EX-99 2 dex99.htm PRESS RELEASE Press Release

Exhibit 99

LOGO

FOR IMMEDIATE RELEASE

MATRIX SERVICE ANNOUNCES FIRST QUARTER FISCAL 2010 RESULTS OF $0.17 PER

FULLY DILUTED SHARE

First Quarter Fiscal 2010 Highlights:

 

  •  

Revenues were $137.7 million,

 

  •  

Gross margins were 12.7%,

 

  •  

Operating income was $7.3 million,

 

  •  

Fully diluted EPS was $0.17 per share,

 

  •  

Backlog was $328.1 million as of September 30, 2009, and

 

  •  

Cash was $56.5 million as of September 30, 2009.

TULSA, OK – November 3, 2009 – Matrix Service Co. (Nasdaq: MTRX), a leading industrial services company, today reported its financial results for the first quarter ended September 30, 2009. In addition, the Company announced the results of the transition period related to the change of the fiscal year end from May 31st to June 30th.

First Quarter of Fiscal 2010 Results

Net income for the first quarter of fiscal 2010 was $4.5 million, or $0.17 per fully diluted share on total revenues of $137.7 million. First quarter operating results included a charge related to a legal matter of $1.2 million or $0.03 per fully diluted share. Total revenues were $186.7 million and net income was $9.5 million or $0.36 per fully diluted share in the comparable period a year earlier.

“As we had anticipated, the market environment in the first quarter was challenging,” said Michael J. Bradley, president and CEO of Matrix Service Company. “I am pleased with the solid execution of the Matrix Service team and our ability to continue to strengthen our financial position during this difficult economy. While the remainder of calendar 2009 remains challenging, we are encouraged by the increasing level of bid activity in both the Repair and Maintenance Services and Construction Services segments of our business. We remain well positioned to execute our growth strategy when market conditions improve.”

Revenues for the Construction Services segment were $77.7 million, compared with $114.8 million in fiscal 2009. The decrease of $37.1 million was mainly due to continued delays in planned projects and a broad based decline in our customers’ capital spending. The economic slowdown impacted all of our markets. Revenues for the Repair and Maintenance Services segment were $60.0 million in fiscal 2010 compared to $71.9 million in fiscal 2009. The decline was also due to the current economy as customers have applied discretion to the scope and timing of maintenance programs.

Consolidated gross profit decreased from $26.7 million in fiscal 2009 to $17.4 million in fiscal 2010. The reduction of $9.3 million was due to the decrease in revenue and lower gross margins. Gross margins decreased from 14.3% in fiscal 2009 to 12.7% in fiscal 2010. The decline was due to lower margins in the Repair and Maintenance Services segment, where the gross margin decreased to 10.5% in the current fiscal quarter versus 16.2% in the prior fiscal quarter. Offset by this decline was an improvement in the Construction Services segment where gross margins increased to 14.3% in the current fiscal quarter compared to 13.1% in fiscal 2009. Gross margins in both segments were negatively affected by a lower volume of business available to recover construction overhead costs. Consolidated SG&A expenses decreased 16.4% to $10.1 million in fiscal 2010 compared to $12.1 million for fiscal 2009. The decline in SG&A expenses is due to our on-going cost reduction efforts related primarily to employee related costs and professional fees.

Consolidated backlog at September 30, 2009 was $328.1 million compared to a backlog of $392.1 million as of June 30, 2009. Contributing to the change were delays of new project awards, decreased spending by our customers and project cancellations, which totaled $12.6 million in the quarter.

Transition Period Results

Net income for the month of June 2009, the fiscal year change transition period, was $1.0 million, or $0.04 per fully diluted share on revenues of $45.8 million. The comparable prior year results were revenues of $60.0 million and net income of $3.7 million, or $0.14 per fully diluted share.

The revenue decline was due to lower Construction Services revenues, which decreased from $36.3 million in June 2008 to $28.5 million in June 2009, and lower Repair and Maintenance Services revenues which decreased from $23.7 million in June 2008 to $17.3 million in June 2009.

Gross profit decreased to $5.1 million in June 2009 compared to $9.8 million a year earlier. The decline in gross profit was due to lower revenues and lower gross margins. Gross margins in both segments were negatively affected by a lower volume of business available to recover construction overhead costs in June 2009.

Consolidated backlog at June 30, 2009 was $392.1 million compared to a backlog of $401.1 million as of May 31, 2009.

Financial Position

In fiscal 2010, the Company’s cash balance increased from $34.6 million as of May 31, 2009 to $56.5 million as of September 30, 2009. The Company did not borrow under its $75 million revolving credit facility during the three months September 30, 2009 or the one month ended June 30, 2009.

Earnings Guidance

Matrix Service is reaffirming its earnings guidance range of $0.80 to $1.10 per fully diluted share for fiscal 2010. The achievement of the earnings guidance is dependent on an improving economic environment and a resulting higher demand for the Company’s services throughout the remainder of fiscal 2010.

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 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 general industrial 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 Alberta, Ontario and New Brunswick 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    Investors and Financial Media:
Tom Long    Trúc Nguyen
Vice President and CFO    Deputy Managing Director
T: 918-838-8822    Grayling Global
E: telong@matrixservice.com    T: 646-284-9418
   E: tnguyen@hfgcg.com

Matrix Service Company

Consolidated Statements of Income

(In thousands, except per share data)

(unaudited)

 

     Three Months Ended     One Month
Ended		  
     September 30,
2009		     August 31,
2008		     June 30,
2009		  

Revenues

    $ 137,650      $ 186,650      $ 45,825   

Cost of revenues

      120,232        159,979        40,676   
                        

Gross profit

      17,418        26,671        5,149   

Selling, general and administrative expenses

      10,087        12,062        3,570   
                        

Operating income

      7,331        14,609        1,579   

Other income (expense):

       

Interest expense

      (174 )      (114 )      (91 ) 

Interest income

      43        109        17   

Other

      83        736        98   
                        

Income before income taxes

      7,283        15,340        1,603   

Provision for federal, state and foreign income taxes

      2,774        5,836        609   
                        

Net income

    $ 4,509      $ 9,504      $ 994   
                        

Basic earnings per common share

    $ 0.17      $ 0.36      $ 0.04   

Diluted earnings per common share

    $ 0.17      $ 0.36      $ 0.04   

Weighted average common shares outstanding:

       

Basic

      26,195        26,073        26,192   

Diluted

      26,437        26,473        26,434   

Matrix Service Company

Consolidated Balance Sheets

(In thousands)

(unaudited)

 

     September 30,
2009		     May 31,
2009		  

Assets

     

Current assets:

     

Cash and cash equivalents

    $ 56,471      $ 34,553   

Accounts receivable, less allowances (September 30, 2009 - $774, and May 31, 2009 - $710)

      87,649        122,283   

Costs and estimated earnings in excess of billings on uncompleted contracts

      32,715        35,619   

Inventories

      4,708        4,926   

Income tax receivable

      -        647   

Deferred income taxes

      4,841        4,843   

Prepaid expenses

      4,427        3,935   

Other current assets

      2,579        3,044   
                

Total current assets

      193,390        209,850   

Property, plant and equipment at cost:

     

Land and buildings

      27,511        27,319   

Construction equipment

      54,586        53,925   

Transportation equipment

      18,002        17,971   

Furniture and fixtures

      14,889        14,527   

Construction in progress

      895        812   
                
     115,883        114,554   

Accumulated depreciation

      (59,147 )      (55,745 ) 
                
     56,736        58,809   

Goodwill

      27,087        25,768   

Other intangible assets

      4,450        4,571   

Other assets

      1,395        4,453   
                

Total assets

    $ 283,058      $ 303,451   
                

Matrix Service Company

Consolidated Balance Sheets

(In thousands, except share data)

(unaudited)

 

     September 30,
2009		     May 31,
2009		  

Liabilities and stockholders’ equity

     

Current liabilities:

     

Accounts payable

    $ 34,645      $ 48,668   

Billings on uncompleted contracts in excess of costs and estimated earnings

      41,971        51,305   

Accrued insurance

      6,875        7,612   

Accrued wages and benefits

      10,412        16,566   

Income tax payable

      680        -   

Current capital lease obligation

      1,069        1,039   

Other accrued expenses

      5,603        2,200   
                

Total current liabilities

      101,255        127,390   

Long-term capital lease obligation

      532        850   

Deferred income taxes

      4,409        4,822   

Stockholders’ equity:

     

Common stock - $.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of September 30, 2009, and May 31, 2009

      279        279   

Additional paid-in capital

      110,971        110,272   

Retained earnings

      80,896        75,393   

Accumulated other comprehensive income

      854        596   
                
     193,000        186,540   

Less: Treasury stock, at cost – 1,689,602 shares as of September 30, 2009, and 1,696,517 shares as of May 31, 2009

     (16,138 )      (16,151 ) 
                

Total stockholders’ equity

      176,862        170,389   
                

Total liabilities and stockholders’ equity

    $ 283,058      $ 303,451   
                

Matrix Service Company

Results of Operations

(In thousands)

(unaudited)

 

     Construction
Services		    Repair &
Maintenance
Services		    Other    Total

Three Months Ended September 30, 2009

            

Gross revenues

    $ 80,579    $ 60,176    $ -    $ 140,755

Less: Inter-segment revenues

      2,908      197      -      3,105
                           

Consolidated revenues

      77,671      59,979      -      137,650

Gross profit

      11,096      6,322      -      17,418

Operating income

      5,266      2,065      -      7,331

Income before income tax expense

      5,212      2,071      -      7,283

Net income

      3,293      1,216      -      4,509

Segment assets

      129,969      90,672      62,417      283,058

Capital expenditures

      268      87      678      1,033

Depreciation and amortization expense

      1,683      1,336      -      3,019

Three Months Ended August 31, 2008

            

Gross revenues

    $ 122,361    $ 72,167    $ -    $ 194,528

Less: Inter-segment revenues

      7,603      275      -      7,878
                           

Consolidated revenues

      114,758      71,892      -      186,650

Gross profit

      15,045      11,626      -      26,671

Operating income

      7,492      7,117      -      14,609

Income before income tax expense

      7,703      7,637      -      15,340

Net income

      4,379      5,125      -      9,504

Segment assets

      150,322      91,116      35,882      277,320

Capital expenditures

      1,039      930      1,136      3,105

Depreciation and amortization expense

      1,412      969      -      2,381

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

Income before income tax expense

      1,116      487      -      1,603

Net income

      720      274      -      994

Capital expenditures

      121      64      163      348

Depreciation and amortization expense

      543      451      -      994