Matrix Service Announces Results for the Fourth Quarter and Fiscal Year Ended June 30, 2010
Revenues for the fourth quarter ended June 30, 2010 were $140.7 million compared to $179.9 million in fiscal 2009. The decrease was primarily due to a lower overall level of spending by customers caused by weak industry conditions. Net income for the fourth quarter of fiscal 2010, adjusted for the charges discussed below, was $0.9 million, or $0.03 per fully diluted share (1). Net income was $6.7 million, or $0.26 per fully diluted share, in the comparable period a year earlier.
Fiscal year 2010 revenues were $550.8 million compared to $689.7 million in fiscal 2009. The decrease was primarily due to a lower overall level of spending in our core markets due to weak industry conditions that became evident in the third quarter of fiscal year 2009. Net income for fiscal 2010, adjusted for the charges discussed below, was $14.4 million, or $0.54 per fully diluted share (1). Net income was $30.6 million, or $1.16 per fully diluted share, in fiscal 2009.
Adjusted results for fiscal year 2010 exclude the following charges:
• Loss on projects at a Gulf Coast site – We recorded a pretax charge of $4.6 million in the fourth quarter of fiscal 2010 and $5.4 million for the fiscal year ended June 30, 2010 caused by increased cost estimates on a series of projects at a customer site.
• California pay practice class action lawsuits – We recorded a pretax charge of $3.1 million in the fourth quarter of fiscal 2010 and $5.1 million for the fiscal year ended June 30, 2010 related to the settlement of this legal matter.
• Claims receivable write-down – We recorded pretax charges totaling $2.9 million in fiscal 2010 caused by a write-down of the value of claim receivables acquired in the February 2009 acquisition of S.M. Electric Company, Inc. (“SME”).
• Claims receivable collection costs – Costs incurred to collect the claims acquired in the SME acquisition were higher than estimated and resulted in a pretax charge of $0.4 million in the fourth quarter of fiscal 2010 and $1.9 million for the fiscal year ended June 30, 2010.
GAAP net income (loss), fully reflecting these charges, was ($4.2) million, or ($0.16) per fully diluted share for the fourth quarter fiscal 2010, and $4.9 million, or $0.18 for the fiscal year ended June 30, 2010.
Consolidated backlog increased $50.8 million, or 16.8% to $353.2 million as of June 30, 2010 compared to $302.4 million as of March 31, 2010.
At June 30, 2010, Matrix Service’s cash balance was $50.9 million. The Company did not borrow under its revolving credit facility during the twelve months ended June 30, 2010.
“We are pleased with the recent backlog growth and are optimistic given the improvements we are seeing in our core markets,” said Michael J. Bradley, President and CEO of Matrix Service Company. “In fiscal 2011, our focus will be on growing profitable backlog, maintaining a strong financial position and continuing our cost optimization efforts as part of our long-term growth strategy. Our earnings for fiscal 2011 is expected to be in a range from $0.60 per fully diluted share to $0.80 per fully diluted share.”
Fraud Investigation Update
The Company will provide an update on its investigation into recently discovered fraudulent activities by current and former employees in one operating location in the United States in its Annual Report on Form 10-K to be filed with the Securities and Exchange Commission.
(1) Adjusted net income is a non-GAAP financial measure that excludes the impact of the charges specifically discussed in this earnings release and the related earnings conference call. Management believes that results excluding these items are more meaningful and comparable to estimates provided by securities analysts and are useful in comparing operational trends of Matrix Service Company relative to its competitors. A reconciliation to the applicable GAAP measures is included at the end of this press 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 5:00 p.m. (Eastern) / 4:00 p.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 engineering, 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 California, Delaware, Illinois, Michigan, New Jersey, Oklahoma, Pennsylvania, Texas, and Washington 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
Vice President and CFO