Matrix Service Company Announces Strong Finish to Fiscal 2015

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  • Company achieves fourth quarter earnings per share of $0.40; full year earnings per share of $0.63
  • Fourth quarter revenue increases to $370.5 million; full year revenue increases to $1.35 billion
  • Recently announced Energy Transfer Partners award increases year-end backlog to $1.4 billion and full year project awards to $1.8 billion
  • Fiscal 2016 earnings guidance: revenue of $1.4 to $1.6 billion and fully diluted EPS of $1.45 to $1.75

TULSA, Okla., Aug. 31, 2015 (GLOBE NEWSWIRE) -- Matrix Service Company MTRX today reported its financial results for the fourth quarter and year ended June 30, 2015.

"As we close the books on fiscal 2015, our business is strong and I am confident in our fiscal 2016 guidance" said John R. Hewitt, President and CEO of Matrix Service Company. "We have begun work on the Napanee Generating Station and all six terminals for Energy Transfer's Dakota Access Pipeline, two foundational projects for fiscal 2016 and 2017. Our reputation and continued diversification has resulted in record backlog; our proposal funnel is full; we have a strong balance sheet; and we continue to invest in our people, processes and systems."

In addition to achieving record revenue, new awards and backlog, the company also achieved a recordable incident rate of 0.60 for fiscal year 2015, ranking them among the leaders in the industry for safety performance. Hewitt added "I am especially proud of our employees' commitment to our core values, of which safety is first, and to our long-term strategy. It is their collective effort that defines the quality of our work, the strength of our client relationships and our ongoing success."

Fourth Quarter Fiscal 2015 Results

Revenue for the fourth quarter ended June 30, 2015 was $370.5 million compared to $344.4 million in the same period a year earlier, an increase of $26.1 million, or 7.6%. In fiscal 2015, the Company generated net income of $10.9 million, or $0.40 per fully diluted share. In the same period a year earlier, the Company earned $7.6 million, or $0.28 per fully diluted share.

On a segment basis, revenue increased in the Oil Gas & Chemical and Electrical Infrastructure segments by $28.7 million and $28.2 million respectively, partially offset by decreases of $23.3 million and $7.5 million in the Industrial and Storage Solutions segments.

Consolidated gross profit was $40.4 million in the three months ended June 30, 2015 compared to $36.9 million in the three months ended June 30, 2014. Fiscal 2015 gross margins were 10.9% compared to 10.7% in the same period a year earlier.

Selling, general and administrative costs were $22.0 million in the fourth quarter of fiscal 2015, compared to $22.7 million in the same period a year earlier. SG&A expense as a percentage of revenue decreased to 5.9% in the three months ended June 30, 2015 as compared to 6.6% for the three months ended June 30, 2014.

Fiscal 2015 Results

Revenue for the year ended June 30, 2015 was $1.349 billion compared to $1.263 billion in the same period a year earlier, an increase of $86.2 million, or 6.8%. In fiscal 2015, the Company earned net income of $17.2 million, or $0.63 per fully diluted share. In the same period a year earlier, the Company earned $35.8 million, or $1.33 per fully diluted share. In fiscal 2015, the Company recorded charges on an acquired EPC joint venture project discussed in previous earnings releases of $53.4 million. The Company's portion of these losses totaled $34.7 million. The charges, which were partially offset by lower incentive compensation, reduced earnings for the period by $0.67 per fully diluted share.

On a segment basis, consolidated revenue increased in the Industrial, Oil Gas & Chemical and Electrical Infrastructure segments by $69.8 million, $65.7 million and $58.5 million respectively, partially offset by a decrease in the Storage Solutions segment of $107.8 million.

Consolidated gross profit was $87.4 million in the year ended June 30, 2015 compared to $136.5 million in same period a year earlier. Fiscal 2015 gross margins were reduced by 4.4% to 6.5% related to charges of $53.4 million on an acquired EPC joint venture power generation project. Fiscal 2014 gross margins were 10.8%.

Consolidated SG&A expenses were $78.6 million in the year ended June 30, 2015 compared to $77.9 million in the same period a year earlier. SG&A expense as a percentage of revenue was 5.8% in the year ended June 30, 2015 compared to 6.2% in the same period a year earlier.

Income Tax Expense

The effective tax rates were 38.4% and 37.0% for the three months and fiscal year ended June 30, 2015. The Company estimates that its fiscal 2016 effective tax rate will approximate 37.0%.

Backlog

Backlog at June 30, 2015 totaled $1.414 billion, an increase of $498.7 million, or 54.4%, compared to the backlog at June 30, 2014 of $915.8 million, and increased by $175.2 million compared to the March 31, 2015 backlog of $1.239 billion. Project awards totaled $545.8 million and $1.848 billion in the three months and fiscal year ended June 30, 2015, respectively.

Financial Position

The Company's cash balance increased to $79.2 million at June 30, 2015 as compared to $77.1 million a year earlier. The cash balance along with availability under the senior credit facility gives the Company liquidity of $174.8 million. In fiscal 2015, the Company generated $23.2 million from operations, funded capital expenditures of $15.8 million, an acquisition of $5.6 million and repurchased shares of $5.0 million while reducing the outstanding balance under the senior credit facility by $2.8 million.

Earnings Guidance

The Company continues to expect fiscal 2016 revenue will be between $1.4 billion and $1.6 billion and earnings will be between $1.45 and $1.75 per fully diluted share. The Company is anticipating normal quarterly variability with the first quarter being the lowest as activity in the Oil Gas and Chemical segment is typically slower in the summer months.

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 10:30 a.m. (Eastern) / 9:30 a.m. (Central) on Tuesday, September 1, 2015 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.

Matrix Service Company
Consolidated Statements of Income
(In thousands, except per share data)
         
  Three Months Ended Twelve Months Ended
  June 30, June 30, June 30, June 30,
  2015 2014 2015 2014
Revenues  $ 370,537  $ 344,358  $ 1,349,255  $ 1,263,089
Cost of revenues 330,133 307,455 1,261,885 1,126,616
Gross profit 40,404 36,903 87,370 136,473
Selling, general and administrative expenses 22,030 22,694 78,568 77,866
Operating income 18,374 14,209 8,802 58,607
Other income (expense):        
Interest expense (290) (538) (1,236) (1,436)
Interest income 78 55 468 112
Other (123) (325) 158 (472)
Income before income tax expense 18,039 13,401 8,192 56,811
Provision for federal, state and foreign income taxes 6,819 5,179 10,090 19,934
Net income (loss) 11,220 8,222 (1,898) 36,877
Less: Net income (loss) attributable to noncontrolling interest 304 666 (19,055) 1,067
Net income attributable to Matrix Service Company $10,916 $7,556 $17,157 $35,810
Basic earnings per common share  $ 0.41  $ 0.29  $ 0.64  $ 1.36
Diluted earnings per common share  $ 0.40  $ 0.28  $ 0.63  $ 1.33
Weighted average common shares outstanding:        
Basic 26,633 26,423 26,603 26,288
Diluted 27,132 27,115 27,177 26,976
         
         
Matrix Service Company
Consolidated Balance Sheets
(In thousands)
     
  June 30, June 30,
  2015 2014
Assets    
Current assets:    
Cash and cash equivalents  $ 79,239  $ 77,115
Accounts receivable, less allowances (2015 -- $561 ; 2014 -- $204) 199,149 204,692
Costs and estimated earnings in excess of billings on uncompleted contracts 86,071 73,008
Inventories 2,773 3,045
Income taxes receivable 579 2,797
Deferred income taxes 7,705 5,994
Other current assets 5,660 8,897
Total current assets 381,176 375,548
Property, plant and equipment, at cost:    
Land and buildings 32,746 31,737
Construction equipment 87,561 82,745
Transportation equipment 47,468 42,087
Office equipment and software 28,874 26,026
Construction in progress 5,196 9,892
Total property, plant and equipment - at cost 201,845 192,487
Accumulated depreciation (116,782) (103,315)
Property, plant and equipment - net 85,063 89,172
Goodwill 71,518 69,837
Other intangible assets 23,961 28,676
Other assets 3,947 5,699
Total assets  $ 565,665  $ 568,932
     
     
Matrix Service Company
Consolidated Balance Sheets (continued)
(In thousands, except share data)
     
  June 30, June 30,
  2015 2014
Liabilities and stockholders' equity    
Current liabilities:    
Accounts payable $ 122,021  $ 111,863
Billings on uncompleted contracts in excess of costs and estimated earnings 102,475 108,440
Accrued wages and benefits 26,725 36,226
Accrued insurance 8,100 8,605
Income taxes payable 3,268
Other accrued expenses 4,498 4,727
Total current liabilities 267,087 269,861
Deferred income taxes 5,220 5,167
Borrowings under senior credit facility 8,804 11,621
Total liabilities 281,111 286,649
Commitments and contingencies    
Stockholders' equity:    
Common stock—$.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of June 30, 2015 and June 30, 2014; 26,440,823 and 26,434,447 shares outstanding as of June 30, 2015 and June 30, 2014 279 279
Additional paid-in capital 123,038 119,777
Retained earnings 194,394 177,237
Accumulated other comprehensive income (5,926) (182)
  311,785 297,111
Less treasury stock, at cost — 1,447,394 and 1,453,770 shares as of June 30, 2015 and June 30, 2014 (18,489) (16,595)
Total Matrix Service Company stockholders' equity 293,296 280,516
Noncontrolling interest (8,742) 1,767
Total stockholders' equity 284,554 282,283
Total liabilities and stockholders' equity  $ 565,665  $ 568,932
     
     
Results of Operations
(In thousands)
           
  Electrical Oil Gas & Storage    
  Infrastructure Chemical Solutions Industrial Total
Three Months Ended June 30, 2015          
Gross revenues  $ 101,616  $ 82,596  $ 133,178  $ 57,146  $ 374,536
Less: inter-segment revenues 1,810 314 1,875 3,999
Consolidated revenues 101,616 80,786 132,864 55,271 370,537
Gross profit 7,532 6,395 18,089 8,388 40,404
Operating income 2,191 1,241 10,284 4,658 18,374
           
Three months ended June 30, 2014          
Gross revenues  $ 73,369  $ 52,106  $ 140,496  $ 78,535  $ 344,506
Less: inter-segment revenues 16 132 148
Consolidated revenues 73,369 52,090 140,364 78,535 344,358
Gross profit 7,474 5,298 16,554 7,577 36,903
Operating income 3,045 1,017 7,634 2,513 14,209
           
Twelve Months Ended June 30, 2015          
Gross revenues  $ 264,050  $ 310,826  $ 504,155  $ 281,319  $ 1,360,350
Less: inter-segment revenues 5,466 1,032 4,597 11,095
Consolidated revenues 264,050 305,360 503,123 276,722 1,349,255
Gross profit (31,444) 25,394 58,085 35,335 87,370
Operating income (loss) (44,293) 7,064 29,069 16,962 8,802
           
Twelve Months Ended June 30, 2014          
Gross revenues  $ 205,570  $ 240,131  $ 611,826  $ 206,933  $ 1,264,460
Less: inter-segment revenues 441 930 1,371
Consolidated revenues 205,570 239,690 610,896 206,933 1,263,089
Gross profit 20,629 26,912 68,448 20,484 136,473
Operating income 7,703 9,939 34,310 6,655 58,607

Backlog

We define backlog as the total dollar amount of revenue 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 amount.

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.

Three Months Ended June 30, 2015

The following table provides a summary of changes in our backlog for the three months ended June 30, 2015:

  Electrical Oil Gas & Storage    
  Infrastructure Chemical Solutions Industrial Total
  (In thousands)
Backlog as of March 31, 2015  $ 553,068  $ 133,614  $ 408,302  $ 144,251  $ 1,239,235
Net awards 36,401 80,157 395,055 34,167 545,780
Revenue recognized (101,616) (80,786) (132,864) (55,271) (370,537)
Backlog as of June 30, 2015  $ 487,853  $ 132,985  $ 670,493  $ 123,147  $ 1,414,478

Twelve Months Ended June 30, 2015

The following table provides a summary of changes in our backlog for the twelve months ended June 30, 2015:

  Electrical Oil Gas & Storage    
  Infrastructure Chemical Solutions Industrial Total
  (In thousands)
Backlog as of June 30, 2014  $ 162,136  $ 110,217  $ 482,631  $ 160,842  $ 915,826
Net awards 589,767 328,128 690,985 239,027 1,847,907
Revenue recognized (264,050) (305,360) (503,123) (276,722) (1,349,255)
Backlog as of June 30, 2015  $ 487,853  $ 132,985  $ 670,493  $ 123,147  $ 1,414,478
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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