Matrix Service Company (Nasdaq: MTRX), a leading
contractor to the energy and industrial markets across North
America, today reported financial results for its third quarter of
fiscal 2022.
Key highlights:
- Project awards in the
quarter of $179.7 million bring year-to-date awards to
$638.7 million, an 81% increase compared to first nine months
of the prior year, resulting in a book-to-bill of 1.3
year-to-date
- Recent
notable awards include thermal vacuum chambers, electrical
infrastructure projects, construction of a borate mining facility,
and early engineering for an LNG export terminal
- Backlog
increased to $594.2 million, an increase of 28% compared to the
start of the fiscal year
- Liquidity
of $86.8 million and no debt
- Third
quarter revenue of $177.0 million and loss per fully diluted
share of $1.30; adjusted loss per fully diluted share of
$0.50(1) excluding one-time
non-cash items
“Our revenue volume and
financial performance have been impacted by delays in project
starts on certain projects in our backlog as well as delays in
awards of larger project work. While I am pleased that we achieved
our third consecutive quarter with a book-to-bill of greater than
1.0 and have a book-to-bill of 1.3 through the first nine months of
our fiscal year, I am more excited by our near-term project
pipeline, which should lead to material increases in backlog over
the next two quarters as larger energy infrastructure projects are
awarded. In addition to the long-term need for reliable natural gas
supply, recent global events underscore the urgency of accelerating
these projects to support the world’s need for enhanced energy
security by increasing the availability of LNG globally. Many of
these projects are in our sales pipeline, and we expect them to
materialize over the next six months," said John R. Hewitt,
President and CEO.
"We continue to strengthen Matrix through the
expansion of our shared service model to include enterprise-wide
finance, accounting and human resources, and creation of a center
of operational excellence to initially optimize procurement and
quality, health and safety and ultimately include various project
management and proposal services. This will allow us to better
deliver against the opportunity set that lies ahead and also
mitigate execution risk going forward.”
Earnings Summary
Revenue in the third quarter of fiscal 2022 was
$177.0 million, an increase of $15.0 million compared to
second quarter fiscal 2022 revenue of $162.0 million. Gross margin
(loss) was (1.0%) in the third quarter of fiscal 2022 primarily due
to under recovered overheads as well as an increase in forecasted
cost on two projects won in the very competitive environment during
the height of the pandemic.
In the Storage and Terminals Solutions segment,
a gross margin (loss) of (0.9%) for the quarter was primarily the
result of under recovered overheads and the execution of smaller
competitively priced capital projects.
In the Process and Industrial Facilities
segment, third quarter gross margin (loss) of (0.6%) was primarily
due to an increase in forecasted costs to complete a midstream gas
processing project. The increase in forecasted costs was primarily
due to poor performance of a, now terminated, subcontractor, which
will require rework in order to meet our client's
expectations.
In the Utility and Power Infrastructure segment,
third quarter gross margin was (0.8%) as a result of under recovery
of construction overhead costs, lower margins on capital work bid
competitively, and an increase in forecasted cost on a capital
project.
In the third quarter, we recorded a non-cash
impairment to goodwill of $18.3 million.
We booked a $1.6 credit to restructuring costs
due to a favorable settlement of a restructuring obligation related
to our exit from the domestic iron and steel industry in fiscal
2020. We continued to implement our previously announced business
improvement plan during the third quarter. The current phase of our
plan is focused on the consolidation of transactional services,
procedures and operational talent to increase our efficiency,
competitiveness and profitability. Since we implemented the plan in
fiscal 2020, we estimate that we have reduced our cost structure by
approximately $82 million, or 30%, with one third of those
reductions related to SG&A and the rest related to construction
overhead, which is included in cost of revenue in the Condensed
Consolidated Statements of Income.
Our effective tax rates for the three months
ended March 31, 2022 and March 31, 2021 were 0.4% and
28.2%, respectively. The effective tax rate was impacted by a $7.7
million valuation allowance placed on our deferred tax assets
during the third quarter of fiscal 2022.
For the three months ended March 31, 2022,
we had a net loss of $34.9 million, or $1.30 per fully diluted
share, compared to a net loss of $12.9 million, or $0.49 per fully
diluted share, in the three months ended March 31, 2021. For
the three months ended March 31, 2022, we had and adjusted net loss
of $13.4 million, or $0.50 per fully diluted share compared to an
adjusted loss of $11.5 million, or $0.43 per diluted share, for the
three months ended March 31, 2021.
Backlog
Our backlog as of March 31, 2022 was $594.2
million. Project awards totaled $179.7 million and $638.7 million
during the three and nine months ended March 31, 2022,
respectively, leading to book-to-bill ratios of 1.0 and 1.3 for the
three and nine-month periods. On a segment basis, the third quarter
book-to-bill was 0.4 for Utility and Power Infrastructure (0.7
year-to-date), driven largely by bookings in electrical
infrastructure. For Process and Industrial Facilities, the
book-to-bill was 1.5 (1.9 year-to-date) led by key awards for two
thermal vacuum chamber projects, a midstream gas processing plant,
a borate mining facility, and other renewable energy capital
projects. For Storage and Terminal Solutions, the quarterly
book-to-bill was 1.1 (1.2 year-to-date) led by midstream storage
and other renewables projects. Bidding activity is strong, and
while the timing of project awards can fluctuate, we expect the
trend of improving backlog to continue.
The table below summarizes our awards, book-to-bill ratios and
backlog by segment for our third fiscal quarter and year-to-date
(in thousands, except for book-to-bill ratios):
|
|
Three Months Ended March 31,
2022 |
|
Nine Months Ended March 31,
2022 |
|
Backlog as of March 31, 2022 |
Segment: |
|
Awards |
|
Book-to-Bill |
|
Awards |
|
Book-to-Bill |
|
Utility and Power Infrastructure |
|
$ |
23,366 |
|
0.4 |
|
$ |
115,648 |
|
0.7 |
|
$ |
114,393 |
Process and Industrial Facilities |
|
|
104,729 |
|
1.5 |
|
|
315,143 |
|
1.9 |
|
|
286,728 |
Storage and Terminal Solutions |
|
|
51,575 |
|
1.1 |
|
|
207,936 |
|
1.2 |
|
|
193,106 |
Total |
|
$ |
179,670 |
|
1.0 |
|
$ |
638,727 |
|
1.3 |
|
$ |
594,227 |
|
|
Three Months Ended March 31,
2021 |
|
Nine Months Ended March 31,
2021 |
|
Backlog as of March 31, 2021 |
Segment: |
|
Awards |
|
Book-to-Bill |
|
Awards |
|
Book-to-Bill |
|
Utility and Power Infrastructure |
|
$ |
49,808 |
|
1.1 |
|
$ |
87,898 |
|
0.6 |
|
$ |
203,300 |
Process and Industrial Facilities |
|
|
40,836 |
|
1.0 |
|
|
149,732 |
|
1.1 |
|
|
155,430 |
Storage and Terminal Solutions |
|
|
47,399 |
|
0.8 |
|
|
114,960 |
|
0.6 |
|
|
179,607 |
Total |
|
$ |
138,043 |
|
0.9 |
|
$ |
352,590 |
|
0.7 |
|
$ |
538,337 |
Financial Position
At March 31, 2022, we had no debt and total
liquidity of $86.8 million. Liquidity is comprised of $34.1 million
of unrestricted cash and cash equivalents and $52.7 million of
borrowing availability under the ABL Facility. The Company has
$25.0 million of restricted cash to support the ABL Facility.
(1)Non-GAAP Financial
Measure
Adjusted loss per share is a non-GAAP financial
measure which excludes the financial impact of a valuation
allowance placed on our deferred tax assets, the accelerated
amortization of deferred debt amendment fees associated with the
prior credit agreement and restructuring costs. See the Non-GAAP
Financial Measures section included at the end of this release for
a reconciliation to loss per share.
Conference Call 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, May 10, 2022 and will be simultaneously
broadcast live over the Internet which can be accessed at our
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 1-888-660-6127
Dial in - Toll 1-973-890-8355
Audience Passcode 8678241
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 Contractors by
Engineering-News Record, was recognized for its Board
diversification, 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 and read our inaugural Sustainability
Report.
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 |
|
Nine Months Ended |
|
|
March 31,2022 |
|
March 31,2021 |
|
March 31,2022 |
|
March 31,2021 |
Revenue |
|
$ |
177,003 |
|
|
$ |
148,260 |
|
|
$ |
507,061 |
|
|
$ |
498,499 |
|
Cost of revenue |
|
|
178,766 |
|
|
|
146,700 |
|
|
|
509,125 |
|
|
|
467,276 |
|
Gross profit (loss) |
|
|
(1,763 |
) |
|
|
1,560 |
|
|
|
(2,064 |
) |
|
|
31,223 |
|
Selling, general and
administrative expenses |
|
|
17,041 |
|
|
|
17,179 |
|
|
|
49,592 |
|
|
|
52,031 |
|
Goodwill impairment |
|
|
18,312 |
|
|
|
— |
|
|
|
18,312 |
|
|
|
— |
|
Restructuring costs |
|
|
(1,578 |
) |
|
|
1,860 |
|
|
|
(278 |
) |
|
|
6,585 |
|
Operating loss |
|
|
(35,538 |
) |
|
|
(17,479 |
) |
|
|
(69,690 |
) |
|
|
(27,393 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(204 |
) |
|
|
(322 |
) |
|
|
(2,705 |
) |
|
|
(1,055 |
) |
Interest income |
|
|
19 |
|
|
|
25 |
|
|
|
69 |
|
|
|
96 |
|
Other |
|
|
677 |
|
|
|
(157 |
) |
|
|
534 |
|
|
|
1,849 |
|
Loss before income tax expense
(benefit) |
|
|
(35,046 |
) |
|
|
(17,933 |
) |
|
|
(71,792 |
) |
|
|
(26,503 |
) |
Provision (benefit) for federal,
state and foreign income taxes |
|
|
(147 |
) |
|
|
(5,060 |
) |
|
|
5,564 |
|
|
|
(6,002 |
) |
Net loss |
|
$ |
(34,899 |
) |
|
$ |
(12,873 |
) |
|
$ |
(77,356 |
) |
|
$ |
(20,501 |
) |
|
|
|
|
|
|
|
|
|
Basic loss per common share |
|
$ |
(1.30 |
) |
|
$ |
(0.49 |
) |
|
$ |
(2.90 |
) |
|
$ |
(0.78 |
) |
Diluted loss per common
share |
|
$ |
(1.30 |
) |
|
$ |
(0.49 |
) |
|
$ |
(2.90 |
) |
|
$ |
(0.78 |
) |
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
26,783 |
|
|
|
26,515 |
|
|
|
26,714 |
|
|
|
26,422 |
|
Diluted |
|
|
26,783 |
|
|
|
26,515 |
|
|
|
26,714 |
|
|
|
26,422 |
|
Matrix Service
CompanyCondensed Consolidated Balance
Sheets(unaudited)(In
thousands)
|
March 31,2022 |
|
June 30,2021 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
34,092 |
|
|
$ |
83,878 |
|
Accounts receivable, less allowances (March 31, 2022—$634 and
June 30, 2021—$898) |
|
137,690 |
|
|
|
148,030 |
|
Costs and estimated earnings in excess of billings on uncompleted
contracts |
|
46,393 |
|
|
|
30,774 |
|
Inventories |
|
6,907 |
|
|
|
7,342 |
|
Income taxes receivable |
|
13,734 |
|
|
|
16,965 |
|
Other current assets |
|
7,322 |
|
|
|
4,230 |
|
Total current assets |
|
246,138 |
|
|
|
291,219 |
|
Property, plant and equipment
at cost: |
|
|
|
Land and buildings |
|
41,745 |
|
|
|
41,633 |
|
Construction equipment |
|
93,862 |
|
|
|
94,453 |
|
Transportation equipment |
|
49,532 |
|
|
|
50,510 |
|
Office equipment and software |
|
43,447 |
|
|
|
42,706 |
|
Construction in progress |
|
564 |
|
|
|
493 |
|
Total property, plant and equipment - at cost |
|
229,150 |
|
|
|
229,795 |
|
Accumulated depreciation |
|
(168,672 |
) |
|
|
(160,388 |
) |
Property, plant and equipment - net |
|
60,478 |
|
|
|
69,407 |
|
Restricted cash |
|
25,000 |
|
|
|
— |
|
Operating lease right-of-use
assets |
|
20,811 |
|
|
|
22,412 |
|
Goodwill |
|
42,240 |
|
|
|
60,636 |
|
Other intangible assets, net
of accumulated amortization |
|
5,228 |
|
|
|
6,614 |
|
Deferred income taxes |
|
— |
|
|
|
5,295 |
|
Other assets, non-current |
|
13,185 |
|
|
|
11,973 |
|
Total assets |
$ |
413,080 |
|
|
$ |
467,556 |
|
Matrix Service
CompanyCondensed Consolidated Balance Sheets
(continued)(unaudited)(In
thousands, except share data)
|
March 31,2022 |
|
June 30,2021 |
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
68,161 |
|
|
$ |
60,920 |
|
Billings on uncompleted contracts in excess of costs and estimated
earnings |
|
73,868 |
|
|
|
53,832 |
|
Accrued wages and benefits |
|
23,073 |
|
|
|
21,008 |
|
Accrued insurance |
|
6,310 |
|
|
|
6,568 |
|
Operating lease liabilities |
|
4,928 |
|
|
|
5,747 |
|
Other accrued expenses |
|
3,841 |
|
|
|
5,327 |
|
Total current liabilities |
|
180,181 |
|
|
|
153,402 |
|
Deferred income taxes |
|
32 |
|
|
|
34 |
|
Operating lease liabilities |
|
19,630 |
|
|
|
20,771 |
|
Other liabilities, non-current |
|
401 |
|
|
|
7,810 |
|
Total liabilities |
|
200,244 |
|
|
|
182,017 |
|
Commitments and
contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Common stock—$.01 par value; 60,000,000 shares authorized;
27,888,217 shares issued as of March 31, 2022 and June 30, 2021;
26,783,265 and 26,549,438 shares outstanding as of March 31, 2022
and June 30, 2021, respectively |
|
279 |
|
|
|
279 |
|
Additional paid-in capital |
|
137,886 |
|
|
|
137,575 |
|
Retained earnings |
|
97,822 |
|
|
|
175,178 |
|
Accumulated other comprehensive loss |
|
(7,477 |
) |
|
|
(6,749 |
) |
|
|
228,510 |
|
|
|
306,283 |
|
Less: Treasury stock, at cost — 1,104,952 shares as of March 31,
2022, and 1,338,779 shares as of June 30, 2021 |
|
(15,674 |
) |
|
|
(20,744 |
) |
Total stockholders'
equity |
|
212,836 |
|
|
|
285,539 |
|
Total liabilities and
stockholders’ equity |
$ |
413,080 |
|
|
$ |
467,556 |
|
Matrix Service
CompanyResults of
Operations(unaudited)(In
thousands)
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
March 31,2022 |
|
March 31,2021 |
|
March 31,2022 |
|
March 31,2021 |
Gross
revenue |
|
|
|
|
|
|
|
|
Utility and Power Infrastructure |
|
$ |
59,341 |
|
|
$ |
44,720 |
|
|
$ |
171,298 |
|
|
$ |
157,414 |
|
Process and Industrial
Facilities |
|
|
69,786 |
|
|
|
43,095 |
|
|
|
167,033 |
|
|
|
141,570 |
|
Storage and Terminal
Solutions |
|
|
49,254 |
|
|
|
61,542 |
|
|
|
175,174 |
|
|
|
204,572 |
|
Total gross revenue |
|
$ |
178,381 |
|
|
$ |
149,357 |
|
|
$ |
513,505 |
|
|
$ |
503,556 |
|
Less: Inter-segment
revenue |
|
|
|
|
|
|
|
|
Process and Industrial
Facilities |
|
$ |
815 |
|
|
$ |
261 |
|
|
$ |
3,841 |
|
|
$ |
1,543 |
|
Storage and Terminal
Solutions |
|
|
563 |
|
|
|
836 |
|
|
|
2,603 |
|
|
|
3,514 |
|
Total inter-segment revenue |
|
$ |
1,378 |
|
|
$ |
1,097 |
|
|
$ |
6,444 |
|
|
$ |
5,057 |
|
Consolidated
revenue |
|
|
|
|
|
|
|
|
Utility and Power
Infrastructure |
|
$ |
59,341 |
|
|
$ |
44,720 |
|
|
$ |
171,298 |
|
|
$ |
157,414 |
|
Process and Industrial
Facilities |
|
|
68,971 |
|
|
|
42,834 |
|
|
|
163,192 |
|
|
|
140,027 |
|
Storage and Terminal
Solutions |
|
|
48,691 |
|
|
|
60,706 |
|
|
|
172,571 |
|
|
|
201,058 |
|
Total consolidated revenue |
|
$ |
177,003 |
|
|
$ |
148,260 |
|
|
$ |
507,061 |
|
|
$ |
498,499 |
|
Gross profit
(loss) |
|
|
|
|
|
|
|
|
Utility and Power
Infrastructure |
|
$ |
(492 |
) |
|
$ |
(4,692 |
) |
|
$ |
(7,089 |
) |
|
$ |
7,818 |
|
Process and Industrial
Facilities |
|
|
(441 |
) |
|
|
(171 |
) |
|
|
6,663 |
|
|
|
11,352 |
|
Storage and Terminal
Solutions |
|
|
(458 |
) |
|
|
6,423 |
|
|
|
(216 |
) |
|
|
12,053 |
|
Corporate |
|
|
(372 |
) |
|
|
— |
|
|
|
(1,422 |
) |
|
|
— |
|
Total gross profit (loss) |
|
$ |
(1,763 |
) |
|
$ |
1,560 |
|
|
$ |
(2,064 |
) |
|
$ |
31,223 |
|
Selling, general and
administrative expenses |
|
|
|
|
|
|
|
|
Utility and Power
Infrastructure |
|
$ |
2,910 |
|
|
$ |
2,356 |
|
|
$ |
9,109 |
|
|
$ |
7,154 |
|
Process and Industrial
Facilities |
|
|
3,198 |
|
|
|
3,882 |
|
|
|
8,752 |
|
|
|
11,319 |
|
Storage and Terminal
Solutions |
|
|
4,063 |
|
|
|
4,792 |
|
|
|
12,850 |
|
|
|
13,854 |
|
Corporate |
|
|
6,870 |
|
|
|
6,149 |
|
|
|
18,881 |
|
|
|
19,704 |
|
Total selling, general and administrative expenses |
|
$ |
17,041 |
|
|
$ |
17,179 |
|
|
$ |
49,592 |
|
|
$ |
52,031 |
|
Goodwill impairment
and restructuring costs |
|
|
|
|
|
|
|
|
Utility and Power
Infrastructure |
|
$ |
2,659 |
|
|
$ |
403 |
|
|
$ |
2,705 |
|
|
$ |
1,226 |
|
Process and Industrial
Facilities |
|
|
6,856 |
|
|
|
781 |
|
|
|
6,839 |
|
|
|
3,645 |
|
Storage and Terminal
Solutions |
|
|
7,219 |
|
|
|
590 |
|
|
|
7,293 |
|
|
|
1,244 |
|
Corporate |
|
|
— |
|
|
|
86 |
|
|
|
1,197 |
|
|
|
470 |
|
Total goodwill impairment and restructuring costs |
|
$ |
16,734 |
|
|
$ |
1,860 |
|
|
$ |
18,034 |
|
|
$ |
6,585 |
|
Operating income
(loss) |
|
|
|
|
|
|
|
|
Utility and Power
Infrastructure |
|
$ |
(6,061 |
) |
|
$ |
(7,451 |
) |
|
$ |
(18,903 |
) |
|
$ |
(562 |
) |
Process and Industrial
Facilities |
|
|
(10,495 |
) |
|
|
(4,834 |
) |
|
|
(8,928 |
) |
|
|
(3,612 |
) |
Storage and Terminal
Solutions |
|
|
(11,740 |
) |
|
|
1,041 |
|
|
|
(20,359 |
) |
|
|
(3,045 |
) |
Corporate |
|
|
(7,242 |
) |
|
|
(6,235 |
) |
|
|
(21,500 |
) |
|
|
(20,174 |
) |
Total operating loss |
|
$ |
(35,538 |
) |
|
$ |
(17,479 |
) |
|
$ |
(69,690 |
) |
|
$ |
(27,393 |
) |
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 ("LNTP"), we include the entire scope
of work in our backlog if we conclude that the likelihood of the
full project proceeding as 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 March 31, 2022:
|
Utility and Power Infrastructure |
|
Process and Industrial Facilities |
|
Storage and
TerminalSolutions |
|
Total |
|
(In thousands) |
Backlog as of December 31, 2021 |
$ |
150,368 |
|
|
$ |
250,970 |
|
|
$ |
190,222 |
|
|
$ |
591,560 |
|
Project awards |
|
23,366 |
|
|
|
104,729 |
|
|
|
51,575 |
|
|
|
179,670 |
|
Revenue recognized |
|
(59,341 |
) |
|
|
(68,971 |
) |
|
|
(48,691 |
) |
|
|
(177,003 |
) |
Backlog as of March 31, 2022 |
$ |
114,393 |
|
|
$ |
286,728 |
|
|
$ |
193,106 |
|
|
$ |
594,227 |
|
Book-to-bill ratio(1) |
|
0.4 |
|
|
|
1.5 |
|
|
|
1.1 |
|
|
|
1.0 |
|
____________
(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 nine months ended March 31,
2022:
|
Utility and Power Infrastructure |
|
Process and Industrial Facilities |
|
Storage and
TerminalSolutions |
|
Total |
|
(In thousands) |
Backlog as of June 30, 2021 |
$ |
170,043 |
|
|
$ |
134,777 |
|
|
$ |
157,741 |
|
|
$ |
462,561 |
|
Project awards |
|
115,648 |
|
|
|
315,143 |
|
|
|
207,936 |
|
|
|
638,727 |
|
Revenue recognized |
|
(171,298 |
) |
|
|
(163,192 |
) |
|
|
(172,571 |
) |
|
|
(507,061 |
) |
Backlog as of March 31,
2022 |
$ |
114,393 |
|
|
$ |
286,728 |
|
|
$ |
193,106 |
|
|
$ |
594,227 |
|
Book-to-bill ratio(1) |
|
0.7 |
|
|
|
1.9 |
|
|
|
1.2 |
|
|
|
1.3 |
|
____________
(1) Calculated by dividing project awards by
revenue recognized during the period.Non-GAAP Financial
Measures
In order to more clearly depict our core
profitability, the following tables present our operating results
after certain adjustments:
Reconciliation of Adjusted Net Loss and
Diluted Loss per Common
Share(1)(In thousands, except per
share data)
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
March 31, 2022 |
|
March 31, 2021 |
|
March 31, 2022 |
|
March 31, 2021 |
Net loss, as reported |
|
$ |
(34,899 |
) |
|
$ |
(12,873 |
) |
|
$ |
(77,356 |
) |
|
$ |
(20,501 |
) |
Restructuring costs incurred |
|
|
(1,578 |
) |
|
|
1,860 |
|
|
|
(278 |
) |
|
|
6,585 |
|
Goodwill impairment |
|
|
18,312 |
|
|
|
— |
|
|
|
18,312 |
|
|
|
— |
|
Accelerated amortization of deferred debt amendment fees(2) |
|
|
— |
|
|
|
— |
|
|
|
1,518 |
|
|
|
— |
|
Deferred tax asset valuation allowance(3) |
|
|
7,671 |
|
|
|
— |
|
|
|
21,869 |
|
|
|
— |
|
Tax impact of adjustments |
|
|
(2,911 |
) |
|
|
(479 |
) |
|
|
(3,636 |
) |
|
|
(1,695 |
) |
Adjusted net loss |
|
$ |
(13,405 |
) |
|
$ |
(11,492 |
) |
|
$ |
(39,571 |
) |
|
$ |
(15,611 |
) |
|
|
|
|
|
|
|
|
|
Loss per fully diluted share,
as reported |
|
$ |
(1.30 |
) |
|
$ |
(0.49 |
) |
|
$ |
(2.90 |
) |
|
$ |
(0.78 |
) |
Adjusted loss per fully
diluted share |
|
$ |
(0.50 |
) |
|
$ |
(0.43 |
) |
|
$ |
(1.48 |
) |
|
$ |
(0.59 |
) |
____________
(1) This table presents non-GAAP financial
measures of our adjusted net loss and adjusted diluted loss per
common share for the three and nine months ended March 31, 2022 and
2021. The most directly comparable financial measures are net loss
and net loss per diluted 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 our core operating results during the periods
presented and provide a more comparable measure of our operating
results to other companies considered to be in similar businesses.
Since adjusted net loss and adjusted diluted 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.(2) Interest expense in fiscal 2022 included $1.5 million
of accelerated amortization of deferred debt amendment fees.(3) In
determining the need for a valuation allowance on deferred tax
assets, the accounting standards provide that the existence of a
cumulative loss over a three-year period generally precludes the
use of management’s projections of future taxable income.
Consequently, we have recorded a full valuation allowance against
the deferred tax assets in the U.S. taxable jurisdiction in the
amount of $21.9 million during fiscal 2022. These assets are
primarily comprised of federal net operating losses, which have an
indefinite carryforward, federal tax credits and state net
operating losses. To the extent the Company generates taxable
income in the future, or cumulative losses are no longer present
and our future projections for growth or tax planning strategies
are demonstrated, we will realize the benefit associated with the
net operating losses for which the valuation allowance has been
provided.
Reconciliation of Net Loss to Adjusted
EBITDA(1)
|
Three Months Ended |
|
Nine Months Ended |
|
March 31,2022 |
|
March 31,2021 |
|
March 31,2022 |
|
March 31,2021 |
|
(In thousands) |
Net loss |
$ |
(34,899 |
) |
|
$ |
(12,873 |
) |
|
$ |
(77,356 |
) |
|
$ |
(20,501 |
) |
Goodwill impairment |
|
18,312 |
|
|
|
— |
|
|
|
18,312 |
|
|
|
— |
|
Restructuring costs |
|
(1,578 |
) |
|
|
1,860 |
|
|
|
(278 |
) |
|
|
6,585 |
|
Stock-based compensation |
|
2,088 |
|
|
|
2,214 |
|
|
|
5,823 |
|
|
|
6,413 |
|
Interest expense |
|
204 |
|
|
|
322 |
|
|
|
2,705 |
|
|
|
1,055 |
|
Provision (benefit) for income
taxes |
|
(147 |
) |
|
|
(5,060 |
) |
|
|
5,564 |
|
|
|
(6,002 |
) |
Depreciation and
amortization |
|
3,716 |
|
|
|
4,352 |
|
|
|
11,557 |
|
|
|
13,639 |
|
Adjusted EBITDA |
$ |
(12,304 |
) |
|
$ |
(9,185 |
) |
|
$ |
(33,673 |
) |
|
$ |
1,189 |
|
____________
(1) This table presents Adjusted EBITDA, which
we define as net loss before impairment of goodwill and other
intangible assets, restructuring costs, stock-based compensation
expense, interest expense, income taxes, and depreciation and
amortization, because it is used by the financial community as a
method of measuring our performance and of evaluating the market
value of companies considered to be in similar businesses. We
believe that the line item on our Consolidated Statements of Income
entitled “Net loss” is the most directly comparable GAAP measure to
Adjusted EBITDA. Since Adjusted EBITDA is not a measure of
performance calculated in accordance with GAAP, it should not be
considered in isolation of, or as a substitute for, net earnings as
an indicator of operating performance. Adjusted EBITDA, as we
calculate it, may not be comparable to similarly titled measures
employed by other companies. In addition, this measure is not a
measure of our ability to fund our cash needs. As Adjusted EBITDA
excludes certain financial information compared with net loss, the
most directly comparable GAAP financial measure, users of this
financial information should consider the type of events and
transactions that are excluded. Adjusted EBITDA has certain
material limitations as follows:
- It does not include impairment to goodwill. While impairment to
goodwill is a non-cash expense in the period recognized, cash or
other consideration was still transferred in exchange for goodwill
in the period of the acquisition. Any measure that excludes
impairment to goodwill has material limitations since this expense
represents the loss of an asset that was acquired in exchange for
cash or other assets.
- It does not include restructuring costs. Restructuring costs
represent material costs that we incurred and are oftentimes cash
expenses. Therefore, any measure that excludes restructuring costs
has material limitations.
- It does not include stock-based compensation. Stock-based
compensation represents material amounts of equity that are awarded
to our employees and directors for services rendered. While the
expense is non-cash, we release vested shares out of our treasury
stock, which has historically been replenished by using cash to
periodically repurchase our stock. Therefore, any measure that
excludes stock-based compensation has material limitations.
- It does not include interest expense. Because we have borrowed
money to finance our operations and to acquire businesses, pay
commitment fees to maintain our senior secured revolving credit
facility, and incur fees to issue letters of credit under the
senior secured revolving 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.
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