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8-K - FORM 8-K - MATRIX SERVICE COd434766d8k.htm

Exhibit 99

 

LOGO

MATRIX SERVICE COMPANY ANNOUNCES RESULTS FOR THE FIRST QUARTER ENDED SEPTEMBER 30, 2012

First Quarter Highlights:

 

   

Backlog at record $534.6 million with project awards of $246.8 million

 

   

Quarterly revenues were $209.6 million, an increase of 23.8%

 

   

Fully diluted earnings per share increase 38.5% to $0.18

 

   

Company reaffirms fiscal 2013 earnings and revenue guidance

TULSA, OK – November 8, 2012 – Matrix Service Company (Nasdaq: MTRX) today reported its financial results for the first quarter ended September 30, 2012. In the quarter, the Company experienced strong growth in new contract awards resulting in record backlog of $534.6 million as of September 30, 2012. The Company’s strategic investments and business development efforts have resulted in significant new transmission and distribution projects and emerging opportunities in the mining and minerals market. In addition to the strategic growth areas, our core business continues to perform well, resulting in record quarterly revenue of $209.6 million.

John R. Hewitt, President and CEO of Matrix Service Company, said "Our performance in the quarter is consistent with our strategic focus and we are seeing significant business activity across all operating segments. Consistent with our vision, we continue to invest in strategic end markets, resulting in exciting new contract awards and greater diversity in our business.”

Financial Results

Revenues for the first quarter ended September 30, 2012 were $209.6 million compared to $169.3 million in the same period a year earlier, an increase of $40.3 million, or 23.8%. Net income for the first quarter of fiscal 2013 was $4.7 million, or $0.18 per fully diluted share. In the same period a year earlier the Company earned $3.5 million, or $0.13 per fully diluted share.

Consolidated gross profit was $22.2 million in the first quarter of fiscal 2013 compared to $18.1 million in the same period a year earlier primarily due to higher revenues. Revenues increased in our Oil Gas & Chemical, Electrical Infrastructure and Storage Solutions segments by $21.3 million, $11.3 million and$9.3 million, respectively. Gross margins were 10.6% in the first quarter of fiscal 2013 versus 10.7% in the first quarter of fiscal 2012. In line with our plan, selling, general and administrative costs increased by $2.8 million, or 24.3%. This increase is primarily related to our planned investments in the branding initiative and strategic growth areas. In addition, the first quarter results include a bad debt charge of $0.7 million. SG&A expense as a percentage of revenue remained unchanged at 6.8%.


Backlog

Backlog at September 30, 2012 totaled $534.6 million, an increase of $37.1 million, or 7.5%, compared to the backlog at June 30, 2012 of $497.5 million. Project awards in the first quarter totaled $246.8 million.

Financial Position

At September 30, 2012, the Company’s cash balance was $17.2 million. The cash balance along with availability under the senior credit facility gives the Company liquidity of $125.6 million. The cash balance at September 30, 2012, which has increased to approximately $50 million at the end of October, was lower than the previous quarter due to a high volume of time and material work and short-term maintenance projects at the end of the first quarter.

Stock Repurchase Program

On November 6, 2012 the Board of Directors approved an extension of the Company’s Stock Repurchase Program which was set to expire on December 31, 2012. Under the extension, which expires at the end of calendar year 2014, the Company has authorization to purchase up to 2.1 million shares.

Earnings Guidance

The Company is reaffirming fiscal 2013 guidance of revenue between $800 million and $850 million and earnings between $0.83 and $0.98 per fully diluted share.

Conference Call Details

In conjunction with the earnings release, Matrix Service Company 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 Friday, November 9, 2012 and will be simultaneously broadcast live over the Internet which can be accessed at the Company’s website at www.matrixservicecompany.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, fabrication, construction and repair and maintenance services to the Electrical Infrastructure, Oil Gas & Chemical, Storage Solutions and Industrial markets.

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

Vice President and CFO

T: 918-838-8822

Email:kcavanah@matrixservicecompany.com


Matrix Service Company

Consolidated Statements of Income

(In thousands, except per share data)

 

     Three Months Ended  
     September 30,     September 30,  
     2012     2011  

Revenues

   $ 209,608      $ 169,321   

Cost of revenues

     187,364        151,228   
  

 

 

   

 

 

 

Gross profit

     22,244        18,093   

Selling, general and administrative expenses

     14,320        11,483   
  

 

 

   

 

 

 

Operating income

     7,924        6,610   

Other income (expense):

    

Interest expense

     (183     (277

Interest income

     8        3   

Other

     57        (676
  

 

 

   

 

 

 

Income before income tax expense

     7,806        5,660   

Provision for federal, state and foreign income taxes

     3,122        2,151   
  

 

 

   

 

 

 

Net income

   $ 4,684      $ 3,509   
  

 

 

   

 

 

 

Basic earnings per common share

   $ 0.18      $ 0.13   

Diluted earnings per common share

   $ 0.18      $ 0.13   

Weighted average common shares outstanding:

    

Basic

     25,788        26,400   

Diluted

     26,148        26,722   


Matrix Service Company

Consolidated Balance Sheets

(In thousands)

 

     September 30,     June 30,  
     2012     2012  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 17,170      $ 39,726   

Accounts receivable, less allowances (September 30, 2012 — $1,906 and June 30, 2012 — $1,201)

     156,844        108,034   

Costs and estimated earnings in excess of billings on uncompleted contracts

     77,598        68,562   

Inventories

     3,267        2,482   

Deferred income taxes

     5,760        6,024   

Other current assets

     5,560        5,688   
  

 

 

   

 

 

 

Total current assets

     266,199        230,516   

Property, plant and equipment at cost:

    

Land and buildings

     29,357        28,846   

Construction equipment

     60,207        59,176   

Transportation equipment

     26,027        25,865   

Office equipment and software

     17,391        16,892   

Construction in progress

     5,984        2,910   
  

 

 

   

 

 

 
     138,966        133,689   

Accumulated depreciation

     (81,407     (78,814
  

 

 

   

 

 

 
     57,559        54,875   

Goodwill

     28,763        28,675   

Other intangible assets

     6,392        6,504   

Other assets

     3,937        2,565   
  

 

 

   

 

 

 

Total assets

   $ 362,850      $ 323,135   
  

 

 

   

 

 

 


Matrix Service Company

Consolidated Balance Sheets (continued)

(In thousands, except share data)

 

     September 30,     June 30,  
     2012     2012  

Liabilities and stockholders’ equity

    

Current liabilities:

    

Accounts payable

   $ 61,664      $ 48,931   

Billings on uncompleted contracts in excess of costs and estimated earnings

     45,637        30,293   

Accrued wages and benefits

     15,281        15,298   

Accrued insurance

     7,055        6,912   

Income taxes payable

     3,238        1,115   

Acquisition payable

     400        400   

Other accrued expenses

     3,334        3,014   
  

 

 

   

 

 

 

Total current liabilities

     136,609        105,963   

Deferred income taxes

     6,063        6,075   

Long term debt

     3,355        —     
  

 

 

   

 

 

 

Total liabilities

     146,027        112,038   

Commitments and contingencies

    

Stockholders’ equity:

    

Common stock — $.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of September 30, 2012, and June 30, 2012

     279        279   

Additional paid-in capital

     117,297        116,693   

Retained earnings

     122,103        117,419   

Accumulated other comprehensive income

     1,238        771   
  

 

 

   

 

 

 
     240,917        235,162   

Less: Treasury stock, at cost — 2,051,764 shares as of September 30, 2012, and 2,141,990 shares as of June 30, 2012

     (24,094     (24,065
  

 

 

   

 

 

 

Total stockholders’ equity

     216,823        211,097   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 362,850      $ 323,135   
  

 

 

   

 

 

 


Results of Operations

(In thousands)

 

     Three Months Ended  
     September 30,
2012
    September 30,
2011
 

Gross revenues

    

Electrical Infrastructure

   $ 33,270      $ 22,012   

Oil Gas & Chemical

     67,097        45,999   

Storage Solutions

     105,418        95,922   

Industrial

     4,975        6,575   
  

 

 

   

 

 

 

Total gross revenues

   $ 210,760      $ 170,508   
  

 

 

   

 

 

 

Less: Inter-segment revenues

    

Electrical Infrastructure

   $ —        $ —     

Oil Gas & Chemical

     —          175   

Storage Solutions

     1,152        1,012   

Industrial

     —          —     
  

 

 

   

 

 

 

Total inter-segment revenues

   $ 1,152      $ 1,187   
  

 

 

   

 

 

 

Consolidated revenues

    

Electrical Infrastructure

   $ 33,270      $ 22,012   

Oil Gas & Chemical

     67,097        45,824   

Storage Solutions

     104,266        94,910   

Industrial

     4,975        6,575   
  

 

 

   

 

 

 

Total consolidated revenues

   $ 209,608      $ 169,321   
  

 

 

   

 

 

 

Gross profit (loss)

    

Electrical Infrastructure

   $ 4,706      $ 2,785   

Oil Gas & Chemical

     7,867        4,347   

Storage Solutions

     9,969        10,387   

Industrial

     (298     574   
  

 

 

   

 

 

 

Total gross profit

   $ 22,244      $ 18,093   
  

 

 

   

 

 

 

Operating income (loss)

    

Electrical Infrastructure

   $ 2,319      $ 729   

Oil Gas & Chemical

     3,775        1,412   

Storage Solutions

     3,449        4,226   

Industrial

     (1,619     243   
  

 

 

   

 

 

 

Total operating income

   $ 7,924      $ 6,610   
  

 

 

   

 

 

 

Segment assets

    

Electrical Infrastructure

   $ 56,826      $ 40,550   

Oil Gas & Chemical

     71,848        54,036   

Storage Solutions

     186,600        139,820   

Industrial

     14,179        17,949   

Other

     33,397        46,918   
  

 

 

   

 

 

 

Total segment assets

   $ 362,850      $ 299,273   
  

 

 

   

 

 

 


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, notice to proceed or other type of assurance that we consider firm. The following arrangements are considered firm:

 

   

fixed-price awards;

 

   

minimum customer commitments on cost plus arrangements; and

 

   

certain time and material arrangements in which the estimated 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 September 30, 2012:

 

     Electrical
Infrastructure
    Oil Gas &
Chemical
    Storage
Solutions
    Industrial     Total  
     (In thousands)  

Backlog as of June 30, 2012

   $ 127,699      $ 117,862      $ 236,571      $ 15,320      $ 497,452   

Net awards

     40,889        66,092        132,603        7,218        246,802   

Revenue recognized

     (33,270     (67,097     (104,266     (4,975     (209,608
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Backlog as of September 30, 2012

   $ 135,318      $ 116,857      $ 264,908      $ 17,563      $ 534,646