MTRX

Matrix Service Company (MTRX)

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Exchange: NASDAQ
Industry: Basic Industries
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Matrix Service (MTRX)

Q1 2013 Earnings Call

November 09, 2012 11:00 am ET

Executives

Kevin S. Cavanah - Chief Financial Officer, Chief Accounting Officer, Vice President and Secretary

John R. Hewitt - Chief Executive Officer, President and Director

Analysts

Richard Wesolowski - Sidoti & Company, LLC

Michael J. Harrison - First Analysis Securities Corporation, Research Division

Tahira Afzal - KeyBanc Capital Markets Inc., Research Division

Martin W. Malloy - Johnson Rice & Company, L.L.C., Research Division

Stephen Ragard - Stephens Inc., Research Division

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Matrix Service Company conference call to discuss results for the first quarter ended September 30. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host for today, Mr. Kevin Cavanah, Vice President and CFO. Sir, you may begin.

Kevin S. Cavanah

Thank you. I would now like to take a moment to read the following. Various remarks the company may make about future expectations, plans and 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 fiscal year ended June 30, 2012, and in subsequent filings made by the company with the SEC.

I will now turn the call over to John Hewitt, President and CEO of Matrix Service Company.

John R. Hewitt

Thank you, Kevin, and good morning, everyone. We appreciate you joining us on the call this morning.

Before discussing our first quarter results, I want to provide some brief comments related to Hurricane Sandy and our operations on the East Coast. First of all, our best wishes, thoughts and prayers are with our employees, family members, friends and the local communities in which we work as they recover from the destruction caused by Hurricane Sandy. Many of our employees in the northeastern U.S. have been working around-the-clock in response to Hurricane Sandy, the health and safety of those individuals and all our employees has been our top priority. All of our offices on the East Coast are up and running and many of our clients are beginning to return to normal operations. I want to thank our employees and all other storm response personnel in the area for their hard work and dedication to improving the condition of those impacted by the storm.

Regarding our operations, we continue to execute on our strategic objectives and are satisfied that the business is responding as we expected. The performance in the first quarter was strong and reflects the company's hard work. Our strategic focus areas are beginning to gain traction, supported by continued strength in the markets we serve.

Matrix Service Company booked nearly $250 million of new work in the first 3 months of fiscal 2013. Our consolidated backlog continues to increase and was $534.6 million as of September 30, 2012.

The company continues to see a strong bid pipeline and new opportunities opening up in connection with our strategic objectives. We have laid the groundwork for this growth in several ways: Key talent additions throughout the organization, re-segmenting to improve both internal and external visibility of our business and launching a new brand and corporate identity to better position the company going forward.

Regarding acquisitions. We are actively pursuing several opportunities, as well as reaching out to potential targets on a consistent basis. We are committed to find the right opportunities for the company that will supplement our existing service offering and further strengthen our strategic growth areas.

Now a few words about our segments. The Electrical Infrastructure segment continues to see solid margins and consistent work in the northeastern region of the United States. As mentioned on our last call, the company's reputation for providing transmission, distribution, substation and strong response work is growing throughout the Northeast due to our capable employees and quality work performed in a safe and professional manner.

We continued to view our Electrical Infrastructure segment as a high-growth area within the company and are actively looking for acquisition opportunities that complement the profile of our existing business.

I'm also pleased to announce that Matrix SME was recently awarded contracts in excess of $12 million for high-voltage transmission work throughout New Jersey. These awards further demonstrate the company's capabilities in the Transmission and Distribution industry, as well as our commitment to growth within our Electrical Infrastructure segment.

In addition, we are currently pursuing opportunities for natural gas-fired combined cycle power generation projects on the East Coast, which we believe will add to the strength of this segment.

Our Oil, Gas & Chemical segment continues to see strong growth in the turnaround maintenance and industrial cleaning spaces. The West Coast, Gulf Coast and Mid-Continent states continue to represent areas of strength for our plant services work, although we continue to make steady progress in other areas throughout the U.S. including recent plant projects in Hawaii, Alaska, Wyoming and Utah.

Also in the quarter, we performed turnaround and maintenance work for the new owners of the refinery in Trainer, Pennsylvania, which represents an improvement in this area from previous quarters.

Additionally, our industrial cleaning business is successfully bidding work alongside our plant maintenance teams, focusing on supplementing core services with higher margins specialty work. This ability to cost leverage our services was a key strategic objective and we're beginning to see results.

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