Matrix Service Company (Nasdaq: MTRX), a leading
contractor to the energy and industrial markets across North
America, today reported financial results for its second quarter of
fiscal 2021.
Key highlights:
- Generated cash flow from operations of $20.8 million in
the quarter and fully repaid outstanding debt, ended the quarter
with cash of $93.5 million
- Second quarter revenue was $167.5 million, reflecting
the continued impact of the pandemic and related market
disruptions
- Second quarter loss per fully
diluted share of $0.17, adjusted loss per fully diluted share of
$0.03(1)
- Achieved annualized cost
savings of $60 million, or 25%, across construction overhead and
SG&A
- Project awards of $111.8
million in the quarter resulting in backlog of $622.8 million;
expectations for increasing project awards in second half of fiscal
year
- Entered into Memorandum of
Understanding with Chart Industries to develop and market turnkey
hydrogen solutions as part of our longer-term diversification
strategy of providing services to the growing clean energy
market
“As expected, second quarter results were
affected by the continued impact of COVID-19 on our end markets,
including client business uncertainty, additional safety protocols
implemented to protect employee health, energy demand destruction,
and a global economic slowdown. These impacts resulted in reduced
revenue and is continuing to disrupt the timing of awards from what
is otherwise a strong opportunity pipeline,” said Matrix Service
Company president and CEO John R. Hewitt.
“We expect improvement as we move through the
second half of the fiscal year. Additionally, bidding
opportunities, especially in key strategic areas including small to
mid-size LNG facilities, electrical infrastructure, thermal vacuum
chambers, rare earth metals and minerals, and hydrogen are robust
and speak to the diversification of our business as well as the
strategic shift we have taken as the transition to cleaner energy
accelerates. Our strong financial position, combined with a leaner
organization, position us to create value for our shareholders as
we serve the evolving infrastructure needs of our customers in both
the near- and long-term.”
Update on Company Response to COVID-19
Pandemic
Throughout the course of the COVID-19 pandemic,
the Company's top priority has been to maintain a safe working
environment for all office and field employees, customers and
business partners. As the world continues to recover from this
pandemic, our project teams, in coordination with our clients,
continue to operate under enhanced work processes to integrate
guidance from governmental agencies and leading health
organizations to protect the health and safety of everyone on our
job sites while maintaining productivity.
Over the last year, the Company has reduced its
cost structure in excess of $60 million, or approximately 25%, with
a third of those reductions related to SG&A and the rest
related to construction overhead, which is included in cost of
revenue on the income statement. Even with these dramatic
reductions in construction overhead, the current revenue levels
will not allow for complete recovery which reduces the gross
margin. However, based on our opportunity pipeline and the strength
we see returning to the business, the current adjusted overhead
levels are appropriate. While the Company will continue to manage
our cost structure, we are now focused on rebuilding our backlog
and revenue volume.
Second Quarter Fiscal 2021 Results
Consolidated
Consolidated revenue was $167.5 million for the
three months ended December 31, 2020, compared to $318.7
million in the same period in the prior fiscal year. On a segment
basis, revenue decreased for the Process and Industrial Facilities
and Storage and Terminal Solutions segments by $91.6 million, and
$62.5 million, respectively. These decreases were partially offset
by an increase in the Utility and Power Infrastructure segment of
$2.9 million.
Consolidated gross profit decreased to $15.3
million in the three months ended December 31, 2020 compared
to $30.0 million in the same period in the prior fiscal year. Gross
margin decreased to 9.1% in the three months ended
December 31, 2020 compared to 9.4% in the same period in the
prior fiscal year. Despite generally strong project execution,
gross margins in fiscal 2021 were lower than fiscal 2020 due to
lower than forecasted volumes, which led to higher under recovery
of construction overhead costs.
Consolidated SG&A expenses were $16.7
million in the three months ended December 31, 2020 compared
to $23.2 million in the same period a year earlier. The decrease is
primarily attributable to cost reductions implemented throughout
the past year and lower incentive compensation.
In connection with these cost reductions, the
Company recorded $5.0 million of restructuring costs in the three
months ended December 31, 2020.
For the three months ended December 31,
2020, we had a net loss of $4.6 million, or $0.17 per fully diluted
share, compared to a net loss of $28.0 million, or $1.04 per fully
diluted share, in the three months ended December 31, 2019.
For the three months ended December 31, 2020, the adjusted net loss
was $0.8 million, or $0.03 per fully diluted share, compared to
adjusted net income of $5.2 million, or $0.19 per fully diluted
share, in the three months ended December 31, 2019 (1).
Utility and Power Infrastructure
Revenue for the Utility and Power Infrastructure
segment was $52.0 million in the three months ended
December 31, 2020 compared to $49.2 million in the same period
a year earlier. The increase is due to a higher volume of LNG
utility peak shaving work, partially offset by lower volumes of
power work. The segment gross margin was 10.8% in fiscal 2021
compared to (2.5)% in fiscal 2020. The fiscal 2021 segment gross
margin was positively impacted by strong project execution,
partially offset by under recovery of construction overhead
costs.
In the Utility and Power Infrastructure segment,
performance in the power delivery portion continues to be strong on
reduced revenue, however bidding activity is strong, and we expect
project awards to improve as we move through the fiscal year.
Similarly, our LNG peak shaving projects are performing well and
the opportunity pipeline for future projects is strong, however
those awards, while significant, can be less frequent. We are
optimistic that the priorities of the new presidential
administration will lead to increased opportunities in this
segment.
Process and Industrial
Facilities
Revenue for the Process and Industrial
Facilities segment was $51.3 million in the three months ended
December 31, 2020 compared to $142.9 million in the same
period a year earlier. The decrease is primarily due to our
strategic exit from the domestic iron and steel industry in the
third quarter of fiscal 2020, completion of a major capital
project, lower volumes of midstream gas projects, and reduced
refinery turnaround and maintenance work. The segment gross margin
was 15.3% for the three months ended December 31, 2020
compared to 9.7% in the same period last year. Segment gross margin
in the second quarter of fiscal 2021 was positively impacted by
strong project execution. Under recovery of construction overhead
costs in fiscal 2021 was offset by the positive impact of a
one-time workers compensation item.
In the Process and Industrial Facilities
segment, overall the short-term impact of the global pandemic on
the Company's refinery turnaround and maintenance operations has
moderated while maintenance volumes in locations where we have a
permanent presence has returned to normal. However, some refiners
continue to delay or reduce discretionary maintenance and capital
spending. We expect some improvement in the Spring turnaround
cycle.
During the second quarter of fiscal 2021, our
focus to expand services in the midstream gas market was rewarded
with a key contract for a natural gas pipeline compressor station
upgrade. In addition, we continue to see strong demand for thermal
vacuum chambers, as well as increasing opportunities in mining and
minerals and chemicals.
Storage and Terminal Solutions
Revenue for the Storage and Terminal Solutions
segment was $64.2 million in the three months ended
December 31, 2020 compared to $126.6 million in the same
period a year earlier. The decrease in segment revenue is primarily
a result of lower volumes of crude oil tank and terminal capital
work and repair and maintenance work. In the current quarter the
gross margin was 2.9% compared to 14.2% in the same quarter a year
earlier. Despite the majority of the segment executing at a high
level, two items negatively impacted the current quarterly gross
margin. First, the low revenue volume resulted in the under
recovery of construction overhead costs, and secondly the Company
incurred an increase in expected costs to complete the construction
of a large crude terminal. The Company has achieved mechanical
completion, is demobilizing from the site, and working through
final closeout and change orders with the client.
In the Storage and Terminal Solutions segment,
we have seen deferrals in award dates and lengthening award cycles
as a result of the COVID-19 pandemic and its disruption of global
energy demand. Opportunities in crude oil tanks and terminals are
limited, however, this segment also includes a strong funnel of
opportunities in North America, Central America and the Caribbean
for storage infrastructure projects related to natural gas, LNG,
ammonia, renewable energy, and NGLs that support clean energy
initiatives and chemical feed stocks.
Six Month Fiscal 2021
Results
Consolidated revenue was $350.2 million for
the six months ended December 31, 2020, compared to $656.8
million in the same period in the prior fiscal year. On a segment
basis, revenue decreased for the Process and Industrial Facilities
and Storage and Terminal Solutions segments by $200.6 million, and
$121.8 million, respectively. These decreases were partially offset
by an increase in the Utility and Power Infrastructure segment of
$15.8 million.
Consolidated gross profit decreased to $29.7
million in the six months ended December 31, 2020 compared to
$62.5 million in the same period in the prior fiscal year. Gross
margin decreased to 8.5% in the six months ended December 31,
2020 compared to 9.5% in the same period in the prior fiscal year.
Despite generally strong project execution, gross margins in the
first half of fiscal 2021 were lower than fiscal 2020 due to lower
than forecasted volumes, which led to higher under recovery of
construction overhead costs.
Consolidated SG&A expenses were $34.9
million in the six months ended December 31, 2020 compared to
$46.9 million in the same period a year earlier. The decrease is
primarily attributable to cost reductions implemented throughout
the past year and lower incentive compensation.
In connection with these cost reductions, the
Company recorded $4.7 million of restructuring costs in the six
months ended December 31, 2020.
For the six months ended December 31, 2020,
we had a net loss of $7.6 million, or $0.29 per fully diluted
share, compared to a net loss of $21.9 million, or $0.81 per fully
diluted share, in the six months ended December 31, 2019. For
the six months ended December 31, 2020, the adjusted net loss was
$4.1 million, or $0.16 per fully diluted share, compared to
adjusted net income of $11.4 million, or $0.41 per fully diluted
share, in the six months ended December 31, 2019 (1).
Income Tax Expense
Our effective tax rates for the three and six
months ended December 31, 2020 were 20.9% and 11.0%,
respectively. The effective tax rate in fiscal 2021 was negatively
impacted by deferred tax asset adjustments of $0.2 million and $1.2
million during the three and six months ended December 31, 2020,
respectively. The Company estimates that its fiscal 2021 effective
tax rate will be approximately 27% for the remainder of the
year.
Backlog
Backlog at December 31, 2020 was $622.8
million. The quarterly and year-to-date book-to-bill ratios were
0.7 and 0.6 on project awards of $111.8 million and $214.5 million,
respectively.
Financial Position
During the quarter the Company generated $20.8
million of cash flow from operations and paid off outstanding debt
of $9.4 million. At December 31, 2020 the Company had total
liquidity of $126.9 million, which includes $33.4 million of
availability under the credit facility and a cash balance of $93.5
million. The Company had no debt at December 31, 2020.
Non-GAAP Financial Measure
(1) Adjusted earnings (loss) per share is a
non-GAAP financial measure which excludes the financial impact of
certain impairment charges, restructuring costs and tax reserves.
In the three and six months ended December 31, 2020, earnings were
adjusted for restructuring costs only. See the Non-GAAP Financial
Measures section included at the end of this release for a
reconciliation to earnings per share.
Conference Call / Webcast
Details
In conjunction with the earnings release, Matrix
Service Company will host a conference call / webcast with John R.
Hewitt, President and CEO, and Kevin S. Cavanah, Vice President and
CFO. The call will take place at 10:30 a.m. (Eastern) / 9:30 a.m.
(Central) on Tuesday, February 9, 2021 and will be simultaneously
broadcast live over the Internet which can be accessed at the
Company’s website at matrixservicecompany.com under Investor
Relations, Events and Presentations. 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.
Dial in - Toll-Free: 1-888-660-6127Dial in -
Toll: 1-973-890-8355Audience Passcode: 6676476
About Matrix Service Company
Matrix Service Company (Nasdaq: MTRX), through
its subsidiaries, is a leading North American industrial
engineering and construction contractor headquartered in Tulsa,
Oklahoma with offices located throughout the United States and
Canada, as well as Sydney, Australia and Seoul, South Korea.
The Company reports its financial results in
three key operating segments: Utility and Power Infrastructure,
Process and Industrial Facilities, and Storage and Terminal
Solutions.
With a focus on sustainability, building strong
Environment, Social and Governance (ESG) practices, and living our
core values, Matrix ranks among the Top 100 Contractors by
Engineering-News Record, was recognized for its Board
diversification by 2020 Women on Boards, is an active signatory to
CEO Action for Diversity and Inclusion, and is consistently
recognized as a Great Place to Work®. To learn more about Matrix
Service Company, visit matrixservicecompany.com.
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 the
successful implementation of the Company's business improvement
plan and the 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, except
as required by law.
For more information, please contact:
Kevin S. CavanahVice President and CFOT: 918-838-8822Email:
kcavanah@matrixservicecompany.com
Kellie SmytheSenior Director, Investor RelationsT:
918-359-8267Email: ksmythe@matrixservicecompany.com
Matrix Service
CompanyCondensed Consolidated Statements of
Income(unaudited)(In thousands,
except per share data)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
December 31,2020 |
|
December 31,2019 |
|
December 31,2020 |
|
December 31,2019 |
Revenue |
|
$ |
167,468 |
|
|
$ |
318,677 |
|
|
$ |
350,239 |
|
|
$ |
656,774 |
|
Cost of revenue |
|
152,155 |
|
|
288,676 |
|
|
320,576 |
|
|
594,308 |
|
Gross profit |
|
15,313 |
|
|
30,001 |
|
|
29,663 |
|
|
62,466 |
|
Selling, general and
administrative expenses |
|
16,724 |
|
|
23,165 |
|
|
34,852 |
|
|
46,856 |
|
Goodwill and other intangible
asset impairments |
|
— |
|
|
38,515 |
|
|
— |
|
|
38,515 |
|
Restructuring costs |
|
5,045 |
|
|
— |
|
|
4,725 |
|
|
— |
|
Operating loss |
|
(6,456 |
) |
|
(31,679 |
) |
|
(9,914 |
) |
|
(22,905 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
(358 |
) |
|
(444 |
) |
|
(733 |
) |
|
(833 |
) |
Interest income |
|
38 |
|
|
417 |
|
|
71 |
|
|
891 |
|
Other |
|
973 |
|
|
396 |
|
|
2,006 |
|
|
399 |
|
Loss before income tax
benefit |
|
(5,803 |
) |
|
(31,310 |
) |
|
(8,570 |
) |
|
(22,448 |
) |
Benefit from federal, state and
foreign income taxes |
|
(1,212 |
) |
|
(3,302 |
) |
|
(942 |
) |
|
(591 |
) |
Net loss |
|
$ |
(4,591 |
) |
|
$ |
(28,008 |
) |
|
$ |
(7,628 |
) |
|
$ |
(21,857 |
) |
|
|
|
|
|
|
|
|
|
Basic loss per common share |
|
$ |
(0.17 |
) |
|
$ |
(1.04 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.81 |
) |
Diluted loss per common
share |
|
$ |
(0.17 |
) |
|
$ |
(1.04 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.81 |
) |
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
26,489 |
|
|
26,925 |
|
|
26,377 |
|
|
26,930 |
|
Diluted |
|
26,489 |
|
|
26,925 |
|
|
26,377 |
|
|
26,930 |
|
Matrix Service
CompanyCondensed Consolidated Balance
Sheets(unaudited)(In
thousands)
|
December 31,2020 |
|
June 30,2020 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
93,481 |
|
|
$ |
100,036 |
|
Accounts receivable, less allowances (December 31, 2020—$853 and
June 30, 2020—$905) |
151,068 |
|
|
160,671 |
|
Costs and estimated earnings in excess of billings on uncompleted
contracts |
41,398 |
|
|
59,548 |
|
Inventories |
6,764 |
|
|
6,460 |
|
Income taxes receivable |
4,287 |
|
|
3,919 |
|
Other current assets |
7,769 |
|
|
4,526 |
|
Total current assets |
304,767 |
|
|
335,160 |
|
Property, plant and equipment
at cost: |
|
|
|
Land and buildings |
43,243 |
|
|
42,695 |
|
Construction equipment |
94,893 |
|
|
94,154 |
|
Transportation equipment |
52,182 |
|
|
55,864 |
|
Office equipment and software |
42,143 |
|
|
39,356 |
|
Construction in progress |
2,065 |
|
|
4,427 |
|
Total property, plant and equipment - at cost |
234,526 |
|
|
236,496 |
|
Accumulated depreciation |
(158,774 |
) |
|
(155,748 |
) |
Property, plant and equipment - net |
75,752 |
|
|
80,748 |
|
Operating lease right-of-use
assets |
18,308 |
|
|
21,375 |
|
Goodwill |
60,605 |
|
|
60,369 |
|
Other intangible assets, net
of accumulated amortization |
7,743 |
|
|
8,837 |
|
Deferred income taxes |
6,815 |
|
|
5,988 |
|
Other assets |
5,920 |
|
|
4,833 |
|
Total assets |
$ |
479,910 |
|
|
$ |
517,310 |
|
Matrix Service
CompanyCondensed Consolidated Balance Sheets
(continued)(unaudited)(In
thousands, except share data)
|
December 31,2020 |
|
June 30,2020 |
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
51,269 |
|
|
$ |
73,094 |
|
Billings on uncompleted contracts in excess of costs and estimated
earnings |
62,244 |
|
|
63,889 |
|
Accrued wages and benefits |
16,373 |
|
|
16,205 |
|
Accrued insurance |
7,795 |
|
|
7,301 |
|
Operating lease liabilities |
5,359 |
|
|
7,568 |
|
Other accrued expenses |
7,087 |
|
|
7,890 |
|
Total current liabilities |
150,127 |
|
|
175,947 |
|
Deferred income taxes |
75 |
|
|
61 |
|
Operating lease liabilities |
17,521 |
|
|
19,997 |
|
Borrowings under senior secured revolving credit facility |
— |
|
|
9,208 |
|
Other liabilities |
7,898 |
|
|
4,208 |
|
Total liabilities |
175,621 |
|
|
209,421 |
|
Commitments and
contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Common stock—$.01 par value; 60,000,000 shares authorized;
27,888,217 shares issued as of December 31, 2020 and June 30, 2020;
26,502,960 and 26,141,528 shares outstanding as of December 31,
2020 and June 30, 2020 |
279 |
|
|
279 |
|
Additional paid-in capital |
133,957 |
|
|
138,966 |
|
Retained earnings |
198,774 |
|
|
206,402 |
|
Accumulated other comprehensive loss |
(7,150 |
) |
|
(8,373 |
) |
|
325,860 |
|
|
337,274 |
|
Less: Treasury stock, at cost — 1,385,257 shares as of December 31,
2020, and 1,746,689 shares as of June 30, 2020 |
(21,571 |
) |
|
(29,385 |
) |
Total stockholders'
equity |
304,289 |
|
|
307,889 |
|
Total liabilities and
stockholders’ equity |
$ |
479,910 |
|
|
$ |
517,310 |
|
Matrix Service
CompanyResults of
Operations(unaudited)(In
thousands)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
December 31,2020 |
|
December 31,2019 |
|
December 31,2020 |
|
December 31,2019 |
Gross
revenue |
|
|
|
|
|
|
|
|
Utility and Power Infrastructure |
|
$ |
52,023 |
|
|
$ |
49,155 |
|
|
$ |
112,694 |
|
|
$ |
96,882 |
|
Process and Industrial
Facilities |
|
51,747 |
|
|
143,769 |
|
|
98,475 |
|
|
299,221 |
|
Storage and Terminal
Solutions |
|
65,434 |
|
|
128,008 |
|
|
143,030 |
|
|
264,009 |
|
Total gross revenue |
|
$ |
169,204 |
|
|
$ |
320,932 |
|
|
$ |
354,199 |
|
|
$ |
660,112 |
|
Less: Inter-segment
revenue |
|
|
|
|
|
|
|
|
Process and Industrial
Facilities |
|
$ |
485 |
|
|
$ |
886 |
|
|
$ |
1,282 |
|
|
$ |
1,461 |
|
Storage and Terminal
Solutions |
|
1,251 |
|
|
1,369 |
|
|
2,678 |
|
|
1,877 |
|
Total inter-segment revenue |
|
$ |
1,736 |
|
|
$ |
2,255 |
|
|
$ |
3,960 |
|
|
$ |
3,338 |
|
Consolidated
revenue |
|
|
|
|
|
|
|
|
Utility and Power
Infrastructure |
|
$ |
52,023 |
|
|
$ |
49,155 |
|
|
$ |
112,694 |
|
|
$ |
96,882 |
|
Process and Industrial
Facilities |
|
51,262 |
|
|
142,883 |
|
|
97,193 |
|
|
297,760 |
|
Storage and Terminal
Solutions |
|
64,183 |
|
|
126,639 |
|
|
140,352 |
|
|
262,132 |
|
Total consolidated revenue |
|
$ |
167,468 |
|
|
$ |
318,677 |
|
|
$ |
350,239 |
|
|
$ |
656,774 |
|
Gross profit
(loss) |
|
|
|
|
|
|
|
|
Utility and Power
Infrastructure |
|
$ |
5,597 |
|
|
$ |
(1,226 |
) |
|
$ |
12,510 |
|
|
$ |
(1,394 |
) |
Process and Industrial
Facilities |
|
7,864 |
|
|
13,838 |
|
|
11,523 |
|
|
27,428 |
|
Storage and Terminal
Solutions |
|
1,852 |
|
|
18,026 |
|
|
5,630 |
|
|
37,768 |
|
Corporate |
|
— |
|
|
(637 |
) |
|
— |
|
|
(1,336 |
) |
Total gross profit |
|
$ |
15,313 |
|
|
$ |
30,001 |
|
|
$ |
29,663 |
|
|
$ |
62,466 |
|
Selling, general and
administrative expenses |
|
|
|
|
|
|
|
|
Utility and Power
Infrastructure |
|
$ |
2,576 |
|
|
$ |
2,778 |
|
|
$ |
4,798 |
|
|
$ |
5,410 |
|
Process and Industrial
Facilities |
|
3,387 |
|
|
7,385 |
|
|
7,437 |
|
|
14,323 |
|
Storage and Terminal
Solutions |
|
3,919 |
|
|
6,791 |
|
|
9,062 |
|
|
13,777 |
|
Corporate |
|
6,842 |
|
|
6,211 |
|
|
13,555 |
|
|
13,346 |
|
Total selling, general and administrative expenses |
|
$ |
16,724 |
|
|
$ |
23,165 |
|
|
$ |
34,852 |
|
|
$ |
46,856 |
|
Intangible asset
impairments and restructuring costs |
|
|
|
|
|
|
|
|
Utility and Power
Infrastructure |
|
$ |
812 |
|
|
$ |
24,900 |
|
|
$ |
823 |
|
|
$ |
24,900 |
|
Process and Industrial
Facilities |
|
3,364 |
|
|
13,615 |
|
|
2,864 |
|
|
13,615 |
|
Storage and Terminal
Solutions |
|
641 |
|
|
— |
|
|
654 |
|
|
— |
|
Corporate |
|
228 |
|
|
— |
|
|
384 |
|
|
— |
|
Total asset impairments and restructuring costs |
|
$ |
5,045 |
|
|
$ |
38,515 |
|
|
$ |
4,725 |
|
|
$ |
38,515 |
|
Operating income
(loss) |
|
|
|
|
|
|
|
|
Utility and Power
Infrastructure |
|
$ |
2,209 |
|
|
$ |
(28,904 |
) |
|
$ |
6,889 |
|
|
$ |
(31,704 |
) |
Process and Industrial
Facilities |
|
1,113 |
|
|
(7,162 |
) |
|
1,222 |
|
|
(510 |
) |
Storage and Terminal
Solutions |
|
(2,708 |
) |
|
11,235 |
|
|
(4,086 |
) |
|
23,991 |
|
Corporate |
|
(7,070 |
) |
|
(6,848 |
) |
|
(13,939 |
) |
|
(14,682 |
) |
Total operating loss |
|
$ |
(6,456 |
) |
|
$ |
(31,679 |
) |
|
$ |
(9,914 |
) |
|
$ |
(22,905 |
) |
Backlog
We define backlog as the total dollar amount of
revenue that we expect to recognize as a result of performing work
that has been awarded to us through a signed contract, limited
notice to proceed or other type of assurance that we consider firm.
The following arrangements are considered firm:
- 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.
For long-term maintenance contracts with no
minimum commitments and other established customer agreements, we
include only the amounts that we expect to recognize as revenue
over the next 12 months. For arrangements in which we have received
a limited notice to proceed, we include the entire scope of work in
our backlog if we conclude that the likelihood of the full project
proceeding is high. For all other arrangements, we calculate
backlog as the estimated contract amount less revenue recognized as
of the reporting date.
The following table provides a summary of changes in our backlog
for the three months ended December 31, 2020:
|
Utility and Power Infrastructure |
|
Process and Industrial Facilities |
|
Storage and
TerminalSolutions |
|
Total |
|
(In thousands) |
Backlog as of September 30, 2020 |
$ |
233,463 |
|
|
$ |
150,590 |
|
|
$ |
294,374 |
|
|
$ |
678,427 |
|
Project awards |
16,772 |
|
|
58,100 |
|
|
36,942 |
|
|
111,814 |
|
Revenue recognized |
(52,023 |
) |
|
(51,262 |
) |
|
(64,183 |
) |
|
(167,468 |
) |
Backlog as of December 31,
2020 |
$ |
198,212 |
|
|
$ |
157,428 |
|
|
$ |
267,133 |
|
|
$ |
622,773 |
|
Book-to-bill ratio(1) |
0.3 |
|
|
1.1 |
|
|
0.6 |
|
|
0.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Calculated by
dividing project awards by revenue recognized during the
period.
The following table provides a summary of
changes in our backlog for the six months ended December 31,
2020:
|
Utility and Power Infrastructure |
|
Process and Industrial Facilities |
|
Storage and
TerminalSolutions |
|
Total |
|
(In thousands) |
Backlog as of June 30, 2020 |
$ |
272,816 |
|
|
$ |
145,725 |
|
|
$ |
339,924 |
|
|
$ |
758,465 |
|
Project awards |
38,090 |
|
|
108,896 |
|
|
67,561 |
|
|
214,547 |
|
Revenue recognized |
(112,694 |
) |
|
(97,193 |
) |
|
(140,352 |
) |
|
(350,239 |
) |
Backlog as of December 31,
2020 |
$ |
198,212 |
|
|
$ |
157,428 |
|
|
$ |
267,133 |
|
|
$ |
622,773 |
|
Book-to-bill ratio(1) |
0.3 |
|
|
1.1 |
|
|
0.5 |
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Calculated by dividing project
awards by revenue recognized during the period.
Non-GAAP Financial Measures
In order to more clearly depict the core
profitability of the Company, the following table presents our net
income (loss) and earnings (loss) per fully diluted share for the
three and six months ended December 31, 2020 and 2019 after
adjusting for restructuring costs, impairments and the tax impacts
of these adjustments and other net tax items:
Reconciliation of Adjusted Net Income
(Loss) and Diluted Earnings (Loss) per Common
Share(1)(In thousands, except per
share data)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
December 31, 2020 |
|
December 31, 2019 |
|
December 31, 2020 |
|
December 31, 2019 |
Net loss, as reported |
|
$ |
(4,591 |
) |
|
$ |
(28,008 |
) |
|
$ |
(7,628 |
) |
|
$ |
(21,857 |
) |
Restructuring costs incurred |
|
5,045 |
|
|
— |
|
|
4,725 |
|
|
— |
|
Goodwill and intangible asset impairments |
|
— |
|
|
38,515 |
|
|
— |
|
|
38,515 |
|
Tax impact of adjustments and other net tax items |
|
(1,299 |
) |
|
(5,275 |
) |
|
(1,217 |
) |
|
(5,275 |
) |
Adjusted net income
(loss) |
|
$ |
(845 |
) |
|
$ |
5,232 |
|
|
$ |
(4,120 |
) |
|
$ |
11,383 |
|
|
|
|
|
|
|
|
|
|
Loss per fully diluted share,
as reported |
|
$ |
(0.17 |
) |
|
$ |
(1.04 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.81 |
) |
Adjusted earnings (loss) per
fully diluted share |
|
$ |
(0.03 |
) |
|
$ |
0.19 |
|
|
$ |
(0.16 |
) |
|
$ |
0.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This table presents non-GAAP
financial measures of our adjusted net income (loss) and adjusted
diluted earnings (loss) per common share for the three and six
months ended December 31, 2020 and 2019. The most directly
comparable GAAP financial measures are net loss and diluted loss
per common share, respectively, presented in the condensed
consolidated statements of income. We have presented these non-GAAP
financial measures because we believe they more clearly depict the
core operating results of the Company during the periods presented
and provide a more comparable measure of the Company's operating
results to other companies considered to be in similar businesses.
Since adjusted net income (loss) and adjusted diluted earnings
(loss) per common share are not measures of performance calculated
in accordance with GAAP, they should be considered in addition to,
rather than as a substitute for, the most directly comparable GAAP
financial measures.
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