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) August 31, 2015
___________________ 
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 August 31, 2015, Matrix Service Company (the “Company”) issued a press release announcing financial results for the fourth quarter and fiscal year ending June 30, 2015 and reaffirmed its fiscal 2016 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 August 31, 2015, announcing financial results for the fourth quarter and fiscal year ending June 30, 2015 and reaffirmed its fiscal 2016 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: August 31, 2015
 
By:
 
/s/ Kevin S. Cavanah
 
 
 
 
 
 
 
 
 
Kevin S. Cavanah
 
 
 
 
Vice President and Chief Financial Officer







EXHIBIT INDEX
 
 
 
 
Exhibit No.
  
Description
99
  
Press Release dated August 31, 2015, announcing financial results for the fourth quarter and fiscal year ending June 30, 2015 and reaffirmed its fiscal 2016 guidance



Exhibit
Exhibit 99


MATRIX SERVICE COMPANY ANNOUNCES STRONG FINISH TO FISCAL 2015

Company achieves fourth quarter earnings per share of $0.40; full year earnings per share of $0.63
Fourth quarter revenue increases to $370.5 million; full year revenue increases to $1.35 billion
Recently announced Energy Transfer Partners award increases year-end backlog to $1.4 billion and full year project awards to $1.8 billion
Fiscal 2016 earnings guidance: revenue of $1.4 to $1.6 billion and fully diluted EPS of $1.45 to $1.75

TULSA, OK – August 31, 2015 – Matrix Service Company (Nasdaq: MTRX) today reported its financial results for the fourth quarter and year ended June 30, 2015.

“As we close the books on fiscal 2015, our business is strong and I am confident in our fiscal 2016 guidance” said John R. Hewitt, President and CEO of Matrix Service Company. “We have begun work on the Napanee Generating Station and all six terminals for Energy Transfer’s Dakota Access Pipeline, two foundational projects for fiscal 2016 and 2017. Our reputation and continued diversification has resulted in record backlog; our proposal funnel is full; we have a strong balance sheet; and we continue to invest in our people, processes and systems.”

In addition to achieving record revenue, new awards and backlog, the company also achieved a recordable incident rate of 0.60 for fiscal year 2015, ranking them among the leaders in the industry for safety performance. Hewitt added “I am especially proud of our employees’ commitment to our core values, of which safety is first, and to our long-term strategy. It is their collective effort that defines the quality of our work, the strength of our client relationships and our ongoing success.”

Fourth Quarter Fiscal 2015 Results

Revenue for the fourth quarter ended June 30, 2015 was $370.5 million compared to $344.4 million in the same period a year earlier, an increase of $26.1 million, or 7.6%. In fiscal 2015, the Company generated net income of $10.9 million, or $0.40 per fully diluted share. In the same period a year earlier, the Company earned $7.6 million, or $0.28 per fully diluted share.

On a segment basis, revenue increased in the Oil Gas & Chemical and Electrical Infrastructure segments by $28.7 million and $28.2 million respectively, partially offset by decreases of $23.3 million and $7.5 million in the Industrial and Storage Solutions segments.

Consolidated gross profit was $40.4 million in the three months ended June 30, 2015 compared to $36.9 million in the three months ended June 30, 2014. Fiscal 2015 gross margins were 10.9% compared to 10.7% in the same period a year earlier.

Selling, general and administrative costs were $22.0 million in the fourth quarter of fiscal 2015, compared to $22.7 million in the same period a year earlier. SG&A expense as a percentage of revenue decreased to 5.9% in the three months ended June 30, 2015 as compared to 6.6% for the three months ended June 30, 2014.

Fiscal 2015 Results

Revenue for the year ended June 30, 2015 was $1.349 billion compared to $1.263 billion in the same period a year earlier, an increase of $86.2 million, or 6.8%. In fiscal 2015, the Company earned net income of $17.2 million, or $0.63 per fully diluted share. In the same period a year earlier, the Company earned $35.8 million, or $1.33 per fully diluted share. In fiscal 2015, the Company recorded charges on an acquired EPC joint venture project discussed in previous earnings releases of $53.4 million. The Company's portion of these losses totaled $34.7 million. The charges, which were partially offset by lower incentive compensation, reduced earnings for the period by $0.67 per fully diluted share.





On a segment basis, consolidated revenue increased in the Industrial, Oil Gas & Chemical and Electrical Infrastructure segments by $69.8 million, $65.7 million and $58.5 million respectively, partially offset by a decrease in the Storage Solutions segment of $107.8 million.

Consolidated gross profit was $87.4 million in the year ended June 30, 2015 compared to $136.5 million in same period a year earlier. Fiscal 2015 gross margins were reduced by 4.4% to 6.5% related to charges of $53.4 million on an acquired EPC joint venture power generation project. Fiscal 2014 gross margins were 10.8%.

Consolidated SG&A expenses were $78.6 million in the year ended June 30, 2015 compared to $77.9 million in the same period a year earlier. SG&A expense as a percentage of revenue was 5.8% in the year ended June 30, 2015 compared to 6.2% in the same period a year earlier.

Income Tax Expense

The effective tax rates were 38.4% and 37.0% for the three months and fiscal year ended June 30, 2015. The Company estimates that its fiscal 2016 effective tax rate will approximate 37.0%.

Backlog

Backlog at June 30, 2015 totaled $1.414 billion, an increase of $498.7 million, or 54.4%, compared to the backlog at June 30, 2014 of $915.8 million, and increased by $175.2 million compared to the March 31, 2015 backlog of $1.239 billion. Project awards totaled $545.8 million and $1.848 billion in the three months and fiscal year ended June 30, 2015, respectively.

Financial Position

The Company’s cash balance increased to $79.2 million at June 30, 2015 as compared to $77.1 million a year earlier. The cash balance along with availability under the senior credit facility gives the Company liquidity of $174.8 million. In fiscal 2015, the Company generated $23.2 million from operations, funded capital expenditures of $15.8 million, an acquisition of $5.6 million and repurchased shares of $5.0 million while reducing the outstanding balance under the senior credit facility by $2.8 million.

Earnings Guidance

The Company continues to expect fiscal 2016 revenue will be between $1.4 billion and $1.6 billion and earnings will be between $1.45 and $1.75 per fully diluted share. The Company is anticipating normal quarterly variability with the first quarter being the lowest as activity in the Oil Gas and Chemical segment is typically slower in the summer months.





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 10:30 a.m. (Eastern) / 9:30 a.m. (Central) on Tuesday, September 1, 2015 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,
2015
 
June 30,
2014
 
June 30,
2015
 
June 30,
2014
Revenues
 
$
370,537

 
$
344,358

 
$
1,349,255

 
$
1,263,089

Cost of revenues
 
330,133

 
307,455

 
1,261,885

 
1,126,616

Gross profit
 
40,404

 
36,903

 
87,370

 
136,473

Selling, general and administrative expenses
 
22,030

 
22,694

 
78,568

 
77,866

Operating income
 
18,374

 
14,209

 
8,802

 
58,607

Other income (expense):
 
 
 
 
 
 
 
 
Interest expense
 
(290
)
 
(538
)
 
(1,236
)
 
(1,436
)
Interest income
 
78

 
55

 
468

 
112

Other
 
(123
)
 
(325
)
 
158

 
(472
)
Income before income tax expense
 
18,039

 
13,401

 
8,192

 
56,811

Provision for federal, state and foreign income taxes
 
6,819

 
5,179

 
10,090

 
19,934

Net income (loss)
 
11,220

 
8,222

 
(1,898
)
 
36,877

Less: Net income (loss) attributable to noncontrolling interest
 
304

 
666

 
(19,055
)
 
1,067

Net income attributable to Matrix Service Company
 
$10,916
 
$7,556
 
$17,157
 
$35,810
Basic earnings per common share
 
$
0.41

 
$
0.29

 
$
0.64

 
$
1.36

Diluted earnings per common share
 
$
0.40

 
$
0.28

 
$
0.63

 
$
1.33

Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
26,633

 
26,423

 
26,603

 
26,288

Diluted
 
27,132

 
27,115

 
27,177

 
26,976





Matrix Service Company
Consolidated Balance Sheets
(In thousands)
 

 
 
June 30,
2015
 
June 30,
2014
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
79,239

 
$
77,115

Accounts receivable, less allowances (2015 - $561 ; 2014 - $204)
 
199,149

 
204,692

Costs and estimated earnings in excess of billings on uncompleted contracts
 
86,071

 
73,008

Inventories
 
2,773

 
3,045

Income taxes receivable
 
579

 
2,797

Deferred income taxes
 
7,705

 
5,994

Other current assets
 
5,660

 
8,897

Total current assets
 
381,176

 
375,548

Property, plant and equipment, at cost:
 
 
 
 
Land and buildings
 
32,746

 
31,737

Construction equipment
 
87,561

 
82,745

Transportation equipment
 
47,468

 
42,087

Office equipment and software
 
28,874

 
26,026

Construction in progress
 
5,196

 
9,892

Total property, plant and equipment - at cost
 
201,845

 
192,487

Accumulated depreciation
 
(116,782
)
 
(103,315
)
Property, plant and equipment - net
 
85,063

 
89,172

Goodwill
 
71,518

 
69,837

Other intangible assets
 
23,961

 
28,676

Other assets
 
3,947

 
5,699

Total assets
 
$
565,665

 
$
568,932





Matrix Service Company
Consolidated Balance Sheets (continued)
(In thousands, except share data)
 
 
 
June 30,
2015
 
June 30,
2014
Liabilities and stockholders’ equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
122,021

 
$
111,863

Billings on uncompleted contracts in excess of costs and estimated earnings
 
102,475

 
108,440

Accrued wages and benefits
 
26,725

 
36,226

Accrued insurance
 
8,100

 
8,605

Income taxes payable
 
3,268

 

Other accrued expenses
 
4,498

 
4,727

Total current liabilities
 
267,087

 
269,861

Deferred income taxes
 
5,220

 
5,167

Borrowings under senior credit facility
 
8,804

 
11,621

Total liabilities
 
281,111

 
286,649

Commitments and contingencies
 
 
 
 
Stockholders’ equity:
 
 
 
 
Common stock—$.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of June 30, 2015 and June 30, 2014; 26,440,823 and 26,434,447 shares outstanding as of June 30, 2015 and June 30, 2014
 
279

 
279

Additional paid-in capital
 
123,038

 
119,777

Retained earnings
 
194,394

 
177,237

Accumulated other comprehensive income
 
(5,926
)
 
(182
)
 
 
311,785

 
297,111

Less treasury stock, at cost — 1,447,394 and 1,453,770 shares as of June 30, 2015 and June 30, 2014
 
(18,489
)
 
(16,595
)
Total Matrix Service Company stockholders' equity
 
293,296

 
280,516

Noncontrolling interest
 
(8,742
)
 
1,767

Total stockholders' equity
 
284,554

 
282,283

Total liabilities and stockholders’ equity
 
$
565,665

 
$
568,932





Results of Operations
(In thousands)
 
 
 
 
 
 
 
 
 
 
Electrical
Infrastructure
 
Oil Gas &
Chemical
 
Storage
Solutions
 
Industrial
 
Total
Three Months Ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
Gross revenues
 
$
101,616

 
$
82,596

 
$
133,178

 
$
57,146

 
$
374,536

Less: inter-segment revenues
 

 
1,810

 
314

 
1,875

 
3,999

Consolidated revenues
 
101,616

 
80,786

 
132,864

 
55,271

 
370,537

Gross profit
 
7,532

 
6,395

 
18,089

 
8,388

 
40,404

Operating income
 
2,191

 
1,241

 
10,284

 
4,658

 
18,374

 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2014
 
 
 
 
 
 
 
 
 
 
Gross revenues
 
$
73,369

 
$
52,106

 
$
140,496

 
$
78,535

 
$
344,506

Less: inter-segment revenues
 

 
16

 
132

 

 
148

Consolidated revenues
 
73,369

 
52,090

 
140,364

 
78,535

 
344,358

Gross profit
 
7,474

 
5,298

 
16,554

 
7,577

 
36,903

Operating income
 
3,045

 
1,017

 
7,634

 
2,513

 
14,209

 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
Gross revenues
 
$
264,050

 
$
310,826

 
$
504,155

 
$
281,319

 
$
1,360,350

Less: inter-segment revenues
 

 
5,466

 
1,032

 
4,597

 
11,095

Consolidated revenues
 
264,050

 
305,360

 
503,123

 
276,722

 
1,349,255

Gross profit
 
(31,444
)
 
25,394

 
58,085

 
35,335

 
87,370

Operating income (loss)
 
(44,293
)
 
7,064

 
29,069

 
16,962

 
8,802

 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended June 30, 2014
 
 
 
 
 
 
 
 
 
 
Gross revenues
 
$
205,570

 
$
240,131

 
$
611,826

 
$
206,933

 
$
1,264,460

Less: inter-segment revenues
 

 
441

 
930

 

 
1,371

Consolidated revenues
 
205,570

 
239,690

 
610,896

 
206,933

 
1,263,089

Gross profit
 
20,629

 
26,912

 
68,448

 
20,484

 
136,473

Operating income
 
7,703

 
9,939

 
34,310

 
6,655

 
58,607





Backlog
We define backlog as the total dollar amount of revenue 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 amount.
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, 2015

The following table provides a summary of changes in our backlog for the three months ended June 30, 2015:

 
 
Electrical
Infrastructure
 
Oil Gas &
Chemical
 
Storage
Solutions
 
Industrial
 
Total
 
 
(In thousands)
Backlog as of March 31, 2015
 
$
553,068

 
$
133,614

 
$
408,302

 
$
144,251

 
$
1,239,235

Net awards
 
36,401

 
80,157

 
395,055

 
34,167

 
545,780

Revenue recognized
 
(101,616
)
 
(80,786
)
 
(132,864
)
 
(55,271
)
 
(370,537
)
Backlog as of June 30, 2015
 
$
487,853

 
$
132,985

 
$
670,493

 
$
123,147

 
$
1,414,478

Twelve Months Ended June 30, 2015

The following table provides a summary of changes in our backlog for the twelve months ended June 30, 2015:

 
 
Electrical
Infrastructure
 
Oil Gas &
Chemical
 
Storage
Solutions
 
Industrial
 
Total
 
 
(In thousands)
Backlog as of June 30, 2014
 
$
162,136

 
$
110,217

 
$
482,631

 
$
160,842

 
$
915,826

Net awards
 
589,767

 
328,128

 
690,985

 
239,027

 
1,847,907

Revenue recognized
 
(264,050
)
 
(305,360
)
 
(503,123
)
 
(276,722
)
 
(1,349,255
)
Backlog as of June 30, 2015
 
$
487,853

 
$
132,985

 
$
670,493

 
$
123,147

 
$
1,414,478