06.30.13 8-K


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) September 3, 2013
___________________ 
Matrix Service Company
(Exact Name of Registrant as Specified in Its Charter)
___________________ 
 
 
 
 
 
DELAWARE
 
001-15461
 
73-1352174
(State or Other Jurisdiction
of Incorporation)
 
(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 September 3, 2013, Matrix Service Company (the “Company”) issued a press release announcing financial results for the fourth quarter and fiscal year ending June 30, 2013 and fiscal 2014 guidance. 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 9.01
Financial Statements and Exhibits.
The following exhibit is furnished herewith:
 
 
 
 
Exhibit No.
  
Description
99
  
Press Release dated September 3, 2013, announcing financial results for the fourth quarter and fiscal year ending June 30, 2013 and fiscal 2014 guidance.







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: September 3, 2013
 
By:
 
/s/ Kevin S. Cavanah
 
 
 
 
 
 
 
 
 
Kevin S. Cavanah
 
 
 
 
Vice President and Chief Financial Officer







EXHIBIT INDEX
 
 
 
 
Exhibit No.
  
Description
99
  
Press Release dated September 3, 2013, announcing financial results for the fourth quarter and fiscal year ending June 30, 2013 and fiscal 2014 guidance.


06.30.13 Exhibit 99
Exhibit 99


MATRIX SERVICE COMPANY ANNOUNCES RESULTS FOR THE FOURTH QUARTER AND FISCAL YEAR ENDED JUNE 30, 2013 AND PROVIDES FISCAL 2014 GUIDANCE

Fiscal 2013 fully diluted earnings per share was $0.91 compared to $0.65 a year earlier
Backlog increased by 26.0% in fiscal 2013 to $626.7 million on project awards of over $1.0 billion
Revenues increased 27.4% in the fourth quarter and 20.8% in fiscal 2013
Fourth quarter revenues were $235.6 million and fully diluted earnings per share was $0.28

TULSA, OK – September 3, 2013 – Matrix Service Company (Nasdaq: MTRX) today reported its financial results for the fourth quarter and year ended June 30, 2013. In fiscal 2013, the Company achieved record performances in safety, revenue and new project awards.
John Hewitt, President and CEO of Matrix Service Company said, "We achieved record revenue in fiscal 2013 while growing our backlog 26% as a result of the leadership, hard work and values of our employees. Our operating results, backlog growth and strong balance sheet are evidence of our significant progress toward achieving our strategic goals and have positioned us for continued success in fiscal 2014."
Fourth Quarter Fiscal 2013 Results
Revenues for the fourth quarter ended June 30, 2013 were $235.6 million compared to $184.9 million in the same period a year earlier, an increase of $50.7 million, or 27.4%. Net income for the fourth quarter of fiscal 2013 was $7.4 million, or $0.28 per fully diluted share. In the same period a year earlier, the Company earned $1.8 million, or $0.07 per fully diluted share.
Revenues increased in the Industrial, Electrical Infrastructure and Oil Gas & Chemical segments by $24.2 million, $14.3 million, and $11.8 million, respectively. Revenues in the Storage Solutions segment were $96.5 million in the fourth quarter of fiscal 2013 compared to $96.1 million in the same period a year earlier. Consolidated gross profit was $27.0 million in the fourth quarter of fiscal 2013 compared to $18.7 million in the same period a year earlier. Gross margins were 11.5% in the fourth quarter of fiscal 2013 versus 10.1% in the fourth quarter of fiscal 2012. In line with our expectations, selling, general and administrative costs increased by $3.2 million which is primarily related to our planned investments in strategic growth areas and related support functions and higher business volumes.
Fiscal 2013 Results
Fiscal 2013 revenues were $892.6 million compared to $739.0 million in the same period a year earlier, an increase of $153.6 million, or 20.8%. Net income for fiscal 2013 was $24.0 million, or $0.91 per fully diluted share. In the same period a year earlier the Company earned $17.2 million, or $0.65 per fully diluted share.
Revenues increased in all of our segments: Oil Gas & Chemical, Electrical Infrastructure, Industrial, and Storage Solutions increased $68.0 million, $36.1 million, $34.3 million and $15.0 million, respectively. Consolidated gross profit was $94.7 million in fiscal 2013 compared to $79.6 million in the same period a year earlier. Gross margins were 10.6% in fiscal 2013 versus 10.8% in the same period a year earlier. In line with our expectations, selling, general and administrative costs increased by $10.0 million which is primarily related to planned investments in our branding initiative, strategic growth areas and related support functions and increased business volumes.





Income Tax Expense

The effective tax rates were 34.7% and 33.2% for the three months and and fiscal year ended June 30, 2013. The fiscal 2013 tax rate was positively impacted by the effect of retroactive tax legislation passed in the third quarter extending certain tax benefits. The fourth quarter tax rate was positively impacted by a change in the estimated benefit the Company expects to receive from a tax deduction. The Company estimates that its effective tax rate on future earnings will approximate 38%.

Backlog
Backlog at June 30, 2013 totaled $626.7 million, an increase of $129.2 million, or 26.0%, compared to the backlog at June 30, 2012 of $497.5 million and decreased by $17.6 million, or 2.7%, compared to the March 31, 2013 backlog of $644.3 million. Project awards totaled $217.9 million and $1.0 billion in the three months and fiscal year ended June 30, 2013.
Financial Position
At June 30, 2013, the Company’s cash balance was $63.8 million as compared to $39.7 million at June 30, 2012. The cash balance along with availability under the senior credit facility gives the Company liquidity of $175.4 million.
Earnings Guidance
The Company expects that fiscal 2014 revenues will be between $980 million and $1.04 billion and earnings to be between $1.00 and $1.15 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 Wednesday, September 4, 2013 and will be simultaneously broadcast live over the Internet which can be accessed at the Company’s website at 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.
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 S. Cavanah
Vice President and CFO
T: 918-838-8822
Email:kcavanah@matrixservicecompany.com




Matrix Service Company
Consolidated Statements of Income
(In thousands, except per share data)
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
June 30,
2013
 
June 30,
2012
 
June 30,
2013
 
June 30,
2012
Revenues
 
$
235,560

 
$
184,862

 
$
892,574

 
$
739,046

Cost of revenues
 
208,561

 
166,206

 
797,872

 
659,428

Gross profit
 
26,999

 
18,656

 
94,702

 
79,618

Selling, general and administrative expenses
 
15,412

 
12,246

 
57,988

 
47,983

Operating income
 
11,587

 
6,410

 
36,714

 
31,635

Other income (expense):
 
 
 
 
 
 
 
 
Interest expense
 
(195
)
 
(197
)
 
(800
)
 
(814
)
Interest income
 
7

 
8

 
32

 
26

Other
 
(123
)
 
73

 
(30
)
 
(357
)
Income before income tax expense
 
11,276

 
6,294

 
35,916

 
30,490

Provision for federal, state and foreign income taxes
 
3,909

 
4,508

 
11,908

 
13,302

Net income
 
$
7,367

 
$
1,786

 
$
24,008

 
$
17,188

Basic earnings per common share
 
$
0.28

 
$
0.07

 
$
0.92

 
$
0.66

Diluted earnings per common share
 
$
0.28

 
$
0.07

 
$
0.91

 
$
0.65

Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
26,086

 
25,738

 
25,962

 
25,921

Diluted
 
26,548

 
26,122

 
26,358

 
26,298





Matrix Service Company
Consolidated Balance Sheets
(In thousands)
 

 
 
June 30,
2013
 
June 30,
2012
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
63,750

 
$
39,726

Accounts receivable, less allowances (2013 - $795 ; 2012—$1,201)
 
140,840

 
108,034

Costs and estimated earnings in excess of billings on uncompleted contracts
 
73,773

 
68,562

Inventories
 
2,988

 
2,482

Income taxes receivable
 
3,032

 

Deferred income taxes
 
5,657

 
6,024

Other current assets
 
6,234

 
5,688

Total current assets
 
296,274

 
230,516

Property, plant and equipment at cost:
 
 
 
 
Land and buildings
 
29,649

 
28,846

Construction equipment
 
69,998

 
59,176

Transportation equipment
 
34,366

 
25,865

Office equipment and software
 
18,426

 
16,892

Construction in progress
 
9,080

 
2,910

 
 
161,519

 
133,689

Accumulated depreciation
 
(90,218
)
 
(78,814
)
 
 
71,301

 
54,875

Goodwill
 
30,836

 
28,675

Other intangible assets
 
7,551

 
6,504

Other assets
 
4,016

 
2,565

Total assets
 
$
409,978

 
$
323,135





Matrix Service Company
Consolidated Balance Sheets (continued)
(In thousands, except share data)
 
 
 
June 30,
2013
 
June 30,
2012
Liabilities and stockholders’ equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
68,961

 
$
48,931

Billings on uncompleted contracts in excess of costs and estimated earnings
 
62,848

 
30,293

Accrued wages and benefits
 
21,919

 
15,298

Accrued insurance
 
7,599

 
6,912

Income taxes payable
 

 
1,115

Other accrued expenses
 
3,039

 
3,414

Total current liabilities
 
164,366

 
105,963

Deferred income taxes
 
7,450

 
6,075

Commitments and contingencies
 
 
 
 
Stockholders’ equity:
 
 
 
 
Common stock—$.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of June 30, 2013 and June 30, 2012
 
279

 
279

Additional paid-in capital
 
118,190

 
116,693

Retained earnings
 
141,427

 
117,419

Accumulated other comprehensive income
 
227

 
771

 
 
260,123

 
235,162

Less treasury stock, at cost— 1,779,593 and 2,141,990 shares as of June 30, 2013 and June 30, 2012
 
(21,961
)
 
(24,065
)
Total stockholders’ equity
 
238,162

 
211,097

Total liabilities and stockholders’ equity
 
$
409,978

 
$
323,135





Results of Operations
(In thousands)
 
 
 
 
 
 
 
 
 
 
Electrical
Infrastructure
 
Oil Gas &
Chemical
 
Storage
Solutions
 
Industrial
 
Total
Three Months Ended June 30, 2013
 
 
 
 
 
 
 
 
 
 
Gross revenues
 
$
46,102

 
$
66,609

 
$
96,993

 
$
26,472

 
$
236,176

Less: inter-segment revenues
 

 
87

 
529

 

 
616

Consolidated revenues
 
46,102

 
66,522

 
96,464

 
26,472

 
235,560

Gross profit
 
5,425

 
8,951

 
10,910

 
1,713

 
26,999

Operating income (loss)
 
2,746

 
4,428

 
4,458

 
(45
)
 
11,587

 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2012
 
 
 
 
 
 
 
 
 
 
Gross revenues
 
$
31,825

 
$
54,713

 
$
96,530

 
$
2,220

 
$
185,288

Less: inter-segment revenues
 

 

 
426

 

 
426

Consolidated revenues
 
31,825

 
54,713

 
96,104

 
2,220

 
184,862

Gross profit
 
4,092

 
5,772

 
9,316

 
(524
)
 
18,656

Operating income (loss)
 
1,850

 
2,390

 
2,973

 
(803
)
 
6,410

 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended June 30, 2013
 
 
 
 
 
 
 
 
 
 
Gross revenues
 
$
171,204

 
$
273,979

 
$
395,794

 
$
54,321

 
$
895,298

Less: inter-segment revenues
 

 
131

 
2,593

 

 
2,724

Consolidated revenues
 
171,204

 
273,848

 
393,201

 
54,321

 
892,574

Gross profit
 
21,754

 
32,879

 
37,455

 
2,614

 
94,702

Operating income (loss)
 
11,185

 
15,415

 
11,904

 
(1,790
)
 
36,714

 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended June 30, 2012
 
 
 
 
 
 
 
 
 
 
Gross revenues
 
$
135,086

 
$
206,031

 
$
380,488

 
$
19,983

 
$
741,588

Less: inter-segment revenues
 

 
208

 
2,334

 

 
2,542

Consolidated revenues
 
135,086

 
205,823

 
378,154

 
19,983

 
739,046

Gross profit
 
16,676

 
20,070

 
42,393

 
479

 
79,618

Operating income (loss)
 
7,609

 
8,134

 
17,493

 
(1,601
)
 
31,635





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.
Three Months Ended June 30, 2013

The following table provides a summary of changes in our backlog for the three months ended June 30, 2013:

 
 
Electrical
Infrastructure
 
Oil Gas &
Chemical
 
Storage
Solutions
 
Industrial
 
Total
 
 
(In thousands)
Backlog as of March 31, 2013
 
$
116,034

 
$
115,691

 
$
324,429

 
$
88,195

 
$
644,349

Net awards
 
33,588

 
70,969

 
91,753

 
21,638

 
217,948

Revenue recognized
 
(46,102
)
 
(66,522
)
 
(96,464
)
 
(26,472
)
 
(235,560
)
Backlog as of June 30, 2013
 
$
103,520

 
$
120,138

 
$
319,718

 
$
83,361

 
$
626,737

Twelve Months Ended June 30, 2013

The following table provides a summary of changes in our backlog for the twelve months ended June 30, 2013:

 
 
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
 
147,025

 
276,124

 
476,348

 
122,362

 
1,021,859

Revenue recognized
 
(171,204
)
 
(273,848
)
 
(393,201
)
 
(54,321
)
 
(892,574
)
Backlog as of June 30, 2013
 
$
103,520

 
$
120,138

 
$
319,718

 
$
83,361

 
$
626,737