|
☒
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
☐
|
Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
|
Delaware
|
|
73-1352174
|
(State of incorporation)
|
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value $0.01 per share
|
MTRX
|
NASDAQ Global Select Market
|
Large Accelerated Filer
|
|
☐
|
Accelerated Filer
|
|
☒
|
Non-accelerated Filer
|
|
☐
|
Smaller Reporting Company
|
|
☐
|
Emerging Growth Company
|
|
☐
|
|
|
|
|
|
|
PAGE
|
FINANCIAL INFORMATION
|
|
|
|
|
|
Item 1.
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
OTHER INFORMATION
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
|
Three Months Ended
|
||||||
|
September 30,
2019 |
|
September 30,
2018 |
||||
Revenues
|
$
|
338,097
|
|
|
$
|
318,511
|
|
Cost of revenues
|
305,632
|
|
|
295,090
|
|
||
Gross profit
|
32,465
|
|
|
23,421
|
|
||
Selling, general and administrative expenses
|
23,691
|
|
|
21,201
|
|
||
Operating income
|
8,774
|
|
|
2,220
|
|
||
Other income (expense):
|
|
|
|
||||
Interest expense
|
(389
|
)
|
|
(292
|
)
|
||
Interest income
|
474
|
|
|
282
|
|
||
Other
|
3
|
|
|
546
|
|
||
Income before income tax expense
|
8,862
|
|
|
2,756
|
|
||
Provision for federal, state and foreign income taxes
|
2,711
|
|
|
451
|
|
||
Net income
|
$
|
6,151
|
|
|
$
|
2,305
|
|
|
|
|
|
||||
Basic earnings per common share
|
$
|
0.23
|
|
|
$
|
0.09
|
|
Diluted earnings per common share
|
$
|
0.22
|
|
|
$
|
0.08
|
|
Weighted average common shares outstanding:
|
|
|
|
||||
Basic
|
26,935
|
|
|
26,921
|
|
||
Diluted
|
27,575
|
|
|
27,589
|
|
|
Three Months Ended
|
|
||||||
|
September 30,
2019 |
|
September 30,
2018 |
|
||||
Net income
|
$
|
6,151
|
|
|
$
|
2,305
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
||||
Foreign currency translation gain (loss) (net of tax expense (benefit) of ($22) and $62 for the three months ended September 30, 2019 and 2018, respectively)
|
(394
|
)
|
|
401
|
|
|
||
Comprehensive income
|
$
|
5,757
|
|
|
$
|
2,706
|
|
|
|
|||||||
|
September 30,
2019 |
|
June 30,
2019 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
139,889
|
|
|
$
|
89,715
|
|
Accounts receivable, less allowances (September 30, 2019— $1,091 and June 30, 2019—$923)
|
214,614
|
|
|
218,432
|
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
65,996
|
|
|
96,083
|
|
||
Inventories
|
7,561
|
|
|
8,017
|
|
||
Income taxes receivable
|
1,337
|
|
|
29
|
|
||
Other current assets
|
9,969
|
|
|
5,034
|
|
||
Total current assets
|
439,366
|
|
|
417,310
|
|
||
Property, plant and equipment at cost:
|
|
|
|
||||
Land and buildings
|
41,057
|
|
|
41,179
|
|
||
Construction equipment
|
92,142
|
|
|
91,793
|
|
||
Transportation equipment
|
55,179
|
|
|
52,526
|
|
||
Office equipment and software
|
44,164
|
|
|
43,632
|
|
||
Construction in progress
|
7,563
|
|
|
7,619
|
|
||
Total property, plant and equipment - at cost
|
240,105
|
|
|
236,749
|
|
||
Accumulated depreciation
|
(158,589
|
)
|
|
(157,414
|
)
|
||
Property, plant and equipment - net
|
81,516
|
|
|
79,335
|
|
||
Operating lease right-of-use assets
|
23,595
|
|
|
—
|
|
||
Goodwill
|
93,300
|
|
|
93,368
|
|
||
Other intangible assets
|
18,516
|
|
|
19,472
|
|
||
Deferred income taxes
|
2,719
|
|
|
2,683
|
|
||
Other assets
|
13,742
|
|
|
21,226
|
|
||
Total assets
|
$
|
672,754
|
|
|
$
|
633,394
|
|
|
September 30,
2019 |
|
June 30,
2019 |
||||
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
96,984
|
|
|
$
|
114,647
|
|
Billings on uncompleted contracts in excess of costs and estimated earnings
|
130,191
|
|
|
105,626
|
|
||
Accrued wages and benefits
|
34,214
|
|
|
38,357
|
|
||
Accrued insurance
|
9,539
|
|
|
9,021
|
|
||
Operating lease liabilities
|
8,660
|
|
|
—
|
|
||
Income taxes payable
|
—
|
|
|
2,517
|
|
||
Other accrued expenses
|
5,721
|
|
|
5,331
|
|
||
Total current liabilities
|
285,309
|
|
|
275,499
|
|
||
Deferred income taxes
|
2,346
|
|
|
298
|
|
||
Operating lease liabilities
|
15,998
|
|
|
—
|
|
||
Borrowings under senior secured revolving credit facility
|
11,366
|
|
|
5,347
|
|
||
Other liabilities
|
308
|
|
|
293
|
|
||
Total liabilities
|
315,327
|
|
|
281,437
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock—$.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of September 30, 2019 and June 30, 2019; 27,131,446 and 26,807,203 shares outstanding as of September 30, 2019 and June 30, 2019
|
279
|
|
|
279
|
|
||
Additional paid-in capital
|
132,936
|
|
|
137,712
|
|
||
Retained earnings
|
245,627
|
|
|
239,476
|
|
||
Accumulated other comprehensive loss
|
(8,145
|
)
|
|
(7,751
|
)
|
||
|
370,697
|
|
|
369,716
|
|
||
Less: Treasury stock, at cost — 756,771 shares as of September 30, 2019, and 1,081,014 shares as of June 30, 2019
|
(13,270
|
)
|
|
(17,759
|
)
|
||
Total stockholders' equity
|
357,427
|
|
|
351,957
|
|
||
Total liabilities and stockholders’ equity
|
$
|
672,754
|
|
|
$
|
633,394
|
|
|
Three Months Ended
|
||||||
|
September 30,
2019 |
|
September 30,
2018 |
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
6,151
|
|
|
$
|
2,305
|
|
Adjustments to reconcile net income to net cash provided by operating activities, net of effects from acquisitions and disposals:
|
|
|
|
||||
Depreciation and amortization
|
4,779
|
|
|
4,543
|
|
||
Stock-based compensation expense
|
3,024
|
|
|
2,585
|
|
||
Deferred income tax
|
1,990
|
|
|
362
|
|
||
Gain on disposal of business
|
—
|
|
|
(427
|
)
|
||
Gain on sale of property, plant and equipment
|
(93
|
)
|
|
(171
|
)
|
||
Provision for uncollectible accounts
|
224
|
|
|
76
|
|
||
Other
|
84
|
|
|
101
|
|
||
Changes in operating assets and liabilities increasing (decreasing) cash, net of effects from acquisitions and disposals:
|
|
|
|
||||
Accounts receivable
|
3,594
|
|
|
(11,284
|
)
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
30,087
|
|
|
302
|
|
||
Inventories
|
456
|
|
|
(1,369
|
)
|
||
Other assets and liabilities
|
(297
|
)
|
|
(10,860
|
)
|
||
Accounts payable
|
(15,240
|
)
|
|
15,261
|
|
||
Billings on uncompleted contracts in excess of costs and estimated earnings
|
24,565
|
|
|
(2,229
|
)
|
||
Accrued expenses
|
(3,220
|
)
|
|
9,624
|
|
||
Net cash provided by operating activities
|
56,104
|
|
|
8,819
|
|
||
Investing activities:
|
|
|
|
||||
Capital expenditures
|
(8,684
|
)
|
|
(2,482
|
)
|
||
Proceeds from disposal of business
|
—
|
|
|
3,693
|
|
||
Proceeds from asset sales
|
151
|
|
|
267
|
|
||
Net cash provided (used) by investing activities
|
$
|
(8,533
|
)
|
|
$
|
1,478
|
|
|
Three Months Ended
|
||||||
|
September 30,
2019 |
|
September 30,
2018 |
||||
Financing activities:
|
|
|
|
||||
Advances under senior secured revolving credit facility
|
$
|
8,984
|
|
|
$
|
2,298
|
|
Repayments of advances under senior secured revolving credit facility
|
(2,872
|
)
|
|
(765
|
)
|
||
Issuances of common stock
|
—
|
|
|
128
|
|
||
Proceeds from issuance of common stock under employee stock purchase plan
|
83
|
|
|
78
|
|
||
Repurchase of common stock for payment of statutory taxes due on equity-based compensation
|
(3,394
|
)
|
|
(1,559
|
)
|
||
Net cash provided by financing activities
|
2,801
|
|
|
180
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(198
|
)
|
|
202
|
|
||
Increase in cash and cash equivalents
|
50,174
|
|
|
10,679
|
|
||
Cash and cash equivalents, beginning of period
|
89,715
|
|
|
64,057
|
|
||
Cash and cash equivalents, end of period
|
$
|
139,889
|
|
|
$
|
74,736
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Income taxes
|
$
|
5,069
|
|
|
$
|
66
|
|
Interest
|
$
|
417
|
|
|
$
|
456
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Purchases of property, plant and equipment on account
|
$
|
263
|
|
|
$
|
274
|
|
|
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Treasury
Stock
|
|
Accumulated
Other
Comprehensive
Income(Loss)
|
|
Total
|
||||||||||||
Balances, July 1, 2019
|
$
|
279
|
|
|
$
|
137,712
|
|
|
$
|
239,476
|
|
|
$
|
(17,759
|
)
|
|
$
|
(7,751
|
)
|
|
$
|
351,957
|
|
Net income
|
—
|
|
|
—
|
|
|
6,151
|
|
|
—
|
|
|
—
|
|
|
6,151
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(394
|
)
|
|
(394
|
)
|
||||||
Issuance of deferred shares (494,274 shares)
|
—
|
|
|
(7,813
|
)
|
|
—
|
|
|
7,813
|
|
|
—
|
|
|
—
|
|
||||||
Treasury shares sold to Employee Stock Purchase Plan (4,053 shares)
|
—
|
|
|
13
|
|
|
—
|
|
|
70
|
|
|
—
|
|
|
83
|
|
||||||
Treasury shares purchased to satisfy tax withholding obligations (174,084 shares)
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,394
|
)
|
|
—
|
|
|
(3,394
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
|
3,024
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,024
|
|
||||||
Balances, September 30, 2019
|
$
|
279
|
|
|
$
|
132,936
|
|
|
$
|
245,627
|
|
|
$
|
(13,270
|
)
|
|
$
|
(8,145
|
)
|
|
$
|
357,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balances, July 1, 2018
|
$
|
279
|
|
|
$
|
132,198
|
|
|
$
|
211,494
|
|
|
$
|
(17,717
|
)
|
|
$
|
(7,411
|
)
|
|
$
|
318,843
|
|
Net income
|
—
|
|
|
—
|
|
|
2,305
|
|
|
—
|
|
|
—
|
|
|
2,305
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
401
|
|
|
401
|
|
||||||
Exercise of stock options (12,500 shares)
|
—
|
|
|
(126
|
)
|
|
—
|
|
|
254
|
|
|
—
|
|
|
128
|
|
||||||
Issuance of deferred shares (221,775 shares)
|
—
|
|
|
(4,768
|
)
|
|
—
|
|
|
4,768
|
|
|
—
|
|
|
—
|
|
||||||
Treasury shares sold to Employee Stock Purchase Plan (4,323 shares)
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
82
|
|
|
—
|
|
|
78
|
|
||||||
Treasury shares purchased to satisfy tax withholding obligations (72,604 shares)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,559
|
)
|
|
—
|
|
|
(1,559
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
|
2,585
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,585
|
|
||||||
Balances, September 30, 2018
|
$
|
279
|
|
|
$
|
129,885
|
|
|
$
|
213,799
|
|
|
$
|
(14,172
|
)
|
|
$
|
(7,010
|
)
|
|
$
|
322,781
|
|
|
September 30,
2019 |
|
June 30,
2019 |
|
Change
|
||||||
|
(in thousands)
|
||||||||||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
$
|
65,996
|
|
|
$
|
96,083
|
|
|
$
|
(30,087
|
)
|
Billings on uncompleted contracts in excess of costs and estimated earnings
|
(130,191
|
)
|
|
(105,626
|
)
|
|
(24,565
|
)
|
|||
Net contract liabilities
|
$
|
(64,195
|
)
|
|
$
|
(9,543
|
)
|
|
$
|
(54,652
|
)
|
|
|
Three Months Ended
|
||||||
|
|
September 30,
2019 |
|
September 30,
2018 |
||||
|
|
(In thousands)
|
||||||
United States
|
|
$
|
314,416
|
|
|
$
|
310,137
|
|
Canada
|
|
21,170
|
|
|
7,081
|
|
||
Other international
|
|
2,511
|
|
|
1,293
|
|
||
Total Revenue
|
|
$
|
338,097
|
|
|
$
|
318,511
|
|
|
|
Three Months Ended
|
||||||
|
|
September 30,
2019 |
|
September 30,
2018 |
||||
|
|
(In thousands)
|
||||||
Fixed-price contracts
|
|
$
|
176,320
|
|
|
$
|
179,122
|
|
Time and materials and other cost reimbursable contracts
|
|
161,777
|
|
|
139,389
|
|
||
Total Revenue
|
|
$
|
338,097
|
|
|
$
|
318,511
|
|
|
|
|
|
Three Months Ended
|
||
|
|
|
|
September 30, 2019
|
||
Lease expense
|
|
Location of Expense in Statements of Income
|
|
(in thousands)
|
||
Operating lease expense
|
|
Cost of revenues and selling, general and administrative expenses
|
|
$
|
3,117
|
|
Short-term lease expense(1)
|
|
Cost of revenues
|
|
9,608
|
|
|
Total lease expense
|
|
|
|
$
|
12,725
|
|
|
|
|
|
|
(1)
|
Represents the lease expense of equipment that is subject to month-to-month rental agreements with expected rental durations of less than one year.
|
|
|
September 30, 2019
|
||
Maturity Analysis(1):
|
|
(in thousands)
|
||
Remainder of Fiscal 2020
|
|
$
|
7,446
|
|
Fiscal 2021
|
|
6,483
|
|
|
Fiscal 2022
|
|
4,828
|
|
|
Fiscal 2023
|
|
3,141
|
|
|
Fiscal 2024
|
|
1,519
|
|
|
Thereafter
|
|
5,024
|
|
|
Total future operating lease payments
|
|
28,441
|
|
|
Less: imputed interest
|
|
(3,783
|
)
|
|
Net present value of future lease payments
|
|
24,658
|
|
|
Less: current portion of operating lease liabilities
|
|
8,660
|
|
|
Non-current operating lease liabilities
|
|
$
|
15,998
|
|
|
|
|
|
|
(1)
|
This analysis does not include a lease that has been executed, but is not expected to commence until December 2019. This lease has a 10 year term and future minimum lease payments of $11.9 million.
|
Weighted-average remaining lease term (in years)
|
|
5.1
|
|
Weighted-average discount rate
|
|
5.6
|
%
|
|
|
Three Months Ended
|
||
|
|
September 30, 2019
|
||
|
|
(in thousands)
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
||
Operating cash flows from operating leases
|
|
$
|
3,134
|
|
Right-of-use assets obtained in exchange for lease liabilities:
|
|
|
||
Operating leases
|
|
$
|
26,399
|
|
|
Electrical
Infrastructure
|
|
Oil Gas &
Chemical
|
|
Storage
Solutions
|
|
Industrial
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Net balance at June 30, 2019
|
$
|
24,830
|
|
|
$
|
30,829
|
|
|
$
|
16,736
|
|
|
$
|
20,973
|
|
|
$
|
93,368
|
|
Translation adjustment(1)
|
(13
|
)
|
|
—
|
|
|
(53
|
)
|
|
(2
|
)
|
|
(68
|
)
|
|||||
Net balance at September 30, 2019
|
$
|
24,817
|
|
|
$
|
30,829
|
|
|
$
|
16,683
|
|
|
$
|
20,971
|
|
|
$
|
93,300
|
|
|
|
|
|
|
(1)
|
The translation adjustments relate to the periodic translation of Canadian Dollar and South Korean Won denominated goodwill recorded as a part of prior acquisitions in Canada and South Korea, in which the local currency was determined to be the functional currency.
|
|
|
|
At September 30, 2019
|
||||||||||
|
Useful Life
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
||||||
|
(Years)
|
|
(In thousands)
|
||||||||||
Intellectual property
|
10 to 15
|
|
$
|
2,579
|
|
|
$
|
(1,823
|
)
|
|
$
|
756
|
|
Customer-based
|
6 to 15
|
|
38,525
|
|
|
(20,773
|
)
|
|
17,752
|
|
|||
Non-compete agreements
|
4
|
|
1,453
|
|
|
(1,445
|
)
|
|
8
|
|
|||
Total amortizing intangible assets
|
|
|
$
|
42,557
|
|
|
$
|
(24,041
|
)
|
|
$
|
18,516
|
|
|
|
|
At June 30, 2019
|
||||||||||
|
Useful Life
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
||||||
|
(Years)
|
|
(In thousands)
|
||||||||||
Intellectual property
|
10 to 15
|
|
$
|
2,579
|
|
|
$
|
(1,779
|
)
|
|
$
|
800
|
|
Customer-based
|
6 to 15
|
|
38,572
|
|
|
(19,915
|
)
|
|
18,657
|
|
|||
Non-compete agreements
|
4
|
|
1,453
|
|
|
(1,438
|
)
|
|
15
|
|
|||
Total amortizing intangible assets
|
|
|
$
|
42,604
|
|
|
$
|
(23,132
|
)
|
|
$
|
19,472
|
|
Period ending:
|
|
||
Remainder of Fiscal 2020
|
$
|
2,819
|
|
Fiscal 2021
|
3,743
|
|
|
Fiscal 2022
|
2,899
|
|
|
Fiscal 2023
|
2,447
|
|
|
Fiscal 2024
|
2,134
|
|
|
Fiscal 2025
|
1,739
|
|
|
Thereafter
|
2,735
|
|
|
Total estimated remaining amortization expense at September 30, 2019
|
$
|
18,516
|
|
•
|
Our Leverage Ratio, determined as of the end of each fiscal quarter, may not exceed 3.00 to 1.00.
|
•
|
We are required to maintain a Fixed Charge Coverage Ratio, determined as of the end of each fiscal quarter, greater than or equal to 1.25 to 1.00.
|
•
|
Asset dispositions (other than dispositions in which all of the net cash proceeds therefrom are reinvested into the Company and dispositions of inventory and obsolete or unneeded equipment in the ordinary course of business) are limited to $20.0 million per 12-month period.
|
•
|
The ABR or the Adjusted LIBO Rate, in the case of revolving loans denominated in U.S. Dollars;
|
•
|
The Canadian Prime Rate or the CDOR rate, in the case of revolving loans denominated in Canadian Dollars;
|
•
|
The Adjusted LIBO Rate, in the case of revolving loans denominated in Pounds Sterling or Australian Dollars; or
|
•
|
The EURIBO Rate, in the case of revolving loans denominated in Euros,
|
|
September 30,
2019 |
|
June 30,
2019 |
||||
|
(In thousands)
|
||||||
Senior secured revolving credit facility
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Capacity constraint due to the Leverage Ratio
|
72,174
|
|
|
94,323
|
|
||
Capacity under the credit facility
|
227,826
|
|
|
205,677
|
|
||
Letters of credit
|
48,040
|
|
|
48,147
|
|
||
Borrowings outstanding
|
11,366
|
|
|
5,347
|
|
||
Availability under the senior secured revolving credit facility
|
$
|
168,420
|
|
|
$
|
152,183
|
|
|
Three Months Ended
|
||||||
|
September 30,
2019 |
|
September 30,
2018 |
||||
|
(In thousands, except per share data)
|
||||||
Basic EPS:
|
|
|
|
||||
Net income
|
$
|
6,151
|
|
|
$
|
2,305
|
|
Weighted average shares outstanding
|
26,935
|
|
|
26,921
|
|
||
Basic earnings per share
|
$
|
0.23
|
|
|
$
|
0.09
|
|
Diluted EPS:
|
|
|
|
||||
Weighted average shares outstanding – basic
|
26,935
|
|
|
26,921
|
|
||
Dilutive stock options
|
25
|
|
|
31
|
|
||
Dilutive nonvested deferred shares
|
615
|
|
|
637
|
|
||
Diluted weighted average shares
|
27,575
|
|
|
27,589
|
|
||
Diluted earnings per share
|
$
|
0.22
|
|
|
$
|
0.08
|
|
|
Three Months Ended
|
||||
|
September 30,
2019 |
|
September 30,
2018 |
||
|
(In thousands)
|
||||
Nonvested deferred shares
|
269
|
|
|
167
|
|
Total antidilutive securities
|
269
|
|
|
167
|
|
|
Three Months Ended
|
||||||
|
September 30,
2019 |
|
September 30,
2018 |
||||
Gross revenues
|
|
|
|
||||
Electrical Infrastructure
|
$
|
31,532
|
|
|
$
|
44,701
|
|
Oil Gas & Chemical
|
57,786
|
|
|
75,562
|
|
||
Storage Solutions
|
150,752
|
|
|
113,767
|
|
||
Industrial
|
99,287
|
|
|
85,557
|
|
||
Total gross revenues
|
$
|
339,357
|
|
|
$
|
319,587
|
|
Less: Inter-segment revenues
|
|
|
|
||||
Oil Gas & Chemical
|
$
|
256
|
|
|
$
|
71
|
|
Storage Solutions
|
685
|
|
|
1,005
|
|
||
Industrial
|
319
|
|
|
—
|
|
||
Total inter-segment revenues
|
$
|
1,260
|
|
|
$
|
1,076
|
|
Consolidated revenues
|
|
|
|
||||
Electrical Infrastructure
|
$
|
31,532
|
|
|
$
|
44,701
|
|
Oil Gas & Chemical
|
57,530
|
|
|
75,491
|
|
||
Storage Solutions
|
150,067
|
|
|
112,762
|
|
||
Industrial
|
98,968
|
|
|
85,557
|
|
||
Total consolidated revenues
|
$
|
338,097
|
|
|
$
|
318,511
|
|
Gross profit
|
|
|
|
||||
Electrical Infrastructure
|
$
|
104
|
|
|
$
|
3,383
|
|
Oil Gas & Chemical
|
3,635
|
|
|
5,625
|
|
||
Storage Solutions
|
21,055
|
|
|
9,553
|
|
||
Industrial
|
7,671
|
|
|
4,860
|
|
||
Total gross profit
|
$
|
32,465
|
|
|
$
|
23,421
|
|
Operating income (loss)
|
|
|
|
||||
Electrical Infrastructure
|
$
|
(1,844
|
)
|
|
$
|
657
|
|
Oil Gas & Chemical
|
(1,773
|
)
|
|
514
|
|
||
Storage Solutions
|
9,452
|
|
|
285
|
|
||
Industrial
|
2,939
|
|
|
764
|
|
||
Total operating income
|
$
|
8,774
|
|
|
$
|
2,220
|
|
|
|
September 30,
2019 |
|
June 30,
2019 |
||||
Electrical Infrastructure
|
|
$
|
137,643
|
|
|
$
|
155,880
|
|
Oil Gas & Chemical
|
|
93,866
|
|
|
91,959
|
|
||
Storage Solutions
|
|
206,144
|
|
|
188,912
|
|
||
Industrial
|
|
68,091
|
|
|
90,336
|
|
||
Unallocated assets
|
|
167,010
|
|
|
106,307
|
|
||
Total segment assets
|
|
$
|
672,754
|
|
|
$
|
633,394
|
|
•
|
fixed-price awards;
|
•
|
minimum customer commitments on cost plus arrangements; and
|
•
|
certain time and material arrangements in which the estimated value is firm or can be estimated with a reasonable amount of certainty in both timing and amounts.
|
|
Electrical
Infrastructure
|
|
Oil Gas &
Chemical
|
|
Storage
Solutions
|
|
Industrial
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Backlog as of June 30, 2019
|
$
|
73,883
|
|
|
$
|
134,563
|
|
|
$
|
641,295
|
|
|
$
|
248,608
|
|
|
$
|
1,098,349
|
|
Project awards
|
30,312
|
|
|
91,160
|
|
|
143,467
|
|
|
56,749
|
|
|
321,688
|
|
|||||
Revenue recognized
|
(31,532
|
)
|
|
(57,530
|
)
|
|
(150,067
|
)
|
|
(98,968
|
)
|
|
(338,097
|
)
|
|||||
Backlog as of September 30, 2019
|
$
|
72,663
|
|
|
$
|
168,193
|
|
|
$
|
634,695
|
|
|
$
|
206,389
|
|
|
$
|
1,081,940
|
|
Book-to-bill ratio(1)
|
1.0
|
|
|
1.6
|
|
|
1.0
|
|
|
0.6
|
|
|
1.0
|
|
|
|
|
|
|
(1)
|
Calculated by dividing project awards by revenue recognized during the period.
|
•
|
It does not include interest expense. Because we have borrowed money to finance our operations and acquisitions, pay commitment fees to maintain our credit facility, and incur fees to issue letters of credit under the credit facility, interest expense is a necessary and ongoing part of our costs and has assisted us in generating revenue. Therefore, any measure that excludes interest expense has material limitations.
|
•
|
It does not include income taxes. Because the payment of income taxes is a necessary and ongoing part of our operations, any measure that excludes income taxes has material limitations.
|
•
|
It does not include depreciation or amortization expense. Because we use capital and intangible assets to generate revenue, depreciation and amortization expense is a necessary element of our cost structure. Therefore, any measure that excludes depreciation or amortization expense has material limitations.
|
|
Three Months Ended
|
||||||
|
September 30,
2019 |
|
September 30,
2018 |
||||
|
(In thousands)
|
||||||
Net income
|
$
|
6,151
|
|
|
$
|
2,305
|
|
Interest expense
|
389
|
|
|
292
|
|
||
Provision for income taxes
|
2,711
|
|
|
451
|
|
||
Depreciation and amortization
|
4,779
|
|
|
4,543
|
|
||
EBITDA
|
$
|
14,030
|
|
|
$
|
7,591
|
|
Liquidity as of June 30, 2019
|
$
|
241,898
|
|
Net increase in cash and cash equivalents
|
50,174
|
|
|
Decrease in credit facility capacity constraint
|
22,149
|
|
|
Increase in net borrowings on credit facility
|
(6,019
|
)
|
|
Decrease in letters of credit outstanding
|
107
|
|
|
Liquidity as of September 30, 2019
|
$
|
308,309
|
|
•
|
Changes in costs and estimated earnings in excess of billings on uncompleted contracts and billings on uncompleted contracts in excess of costs due to contract terms that determine the timing of billings to customers and the collection of those billings:
|
•
|
Some cost plus and fixed price customer contracts are billed based on milestones which may require us to incur significant expenditures prior to collections from our customers.
|
•
|
Some fixed price customer contracts allow for significant upfront billings at the beginning of a project, which temporarily increases liquidity near term.
|
•
|
Time and material contracts are normally billed in arrears. Therefore, we are routinely required to carry these costs until they can be billed and collected.
|
•
|
Some of our large construction projects may require security in the form of letters of credit or significant retentions. The timing of collection of retentions is often uncertain.
|
•
|
Other changes in working capital.
|
•
|
Capital expenditures.
|
•
|
Acquisitions and disposals of businesses.
|
•
|
Strategic investments in new operations.
|
•
|
Purchases of shares under our stock buyback program.
|
•
|
Contract disputes, which can be significant.
|
•
|
Collection issues, including those caused by weak commodity prices or other factors which can lead to credit deterioration of our customers.
|
•
|
Capacity constraints under our senior secured revolving credit facility and remaining in compliance with all covenants contained in the credit agreement.
|
•
|
Issuances of letters of credit.
|
Net income
|
$
|
6,151
|
|
Non-cash expenses
|
7,934
|
|
|
Deferred income tax
|
1,990
|
|
|
Cash effect of changes in working capital
|
39,945
|
|
|
Other
|
84
|
|
|
Net cash provided by operating activities
|
$
|
56,104
|
|
•
|
Accounts receivable, net of bad debt expense recognized during the period, decreased $3.6 million during the three months ended September 30, 2019, which increased cash flows from operating activities. The variance is primarily attributable to the timing of billing and collections.
|
•
|
Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") decreased $30.1 million, which increased cash flows from operating activities. Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") increased $24.6 million, which increased cash flows from operating activities. CIE and BIE balances can experience significant fluctuations based on the timing of when job costs are incurred and the invoicing of those job costs to the customer.
|
•
|
Prepaid expenses and other assets decreased $3.5 million, which increased cash flows from operating activities.
|
•
|
Accounts payable and accrued expenses decreased by $18.5 million during the three months ended September 30, 2019, which decreased cash flows from operating activities. The variance is primarily attributable to the timing of vendor payments.
|
•
|
Income tax payable decreased $3.8 million, which decreased cash flows from operating activities.
|
•
|
Our Leverage Ratio, determined as of the end of each fiscal quarter, may not exceed 3.00 to 1.00.
|
•
|
We are required to maintain a Fixed Charge Coverage Ratio, determined as of the end of each fiscal quarter, greater than or equal to 1.25 to 1.00.
|
•
|
Asset dispositions (other than dispositions in which all of the net cash proceeds therefrom are reinvested into the Company and dispositions of inventory and obsolete or unneeded equipment in the ordinary course of business) are limited to $20.0 million per 12-month period.
|
•
|
The ABR or the Adjusted LIBO Rate, in the case of revolving loans denominated in U.S. Dollars;
|
•
|
The Canadian Prime Rate or the CDOR rate, in the case of revolving loans denominated in Canadian Dollars;
|
•
|
The Adjusted LIBO Rate, in the case of revolving loans denominated in Pounds Sterling or Australian Dollars; or
|
•
|
The EURIBO Rate, in the case of revolving loans denominated in Euros,
|
•
|
exclude non-cash stock-based compensation expense,
|
•
|
include pro forma EBITDA of acquired businesses as if the acquisition occurred at the beginning of the previous four quarters, and
|
•
|
exclude certain other extraordinary items, as defined in the Credit Agreement.
|
|
September 30,
2019 |
|
June 30,
2019 |
||||
|
(In thousands)
|
||||||
Senior secured revolving credit facility
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Capacity constraint due to the Leverage Ratio
|
72,174
|
|
|
94,323
|
|
||
Capacity under the credit facility
|
227,826
|
|
|
205,677
|
|
||
Letters of credit
|
48,040
|
|
|
48,147
|
|
||
Borrowings outstanding
|
11,366
|
|
|
5,347
|
|
||
Availability under the senior secured revolving credit facility
|
$
|
168,420
|
|
|
$
|
152,183
|
|
•
|
our ability to generate sufficient cash from operations, access our credit facility, or raise cash in order to meet our short and long-term capital requirements;
|
•
|
the impact to our business of changes in crude oil, natural gas and other commodity prices;
|
•
|
amounts and nature of future revenues and margins from each of our segments;
|
•
|
trends in the industries we serve;
|
•
|
the likely impact of new or existing regulations or market forces on the demand for our services;
|
•
|
expansion and other trends of the industries we serve;
|
•
|
our expectations with respect to the likelihood of a future impairment; and
|
•
|
our ability to comply with the covenants in our credit agreement.
|
•
|
the risk factors discussed in our Form 10-K for the fiscal year ended June 30, 2019 and listed from time to time in our filings with the Securities and Exchange Commission;
|
•
|
economic, market or business conditions in general and in the oil, natural gas, power, iron and steel, agricultural and mining industries in particular;
|
•
|
the under-utilization of our work force;
|
•
|
delays in the commencement of major projects, whether due to permitting issues or other factors;
|
•
|
reduced creditworthiness of our customer base and the higher risk of non-payment of receivables due to volatility of crude oil, natural gas, steel and other commodity prices to which our customers' businesses are affected;
|
•
|
the inherently uncertain outcome of current and future litigation;
|
•
|
the adequacy of our reserves for claims and contingencies;
|
•
|
changes in laws or regulations, including the imposition or threatened imposition, cancellation or delay of tariffs on imported goods; and
|
•
|
other factors, many of which are beyond our control.
|
|
Total Number
of Shares
Purchased
|
|
Average Price
Paid
Per Share
|
|
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
|
|
Maximum
Number of
Shares That
May Yet Be
Purchased
Under the Plans
or Programs (C)
|
|||||
July 1 to July 31, 2019
|
|
|
|
|
|
|
|
|||||
Share Repurchase Program (A)
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
2,396,643
|
|
Employee Transactions (B)
|
287
|
|
|
$
|
20.38
|
|
|
—
|
|
|
—
|
|
August 1 to August 31, 2019
|
|
|
|
|
|
|
|
|||||
Share Repurchase Program (A)
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
2,396,643
|
|
Employee Transactions (B)
|
173,797
|
|
|
$
|
19.49
|
|
|
—
|
|
|
—
|
|
September 1 to September 30, 2019
|
|
|
|
|
|
|
|
|||||
Share Repurchase Program (A)
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
2,396,643
|
|
Employee Transactions (B)
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
(A)
|
Represents shares purchased under our stock buyback program.
|
(B)
|
Represents shares withheld to satisfy the employee’s tax withholding obligation that is incurred upon the vesting of deferred shares granted under the Company’s stock incentive plans.
|
(C)
|
As described under the caption “Stock Repurchase Program and Treasury Shares” in the Liquidity and Capital Resources section of Part I, Item 2 of this Form 10-Q, on November 6, 2018, the Board of Directors approved a new stock buyback program (the “November 2018 Program”), which replaced the December 2016 Program. Under the November 2018 Program, the Company may repurchase common stock up to a maximum of $30.0 million per calendar year provided that the aggregate number of shares repurchased may not exceed 10%, or approximately 2.7 million, of the Company's shares outstanding as of November 6, 2018. The Company may repurchase its stock from time to time in the open market at prevailing market prices or in privately negotiated transactions and is not obligated to purchase any shares. The November 2018 Program will continue unless and until it is modified or revoked by the Board of Directors.
|
Exhibit No.
|
|
Description
|
|
|
|
Exhibit 10:
|
|
|
|
|
|
Exhibit 31.1:
|
|
|
|
|
|
Exhibit 31.2:
|
|
|
|
|
|
Exhibit 32.1:
|
|
|
|
|
|
Exhibit 32.2:
|
|
|
|
|
|
Exhibit 95:
|
|
|
|
|
|
Exhibit 101.INS:
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
Exhibit 101.SCH:
|
|
XBRL Taxonomy Schema Document.
|
|
|
|
Exhibit 101.CAL:
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
Exhibit 101.DEF:
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
Exhibit 101.LAB:
|
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
|
|
|
Exhibit 101.PRE:
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
Exhibit 104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
|
|
MATRIX SERVICE COMPANY
|
|
|
|
Date:
|
November 7, 2019
|
By: /s/ Kevin S. Cavanah
|
|
|
Kevin S. Cavanah Vice President and Chief Financial Officer signing on behalf of the registrant and as the registrant’s principal financial officer
|
|
MATRIX SERVICE COMPANY
|
|||
|
|
|||
|
By:
|
|
||
|
Name:
|
|
||
|
Title:
|
|
||
|
|
|||
|
INDEMNITEE:
|
|||
|
|
|||
|
|
|||
|
[Indemnitee’s typed name]
|
|||
|
|
|||
|
Address for notices:
|
|||
|
|
|||
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Matrix Service Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
November 7, 2019
|
|
|
|
|
/s/ John R. Hewitt
|
|
|
John R. Hewitt
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Matrix Service Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
November 7, 2019
|
|
|
|
|
/s/ Kevin S. Cavanah
|
|
|
Kevin S. Cavanah
|
|
|
Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
November 7, 2019
|
|
|
|
|
/s/ John R. Hewitt
|
|
|
John R. Hewitt
|
|
|
President and Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
November 7, 2019
|
|
|
|
|
/s/ Kevin S. Cavanah
|
|
|
Kevin S. Cavanah
|
|
|
Vice President and Chief Financial Officer
|