Matrix Service Company Announces Third Quarter Results Along With Changes In Operating Segments And Full Year Guidance
TULSA, Okla., May 7, 2012 (GLOBE NEWSWIRE) -- Matrix Service Company (Nasdaq:MTRX) today announced changes to its operating segments to align with the Company's strategic plans. Historically, the Company has reported two operating segments, Construction Services and Repair and Maintenance Services. Going forward, the Company will report four operating segments:
- Electrical Infrastructure,
- Oil Gas & Chemical,
- Storage Solutions, and
- Industrial.
These new operating segments are consistent with the Company's current management focus and organizational structure, and will provide greater transparency into the business. Detailed descriptions of the new operating segments will be included in the Company's Quarterly Report on Form 10-Q and will be discussed further on the Company's conference call on May 8, 2012.
The Company completed an update of its long-term strategic plan in the third quarter and is investing in many high growth areas including mining and metals, material handling, industrial cleaning, high voltage electrical and shale energy opportunities. The Company is also investing in support infrastructure areas such as safety, marketing, corporate development, systems and training. While these investments are expected to have a negative effect on earnings in the short-term, the Company believes they are necessary to achieve its strategic goals and will result in improved operating results over the long-term.
John R. Hewitt, President and CEO of Matrix Service Company, said "These new reporting segments provide a better description of our business and align with our vision for the future. Consistent with our strategic plan, Matrix Service Company will continue to invest in growth opportunities in order to deliver increased shareholder value."
Financial results for the three and nine months ended March 31, 2012 reflect strong revenue growth as core markets improve and strategic initiatives begin to contribute to backlog growth. Matrix Service Company continues to grow its backlog and the opportunity pipeline in all operating segments remains very strong. Consolidated backlog increased to $454.9 million as of March 31, 2012 compared to $433.6 million as of the end of the second quarter and $405.1 million as of June 30, 2011. The Company continues to see strong bid flow and booked in excess of $600 million of new work in the nine months ended March 31, 2012. Backlog has increased in five consecutive quarters and is at its highest level since the third quarter of fiscal 2009.
John R. Hewitt added "We are pleased with the solid revenue and backlog growth in the quarter and year to date, which reflects the quality of our people and services, as well as the impact of our ongoing investments in the business."
Third Quarter of Fiscal 2012 Results
Revenues for the third quarter ended March 31, 2012 were $183.9 million, an increase of $47.6 million, or 34.9%, from $136.3 million in the same period a year earlier. Net income for the third quarter of fiscal 2012 was $4.9 million, or $0.19 per fully diluted share. In the comparable period a year earlier, net income was $4.9 million, or $0.18 per fully diluted share.
Consolidated gross profit was $19.8 million in the third quarter of fiscal 2012 compared to $18.6 million in the same period a year earlier. The increase of $1.2 million was due to higher revenues in the third quarter of fiscal 2012 in our Oil Gas & Chemical and Storage Solutions segments when compared to the same period a year earlier largely offset by the impact of lower gross margins. Gross margins decreased to 10.8% in the third quarter of fiscal 2012 compared to 13.6% in the same period a year earlier largely due to lower margins in the Storage Solutions segment, an increase in the proportion of lower margin revenues in the Oil Gas & Chemical segment, a lower than anticipated volume of Electrical Infrastructure activity, and investments in strategic growth areas. Selling, general and administrative expenses were $12.4 million, or 6.7% of revenue, in the third quarter of fiscal 2012 compared to $10.9 million, or 8.0% of revenue, in the third quarter of fiscal 2011.
Nine Month Fiscal 2012 Results
Revenues for the nine months ended March 31, 2012 were $554.2 million, an increase of $90.8 million, or 19.6%, from $463.4 million in the same period a year earlier. Net income for the nine months ended March 31, 2012 was $15.4 million, or $0.58 per fully diluted share. In the comparable period a year earlier, net income was $13.3 million, or $0.50 per fully diluted share.
Consolidated gross profit was $61.0 million in the nine months ended March 31, 2012 compared to $54.0 million in the same period a year earlier. The increase of $7.0 million was due to higher revenues in the nine months ended March 31, 2012 when compared to the same period a year earlier partially offset by the impact of lower gross margins which decreased to 11.0% in the first nine months of fiscal 2012 compared to 11.7% in the same period a year earlier. Selling, general and administrative expenses were $35.7 million, or 6.4% of revenue, in the nine months ended March 31, 2012 compared to $32.7 million, or 7.0% of revenue, in the same period a year earlier.
Financial Position
At March 31, 2012, Matrix Service's cash balance was $43.1 million. The cash balance along with availability under the senior credit facility gives the Company liquidity of $157.0 million.
Earnings Guidance
Conditions in our east coast operations including instability in local refinery operations, warm winter weather, and the impact of low natural gas prices, as well as timing delays of various project start dates and contract awards have negatively affected the Electrical Infrastructure segment. These factors combined with the strategic investments discussed above are impacting the last half of our fiscal year. Matrix Service Company is therefore reducing its full year EPS guidance to a range of $0.77 to $0.85 and its revenue guidance to $725 million to $750 million.
Conference Call Details
In conjunction with the earnings release, Matrix Service 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 May 8, 2012 and will be simultaneously broadcast live on the Internet, which can be accessed at the Company's website at www.matrixservice.com on the Investors' page under Events & Presentations. 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 maintenance services to Electrical Infrastructure, Oil Gas & Chemical, Storage Solutions and Industrial markets.
The Company is headquartered in Tulsa, Oklahoma, with regional operating facilities in 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 | ||||
| Condensed Consolidated Statements of Income | ||||
| (In thousands, except per share data) | ||||
| (unaudited) | ||||
| Three Months Ended | Nine Months Ended | |||
| March 31, 2012 | March 31, 2011 | March 31, 2012 | March 31, 2011 | |
| Revenues | $ 183,899 | $ 136,333 | $ 554,184 | $ 463,423 |
| Cost of revenues | 164,128 | 117,763 | 493,222 | 409,383 |
| Gross profit | 19,771 | 18,570 | 60,962 | 54,040 |
| Selling, general and administrative expenses | 12,356 | 10,930 | 35,737 | 32,655 |
| Operating income | 7,415 | 7,640 | 25,225 | 21,385 |
| Other income (expense): | ||||
| Interest expense | (174) | (227) | (617) | (594) |
| Interest income | 12 | 43 | 18 | 65 |
| Other | (55) | 485 | (430) | 595 |
| Income before income tax expense | 7,198 | 7,941 | 24,196 | 21,451 |
| Provision for federal, state and foreign income taxes | 2,336 | 3,018 | 8,794 | 8,152 |
| Net income | $ 4,862 | $ 4,923 | $ 15,402 | $ 13,299 |
| Basic earnings per common share | $ 0.19 | $ 0.19 | $ 0.59 | $ 0.50 |
| Diluted earnings per common share | $ 0.19 | $ 0.18 | $ 0.58 | $ 0.50 |
| Weighted average common shares outstanding: | ||||
| Basic | 25,723 | 26,425 | 25,982 | 26,389 |
| Diluted | 26,079 | 26,723 | 26,333 | 26,636 |
| Matrix Service Company | ||
| Condensed Consolidated Balance Sheets | ||
| (In thousands) | ||
| (unaudited) | ||
| March 31, | June 30, | |
| 2012 | 2011 | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 43,132 | $ 59,357 |
| Accounts receivable, less allowances (March 31, 2012 -- $1,174 and June 30, 2011 -- $1,428) | 113,830 | 103,483 |
| Costs and estimated earnings in excess of billings on uncompleted contracts | 55,052 | 40,056 |
| Inventories | 2,547 | 2,249 |
| Deferred income taxes | 5,706 | 5,607 |
| Other current assets | 3,697 | 4,798 |
| Total current assets | 223,964 | 215,550 |
| Property, plant and equipment at cost: | ||
| Land and buildings | 28,401 | 28,287 |
| Construction equipment | 58,573 | 55,272 |
| Transportation equipment | 24,760 | 21,690 |
| Office equipment and software | 16,632 | 15,442 |
| Construction in progress | 2,591 | 2,465 |
| 130,957 | 123,156 | |
| Accumulated depreciation | (76,719) | (69,845) |
| 54,238 | 53,311 | |
| Goodwill | 28,725 | 29,058 |
| Other intangible assets | 6,614 | 6,953 |
| Other assets | 2,235 | 1,564 |
| Total assets | $ 315,776 | $ 306,436 |
| Matrix Service Company | ||
| Condensed Consolidated Balance Sheets | ||
| (In thousands, except share data) | ||
| (unaudited) | ||
| March 31, | June 30, | |
| 2012 | 2011 | |
| Liabilities and stockholders' equity | ||
| Current liabilities: | ||
| Accounts payable | $ 42,760 | $ 36,377 |
| Billings on uncompleted contracts in excess of costs and estimated earnings | 28,262 | 35,485 |
| Accrued insurance | 7,228 | 7,514 |
| Accrued wages and benefits | 17,373 | 18,099 |
| Other accrued expenses | 2,633 | 2,701 |
| Total current liabilities | 98,256 | 100,176 |
| Deferred income taxes | 6,188 | 5,789 |
| Long-term debt | 1,757 | -- |
| Acquisition payable | 800 | 800 |
| Total liabilities | 107,001 | 106,765 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
| Common stock -- $.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of March 31, 2012, and June 30, 2011 | 279 | 279 |
| Additional paid-in capital | 115,844 | 113,686 |
| Retained earnings | 115,633 | 100,231 |
| Accumulated other comprehensive income | 1,087 | 1,436 |
| 232,843 | 215,632 | |
| Less: Treasury stock, at cost – 2,157,906 shares as of March 31, 2012, and 1,417,539 shares as of June 30, 2011 | (24,068) | (15,961) |
| Total stockholders' equity | 208,775 | 199,671 |
| Total liabilities and stockholders' equity | $ 315,776 | $ 306,436 |
| Results of Operations | ||||||
| (In thousands) | ||||||
| Electrical Infrastructure |
Oil Gas & Chemical |
Storage Solutions |
Industrial |
Other |
Total |
|
| Three Months Ended March 31, 2012 | ||||||
| Gross revenues | $ 37,621 | $ 55,569 | $ 88,326 | $ 3,112 | $ -- | $ 184,628 |
| Less: Inter-segment revenues | -- | -- | 729 | -- | -- | 729 |
| Consolidated revenues | 37,621 | 55,569 | 87,597 | 3,112 | -- | 183,899 |
| Gross profit | 4,809 | 5,015 | 9,999 | (52) | -- | 19,771 |
| Operating income | 2,540 | 1,922 | 3,745 | (792) | -- | 7,415 |
| Segment assets | 53,961 | 63,222 | 131,673 | 13,744 | 53,176 | 315,776 |
| Three Months Ended March 31, 2011 | ||||||
| Gross revenues | $ 28,825 | $ 32,501 | $ 68,616 | $ 6,785 | $ -- | $ 136,727 |
| Less: Inter-segment revenues | -- | 255 | 139 | -- | -- | 394 |
| Consolidated revenues | 28,825 | 32,246 | 68,477 | 6,785 | -- | 136,333 |
| Gross profit | 3,846 | 3,480 | 10,245 | 999 | -- | 18,570 |
| Operating income | 1,661 | 846 | 4,654 | 479 | -- | 7,640 |
| Segment assets | 50,950 | 40,935 | 118,793 | 14,046 | 68,083 | 292,807 |
| Nine Months Ended March 31, 2012 | ||||||
| Gross revenues | $ 103,261 | $ 151,318 | $ 283,958 | $ 17,763 | $ -- | $ 556,300 |
| Less: Inter-segment revenues | -- | 208 | 1,908 | -- | -- | 2,116 |
| Consolidated revenues | 103,261 | 151,110 | 282,050 | 17,763 | -- | 554,184 |
| Gross profit | 12,585 | 14,298 | 33,075 | 1,004 | -- | 60,962 |
| Operating income | 5,761 | 5,744 | 14,518 | (798) | -- | 25,225 |
| Segment assets | 53,961 | 63,222 | 131,673 | 13,744 | 53,176 | 315,776 |
| Nine Months Ended March 31, 2011 | ||||||
| Gross revenues | $ 126,158 | $ 96,186 | $ 215,922 | $ 26,065 | $ -- | $ 464,331 |
| Less: Inter-segment revenues | 7 | 376 | 525 | -- | -- | 908 |
| Consolidated revenues | 126,151 | 95,810 | 215,397 | 26,065 | -- | 463,423 |
| Gross profit | 15,004 | 9,109 | 27,202 | 2,725 | -- | 54,040 |
| Operating income | 7,801 | 1,494 | 10,879 | 1,211 | -- | 21,385 |
| Segment assets | 50,950 | 40,935 | 118,793 | 14,046 | 68,083 | 292,807 |
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 signed contracts 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.
Three Months Ended March 31, 2012
The following table provides a summary of changes in our backlog for the three months ended March 31, 2012:
| Electrical Infrastructure |
Oil Gas & Chemical |
Storage Solutions |
Industrial |
Total |
|
| (In thousands) | |||||
| Backlog as of December 31, 2011 | $ 119,954 | $ 69,038 | $ 240,227 | $ 4,361 | $ 433,580 |
| Net awards | 28,242 | 61,105 | 100,337 | 15,567 | 205,251 |
| Revenue recognized | (37,621) | (55,569) | (87,597) | (3,112) | (183,899) |
| Backlog as of March 31, 2012 | $ 110,575 | $ 74,574 | $ 252,967 | $ 16,816 | $ 454,932 |
Nine Months Ended March 31, 2012
The following table provides a summary of changes in our backlog for the nine months ended March 31, 2012:
| Electrical Infrastructure |
Oil Gas & Chemical |
Storage Solutions |
Industrial |
Total |
|
| (In thousands) | |||||
| Backlog as of June 30, 2011 | $ 85,551 | $ 92,162 | $ 218,073 | $ 9,332 | $ 405,118 |
| Net awards | 128,285 | 133,522 | 316,944 | 25,247 | 603,998 |
| Revenue recognized | (103,261) | (151,110) | (282,050) | (17,763) | (554,184) |
| Backlog as of March 31, 2012 | $ 110,575 | $ 74,574 | $ 252,967 | $ 16,816 | $ 454,932 |
CONTACT: Matrix Service Company
Kevin Cavanah
Vice President and CFO
T: 918-838-8822
E: kcavanah@matrixservice.com
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