TULSA, Okla., Sept. 28 /PRNewswire-FirstCall/ -- Matrix Service Co. today reported its financial results for the fourth quarter and fiscal year ended June 30, 2010.
Revenues for the fourth quarter ended June 30, 2010 were $140.7 million compared to $179.9 million in fiscal 2009. The decrease was primarily due to a lower overall level of spending by customers caused by weak industry conditions. Net income for the fourth quarter of fiscal 2010, adjusted for the charges discussed below, was $0.9 million, or $0.03 per fully diluted share(1). Net income was $6.7 million, or $0.26 per fully diluted share, in the comparable period a year earlier.
Fiscal year 2010 revenues were $550.8 million compared to $689.7 million in fiscal 2009. The decrease was primarily due to a lower overall level of spending in our core markets due to weak industry conditions that became evident in the third quarter of fiscal year 2009. Net income for fiscal 2010, adjusted for the charges discussed below, was $14.4 million, or $0.54 per fully diluted share (1). Net income was $30.6 million, or $1.16 per fully diluted share, in fiscal 2009.
Adjusted results for fiscal year 2010 exclude the following charges: -- Loss on projects at a Gulf Coast site - We recorded a pretax charge of $4.6 million in the fourth quarter of fiscal 2010 and $5.4 million for the fiscal year ended June 30, 2010 caused by increased cost estimates on a series of projects at a customer site. -- California pay practice class action lawsuits - We recorded a pretax charge of $3.1 million in the fourth quarter of fiscal 2010 and $5.1 million for the fiscal year ended June 30, 2010 related to the settlement of this legal matter. -- Claims receivable write-down - We recorded pretax charges totaling $2.9 million in fiscal 2010 caused by a write-down of the value of claim receivables acquired in the February 2009 acquisition of S.M. Electric Company, Inc. ("SME"). -- Claims receivable collection costs - Costs incurred to collect the claims acquired in the SME acquisition were higher than estimated and resulted in a pretax charge of $0.4 million in the fourth quarter of fiscal 2010 and $1.9 million for the fiscal year ended June 30, 2010.
GAAP net income (loss), fully reflecting these charges, was ($4.2) million, or ($0.16) per fully diluted share for the fourth quarter fiscal 2010, and $4.9 million, or $0.18 for the fiscal year ended June 30, 2010.
Backlog
Consolidated backlog increased $50.8 million, or 16.8% to $353.2 million as of June 30, 2010 compared to $302.4 million as of March 31, 2010.
Financial Position
At June 30, 2010, Matrix Service's cash balance was $50.9 million. The Company did not borrow under its revolving credit facility during the twelve months ended June 30, 2010.
Earnings Guidance
"We are pleased with the recent backlog growth and are optimistic given the improvements we are seeing in our core markets," said Michael J. Bradley, President and CEO of Matrix Service Company. "In fiscal 2011, our focus will be on growing profitable backlog, maintaining a strong financial position and continuing our cost optimization efforts as part of our long-term growth strategy. Our earnings for fiscal 2011 is expected to be in a range from $0.60 per fully diluted share to $0.80 per fully diluted share."
Fraud Investigation Update
The Company will provide an update on its investigation into recently discovered fraudulent activities by current and former employees in one operating location in the United States in its Annual Report on Form 10-K to be filed with the Securities and Exchange Commission.
(1) Adjusted net income is a non-GAAP financial measure that excludes the impact of the charges specifically discussed in this earnings release and the related earnings conference call. Management believes that results excluding these items are more meaningful and comparable to estimates provided by securities analysts and are useful in comparing operational trends of Matrix Service Company relative to its competitors. A reconciliation to the applicable GAAP measures is included at the end of this press release.
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 5:00 p.m. (Eastern) / 4:00 p.m. (Central) today and will be simultaneously broadcast live over the Internet at http://www.matrixservice.com/ or http://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 Vice President and CFO T: 918-838-8822 E: telong@matrixservice.com Matrix Service Company Consolidated Statements of Income (In thousands, except per share data) Twelve Months Ended One Month ------------------- Ended ----- June 30, May 31, May 31, June 30, 2010 2009 2008 2009 ---- ---- ---- ---- Revenues $550,814 $689,720 $731,301 $45,825 Cost of revenues 497,892 595,397 656,184 40,676 ------- ------- ------- ------ Gross profit 52,922 94,323 75,117 5,149 Selling, general and administrative expenses 45,169 47,006 40,566 3,570 ------ ------ ------ ----- Operating income 7,753 47,317 34,551 1,579 Other income (expense): Interest expense (672) (563) (890) (91) Interest income 79 330 82 17 Other 250 675 (27) 98 --- --- --- --- Income before income tax expense 7,410 47,759 33,716 1,603 Provision for federal, state and foreign income taxes 2,534 17,170 12,302 609 ----- ------ ------ --- Net income $4,876 $30,589 $21,414 $994 ====== ======= ======= ==== Basic earnings per common share $0.19 $1.17 $0.81 $0.04 ===== ===== ===== ===== Diluted earnings per common share $0.18 $1.16 $0.80 $0.04 ===== ===== ===== ===== Weighted average common shares outstanding: Basic 26,275 26,121 26,427 26,192 Diluted 26,499 26,390 26,875 26,434 Matrix Service Company Consolidated Balance Sheets (In thousands) June 30, May 31, 2010 2009 --- --- Assets Current assets: Cash and cash equivalents $50,899 $34,553 Accounts receivable, less allowances (2010 -$1,404; 2009 -$710) 87,327 122,283 Costs and estimated earnings in excess of billings on uncompleted contracts 40,920 35,619 Inventories 3,451 4,926 Income tax receivable 1,779 647 Deferred income taxes 8,073 4,843 Prepaid expenses 4,557 3,935 Other current assets 1,519 3,044 ----- ----- Total current assets 198,525 209,850 Property, plant and equipment, at cost: Land and buildings 27,859 27,319 Construction equipment 52,086 53,925 Transportation equipment 19,192 17,971 Furniture and fixtures 14,358 14,527 Construction in progress 1,251 812 ----- --- 114,746 114,554 Accumulated depreciation (61,817) (55,745) ------- ------- 52,929 58,809 Goodwill 27,216 25,768 Other intangible assets 4,141 4,571 Other assets 1,997 4,453 ----- ----- Total assets $284,808 $303,451 ======== ======== Matrix Service Company Consolidated Balance Sheets (continued) (In thousands, except share data) June 30, May 31, 2010 2009 ---- ---- Liabilities and stockholders' equity Current liabilities: Accounts payable $44,769 $48,668 Billings on uncompleted contracts in excess of costs and estimated earnings 28,877 51,305 Accrued insurance 8,257 7,612 Accrued wages and benefits 13,538 16,566 Current capital lease obligation 772 1,039 Other accrued expenses 6,572 2,200 ----- ----- Total current liabilities 102,785 127,390 Long-term capital lease obligation 259 850 Deferred income taxes 4,179 4,822 Commitments and contingencies - - Stockholders' equity: Common stock -$.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of June 30, 2010 and May 31, 2009 279 279 Additional paid-in capital 111,637 110,272 Retained earnings 81,252 75,393 Accumulated other comprehensive income 495 596 --- --- 193,663 186,540 Less treasury stock, at cost - 1,546,512 and 1,696,517 shares as of June 30, 2010 and May 31, 2009 (16,078) (16,151) ------- ------- Total stockholders' equity 177,585 170,389 ------- ------- Total liabilities and stockholders' equity $284,808 $303,451 ======== ======== Results of Operations (In thousands) Repair and Other Total Construction Maintenance ----- Services Services -------- -------- Three Months Ended June 30, 2010 Gross revenues $89,453 $54,048 $- $143,501 Less: Inter-segment revenues 2,773 2 - 2,775 ----- --- --- ----- Consolidated revenues 86,680 54,046 - 140,726 Gross profit 1,287 2,483 - 3,770 Operating income (loss) (5,195) (1,494) - (6,689) Segment assets 131,079 93,224 60,505 284,808 Capital expenditures 60 151 1,032 1,243 Depreciation and amortization expense 1,602 1,269 - 2,871 Three Months Ended May 31, 2009 Gross revenues $106,171 $79,393 $- $185,564 Less: Inter-segment revenues 5,685 8 - 5,693 ----- --- --- ----- Consolidated revenues 100,486 79,385 - 179,871 Gross profit 13,821 9,501 - 23,322 Operating income 6,360 4,710 - 11,070 Segment assets 154,817 112,929 35,705 303,451 Capital expenditures 225 491 649 1,365 Depreciation and amortization expense 1,928 1,215 - 3,143 Twelve Months Ended June 30, 2010 Gross revenues $333,937 $229,774 $- $563,711 Less: Inter-segment revenues 12,683 214 - 12,897 ------ --- --- ------ Consolidated revenues 321,254 229,560 - 550,814 Gross profit 34,374 18,548 - 52,922 Operating income 5,957 1,796 - 7,753 Segment assets 131,079 93,224 60,505 284,808 Capital expenditures 625 1,233 3,444 5,302 Depreciation and amortization expense 6,578 5,173 - 11,751 Twelve Months Ended May 31, 2009 Gross revenues $422,223 $295,579 $- $717,802 Less: Inter-segment revenues 26,983 1,099 - 28,082 ------ ----- --- ------ Consolidated revenues 395,240 294,480 - 689,720 Gross profit 50,959 43,364 - 94,323 Operating income 22,111 25,206 - 47,317 Segment assets 154,817 112,929 35,705 303,451 Capital expenditures 2,586 2,316 5,081 9,983 Depreciation and amortization expense 6,271 4,489 - 10,760 One Month Ended June 30, 2009 Gross revenues $29,224 $17,297 $- $46,521 Less: Inter-segment revenues 693 3 - 696 --- --- --- --- Consolidated revenues 28,531 17,294 - 45,825 Gross profit 3,251 1,898 - 5,149 Operating income 1,141 438 - 1,579 Capital expenditures 121 64 163 348 Depreciation and amortization expense 543 451 - 994 Segment Revenue from External Customers by Industry Type (In thousands) Construction Repair and Total Services Maintenance ----- -------- Services Three Months Ended June 30, 2010 Aboveground Storage Tanks $40,147 $21,261 $61,408 Downstream Petroleum 17,753 25,683 43,436 Electrical and Instrumentation 24,273 7,102 31,375 Specialty 4,507 - 4,507 ----- --- ----- Total $86,680 $54,046 $140,726 ======= ======= ======== Three Months Ended May 31, 2009 Aboveground Storage Tanks $40,049 $29,950 $69,999 Downstream Petroleum 29,962 41,545 71,507 Electrical and Instrumentation 21,808 7,890 29,698 Specialty 8,667 - 8,667 ----- --- ----- Total $100,486 $79,385 $179,871 ======== ======= ======== Twelve Months Ended June 30, 2010 Aboveground Storage Tanks $135,883 $91,085 $226,968 Downstream Petroleum 87,003 114,976 201,979 Electrical and Instrumentation 71,999 23,499 95,498 Specialty 26,369 - 26,369 ------ --- ------ Total $321,254 $229,560 $550,814 ======== ======== ======== Twelve Months Ended May 31, 2009 Aboveground Storage Tanks $177,821 $166,348 $344,169 Downstream Petroleum 144,179 106,149 250,328 Electrical and Instrumentation 45,874 21,983 67,857 Specialty 27,366 - 27,366 ------ --- ------ Total $395,240 $294,480 $689,720 ======== ======== ======== One Month Ended June 30, 2009 Aboveground Storage Tanks $10,267 $8,634 $18,901 Downstream Petroleum 8,593 7,039 15,632 Electrical and Instrumentation 7,459 1,621 9,080 Specialty 2,212 - 2,212 ----- --- ----- Total $28,531 $17,294 $45,825 ======= ======= ======= 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 summary of changes in our backlog for the three months ended June 30, 2010:
Construction Repair and Total Services Maintenance ----- -------- Services -------- (In thousands) Backlog as of March 31, 2010 $150,413 $152,009 $302,422 New backlog awarded 133,942 57,578 191,520 Backlog cancelled - - - Revenue recognized on contracts in backlog (86,680) (54,046) (140,726) ------- ------- -------- Backlog as of June 30, 2010 $197,675 $155,541 $353,216 ======== ======== ========
The following table provides a summary of changes in our backlog for the twelve months ended June 30, 2010:
Construction Repair and Total Services Maintenance ----- -------- Services -------- (In thousands) Backlog as of June 30, 2009 $224,260 $167,837 $392,097 New backlog awarded 312,907 217,264 530,171 Backlog cancelled (18,238) - (18,238) Revenue recognized on contracts in backlog (321,254) (229,560) (550,814) -------- -------- -------- Backlog as of June 30, 2010 $197,675 $155,541 $353,216 ======== ======== ======== Reconciliation of Non-GAAP Financial Measures - Quarter and Year Ended June 30, 2010 Year Ended June 30, 2010 ------------------------ Construction Services --------------------- Special Items As Reported (1) Adjusted (In thousands, except percentages and earnings per share) Gross profit $34,374 $7,671 (2) $42,045 Gross margin 10.7% 13.4% Operating income $5,957 $12,528 (3) $18,485 Net income Earnings per share - diluted Year Ended June 30, 2010 ------------------------ Repair and Maintenance Services ------------------------------- Special As Reported Items (1) Adjusted (In thousands, except percentages and earnings per share) Gross profit $18,548 $2,793 (4) $21,341 Gross margin 8.1% 9.3% Operating income $1,796 $2,816 (4) $4,612 Net income Earnings per share - diluted Year Ended June 30, 2010 ------------------------ Consolidated ------------ Special Items As Reported (1) Adjusted (In thousands, except percentages and earnings per share) Gross profit $52,922 $10,464 $63,386 Gross margin 9.6% 11.7% Operating income $7,753 $15,344 $23,097 Net income $4,876 $9,513 $14,389 Earnings per share - diluted $0.18 $0.36 $0.54 Quarter Ended June 30, 2010 --------------------------- Construction Services --------------------- Special Items As Reported (1) Adjusted (In thousands, except percentages and earnings per share) Gross profit $1,287 $6,045 (5) $7,332 Gross margin 1.5% 8.4% Operating income(loss) $(5,195) $6,485 (6) $1,290 Net income(loss) Earnings(loss) per share - diluted Quarter Ended June 30, 2010 --------------------------- Repair and Maintenance Services ------------------------------- Special As Reported Items (1) Adjusted (In thousands, except percentages and earnings per share) Gross profit $2,482 $1,716 (4) $4,198 Gross margin 4.6% 7.8% Operating income(loss) $(1,494) $1,716 (4) $222 Net income(loss) Earnings(loss) per share - diluted Quarter Ended June 30, 2010 --------------------------- Consolidated ------------ Special Items As Reported (1) Adjusted (In thousands, except percentages and earnings per share) Gross profit $3,769 $7,761 $11,530 Gross margin 2.7% 8.1% Operating income(loss) $(6,689) $8,201 $1,512 Net income(loss) $(4,229) $5,085 $856 Earnings(loss) per share - diluted $(0.16) $0.19 $0.03 (1) These items are referred to as "Non-routine Charges" and "Significant Loss on Projects" in Part II, Item 7. of the June 30, 2010 Annual Report on Form 10-K filed with the Securities and Exchange Commission. (2) Includes $5.4 million related to the loss on projects at a Gulf Coast site and $2.3 million related to the California pay practice class action lawsuits. (3) Includes $5.4 million related to the loss on projects at a Gulf Coast site, $2.3 million related to the California pay practice class action lawsuits, $2.9 million related to a claims receivable write-down and $1.9 million for excess collection costs on claims receivable. (4) Charge related to California pay practice class action lawsuits. (5) Includes $4.6 million related to the loss on projects at a Gulf Coast site and $1.4 million related to the California pay practice class action lawsuits. (6) Includes $4.6 million related to the loss on projects at a Gulf Coast site, $1.4 million related to the California pay practice class action lawsuits and $0.4 million for excess collection costs on claims receivable.
Matrix Service Company
CONTACT: Tom Long, Vice President and CFO of Matrix Service Company,
+1-918-838-8822, telong@matrixservice.com
Web Site: http://www.matrixservice.com/
