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Matrix Service Company Announces Record Third Quarter Results and Increases Fiscal 2014 Revenue and Earnings Guidance

(May 08, 2014)



  • Quarterly revenues increased 68.8% to a record $381.5 million


  • Record quarterly earnings of $0.42 per fully diluted share compared to $0.25 in the same period a year earlier


  • Record backlog of $905.1 million


  • Matrix Service Company celebrated its 30th anniversary in April



TULSA, Okla., May 8, 2014 (GLOBE NEWSWIRE) -- Matrix Service Company (Nasdaq:MTRX) today reported its financial results for the third quarter and nine months ended March 31, 2014. The strong operating trends continued in the third quarter with quarterly revenues totaling $381.5 million, fully diluted earnings per share totaling $0.42 and period end backlog of $905.1 million.



John Hewitt, President and CEO of Matrix Service Company said, "In April we celebrated the first thirty years of Matrix Service Company. As we transition to the next thirty years, this quarter's performance continues to demonstrate the potential of the business and the great leadership provided by our employees. The performance demonstrates both the soundness of our strategy and our ability to achieve our strategic objectives. We look forward to building on this strategy long into the future."



Third Quarter Fiscal 2014 Results


Revenues for the third quarter ended March 31, 2014 were $381.5 million compared to $226.0 million in the same period a year earlier, an increase of $155.5 million, or 68.8%. Net income for the third quarter of fiscal 2014 was $11.4 million, or $0.42 per fully diluted share. In the same period a year earlier, the Company earned $6.5 million, or $0.25 per fully diluted share.




Revenues increased in our Storage Solutions, Industrial, and Electrical Infrastructure segments by $87.0 million, $58.7 million, and $20.4 million, respectively. Revenues in the Oil Gas & Chemical segment declined by $10.6 million. Fiscal 2014 gross margins improved to 10.5% compared to 10.2% in the same period a year earlier. Consolidated gross profit was $39.9 million in the third quarter of fiscal 2014 compared to $23.1 million in the same period a year earlier due to significantly higher revenues and slightly higher gross margins. Selling, general and administrative costs were $21.1 million in the third quarter of fiscal 2014 compared to $14.7 million in the same period a year earlier. Selling, general and administrative costs as a percent of revenue declined to 5.5% in fiscal 2014 compared to 6.5% in the same period a year earlier.



Nine Month Fiscal 2014 Results



Revenues for the nine months ended March 31, 2014 were $918.7 million compared to $657.0 million in the same period a year earlier, an increase of $261.7 million, or 39.8%. Net income for the first nine months of fiscal 2014 was $28.3 million, or $1.05 per fully diluted share. In the same period a year earlier, the Company earned $16.6 million, or $0.63 per fully diluted share.



Revenues increased in our Storage Solutions, Industrial and Electrical Infrastructure segments by $173.8 million, $100.5 million and $7.1 million, respectively. Revenues in the Oil Gas & Chemical segment declined by $19.7 million. Strong project execution enabled the Company to achieve a fiscal 2014 gross margin of 10.8% despite a Storage Solutions project charge of $5.4 million, which reduced margins by 0.8%. In the same period a year earlier gross margins were 10.3%. Consolidated gross profit was $99.6 million in the first nine months of fiscal 2014 compared to $67.7 million in the same period a year earlier due to higher revenues and higher gross margins. Selling, general and administrative costs were $55.1 million in fiscal 2014 compared to $42.6 million in the same period a year earlier. Acquisition related expenses of $2.0 million increased selling, general and administrative costs as a percent of revenue by 0.2% to 6.0% in fiscal 2014 compared to 6.5% in the same period a year earlier.



Backlog



Backlog at March 31, 2014 totaled $905.1 million, an increase of $278.4 million, or 44.4%, compared to the backlog at June 30, 2013 of $626.7 million, and increased $22.5 million, or 2.5%, compared to December 31, 2013 backlog of $882.6 million. Project awards totaled $404.0 million and $955.0 million in the three and nine months ended March 31, 2014.



Financial Position



As previously announced, the Company increased the capacity of its credit facility from $125.0 million to $200.0 million during the third quarter. Availability under the expanded credit facility of $137.9 million along with the Company's cash balance of $59.8 million provided liquidity of $197.7 million at March 31, 2014.



Earnings Guidance



The Company is increasing its fiscal 2014 revenue guidance to between $1.25 billion and $1.30 billion and its earnings per fully diluted share guidance to between $1.34 and $1.42.



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, May 9, 2014 and will be simultaneously broadcast live over the Internet which can be accessed at the Company's website at 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, except as required by law.














































































































































































Matrix Service Company

Consolidated Statements of Income

(In thousands, except per share data)

 

 

 

 

 

 

Three Months Ended

Nine Months Ended

 

March 31,

2014

March 31,

2013

March 31,

2014

March 31,

2013

Revenues

 $ 381,516

 $ 225,970

 $ 918,731

 $ 657,014

Cost of revenues

341,572

202,844

819,161

589,311

Gross profit

39,944

23,126

99,570

67,703

Selling, general and administrative expenses

21,125

14,695

55,172

42,576

Operating income

18,819

8,431

44,398

25,127

Other income (expense):

 

 

 

 

Interest expense

(324)

(205)

(898)

(605)

Interest income

44

5

57

25

Other

9

43

(147)

93

Income before income tax expense

18,548

8,274

43,410

24,640

Provision for federal, state and foreign income taxes

6,756

1,753

14,755

7,999

Net income

 $ 11,792

 $ 6,521

 $ 28,655

 $ 16,641

Less: Net income attributable to noncontrolling interest

396


401


Net income attributable to Matrix Service Company

 $ 11,396

 $ 6,521

 $ 28,254

 $ 16,641

 

 

 

 

 

Basic earnings per common share

 $ 0.43

 $ 0.25

 $ 1.08

 $ 0.64

Diluted earnings per common share

 $ 0.42

 $ 0.25

 $ 1.05

 $ 0.63

Weighted average common shares outstanding:

 

 

 

 

Basic

26,374

26,039

26,244

25,921

Diluted

27,040

26,411

26,898

26,269














































































































































 

Matrix Service Company

Consolidated Balance Sheets

(In thousands)

 

 

 

 

March 31,

2014

June 30,

2013

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

 $ 59,758

 $ 63,750

Accounts receivable, less allowances (March 31, 2014— $126 and June 30, 2013—$795)

232,167

140,840

Costs and estimated earnings in excess of billings on uncompleted contracts

98,278

73,773

Deferred income taxes

8,898

5,657

Inventories

3,143

2,988

Income taxes receivable


3,032

Other current assets

5,007

6,234

Total current assets

407,251

296,274

Property, plant and equipment at cost:

 

 

Land and buildings

31,195

29,649

Construction equipment

80,247

69,998

Transportation equipment

41,008

34,366

Office equipment and software

21,392

18,426

Construction in progress

13,939

9,080

 

187,781

161,519

Accumulated depreciation

(99,684)

(90,218)

 

88,097

71,301

Goodwill

66,589

30,836

Other intangible assets

29,705

7,551

Other assets

6,173

4,016

Total assets

 $ 597,815

 $ 409,978



















































































































































 

Matrix Service Company

Consolidated Balance Sheets (continued)

(In thousands, except share data)

 

 

 

 

March 31,

2014

June 30,

2013

Liabilities and stockholders' equity

 

 

Current liabilities:

 

 

Accounts payable

 $ 121,802

 $ 68,961

Billings on uncompleted contracts in excess of costs and estimated earnings

100,614

62,848

Accrued wages and benefits

39,671

21,919

Accrued insurance

8,595

7,599

Income taxes payable

1,471


Other accrued expenses

3,641

3,039

Total current liabilities

275,794

164,366

Deferred income taxes

6,365

7,450

Borrowings under senior credit facility

45,103


Total liabilities

327,262

171,816

Commitments and contingencies

 

 

Stockholders' equity:

 

 

Common stock—$.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of March 31, 2014, and June 30, 2013

279

279

Additional paid-in capital

118,164

118,190

Retained earnings

169,681

141,427

Accumulated other comprehensive income

(1,713)

227

 

286,411

260,123

Less: Treasury stock, at cost— 1,476,765 shares as of March 31, 2014, and 1,779,593 shares as of June 30, 2013

(16,959)

(21,961)

Total Matrix Service Company stockholders' equity

269,452

238,162

Noncontrolling interest

1,101


Total stockholders' equity

270,553

238,162

Total liabilities and stockholders' equity

 $ 597,815

 $ 409,978






















































































































































































































































 

Matrix Service Company

Results of Operations

(In thousands)

 

 

 

 

 

 

Three Months Ended

Nine Months Ended

 

March 31,

2014

March 31,

2013

March 31,

2014

March 31,

2013

Gross revenues

 

 

 

 

Electrical Infrastructure

 $ 62,144

 $ 41,709

 $ 132,201

 $ 125,102

Oil Gas & Chemical

63,112

73,638

188,025

207,370

Storage Solutions

182,129

95,200

471,330

298,801

Industrial

74,577

15,841

128,398

27,849

Total gross revenues

 $ 381,962

 $ 226,388

 $ 919,954

 $ 659,122

Less: Inter-segment revenues

 

 

 

 

Electrical Infrastructure

$ — 

$ — 

$ — 

$ — 

Oil Gas & Chemical

118

44

425

44

Storage Solutions

328

374

798

2,064

Industrial





Total inter-segment revenues

 $ 446

 $ 418

 $ 1,223

 $ 2,108

Consolidated revenues

 

 

 

 

Electrical Infrastructure

 $ 62,144

 $ 41,709

 $ 132,201

 $ 125,102

Oil Gas & Chemical

62,994

73,594

187,600

207,326

Storage Solutions

181,801

94,826

470,532

296,737

Industrial

74,577

15,841

128,398

27,849

Total consolidated revenues

 $ 381,516

 $ 225,970

 $ 918,731

 $ 657,014

Gross profit (loss)

 

 

 

 

Electrical Infrastructure

 $ 5,971

 $ 4,994

 $ 13,155

 $ 16,329

Oil Gas & Chemical

7,397

8,016

21,614

23,928

Storage Solutions

19,269

8,828

51,894

26,545

Industrial

7,307

1,288

12,907

901

Total gross profit

 $ 39,944

 $ 23,126

 $ 99,570

 $ 67,703

Operating income (loss)

 

 

 

 

Electrical Infrastructure

 $ 2,498

 $ 2,424

 $ 4,658

 $ 8,439

Oil Gas & Chemical

3,252

3,285

8,922

10,987

Storage Solutions

10,084

2,447

26,676

7,446

Industrial

2,985

275

4,142

(1,745)

Total operating income

 $ 18,819

 $ 8,431

 $ 44,398

 $ 25,127


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 and other established arrangements, 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.



Three Months Ended March 31, 2014



The following table provides a summary of changes in our backlog for the three months ended March 31, 2014:


















































 

Electrical

Infrastructure

Oil Gas &

Chemical

Storage

Solutions

Industrial

Total

 

(In thousands)

Backlog as of December 31, 2013

 $ 212,495

 $ 142,363

 $ 353,480

 $ 174,292

 $ 882,630

Net awards

46,070

49,484

242,199

66,204

403,957

Revenue recognized

(62,144)

(62,994)

(181,801)

(74,577)

(381,516)

Backlog as of March 31, 2014

 $ 196,421

 $ 128,853

 $ 413,878

 $ 165,919

 $ 905,071


Nine Months Ended March 31, 2014



The following table provides a summary of changes in our backlog for the nine months ended March 31, 2014:


























































 

Electrical

Infrastructure

Oil Gas &

Chemical

Storage

Solutions

Industrial

Total

 

(In thousands)

Backlog as of June 30, 2013

 $ 103,520

 $ 120,138

 $ 319,718

 $ 83,361

 $ 626,737

Backlog acquired

123,492

2,825


115,723

242,040

Net awards

101,610

193,490

564,692

95,233

955,025

Revenue recognized

(132,201)

(187,600)

(470,532)

(128,398)

(918,731)

Backlog as of March 31, 2014

 $ 196,421

 $ 128,853

 $ 413,878

 $ 165,919

 $ 905,071

CONTACT: For more information, please contact:
Matrix Service Company
Kevin S. Cavanah
Vice President and CFO
T: 918-838-8822
Email:kcavanah@matrixservicecompany.com



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