Matrix Service Management Discusses Q4 2012 Results - Earnings Call Transcript

Matrix Service (MTRX)

Q4 2012 Earnings Call

September 06, 2012 11:00 am ET


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

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


Matthew P. Tucker - KeyBanc Capital Markets Inc., Research Division

Matt Duncan - Stephens Inc., Research Division

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

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

Tristan Richardson - D.A. Davidson & Co., Research Division



Good day, ladies and gentlemen, and welcome to the Matrix Service Company conference call to discuss the results for the fourth quarter and full year ended June 30, 2012. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Kevin Cavanah, Vice President and Chief Financial Officer. Sir, you may begin.

Kevin S. Cavanah

Thank you. 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 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 we discuss our fourth quarter and fiscal year results, as well as guidance for fiscal 2013, I want to provide an update on our strategic planned activities and highlight key strategic accomplishments in Matrix Service Company in the past year.

Matrix Service Company, finished our fiscal year with a consolidated OSHA recordable incident rate of 0.65, and with our major of SME group working 270 days without an OSHA recordable incident. We have a long way to go on our journey to a 0 incident rate, but our teams are making great progress. Our ability to continuously improve on these results is essential to our core values and the critical expectations of our clients.

On August 9, we introduced a new brand identity, logo and tagline to better reflect our expanded capabilities and to complement our strategic growth plans. We have transitioned from multiple brands to a master brand architecture that represents the company's full range of service capabilities and our strong industry experience. This is a culmination of many months of hard work from a broad team within the company, and I'll encourage you to visit our new corporate website at to see our logo and for more information.

This year, we restructured some of our operations away from a regional focus to one that is more market driven, which is complementary and supportive of our strategy and the new operating segments. These Operating segments: Electrical Infrastructure, Oil Gas & Chemical, Storage Solutions, and Industrial provide greater internal focus and external transparency into our business and help us better tell the Matrix Service Company's story.

We continue to move forward on an important ERP infrastructure investment. This multi-year program will improve and upgrade our systems and processes across the organization. When complete, we expect to have a more efficient and consistent business process environment that supports our long-term growth plans.

This fiscal year, we opened 3 new ops locations: Baton Rouge, Louisiana, in support of our industrial cleaning business; as well as Tucson, Arizona and Salt Lake City, Utah to support our mining and minerals focus, as well as fulfilling some of our geographic expansion objectives.

In the second half of the fiscal year, we filled 2 key open positions on the senior management team, with the addition of Jack Frost, Vice President of Health, Safety and Environmental; and Alan Updyke, Vice President of Capital Construction. These individuals will provide critical leadership and experience to support our growth strategy. In addition, to provide more focus on the acquisition side of our strategy, Jason Turner, our Vice President and Treasurer, has taken on the role of Corporate Development. And finally, Jim Collins was promoted to Vice President of Electrical Infrastructure to apply more focus on the development and expansion of our high-voltage electrical services, including transmission and distribution.

Speaking of which, our Electrical Infrastructure segment continues to provide solid margins and consistent work in Northeastern region of the United States, and we are gaining a strong reputation in storm damage repair work across North America.

While new power generation projects are progressing slowly, the substation market continues to provide a steady flow of opportunities. We're investing heavily in our Electrical Infrastructure segment and are actively looking for acquisition opportunities in the high-voltage electrical space.

Additionally, we are pleased to announce one of our recent awards for Matrix SME with PSEG to upgrade 4 substations as part of the North Central reliability projects in New Jersey. Work on this project with a contract value of approximately $40 million will begin immediately with the scheduled in-service date of June 2014. Overall, this segment's backlog had increased 49% compared to fiscal 2011.

The Oil Gas & Chemical operating segment continues to see record work volumes, with fiscal 2012 revenue growth of 43.5% over fiscal 2011. Our refinery turnaround and maintenance activity in this segment continues to see robust growth, with fiscal 2012 in a record year for the company in terms of the number of turnarounds performed as well as man hours worked. In the fourth quarter alone, we had over 1,600 personnel in the field working at over 17 locations. We continue to see a large number of turnaround opportunities across the U.S., including the north slope of Alaska, the Gulf Coast and mid-continent states.

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