Matrix Service (MTRX)
Q4 2011 Earnings Call
September 08, 2011 11:00 am ET
John Hewitt - Chief Executive Officer and President
Kevin Cavanah - Chief Financial Officer and Vice President
Michael Harrison - First Analysis Securities Corporation
Matthew Tucker - KeyBanc Capital Markets Inc.
William Bremer - Maxim Group LLC
Matt Duncan - Stephens Inc.
Martin Malloy - Johnson Rice & Company, L.L.C.
Unknown Analyst -
Richard Wesolowski - Sidoti & Company, LLC
Previous Statements by MTRX
» Matrix Service's CEO Discusses Q3 2011 Results - Earnings Call Transcript
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Thank you, Ron. I would now like to take a moment to read the following. Various remarks that the company may make about future expectations, plans and prospects for Matrix Service Co. constitute forward-looking statements for the 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 fiscal year ended June 30, 2011, and in subsequent filings made by the company with the SEC.
I would now like to turn the call over to John Hewitt, President and CEO of Matrix Service Co., John?
Thank you, Kevin. Good day, everyone, and thank you for joining us today to discuss the results for the fourth quarter and fiscal year ended June 30, 2011. In a few minutes, Kevin will review the financial results, and I would like to briefly comment on the company's operating performance in fiscal 2011.
Although fiscal 2011 was a good year for Matrix Service Co., as both revenues and backlog increased from lower levels experienced during the recession that impacted fiscal 2010, gross margins are improved significantly in fiscal 2011, reflecting better project execution and a recovery of construction overhead costs due to higher business volume and man hours. Our Electrical and Instrumentation group was a major contributor to the company's improvement in fiscal 2011 with E&I group achieving revenue growth of 58% in fiscal 2011 compared to the prior year. In addition, our Aboveground Storage Tank construction group achieved revenue growth of 35% in fiscal 2011. Growth in these groups was partially offset by continued weakness in the Downstream Petroleum market with both the Repair and Maintenance Services and Construction Services segments combining for an 8% decline year-over-year.
We are, however, optimistic about the near-term prospects for the Downstream Petroleum market as backlog has increased over the last half of fiscal 2011. Finally, our balance sheet and liquidity remain very strong, positioning the company to execute on our strategic plans, which I will discuss later on this call.
I'd now like to turn the call over to Kevin to discuss our financial results for the period.
Thanks, John. In our press release yesterday, we disclosed the results of the fourth quarter and the full year of fiscal 2011. As I go through my prepared remarks, please note that the fourth quarter and full-year results for fiscal 2010 included certain non-routine charges that were previously disclosed in our SEC filings. We did not incur similar charges in fiscal 2011.
First of all, revenues for the fourth quarter ended June 30, 2011, were $164 million compared to $141 million in fiscal 2010. The increase of $23 million was primarily due to turnaround activity in the Downstream Petroleum market, new awards in our AST Construction Services segment and continued growth in our Electrical and Instrumentation, Repair and Maintenance business. Consolidated gross margins for the quarter were 12.8%, compared to 2.7% in the fourth quarter last year. SG&A expenses were 6.9% of revenue for the fourth quarter compared to 7.4% in the same period last year. This produced net income for the fourth quarter of fiscal 2011 of $5.7 million or $0.21 per fully diluted share compared to a net loss of $4.2 million or $0.16 per fully diluted share in the fourth quarter last year.
Construction Services segment revenues were $86 million in the quarter compared to $87 million in the same period of last year. Gross margins in Construction Services segment were 14.2% compared to 1.5% in the prior year. The gross margins benefited from strong project execution throughout the quarter.
Repair and Maintenance Services segment revenues increased to $78 million in the fourth quarter compared to $54 million in the prior year. The increase resulted from higher demand in the Downstream Petroleum and Electrical and Instrumentation markets. Gross margins in Repair and Maintenance Services segment were 11.2% in the fourth quarter compared to 4.6% in the prior year.
For fiscal year 2011, revenues were $627 million, an increase of $76 million from consolidated revenues of $551 million in fiscal 2010. This 14% increase reflects improvement in many of our end markets in spite of the continued effects of the global recession. Business activity increased for our AST Construction Services and for both our Electrical and Instrumentation, Construction and Repair and Maintenance Services. Consolidated gross margins were 11.9% for fiscal 2011 compared to 9.6% in the prior year. SG&A expenses in fiscal 2011 were 7% of revenues compared to 8.2% in the prior year. Net income for fiscal 2011 was $19 million or $0.71 per fully diluted share compared to $4.9 million or $0.18 per fully diluted share in fiscal 2010.