Matrix Service Announces Second Quarter Fiscal 2010 Results of $0.17 per Fully Diluted Share
TULSA, Okla., Feb. 4 /PRNewswire-FirstCall/ -- Matrix Service Co. (Nasdaq: MTRX), a leading industrial services company, today reported its financial results for the three and six months ended December 31, 2009.
Second Quarter Fiscal 2010 Highlights:
- Revenues were $150.4 million,
- Gross margins were 12.3%,
- Net income was $4.5 million,
- Fully diluted EPS was $0.17 per share,
- Backlog was $323.7 million as of December 31, 2009, and
- Cash was $61.4 million as of December 31, 2009.
Six Month Fiscal 2010 Highlights:
- Revenues were $288.1 million,
- Gross margins were 12.4%, and
- Fully diluted EPS was $0.34 per share.
Second Quarter of Fiscal 2010 Results
Net income for the second quarter of fiscal 2010 was $4.5 million, or $0.17 per fully diluted share on total revenues of $150.4 million. Second quarter operating results included a charge related to collection costs on claims acquired in a recent acquisition of $0.9 million or $0.02 per fully diluted share. Total revenues were $176.9 million and net income was $10.1 million, or $0.38 per fully diluted share, in the comparable period a year earlier.
"As we expected, the market environment continued to be challenging through the end of calendar 2009," said Michael J. Bradley, president and CEO of Matrix Service Company. "The Matrix Service team executed at a high level while further strengthening our financial condition. Although some awards are occurring later than expected, we continue to see strong bid flow, especially in our Construction Services segment where second quarter backlog awards were at their highest quarterly amount in almost two years and totaled over $100 million. The growth in our Electrical and Instrumentation business contributed significantly to second quarter awards and demonstrates our diversification and expanded capabilities which is allowing us to pursue projects of greater scale and complexity."
Revenues for the Construction Services segment were $80.6 million, compared with $100.1 million in fiscal 2009. The decrease of $19.5 million was primarily due to delays in project awards and a decline in our customers' capital spending. Revenues for the Repair and Maintenance Services segment were $69.8 million in fiscal 2010 compared to $76.8 million in fiscal 2009. The decline was due to customers applying discretion to the scope and timing of maintenance programs.
Consolidated gross profit decreased from $26.4 million in fiscal 2009 to $18.4 million in fiscal 2010. The decrease of $8.0 million was due to lower revenues in fiscal 2010 and lower gross margins, which decreased to 12.3% in fiscal 2010 compared to 14.9% a year earlier. Gross margins in the Repair and Maintenance Services segment were 9.4% in the current fiscal year compared to 17.7% in the prior fiscal year. Construction Services segment gross margins were 14.8% in the current fiscal year compared to 12.7% in fiscal 2009. Gross margins in both segments were negatively affected by a lower volume of business available to recover construction overhead costs. Consolidated SG&A expenses decreased 3.4% to $11.4 million in fiscal 2010 compared to $11.8 million for fiscal 2009. The decline in SG&A expenses is due to our on-going cost reduction efforts related primarily to employee related costs and professional fees, partially offset by a charge of $0.9 million in fiscal 2010 related to the collection of claims acquired in a recent acquisition.
Six Month Fiscal 2010 Results
Net income for fiscal 2010 was $9.0 million, or $0.34 per fully diluted share, on total revenues of $288.1 million. Fiscal 2010 operating results include charges related to a legal matter of $1.3 million, or $.03 per fully diluted share, and $0.9 million, or $0.02 per fully diluted share, related to collection costs on claims acquired in a recent acquisition. Total revenues were $363.6 million and net income was $19.6 million or $0.74 per fully diluted share in fiscal 2009.
Revenues for the Construction Services segment were $158.3 million compared with $214.9 million in fiscal 2009. The decrease of $56.6 million was primarily due to delays in project awards and a decline in our customers' capital spending. Revenues for the Repair and Maintenance Services segment were $129.8 million in fiscal 2010 compared to $148.7 million in fiscal 2009. The decline was due to customers applying discretion to the scope and timing of maintenance programs.
Consolidated gross profit decreased from $53.0 million in fiscal 2009 to $35.9 million in fiscal 2010. The reduction of $17.1 million was due primarily to the decrease in revenues and lower gross margins of 12.4% in fiscal 2010 compared to 14.6% in fiscal 2009. Gross margins in the Repair and Maintenance Services segment were 9.9% in the current fiscal year versus 17.0% in the prior fiscal year. Construction Services segment gross margins were 14.5% in the current fiscal year compared to 12.9% in fiscal 2009. Gross margins in both segments were negatively affected by a lower volume of business available to recover construction overhead costs. Consolidated SG&A expenses decreased $2.3 million to $21.5 million fiscal 2010 compared to $23.8 million for fiscal 2009. The decline in SG&A expenses is due to our on-going cost reduction efforts related primarily to employee related costs and professional fees, partially offset by a charge of $0.9 million incurred in fiscal 2010 related to the collection of claims acquired in a recent acquisition.
Backlog
Consolidated backlog as of December 31, 2009 was $323.7 million compared to $328.1 million as of September 30, 2009.
Financial Position
During the second quarter, the Company increased its cash balance from $56.5 million as of September 30, 2009, to $61.4 million as of December 31, 2009. The Company did not borrow under its $75.0 million revolving credit facility during the six months ended December 31, 2009.
Earnings Guidance
The outlook for the Construction Services segment is improving, but the timing of project awards continues to lag expectations. The Repair and Maintenance Services segment continues to be affected by the lingering weakness in the economy and energy sector which has caused an overall softening of the Aboveground Storage Tank market and weak fundamentals within the refining industry. As a result, Matrix Service expects to achieve earnings toward the lower end our of our previously stated EPS guidance of $0.80 to $1.10 per fully diluted share, excluding the legal charge previously announced of $0.03 per fully diluted share and the charge related to collection costs on claims acquired in a recent acquisition of $0.02 per fully diluted share.
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, 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 |
|
Tom Long |
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Vice President and CFO |
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T: 918-838-8822 |
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Matrix Service Company
Consolidated Statements of Income
(In thousands, except per share data)
(unaudited)
One Month
Three Months Ended Six Months Ended Ended
------------------------- ------------------------ --------
December 31, November 30, December 31, November 30, June 30,
2009 2008 2009 2008 2009
-------- -------- ------- -------- --------
Revenues $150,425 $176,937 $288,075 $363,587 $45,825
Cost of
revenues 131,983 150,568 252,215 310,547 40,676
-------- -------- ------- -------- --------
Gross profit 18,442 26,369 35,860 53,040 5,149
Selling,
general and
administrative
expenses 11,376 11,776 21,463 23,838 3,570
-------- -------- ------- -------- --------
Operating
income 7,066 14,593 14,397 29,202 1,579
Other income
(expense):
Interest
expense (188) (123) (362) (237) (91)
Interest
income 17 104 60 213 17
Other 461 175 544 911 98
-------- -------- ------- -------- --------
Income before
income tax
expense 7,356 14,749 14,639 30,089 1,603
Provision for
federal,
state and
foreign
income taxes 2,823 4,621 5,597 10,457 609
-------- -------- ------- -------- --------
Net income $4,533 $10,128 $9,042 $19,632 $994
======== ======== ======= ======== ========
Basic earnings
per
common share $0.17 $0.39 $0.34 $0.75 $0.04
Diluted earnings
per
common share $0.17 $0.38 $0.34 $0.74 $0.04
Weighted average
common
shares
outstanding:
Basic 26,273 26,102 26,234 26,087 26,192
Diluted 26,459 26,400 26,449 26,456 26,434
Matrix Service Company
Consolidated Balance Sheets
(In thousands)
December 31, May 31,
2009 2009
---- ----
Assets
Current assets:
Cash and cash equivalents $61,367 $34,553
Accounts receivable, less allowances
(December 31, 2009 -$811 and May 31,
2009 -$710) 76,175 122,283
Costs and estimated earnings in excess
of billings on uncompleted contracts 36,813 35,619
Inventories 4,284 4,926
Income taxes receivable - 647
Deferred income taxes 3,926 4,843
Prepaid expenses 4,562 3,935
Other current assets 2,322 3,044
----- -----
Total current assets 189,449 209,850
Property, plant and equipment at cost:
Land and buildings 27,580 27,319
Construction equipment 55,311 53,925
Transportation equipment 18,563 17,971
Furniture and fixtures 15,042 14,527
Construction in progress 1,155 812
----- ---
117,651 114,554
Accumulated depreciation (61,751) (55,745)
------- -------
55,900 58,809
Goodwill 27,248 25,768
Other intangible assets 4,317 4,571
Other assets 1,349 4,453
----- -----
Total assets $278,263 $303,451
======== ========
Matrix Service Company
Consolidated Balance Sheets
(In thousands, except share data)
December 31, May 31,
2009 2009
---- ----
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $36,190 $48,668
Billings on uncompleted contracts
in excess of costs and estimated
earnings 35,539 51,305
Accrued insurance 7,236 7,612
Accrued wages and benefits 10,223 16,566
Income taxes payable 12 -
Current capital lease obligation 943 1,039
Other accrued expenses 2,295 2,200
----- -----
Total current liabilities 92,438 127,390
Long-term capital lease obligation 588 850
Deferred income taxes 4,095 4,822
Stockholders' equity:
Common stock -$.01 par value;
60,000,000 shares
authorized; 27,888,217 shares
issued as of December 31, 2009 and
May 31, 2009 279 279
Additional paid-in capital 110,740 110,272
Retained earnings 85,429 75,393
Accumulated other comprehensive
income 834 596
--- ---
197,282 186,540
Less: Treasury stock, at cost –
1,582,261 shares as of
December 31, 2009 and 1,696,517
shares as of May 31, 2009 (16,140) (16,151)
------- -------
Total stockholders' equity 181,142 170,389
------- -------
Total liabilities and stockholders'
equity $278,263 $303,451
======== ========
Results of Operations
(In thousands)
Repair &
Construction Maintenance
Services Services Other Total
-------- ------------ ----- -----
Three Months Ended
December 31, 2009
Gross revenues $84,511 $69,849 $- $154,360
Less: Inter-segment
revenues 3,929 6 - 3,935
----- --- --- -----
Revenues 80,582 69,843 - 150,425
Gross profit 11,894 6,548 - 18,442
Operating income 5,006 2,060 - 7,066
Income before income
tax expense 5,139 2,217 - 7,356
Net income 3,224 1,309 - 4,533
Segment assets 120,697 88,760 68,806 278,263
Capital expenditures 234 719 863 1,816
Depreciation and
amortization expense 1,647 1,300 - 2,947
Three Months Ended
November 30, 2008
Gross revenues $108,084 $77,499 $- $185,583
Less: Inter-segment
revenues 7,955 691 - 8,646
----- --- --- -----
Revenues 100,129 76,808 - 176,937
Gross profit 12,761 13,608 - 26,369
Operating income 5,618 8,975 - 14,593
Income before income
tax expense 5,680 9,069 - 14,749
Net income 4,434 5,694 - 10,128
Segment assets 135,887 96,865 31,771 264,523
Capital expenditures 932 814 1,739 3,485
Depreciation and
amortization expense 1,359 1,121 - 2,480
Six Months Ended
December 31, 2009
Gross revenues $165,090 $130,025 $- $295,115
Less: Inter-segment
revenues 6,837 203 - 7,040
----- --- --- -----
Revenues 158,253 129,822 - 288,075
Gross profit 22,990 12,870 - 35,860
Operating income 10,272 4,125 - 14,397
Income before income
tax expense 10,351 4,288 - 14,639
Net income 6,517 2,525 - 9,042
Segment assets 120,697 88,760 68,806 278,263
Capital expenditures 502 806 1,541 2,849
Depreciation and
amortization expense 3,330 2,636 - 5,966
Six Months Ended
November 30, 2008
Gross revenues $230,445 $149,666 $- $380,111
Less: Inter-segment
revenues 15,558 966 - 16,524
------ --- --- ------
Revenues 214,887 148,700 - 363,587
Gross profit 27,806 25,234 - 53,040
Operating income 13,110 16,092 - 29,202
Income before income
tax expense 13,383 16,706 - 30,089
Net income 8,813 10,819 - 19,632
Segment assets 135,887 96,865 31,771 264,523
Capital expenditures 1,973 1,744 2,873 6,590
Depreciation and
amortization expense 2,771 2,090 - 4,861
One Month Ended June
30, 2009
Gross revenues $29,224 $17,297 $- $46,521
Less: Inter-segment
revenues 693 3 - 696
--- --- --- ---
Revenues 28,531 17,294 - 45,825
Gross profit 3,251 1,898 - 5,149
Operating income 1,141 438 - 1,579
Income before income
tax expense 1,116 487 - 1,603
Net income 720 274 - 994
Capital expenditures 121 64 163 348
Depreciation and
amortization expense 543 451 - 994
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
revenues recognized as of the reporting date.
The following table provides a rollforward of our backlog for the three-
months ended December 31, 2009:
Repair and
Construction Maintenance
Services Services Total
------------ ---------- --------
(In thousands)
Backlog as of September 30, 2009 $167,852 $160,266 $328,118
New backlog awarded 100,759 50,862 151,621
Backlog cancelled (5,600) - (5,600)
Revenue recognized on contracts
in backlog (80,582) (69,843) (150,425)
------- ------- --------
Backlog as of December 31, 2009 $182,429 $141,285 $323,714
======== ======== ========
The following table provides a rollforward of our backlog for the six-
months ended December 31, 2009:
Repair and
Construction Maintenance
Services Services Total
------------ ---------- --------
(In thousands)
Backlog as of June 30, 2009 $224,260 $167,837 $392,097
New backlog awarded 134,660 103,270 237,930
Backlog cancelled (18,238) - (18,238)
Revenue recognized on contracts
in backlog (158,253) (129,822) (288,075)
-------- -------- --------
Backlog as of December 31, 2009 $182,429 $141,285 $323,714
======== ======== ========
SOURCE Matrix Service Co.
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