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 7, 2013
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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 November 7, 2013, Matrix Service Company (the “Company”) issued a press release announcing financial results for the first quarter ended September 30, 2013. 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 7, 2013, announcing financial results for the first quarter ended September 30, 2013. | |
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 7, 2013 | By: | /s/ Kevin S. Cavanah | ||
Kevin S. Cavanah | ||||
Vice President and Chief Financial Officer | ||||
EXHIBIT INDEX
Exhibit No. | Description | |
99 | Press Release dated November 7, 2013, announcing financial results for the first quarter ended September 30, 2013. | |
Exhibit 99
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, OK – November 7, 2013 – 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.
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 | ||||||||
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 | ||||||||||