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Matrix Servic Management Discusses Q2 2011 Earnings Call Transcript

The operating results in the quarter and six-month period are in line with our expectations, driven by stronger demand for Construction Services in the aboveground storage tank market and Construction and Repair and Maintenance services in the Electrical and Instrumentation market. Revenue in the E&I market was up 117% for the six months compared to the prior year, and AST Construction revenues increased 34% over the six-month period a year ago. Unfortunately, our Repair and Maintenance Service segments continued to be soft, although there are some signs of recovery. Consolidated gross margins, while lower compared to the same periods last year, increased over the last two quarters as a result of better overhead costs recovery, driven by increased business volume and costs reductions.

The costs reductions implemented in fiscal 2009 and fiscal 2010 had contributed to our operating results in the three-month and six-month periods. Our proactive and aggressive changes to our cost structure, necessitated by the economic downturn or slowdown have allowed the company to more fully absorb overhead costs. We will continue to manage our costs to maintain the appropriate resources given the level of economic activity in our business.

With that in mind, we are encouraged by the improving outlook in many of our businesses as we continue to see a number of attractive opportunities across our core markets. We continue to see strong demand in the Construction Services segment, and we are also beginning to experience growing demand in the Repair and Maintenance Service segment. The Aboveground Storage Tank business continues to strengthen as a result of several factors. A significant driver of the AST market continues to be the development of the Canadian oil sands and related pipelines necessary to transport crude oil to the Gulf Coast. In addition, the increasing number of finished product formulations requires additional tankage as terminal operators look to improve logistics at their facility. Finally, global demand for products and security concerns is creating greater demand for export terminals in aviation fuel storage.

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