UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) July 30, 2009
Matrix Service Company
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
| 001-15461 | 73-1352174 | |
| (Commission File Number) | (IRS Employer Identification No.) |
| 5100 E Skelly Dr., Suite 700, TULSA, OK | 74135 | |
| (Address of Principal Executive Offices) | (Zip Code) |
918-838-8822
(Registrant’s Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition. |
On August 4, 2009, Matrix Service Company (the “Company”) issued a press release announcing its financial results for the fourth quarter and fiscal year ending May 31, 2009 and guidance for fiscal year 2010. The full text of the press release is attached as Exhibit 99 to this Current Report on Form 8-K.
The information in this Item 2.02 and Exhibit 99 attached hereto is being furnished pursuant to Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
On July 30, 2009, the Company’s Board of Directors approved a change in the Company’s fiscal year from the twelve month period of June 1 to May 31 to the twelve month period of July 1 to June 30. The Company’s previous May 31 fiscal year caused the preparation of our quarterly and annual reports to coincide with numerous holidays. This difficulty has been exacerbated in recent years by the combination of accelerated filing requirements and an increase in the amount of time and work required to prepare periodic filings. In addition, the change to June 30 allows the Company to report on the same quarterly cycle as most other construction companies. The change in fiscal year is effective immediately.
The reporting periods, applicable reports and their respective due dates for fiscal 2010 will be as follows:
| Report to be Filed |
Reporting Period |
Report Due Date | ||
| Form 10-Q | Month ended June 30, 2009 and 1st fiscal quarter ended September 30, 2009 |
November 9, 2009 | ||
| Form 10-Q | 2nd fiscal quarter ended December 31, 2009 | February 9, 2010 | ||
| Form 10-Q | 3rd fiscal quarter ended March 31, 2010 | May 10, 2010 | ||
| Form 10-K | Fiscal year ended June 30, 2010 | September 13, 2010 | ||
| Item 9.01 | Financial Statements and Exhibits. |
The following exhibits are filed or furnished herewith:
| Exhibit No. |
Description | |
| 99 | Press Release dated August 4, 2009, announcing financial results for the fourth quarter and fiscal year ending May 31, 2009, guidance for fiscal year 2010 and a change in fiscal year. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Matrix Service Company | ||||
| Dated: August 4, 2009 | By: | /s/ Kevin S. Cavanah | ||
| Kevin S. Cavanah | ||||
| Vice President – Accounting & Financial Reporting and Principal Accounting Officer | ||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99 | Press Release dated August 4, 2009, announcing financial results for the fourth quarter and fiscal year ending May 31, 2009, guidance for fiscal year 2010 and a change in fiscal year. |
Exhibit 99
FOR IMMEDIATE RELEASE
MATRIX SERVICE ANNOUNCES RESULTS FOR FOURTH QUARTER AND FISCAL YEAR ENDED MAY 31, 2009
Matrix Service Announces Change in Fiscal Year and Provides Guidance for Fiscal 2010
Fourth-Quarter Fiscal 2009 Highlights:
| • | Revenues were $179.9 million; |
| • | Gross margins were 13.0%; |
| • | Operating income was $11.1 million; |
| • | Fully diluted EPS was $0.26 per share; and |
| • | Backlog was $401.1 million as of May 31, 2009. |
Twelve-Month Fiscal 2009 Highlights:
| • | Revenues were $689.7 million; |
| • | Gross margins were 13.7%; |
| • | Record operating income of $47.3 million; and |
| • | Record fully diluted EPS of $1.16 per share. |
TULSA, OK – August 4, 2009 – Matrix Service Co. (Nasdaq: MTRX), a leading industrial services company, today reported its financial results for the fourth quarter and fiscal year ended May 31, 2009.
Fourth Quarter of Fiscal 2009 Results
Net income for the fourth quarter of fiscal 2009 was $6.7 million, or $0.26 per fully diluted share, versus net income in the fourth quarter of fiscal 2008 of $8.9 million, or $0.34 per fully diluted share. Consolidated revenues were $179.9 million in fourth quarter compared to $194.1 million in the fourth quarter of fiscal 2008. The decline in fourth quarter consolidated revenues was the result of a decrease in the Construction Services segment of $20.8 million partially offset by an increase in the Repair and Maintenance Services segment of $6.6 million.
Mike Bradley, chief executive officer stated, “As we expected, the fourth quarter improved significantly from the third quarter due to strong project execution on a higher revenue volume. We are very pleased with these results and proud of the record year achieved by Matrix Service despite the challenging economic environment we encountered for much of the year.”
Revenues for the Construction Services segment were $100.5 million, compared with $121.3 million in the same period a year earlier. The decrease was primarily due to lower Downstream Petroleum revenues, which decreased to $30.0 million in the fourth quarter of fiscal 2009, compared to $43.6 million in the year earlier period, lower Aboveground Storage Tank revenues, which decreased to $40.0 million in the fourth quarter in fiscal 2009, compared to $52.5 million the year earlier period, and lower Specialty revenues, which decreased to $8.7 million in the fourth quarter of fiscal 2009, compared to $17.3 million in the year earlier period, and, partially offset by higher Electrical and Instrumentation revenues, which improved from $7.9 million in fiscal 2008 to $21.8 million in the current period.
Revenues for the Repair and Maintenance Services segment were $79.4 million, compared to $72.8 million in the year earlier period. The improvement was due to higher Downstream Petroleum revenues, which increased to $41.5 million in the fourth quarter of fiscal 2009, compared to $22.4 million in the year earlier period and higher Electrical and Instrumentation revenues, which increased to $7.9 million, compared to $7.4 million in the year earlier period. These were partially offset by lower Aboveground Storage Tank revenues, which decreased from $43.0 million in fiscal 2008 to $30.0 million in the current period.
Consolidated gross profit decreased from $24.0 million in the fourth quarter of fiscal 2008 to $23.3 million in the fourth quarter of fiscal 2009. The decrease was due to a 7.3% decline in consolidated revenues, partially offset by higher gross margins, which improved to 13.0% from 12.3% in the same period of fiscal 2008. The gross margin improvement was due to higher margins in the Construction Services segment, where the gross margin increased to 13.8% in the current fiscal year up from 12.3% in the prior fiscal year. The Repair and Maintenance Services segment gross margins decreased to 12.0% in the current year period compared to 12.5% in the fourth quarter of fiscal 2008.
Consolidated SG&A expenses increased $2.5 million to $12.3 million in the fourth quarter of fiscal 2009 compared to $9.8 million in the fourth quarter of fiscal 2008. The increase was primarily due to the costs of our expansion into Western Canada and the Gulf Coast Region, the acquisition of S.M. Electric Company, Inc. (“SME”) in February 2009, increased professional fees and higher employee related and facility costs incurred to build the infrastructure and sales force necessary to support our long term growth plan. SG&A expense as a percentage of revenue increased to 6.8% in fiscal 2009 compared to 5.0% in the same period of the prior fiscal year due to the increase in expense combined with the $14.2 million decline in revenues.
EBITDA(1) was $14.2 million compared to $16.4 million in the same period last year.
Consolidated backlog as of May 31, 2009 was $401.1 million compared to $452.5 million at the end of the third fiscal quarter. Contributing to the change were awards of $142.4 million and project cancellations of $14.0 million.
Fiscal Year 2009 Results
For the fiscal year ended May 31, 2009, net income grew to $30.6 million, or $1.16 per fully diluted share, up from net income of $21.4 million, or $0.80 per fully diluted share in fiscal 2008. Consolidated revenues were $689.7 million in fiscal 2009, a decrease of $41.6 million from consolidated revenues of $731.3 million in fiscal 2008. The decline in consolidated revenues was the result of a decrease in the Construction Services segment of $60.7 million, offset partially by an increase of $19.1 million in the Repair and Maintenance Services segment.
Revenues for the Construction Services segment were $395.2 million, compared with $455.9 million in the same period a year earlier. The decrease of $60.7 million was primarily due to lower Specialty revenues, which decreased $50.8 million as the construction of the tanks on a Gulf Coast LNG project was completed in the fourth quarter of fiscal 2008. In addition, Aboveground Storage Tank revenues decreased $23.6 million to $177.8 million in fiscal 2009, compared to $201.4 million a year earlier, and Downstream Petroleum revenues decreased $12.2 million to $144.2 million in fiscal 2009, compared to $156.4 million in fiscal 2008. Partially offsetting these declines was higher Electrical and Instrumentation revenues, which increased $25.9 million to $45.9 million in fiscal 2009, compared to $20.0 million a year earlier.
Revenues for the Repair and Maintenance Services segment were $294.5 million in fiscal 2009 compared to $275.4 million in fiscal 2008. The improvement was due to higher Downstream Petroleum revenues, which increased $17.2 million to $106.2 million in fiscal 2009, compared to $89.0 million in the prior fiscal year and higher Electrical and Instrumentation revenues, which increased $3.6 million to $22.0 million in fiscal 2009, compared to $18.4 million in fiscal 2008. These increases were partially offset by lower Aboveground Storage Tank revenues, which decreased $1.7 million to $166.3 million in fiscal 2009 from $168.0 million during fiscal 2008.
Consolidated gross profit increased from $75.1 million in fiscal 2008 to $94.3 million in fiscal 2009. The improvement of $19.2 million or 25.6% was due to higher gross margins, which improved from 10.3% in fiscal 2008 to 13.7% in fiscal 2009. The gross margin improvement was due to higher margins in the Construction Services segment, where the gross margin increased to 12.9% in the current fiscal year up from 7.3% in the prior fiscal year. The Repair and Maintenance Services segment gross margins were 14.7% in fiscal 2009 compared to 15.3% in fiscal 2008.
Consolidated SG&A expenses increased $6.4 million, or 15.8%, in fiscal 2009 to $47.0 million, from $40.6 million for fiscal 2008. The increase was primarily due to the costs of our expansion into Western Canada and the Gulf Coast Region, the SME acquisition, and higher employee related and facility costs incurred to build the infrastructure and sales force necessary to support our long-term growth plan. SG&A expense, as a percentage of revenue, increased to 6.8% in fiscal 2009 compared to 5.6% in fiscal 2008.
EBITDA(1) increased to $59.1 million, from $42.9 million in the same period last year.
Financial Position
During the fourth quarter, the Company increased its cash balance from $22.6 million as of February 28, 2009, to $34.6 million as of May 31, 2009. The Company did not borrow under its $75 million revolving credit facility during the three months and year ended May 31, 2009.
Change in Fiscal Year
On July 30, 2009, the Company’s Board of Directors approved a change in the Company’s fiscal year end to June 30, effective immediately. In early November, the Company will report operating results for the month ended June 30, 2009 and the quarter ended September 30, 2009.
Earnings Guidance
Mr. Bradley provided the following comments regarding earnings guidance, “We believe the Company is well positioned to manage through the current economic environment and to capitalize on opportunities as the market improves. We also believe that our strong financial position will enable us to pursue strategic acquisitions that arise in this market. With the remainder of calendar 2009 expected to be challenging for both the Construction Services and Repair and Maintenance Services segments, the Company expects to achieve earnings in fiscal 2010 in the range of $0.80 per fully diluted share to $1.10 per fully diluted share. Capital expenditures are expected to be approximately $12 million.”
| 1) | The Company believes that EBITDA (earnings before interest, income taxes, depreciation and amortization) is used by the financial community as a method of measuring the Company’s performance and of evaluating the market value of companies considered to be in similar businesses. EBITDA should not be considered as an alternative to net income or cash provided by operating activities, as defined by accounting principles generally accepted in the United States (“GAAP”). A reconciliation of EBITDA to net income is included at the end of this release. |
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 general industrial 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 Oklahoma, Texas, California, Michigan, New Jersey, Pennsylvania, Illinois, Washington, and Delaware 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 Finance and CFO
T: +1-918-838-8822
E: telong@matrixservice.com
Investors and Financial Media:
Trúc Nguyen, Managing Director
Grayling
T: +1-646-284-9418
E: truc.nguyen@us.grayling.com
Matrix Service Company
Consolidated Statements of Income
(In thousands, except per share data)
| Fiscal Year Ended May 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
| Revenues |
$ | 689,720 | $ | 731,301 | $ | 639,846 | ||||||
| Cost of revenues |
595,397 | 656,184 | 573,960 | |||||||||
| Gross profit |
94,323 | 75,117 | 65,886 | |||||||||
| Selling, general and administrative expenses |
47,006 | 40,566 | 32,836 | |||||||||
| Operating income |
47,317 | 34,551 | 33,050 | |||||||||
| Other income (expense): |
||||||||||||
| Interest expense |
(563 | ) | (890 | ) | (2,403 | ) | ||||||
| Interest income |
330 | 82 | 139 | |||||||||
| Other |
675 | (27 | ) | 328 | ||||||||
| Income before income taxes |
47,759 | 33,716 | 31,114 | |||||||||
| Provision for federal, state and foreign income taxes |
17,170 | 12,302 | 11,943 | |||||||||
| Net income |
$ | 30,589 | $ | 21,414 | $ | 19,171 | ||||||
| Basic earnings per common share |
$ | 1.17 | $ | 0.81 | $ | 0.83 | ||||||
| Diluted earnings per common share |
$ | 1.16 | $ | 0.80 | $ | 0.74 | ||||||
| Weighted average common shares outstanding: |
||||||||||||
| Basic |
26,121 | 26,427 | 23,056 | |||||||||
| Diluted |
26,390 | 26,875 | 26,752 | |||||||||
Matrix Service Company
Consolidated Balance Sheets
(In thousands)
| As of May 31, | ||||||||
| 2009 | 2008 | |||||||
| Assets | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 34,553 | $ | 21,989 | ||||
| Accounts receivable, less allowances (2009 - $710; 2008 - $269) |
122,283 | 105,858 | ||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts |
35,619 | 49,940 | ||||||
| Inventories |
4,926 | 4,255 | ||||||
| Income tax receivable |
647 | — | ||||||
| Deferred income taxes |
4,843 | 4,399 | ||||||
| Prepaid expenses |
3,935 | 3,357 | ||||||
| Other current assets |
3,044 | 809 | ||||||
| Total current assets |
209,850 | 190,607 | ||||||
| Property, plant and equipment, at cost: |
||||||||
| Land and buildings |
27,319 | 24,268 | ||||||
| Construction equipment |
53,925 | 47,370 | ||||||
| Transportation equipment |
17,971 | 16,927 | ||||||
| Furniture and fixtures |
14,527 | 11,781 | ||||||
| Construction in progress |
812 | 6,712 | ||||||
| 114,554 | 107,058 | |||||||
| Accumulated depreciation |
(55,745 | ) | (49,811 | ) | ||||
| 58,809 | 57,247 | |||||||
| Goodwill |
25,768 | 23,329 | ||||||
| Other intangible assets |
4,571 | — | ||||||
| Other assets |
4,453 | 3,410 | ||||||
| Total assets |
$ | 303,451 | $ | 274,593 | ||||
Matrix Service Company
Consolidated Balance Sheets (continued)
(In thousands, except share data)
| As of May 31, | ||||||||
| 2009 | 2008 | |||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 48,668 | $ | 53,560 | ||||
| Billings on uncompleted contracts in excess of costs and estimated earnings |
51,305 | 48,709 | ||||||
| Accrued insurance |
7,612 | 8,451 | ||||||
| Accrued wages and benefits |
16,566 | 14,976 | ||||||
| Income tax payable |
— | 2,028 | ||||||
| Current capital lease obligation |
1,039 | 1,042 | ||||||
| Other accrued expenses |
2,200 | 1,015 | ||||||
| Total current liabilities |
127,390 | 129,781 | ||||||
| Long-term capital lease obligation |
850 | 1,000 | ||||||
| Deferred income taxes |
4,822 | 5,112 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock - $.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of May 31, 2009 and 2008 |
279 | 279 | ||||||
| Additional paid-in capital |
110,272 | 108,402 | ||||||
| Retained earnings |
75,393 | 44,809 | ||||||
| Accumulated other comprehensive income |
596 | 1,584 | ||||||
| 186,540 | 155,074 | |||||||
| Less treasury stock, at cost – 1,696,517 and 1,825,600 shares as of May 31, 2009 and 2008 |
(16,151 | ) | (16,374 | ) | ||||
| Total stockholders’ equity |
170,389 | 138,700 | ||||||
| Total liabilities and stockholders’ equity |
$ | 303,451 | $ | 274,593 | ||||
Results of Operations
(In thousands)
| Construction Services |
Repair & Maintenance Services |
Other | Total | ||||||||||
| Three Months Ended May 31, 2009 |
|||||||||||||
| Gross revenues |
$ | 106,171 | $ | 79,393 | $ | — | $ | 185,564 | |||||
| Less: Inter-segment revenues |
5,685 | 8 | — | 5,693 | |||||||||
| Consolidated revenues |
100,486 | 79,385 | — | 179,871 | |||||||||
| Gross profit |
13,821 | 9,501 | — | 23,322 | |||||||||
| Operating income |
6,360 | 4,710 | — | 11,070 | |||||||||
| Income before income tax expense |
6,225 | 4,650 | — | 10,875 | |||||||||
| Net income |
3,943 | 2,802 | — | 6,745 | |||||||||
| Segment assets |
154,817 | 112,929 | 35,705 | 303,451 | |||||||||
| Capital expenditures |
225 | 491 | 649 | 1,365 | |||||||||
| Depreciation and amortization expense |
1,928 | 1,215 | — | 3,143 | |||||||||
| Three Months Ended May 31, 2008 |
|||||||||||||
| Gross revenues |
$ | 127,050 | $ | 73,248 | $ | — | $ | 200,298 | |||||
| Less: Inter-segment revenues |
5,757 | 421 | — | 6,178 | |||||||||
| Consolidated revenues |
121,293 | 72,827 | — | 194,120 | |||||||||
| Gross profit |
14,888 | 9,078 | — | 23,966 | |||||||||
| Operating income |
8,783 | 5,409 | — | 14,192 | |||||||||
| Income before income tax expense |
8,654 | 5,317 | — | 13,971 | |||||||||
| Net income |
5,488 | 3,378 | — | 8,866 | |||||||||
| Segment assets |
150,174 | 93,052 | 31,367 | 274,593 | |||||||||
| Capital expenditures |
2,537 | 1,279 | 1,376 | 5,192 | |||||||||
| Depreciation and amortization expense |
1,351 | 992 | — | 2,343 | |||||||||
| Twelve Months Ended May 31, 2009 |
|||||||||||||
| Gross revenues |
$ | 422,223 | $ | 295,579 | $ | — | $ | 717,802 | |||||
| Less: Inter-segment revenues |
26,983 | 1,099 | — | 28,082 | |||||||||
| Consolidated revenues |
395,240 | 294,480 | — | 689,720 | |||||||||
| Gross profit |
50,959 | 43,364 | — | 94,323 | |||||||||
| Operating income |
22,111 | 25,206 | — | 47,317 | |||||||||
| Income before income tax expense |
21,973 | 25,786 | — | 47,759 | |||||||||
| Net income |
14,207 | 16,382 | — | 30,589 | |||||||||
| Segment assets |
154,817 | 112,929 | 35,705 | 303,451 | |||||||||
| Capital expenditures |
2,586 | 2,316 | 5,081 | 9,983 | |||||||||
| Depreciation and amortization expense |
6,271 | 4,489 | — | 10,760 | |||||||||
| Twelve Months Ended May 31, 2008 |
|||||||||||||
| Gross revenues |
$ | 472,696 | $ | 278,818 | $ | — | $ | 751,514 | |||||
| Less: Inter-segment revenues |
16,809 | 3,404 | — | 20,213 | |||||||||
| Consolidated revenues |
455,887 | 257,414 | — | 731,301 | |||||||||
| Gross profit |
33,081 | 42,036 | — | 75,117 | |||||||||
| Operating income (loss) |
8,579 | 25,997 | (25 | ) | 34,551 | ||||||||
| Income (loss) before income tax expense |
7,950 | 25,791 | (25 | ) | 33,716 | ||||||||
| Net income (loss) |
5,483 | 15,946 | (15 | ) | 21,414 | ||||||||
| Segment assets |
150,174 | 93,052 | 31,367 | 274,593 | |||||||||
| Capital expenditures |
9,272 | 4,363 | 4,667 | 18,302 | |||||||||
| Depreciation and amortization expense |
4,966 | 3,407 | — | 8,373 | |||||||||
Segment Revenue from External Customers by Industry Type
(In thousands)
| Construction Services |
Repair & Maintenance Services |
Total | |||||||
| Three Months Ended May 31, 2009 |
|||||||||
| Aboveground Storage Tanks |
$ | 40,049 | $ | 29,950 | $ | 69,999 | |||
| Downstream Petroleum |
29,962 | 41,545 | 71,507 | ||||||
| Electrical and Instrumentation |
21,808 | 7,890 | 29,698 | ||||||
| Specialty |
8,667 | — | 8,667 | ||||||
| Total |
$ | 100,486 | $ | 79,385 | $ | 179,871 | |||
| Three Months Ended May 31, 2008 |
|||||||||
| Aboveground Storage Tanks |
$ | 52,538 | $ | 43,037 | $ | 95,575 | |||
| Downstream Petroleum |
43,580 | 22,418 | 65,998 | ||||||
| Electrical and Instrumentation |
7,859 | 7,372 | 15,231 | ||||||
| Specialty |
17,316 | — | 17,316 | ||||||
| Total |
$ | 121,293 | $ | 72,827 | $ | 194,120 | |||
| Twelve Months Ended May 31, 2009 |
|||||||||
| Aboveground Storage Tanks |
$ | 177,821 | $ | 166,348 | $ | 344,169 | |||
| Downstream Petroleum |
144,179 | 106,149 | 250,328 | ||||||
| Electrical and Instrumentation |
45,874 | 21,983 | 67,857 | ||||||
| Specialty |
27,366 | — | 27,366 | ||||||
| Total |
$ | 395,240 | $ | 294,480 | $ | 689,720 | |||
| Twelve Months Ended May 31, 2008 |
|||||||||
| Aboveground Storage Tanks |
$ | 201,446 | $ | 167,970 | $ | 369,416 | |||
| Downstream Petroleum |
156,371 | 89,001 | 245,372 | ||||||
| Electrical and Instrumentation |
19,975 | 18,443 | 38,418 | ||||||
| Specialty |
78,095 | — | 78,095 | ||||||
| Total |
$ | 455,887 | $ | 275,414 | $ | 731,301 | |||
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 revenues recognized as of the reporting date.
The following table provides a rollforward of our backlog for the three-months ended May 31, 2009:
| Construction Services |
Repair and Maintenance Services |
Total | ||||||||||
| (In thousands) | ||||||||||||
| Backlog as of February 28, 2009 |
$ | 272,601 | $ | 179,879 | $ | 452,480 | ||||||
| New backlog awarded |
75,423 | 67,000 | 142,423 | |||||||||
| Backlog acquired |
— | — | — | |||||||||
| Backlog cancelled |
(13,959 | ) | — | (13,959 | ) | |||||||
| Revenue recognized on contracts in backlog |
(100,486 | ) | (79,385 | ) | (179,871 | ) | ||||||
| Backlog as of May 31, 2009 |
$ | 233,579 | $ | 167,494 | $ | 401,073 | ||||||
The following table provides a rollforward of our backlog for the twelve-months ended May 31, 2009:
| Construction Services |
Repair and Maintenance Services |
Total | ||||||||||
| (In thousands) | ||||||||||||
| Backlog as of May 31, 2008 |
$ | 325,341 | $ | 141,967 | $ | 467,308 | ||||||
| New backlog awarded |
323,752 | 312,371 | 636,123 | |||||||||
| Backlog acquired |
28,262 | 10,378 | 38,640 | |||||||||
| Backlog cancelled |
(48,536 | ) | (2,742 | ) | (51,278 | ) | ||||||
| Revenue recognized on contracts in backlog |
(395,240 | ) | (294,480 | ) | (689,720 | ) | ||||||
| Backlog as of May 31, 2009 |
$ | 233,579 | $ | 167,494 | $ | 401,073 | ||||||
Non-GAAP Financial Measure
EBITDA is a supplemental, non-GAAP financial measure. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. We have presented EBITDA because it is used by the financial community as a method of measuring our performance and of evaluating the market value of companies considered to be in similar businesses. We believe that the line item on our Consolidated Statements of Income entitled “Net income” is the most directly comparable GAAP measure to EBITDA. Since EBITDA is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, net earnings as an indicator of operating performance. EBITDA, as we calculate it, may not be comparable to similarly titled measures employed by other companies. In addition, this measure is not necessarily a measure of our ability to fund our cash needs. As EBITDA excludes certain financial information compared with net income, the most directly comparable GAAP financial measure, users of this financial information should consider the type of events and transactions, which are excluded. Our non-GAAP performance measure, EBITDA, has certain material limitations as follows:
| • | It does not include interest expense. Because we have borrowed money to finance our operations, interest expense is a necessary and ongoing part of our costs and has assisted us in generating revenue. Therefore, any measure that excludes interest expense has material limitations. |
| • | It does not include income taxes. Because the payment of income taxes is a necessary and ongoing part of our operations, any measure that excludes income taxes has material limitations. |
| • | It does not include depreciation or amortization expense. Because we use capital and intangible assets to generate revenue, depreciation and amortization expense is a necessary element of our cost structure. Therefore, any measure that excludes depreciation or amortization expense has material limitations. |
A reconciliation of EBITDA to net income follows:
| Three Months Ended | Twelve Months Ended | |||||||||||
| May 31, 2009 | May 31, 2008 | May 31, 2009 | May 31, 2008 | |||||||||
| (In thousands) | (In thousands) | |||||||||||
| Net income |
$ | 6,745 | $ | 8,866 | $ | 30,589 | $ | 21,414 | ||||
| Interest expense (net of interest income in 2008) |
187 | 105 | 563 | 808 | ||||||||
| Provision for income taxes |
4,130 | 5,105 | 17,170 | 12,302 | ||||||||
| Depreciation and amortization |
3,143 | 2,343 | 10,760 | 8,373 | ||||||||
| EBITDA |
$ | 14,205 | $ | 16,419 | $ | 59,082 | $ | 42,897 | ||||