This morning, we announced our earnings for the quarter, excluding non-routine charges, of $0.10 per fully diluted share which were below our expectations. The primary driver impacting our third quarter results the much lower volume of recurring repair and maintenance activity than we had expected. As stated in our April 23 press release, we had anticipated that business activity would pick up in the second half of the fiscal year. While earnings for the first half of fiscal 2010 were in line with our plan, our clients are still experiencing a challenging economic environment which had resulted in continued delays of capital projects and lower repair and maintenance spending. We see this continued into the fourth quarter which coupled with a very competitive environment, has resulted in a reduction to our EPS guidance for the fiscal year to $0.55 to $0.65 per fully diluted share.This guidance excludes the impact of non-routine charges related to acquired claim receivables and other legal matters. Having said that though, we remain confident in our long-term strategy and believe our strong balance sheet has positioned the company to grow as our markets improve. As I will discuss in a few minutes, we are seeing more encouraging signs as we move into our fiscal 2011. Additionally, as we announced in the April 23 press release, we continue to manage the company's cost structure in response to the challenging economic environment. In addition to previously reduced administrative costs at $6 million per year, the company took difficult but necessary actions during the third quarter to further reduce overhead costs. We expect the third quarter cost reductions to total $6 million annually. Our plan going forward is to maintain an appropriate cost structure and level of talent to ensure we execute our projects safely and effectively and allow us to grow and expand our business both domestically and internationally.
Despite the challenging environment, we are pleased with the performance of the Matrix team and remain optimistic about our growth prospects. Project execution continues to be strong and safety performance is excellent. As I mentioned earlier, the company's financial position remains strong with over $50 million in cash, positive cash flow and no bank debt. We have added bonding capacity to grow our backlog and are encouraged by numerous opportunities across our markets. Many of these opportunities are the result of our expanded and diversified capability gained through recent acquisitions and additions of business development and project personnel.Our project funnel continues to grow and we're attracting several billion dollars of projects. Overall, the bid activity remains strong with opportunities in power, electrical instrumentation, Aboveground Storage Tanks and terminals and alternative energy. While recent awards have been slow to develop, we believe that project awards will increase as we move into fiscal year 2011 based on client indication. Regarding backlog, our backlog declined by $22 million in the third quarter. However, we did sign two contracts totaling $40 million shortly after the end of the quarter which we had expected to be in our March 31 backlog. One of that contracts, the thermal vacuum chamber was announced this morning in a separate news release and demonstrates our continued diversification efforts and our ability to leverage our engineering capabilities. The other contract is a multiple tank package in our Aboveground Storage Tank business. We have received several letters of intent and verbal awards on additional projects. The recent contracts and favorable indications of project awards lead us to be more optimistic about our backlog going forward. Looking ahead, we remain excited about our future and believe Matrix is well-positioned to grow as the economy improves. Our expanded engineering and construction capabilities have enabled us to pursue a broader range of turnkey terminal, high voltage power, industrial and renewable energy projects. Our increased scope of engineering has provided the opportunity to perform front-end engineering and design studies. We are now capable of self-performing a larger scope of engineering procurements, fabrications, constructions and E&I services which has expanded our client base both domestically and internationally. Read the rest of this transcript for free on seekingalpha.com