electrical Infrastructure, Oil Gas & Chemical, Storage Solutions and Industrial markets.

The Company is headquartered in Tulsa, Oklahoma, with regional operating facilities throughout the United States and Canada.

The Matrix Service Company logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=13990

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.

Matrix Service Company
Consolidated Statements of Income
(In thousands, except per share data)
Three Months Ended
September 30,
2012
September 30,
2011
Revenues $ 209,608 $ 169,321
Cost of revenues 187,364 151,228
Gross profit 22,244 18,093
Selling, general and administrative expenses 14,320 11,483
Operating income 7,924 6,610
Other income (expense):
Interest expense (183) (277)
Interest income 8 3
Other 57 (676)
Income before income tax expense 7,806 5,660
Provision for federal, state and foreign income taxes 3,122 2,151
Net income $ 4,684 $ 3,509
Basic earnings per common share $ 0.18 $ 0.13
Diluted earnings per common share $ 0.18 $ 0.13
Weighted average common shares outstanding:
Basic 25,788 26,400
Diluted 26,148 26,722
Matrix Service Company
Consolidated Balance Sheets
(In thousands)
September 30,
2012
June 30,
2012
Assets
Current assets:
Cash and cash equivalents $ 17,170 $ 39,726
Accounts receivable, less allowances (September 30, 2012 -- $1,906 and June 30, 2012 -- $1,201) 156,844 108,034
Costs and estimated earnings in excess of billings on uncompleted contracts 77,598 68,562
Inventories 3,267 2,482
Deferred income taxes 5,760 6,024
Other current assets 5,560 5,688
Total current assets 266,199 230,516
Property, plant and equipment at cost:
Land and buildings 29,357 28,846
Construction equipment 60,207 59,176
Transportation equipment 26,027 25,865
Office equipment and software 17,391 16,892
Construction in progress 5,984 2,910
138,966 133,689
Accumulated depreciation (81,407) (78,814)
57,559 54,875
Goodwill 28,763 28,675
Other intangible assets 6,392 6,504
Other assets 3,937 2,565
Total assets $ 362,850 $ 323,135
Matrix Service Company
Consolidated Balance Sheets (continued)
(In thousands, except share data)
September 30,
2012
June 30,
2012
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 61,664 $ 48,931
Billings on uncompleted contracts in excess of costs and estimated earnings 45,637 30,293
Accrued wages and benefits 15,281 15,298
Accrued insurance 7,055 6,912
Income taxes payable 3,238 1,115
Acquisition payable 400 400
Other accrued expenses 3,334 3,014
Total current liabilities 136,609 105,963
Deferred income taxes 6,063 6,075
Long term debt 3,355 --
Total liabilities 146,027 112,038
Commitments and contingencies
Stockholders' equity:
Common stock -- $.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of September 30, 2012, and June 30, 2012 279 279
Additional paid-in capital 117,297 116,693
Retained earnings 122,103 117,419
Accumulated other comprehensive income 1,238 771
240,917 235,162
Less: Treasury stock, at cost –2,051,764 shares as of September 30, 2012, and 2,141,990 shares as of June 30, 2012 (24,094) (24,065)
Total stockholders' equity 216,823 211,097
Total liabilities and stockholders' equity $ 362,850 $ 323,135
Results of Operations
(In thousands)
Three Months Ended
September 30,
2012
September 30,
2011
Gross revenues
Electrical Infrastructure $ 33,270 $ 22,012
Oil Gas & Chemical 67,097 45,999
Storage Solutions 105,418 95,922
Industrial 4,975 6,575
Total gross revenues $ 210,760 $ 170,508
Less: Inter-segment revenues
Electrical Infrastructure $ -- $ --
Oil Gas & Chemical -- 175
Storage Solutions 1,152 1,012
Industrial -- --
Total inter-segment revenues $ 1,152 $ 1,187
Consolidated revenues
Electrical Infrastructure $ 33,270 $ 22,012
Oil Gas & Chemical 67,097 45,824
Storage Solutions 104,266 94,910
Industrial 4,975 6,575
Total consolidated revenues $ 209,608 $ 169,321
Gross profit (loss)
Electrical Infrastructure $ 4,706 $ 2,785
Oil Gas & Chemical 7,867 4,347
Storage Solutions 9,969 10,387
Industrial (298) 574
Total gross profit $ 22,244 $ 18,093
Operating income (loss)
Electrical Infrastructure $ 2,319 $ 729
Oil Gas & Chemical 3,775 1,412
Storage Solutions 3,449 4,226
Industrial (1,619) 243
Total operating income $ 7,924 $ 6,610
Segment assets
Electrical Infrastructure $ 56,826 $ 40,550
Oil Gas & Chemical 71,848 54,036
Storage Solutions 186,600 139,820
Industrial 14,179 17,949
Other 33,397 46,918
Total segment assets $ 362,850 $ 299,273

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, notice to proceed or other type of assurance that we consider firm. The following arrangements are considered firm:

  • fixed-price awards;
  • minimum customer commitments on cost plus arrangements; and
  • certain time and material arrangements in which the estimated 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 revenues recognized as of the reporting date.

The following table provides a summary of changes in our backlog for the three months ended September 30, 2012:

Electrical
Infrastructure
Oil Gas &
Chemical
Storage
Solutions

Industrial

Total
(In thousands)
Backlog as of June 30, 2012 $ 127,699 $ 117,862 $ 236,571 $ 15,320 $ 497,452
Net awards 40,889 66,092 132,603 7,218 246,802
Revenue recognized (33,270) (67,097) (104,266) (4,975) (209,608)
Backlog as of September 30, 2012 $ 135,318 $ 116,857 $ 264,908 $ 17,563 $ 534,646
CONTACT: Matrix Service Company Kevin S. Cavanah Vice President and CFO T: 918-838-8822 Email:kcavanah@matrixservicecompany.com

Source:Matrix Service Company