Matrix Service Company Reports Third Quarter Operating Profit Increase Of 59.8%

Apr 10, 2001, 01:00 ET from Matrix Service Company

    TULSA, Okla., April 10 /PRNewswire/ --
 Matrix Service Company (Nasdaq:   MTRX) announces operating results for the
 third quarter and for the nine months ended February 28, 2001.
 
     Three Months Ended February 28, 2001 Compared to Three Months Ended
 February 29, 2000
     Consolidated Operating Profit grew to $2.1 million for the third quarter
 of fiscal 2001 compared to $1.3 million for the same period last year, an
 increase of 59.8%.  The growth was driven by strong performance in Aboveground
 Storage Tank (AST) Services and improved performance in Construction Services.
     Consolidated Revenues grew slightly from $48.0 million for the three
 months ended February 28, 2000 to $49.1 million for the three months ended
 February 28, 2001.  Revenues grew 7.1% in AST Services due to an excellent
 business environment and over 261% in Construction Services, the result of a
 higher backlog of business entering fiscal year 2001 than in fiscal year 2000.
 These revenue increases were offset somewhat by lower revenues in Plant
 Services as more scheduled turnarounds took place in the third fiscal quarter
 last year versus this year.
     Gross margins on a consolidated basis increased from 9.3% for the three
 months ended February 29, 2000 to 11.7% for the three months ended
 February 28, 2001.  Gross margins in the AST Services Division increased from
 9.8% to 13.8% primarily due to an excellent mix of work, effective utilization
 of fixed costs, and negative gross margins on the Venezuela project
 experienced in the prior year.  Gross margins in the Plant Services Division
 decreased from 13.7% for the three months ended February 29, 2000 to 8.2% for
 the three months ended February 28, 2001 due to higher unabsorbed fixed costs
 in anticipation of higher turnaround activity in the fourth quarter of fiscal
 2001 and less than satisfactory performance on one large project.  Gross
 margins in the Construction Services Division were up significantly in the
 third quarter this fiscal year versus the third quarter last fiscal year due
 to higher volume in the current quarter relative to the Division's fixed cost
 structure and higher margin jobs in fiscal 2001 versus fiscal 2000.
     Net income for the quarter ended February 28, 2001 was $1.4 million or
 $0.17 per share fully diluted compared with net income of $1.2 million or
 $0.13 per share fully diluted for the same period of the prior year.  Net
 income for the quarter ended February 29, 2000 was positively impacted by the
 recognition of tax benefits for the Company's fiscal year 1999 losses, which
 offset all tax liability that would have been incurred in the third quarter of
 fiscal 2000 except for a 13.2% accrual for state income and federal
 alternative minimum taxes.  The impact in the third quarter ended
 February 29, 2000 was $0.3 million or $0.04 per share fully diluted.  As a
 result, on a tax adjusted basis, net income for the quarter ended
 February 28, 2001 increased from $0.09 per share fully diluted last year to
 $0.17 per share fully diluted this year, an increase of 88.9%.
 
     Nine Months Ended February 28, 2001 Compared to Nine Months Ended
 February 29, 2000
     Net income for the first nine months ended February 28, 2001 was
 $2.4 million or $0.28 per share fully diluted on revenues of $132.0 million,
 compared with net income of $5.7 million or $0.63 per share fully diluted on
 revenues of $146.3 million for the nine months ended February 29, 2000.  Net
 income for the nine months ended February 29, 2000 was positively impacted by
 the same tax anomaly that positively impacted the third quarter of fiscal year
 2000.  The impact for the nine months ended February 29, 2000 was $1.9 million
 or $0.21 per share fully diluted.
     Gross revenues in the Company's core business segments (AST Services,
 Plant Services and Construction Services) were $133.2 million for the nine
 months ended February 28, 2001 compared to $128.0 million for the nine months
 ended February 29, 2000.  The increase in revenues was attributed primarily to
 increases in AST Services of $7.9 million and Construction Services of
 $7.7 million offset by a decline in Plant Services of $10.4 million.  The
 revenue decline in Plant Services was primarily attributed to the timing of
 turnaround work this fiscal year versus last fiscal year.
     Gross revenues for Other Services (primarily the exited Municipal Water
 Services Division) declined from $19.1 million for the nine months ended
 February 29, 2000 to $0.0 million for the nine months ended February 28, 2001
 as both Brown Steel Contractors, Inc. and San Luis Tank and Piping
 Construction Company, Inc. were sold or liquidated in the prior year and
 existing contracts liquidated.
     Consolidated gross margins increased from 10.6% for the nine months ended
 February 29, 2000 to 10.8% for the nine months ended February 28, 2001.  Gross
 margins in the AST Services Division increased from 13.3% to 13.4%.  Gross
 margins in the Plant Services Division declined from 11.0% for the nine months
 ended February 29, 2000 to 6.5% for the nine months ended February 28, 2001
 due to higher unabsorbed fixed costs with lower volumes and performance
 difficulties with one third-quarter project.  Gross margins in the
 Construction Services Division were 0.7% for the first nine months of fiscal
 year 2001 versus (8.6%)% in the first nine months last year due to
 significantly higher volume relative to the Division's fixed cost structure in
 2001 versus 2000.
     Brad Vetal, President and Chief Executive Officer, said, "We are pleased
 with the performance of the Company in the third quarter and believe we are
 positioned for continued improvements in the fourth quarter and next year.  We
 anticipate that the Plant Services sector will have substantially better
 results in the fourth quarter of this fiscal year versus both the last quarter
 and last year's fourth quarter based on the current level of committed
 turnarounds.  The AST Services Division should continue its outstanding
 performance provided our client base continues to commit to repair and
 maintenance work at a pace similar to the current environment.  Although the
 Construction Services Division showed a substantial improvement over last
 year's performance, the current level of activity is still insufficient to
 generate returns that meet our expectations.  Although the current backlog is
 $16.3 million, delays in starting projects will negatively impact short-term
 results.  We have reduced substantially the fixed cost structure in this
 Division and will continue to examine how this sector best fits into our
 longer-term strategy.  We are committed to making this Division a profitable
 part of the Matrix operation.  As a result of the continued negative operating
 performance at the Construction Services Division and lower margins in the
 third quarter at the Plant Services Division, we believe that earnings from
 our core businesses for the full fiscal year 2001 will be similar to last
 year's results.  Consolidated revenues for the full fiscal year 2001 will be
 in the $181 million to $184 million range."
     This release contains certain forward-looking statements including
 statements preceded or modified by the words "anticipate", "expect",
 "believe", "should" and "will" and words of similar effect, concerning the
 Company's operations, economic performance and management's best judgment as
 to what may occur in the future.  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 identified in the
 Company's Quarterly Report (10-Q) for the quarters ended August 31, 2000,
 November 30, 2000 and February 28, 2001, and the Annual Report (10-K) for the
 year ended May 31, 2000, many of which are beyond the control of the Company,
 and any one of which, or a combination of which, could materially affect the
 results of the Company's operations.
     Matrix Service Company designs, constructs, maintains and provides
 specialized repair services and products for aboveground storage tanks
 principally for petroleum refineries, bulk storage terminals, pipelines and
 chemical plants.  The Company also provides general industrial construction
 and in-plant routine maintenance, process unit turnarounds and construction
 services.
     The Company is headquartered in Tulsa, Oklahoma with regional operating
 facilities located in Oklahoma, Texas, California, Michigan, Pennsylvania,
 Washington, and Delaware in the U.S. and Canada.
 
                             Matrix Service Company
                       Consolidated Statements of Income
                (in thousands, except share and per share data)
 
                            Three Months Ended          Nine Months Ended
                                (unaudited)                (unaudited)
                        February 28,  February 29,  February 28,  February 29,
                            2001          2000          2001          2000
 
     Revenues            $  49,135     $  48,033     $ 132,049     $ 146,277
     Cost of revenues       43,373        43,552       117,699       130,798
     Gross profit            5,762         4,481        14,350        15,479
     Selling, general and
      administrative
      expenses               3,617         3,064        10,462         9,425
     Goodwill and
      non-compete
      amortization              91           132           267           351
     Operating income        2,054         1,285         3,621         5,703
 
     Other income (expense):
       Interest expense       (119)          (28)         (248)         (271)
       Interest income          32             9           113            63
       Other                   230            98           278           521
     Income before income
      tax expense            2,197         1,364         3,764         6,016
     Provision for federal,
      state and Foreign
      income tax expense       747           180         1,317           350
 
     Net income          $   1,450     $   1,184     $   2,447     $   5,666
 
     Earnings per share
      of common stock:
       Basic             $    0.17     $    0.13     $    0.28     $    0.64
       Diluted           $    0.17     $    0.13     $    0.28     $    0.63
 
     Weighted average
      number of common
      shares:
       Basic             8,326,372     8,884,456     8,522,326     8,920,222
       Diluted           8,591,324     9,079,420     8,686,031     9,026,844
 
 
                             Matrix Service Company
                          Consolidated Balance Sheets
                                 (in thousands)
 
                                                     February 28,    May 31,
                                                         2001         2000
     ASSETS:                                        (unaudited)
 
     Current assets:
       Cash and cash equivalents                     $    1,414   $    1,806
       Accounts receivable, less allowances
        (February 28 - $30, May 31 - $150)               26,795       24,188
       Costs and estimated earnings in excess of
        billings on uncompleted contracts                11,951       11,029
       Inventories                                        2,330        3,049
       Income tax receivable                                 17          146
       Deferred income taxes                                988          ---
       Prepaid expenses                                   2,969        2,559
 
     Total current assets                                46,464       42,777
 
     Investment in joint venture                            366          279
 
     Property, plant and equipment at cost:
 
       Land and buildings                                 9,441        9,992
       Construction equipment                            19,187       17,892
       Transportation equipment                           7,416        7,220
       Furniture and fixtures                             4,773        4,399
       Construction in progress                           2,298        1,995
 
                                                         43,115       41,498
         Less accumulated depreciation                   22,053       20,211
 
     Net property, plant and equipment                   21,062       21,287
 
     Goodwill, net of accumulated amortization
      (February 28 - $2,345, May 31 - $2,092)            11,348       11,660
 
     Other assets                                         1,858        2,303
 
     Total assets                                    $   81,098   $   78,306
 
 
                             Matrix Service Company
                          Consolidated Balance Sheets
                                 (in thousands)
 
                                                      February 28,    May 31,
                                                          2001         2000
                                                      (unaudited)
 
     LIABILITIES AND STOCKHOLDERS' EQUITY:
 
     Current liabilities:
 
       Accounts payable                               $    6,630   $    8,759
       Billings on uncompleted contracts in
        excess of costs and estimated earnings             8,148        5,138
       Accrued insurance                                   2,546        3,112
       Accrued environmental reserves                        203          432
       Earnout payable                                       ---          968
       Income taxes payable                                  553          412
       Other accrued expenses                              3,881        4,560
       Current portion of long-term debt                     ---           22
 
     Total current liabilities                            21,961       23,403
 
       Long-term debt                                      4,195          ---
 
       Deferred income taxes                               1,657          ---
 
     Stockholders' equity:
 
       Common stock                                           96           96
       Additional paid-in capital                         51,596       51,596
       Retained earnings                                  10,144        7,785
       Accumulated other comprehensive income               (789)        (693)
 
                                                          61,047       58,784
       Less:  Treasury stock, at cost                     (7,762)      (3,881)
 
     Total stockholders' equity                           53,285       54,903
 
     Total liabilities and stockholders' equity       $   81,098   $   78,306
 
 
                             Matrix Service Company
                       3rd Quarter Results of Operations
                            ($ Amounts in millions)
 
                       AST    Construction      Plant        Other    Combined
                    Services     Services     Services     Services     Total
 
     Three Months Ended February 28, 2001
     Gross revenues   36.2          4.7          8.5          0.0        49.4
     Less: Inter-segment
      revenues        (0.2)        (0.1)         0.0          0.0        (0.3)
     Consolidated
      revenues        36.0          4.6          8.5          0.0        49.1
     Gross profit      5.0          0.0          0.7          0.0         5.7
     Operating income
      (loss)           2.2         (0.3)         0.2         (0.1)        2.0
     Income (loss)
      before income
      tax expense      2.4         (0.4)         0.2          0.0         2.2
     Net income (loss) 1.4         (0.2)         0.2          0.0         1.4
 
     Identifiable
      assets          60.3          5.6         11.5          2.8        80.2
     Capital
      expenditures     0.9          0.0          0.1          0.0         1.0
     Depreciation
      expense          0.8          0.1          0.1          0.0         1.0
 
     Three Months Ended February 29, 2000
     Gross revenues   33.8          1.3         11.7          1.5        48.3
     Less: Inter-segment
      revenues         0.0          0.0          0.0         (0.2)       (0.2)
     Consolidated
      revenues        33.8          1.3         11.7          1.3        48.1
     Gross profit      3.3         (0.5)         1.6          0.1         4.5
     Operating income
      (loss)           1.0         (0.8)         1.1          0.0         1.3
     Income (loss)
      before income
      tax expense      1.0         (0.8)         1.1          0.0         1.3
     Net income (loss) 0.9         (0.8)         1.1          0.0         1.2
 
     Identifiable
      assets          56.1          1.4         13.8          6.9        78.2
     Capital
      expenditures     1.5          0.1          0.2          0.0         1.8
     Depreciation
      expense          0.7          0.0          0.1          0.0         0.8
 
     Nine Months Ended February 28, 2001
     Gross revenues  101.1         13.5         18.6          0.0       133.2
     Less: Inter-segment
      revenues        (1.0)        (0.2)         0.0          0.0        (1.2)
     Consolidated
      revenues       100.1         13.3         18.6          0.0       132.0
     Gross profit     13.5          0.1          1.2         (0.5)       14.3
     Operating income
      (loss)           5.3         (0.9)        (0.2)        (0.6)        3.6
     Income (loss)
      before income
      tax expense      5.5         (1.1)        (0.2)        (0.4)        3.8
     Net income (loss) 3.5         (0.7)        (0.1)        (0.3)        2.4
 
     Identifiable
      assets          60.3          5.6         11.5          2.8        80.2
     Capital
      expenditures     2.9          0.1          0.4          0.0         3.4
     Depreciation
      expense          2.7          0.1          0.3          0.0         3.1
 
     Nine Months Ended February 29, 2000
     Gross revenues   93.2          5.8         29.0         19.1       147.1
     Less: Inter-segment
      revenues        (0.1)         0.0          0.0         (0.7)       (0.8)
     Consolidated
      revenues        93.1          5.8         29.0         18.4       146.3
     Gross profit     12.4         (0.5)         3.2          0.4        15.5
     Operating income
      (loss)           5.6         (1.5)         1.7         (0.1)        5.7
     Income (loss)
      before income
      tax expense      5.6         (1.1)         1.6         (0.1)        6.0
     Net income (loss) 5.3         (1.1)         1.6         (0.1)        5.7
 
     Identifiable
      assets          56.1          1.4         13.8          6.9        78.2
     Capital
      expenditures     4.0          0.3          0.5          0.0         4.8
     Depreciation
      expense          1.9          0.2          0.2          0.3         2.6
 
 

SOURCE Matrix Service Company
    TULSA, Okla., April 10 /PRNewswire/ --
 Matrix Service Company (Nasdaq:   MTRX) announces operating results for the
 third quarter and for the nine months ended February 28, 2001.
 
     Three Months Ended February 28, 2001 Compared to Three Months Ended
 February 29, 2000
     Consolidated Operating Profit grew to $2.1 million for the third quarter
 of fiscal 2001 compared to $1.3 million for the same period last year, an
 increase of 59.8%.  The growth was driven by strong performance in Aboveground
 Storage Tank (AST) Services and improved performance in Construction Services.
     Consolidated Revenues grew slightly from $48.0 million for the three
 months ended February 28, 2000 to $49.1 million for the three months ended
 February 28, 2001.  Revenues grew 7.1% in AST Services due to an excellent
 business environment and over 261% in Construction Services, the result of a
 higher backlog of business entering fiscal year 2001 than in fiscal year 2000.
 These revenue increases were offset somewhat by lower revenues in Plant
 Services as more scheduled turnarounds took place in the third fiscal quarter
 last year versus this year.
     Gross margins on a consolidated basis increased from 9.3% for the three
 months ended February 29, 2000 to 11.7% for the three months ended
 February 28, 2001.  Gross margins in the AST Services Division increased from
 9.8% to 13.8% primarily due to an excellent mix of work, effective utilization
 of fixed costs, and negative gross margins on the Venezuela project
 experienced in the prior year.  Gross margins in the Plant Services Division
 decreased from 13.7% for the three months ended February 29, 2000 to 8.2% for
 the three months ended February 28, 2001 due to higher unabsorbed fixed costs
 in anticipation of higher turnaround activity in the fourth quarter of fiscal
 2001 and less than satisfactory performance on one large project.  Gross
 margins in the Construction Services Division were up significantly in the
 third quarter this fiscal year versus the third quarter last fiscal year due
 to higher volume in the current quarter relative to the Division's fixed cost
 structure and higher margin jobs in fiscal 2001 versus fiscal 2000.
     Net income for the quarter ended February 28, 2001 was $1.4 million or
 $0.17 per share fully diluted compared with net income of $1.2 million or
 $0.13 per share fully diluted for the same period of the prior year.  Net
 income for the quarter ended February 29, 2000 was positively impacted by the
 recognition of tax benefits for the Company's fiscal year 1999 losses, which
 offset all tax liability that would have been incurred in the third quarter of
 fiscal 2000 except for a 13.2% accrual for state income and federal
 alternative minimum taxes.  The impact in the third quarter ended
 February 29, 2000 was $0.3 million or $0.04 per share fully diluted.  As a
 result, on a tax adjusted basis, net income for the quarter ended
 February 28, 2001 increased from $0.09 per share fully diluted last year to
 $0.17 per share fully diluted this year, an increase of 88.9%.
 
     Nine Months Ended February 28, 2001 Compared to Nine Months Ended
 February 29, 2000
     Net income for the first nine months ended February 28, 2001 was
 $2.4 million or $0.28 per share fully diluted on revenues of $132.0 million,
 compared with net income of $5.7 million or $0.63 per share fully diluted on
 revenues of $146.3 million for the nine months ended February 29, 2000.  Net
 income for the nine months ended February 29, 2000 was positively impacted by
 the same tax anomaly that positively impacted the third quarter of fiscal year
 2000.  The impact for the nine months ended February 29, 2000 was $1.9 million
 or $0.21 per share fully diluted.
     Gross revenues in the Company's core business segments (AST Services,
 Plant Services and Construction Services) were $133.2 million for the nine
 months ended February 28, 2001 compared to $128.0 million for the nine months
 ended February 29, 2000.  The increase in revenues was attributed primarily to
 increases in AST Services of $7.9 million and Construction Services of
 $7.7 million offset by a decline in Plant Services of $10.4 million.  The
 revenue decline in Plant Services was primarily attributed to the timing of
 turnaround work this fiscal year versus last fiscal year.
     Gross revenues for Other Services (primarily the exited Municipal Water
 Services Division) declined from $19.1 million for the nine months ended
 February 29, 2000 to $0.0 million for the nine months ended February 28, 2001
 as both Brown Steel Contractors, Inc. and San Luis Tank and Piping
 Construction Company, Inc. were sold or liquidated in the prior year and
 existing contracts liquidated.
     Consolidated gross margins increased from 10.6% for the nine months ended
 February 29, 2000 to 10.8% for the nine months ended February 28, 2001.  Gross
 margins in the AST Services Division increased from 13.3% to 13.4%.  Gross
 margins in the Plant Services Division declined from 11.0% for the nine months
 ended February 29, 2000 to 6.5% for the nine months ended February 28, 2001
 due to higher unabsorbed fixed costs with lower volumes and performance
 difficulties with one third-quarter project.  Gross margins in the
 Construction Services Division were 0.7% for the first nine months of fiscal
 year 2001 versus (8.6%)% in the first nine months last year due to
 significantly higher volume relative to the Division's fixed cost structure in
 2001 versus 2000.
     Brad Vetal, President and Chief Executive Officer, said, "We are pleased
 with the performance of the Company in the third quarter and believe we are
 positioned for continued improvements in the fourth quarter and next year.  We
 anticipate that the Plant Services sector will have substantially better
 results in the fourth quarter of this fiscal year versus both the last quarter
 and last year's fourth quarter based on the current level of committed
 turnarounds.  The AST Services Division should continue its outstanding
 performance provided our client base continues to commit to repair and
 maintenance work at a pace similar to the current environment.  Although the
 Construction Services Division showed a substantial improvement over last
 year's performance, the current level of activity is still insufficient to
 generate returns that meet our expectations.  Although the current backlog is
 $16.3 million, delays in starting projects will negatively impact short-term
 results.  We have reduced substantially the fixed cost structure in this
 Division and will continue to examine how this sector best fits into our
 longer-term strategy.  We are committed to making this Division a profitable
 part of the Matrix operation.  As a result of the continued negative operating
 performance at the Construction Services Division and lower margins in the
 third quarter at the Plant Services Division, we believe that earnings from
 our core businesses for the full fiscal year 2001 will be similar to last
 year's results.  Consolidated revenues for the full fiscal year 2001 will be
 in the $181 million to $184 million range."
     This release contains certain forward-looking statements including
 statements preceded or modified by the words "anticipate", "expect",
 "believe", "should" and "will" and words of similar effect, concerning the
 Company's operations, economic performance and management's best judgment as
 to what may occur in the future.  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 identified in the
 Company's Quarterly Report (10-Q) for the quarters ended August 31, 2000,
 November 30, 2000 and February 28, 2001, and the Annual Report (10-K) for the
 year ended May 31, 2000, many of which are beyond the control of the Company,
 and any one of which, or a combination of which, could materially affect the
 results of the Company's operations.
     Matrix Service Company designs, constructs, maintains and provides
 specialized repair services and products for aboveground storage tanks
 principally for petroleum refineries, bulk storage terminals, pipelines and
 chemical plants.  The Company also provides general industrial construction
 and in-plant routine maintenance, process unit turnarounds and construction
 services.
     The Company is headquartered in Tulsa, Oklahoma with regional operating
 facilities located in Oklahoma, Texas, California, Michigan, Pennsylvania,
 Washington, and Delaware in the U.S. and Canada.
 
                             Matrix Service Company
                       Consolidated Statements of Income
                (in thousands, except share and per share data)
 
                            Three Months Ended          Nine Months Ended
                                (unaudited)                (unaudited)
                        February 28,  February 29,  February 28,  February 29,
                            2001          2000          2001          2000
 
     Revenues            $  49,135     $  48,033     $ 132,049     $ 146,277
     Cost of revenues       43,373        43,552       117,699       130,798
     Gross profit            5,762         4,481        14,350        15,479
     Selling, general and
      administrative
      expenses               3,617         3,064        10,462         9,425
     Goodwill and
      non-compete
      amortization              91           132           267           351
     Operating income        2,054         1,285         3,621         5,703
 
     Other income (expense):
       Interest expense       (119)          (28)         (248)         (271)
       Interest income          32             9           113            63
       Other                   230            98           278           521
     Income before income
      tax expense            2,197         1,364         3,764         6,016
     Provision for federal,
      state and Foreign
      income tax expense       747           180         1,317           350
 
     Net income          $   1,450     $   1,184     $   2,447     $   5,666
 
     Earnings per share
      of common stock:
       Basic             $    0.17     $    0.13     $    0.28     $    0.64
       Diluted           $    0.17     $    0.13     $    0.28     $    0.63
 
     Weighted average
      number of common
      shares:
       Basic             8,326,372     8,884,456     8,522,326     8,920,222
       Diluted           8,591,324     9,079,420     8,686,031     9,026,844
 
 
                             Matrix Service Company
                          Consolidated Balance Sheets
                                 (in thousands)
 
                                                     February 28,    May 31,
                                                         2001         2000
     ASSETS:                                        (unaudited)
 
     Current assets:
       Cash and cash equivalents                     $    1,414   $    1,806
       Accounts receivable, less allowances
        (February 28 - $30, May 31 - $150)               26,795       24,188
       Costs and estimated earnings in excess of
        billings on uncompleted contracts                11,951       11,029
       Inventories                                        2,330        3,049
       Income tax receivable                                 17          146
       Deferred income taxes                                988          ---
       Prepaid expenses                                   2,969        2,559
 
     Total current assets                                46,464       42,777
 
     Investment in joint venture                            366          279
 
     Property, plant and equipment at cost:
 
       Land and buildings                                 9,441        9,992
       Construction equipment                            19,187       17,892
       Transportation equipment                           7,416        7,220
       Furniture and fixtures                             4,773        4,399
       Construction in progress                           2,298        1,995
 
                                                         43,115       41,498
         Less accumulated depreciation                   22,053       20,211
 
     Net property, plant and equipment                   21,062       21,287
 
     Goodwill, net of accumulated amortization
      (February 28 - $2,345, May 31 - $2,092)            11,348       11,660
 
     Other assets                                         1,858        2,303
 
     Total assets                                    $   81,098   $   78,306
 
 
                             Matrix Service Company
                          Consolidated Balance Sheets
                                 (in thousands)
 
                                                      February 28,    May 31,
                                                          2001         2000
                                                      (unaudited)
 
     LIABILITIES AND STOCKHOLDERS' EQUITY:
 
     Current liabilities:
 
       Accounts payable                               $    6,630   $    8,759
       Billings on uncompleted contracts in
        excess of costs and estimated earnings             8,148        5,138
       Accrued insurance                                   2,546        3,112
       Accrued environmental reserves                        203          432
       Earnout payable                                       ---          968
       Income taxes payable                                  553          412
       Other accrued expenses                              3,881        4,560
       Current portion of long-term debt                     ---           22
 
     Total current liabilities                            21,961       23,403
 
       Long-term debt                                      4,195          ---
 
       Deferred income taxes                               1,657          ---
 
     Stockholders' equity:
 
       Common stock                                           96           96
       Additional paid-in capital                         51,596       51,596
       Retained earnings                                  10,144        7,785
       Accumulated other comprehensive income               (789)        (693)
 
                                                          61,047       58,784
       Less:  Treasury stock, at cost                     (7,762)      (3,881)
 
     Total stockholders' equity                           53,285       54,903
 
     Total liabilities and stockholders' equity       $   81,098   $   78,306
 
 
                             Matrix Service Company
                       3rd Quarter Results of Operations
                            ($ Amounts in millions)
 
                       AST    Construction      Plant        Other    Combined
                    Services     Services     Services     Services     Total
 
     Three Months Ended February 28, 2001
     Gross revenues   36.2          4.7          8.5          0.0        49.4
     Less: Inter-segment
      revenues        (0.2)        (0.1)         0.0          0.0        (0.3)
     Consolidated
      revenues        36.0          4.6          8.5          0.0        49.1
     Gross profit      5.0          0.0          0.7          0.0         5.7
     Operating income
      (loss)           2.2         (0.3)         0.2         (0.1)        2.0
     Income (loss)
      before income
      tax expense      2.4         (0.4)         0.2          0.0         2.2
     Net income (loss) 1.4         (0.2)         0.2          0.0         1.4
 
     Identifiable
      assets          60.3          5.6         11.5          2.8        80.2
     Capital
      expenditures     0.9          0.0          0.1          0.0         1.0
     Depreciation
      expense          0.8          0.1          0.1          0.0         1.0
 
     Three Months Ended February 29, 2000
     Gross revenues   33.8          1.3         11.7          1.5        48.3
     Less: Inter-segment
      revenues         0.0          0.0          0.0         (0.2)       (0.2)
     Consolidated
      revenues        33.8          1.3         11.7          1.3        48.1
     Gross profit      3.3         (0.5)         1.6          0.1         4.5
     Operating income
      (loss)           1.0         (0.8)         1.1          0.0         1.3
     Income (loss)
      before income
      tax expense      1.0         (0.8)         1.1          0.0         1.3
     Net income (loss) 0.9         (0.8)         1.1          0.0         1.2
 
     Identifiable
      assets          56.1          1.4         13.8          6.9        78.2
     Capital
      expenditures     1.5          0.1          0.2          0.0         1.8
     Depreciation
      expense          0.7          0.0          0.1          0.0         0.8
 
     Nine Months Ended February 28, 2001
     Gross revenues  101.1         13.5         18.6          0.0       133.2
     Less: Inter-segment
      revenues        (1.0)        (0.2)         0.0          0.0        (1.2)
     Consolidated
      revenues       100.1         13.3         18.6          0.0       132.0
     Gross profit     13.5          0.1          1.2         (0.5)       14.3
     Operating income
      (loss)           5.3         (0.9)        (0.2)        (0.6)        3.6
     Income (loss)
      before income
      tax expense      5.5         (1.1)        (0.2)        (0.4)        3.8
     Net income (loss) 3.5         (0.7)        (0.1)        (0.3)        2.4
 
     Identifiable
      assets          60.3          5.6         11.5          2.8        80.2
     Capital
      expenditures     2.9          0.1          0.4          0.0         3.4
     Depreciation
      expense          2.7          0.1          0.3          0.0         3.1
 
     Nine Months Ended February 29, 2000
     Gross revenues   93.2          5.8         29.0         19.1       147.1
     Less: Inter-segment
      revenues        (0.1)         0.0          0.0         (0.7)       (0.8)
     Consolidated
      revenues        93.1          5.8         29.0         18.4       146.3
     Gross profit     12.4         (0.5)         3.2          0.4        15.5
     Operating income
      (loss)           5.6         (1.5)         1.7         (0.1)        5.7
     Income (loss)
      before income
      tax expense      5.6         (1.1)         1.6         (0.1)        6.0
     Net income (loss) 5.3         (1.1)         1.6         (0.1)        5.7
 
     Identifiable
      assets          56.1          1.4         13.8          6.9        78.2
     Capital
      expenditures     4.0          0.3          0.5          0.0         4.8
     Depreciation
      expense          1.9          0.2          0.2          0.3         2.6
 
 SOURCE  Matrix Service Company