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, Okla., Nov. 3
/PRNewswire-FirstCall/ -- 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 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 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 Truc
Nguyen Vice President and CFO Deputy Managing Director T:
918-838-8822 Grayling Global E: T: 646-284-9418 E: Matrix Service
Company Consolidated Statements of Income (In thousands, except per
share data) (unaudited) One Month Three Months Ended Ended
------------------ --------- September 30, August 31, June 30, 2009
2008 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, May 31, 2009 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, May 31, 2009 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) Repair &
Construction Maintenance Services 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 DATASOURCE:
Matrix Service Co. CONTACT: Tom Long, Vice President and CFO of
Matrix Service Company, +1-918-838-8822, ; Investors and Financial
Media, Truc Nguyen, Deputy Managing Director of Grayling Global,
+1-646-284-9418, , for Matrix Service Co. Web Site:
http://www.matrixservice.com/
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