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Matrix Service Company Reports Third Quarter Results; Lowers Fiscal 2016 Guidance

TULSA, Okla., May 04, 2016 (GLOBE NEWSWIRE via COMTEX) --

Matrix Service Company MTRX, +1.33% a leading contractor to the energy, power and industrial markets across North America, today reported its financial results for its third quarter and nine months ended March 31, 2016.

Key highlights:

  • Year-to-date revenue in the Electrical and Storage Solutions segments increased 54.8% and 7.8%, respectively, while market conditions negatively impacted the Industrial and Oil Gas & Chemical segments
  • Consolidated gross profit for the three and nine months ended March 31, 2016 was $27.3 million and $91.9 million compared to $2.6 million and $47.0 million for the same periods in fiscal 2015
  • Fully diluted quarterly earnings per share increased to $0.16 from a loss of $0.11 a year earlier
  • Backlog remains healthy at $1.03 billion with an increase in project awards of 26.4% over the prior period
  • Total liquidity improved 11.3% to $239.9 million at March 31, 2016
  • Company completed $5.5 million in quarterly share repurchases for a total of $10.5 million over the last 12 months

"Third quarter gross margin performance in our primary segments was strong, we received new awards of nearly $225 million in the quarter, and we generated positive cash from operations while also closing an acquisition and repurchasing stock," said John R. Hewitt, Matrix Service Company's President and Chief Executive Officer. "That said, because of the negative impact of low commodity prices and reduced gross margins in our Oil Gas & Chemical and Industrial segments, earnings have trailed our expectations. While we still expect overall improvement in operating results in the fourth quarter, low commodity prices will continue to impact our business. We are, therefore, adjusting guidance for the remainder of the fiscal year."

Hewitt added that despite continued market volatility, long-term opportunities for growth in the Company's diversified portfolio and proposal activity across its primary segments remain strong.

"We remain confident in our ability to win projects in an increasingly competitive environment," said Hewitt. "However, a more cautious approach to decision-making on the part of clients, together with more conservative financial and regulatory requirements, will impact the timing of those awards. Improvement in the global economy and the commodity supply demand imbalances will provide additional stimulus for consolidated backlog growth."

Third Quarter Fiscal 2016 Results

Consolidated revenue was $309.4 million for the three months ended March 31, 2016, compared to $314.2 million in the same period in the prior fiscal year. On a segment basis, consolidated revenue increased in the Electrical Infrastructure and Storage Solutions segments by $46.2 million and $25.4 million, respectively. These increases were offset by decreased revenue in the Oil Gas & Chemical and Industrial segments of $40.1 million and $36.3 million, respectively.

Consolidated gross profit increased to $27.3 million in the three months ended March 31, 2016 compared to $2.6 million in the three months ended March 31, 2015. Consolidated gross margins were 8.8% in the three months ended March 31, 2016 compared to 0.8% for the three months ended March 31, 2015.

On a segment basis, gross profit increased by $32.8 million in the Electrical Infrastructure segment with a fiscal 2016 gross margin of 11.0%. Electrical Infrastructure margins for fiscal 2015 were negatively impacted by a joint venture project charge of $28.5 million on the Garrison Energy Center project, of which $10.0 million was our joint venture partner's share and was reported as non-controlling interest. This charge reduced fiscal 2015 margins by 57.7% to (46.5%). Gross profit in the Storage Solutions segment increased $3.9 million with fiscal 2016 margins of 11.4%. Gross profit decreased in the Industrial and Oil Gas & Chemical segments by $7.4 million and $4.7 million respectively. Fiscal 2016 gross margins of (3.1%) and 4.7% in the Industrial and Oil Gas & Chemical segments were the result of unfavorable market conditions including lower levels of maintenance and turnaround work, as well as fewer higher margin capital projects which resulted in less recovery of fixed overhead costs. Additionally, a project charge in our upstream business and a forecasted unfavorable customer settlement in the Industrial segment also impacted these margins.

Consolidated SG&A expenses increased to $21.0 million for the three months ended March 31, 2016 compared to $17.1 million in the same period a year earlier. The increase was primarily due to lower fiscal 2015 incentive compensation and fiscal 2016 acquisition related costs of $0.8 million.

Nine Month Fiscal 2016 Results

Consolidated revenue for the nine months ended March 31, 2016 was $952.3 million compared to $978.7 million in the same period a year earlier, a decrease of $26.4 million, or 2.7%. On a segment basis, consolidated revenue increased in the Electrical Infrastructure and Storage Solutions segments by $89.0 million and $28.8 million, respectively. These increases were offset by decreased revenue in the Industrial and Oil Gas & Chemical segments of $105.2 million and $39.0 million, respectively.

Consolidated gross profit increased to $91.9 million in the nine months ended March 31, 2016 compared to $47.0 million in the nine months ended March 31, 2015. Consolidated gross margins were 9.6% in the nine months ended March 31, 2016 compared to 4.8% for the nine months ended March 31, 2015.

On a segment basis, gross profit increased by $58.1 million in the Electrical Infrastructure segment. Electrical Infrastructure margins for fiscal 2016 were negatively impacted by joint venture project charges of $7.1 million on the Garrison Energy Center project, of which $3.3 million was our joint venture partner's share and is reported as non-controlling interest. In fiscal 2015 these charges totaled $54.7 million of which $19.4 million was our joint venture partner's share and was reported as non-controlling interest. These charges reduced fiscal 2016 gross margins by 3.2% to 7.6 % and fiscal 2015 margins by 35.1% to (24.0%). Gross profit in the Storage Solutions segment increased $9.8 million for the nine months ended March 31, 2016 with margins of 12.5%. Gross profit decreased in the Industrial and Oil Gas & Chemical segments by $18.2 million and $4.7 million respectively. Fiscal 2016 gross margins of 7.5% and 7.7% in the Industrial and Oil Gas &...


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