Matrix Service (MTRX) 8-K Matrix Service Company Announces Strong Second Quarter Results

Exhibit 99

MATRIX SERVICE COMPANY ANNOUNCES STRONG SECOND QUARTER RESULTS

Highlights:

• Second quarter earnings $0.27 per fully diluted share, up 35% from the second quarter of fiscal 2011

• Second quarter revenues $201.0 million, up 14.7% from the second quarter of fiscal 2011

• December 31, 2011 backlog increased to $433.6 million on $207.9 million of project awards during the second quarter

TULSA, OK – February 8, 2012 – Matrix Service Company(Nasdaq: MTRX) today reported its financial results for the three and six months ended December 31, 2011.

Second Quarter of Fiscal 2012 Results

Revenues for the second quarter ended December 31, 2011 were $201.0 million, an increase of $25.7 million, or 14.7%, from $175.3 million in the same period a year earlier. Net income for the second quarter of fiscal 2012 was $7.0 million, or $0.27 per fully diluted share. In the comparable period a year earlier, net income was $5.3 million, or $0.20 per fully diluted share.

Consolidated gross profit was $23.1 million in the second quarter of fiscal 2012 compared to $19.8 million in the same period a year earlier. The increase of $3.3 million was due to higher revenues in the second quarter of fiscal 2012 when compared to the same period a year earlier and slightly higher gross margins, which increased to 11.5% in the second quarter of fiscal 2012 compared to 11.3% in the same period a year earlier. Selling, general and administrative expenses were $11.9 million, or 5.9% of revenue, in the second quarter of fiscal 2012 compared to $11.1 million, or 6.4% of revenue, in the second quarter of fiscal 2011.

John R. Hewitt, President and CEO of Matrix Service Company, said “We are pleased with our second quarter results and feel very good about our year. We are seeing strength return to the majority of our markets with increased opportunities in all business lines.”

Six Month Fiscal 2012 Results

Revenues for the six months ended December 31, 2011 were $370.3 million, an increase of $43.2 million, or 13.2%, from $327.1 million in the same period a year earlier. Net income for the six months ended December 31, 2011 was $10.5 million, or $0.40 per fully diluted share. In the comparable period a year earlier, net income was $8.4 million, or $0.32 per fully diluted share.

Consolidated gross profit was $41.2 million in the six months ended December 31, 2011 compared to $35.5 million in the same period a year earlier. The increase of $5.7 million was due to higher revenues in the six months ended December 31, 2011 when compared to the same period a year earlier and slightly higher gross margins which increased to 11.1% in the first half of fiscal 2012 compared to 10.8% the same period a year earlier. Selling, general and administrative expenses were $23.4 million, or 6.3% of revenue, in the six months ended December 31, 2011 compared to $21.7 million, or 6.6% of revenue, in the same period a year earlier.

Backlog

Consolidated backlog increased $28.5 million, or 7.0%, to $433.6 million as of December 31, 2011 compared to $405.1 million as of June 30, 2011. The Company continues to see strong bid flow and booked approximately $400 million of new work in the six months ended December 31, 2011. Backlog has increased in four consecutive quarters and is at its highest level since the third quarter of fiscal 2009.

Financial Position

At December 31, 2011, Matrix Service’s cash balance was $37.4 million with no borrowings outstanding on its senior credit facility.

Share Buyback

The Company purchased approximately 370,000 shares of Matrix Service common stock in the three months ended December 31, 2011 for $3.3 million under the Company’s stock buyback plan. Through the first six months of fiscal 2012, the Company has purchased approximately 887,000 shares for a total of $8.1 million. The Company has the authority to purchase an additional 2.1 million shares under the stock buyback plan through the end of calendar 2012. The share buyback was financed with cash on hand.

Earnings Guidance

The Company is increasing its revenue guidance for fiscal 2012 to between $725.0 million and $775.0 million from the previously announced range of $675.0 million to $725.0 million and is increasing the lower end of its earnings guidance from the previously announced $0.80 per fully diluted share to $0.85 per fully diluted share. The upper end of the Company’s fiscal 2012 earnings guidance is unchanged at $0.95 per fully diluted share.

Conference Call Details

In conjunction with the press release, Matrix Service will host a conference call with John R. Hewitt, President and CEO, and Kevin S. Cavanah, Vice President and CFO. The call will take place at 11:00 a.m. (Eastern) / 10:00 a.m. (Central) on February 9, 2012 and will be simultaneously broadcast live over the Internet which can be accessed at the Company’s website atwww.matrixservice.com on the Investors’ page under Conference Calls/Events. Please allow extra time prior to the call to visit the site and download the streaming media software required to listen to the Internet broadcast. The conference call will be recorded and will be available for replay within one hour of completion of the live call and can be accessed following the same link as the live call.

About Matrix Service Company

Matrix Service Company provides engineering, construction and repair and maintenance services principally to the petroleum, power, bulk storage terminal, pipeline and industrial gas industries.

The Company is headquartered in Tulsa, Oklahoma, with regional operating facilities located throughout the United States and Canada.

This release contains forward-looking statements that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are generally accompanied by words such as “anticipate,” “continues,” “expect,” “forecast,” “outlook,” “believe,” “estimate,” “should” and “will” and words of similar effect that convey future meaning, concerning the Company's operations, economic performance and management's best judgment as to what may occur in the future. Future events involve risks and uncertainties that may cause actual results to differ materially from those we currently anticipate. The actual results for the current and future periods and other corporate developments will depend upon a number of economic, competitive and other influences, including those factors discussed in the “Risk Factors” and “Forward Looking Statements” sections and elsewhere in the Company's reports and filings made from time to time with the Securities and Exchange Commission. Many of these risks and uncertainties are beyond the control of the Company, and any one of which, or a combination of which, could materially and adversely affect the results of the Company's operations and its financial condition. We undertake no obligation to update information contained in this release.

For more information, please contact:

Matrix Service Company

Kevin Cavanah

Vice President and CFO

T: 918-838-8822

E: kcavanah@matrixservice.com

Matrix Service Company Condensed Consolidated Statements of Income (In thousands, except per share data) (unaudited)
	Three Months Ended						Six Months Ended
	December 31, 2011			December 31, 2010			December 31, 2011			December 31, 2010
Revenues	$	200,964		$	175,252		$	370,285		$	327,090
Cost of revenues		177,866			155,484			329,094			291,620
Gross profit		23,098			19,768			41,191			35,470
Selling, general and administrative expenses		11,898			11,136			23,381			21,725
Operating income		11,200			8,632			17,810			13,745
Other income (expense):
Interest expense		(166	)		(197	)		(443	)		(367	)
Interest income		3			9			6			22
Other		301			83			(375	)		110
Income before income tax expense		11,338			8,527			16,998			13,510
Provision for federal, state and foreign income taxes		4,307			3,240			6,458			5,134
Net income	$	7,031		$	5,287		$	10,540		$	8,376
Basic earnings per common share	$	0.27		$	0.20		$	0.40		$	0.32
Diluted earnings per common share	$	0.27		$	0.20		$	0.40		$	0.32
Weighted average common shares outstanding:
Basic		25,819			26,400			26,110			26,372
Diluted		26,111			26,628			26,420			26,584

Matrix Service Company

Condensed Consolidated Balance Sheets

(In thousands)

(unaudited)

	December 31, 2011			June 30, 2011
Assets
Current assets:
Cash and cash equivalents	$	37,442		$	59,357
Accounts receivable, less allowances (December 31, 2011—$1,457 and June 30, 2011—$1,428)		115,695			103,483
Costs and estimated earnings in excess of billings on uncompleted contracts		56,530			40,056
Inventories		2,581			2,249
Deferred income taxes		5,672			5,607
Other current assets		3,363			4,798
Total current assets		221,283			215,550
Property, plant and equipment at cost:
Land and buildings		28,355			28,287
Construction equipment		58,133			55,272
Transportation equipment		24,488			21,690
Office equipment and software		15,915			15,442
Construction in progress		1,342			2,465
		128,233			123,156
Accumulated depreciation		(74,138	)		(69,845	)
		54,095			53,311
Goodwill		28,905			29,058
Other intangible assets		6,727			6,953
Other assets		4,588			1,564
Total assets	$	315,598		$	306,436

Matrix Service Company

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(unaudited)

	December 31, 2011			June 30, 2011
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	48,814		$	36,377
Billings on uncompleted contracts in excess of costs and estimated earnings		31,816			35,485
Accrued insurance		7,254			7,514
Accrued wages and benefits		13,331			18,099
Other accrued expenses		5,089			2,701
Total current liabilities		106,304			100,176
Deferred income taxes		5,877			5,789
Acquisition payable		800			800
Total liabilities		112,981			106,765
Commitments and contingencies		—			—
Stockholders’ equity:
Common stock—$.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of December 31, 2011, and June 30, 2011		279			279
Additional paid-in capital		114,913			113,686
Retained earnings		110,771			100,231
Accumulated other comprehensive income		715			1,436
		226,678			215,632
Less: Treasury stock, at cost – 2,169,927 shares as of December 31, 2011, and 1,417,539 shares as of June 30, 2011		(24,061	)		(15,961	)
Total stockholders’ equity		202,617			199,671
Total liabilities and stockholders’ equity	$	315,598		$	306,436

Results of Operations

(in thousands)

	Construction Services		Repair and Maintenance Services		Other		Total
Three Months Ended December 31, 2011
Gross revenues	$	122,532	$	82,076	$	—	$	204,608
Less: Inter-segment revenues		3,634		10		—		3,644
Consolidated revenues		118,898		82,066		—		200,964
Gross profit		13,598		9,500		—		23,098
Operating income		6,086		5,114		—		11,200
Segment assets		163,654		104,170		47,774		315,598
Capital expenditures		1,543		1,100		1,128		3,771
Depreciation and amortization expense		1,736		1,176		—		2,912
Three Months Ended December 31, 2010
Gross revenues	$	107,886	$	69,855	$	—	$	177,741
Less: Inter-segment revenues		2,282		207		���		2,489
Consolidated revenues		105,604		69,648		—		175,252
Gross profit		12,815		6,953		—		19,768
Operating income		6,144		2,488		—		8,632
Segment assets		141,477		101,964		47,504		290,945
Capital expenditures		1,286		93		891		2,270
Depreciation and amortization expense		1,516		1,209		—		2,725
Six Months Ended December 31, 2011
Gross revenues	$	225,397	$	152,098	$	—	$	377,495
Less: Inter-segment revenues		6,902		308		—		7,210
Consolidated revenues		218,495		151,790		—		370,285
Gross profit		24,469		16,722		—		41,191
Operating income		9,996		7,814		—		17,810
Segment assets		163,654		104,170		47,774		315,598
Capital expenditures		3,329		1,791		1,639		6,759
Depreciation and amortization expense		3,407		2,331		—		5,738
Six Months Ended December 31, 2010
Gross revenues	$	207,506	$	124,286	$	—	$	331,792
Less: Inter-segment revenues		4,388		314		—		4,702
Consolidated revenues		203,118		123,972		—		327,090
Gross profit		24,159		11,311		—		35,470
Operating income		10,923		2,822		—		13,745
Segment assets		141,477		101,964		47,504		290,945
Capital expenditures		2,158		331		2,040		4,529
Depreciation and amortization expense		3,065		2,458		—		5,523

Segment revenue from external customers by market is as follows:
	Construction Services		Repair and Maintenance Services		Total
	(In thousands)
Three Months Ended December 31, 2011
Aboveground Storage Tanks	$	55,090	$	28,435	$	83,525
Downstream Petroleum		33,317		31,267		64,584
Electrical and Instrumentation		24,836		22,364		47,200
Specialty		5,655		—		5,655
Total	$	118,898	$	82,066	$	200,964
Three Months Ended December 31, 2010
Aboveground Storage Tanks	$	49,545	$	21,868	$	71,413
Downstream Petroleum		22,648		28,386		51,034
Electrical and Instrumentation		27,385		19,394		46,779
Specialty		6,026		—		6,026
Total	$	105,604	$	69,648	$	175,252
Six Months Ended December 31, 2011
Aboveground Storage Tanks	$	113,744	$	53,034	$	166,778
Downstream Petroleum		52,938		63,155		116,093
Electrical and Instrumentation		39,875		35,601		75,476
Specialty		11,938		—		11,938
Total	$	218,495	$	151,790	$	370,285
Six Months Ended December 31, 2010
Aboveground Storage Tanks	$	90,325	$	43,100	$	133,425
Downstream Petroleum		43,575		50,792		94,367
Electrical and Instrumentation		57,307		30,080		87,387
Specialty		11,911		—		11,911
Total	$	203,118	$	123,972	$	327,090

Backlog

We define backlog as the total dollar amount of revenues that we expect to recognize as a result of performing work that has been awarded to us through a signed contract that we consider firm. The following contract types are considered firm:

• fixed-price arrangements;

• minimum customer commitments on cost plus arrangements; and

• certain time and material contracts in which the estimated contract value is firm or can be estimated with a reasonable amount of certainty in both timing and amounts.

For long-term maintenance contracts we include only the amounts that we expect to recognize into revenue over the next 12 months. For all other arrangements, we calculate backlog as the estimated contract amount less the revenue recognized as of the reporting date.

Three Months Ended December 31, 2011

The following table provides a summary of changes in our backlog for the three months ended December 31, 2011:

	Construction Services			Repair and Maintenance Services			Total
	(In thousands)
Backlog as of September 30, 2011	$	251,132		$	175,468		$	426,600
Net awards		132,328			75,616			207,944
Revenue recognized		(118,898	)		(82,066	)		(200,964	)
Backlog as of December 31, 2011	$	264,562		$	169,018		$	433,580

Six Months Ended December 31, 2011

The following table provides a summary of changes in our backlog for the six months ended December 31, 2011:

	Construction Services			Repair and Maintenance Services			Total
	(In thousands)
Backlog as of June 30, 2011	$	225,733		$	179,385		$	405,118
Net awards		257,324			141,423			398,747
Revenue recognized		(218,495	)		(151,790	)		(370,285	)
Backlog as of December 31, 2011	$	264,562		$	169,018		$	433,580