First Quarter Fiscal 2009 Highlights: - Operating income was a record $14.6 million, up from $10.9 million a year earlier;
TULSA, Okla., Oct. 2 /PRNewswire-FirstCall/ -- Matrix Service Co.
(Nasdaq: MTRX), a leading industrial services company, today reported its
financial results for the first quarter ended August 31, 2008.
Total revenues for the first quarter increased 15.7% to $186.7 million
from the $161.3 million recorded in the first quarter of fiscal 2008.
Net income for the first quarter of fiscal 2009 was $9.5 million, or $0.36
per fully diluted share, which compares favorably to prior year first quarter
net income of $6.3 million, or $0.23 per fully diluted share.
Michael J. Bradley, president and chief executive officer of Matrix
Service, said, "We are very proud of our overall performance in the first
quarter of fiscal 2009. Our financial results continue to demonstrate our
focus on execution and the Company's strong growth potential."
Consolidated SG&A expenses increased to $12.1 million from $8.0 million in
the same quarter of fiscal 2008 with the addition of key resources necessary
to execute the Company's growth strategy.
EBITDA(1) increased to $17.7 million, from $12.6 million in the same
period last year. Gross margins on a consolidated basis for the current
quarter increased to 14.3% from 11.7% reported in the same quarter a year ago.
The lower margin in the prior fiscal period resulted from a $1.5 million
pre-tax charge for a liquefied natural gas (LNG) construction project in the
Gulf Coast Region.
Construction Services revenues improved by 16.2% to $114.8 million from
$98.8 million in the same period a year earlier. The $16.0 million increase
was a result of higher Aboveground Storage Tank (AST) revenues, which
increased 41.5% to $55.9 million in fiscal 2009, up from $39.5 million a year
earlier, higher revenues in Electrical and Instrumentation (E&I), which
increased $9.3 million to $11.5 million in fiscal 2009, up from $2.2 million a
year earlier, and higher Downstream Petroleum revenues, which increased 14.6%
to $38.5 million in fiscal 2009 from $33.6 million a year earlier. These
increases were partially offset by lower Specialty revenues, which decreased
$14.7 million due to the completion of our Gulf Coast LNG project in fiscal
2008.
Construction Services' gross margins improved to 13.1% from 8.8%,
primarily as a result of the $1.5 million charge taken on the LNG project in
the first quarter of fiscal 2008. Moreover, the gross margins in the first
quarter of fiscal 2009 benefited from the 16.2% increase in revenues, which
led to further absorption of fixed costs.
Revenues for the Repair and Maintenance Services segment increased 15.0%
to $71.9 million, up from $62.5 million a year earlier. The $9.4 million
improvement resulted from higher AST revenues in this segment, which increased
15.4% to $47.9 million in fiscal 2009 from $41.5 million in the prior fiscal
year and higher Downstream Petroleum revenues in this segment, which increased
21.1% to $21.2 million in fiscal 2009 from $17.5 million a year earlier.
Gross margins in the first quarter of fiscal 2009 were 16.2% as compared to
16.4% earned in the first quarter of fiscal 2008.
Mr. Bradley added, "We continue to lay the groundwork to expand our
geographic reach and diversify our service and product offerings to achieve
sustainable and profitable long-term growth. We will also continue to look
for acquisition opportunities that fit our strategy, strengths and culture."
Mr. Bradley continued, "We are maintaining our fiscal 2009 guidance of
$800 million to $850 million in consolidated revenues, earnings of $1.35 per
fully diluted share to $1.60 per fully diluted share and SG&A of 5.5% to 6.0%
of revenues."
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, 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.
(1) The Company uses EBITDA (earnings before net interest, income taxes,
depreciation and amortization) as part of its overall assessment of
financial performance by comparing EBITDA between accounting periods.
Matrix Service believes that EBITDA 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.
For more information, please contact:
Matrix Service Company Investors and Financial Media:
Tom Long Truc Nguyen
Vice President and CFO 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)
Three Months Ended
August 31, August 31,
20082007
(unaudited)
Revenues $186,650$161,327
Cost of revenues 159,979 142,423
Gross profit 26,671 18,904
Selling, general and administrative expenses 12,062 8,046
Operating income 14,609 10,858
Other income (expense):
Interest expense (114) (304)
Interest income 109 16
Other 736 (10)
Income before income taxes 15,340 10,560
Provision for federal, state and foreign income taxes 5,836 4,224
Net income $9,504 $6,336
Basic earnings per common share $0.36 $0.24
Diluted earnings per common share $0.36 $0.23
Weighted average common shares outstanding:
Basic26,073 26,592
Diluted 26,473 27,083
Matrix Service Company
Consolidated Balance Sheets
(In thousands)
August 31, May 31,
2008 2008
(unaudited)
Assets
Current assets:
Cash and cash equivalents $18,819 $21,989
Accounts receivable, less allowances
(August 31, 2008 - $315 and May 31, 2008 - $269) 111,028 105,858
Costs and estimated earnings in excess of billings
on uncompleted contracts47,126 49,940
Inventories 5,870 4,255
Deferred income taxes 4,993 4,399
Prepaid expenses 4,426 3,357
Other current assets809 809
Total current assets 193,071 190,607
Property, plant and equipment at cost:
Land and buildings 24,147 24,268
Construction equipment 47,861 47,370
Transportation equipment 17,081 16,927
Furniture and fixtures 11,840 11,781
Construction in progress 8,610 6,712
109,539 107,058
Accumulated depreciation(51,174)(49,811)
58,365 57,247
Goodwill 23,103 23,329
Other assets2,781 3,410
Total assets $277,320$274,593
Matrix Service Company
Consolidated Balance Sheets
(In thousands, except share data)
August 31,May 31,
20082008
(unaudited)
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$51,236 $53,560
Billings on uncompleted contracts in excess of
costs and estimated earnings43,110 48,709
Accrued insurance 8,771 8,451
Accrued wages and benefits 10,361 14,976
Income tax payable6,047 2,028
Current capital lease obligation 1,107 1,042
Other accrued expenses2,046 1,015
Total current liabilities 122,678 129,781
Long-term capital lease obligation947 1,000
Deferred income taxes 4,950 5,112
Stockholders' equity:
Common stock - $.01 par value; 60,000,000 shares
authorized; 27,888,217 shares issued as of
August 31, 2008 and May 31, 2008 279 279
Additional paid-in capital 109,528 108,402
Retained earnings54,312 44,809
Accumulated other comprehensive income 947 1,584
165,066 155,074
Less: Treasury stock, at cost - 1,806,150 and
1,825,600 shares as of August 31, 2008 and
May 31, 2008 (16,321)(16,374)
Total stockholders' equity148,745 138,700
Total liabilities and stockholders' equity $277,320$274,593
Results of Operations
(In thousands)
Repair &
Construction Maintenance
Services ServicesOther Total
Three Months Ended
August 31, 2008
Gross revenues $122,361 $72,167 $ -$194,528
Less: Inter-segment revenues 7,603 275- 7,878
Consolidated revenues114,758 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 9301,136 3,105
Depreciation expense 1,412 969- 2,381
Three Months Ended
August 31, 2007
Gross revenues $103,017 $63,985 $ -$167,002
Less: Inter-segment revenues 4,238 1,437- 5,675
Consolidated revenues 98,779 62,548- 161,327
Gross profit 8,673 10,231- 18,904
Operating income (loss)3,924 7,019 (85) 10,858
Income (loss) before income
tax expense 3,713 6,932 (85)10,560
Net income (loss) 2,227 4,160 (51) 6,336
Segment assets 135,094 86,732 19,301 241,127
Capital expenditures 1,506 672 710 2,888
Depreciation and amortization
expense 1,053 721- 1,774
Segment revenue from external customers by market is as follows:
Repair &
Construction Maintenance
Services Services Total
(In thousands)
Three Months Ended August 31, 2008
Aboveground Storage Tanks$55,869 $47,897 $103,766
Downstream Petroleum 38,547 21,245 59,792
Electrical and Instrumentation11,4742,750 14,224
Specialty 8,868-8,868
Total $114,758 $71,892 $186,650
Three Months Ended August 31, 2007
Aboveground Storage Tanks$39,474 $41,529 $81,003
Downstream Petroleum 33,551 17,537 51,088
Electrical and Instrumentation 2,1723,4825,654
Specialty 23,582- 23,582
Total$98,779 $62,548 $161,327
Non-GAAP Financial Measure
EBITDA is a supplemental, non-GAAP financial measure. EBITDA is defined
as earnings before net interest expense, income 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 that
are excluded. Our non-GAAP performance measure, EBITDA, has certain material
limitations as follows:
-- It does not include interest income or expense. Because we borrow
money from time to time 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 expense. Because we use capital
assets to generate revenue, depreciation expense is a necessary element
of our cost structure. Therefore, any measure that excludes
depreciation expense has material limitations.
A reconciliation of EBITDA to net income follows:
Three Months Ended
August 31, 2008August 31, 2007
(In thousands)
Net income$9,504 $6,336
Interest expense, net 5288
Provision for income taxes 5,836 4,224
Depreciation and amortization 2,381 1,774
EBITDA $17,726$12,622
SOURCE Matrix Service Co.
