November 7, 2013

Matrix Service Company Announces Strong First Quarter Fiscal 2014 Results and Reaffirms Full Year Guidance

  • Backlog increased 7.4% to a record $672.8 million on project awards of $272.3 million
  • Quarterly revenues increased 7.9% to $226.2 million compared to $209.6 million a year earlier
  • Gross margins improved to 11.3% compared to 10.6% a year earlier
  • First quarter fully diluted earnings per share was $0.25 compared to $0.18 in the same period a year earlier

TULSA, Okla., Nov. 7, 2013 (GLOBE NEWSWIRE) -- Matrix Service Company (Nasdaq:MTRX) today reported its financial results for the first quarter ended September 30, 2013. The trend of strong revenue and backlog growth continued in the first quarter of fiscal 2014 with quarterly revenues of $226.2 million and record period end backlog of $672.8 million.

John Hewitt, President and CEO of Matrix Service Company said, "Our overall opportunities in the markets we serve continue to be strong as evidenced by our record backlog and strengthening margins. We are pleased with our first quarter results and are confident that our strategic investments are providing solid business performance. In addition, our record liquidity position provides us with the necessary resources for strategic investments and acquisitions."

Financial Results

Revenues for the first quarter ended September 30, 2013 were $226.2 million compared to $209.6 million in the same period a year earlier, an increase of $16.6 million, or 7.9%. Net income for the first quarter of fiscal 2014 was $6.6 million, or $0.25 per fully diluted share. In the same period a year earlier, the Company earned $4.7 million, or $0.18 per fully diluted share.

Revenues increased in our Industrial and Storage Solutions segments by $17.7 million and $3.9 million, respectively. Revenues in the Oil Gas & Chemical segment declined by $4.6 million and Electrical Infrastructure revenues were $32.9 million compared to $33.3 million a year earlier. Gross margins were 11.3% in the first quarter of fiscal 2014 versus 10.6% in the first quarter of fiscal 2013. Consolidated gross profit was $25.5 million in the first quarter of fiscal 2014 compared to $22.2 million in the same period a year earlier due to higher revenues and higher gross margins. Selling, general and administrative costs were $14.7 million, or 6.5% of revenue, in the first quarter of fiscal 2014 compared to $14.3 million, or 6.8% of revenue, in the same period a year earlier.

Backlog

Backlog at September 30, 2013 totaled $672.8 million, an increase of $46.1 million, or 7.4%, compared to the backlog at June 30, 2013 of $626.7 million. Project awards in the first quarter totaled $272.3 million.

Financial Position

At September 30, 2013, the Company's cash balance was $79.8 million. The cash balance along with availability under the senior credit facility gives the Company liquidity of $188.7 million.

Earnings Guidance

The Company is maintaining its fiscal 2014 revenue guidance of between $980 million and $1.04 billion and its earnings per fully diluted share guidance of between $1.00 and $1.15.

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 8, 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.

 

Matrix Service Company

Consolidated Statements of Income

(In thousands, except per share data)
     
 Three Months Ended
 September 30,
2013
September 30,
2012
Revenues $ 226,217 $ 209,608
Cost of revenues 200,741 187,364
Gross profit 25,476 22,244
Selling, general and administrative expenses 14,714 14,320
Operating income 10,762 7,924
Other income (expense):    
Interest expense (223) (183)
Interest income 5 8
Other (88) 57
Income before income tax expense 10,456 7,806
Provision for federal, state and foreign income taxes 3,904 3,122
Net income $ 6,552 $ 4,684
Basic earnings per common share $ 0.25 $ 0.18
Diluted earnings per common share $ 0.25 $ 0.18
Weighted average common shares outstanding:    
Basic 26,116 25,788
Diluted 26,647 26,148
 
 
 
Matrix Service Company

Consolidated Balance Sheets

(In thousands)
     
 September 30,
2013
June 30,
2013
Assets    
Current assets:    
Cash and cash equivalents $ 79,762 $ 63,750
Accounts receivable, less allowances (September 30, 2013—$70 and June 30, 2013—$795) 150,473 140,840
Costs and estimated earnings in excess of billings on uncompleted contracts 66,678 73,773
Deferred income taxes 6,063 5,657
Inventories 3,172 2,988
Income taxes receivable 3,032
Other current assets 6,662 6,234
Total current assets 312,810 296,274
Property, plant and equipment at cost:    
Land and buildings 29,667 29,649
Construction equipment 71,132 69,998
Transportation equipment 37,126 34,366
Office equipment and software 18,763 18,426
Construction in progress 9,559 9,080
  166,247 161,519
Accumulated depreciation (92,920) (90,218)
  73,327 71,301
Goodwill 30,887 30,836
Other intangible assets 7,378 7,551
Other assets 4,586 4,016
Total assets $ 428,988 $ 409,978
 
 
 
Matrix Service Company

Consolidated Balance Sheets (continued)

(In thousands, except share data)
     
 September 30,
2013
June 30,
2013
Liabilities and stockholders' equity    
Current liabilities:    
Accounts payable $ 67,799 $ 68,961
Billings on uncompleted contracts in excess of costs and estimated earnings 75,783 62,848
Accrued wages and benefits 17,850 21,919
Accrued insurance 7,651 7,599
Income taxes payable 601
Other accrued expenses 2,558 3,039
Total current liabilities 172,242 164,366
Deferred income taxes 7,844 7,450
Long term debt 2,426
Total liabilities 182,512 171,816
Commitments and contingencies    
Stockholders' equity:    
Common stock—$.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of September 30, 2013, and June 30, 2013 279 279
Additional paid-in capital 119,063 118,190
Retained earnings 147,979 141,427
Accumulated other comprehensive income 529 227
  267,850 260,123
Less: Treasury stock, at cost—1,746,259 shares as of September 30, 2013, and 1,779,593 shares as of June 30, 2013 (21,374) (21,961)
Total stockholders' equity 246,476 238,162
Total liabilities and stockholders' equity $ 428,988 $ 409,978
 
 
 
Matrix Service Company
 
Results of Operations
 
(In thousands)
 
     
 Three Months Ended
 September 30,
2013
September 30,
2012
Gross revenues    
Electrical Infrastructure $ 32,877 $ 33,270
Oil Gas & Chemical 62,792 67,097
Storage Solutions 108,546 105,418
Industrial 22,691 4,975
Total gross revenues $ 226,906 $ 210,760
Less: Inter-segment revenues    
Electrical Infrastructure $ — $ —
Oil Gas & Chemical 297
Storage Solutions 392 1,152
Industrial
Total inter-segment revenues $ 689 $ 1,152
Consolidated revenues    
Electrical Infrastructure $ 32,877 $ 33,270
Oil Gas & Chemical 62,495 67,097
Storage Solutions 108,154 104,266
Industrial 22,691 4,975
Total consolidated revenues $ 226,217 $ 209,608
Gross profit (loss)    
Electrical Infrastructure $ 3,330 $ 4,706
Oil Gas & Chemical 7,531 7,867
Storage Solutions 12,837 9,969
Industrial 1,778 (298)
Total gross profit $ 25,476 $ 22,244
Operating income (loss)    
Electrical Infrastructure $ 1,300 $ 2,319
Oil Gas & Chemical 3,263 3,775
Storage Solutions 5,832 3,449
Industrial 367 (1,619)
Total operating income $ 10,762 $ 7,924
Segment assets    
Electrical Infrastructure $ 59,018 $ 56,826
Oil Gas & Chemical 79,513 71,848
Storage Solutions 157,389 186,600
Industrial 35,801 14,179
Unallocated Corporate assets 97,267 33,397
Total segment assets $ 428,988 $ 362,850

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 September 30, 2013

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

           
 Electrical
Infrastructure
Oil Gas &
Chemical
Storage
Solutions

Industrial

Total
 (In thousands)
Backlog as of June 30, 2013 $ 103,520 $ 120,138 $ 319,718 $ 83,361 $ 626,737
Net awards 26,444 61,277 170,437 14,139 272,297
Revenue recognized (32,877) (62,495) (108,154) (22,691) (226,217)
Backlog as of September 30, 2013 $ 97,087 $ 118,920 $ 382,001 $ 74,809 $ 672,817
CONTACT: Matrix Service Company

         Kevin S. Cavanah

         Vice President and CFO

         T: 918-838-8822

         Email:kcavanah@matrixservicecompany.com


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