• Matrix Service Company closed on its acquisition of Kvaerner North American Construction
• Quarterly revenues of $311.0 million were a record and increased by 40.5% over the prior year
• Second quarter fully diluted earnings per share was $0.38 compared to $0.21 in the same period a year earlier
• Record backlog of $882.6 million on project awards of $278.8 million and acquired backlog of $242.0 million

TULSA, Okla., Feb. 5, 2014 (GLOBE NEWSWIRE) -- Matrix Service Company (Nasdaq:MTRX) today reported its financial results for the second quarter and six months ended December 31, 2013. The trend of strong revenue, earnings and backlog growth continued in the second quarter of fiscal 2014 with quarterly revenues of $311.0 million, $0.38 of earnings per fully diluted share and period end backlog of $882.6 million.

Impact of Previously Announced Acquisition to Earnings

As previously announced, on December 21, 2013 the Company completed the acquisition of Kvaerner North American Construction, a premier provider of capital construction and maintenance services to power generation, integrated iron and steel, and industrial process facilities in North America. Since this acquisition occurred late in the fiscal quarter, acquisition related revenues and earnings were not significant. However, the Company recorded a charge to selling, general and administrative costs of $2.0 million for transaction related fees.

John Hewitt, President and CEO of Matrix Service Company said, "Our second quarter results are visible indications of the progress we are achieving toward our strategic plan and the hard work of our talented employees, which is clearly demonstrated by our record revenues and improving margins. Our liquidity position remains strong and continues to provide us with the necessary resources to achieve both our short and long-term business objectives. The recent acquisition significantly enhances our capabilities and geographic footprint and will enable us to continue to grow the business, particularly in the Electrical Infrastructure and Industrial segments."

Second Quarter Fiscal 2014 Results

Revenues for the second quarter ended December 31, 2013 were $311.0 million compared to $221.4 million in the same period a year earlier, an increase of $89.6 million, or 40.5%. Net income for the second quarter of fiscal 2014 was $10.3 million, or $0.38 per fully diluted share. In the same period a year earlier, the Company earned $5.4 million, or $0.21 per fully diluted share.

Revenues increased in our Storage Solutions and Industrial segments by $82.9 million and $24.1 million, respectively. Revenues in the Electrical Infrastructure and Oil Gas & Chemical segments declined by $12.9 million and $4.5 million, respectively. Strong project execution enabled the Company to achieve a fiscal 2014 gross margin of 11.0% despite a Storage Solutions project charge of $4.4 million, which reduced margins by 1.5%. Gross margins were 10.1% in the second quarter of fiscal 2013. Consolidated gross profit was $34.2 million in the second quarter of fiscal 2014 compared to $22.3 million in the same period a year earlier due to higher revenues and higher gross margins. Selling, general and administrative costs were $19.3 million, in the second quarter of fiscal 2014 compared to $13.6 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 0.6% to 6.2% in fiscal 2014 compared to 6.1% in the same period a year earlier.

Six Month Fiscal 2014 Results

Revenues for the six months ended December 31, 2013 were $537.2 million compared to $431.0 million in the same period a year earlier, an increase of $106.2 million, or 24.6%. Net income for the first six months of fiscal 2014 was $16.9 million, or $0.63 per fully diluted share. In the same period a year earlier, the Company earned $10.1 million, or $0.39 per fully diluted share.

Revenues increased in our Storage Solutions and Industrial segments by $86.8 million and $41.8 million, respectively. Revenues in the Electrical Infrastructure and Oil Gas & Chemical segments declined by $13.3 million and $9.1 million, respectively. Strong project execution enabled the Company to achieve a fiscal 2014 gross margin of 11.1% despite a Storage Solutions project charge of $4.0 million, which reduced margins by 0.9%. In the same period a year earlier gross margins were 10.3%. Consolidated gross profit was $59.6 million in the first six months of fiscal 2014 compared to $44.6 million in the same period a year earlier due to higher revenues and higher gross margins. Selling, general and administrative costs were $34.0 million in fiscal 2014 compared to $27.9 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 0.4% to 6.3% in fiscal 2014 compared to 6.5%, in the same period a year earlier. 

Backlog

Backlog at December 31, 2013 totaled $882.6 million, an increase of $255.9 million, or 40.8%, compared to the backlog at June 30, 2013 of $626.7 million, and increased $209.8 million, or 31.2%, compared to September 30, 2013 backlog of $672.8 million. Project awards totaled $278.8 million and $551.1 million in the three and six months ended December 31, 2013. Backlog at December 31, 2013 also includes acquired backlog of $242.0 million.

Income Tax Expense

The effective tax rates in the three and six months ended December 31, 2013 was 28.4% and 32.2%, respectively. The rates were lower than the comparable periods in the prior year primarily due to a revision to the estimated benefit of the federal R&D tax credit available to the Company.

Financial Position

The net purchase price of Kvaerner North American Construction was $51.4 million and was funded with cash on hand and $15.0 million in borrowings under the senior credit facility. At December 31, 2013, the Company's cash balance was $73.3 million. The cash balance along with availability under the senior credit facility gives the Company liquidity of $162.0 million.

Earnings Guidance

The Company is increasing its fiscal 2014 revenue guidance to between $1.20 billion and $1.25 billion and its earnings per fully diluted share guidance to between $1.15 and $1.30.

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 Thursday, February 6, 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.

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 December 31, 2013

The following table provides a summary of changes in our backlog for the three months ended December 31, 2013:

Six Months Ended December 31, 2013

The following table provides a summary of changes in our backlog for the six months ended December 31, 2013: