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Matrix Service Co. (MTRX)
F2Q10 (Qtr End 12/31/09) Earnings Call
February 4, 2010 11:00 am ET
Truc Nguyen - Investor Relations
Michael Bradley - Chief Executive Officer
Tom Long - Chief Financial Officer
Matt Duncan - Stephens, Inc.
Michael Harrison - First Analysis Corporation
Richard Wesolowski - Sidoti & Company
Martin Malloy - Johnson Rice & Company
Tahira Azfal - KeyBanc Capital Markets
David Yuschak - Madison Williams & Company
Richard Wesolowski - Sidoti & Company
Previous Statements by MTRX
» Matrix Service Co. F1Q10 (Qtr End 09/30/2009) Earnings Call Transcript
» Matrix Service Co. F4Q09 (Qtr End 05/31/09) Earnings Call Transcript
» Matrix Service Co. F3Q09 (Qtr End 02/28/09) Earnings Call Transcript
It is now my pleasure to introduce your host, Trúc Nguyen, Investor Relations for Matrix Service Company. Thank you. Ms. Nguyen, you may now begin.
I would now like to take a moment to read the following. Various remarks that the company may make about future expectations, plans, prospects for Matrix Service Company constitute forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various factors, including those discussed in our Annual Report on Form 10-K for our last fiscal year and in subsequent filings made by the company with the SEC.
I would now turn the call over to Michael Bradley, President and CEO of Matrix Service Company. Mike?
Tom Long, our Chief Financial Officer is with me on the call this morning. We appreciate you joining us to discuss our recently completed second quarter of fiscal 2010.
Before I turn the call over to Tom to discuss the financial results, I would like to comment on our operating performance and highlight our progress in reducing our cost structure and further diversifying our business. I will conclude my remarks with a brief discussion of our outlook for the remainder of fiscal 2010.
This morning we announced our fiscal 2010 earnings for the quarter and year-to-date, which were in line with our projections at the beginning of the fiscal year and reflect the challenging environment that we anticipated and discussed during previous calls.
I am pleased with the execution of our employees in this tough market and competitive environment. Our project teams continue to deliver solid gross profits and excellent safety performance. Our backlog was essentially flat quarter-over-quarter, as we added $100 million in new construction projects during the quarter, which is the highest quarter in almost two years. This was driven primarily from new awards in the Power, and Electrical and Instrumentation, or E&I market, which has been a focus of our growth and diversification strategy.
The Repair and Maintenance backlog was down quarter-over-quarter due to continued soft, aboveground storage tank and downstream petroleum markets, partially offset by increase in the E&I services market, which again highlights our diversification.
Bid activity for our fiscal year 2011, turnaround business has picked up significantly, which is a positive indicator of the longer-term outlook for our downstream petroleum business, however, near-term, the environment challenging.
We continue to improve on our financial position, which remains very strong with over $60 million in cash and no debt. We have ample bonding capacity and are more encouraged today with what we see developing in new construction opportunities across several of our markets. Our project opportunities are of greater scale, with many opportunities exceeding $50 million. Many of these new opportunities really result from our expanded and diversified capabilities, plus our continued investment in business development and project personnel.
We are now tracking projects in excess of $3 billion in our traditional North American market and over $600 million of projects in international markets. Overall, the level of bid activity has increased significantly, with extensive opportunities in Power, E&I, aboveground storage tank alternative energy, and as I just mentioned, turnarounds for our fiscal year 2011.
We remain well positioned to grow significantly as the economy improves. We're expanding our customer base, leveraging our capabilities in E&I, Power and steel plate structures, maximizing the scope of our Engineering and Construction capabilities, and identifying potential acquisitions. We are focused on geographic expansion in the U.S., Canada and select international markets.
These extended capabilities also enable us to pursue a broad range of renewable energy projects and to support air quality control programs for domestic utilities. This increased scope of our engineering organization allows us to provide front-end engineering and design studies to a number of mature and emerging market sectors. We are really pleased with the results of our diversification efforts, at the same time we remain committed to serving and expanding our core customers and markets.
It is clear that against the backdrop of a stabilizing domestic economy, each of the market sectors we serve will recover at a different rate. Increasing activity from new storage, gas powered generation and a commitment to lower greenhouse gases creates significant new business prospects in the near-term.
The development of next-generation nuclear power stations and clean coal technology creates opportunities to materially expand our capital construction, for it may really mean intermediate and long-term.
We also have the capability to deliver EPC solutions for renewable energy programs, including conceptual design, detailed engineering, construction and overall program management. In conjunction with their development many renewable projects require the design and construction of new electrical infrastructure for which we are also well positioned.
We remain cautious as to the timing of the recovery in the downstream petroleum market as there continue to be global market dynamics and domestic legislative agendas that could impact capital spending decisions in refinery operations.