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) November 5, 2010
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 November 5, 2010, Matrix Service Company (the “Company”) issued a press release announcing financial results for the first fiscal quarter ending September 30, 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 9.01 | Financial Statements and Exhibits. |
The following exhibit is furnished herewith:
| Exhibit No. |
Description | |
| 99 | Press Release dated November 5, 2010, announcing financial results for the first fiscal quarter ending September 30, 2010. | |
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: November 5, 2010 | 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 November 5, 2010, announcing financial results for the first fiscal quarter ending September 30, 2010. | |
Exhibit 99
MATRIX SERVICE ANNOUNCES RESULTS FOR THE FIRST QUARTER ENDED SEPTEMBER 30, 2010
TULSA, OK – November 5, 2010 – Matrix Service Co. (Nasdaq: MTRX) today reported its financial results for the first quarter of fiscal 2011 ended September 30, 2010.
Revenues for the first quarter were $151.8 million, an increase of $14.1 million, or 10.2%, from consolidated revenues of $137.7 million in fiscal 2010. Net income for the first quarter of fiscal 2011 was $3.1 million, or $0.12 per fully diluted share. Net income was $4.5 million, or $0.17 per fully diluted share, in the comparable period a year earlier.
Consolidated gross profit was $15.7 million in fiscal 2011 compared to $17.4 million in fiscal 2010. The decrease of $1.7 million was due to lower gross margins which decreased to 10.3% in fiscal 2011 compared to 12.7% a year earlier. Fiscal 2011 selling, general and administrative expenses were $10.6 million compared to $10.1 million in fiscal 2010.
“We are pleased with the improvements we are seeing in our core markets which are reflected in our revenue and backlog growth,” said Michael J. Bradley, President and CEO of Matrix Service Company. “As fiscal 2011 progresses, we remain encouraged that business activity will continue to improve and are reaffirming our previously announced earnings guidance range of $0.60 to $0.80 per fully diluted share.”
Backlog
Consolidated backlog increased $42.0 million, or 11.9%, to $395.2 million as of September 30, 2010 compared to $353.2 million as of June 30, 2010.
Financial Position
At September 30, 2010, Matrix Service’s cash balance was $43.3 million. The Company did not borrow under its revolving credit facility during the three months ended September 30, 2010.
Investigation Update
The Company recorded a charge, which is included in selling, general and administrative expenses, of $0.5 million in the first quarter of fiscal 2011 for the cost of the investigation. Since the internal investigation is complete and all significant costs have been identified, the Company does not believe this matter will significantly affect earnings in future periods.
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 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, 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
Tom Long
Vice President and CFO
T: 918-838-8822
E: telong@matrixservice.com
Matrix Service Company
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(unaudited)
| Three Months Ended | ||||||||
| September 30, 2010 |
September 30, 2009 |
|||||||
| Revenues |
$ | 151,838 | $ | 137,650 | ||||
| Cost of revenues |
136,136 | 120,232 | ||||||
| Gross profit |
15,702 | 17,418 | ||||||
| Selling, general and administrative expenses |
10,589 | 10,087 | ||||||
| Operating income |
5,113 | 7,331 | ||||||
| Other income (expense): |
||||||||
| Interest expense |
(170 | ) | (174 | ) | ||||
| Interest income |
13 | 43 | ||||||
| Other |
27 | 83 | ||||||
| Income before income tax expense |
4,983 | 7,283 | ||||||
| Provision for federal, state and foreign income taxes |
1,894 | 2,774 | ||||||
| Net income |
$ | 3,089 | $ | 4,509 | ||||
| Basic earnings per common share |
$ | 0.12 | $ | 0.17 | ||||
| Diluted earnings per common share |
$ | 0.12 | $ | 0.17 | ||||
| Weighted average common shares outstanding: |
||||||||
| Basic |
26,342 | 26,195 | ||||||
| Diluted |
26,549 | 26,437 | ||||||
Matrix Service Company
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
| September 30, 2010 |
June 30, 2010 |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 43,270 | $ | 50,899 | ||||
| Accounts receivable, less allowances (September 30, 2010 - $1,276 and June 30, 2010 - $1,404) |
102,719 | 87,327 | ||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts |
44,137 | 40,920 | ||||||
| Inventories |
2,756 | 3,451 | ||||||
| Income taxes receivable |
276 | 1,779 | ||||||
| Deferred income taxes |
7,521 | 8,073 | ||||||
| Prepaid expenses |
4,062 | 4,557 | ||||||
| Other current assets |
100 | 1,519 | ||||||
| Total current assets |
204,841 | 198,525 | ||||||
| Property, plant and equipment at cost: |
||||||||
| Land and buildings |
27,745 | 27,859 | ||||||
| Construction equipment |
52,326 | 52,086 | ||||||
| Transportation equipment |
19,763 | 19,192 | ||||||
| Office equipment and software |
14,449 | 14,358 | ||||||
| Construction in progress |
3,278 | 1,251 | ||||||
| 117,561 | 114,746 | |||||||
| Accumulated depreciation |
(64,358 | ) | (61,817 | ) | ||||
| 53,203 | 52,929 | |||||||
| Goodwill |
27,303 | 27,216 | ||||||
| Other intangible assets |
4,083 | 4,141 | ||||||
| Other assets |
3,150 | 1,997 | ||||||
| Total assets |
$ | 292,580 | $ | 284,808 | ||||
Matrix Service Company
Condensed Consolidated Balance Sheets (continued)
(In thousands, except share data)
(unaudited)
| September 30, 2010 |
June 30, 2010 |
|||||||
| Liabilities and stockholders’ equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 38,010 | $ | 44,769 | ||||
| Billings on uncompleted contracts in excess of costs and estimated earnings |
37,034 | 28,877 | ||||||
| Accrued insurance |
7,937 | 8,257 | ||||||
| Accrued wages and benefits |
16,990 | 13,538 | ||||||
| Current capital lease obligation |
775 | 772 | ||||||
| Other accrued expenses |
6,353 | 6,572 | ||||||
| Total current liabilities |
107,099 | 102,785 | ||||||
| Long-term capital lease obligation |
11 | 259 | ||||||
| Deferred income taxes |
3,846 | 4,179 | ||||||
| Total liabilities |
110,956 | 107,223 | ||||||
| Commitments and contingencies |
— | — | ||||||
| Stockholders’ equity: |
||||||||
| Common stock - $.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of September 30, 2010, and June 30, 2010 |
279 | 279 | ||||||
| Additional paid-in capital |
112,201 | 111,637 | ||||||
| Retained earnings |
84,341 | 81,252 | ||||||
| Accumulated other comprehensive income |
882 | 495 | ||||||
| 197,703 | 193,663 | |||||||
| Less: Treasury stock, at cost –1,545,740 shares as of September 30, 2010, and 1,546,512 shares as of June 30, 2010 |
(16,079 | ) | (16,078 | ) | ||||
| Total stockholders’ equity |
181,624 | 177,585 | ||||||
| Total liabilities and stockholders’ equity |
$ | 292,580 | $ | 284,808 | ||||
Results of Operations
(in thousands)
(unaudited)
| Construction Services |
Repair and Maintenance Services |
Other | Total | |||||||||||||
| Three Months Ended September 30, 2010 |
||||||||||||||||
| Gross revenues |
$ | 99,620 | $ | 54,431 | $ | — | $ | 154,051 | ||||||||
| Less: Inter-segment revenues |
2,106 | 107 | — | 2,213 | ||||||||||||
| Consolidated revenues |
97,514 | 54,324 | — | 151,838 | ||||||||||||
| Gross profit |
11,344 | 4,358 | — | 15,702 | ||||||||||||
| Operating income |
4,779 | 334 | — | 5,113 | ||||||||||||
| Segment assets |
147,082 | 97,252 | 48,246 | 292,580 | ||||||||||||
| Capital expenditures |
872 | 238 | 1,149 | 2,259 | ||||||||||||
| Depreciation and amortization expense |
1,549 | 1,249 | — | 2,798 | ||||||||||||
| Three Months Ended September 30, 2009 |
||||||||||||||||
| Gross revenues |
$ | 80,579 | $ | 60,176 | $ | — | $ | 140,755 | ||||||||
| Less: Inter-segment revenues |
2,908 | 197 | — | 3,105 | ||||||||||||
| Consolidated revenues |
77,671 | 59,979 | — | 137,650 | ||||||||||||
| Gross profit |
11,096 | 6,322 | — | 17,418 | ||||||||||||
| Operating income |
5,266 | 2,065 | — | 7,331 | ||||||||||||
| Segment assets |
129,969 | 90,672 | 62,417 | 283,058 | ||||||||||||
| Capital expenditures |
268 | 87 | 678 | 1,033 | ||||||||||||
| Depreciation and amortization expense |
1,683 | 1,336 | — | 3,019 | ||||||||||||
Segment revenue from external customers by market is as follows:
| Construction Services |
Repair and Maintenance Services |
Total | ||||||||||
| (In thousands) | ||||||||||||
| Three Months Ended September 30, 2010 |
||||||||||||
| Aboveground Storage Tanks |
$ | 40,780 | $ | 21,232 | $ | 62,012 | ||||||
| Downstream Petroleum |
20,927 | 22,406 | 43,333 | |||||||||
| Electrical and Instrumentation |
29,922 | 10,686 | 40,608 | |||||||||
| Specialty |
5,885 | — | 5,885 | |||||||||
| Total |
$ | 97,514 | $ | 54,324 | $ | 151,838 | ||||||
| Three Months Ended September 30, 2009 |
||||||||||||
| Aboveground Storage Tanks |
$ | 31,394 | $ | 26,791 | $ | 58,185 | ||||||
| Downstream Petroleum |
24,433 | 27,681 | 52,114 | |||||||||
| Electrical and Instrumentation |
13,487 | 5,507 | 18,994 | |||||||||
| Specialty |
8,357 | — | 8,357 | |||||||||
| Total |
$ | 77,671 | $ | 59,979 | $ | 137,650 | ||||||
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 the revenue recognized as of the reporting date.
The following table provides a summary of changes in our backlog for the three months ended September 30, 2010:
| Construction Services |
Repair and Maintenance Services |
Total | ||||||||||
| (In thousands) | ||||||||||||
| Backlog as of June 30, 2010 |
$ | 197,675 | $ | 155,541 | $ | 353,216 | ||||||
| New backlog awarded |
124,803 | 69,046 | 193,849 | |||||||||
| Revenue recognized on contracts in backlog |
(97,514 | ) | (54,324 | ) | (151,838 | ) | ||||||
| Backlog as of September 30, 2010 |
$ | 224,964 | $ | 170,263 | $ | 395,227 | ||||||