Press Release

• Project charge reduces second quarter earnings per share by $0.29 to $0.12
• Exclusive of project charge, Company experiences strong margin performance across all segments
• Revenue increases from the first to second quarter lead to higher absorption of construction overhead costs
• Year-to-date project awards total $587.7 million excluding recently announced construction award for TransCanada's Napanee Generating Station

TULSA, Okla., Feb. 4, 2015 (GLOBE NEWSWIRE) -- Matrix Service Company (Nasdaq:MTRX) today reported its financial results for the second quarter and six months ended December 31, 2014.

"While the second quarter of this fiscal year has been challenging, our performance and outlook remain strong across all segments. Higher quarterly revenue has resulted in improved segment margins due to better absorption of the construction overhead cost structure. Year-to-date project awards have been good and bid flow continues to be strong. Subsequent to the end of the quarter, we were awarded the construction work on a new 900 megawatt combined cycle gas-fired power generation station for TransCanada Energy, further enhancing our long-term backlog," said John Hewitt, President and CEO of Matrix Service Company.

"That said, the quarter was negatively impacted by a charge on an acquired EPC joint venture project in the Electrical Infrastructure segment which has resulted in our lowering the full year earnings guidance. This charge resulted from delays, technical impacts and additional work that has compressed our delivery schedule obligations. This project is scheduled to be complete within the current fiscal year. Exclusive of this project, the business continues to perform well. Our strategic vision for the Company as well as the long-term strength of our markets has not changed."

The following financial results include the acquired EPC joint venture project. The Company has a 65 percent controlling interest in the joint venture and consolidates the joint venture operating results into the Company's financial statements and reports the minority interest holder's 35 percent share of joint venture activity as a non-controlling interest. The information below represents the consolidated results of the Company and, unless noted otherwise, includes 100 percent of the joint venture activity.

Second Quarter Fiscal 2015 Results

Revenues for the second quarter ended December 31, 2014 were $342.9 million compared to $311.0 million in the same period a year earlier, an increase of $31.9 million, or 10.3%. Our share of the acquired EPC joint venture project charge reduced second quarter of fiscal 2015 net income by $7.9 million to $3.3 million, and reduced fully diluted earnings per share by $0.29 to $0.12. In the same period a year earlier, the Company earned $10.3 million, or $0.38 per fully diluted share.

On a segment basis, consolidated revenues increased in the Industrial, Electrical Infrastructure and Oil Gas & Chemical segments by $48.0 million, $21.3 million and $13.4 million respectively, partially offset by a decrease in the Storage Solutions segment of $50.8 million.

Consolidated gross profit was $16.0 million in the three months ended December 31, 2014 compared to $34.2 million in the three months ended December 31, 2013. Fiscal 2015 gross margins were reduced by 6.7% to 4.7% related to a charge of $22.9 million on an acquired EPC joint venture power generation project. Fiscal 2014 gross margins were 11.0%.

Selling, general and administrative costs were $19.6 million, in the second quarter of fiscal 2015 compared to $19.3 million in the same period a year earlier. SG&A expense as a percentage of revenue decreased to 5.7% in the three months ended December 31, 2014 compared to 6.2% for the three months ended December 31, 2013.

Six Month Fiscal 2015 Results

Revenues for the six months ended December 31, 2014 were $664.6 million compared to $537.2 million in the same period a year earlier, an increase of $127.4 million, or 23.7%. Our share of the acquired EPC joint venture project charge reduced net income for the six months ended December 31, 2014 by $9.0 million to $9.2 million, and reduced fully diluted earnings per share by $0.33 to $0.34. In the same period a year earlier, the Company earned $16.9 million, or $0.63 per fully diluted share.

On a segment basis, consolidated revenues increased in the Industrial, Electrical Infrastructure and Oil Gas & Chemical segments by $104.7 million, $44.1 million and $4.2 million respectively, partially offset by a decrease in the Storage Solutions segment of $25.6 million.

Consolidated gross profit was $44.3 million in the six months ended December 31, 2014 compared to $59.6 million in the six months ended December 31, 2013. Fiscal 2015 gross margins were reduced by 4.4% to 6.7% related to a charge of $26.2 million on an acquired EPC joint venture power generation project. Fiscal 2014 gross margins were 11.1%.

Consolidated SG&A expenses were $39.5 million in the six months ended December 31, 2014 compared to $34.0 million in the same period a year earlier. SG&A expense as a percentage of revenue was 5.9% in the six months ended December 31, 2014 compared to 6.3% in the same period a year earlier.

Backlog

Backlog at December 31, 2014 totaled $839.0 million, a decrease of $76.8 million, or 8.4%, compared to the backlog at June 30, 2014 of $915.8 million. Backlog decreased $145.7 million, or 14.8%, compared to September 30, 2014 backlog of $984.7 million. Project awards totaled $197.2 million and $587.7 million in the three and six months ended December 31, 2014. Backlog at December 31, 2014 does not include the recently announced construction award for the Napanee Generating Station discussed earlier in this earnings release.

Financial Position

Availability under the Company's credit facility of $145.9 million along with the Company's cash balance of $68.6 million provided liquidity of $214.5 million at December 31, 2014.

Earnings Guidance

The Company is maintaining its fiscal 2015 revenue guidance of between $1.425 billion and $1.525 billion and lowering earnings per fully diluted share guidance to between $1.10 and $1.25.

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 Thursday, February 5, 2015 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, except as required by law.

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 and other established arrangements, 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 December 31, 2014

The following table provides a summary of changes in our backlog for the three months ended December 31, 2014:

Six Months Ended December 31, 2014

The following table provides a summary of changes in our backlog for the six months ended December 31, 2014:

CONTACT: For more information, please contact:

         

         Matrix Service Company

         Kevin S. Cavanah

         Vice President and CFO

         T: 918-838-8822

         Email:kcavanah@matrixservicecompany.com