Matrix Service Announces Change in Fiscal Year and Provides
Guidance for Fiscal 2010 TULSA, Okla., Aug. 4
/PRNewswire-FirstCall/ -- Matrix Service Co. (NASDAQ: MTRX), a
leading industrial services company, today reported its financial
results for the fourth quarter and fiscal year ended May 31, 2009.
Fourth-Quarter Fiscal 2009 Highlights: -- Revenues were $179.9
million; -- Gross margins were 13.0%; -- Operating income was $11.1
million; -- Fully diluted EPS was $0.26 per share; and -- Backlog
was $401.1 million as of May 31, 2009. Twelve-Month Fiscal 2009
Highlights: -- Revenues were $689.7 million; -- Gross margins were
13.7%; -- Record operating income of $47.3 million; and -- Record
fully diluted EPS of $1.16 per share. Fourth Quarter of Fiscal 2009
Results Net income for the fourth quarter of fiscal 2009 was $6.7
million, or $0.26 per fully diluted share, versus net income in the
fourth quarter of fiscal 2008 of $8.9 million, or $0.34 per fully
diluted share. Consolidated revenues were $179.9 million in fourth
quarter compared to $194.1 million in the fourth quarter of fiscal
2008. The decline in fourth quarter consolidated revenues was the
result of a decrease in the Construction Services segment of $20.8
million partially offset by an increase in the Repair and
Maintenance Services segment of $6.6 million. Mike Bradley, chief
executive officer stated, "As we expected, the fourth quarter
improved significantly from the third quarter due to strong project
execution on a higher revenue volume. We are very pleased with
these results and proud of the record year achieved by Matrix
Service despite the challenging economic environment we encountered
for much of the year." Revenues for the Construction Services
segment were $100.5 million, compared with $121.3 million in the
same period a year earlier. The decrease was primarily due to lower
Downstream Petroleum revenues, which decreased to $30.0 million in
the fourth quarter of fiscal 2009, compared to $43.6 million in the
year earlier period, lower Aboveground Storage Tank revenues, which
decreased to $40.0 million in the fourth quarter in fiscal 2009,
compared to $52.5 million the year earlier period, and lower
Specialty revenues, which decreased to $8.7 million in the fourth
quarter of fiscal 2009, compared to $17.3 million in the year
earlier period, and, partially offset by higher Electrical and
Instrumentation revenues, which improved from $7.9 million in
fiscal 2008 to $21.8 million in the current period. Revenues for
the Repair and Maintenance Services segment were $79.4 million,
compared to $72.8 million in the year earlier period. The
improvement was due to higher Downstream Petroleum revenues, which
increased to $41.5 million in the fourth quarter of fiscal 2009,
compared to $22.4 million in the year earlier period and higher
Electrical and Instrumentation revenues, which increased to $7.9
million, compared to $7.4 million in the year earlier period. These
were partially offset by lower Aboveground Storage Tank revenues,
which decreased from $43.0 million in fiscal 2008 to $30.0 million
in the current period. Consolidated gross profit decreased from
$24.0 million in the fourth quarter of fiscal 2008 to $23.3 million
in the fourth quarter of fiscal 2009. The decrease was due to a
7.3% decline in consolidated revenues, partially offset by higher
gross margins, which improved to 13.0% from 12.3% in the same
period of fiscal 2008. The gross margin improvement was due to
higher margins in the Construction Services segment, where the
gross margin increased to 13.8% in the current fiscal year up from
12.3% in the prior fiscal year. The Repair and Maintenance Services
segment gross margins decreased to 12.0% in the current year period
compared to 12.5% in the fourth quarter of fiscal 2008.
Consolidated SG&A expenses increased $2.5 million to $12.3
million in the fourth quarter of fiscal 2009 compared to $9.8
million in the fourth quarter of fiscal 2008. The increase was
primarily due to the costs of our expansion into Western Canada and
the Gulf Coast Region, the acquisition of S.M. Electric Company,
Inc. ("SME") in February 2009, increased professional fees and
higher employee related and facility costs incurred to build the
infrastructure and sales force necessary to support our long term
growth plan. SG&A expense as a percentage of revenue increased
to 6.8% in fiscal 2009 compared to 5.0% in the same period of the
prior fiscal year due to the increase in expense combined with the
$14.2 million decline in revenues. EBITDA(1) was $14.2 million
compared to $16.4 million in the same period last year.
Consolidated backlog as of May 31, 2009 was $401.1 million compared
to $452.5 million at the end of the third fiscal quarter.
Contributing to the change were awards of $142.4 million and
project cancellations of $14.0 million. Fiscal Year 2009 Results
For the fiscal year ended May 31, 2009, net income grew to $30.6
million, or $1.16 per fully diluted share, up from net income of
$21.4 million, or $0.80 per fully diluted share in fiscal 2008.
Consolidated revenues were $689.7 million in fiscal 2009, a
decrease of $41.6 million from consolidated revenues of $731.3
million in fiscal 2008. The decline in consolidated revenues was
the result of a decrease in the Construction Services segment of
$60.7 million, offset partially by an increase of $19.1 million in
the Repair and Maintenance Services segment. Revenues for the
Construction Services segment were $395.2 million, compared with
$455.9 million in the same period a year earlier. The decrease of
$60.7 million was primarily due to lower Specialty revenues, which
decreased $50.8 million as the construction of the tanks on a Gulf
Coast LNG project was completed in the fourth quarter of fiscal
2008. In addition, Aboveground Storage Tank revenues decreased
$23.6 million to $177.8 million in fiscal 2009, compared to $201.4
million a year earlier, and Downstream Petroleum revenues decreased
$12.2 million to $144.2 million in fiscal 2009, compared to $156.4
million in fiscal 2008. Partially offsetting these declines was
higher Electrical and Instrumentation revenues, which increased
$25.9 million to $45.9 million in fiscal 2009, compared to $20.0
million a year earlier. Revenues for the Repair and Maintenance
Services segment were $294.5 million in fiscal 2009 compared to
$275.4 million in fiscal 2008. The improvement was due to higher
Downstream Petroleum revenues, which increased $17.2 million to
$106.2 million in fiscal 2009, compared to $89.0 million in the
prior fiscal year and higher Electrical and Instrumentation
revenues, which increased $3.6 million to $22.0 million in fiscal
2009, compared to $18.4 million in fiscal 2008. These increases
were partially offset by lower Aboveground Storage Tank revenues,
which decreased $1.7 million to $166.3 million in fiscal 2009 from
$168.0 million during fiscal 2008. Consolidated gross profit
increased from $75.1 million in fiscal 2008 to $94.3 million in
fiscal 2009. The improvement of $19.2 million or 25.6% was due to
higher gross margins, which improved from 10.3% in fiscal 2008 to
13.7% in fiscal 2009. The gross margin improvement was due to
higher margins in the Construction Services segment, where the
gross margin increased to 12.9% in the current fiscal year up from
7.3% in the prior fiscal year. The Repair and Maintenance Services
segment gross margins were 14.7% in fiscal 2009 compared to 15.3%
in fiscal 2008. Consolidated SG&A expenses increased $6.4
million, or 15.8%, in fiscal 2009 to $47.0 million, from $40.6
million for fiscal 2008. The increase was primarily due to the
costs of our expansion into Western Canada and the Gulf Coast
Region, the SME acquisition, and higher employee related and
facility costs incurred to build the infrastructure and sales force
necessary to support our long-term growth plan. SG&A expense,
as a percentage of revenue, increased to 6.8% in fiscal 2009
compared to 5.6% in fiscal 2008. EBITDA(1) increased to $59.1
million, from $42.9 million in the same period last year. Financial
Position During the fourth quarter, the Company increased its cash
balance from $22.6 million as of February 28, 2009, to $34.6
million as of May 31, 2009. The Company did not borrow under its
$75 million revolving credit facility during the three months and
year ended May 31, 2009. Change in Fiscal Year On July 30, 2009,
the Company's Board of Directors approved a change in the Company's
fiscal year end to June 30, effective immediately. In early
November, the Company will report operating results for the month
ended June 30, 2009 and the quarter ended September 30, 2009.
Earnings Guidance Mr. Bradley provided the following comments
regarding earnings guidance, "We believe the Company is well
positioned to manage through the current economic environment and
to capitalize on opportunities as the market improves. We also
believe that our strong financial position will enable us to pursue
strategic acquisitions that arise in this market. With the
remainder of calendar 2009 expected to be challenging for both the
Construction Services and Repair and Maintenance Services segments,
the Company expects to achieve earnings in fiscal 2010 in the range
of $0.80 per fully diluted share to $1.10 per fully diluted share.
Capital expenditures are expected to be approximately $12 million."
(1) The Company believes that EBITDA (earnings before interest,
income taxes, depreciation and amortization) is used by the
financial community as a method of measuring the Company's
performance and of evaluating the market value of companies
considered to be in similar businesses. EBITDA should not be
considered as an alternative to net income or cash provided by
operating activities, as defined by accounting principles generally
accepted in the United States ("GAAP"). A reconciliation of EBITDA
to net income is included at the end of this 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 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
Oklahoma, Texas, California, Michigan, New Jersey, Pennsylvania,
Illinois, Washington, and Delaware 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 Finance and CFO T:
+1-918-838-8822 E: Investors and Financial Media: Truc Nguyen,
Managing Director Grayling T: +1-646-284-9418 E: Matrix Service
Company Consolidated Statements of Income (In thousands, except per
share data) Fiscal Year Ended May 31, -------------------------
2009 2008 2007 ---- ---- ---- Revenues $689,720 $731,301 $639,846
Cost of revenues 595,397 656,184 573,960 ------- ------- -------
Gross profit 94,323 75,117 65,886 Selling, general and
administrative expenses 47,006 40,566 32,836 ------ ------ ------
Operating income 47,317 34,551 33,050 Other income (expense):
Interest expense (563) (890) (2,403) Interest income 330 82 139
Other 675 (27) 328 --- --- --- Income before income taxes 47,759
33,716 31,114 Provision for federal, state and foreign income taxes
17,170 12,302 11,943 ------ ------ ------ Net income $30,589
$21,414 $19,171 ======= ======= ======= Basic earnings per common
share $1.17 $0.81 $0.83 ===== ===== ===== Diluted earnings per
common share $1.16 $0.80 $0.74 ===== ===== ===== Weighted average
common shares outstanding: Basic 26,121 26,427 23,056 Diluted
26,390 26,875 26,752 Matrix Service Company Consolidated Balance
Sheets (In thousands) As of May 31, ------------- 2009 2008 ----
---- Assets Current assets: Cash and cash equivalents $34,553
$21,989 Accounts receivable, less allowances (2009 - $710; 2008 -
$269) 122,283 105,858 Costs and estimated earnings in excess of
billings on uncompleted contracts 35,619 49,940 Inventories 4,926
4,255 Income tax receivable 647 - Deferred income taxes 4,843 4,399
Prepaid expenses 3,935 3,357 Other current assets 3,044 809 -----
--- Total current assets 209,850 190,607 Property, plant and
equipment, at cost: Land and buildings 27,319 24,268 Construction
equipment 53,925 47,370 Transportation equipment 17,971 16,927
Furniture and fixtures 14,527 11,781 Construction in progress 812
6,712 --- ----- 114,554 107,058 Accumulated depreciation (55,745)
(49,811) ------- ------- 58,809 57,247 Goodwill 25,768 23,329 Other
intangible assets 4,571 - Other assets 4,453 3,410 ----- -----
Total assets $303,451 $274,593 ======== ======== Matrix Service
Company Consolidated Balance Sheets (continued) (In thousands,
except share data) As of May 31, ------------- 2009 2008 ---- ----
Liabilities and stockholders' equity Current liabilities: Accounts
payable $48,668 $53,560 Billings on uncompleted contracts in excess
of costs and estimated earnings 51,305 48,709 Accrued insurance
7,612 8,451 Accrued wages and benefits 16,566 14,976 Income tax
payable - 2,028 Current capital lease obligation 1,039 1,042 Other
accrued expenses 2,200 1,015 ----- ----- Total current liabilities
127,390 129,781 Long-term capital lease obligation 850 1,000
Deferred income taxes 4,822 5,112 Stockholders' equity: Common
stock - $.01 par value; 60,000,000 shares authorized; 27,888,217
shares issued as of May 31, 2009 and 2008 279 279 Additional
paid-in capital 110,272 108,402 Retained earnings 75,393 44,809
Accumulated other comprehensive income 596 1,584 --- ----- 186,540
155,074 Less treasury stock, at cost - 1,696,517 and 1,825,600
shares as of May 31, 2009 and 2008 (16,151) (16,374) -------
------- Total stockholders' equity 170,389 138,700 ------- -------
Total liabilities and stockholders' equity $303,451 $274,593
======== ======== Results of Operations (In thousands) Repair &
Construction Maintenance Services Services Other Total --------
----------- ----- ----- 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 Income before income tax expense 6,225
4,650 - 10,875 Net income 3,943 2,802 - 6,745 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
Three Months Ended May 31, 2008 Gross revenues $127,050 $73,248 $-
$200,298 Less: Inter-segment revenues 5,757 421 - 6,178 ----- ---
--- ----- Consolidated revenues 121,293 72,827 - 194,120 Gross
profit 14,888 9,078 - 23,966 Operating income 8,783 5,409 - 14,192
Income before income tax expense 8,654 5,317 - 13,971 Net income
5,488 3,378 - 8,866 Segment assets 150,174 93,052 31,367 274,593
Capital expenditures 2,537 1,279 1,376 5,192 Depreciation and
amortization expense 1,351 992 - 2,343 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
Income before income tax expense 21,973 25,786 - 47,759 Net income
14,207 16,382 - 30,589 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 Twelve Months Ended
May 31, 2008 Gross revenues $472,696 $278,818 $- $751,514 Less:
Inter-segment revenues 16,809 3,404 - 20,213 ------ ----- ---
------ Consolidated revenues 455,887 257,414 - 731,301 Gross profit
33,081 42,036 - 75,117 Operating income (loss) 8,579 25,997 (25)
34,551 Income (loss) before income tax expense 7,950 25,791 (25)
33,716 Net income (loss) 5,483 15,946 (15) 21,414 Segment assets
150,174 93,052 31,367 274,593 Capital expenditures 9,272 4,363
4,667 18,302 Depreciation and amortization expense 4,966 3,407 -
8,373 Segment Revenue from External Customers by Industry Type (In
thousands) Repair & Construction Maintenance Services Services
Total ------------ ------------- ----- 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 ======== ======= ======== Three Months
Ended May 31, 2008 Aboveground Storage Tanks $52,538 $43,037
$95,575 Downstream Petroleum 43,580 22,418 65,998 Electrical and
Instrumentation 7,859 7,372 15,231 Specialty 17,316 - 17,316 ------
--- ------ Total $121,293 $72,827 $194,120 ======== =======
======== 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 ======== ======== ======== Twelve Months Ended May 31,
2008 Aboveground Storage Tanks $201,446 $167,970 $369,416
Downstream Petroleum 156,371 89,001 245,372 Electrical and
Instrumentation 19,975 18,443 38,418 Specialty 78,095 - 78,095
------ --- ------ Total $455,887 $275,414 $731,301 ========
======== ======== 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 rollforward of our
backlog for the three-months ended May 31, 2009: Repair and
Construction Maintenance Services Services Total -------------
----------- ----- (In thousands) Backlog as of February 28, 2009
$272,601 $179,879 $452,480 New backlog awarded 75,423 67,000
142,423 Backlog acquired - - - Backlog cancelled (13,959) -
(13,959) Revenue recognized on contracts in backlog (100,486)
(79,385) (179,871) -------- ------- -------- Backlog as of May 31,
2009 $233,579 $167,494 $401,073 ======== ======== ======== The
following table provides a rollforward of our backlog for the
twelve-months ended May 31, 2009: Repair and Construction
Maintenance Services Services Total ------------- ----------- -----
(In thousands) Backlog as of May 31, 2008 $325,341 $141,967
$467,308 New backlog awarded 323,752 312,371 636,123 Backlog
acquired 28,262 10,378 38,640 Backlog cancelled (48,536) (2,742)
(51,278) Revenue recognized on contracts in backlog (395,240)
(294,480) (689,720) -------- -------- -------- Backlog as of May
31, 2009 $233,579 $167,494 $401,073 ======== ======== ========
Non-GAAP Financial Measure EBITDA is a supplemental, non-GAAP
financial measure. EBITDA is defined as earnings before interest,
taxes, depreciation and amortization. We have presented EBITDA
because it is used by the financial community as a method of
measuring our performance and of evaluating the market value of
companies considered to be in similar businesses. We believe that
the line item on our Consolidated Statements of Income entitled
"Net income" is the most directly comparable GAAP measure to
EBITDA. Since EBITDA is not a measure of performance calculated in
accordance with GAAP, it should not be considered in isolation of,
or as a substitute for, net earnings as an indicator of operating
performance. EBITDA, as we calculate it, may not be comparable to
similarly titled measures employed by other companies. In addition,
this measure is not necessarily a measure of our ability to fund
our cash needs. As EBITDA excludes certain financial information
compared with net income, the most directly comparable GAAP
financial measure, users of this financial information should
consider the type of events and transactions, which are excluded.
Our non-GAAP performance measure, EBITDA, has certain material
limitations as follows: -- It does not include interest expense.
Because we have borrowed money to finance our operations, interest
expense is a necessary and ongoing part of our costs and has
assisted us in generating revenue. Therefore, any measure that
excludes interest expense has material limitations. -- It does not
include income taxes. Because the payment of income taxes is a
necessary and ongoing part of our operations, any measure that
excludes income taxes has material limitations. -- It does not
include depreciation or amortization expense. Because we use
capital and intangible assets to generate revenue, depreciation and
amortization expense is a necessary element of our cost structure.
Therefore, any measure that excludes depreciation or amortization
expense has material limitations. A reconciliation of EBITDA to net
income follows: Three Months Ended Twelve Months Ended
------------------ ------------------- May 31, 2009 May 31, 2008
May 31, 2009 May 31, 2008 ------------ ------------ ------------
------------ (In thousands) (In thousands) Net income $6,745 $8,866
$30,589 $21,414 Interest expense (net of interest income in 2008)
187 105 563 808 Provision for income taxes 4,130 5,105 17,170
12,302 Depreciation and amortization 3,143 2,343 10,760 8,373 -----
------ ----- ----- EBITDA $14,205 $16,419 $59,082 $42,897 =======
======= ======= ======= DATASOURCE: Matrix Service Co. CONTACT: Tom
Long, Vice President Finance and CFO of Matrix Service Company,
+1-918-838-8822, ; or Investors and Financial Media, Truc Nguyen,
Managing Director of Grayling, +1-646-284-9418, , for Matrix
Service Company Web Site: http://www.matrixservice.com/
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