Matrix Service Announces Results for the Second Quarter Ended December 31, 2010

TULSA, Okla., Feb. 7, 2011 /PRNewswire/ -- Matrix Service Co. (Nasdaq: MTRX) today reported its financial results for the three and six months ended December 31, 2010.

Second Quarter of Fiscal 2011 Results

Revenues for the second quarter ended December 31, 2010 were $175.3 million, an increase of $24.9 million, or 16.6%, from consolidated revenues of $150.4 million in the same period a year earlier. Net income for the second quarter of fiscal 2011 was $5.3 million, or $0.20 per fully diluted share. Net income was $4.5 million, or $0.17 per fully diluted share, in the comparable period a year earlier.

Michael J. Hall, Chairman of the Board of Directors of Matrix Service Company, said, "We are pleased with the results for the quarter and the first half of fiscal 2011. We are also encouraged by the volume of bid activity and improving market conditions in both the Construction Services and Repair and Maintenance Services segments."

Consolidated gross profit was $19.8 million in the second quarter of fiscal 2011 compared to $18.4 million in the second quarter of fiscal 2010. The increase of $1.4 million was due to higher revenues, partially offset by lower gross margins which decreased to 11.3% in the second quarter of fiscal 2011 compared to 12.3% in the comparable period a year earlier. The decrease in gross margins was due to lower direct margins partially offset by the favorable effect of improved recovery of construction overhead costs in the second quarter of fiscal 2011. Selling, general and administrative expenses for the second quarter of fiscal 2011 were $11.1 million compared to $11.4 million in the second quarter of fiscal 2010.

Six Month Fiscal 2011 Results

Revenues for the six months ended December 31, 2010 were $327.1 million, an increase of $39.0 million, or 13.5%, from consolidated revenues of $288.1 million in the same period a year earlier. Net income for the six months ended December 31, 2010 was $8.4 million, or $0.32 per fully diluted share. Net income was $9.0 million, or $0.34 per fully diluted share, in the comparable period a year earlier.

Consolidated gross profit was $35.5 million for the six months ended December 31, 2010 compared to $35.9 million in the prior fiscal year period. The decrease of $0.4 million was due to lower gross margins which decreased to 10.8% in the six months ended December 31, 2010 compared to 12.4% in the same period a year earlier. The decrease in gross margins was due to lower direct margins partially offset by the favorable effect of improved recovery of construction overhead costs. Selling, general and administrative expenses for the six months ended December 31, 2010 were $21.7 million compared to $21.5 million for the six months ended December 31, 2009.

Financial Position

At December 31, 2010, Matrix Service's cash balance was $43.7 million. The Company did not borrow under its revolving credit facility during the six months ended December 31, 2010.

Backlog

Consolidated backlog decreased $29.2 million, or 7.4%, to $366.0 million as of December 31, 2010 compared to $395.2 million as of September 30, 2010. The December 31, 2010 backlog remains above the fiscal 2010 year end backlog of $353.2 million.

Earnings Guidance

Matrix Service expects the second half of fiscal 2011 to be consistent with the first half of the fiscal year, with the fourth quarter being much stronger than the third quarter. Further, the Company expects gross margins to increase slightly in the last half of the fiscal year. As a result, Matrix Service is narrowing the range of fiscal 2011 earnings guidance to $0.60 to $0.75 per fully diluted share as compared to its previous earnings guidance of $0.60 to $0.80 per fully diluted share.

Conference Call Details

In conjunction with the press release, Matrix Service will host a conference call with Michael J. Hall, Chairman of the Board of Directors, Kevin S. Cavanah, vice president and CFO, and Joseph F. Montalbano, vice president and COO.  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.

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.

Three Months Ended December 31, 2010

The following table provides a summary of changes in our backlog for the three months ended December 31, 2010:

Six Months Ended December 31, 2010

The following table provides a summary of changes in our backlog for the six months ended December 31, 2010:

SOURCE Matrix Service Co.