Matrix Service Company Announces Results For The First Quarter Ended September 30, 2011

TULSA, Okla., Nov. 2, 2011 /PRNewswire/ -- Matrix Service Company (Nasdaq: MTRX) today reported its financial results for the first quarter ended September 30, 2011.

Revenues for the first quarter ended September 30, 2011 were $169.3 million, an increase of $17.5 million, or 11.5%, from consolidated revenues of $151.8 million in the same period a year earlier.  Net income for the first quarter of fiscal 2012 was $3.5 million, or $0.13 per fully diluted share.  In the comparable period a year earlier, net income was $3.1 million, or $0.12 per fully diluted share.

Consolidated gross profit was $18.1 million in the first quarter of fiscal 2012 compared to $15.7 million in the same period a year earlier. The increase of $2.4 million was due to higher revenues and improved gross margins which increased to 10.7% in the first quarter of fiscal 2012 compared to 10.3% the same period a year earlier.  Selling, general and administrative expenses were $11.5 million, or 6.8% of revenue, in the first quarter of fiscal 2012 compared to $10.6 million, or 7.0% of revenue, in the first quarter of fiscal 2011.  

John R. Hewitt, President and CEO of Matrix Service Company, said "The first quarter results were in line with our expectations. We are currently seeing considerable bid activity in our key markets and have steadily increased our backlog. Overall, I am very pleased with the performance of the Company and the strong outlook for the balance of the fiscal year."

Backlog

Consolidated backlog increased $21.5 million, or 5.3%, to $426.6 million as of September 30, 2011 compared to $405.1 million as of June 30, 2011.  The Company continues to see strong bid flow and booked $190.8 million of new work in the first quarter of fiscal 2012.  Backlog has increased in three consecutive quarters and is at its highest level since the third quarter of fiscal 2009.

Financial Position

At September 30, 2011, Matrix Service's cash balance was $38.7 million. The Company did not borrow under its revolving credit facility during the three months ended September 30, 2011.

Share Buyback

The Company purchased approximately 517,000 shares of Matrix Service common stock in the first quarter of fiscal 2012 for $4.9 million and an additional 167,000 shares in early October 2011 for $1.5 million.  Under the Company's stock buyback plan, the Company has the authority to purchase an additional 2.3 million shares through the end of calendar 2012.  The share buyback was financed with cash on hand.

Earnings Guidance

The Company is increasing the lower end of its revenue guidance for fiscal 2012 from the previously announced $650 million to $675 million and is increasing the lower end of its earnings guidance from the previously announced $0.75 per fully diluted share to $0.80 per fully diluted share.  The upper end of our fiscal 2012 revenue and earnings guidance is unchanged at $725 million and $0.95 per fully diluted share, respectively.

Conference Call Details

In conjunction with the press 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 November 3, 2011 and will be simultaneously broadcast live over the Internet which can be accessed at the Company's website at www.matrixservice.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, construction and repair and maintenance services principally to the petroleum, power, bulk storage terminal, pipeline and industrial gas industries.

The Company is headquartered in Tulsa, Oklahoma, with regional operating facilities located 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.

For more information, please contact:


Matrix Service Company

Kevin Cavanah

Vice President and CFO

T: 918-838-8822

E: kcavanah@matrixservice.com



Matrix Service Company


Condensed Consolidated Statements of Income


(In thousands, except per share data)


(unaudited)



Three Months Ended


September 30,


September 30,


2011


2010





Revenues

$  169,321


$  151,838

Cost of revenues

151,228


136,136





Gross profit

18,093


15,702

Selling, general and administrative expenses

11,483


10,589





Operating income

6,610


5,113





Other income (expense):




   Interest expense

(277)


(170)

   Interest income

3


13

   Other

(676)


27





Income before income tax expense

5,660


4,983

Provision for federal, state and foreign income taxes

2,151


1,894





Net income

$  3,509


$  3,089





Basic earnings per common share

$  0.13


$  0.12

Diluted earnings per common share

$  0.13


$  0.12





Weighted average common shares outstanding:




  Basic

26,400


26,342

  Diluted

26,722


26,549






Matrix Service Company


Condensed Consolidated Balance Sheets


(In thousands)


(unaudited)


September 30,


June 30,


2011


2011



Assets








Current assets:




  Cash and cash equivalents

$  38,685


$  59,357

  Accounts receivable, less allowances (September 30, 2011 - $1,395
        and June 30, 2011 - $1,428)

104,481


103,483

  Costs and estimated earnings in excess of billings
        on uncompleted contracts

50,501


40,056

  Inventories

2,328


2,249

  Income tax receivable

-


399

  Deferred income taxes

6,295


5,607

  Other current assets

3,989


4,399

Total current assets

206,279


215,550





Property, plant and equipment at cost:




  Land and buildings

28,335


28,287

  Construction equipment

55,701


55,272

  Transportation equipment

23,037


21,690

  Furniture and fixtures

15,465


15,442

  Construction in progress

2,694


2,465


125,232


123,156

  Accumulated depreciation

(71,385)


(69,845)


53,847


53,311





Goodwill

28,834


29,058

Other intangible assets

6,840


6,953

Other assets

3,473


1,564





Total assets

$  299,273



$   306,436








Matrix Service Company


Condensed Consolidated Balance Sheets


(In thousands, except share data)


(unaudited)


September 30,


June 30,


2011


2011



Liabilities and stockholders' equity








Current liabilities:




  Accounts payable

$  44,534


$   36,377

  Billings on uncompleted contracts in
excess of costs and estimated earnings

25,542


35,485

  Accrued insurance

7,990


7,514

  Accrued wages and benefits

11,718


18,099

  Income tax payable

2,678


-

     Current capital lease obligation

176


262

  Other accrued expenses

2,371


2,401

Total current liabilities

95,009


100,138





  Long-term capital lease obligation

16


38

  Deferred income taxes

5,209


5,789

  Acquisition payable

800


800

Total liabilities

101,034


106,765





Commitments and contingencies

-


-





Stockholders' equity:




  Common stock - $.01 par value; 60,000,000 shares authorized;
       27,888,217 shares issued as of September 30, 2011, and June 30, 2011

279


279

  Additional paid-in capital

114,561


113,686

  Retained earnings

103,740


100,231

  Accumulated other comprehensive income

477


1,436


219,057


215,632

  Less:  Treasury stock, at cost –1,898,263 shares as of
       September 30, 2011, and 1,417,539 shares as of June 30, 2011

(20,818)


(15,961)





Total stockholders' equity

198,239


199,671





Total liabilities and stockholders' equity

$  299,273


$  306,436





Results of Operations

(in thousands)



Construction

Services


Repair and

Maintenance

Services




Other




Total



Three Months Ended September 30, 2011








Gross revenues

$  102,865


$  70,022


$  -


$  172,887

Less: Inter-segment revenues

3,268


298


-


3,566

Consolidated revenues

99,597


69,724


-


169,321

Gross profit

10,871


7,222


-


18,093

Operating income

3,910


2,700


-


6,610

Segment assets

146,288


106,049


46,936


299,273

Capital expenditures

1,786


691


511


2,988

Depreciation and amortization expense

1,671


1,155


-


2,826









Three Months Ended September 30, 2010








Gross revenues

$  99,620


$  54,431


$  -


$  154,051

Less: Inter-segment revenues

2,106


107


-


2,213

Consolidated revenues

97,514


54,324


-


151,838

Gross profit

11,344


4,358


-


15,702

Operating income

4,779


334


-


5,113

Segment assets

147,082


97,252


48,246


292,580

Capital expenditures

872


238


1,149


2,259

Depreciation and amortization expense

1,549


1,249


-


2,798






Segment revenue from external customers by market is as follows:




Construction

Services


Repair and

Maintenance

Services




Total


(In thousands)

Three Months Ended September 30, 2011






Aboveground Storage Tanks

$    58,654


$    24,599


$    83,253

Downstream Petroleum

19,622


31,888


51,510

Electrical and Instrumentation

15,038


13,237


28,275

Specialty

6,283


-


6,283

Total

$  99,597


$  69,724


$  169,321







Three Months Ended September 30, 2010






Aboveground Storage Tanks

$  40,780


$  21,232


$    62,012

Downstream Petroleum

20,927


22,406


43,333

Electrical and Instrumentation

29,922


10,686


40,608

Specialty

5,885


-


5,885

Total

$  97,514


$  54,324


$  151,838




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.

The following table provides a summary of changes in our backlog for the three months ended September 30, 2011:



Construction

Services


Repair and

Maintenance

Services


Total



(In thousands)

Backlog as of June 30, 2011


$  225,733


$    179,385


$   405,118

New awards


124,996


65,807


190,803

Revenue recognized


(99,597)


(69,724)


(169,321)

Backlog as of September 30, 2011


$  251,132


$  175,468


$  426,600




SOURCE Matrix Service Company

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