x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | 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.) |
Large accelerated filer | ¨ | Accelerated filer | ý | ||
Non-accelerated filer | o | Smaller reporting company | ¨ | ||
Emerging growth company | o |
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, 2017 | September 30, 2016 | ||||||
Revenues | $ | 269,910 | $ | 341,781 | |||
Cost of revenues | 241,019 | 309,503 | |||||
Gross profit | 28,891 | 32,278 | |||||
Selling, general and administrative expenses | 21,570 | 17,977 | |||||
Operating income | 7,321 | 14,301 | |||||
Other income (expense): | |||||||
Interest expense | (618 | ) | (243 | ) | |||
Interest income | 39 | 12 | |||||
Other | 149 | 7 | |||||
Income before income tax expense | 6,891 | 14,077 | |||||
Provision for federal, state and foreign income taxes | 3,067 | 4,735 | |||||
Net income | $ | 3,824 | $ | 9,342 | |||
Basic earnings per common share | $ | 0.14 | $ | 0.35 | |||
Diluted earnings per common share | $ | 0.14 | $ | 0.35 | |||
Weighted average common shares outstanding: | |||||||
Basic | 26,655 | 26,387 | |||||
Diluted | 26,762 | 26,796 |
Three Months Ended | ||||||||
September 30, 2017 | September 30, 2016 | |||||||
Net income | $ | 3,824 | $ | 9,342 | ||||
Other comprehensive income (loss), net of tax: | ||||||||
Foreign currency translation gain (loss) (net of tax of $16 and $37 for the three months ended September 30, 2017 and 2016, respectively) | 1,107 | (279 | ) | |||||
Comprehensive income | $ | 4,931 | $ | 9,063 |
September 30, 2017 | June 30, 2017 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 46,085 | $ | 43,805 | |||
Accounts receivable, less allowances (September 30, 2017— $9,889 and June 30, 2017—$9,887) | 218,678 | 210,953 | |||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 65,953 | 91,180 | |||||
Inventories | 4,269 | 3,737 | |||||
Income taxes receivable | 3,649 | 4,042 | |||||
Other current assets | 8,991 | 4,913 | |||||
Total current assets | 347,625 | 358,630 | |||||
Property, plant and equipment at cost: | |||||||
Land and buildings | 39,397 | 38,916 | |||||
Construction equipment | 96,325 | 94,298 | |||||
Transportation equipment | 48,645 | 48,574 | |||||
Office equipment and software | 36,702 | 36,556 | |||||
Construction in progress | 3,459 | 5,952 | |||||
Total property, plant and equipment - at cost | 224,528 | 224,296 | |||||
Accumulated depreciation | (146,603 | ) | (144,022 | ) | |||
Property, plant and equipment - net | 77,925 | 80,274 | |||||
Goodwill | 113,860 | 113,501 | |||||
Other intangible assets | 24,831 | 26,296 | |||||
Deferred income taxes | 2,568 | 3,385 | |||||
Other assets | 5,645 | 3,944 | |||||
Total assets | $ | 572,454 | $ | 586,030 |
September 30, 2017 | June 30, 2017 | ||||||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 90,894 | $ | 105,649 | |||
Billings on uncompleted contracts in excess of costs and estimated earnings | 65,559 | 75,127 | |||||
Accrued wages and benefits | 26,357 | 20,992 | |||||
Accrued insurance | 9,033 | 9,340 | |||||
Income taxes payable | 17 | 169 | |||||
Other accrued expenses | 7,660 | 7,699 | |||||
Total current liabilities | 199,520 | 218,976 | |||||
Deferred income taxes | 2,006 | 128 | |||||
Borrowings under senior revolving credit facility | 42,076 | 44,682 | |||||
Other liabilities | 414 | 435 | |||||
Total liabilities | 244,016 | 264,221 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Common stock—$.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of September 30, 2017, and June 30, 2017; 26,727,975 and 26,600,562 shares outstanding as of September 30, 2017 and June 30, 2017 | 279 | 279 | |||||
Additional paid-in capital | 127,526 | 128,419 | |||||
Retained earnings | 226,798 | 222,974 | |||||
Accumulated other comprehensive loss | (6,217 | ) | (7,324 | ) | |||
348,386 | 344,348 | ||||||
Less: Treasury stock, at cost — 1,160,242 shares as of September 30, 2017, and 1,287,655 shares as of June 30, 2017 | (19,948 | ) | (22,539 | ) | |||
Total stockholders' equity | 328,438 | 321,809 | |||||
Total liabilities and stockholders’ equity | $ | 572,454 | $ | 586,030 |
Three Months Ended | |||||||
September 30, 2017 | September 30, 2016 | ||||||
Operating activities: | |||||||
Net income | $ | 3,824 | $ | 9,342 | |||
Adjustments to reconcile net income to net cash provided (used) by operating activities: | |||||||
Depreciation and amortization | 5,593 | 4,904 | |||||
Deferred income tax | 2,711 | 1,044 | |||||
Gain on sale of property, plant and equipment | (121 | ) | (138 | ) | |||
Provision for uncollectible accounts | 7 | 54 | |||||
Stock-based compensation expense | 2,086 | 1,652 | |||||
Other | 93 | 63 | |||||
Changes in operating assets and liabilities increasing (decreasing) cash: | |||||||
Accounts receivable | (7,734 | ) | (40,595 | ) | |||
Costs and estimated earnings in excess of billings on uncompleted contracts | 25,227 | (1,093 | ) | ||||
Inventories | (532 | ) | 168 | ||||
Other assets and liabilities | (5,291 | ) | (2,206 | ) | |||
Accounts payable | (14,463 | ) | (13,597 | ) | |||
Billings on uncompleted contracts in excess of costs and estimated earnings | (9,568 | ) | (5,945 | ) | |||
Accrued expenses | 4,998 | (3,241 | ) | ||||
Net cash provided (used) by operating activities | 6,830 | (49,588 | ) | ||||
Investing activities: | |||||||
Acquisition of property, plant and equipment | (1,878 | ) | (1,826 | ) | |||
Proceeds from asset sales | 248 | 153 | |||||
Net cash used by investing activities | $ | (1,630 | ) | $ | (1,673 | ) |
Three Months Ended | |||||||
September 30, 2017 | September 30, 2016 | ||||||
Financing activities: | |||||||
Advances under senior revolving credit facility | $ | 24,890 | $ | 27,186 | |||
Repayments of advances under senior revolving credit facility | (27,496 | ) | (10,000 | ) | |||
Payment of debt amendment fees | (340 | ) | — | ||||
Issuances of common stock | — | 46 | |||||
Proceeds from issuance of common stock under employee stock purchase plan | 66 | 83 | |||||
Repurchase of common stock for payment of statutory taxes due on equity-based compensation | (454 | ) | (1,878 | ) | |||
Net cash provided (used) by financing activities | (3,334 | ) | 15,437 | ||||
Effect of exchange rate changes on cash and cash equivalents | 414 | (253 | ) | ||||
Increase (decrease) in cash and cash equivalents | 2,280 | (36,077 | ) | ||||
Cash and cash equivalents, beginning of period | 43,805 | 71,656 | |||||
Cash and cash equivalents, end of period | $ | 46,085 | $ | 35,579 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for: | |||||||
Income taxes | $ | 98 | $ | 2,997 | |||
Interest | $ | 582 | $ | 238 | |||
Non-cash investing and financing activities: | |||||||
Purchases of property, plant and equipment on account | $ | 191 | $ | 79 |
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income(Loss) | Non-Controlling Interest | Total | |||||||||||||||||||||
Balances, July 1, 2017 | $ | 279 | $ | 128,419 | $ | 222,974 | $ | (22,539 | ) | $ | (7,324 | ) | $ | — | $ | 321,809 | |||||||||||
Net income | — | — | 3,824 | — | — | — | 3,824 | ||||||||||||||||||||
Other comprehensive income | — | — | — | — | 1,107 | — | 1,107 | ||||||||||||||||||||
Treasury shares sold to Employee Stock Purchase Plan (7,121 shares) | — | (96 | ) | — | 162 | — | — | 66 | |||||||||||||||||||
Issuance of deferred shares (163,201 shares) | — | (2,883 | ) | — | 2,883 | — | — | — | |||||||||||||||||||
Treasury shares purchased to satisfy tax withholding obligations (42,909 shares) | — | — | — | (454 | ) | — | — | (454 | ) | ||||||||||||||||||
Stock-based compensation expense | — | 2,086 | — | — | — | — | 2,086 | ||||||||||||||||||||
Balances, September 30, 2017 | $ | 279 | $ | 127,526 | $ | 226,798 | $ | (19,948 | ) | $ | (6,217 | ) | $ | — | $ | 328,438 | |||||||||||
Balances, July 1, 2016 | $ | 279 | $ | 126,958 | $ | 223,257 | $ | (26,907 | ) | $ | (6,845 | ) | $ | (1,176 | ) | $ | 315,566 | ||||||||||
Retrospective adjustment upon adoption of ASU 2016-09 | — | 100 | (100 | ) | — | — | — | — | |||||||||||||||||||
Balances, July 1, 2016, as adjusted | 279 | 127,058 | 223,157 | (26,907 | ) | (6,845 | ) | (1,176 | ) | 315,566 | |||||||||||||||||
Net income | — | — | 9,342 | — | — | — | 9,342 | ||||||||||||||||||||
Other comprehensive loss | — | — | — | — | (279 | ) | — | (279 | ) | ||||||||||||||||||
Treasury shares sold to Employee Stock Purchase Plan (4,982 shares) | — | 38 | — | 45 | — | — | 83 | ||||||||||||||||||||
Exercise of stock options (4,400 shares) | — | (25 | ) | — | 71 | — | — | 46 | |||||||||||||||||||
Issuance of deferred shares (335,295 shares) | — | (4,259 | ) | — | 4,259 | — | — | — | |||||||||||||||||||
Treasury shares purchased to satisfy tax withholding obligations (113,762 shares) | — | — | — | (1,878 | ) | — | — | (1,878 | ) | ||||||||||||||||||
Stock-based compensation expense | — | 1,652 | — | — | — | — | 1,652 | ||||||||||||||||||||
Balances, September 30, 2016 | $ | 279 | $ | 124,464 | $ | 232,499 | $ | (24,410 | ) | $ | (7,124 | ) | $ | (1,176 | ) | $ | 324,532 |
Cash paid for equity interest | $ | 46,000 | |
Cash paid for working capital | 6,837 | ||
Less: cash acquired | (10,331 | ) | |
Net purchase price | $ | 42,506 |
Cash | $ | 10,331 | |
Accounts receivable | 10,273 | ||
Costs and estimated earnings in excess of billings on uncompleted contracts | 746 | ||
Other current assets | 454 | ||
Current assets | 21,804 | ||
Property, plant and equipment | 942 | ||
Goodwill | 35,146 | ||
Other intangible assets | 10,220 | ||
Total assets acquired | 68,112 | ||
Accounts payable | 962 | ||
Billings on uncompleted contracts in excess of costs and estimated earnings | 11,648 | ||
Other accrued expenses | 2,475 | ||
Current liabilities | 15,085 | ||
Other liabilities | 190 | ||
Net assets acquired | 52,837 | ||
Less: cash acquired | 10,331 | ||
Net purchase price | $ | 42,506 |
Three Months Ended | ||||||
September 30, 2017 | September 30, 2016 | |||||
(In thousands, except per share data) | ||||||
Revenues | $ | 269,910 | $ | 378,494 | ||
Net income | $ | 3,824 | $ | 10,788 | ||
Basic earnings per common share | $ | 0.14 | $ | 0.41 | ||
Diluted earnings per common share | $ | 0.14 | $ | 0.40 |
• | Pro forma earnings during the three months ended September 30, 2016 were adjusted to include $0.3 million of integration expenses that would have been recognized had the acquisition occurred on July 1, 2015. |
• | Pro forma earnings during the three months ended September 30, 2016 were adjusted to include $0.4 million of interest expense. The interest was attributable to the assumption that the Company's borrowings of $46.0 million used to fund the net purchase price had been outstanding as of July 1, 2015. This interest was partially offset by the assumption that Houston Interests' former debt was extinguished as of July 1, 2015. |
• | Pro forma earnings during the three months ended September 30, 2016 were adjusted to exclude $0.1 million of depreciation and intangible asset amortization expense. This adjustment is due to the recognition of amortizable intangible assets as part of the acquisition and the effect of fair value adjustments to acquired property, plant and equipment. |
• | Pro forma earnings during the three months ended September 30, 2016 were adjusted to include income tax expense of $1.9 million. Houston Interests was previously an exempt entity and income taxes were not assessed in its historical financial information. |
September 30, 2017 | June 30, 2017 | ||||||
(in thousands) | |||||||
Costs incurred and estimated earnings recognized on uncompleted contracts | $ | 1,451,623 | $ | 1,919,054 | |||
Billings on uncompleted contracts | 1,451,229 | 1,903,001 | |||||
$ | 394 | $ | 16,053 | ||||
Shown in balance sheet as: | |||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | $ | 65,953 | $ | 91,180 | |||
Billings on uncompleted contracts in excess of costs and estimated earnings | 65,559 | 75,127 | |||||
$ | 394 | $ | 16,053 |
Electrical Infrastructure | Oil Gas & Chemical | Storage Solutions | Industrial | Total | |||||||||||||||
(In thousands) | |||||||||||||||||||
Net balance at June 30, 2017 | $ | 42,152 | $ | 33,604 | $ | 16,764 | $ | 20,981 | $ | 113,501 | |||||||||
Translation adjustment (1) | 234 | — | 81 | 44 | 359 | ||||||||||||||
Net balance at September 30, 2017 | $ | 42,386 | $ | 33,604 | $ | 16,845 | $ | 21,025 | $ | 113,860 |
(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, 2017 | |||||||||||||
Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
(Years) | (In thousands) | ||||||||||||
Intellectual property | 9 to 15 | $ | 2,579 | $ | (1,469 | ) | $ | 1,110 | |||||
Customer-based | 1 to 15 | 38,376 | (14,913 | ) | 23,463 | ||||||||
Non-compete agreements | 4 to 5 | 1,453 | (1,352 | ) | 101 | ||||||||
Trade names | 1 to 3 | 1,630 | (1,473 | ) | 157 | ||||||||
Total amortizing intangible assets | $ | 44,038 | $ | (19,207 | ) | $ | 24,831 |
At June 30, 2017 | |||||||||||||
Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
(Years) | (In thousands) | ||||||||||||
Intellectual property | 9 to 15 | $ | 2,579 | $ | (1,425 | ) | $ | 1,154 | |||||
Customer-based | 1 to 15 | 38,207 | (13,543 | ) | 24,664 | ||||||||
Non-compete agreements | 4 to 5 | 1,453 | (1,298 | ) | 155 | ||||||||
Trade names | 1 to 3 | 1,630 | (1,307 | ) | 323 | ||||||||
Total amortizing intangible assets | $ | 43,869 | $ | (17,573 | ) | $ | 26,296 |
Period ending: | |||
Remainder of Fiscal 2018 | $ | 4,092 | |
Fiscal 2019 | 3,522 | ||
Fiscal 2020 | 3,505 | ||
Fiscal 2021 | 3,445 | ||
Fiscal 2022 | 2,337 | ||
Fiscal 2023 | 2,045 | ||
Thereafter | 5,885 | ||
Total estimated remaining amortization expense at September 30, 2017 | $ | 24,831 |
• | Our Leverage Ratio, determined as of the end of each fiscal quarter, may not exceed 3.00 to 1.00. |
• | As with the Prior Credit Agreement, 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, |
• | The maximum permitted Leverage Ratio was temporarily increased to 4.00 to 1.00 for the quarters ending September 30, 2017, and December 31, 2017. The maximum Leverage Ratio will revert back to 3.00 to 1.00 beginning with the quarter ending March 31, 2018. |
• | The Fixed Charge Coverage Ratio will not be tested for the quarters ending September 30, 2017 and December 31, 2017, but will be in effect and tested quarterly thereafter beginning with the quarter ending March 31, 2018. |
• | A new minimum Consolidated EBITDA covenant was added solely for the four-quarter period ending December 31, 2017. For this period, the Company is required to achieve Consolidated EBITDA of $15.0 million. |
• | The Restricted Payments covenant was amended to restrict cash dividends and share repurchases during the period beginning August 31, 2017 and ending December 31, 2017 to an aggregate basket of $5.0 million. In addition, during such period, both cash dividends and share repurchases are prohibited unless the pro forma Leverage Ratio is less than or equal to 2.50 to 1.00. Thereafter, the restriction reverts back to limiting cash dividends to 50% of net income for each fiscal year, and limiting share repurchases to $30.0 million per calendar year. |
• | An additional increased pricing tier was added for the "Covenant Relief Period" beginning on August 31, 2017 and ending on the date we deliver our financial statements and compliance certificate for the fiscal quarter ending December 31, 2017. If our Leverage Ratio as of any quarterly calculation date during the Covenant Relief Period exceeds 3.00 to 1.00: (1) the Applicable Margin on ABR loans will be 1.875%; (2) the Applicable Margin for Adjusted LIBO, EURIBO and CDOR will be 2.875%; (3) the Applicable Margin for Canadian Prime Rate loans will be 3.375%; and (4) the unused credit facility fee will be 0.50%. |
September 30, 2017 | June 30, 2017 | ||||||
(In thousands) | |||||||
Senior revolving credit facility | $ | 300,000 | $ | 300,000 | |||
Capacity constraint due to the Senior Leverage Ratio | 164,084 | 169,092 | |||||
Capacity under the credit facility | 135,916 | 130,908 | |||||
Borrowings outstanding | 42,076 | 44,682 | |||||
Letters of credit | 8,133 | 7,825 | |||||
Availability under the senior revolving credit facility | $ | 85,707 | $ | 78,401 |
Three Months Ended | |||||||
September 30, 2017 | September 30, 2016 | ||||||
(In thousands, except per share data) | |||||||
Basic EPS: | |||||||
Net income | $ | 3,824 | $ | 9,342 | |||
Weighted average shares outstanding | 26,655 | 26,387 | |||||
Basic earnings per share | $ | 0.14 | $ | 0.35 | |||
Diluted EPS: | |||||||
Weighted average shares outstanding – basic | 26,655 | 26,387 | |||||
Dilutive stock options | 10 | 50 | |||||
Dilutive nonvested deferred shares | 97 | 359 | |||||
Diluted weighted average shares | 26,762 | 26,796 | |||||
Diluted earnings per share | $ | 0.14 | $ | 0.35 |
Three Months Ended | |||||
September 30, 2017 | September 30, 2016 | ||||
(In thousands) | |||||
Nonvested deferred shares | 718 | 78 |
Three Months Ended | |||||||
September 30, 2017 | September 30, 2016 | ||||||
Gross revenues | |||||||
Electrical Infrastructure | $ | 79,971 | $ | 88,025 | |||
Oil Gas & Chemical | 85,861 | 37,828 | |||||
Storage Solutions | 71,572 | 199,650 | |||||
Industrial | 33,271 | 22,727 | |||||
Total gross revenues | $ | 270,675 | $ | 348,230 | |||
Less: Inter-segment revenues | |||||||
Oil Gas & Chemical | $ | 208 | $ | 5,286 | |||
Storage Solutions | 557 | 128 | |||||
Industrial | — | 1,035 | |||||
Total inter-segment revenues | $ | 765 | $ | 6,449 | |||
Consolidated revenues | |||||||
Electrical Infrastructure | $ | 79,971 | $ | 88,025 | |||
Oil Gas & Chemical | 85,653 | 32,542 | |||||
Storage Solutions | 71,015 | 199,522 | |||||
Industrial | 33,271 | 21,692 | |||||
Total consolidated revenues | $ | 269,910 | $ | 341,781 | |||
Gross profit | |||||||
Electrical Infrastructure | $ | 8,267 | $ | 5,250 | |||
Oil Gas & Chemical | 11,038 | 1 | |||||
Storage Solutions | 7,540 | 26,453 | |||||
Industrial | 2,046 | 574 | |||||
Total gross profit | $ | 28,891 | $ | 32,278 | |||
Operating income (loss) | |||||||
Electrical Infrastructure | $ | 3,577 | $ | 1,057 | |||
Oil Gas & Chemical | 4,134 | (2,905 | ) | ||||
Storage Solutions | (75 | ) | 16,773 | ||||
Industrial | (315 | ) | (624 | ) | |||
Total operating income | $ | 7,321 | $ | 14,301 |
September 30, 2017 | June 30, 2017 | |||||||
Electrical Infrastructure | $ | 186,094 | $ | 183,351 | ||||
Oil Gas & Chemical | 137,631 | 129,177 | ||||||
Storage Solutions | 143,648 | 166,742 | ||||||
Industrial | 61,748 | 53,754 | ||||||
Unallocated assets | 43,333 | 53,006 | ||||||
Total segment assets | $ | 572,454 | $ | 586,030 |
• | 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, 2017 | $ | 162,637 | $ | 287,007 | $ | 141,551 | $ | 91,078 | $ | 682,273 | |||||||||
Project awards | 36,976 | 34,195 | 62,602 | 182,661 | 316,434 | ||||||||||||||
Revenue recognized | (79,971 | ) | (85,653 | ) | (71,015 | ) | (33,271 | ) | (269,910 | ) | |||||||||
Backlog as of September 30, 2017 | $ | 119,642 | $ | 235,549 | $ | 133,138 | $ | 240,468 | $ | 728,797 | |||||||||
Book-to-bill ratio(1) | 0.5 | 0.4 | 0.9 | 5.5 | 1.2 |
(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, 2017 | September 30, 2016 | ||||||
(In thousands) | |||||||
Net income | $ | 3,824 | $ | 9,342 | |||
Interest expense | 618 | 243 | |||||
Provision for income taxes | 3,067 | 4,735 | |||||
Depreciation and amortization | 5,593 | 4,904 | |||||
EBITDA | $ | 13,102 | $ | 19,224 |
• | 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. |
• | 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 of new 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 credit facility and remaining in compliance with all covenants contained in the credit agreement |
• | A default by one of the major financial institutions for which our deposits exceed insured deposit limits |
• | Cash on hand outside of the United States that cannot be repatriated without incremental taxation. |
Net income | $ | 3,824 | |
Non-cash expenses | 7,565 | ||
Deferred income tax | 2,711 | ||
Cash effect of changes in working capital | (7,363 | ) | |
Other | 93 | ||
Net cash provided by operating activities | $ | 6,830 |
• | Accounts receivable, net of bad debt expense recognized during the period, increased by $7.7 million during the three months ended September 30, 2017, which reduced cash flows from operating activities. The variance is attributable to the timing of billing and collections. |
• | Accounts payable decreased by $14.5 million during the three months ended September 30, 2017, which reduced cash flows from operating activities. The variance is primarily attributable to the timing of vendor payments. |
• | Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") decreased $25.2 million while billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") decreased $9.5 million. The net change in CIE and BIE increased cash $15.7 million for the three months ended September 30, 2017. 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. |
• | Our Leverage Ratio, determined as of the end of each fiscal quarter, may not exceed 3.00 to 1.00. |
• | As with the Prior Credit Agreement, 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. The Company excluded as extraordinary items the acquisition and integration costs incurred during the previous four quarters. |
• | The maximum permitted Leverage Ratio was temporarily increased to 4.00 to 1.00 for the quarters ending September 30, 2017, and December 31, 2017. The maximum Leverage Ratio will revert back to 3.00 to 1.00 beginning with the quarter ending March 31, 2018. |
• | The Fixed Charge Coverage Ratio will not be tested for the quarters ending September 30, 2017 and December 31, 2017, but will be in effect and tested quarterly thereafter beginning with the quarter ending March 31, 2018. |
• | A new minimum Consolidated EBITDA covenant was added solely for the four-quarter period ending December 31, 2017. For this period, the Company is required to achieve Consolidated EBITDA of $15.0 million. |
• | The Restricted Payments covenant was amended to restrict cash dividends and share repurchases during the period beginning August 31, 2017 and ending December 31, 2017 to an aggregate basket of $5.0 million. In addition, during such period, both cash dividends and share repurchases are prohibited unless the pro forma Leverage Ratio is less than or equal to 2.50 to 1.00. Thereafter, the restriction reverts back to limiting cash dividends to 50% of net income for each fiscal year, and limiting share repurchases to $30.0 million per calendar year. |
• | An additional increased pricing tier was added for the "Covenant Relief Period" beginning on August 31, 2017 and ending on the date we deliver our financial statements and compliance certificate for the fiscal quarter ending December 31, 2017. If our Leverage Ratio as of any quarterly calculation date during the Covenant Relief Period exceeds 3.00 to 1.00: (1) the Applicable Margin on ABR loans will be 1.875%; (2) the Applicable Margin for Adjusted LIBO, EURIBO and CDOR will be 2.875%; (3) the Applicable Margin for Canadian Prime Rate loans will be 3.375%; and (4) the unused credit facility fee will be 0.50%. |
September 30, 2017 | June 30, 2017 | ||||||
(In thousands) | |||||||
Senior revolving credit facility | $ | 300,000 | $ | 300,000 | |||
Capacity constraint due to the Senior Leverage Ratio | 164,084 | 169,092 | |||||
Capacity under the credit facility | 135,916 | 130,908 | |||||
Borrowings outstanding | 42,076 | 44,682 | |||||
Letters of credit | 8,133 | 7,825 | |||||
Availability under the senior revolving credit facility | $ | 85,707 | $ | 78,401 |
• | the impact to our business of 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; |
• | 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 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, 2017 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, gas, power, iron and steel, agricultural and mining industries in particular; |
• | reduced creditworthiness of our customer base and the higher risk of non-payment of receivables due to low prevailing crude oil and other commodity prices; |
• | the inherently uncertain outcome of current and future litigation; |
• | the adequacy of our reserves for contingencies; |
• | changes in laws or regulations; 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, 2017 | ||||||||||||
Share Repurchase Program (A) | — | $ | — | — | 3,289,474 | |||||||
Employee Transactions (B) | 196 | $ | 10.65 | — | ||||||||
August 1 to August 31, 2017 | ||||||||||||
Share Repurchase Program (A) | — | $ | — | — | 3,289,474 | |||||||
Employee Transactions (B) | 40,192 | $ | 10.37 | — | ||||||||
September 1 to September 30, 2017 | ||||||||||||
Share Repurchase Program (A) | — | $ | — | — | 3,289,474 | |||||||
Employee Transactions (B) | 2,521 | $ | 15.25 | — |
(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) | On December 12, 2016, the Board of Directors approved a new stock buyback program (the "December 2016 Program"). Under the December 2016 Program, the Company may repurchase common stock of the Company in any calendar year commencing with calendar year 2016 and continuing through calendar year 2018, up to a maximum of $25.0 million per calendar year. The Company may repurchase its stock from time to time in the open market at prevailing market prices or in privately negotiated transactions. The December 2016 Program will continue through December 31, 2018 unless and until revoked by the Board of Directors. The amount shown as the maximum number of shares that may yet be purchased was calculated using the closing price of our stock on the last trading day of the quarter and the cumulative limit of $50.0 million remaining under the program. |
Exhibit 10.1: | ||
Exhibit 31.1: | ||
Exhibit 31.2: | ||
Exhibit 32.1: | ||
Exhibit 32.2: | ||
Exhibit 95: | ||
Exhibit 101.INS: | XBRL Instance 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. |
MATRIX SERVICE COMPANY | ||
Date: | November 7, 2017 | 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 |
Level | Leverage Ratio | Applicable Margin for Eurocurrency, EURIBOR and CDOR Loans | Applicable Margin for ABR Loans | Applicable Margin for Canadian Prime Rate Loans | Applicable Margin for Unused Fees |
I | < 1.00x | 1.625% | 0.625% | 2.125% | 0.25% |
II | < 1.50x | 1.875% | 0.875% | 2.375% | 0.30% |
III | < 2.00x | 2.125% | 1.125% | 2.625% | 0.35% |
IV | < 2.50x | 2.375% | 1.375% | 2.875% | 0.40% |
V | < 3.00x | 2.625% | 1.625% | 3.125% | 0.45% |
VI | > 3.00x | 2.875% | 1.875% | 3.375% | 0.50% |
Level | Leverage Ratio | Applicable Margin for Eurocurrency, EURIBOR and CDOR Loans | Applicable Margin for ABR Loans | Applicable Margin for Canadian Prime Rate Loans | Applicable Margin for Unused Fees |
I | < 1.00x | 1.625% | 0.625% | 2.125% | 0.25% |
II | < 1.50x | 1.875% | 0.875% | 2.375% | 0.30% |
III | < 2.00x | 2.125% | 1.125% | 2.625% | 0.35% |
IV | < 2.50x | 2.375% | 1.375% | 2.875% | 0.40% |
V | ≥ 2.50x | 2.625% | 1.625% | 3.125% | 0.45% |
Signed by | ||
MATRIX APPLIED TECHNOLOGIES PTY LTD (ACN 089 397 982) | ||
in accordance with section 127 of the Corporations Act 2001 by two directors: | ||
/s/ Joseph F. Montalbano | /s/ Kevin S. Cavanah | |
Signature of director | Signature of director | |
Joseph F. Montalbano | Kevin S. Cavanah | |
Name of director (please print) | Name of director (please print) |
To: | The Lenders parties to the |
1. Detailed Calculation of Consolidated EBITDA for Previous Four Fiscal Quarters:1 |
2. (a) Total Assets of Immaterial Subsidiaries that are not Subsidiary Guarantors: $_________ |
4. Detailed Calculation of Leverage Ratio 4 |
5. Detailed Calculation of Fixed Charge Coverage Ratio 5 |
(1) | Must not be less than $15,000,000 as of the fiscal quarter ending December 31, 2017. |
(2) | If greater than 10%, include notice thereof with this Compliance Certificate. |
(3) | If greater than 10%, include notice thereof with this Compliance Certificate. |
(4) | Must not exceed (a) 3.00 to 1.00 for the fiscal quarter ended June 30, 2017, (b) 4.00 to 1.00 for the fiscal quarters ending September 30, 2017 and December 31, 2017 and (c) 3.00 to 1.00 for any fiscal quarter thereafter. |
(5) | Must not be less than 1.25 to 1.00 for the fiscal quarter ended June 30, 2017. Not tested for the fiscal quarters ending September 30, 2017 and December 31, 2017. For any fiscal quarter thereafter, must not be less than 1.25 to 1.00. |
APPLICABLE MARGIN Actual Results: Leverage Ratio: __________ For Fiscal Quarter Ending ___________________ | |||||
Mark As Applicable with “X” | Leverage Ratio | Applicable Margin for Eurocurrency, EURIBOR and CDOR Loans | Applicable Margin for ABR Loans | Applicable Margin for Canadian Prime Rate Loans | Applicable Margin for Unused Fees |
< 1.00x | 1.625% | 0.625% | 2.125% | 0.25% | |
< 1.50x | 1.875% | 0.875% | 2.375% | 0.30% | |
< 2.00x | 2.125% | 1.125% | 2.625% | 0.35% | |
< 2.50x | 2.375% | 1.375% | 2.875% | 0.40% | |
< 3.00x | 2.625% | 1.625% | 3.125% | 0.45% | |
> 3.00x | 2.875% | 1.875% | 3.375% | 0.50% |
APPLICABLE MARGIN Actual Results: Leverage Ratio: __________ For Fiscal Quarter Ending ___________________ | |||||
Mark As Applicable with “X” | Leverage Ratio | Applicable Margin for Eurocurrency, EURIBOR and CDOR Loans | Applicable Margin for ABR Loans | Applicable Margin for Canadian Prime Rate Loans | Applicable Margin for Unused Fees |
< 1.00x | 1.625% | 0.625% | 2.125% | 0.25% | |
< 1.50x | 1.875% | 0.875% | 2.375% | 0.30% | |
< 2.00x | 2.125% | 1.125% | 2.625% | 0.35% | |
< 2.50x | 2.375% | 1.375% | 2.875% | 0.40% | |
≥ 2.50x | 2.625% | 1.625% | 3.125% | 0.45% |
Report or Delivery Due Date | Status |
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, 2017 | |
/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, 2017 | |
/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, 2017 | |
/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, 2017 | |
/s/ Kevin S. Cavanah | ||
Kevin S. Cavanah | ||
Vice President and Chief Financial Officer |
Mine or Operating Name/MSHA Identification Number | Section 104 S&S Citations(1) | Section 104(b) Orders(2) | Section 104(d) Citations and Orders(3) | Section 110(b)(2) Violations(4) | Section 107(a) Orders(5) | Total Dollar Value of MSHA Assessments Proposed ($) | Total Number of Mining Related Fatalities | Received Notice of Pattern of Violations Under Section 104(e)(6) (yes/no) | Received Notice of Potential to Have Pattern of Violations Under Section 104(e)(7) (yes/no) | Total Number of Legal Actions Pending as of Last Day of Period | Total Number of Legal Actions Initiated During Period | Total Number of Legal Actions Resolved During Period |
Freeport McMoran Morenci Inc. 02-00024 | — | — | — | — | — | — | — | No | No | — | — | — |
Freeport McMoran Safford Inc. 02-03131 | — | — | — | — | — | — | — | No | No | — | — | — |
Big Island Mine & Refinery 48-00154 | — | — | — | — | — | — | — | No | No | — | — | — |
Solvay Chemicals Inc. 48-01295 | — | — | — | — | — | — | — | No | No | — | — | — |
Permanente Cement Plan & Quarry 04-04075 | — | — | — | — | — | $129 | — | No | No | 1 | 1 | — |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Nov. 02, 2017 |
|
Document Documentand Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | MTRX | |
Entity Registrant Name | MATRIX SERVICE CO | |
Entity Central Index Key | 0000866273 | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 26,748,394 |
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Income Statement [Abstract] | ||
Revenues | $ 269,910 | $ 341,781 |
Cost of revenues | 241,019 | 309,503 |
Gross profit | 28,891 | 32,278 |
Selling, general and administrative expenses | 21,570 | 17,977 |
Operating income | 7,321 | 14,301 |
Other income (expense): | ||
Interest expense | (618) | (243) |
Interest income | 39 | 12 |
Other | 149 | 7 |
Income before income tax expense | 6,891 | 14,077 |
Provision for federal, state and foreign income taxes | 3,067 | 4,735 |
Net income | $ 3,824 | $ 9,342 |
Basic earnings (loss) per common share (US$ per share) | $ 0.14 | $ 0.35 |
Diluted earnings (loss) per common share (US$ per share) | $ 0.14 | $ 0.35 |
Weighted average common shares outstanding: | ||
Basic (shares) | 26,655 | 26,387 |
Diluted (shares) | 26,762 | 26,796 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 3,824 | $ 9,342 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation gain (loss) (net of tax of $16 and $37 for the three months ended September 30, 2017 and 2016, respectively) | 1,107 | (279) |
Comprehensive income | $ 4,931 | $ 9,063 |
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Tax | $ 16 | $ 37 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Jun. 30, 2017 |
---|---|---|
Statement Condensed Consolidated Balance Sheets [Abstract] | ||
Accounts receivable, allowances | $ 9,889 | $ 9,887 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 27,888,217 | 27,888,217 |
Common stock, shares outstanding | 26,727,975 | 26,600,562 |
Treasury stock, shares | 1,160,242 | 1,287,655 |
Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - shares |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Exercise of stock options, shares | 0 | 4,400 |
Issuance of deferred shares, shares | 163,201 | 335,295 |
Employee Stock Purchase Plan, shares | 7,121 | 4,982 |
Other treasury shares purchases, shares | 42,909 | 113,762 |
Basis of Presentation (Notes) |
3 Months Ended |
---|---|
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation and Accounting Policies The condensed consolidated financial statements include the accounts of Matrix Service Company (“Matrix”, “we”, “our”, “us”, “its” or the “Company”) and its subsidiaries, unless otherwise indicated. Intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission and do not include all information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. The information furnished reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair statement of the results of operations, cash flows and financial position for the interim periods presented. The accompanying condensed financial statements should be read in conjunction with the audited financial statements for the year ended June 30, 2017, included in the Company’s Annual Report on Form 10-K for the year then ended. The results of operations for the three month period ended September 30, 2017 may not necessarily be indicative of the results of operations for the full year ending June 30, 2018. Recently Issued Accounting Standards Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) On May 28, 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” The ASU also requires entities to disclose both quantitative and qualitative information that enables users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The ASU's disclosure requirements are significantly more comprehensive than those in existing revenue standards. The ASU applies to all contracts with customers except those that are within the scope of other topics in the FASB Accounting Standards Codification ("ASC"). The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted on a limited basis. Management is currently evaluating the impact of adopting the ASU on the Company's financial position, results of operations, cash flows and related disclosures. Adoption of this ASU is expected to affect the manner in which the Company determines the unit of account for its projects (i.e., performance obligations). Under existing guidance, the Company may have multiple performance obligations for large, complex projects. Upon adoption, the Company expects that similar projects may have fewer performance obligations, possibly just one in some cases, which will result in a more constant recognition of revenue and profit over the term of the project. In addition, management expects that profit could be recognized earlier for contract amounts related to unapproved change orders and claims. The Company will adopt this standard on July 1, 2018 using the modified retrospective method of application, which may result in a cumulative effect adjustment to retained earnings as of the date of adoption. Management has completed its review of the new revenue standard and is currently reviewing its contracts in order to confirm its understanding of how the new standard will impact its revenue recognition policy, disclosures, processes and internal controls. At this time, we cannot reliably estimate the amount of any potential retrospective adjustment. Accounting Standards Update 2016-02, Leases (Topic 842) On February 25, 2016, the FASB issued ASU 2016-02. The amendments in this update require, among other things, that lessees recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted, but we do not plan to do so at this time. We are currently evaluating the ASU's expected impact on our financial statements. See Note 8 of Item 8. Financial Statements and Supplementary Data in our 2017 Form 10-K for more information about the timing and amount of future operating lease payments, which we believe is indicative of the materiality of adoption of the ASU to our financial statements. Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments On June 16, 2016, the FASB issued ASU 2016-13, which will change how the Company accounts for its allowance for uncollectible accounts. The amendments in this update require a financial asset (or a group of financial assets) to be presented at the net amount expected to be collected. The income statement will reflect any increases or decreases of expected credit losses that have taken place during the period. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. Current GAAP delays the recognition of the full amount of credit losses until the loss is probable of occurring. The amendments in this update eliminate the probable initial recognition threshold and, instead, reflect the Company's current estimate of all expected credit losses. In addition, current guidance limits the information the Company may consider in measuring a credit loss to its past events and current conditions. The amendments in this update broaden the information the Company may consider in developing its expected credit loss estimate to include forecasted information. The amendments in this update are effective for the Company on July 1, 2020 and the Company may early adopt on July 1, 2019. The Company must apply the amendments in this update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. At this time, the Company does not expect this update to have a material impact to its estimate of the allowance for uncollectible accounts. Accounting Standards Update 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting In May 2017, the FASB issued ASU 2017-09 which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as a modification. Entities should apply the modification accounting guidance if the value, vesting conditions or classification of the award changes. ASU 2017-09 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted and prospective application is required. Management does not expect the adoption of ASU 2017-09 to have a material impact on the Company’s financial position, results of operations or cash flows. |
Acquisitions (Notes) |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Note 2 – Acquisitions Purchase of Houston Interests, LLC On December 12, 2016, the Company completed the acquisition of Houston Interests, LLC ("Houston Interests"), a premier global solutions company that provides consulting, engineering, design, construction services and systems integration. Houston Interests brings expertise to the Company in natural gas processing; sulfur recovery, processing and handling; liquid terminals, silos and other bulk storage; process plant design; power generation environmental controls and material handling; industrial power distribution; electrical, instrumentation and controls; marine structures; material handling systems and terminals for cement, sulfur, fertilizer, coal and grain; and process heaters. The business has been included in our Matrix PDM Engineering, Inc. subsidiary, and its operating results impact primarily the Oil Gas & Chemical and Industrial segments. The Company purchased all of the equity interests of Houston Interests for $42.5 million in cash, net of working capital adjustments and cash acquired. The consideration paid is as follows (in thousands):
The Company funded the equity interest portion of the consideration paid from borrowings under the Company's senior secured revolving credit facility (See Note 5). The purchase of working capital was paid with cash on hand. The net purchase price was allocated to the major categories of assets and liabilities based on their estimated fair value at the acquisition date. The following table summarizes the preliminary net purchase price allocation (in thousands):
The goodwill recognized from the acquisition is primarily attributable to the technical expertise of the acquired workforce and the complementary nature of Houston Interests' operations, which the Company believes will enable the combined entity to expand its service offerings and enter new markets. All of the goodwill recognized is deductible for income tax purposes. The fair value of the net assets acquired is preliminary pending the final valuation of those assets. As a result, goodwill is also preliminary since it has been recorded as the excess of the purchase price over the estimated fair value of the net assets acquired. The Company has agreed to pay the previous owners up to $2.6 million for any unused portion of acquired warranty obligations outstanding as of June 30, 2017. This agreement was settled for $1.7 million, which was paid in July 2017. This settlement was reflected as a decrease to the acquired current liabilities and an increase to the net purchase price. The unaudited financial information in the table below summarizes the combined results of operations of Matrix Service Company and Houston Interests for the three months ended September 30, 2017 and 2016, on a pro forma basis, as though the companies had been combined as of July 1, 2015. The pro forma financial information presented in the table below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at July 1, 2015 nor should it be taken as indicative of future consolidated results of operations.
The pro forma financial information presented in the table above includes the following adjustments to the combined entities' historical financial statements:
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Uncompleted Contracts (Notes) |
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Disclosure Customer Contracts Additional Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Uncompleted Contracts | Uncompleted Contracts Contract terms of the Company’s construction contracts generally provide for progress billings based on project milestones. The excess of costs incurred and estimated earnings over amounts billed on uncompleted contracts is reported as a current asset. The excess of amounts billed over costs incurred and estimated earnings recognized on uncompleted contracts is reported as a current liability. Gross and net amounts on uncompleted contracts are as follows:
Progress billings in accounts receivable at September 30, 2017 and June 30, 2017 included retentions to be collected within one year of $43.7 million and $54.3 million, respectively. Contract retentions collectible beyond one year are included in other assets in the condensed consolidated balance sheet and totaled $3.5 million as of September 30, 2017 and $1.9 million as of June 30, 2017. |
Intangible Assets Including Goodwill (Notes) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Including Goodwill | Intangible Assets Including Goodwill Goodwill The changes in the carrying value of goodwill by segment are as follows:
We performed our annual goodwill impairment test as of May 31, 2017, which resulted in no impairment. However, the aggregate difference between the fair values of our reporting units and their carrying amounts decreased significantly since the previous year's test as a result of market conditions at that time. The fair value of one reporting unit (carrying value of goodwill of $8.0 million) only exceeded its carrying amount by 9%. The valuation model for this reporting unit assumed the award of a significant project prior to the end of the second fiscal quarter, with project work to commence shortly thereafter. This project award was subsequently obtained during the first fiscal quarter of 2018, which resolved the previous contingency. In addition, operating results for the Company during the three months ended September 30, 2017, including updated forecasts for the remainder of the year, do not indicate the existence of any goodwill impairment. The Company will continue to monitor its operating results and forecasts for indicators of impairment and perform additional tests as needed. Other Intangible Assets Information on the carrying value of other intangible assets is as follows:
Amortization expense totaled $1.6 million and $0.8 million during the three months ended September 30, 2017 and September 30, 2016, respectively. We estimate that the remaining amortization expense related to September 30, 2017 amortizing intangible assets will be as follows (in thousands):
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Debt (Notes) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt On February 8, 2017, the Company entered into the Fourth Amended and Restated Credit Agreement (the "Credit Agreement"), by and among the Company and certain foreign subsidiaries, as Borrowers, various subsidiaries of the Company, as Guarantors, JPMorgan Chase Bank, N.A., as Administrative Agent, Sole Lead Arranger and Sole Bookrunner, and the other Lenders party thereto, which replaced the Third Amended and Restated Credit Agreement dated as of November 7, 2011, as previously amended (the "Prior Credit Agreement"). The Credit Agreement provides for a five-year senior secured revolving credit facility of $300.0 million that expires February 8, 2022, which replaces the $250.0 million senior secured revolving credit facility under the Prior Credit Agreement. The new credit facility may be used for working capital, acquisitions, capital expenditures, issuances of letters of credit and other lawful purposes. Except as described in the paragraph below for the August 31, 2017 amendment, the Credit Agreement includes the following covenants and borrowing limitations:
The new credit facility includes a sub-facility for revolving loans denominated in Australian Dollars, Canadian Dollars, Euros and Pounds Sterling in an aggregate amount not to exceed the U.S. Dollar equivalent of $75.0 million and a $200.0 million sublimit for letters of credit. Each revolving borrowing under the Credit Agreement will bear interest at a rate per annum equal to:
in each case, plus the Applicable Margin, which is based on the Company's Leverage Ratio. The Applicable Margin on ABR loans ranges between 0.625% and 1.625%. The Applicable Margin for Adjusted LIBO, EURIBO and CDOR loans ranges between 1.625% and 2.625% and the Applicable Margin for Canadian Prime Rate loans ranges between 2.125% and 3.125%. The unused credit facility fee is between 0.25% and 0.45% based on the Leverage Ratio. The Credit Agreement includes a Senior Leverage Ratio covenant, which provides that Consolidated Funded Indebtedness, as of the end of any fiscal quarter, may not exceed 3.0 times Consolidated EBITDA, as defined in the Credit Agreement, over the previous four quarters. For the four quarters ended September 30, 2017, Consolidated EBITDA was $34.0 million. Consolidated Funded Indebtedness at September 30, 2017 was $50.2 million. On August 31, 2017, the Company entered in to an amendment to its Credit Agreement, which provided the following:
Availability under the senior revolving credit facility at September 30, 2017 was as follows:
Outstanding borrowings at September 30, 2017 under our Credit Agreement were primarily used to fund the acquisition of Houston Interests (See Note 2) and working capital needs in our Canadian business due to the timing of collections and disbursements on the previously announced Electrical Infrastructure project. At September 30, 2017, the Company was in compliance with all affirmative, negative, and financial covenants under the Credit Agreement. |
Income Taxes (Notes) |
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Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We use the asset and liability approach for financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances based on our judgments and estimates are established when necessary to reduce deferred tax assets to the amount expected to be realized in future operating results. Company management believes that realization of deferred tax assets in excess of the valuation allowance is more likely than not. Our estimates are based on facts and circumstances in existence as well as interpretations of existing tax regulations and laws applied to the facts and circumstances. The Company provides for income taxes regardless of whether it has received a tax assessment. Taxes are provided when it is considered probable that additional taxes will be due in excess of amounts included in the tax return. The Company regularly reviews exposure to additional income taxes due, and as further information is known or events occur, adjustments may be recorded. Our effective tax rate for the three months ended September 30, 2017 was 44.5% compared to 33.6% in the same period last year. The effective tax rate in fiscal 2018 was negatively impacted by a higher mix of projected income in the U.S., which is a higher tax jurisdiction than the Company's foreign operations. In addition, the fiscal 2018 effective tax rate was negatively affected by a stock compensation tax adjustment of $0.5 million. The effective tax rate in fiscal 2017 was positively impacted by the projection of a higher mix of income in Canada, which has a lower tax rate relative to the U.S. In addition, the fiscal 2017 effective tax rate benefited from a favorable stock compensation tax adjustment of $0.4 million. |
Commitments and Contingencies (Notes) |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Insurance Reserves The Company maintains insurance coverage for various aspects of its operations. However, exposure to potential losses is retained through the use of deductibles, self-insured retentions and coverage limits. Typically our contracts require us to indemnify our customers for injury, damage or loss arising from the performance of our services and provide warranties for materials and workmanship. The Company may also be required to name the customer as an additional insured up to the limits of insurance available, or we may be required to purchase special insurance policies or surety bonds for specific customers or provide letters of credit in lieu of bonds to satisfy performance and financial guarantees on some projects. Matrix maintains a performance and payment bonding line sufficient to support the business. The Company generally requires its subcontractors to indemnify the Company and the Company’s customer and name the Company as an additional insured for activities arising out of the subcontractors’ work. We also require certain subcontractors to provide additional insurance policies, including surety bonds in favor of the Company, to secure the subcontractors’ work or as required by the subcontract. There can be no assurance that our insurance and the additional insurance coverage provided by our subcontractors will fully protect us against a valid claim or loss under the contracts with our customers. Unapproved Change Orders and Claims Costs and estimated earnings in excess of billings on uncompleted contracts included revenues for unapproved change orders and claims of $12.4 million at September 30, 2017 and $11.0 million at June 30, 2017. Generally, collection of amounts related to unapproved change orders and claims is expected within twelve months. However, since customers may not pay these amounts until final resolution of related claims, collection of these amounts may extend beyond one year. Other The Company and its subsidiaries are participants in various legal actions. It is the opinion of management that none of the known legal actions will have a material impact on the Company’s financial position, results of operations or liquidity. |
Earnings per Common Share (Notes) |
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Earnings per Common Share | Earnings per Common Share Basic earnings per share (“Basic EPS”) is calculated based on the weighted average shares outstanding during the period. Diluted earnings per share (“Diluted EPS”) includes the dilutive effect of stock options and nonvested deferred shares. The computation of basic and diluted earnings per share is as follows:
The following securities are considered antidilutive and have been excluded from the calculation of Diluted EPS:
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Segment Information (Notes) |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information We operate our business through four reportable segments: Electrical Infrastructure, Oil Gas & Chemical, Storage Solutions, and Industrial. The Electrical Infrastructure segment primarily encompasses high voltage services to investor owned utilities, including construction of new substations, upgrades of existing substations, short-run transmission line installations, distribution upgrades and maintenance, and storm restoration services. We also provide construction and maintenance services to a variety of power generation facilities, such as combined cycle plants, natural gas fired power stations, and renewable energy installations. The Oil Gas & Chemical segment includes turnaround activities, plant maintenance, engineering and construction in the downstream and midstream petroleum industries. Our customers in these industries are engaged in refining crude oil and processing, fractionating, and marketing of natural gas and natural gas liquids. Another key offering is industrial cleaning services, which include hydroblasting, hydroexcavating, chemical cleaning and vacuum services. We also perform work in the petrochemical, upstream petroleum, and sulfur extraction, recovery and processing markets. The Storage Solutions segment includes new construction of crude and refined products aboveground storage tanks (“ASTs”), as well as planned and emergency maintenance services. The Storage Solutions segment also includes balance of plant work in storage terminals and tank farms. Also included in the Storage Solutions segment is work related to specialty storage tanks, including liquefied natural gas (“LNG”), liquid nitrogen/liquid oxygen (“LIN/LOX”), liquid petroleum (“LPG”) tanks and other specialty vessels, including spheres. Finally, we offer AST products, including geodesic domes, aluminum internal floating roofs, floating suction and skimmer systems, roof drain systems and floating roof seals. The Industrial segment primarily includes construction and maintenance work in the iron and steel, mining and minerals, and agricultural industries. Our work in the mining and minerals industry is primarily for customers engaged in the extraction of copper. Our work in the agricultural industry includes the engineering and design of grain silos, docks and handling systems; the design of control system automation and materials handling for the food industry; and engineering, construction, process design and balance of plant work for fertilizer production facilities. We also perform work in bulk material handling, thermal vacuum chambers, and other industrial markets. The Company evaluates performance and allocates resources based on operating income. The accounting policies of the reportable segments are the same as those described in the Summary of Significant Accounting Policies footnote included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2017. Intersegment sales and transfers are recorded at cost; therefore, no intersegment profit or loss is recognized. Segment assets consist primarily of cash and cash equivalents, accounts receivable, costs and estimated earnings in excess of billings on uncompleted contracts, property, plant and equipment, goodwill and other intangible assets. Results of Operations (In thousands)
Total assets by segment were as follows:
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Acquisitions (Tables) - Houston Interests, LLC [Member] |
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Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consideration transferred [Table Text Block] | The Company purchased all of the equity interests of Houston Interests for $42.5 million in cash, net of working capital adjustments and cash acquired. The consideration paid is as follows (in thousands):
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Schedule of Preliminary Purchase Price Allocation | The following table summarizes the preliminary net purchase price allocation (in thousands):
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Pro Forma Information | The unaudited financial information in the table below summarizes the combined results of operations of Matrix Service Company and Houston Interests for the three months ended September 30, 2017 and 2016, on a pro forma basis, as though the companies had been combined as of July 1, 2015. The pro forma financial information presented in the table below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at July 1, 2015 nor should it be taken as indicative of future consolidated results of operations.
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Uncompleted Contracts (Tables) |
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Disclosure Customer Contracts Additional Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross and Net Amount of Uncompleted Contracts | Gross and net amounts on uncompleted contracts are as follows:
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Intangible Assets Including Goodwill (Tables) |
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Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Value of Goodwill by Segment | The changes in the carrying value of goodwill by segment are as follows:
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Carrying Value of Other Intangible Assets | Information on the carrying value of other intangible assets is as follows:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] |
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Availability Under the Senior Credit Facility | Availability under the senior revolving credit facility at September 30, 2017 was as follows:
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Earnings per Common Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Earnings Per Share | The computation of basic and diluted earnings per share is as follows:
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Antidilutive Securities Excluded from the Calculation of Diluted EPS | The following securities are considered antidilutive and have been excluded from the calculation of Diluted EPS:
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Segment Information (Tables) |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Results of Operations | Results of Operations (In thousands)
Total assets by segment were as follows:
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Acquisitions (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
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Dec. 12, 2016 |
Sep. 30, 2017 |
Jun. 30, 2017 |
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Business Acquisition [Line Items] | |||
Goodwill | $ 113,860 | $ 113,501 | |
Houston Interests, LLC [Member] | |||
Business Acquisition [Line Items] | |||
Cash paid for equity interest | $ 46,000 | ||
Acquisition related adjustment for working capital settlement | 6,837 | ||
Accounts Receivable | 10,273 | ||
Costs and estimated earnings in excess of billings on uncompleted contracts | 746 | ||
Other current assets | 454 | ||
Current assets | 21,804 | ||
Property, plant and equipment | 942 | ||
Goodwill | 35,146 | ||
Other intangible assets | 10,220 | ||
Total assets acquired | 68,112 | ||
Accounts payable | 962 | ||
Billings on uncompleted contracts in excess of costs and estimated earnings | 11,648 | ||
Other accrued expenses | 2,475 | ||
Current liabilities | 15,085 | ||
Other liabilities | 190 | ||
Net assets acquired | 52,837 | ||
Less: cash acquired | 10,331 | ||
Business Combination, Consideration Transferred | $ 42,506 | ||
Warranty reserve working capital provision | 2,600 | ||
Settlement of warranty reserve | $ 1,700 |
Acquisitions (Narrative) (Details) - Houston Interests, LLC [Member] $ in Thousands |
Dec. 12, 2016
USD ($)
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Business Acquisition [Line Items] | |
Business Acquisition, Effective Date of Acquisition | Dec. 12, 2016 |
Business Acquisition, Name of Acquired Entity | Houston Interests, LLC |
Business Combination, Consideration Transferred | $ 42,506 |
Acquisitions Pro Forma (Details) - Houston Interests, LLC [Member] - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
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Sep. 30, 2017 |
Sep. 30, 2016 |
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Business Acquisition [Line Items] | ||
Revenues | $ 269,910 | $ 378,494 |
Net income attributable to Matrix Service Company | $ 3,824 | $ 10,788 |
Basic earnings per common share | $ 0.14 | $ 0.41 |
Diluted earnings per common share | $ 0.14 | $ 0.40 |
Acquisitions Pro Forma Narrative (Details) - Houston Interests, LLC [Member] $ in Millions |
3 Months Ended |
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Sep. 30, 2016
USD ($)
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Business Acquisition [Line Items] | |
Pro forma acquisition costs, amortized over time | $ 0.3 |
Pro forma interest expense | 0.4 |
Pro forma depreciation and amortization expense | 0.1 |
Pro forma income tax expense | $ 1.9 |
Uncompleted Contracts - Gross and Net Amounts of Uncompleted Contracts (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Jun. 30, 2017 |
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Disclosure Customer Contracts Additional Information [Abstract] | ||
Costs incurred and estimated earnings recognized on uncompleted contracts | $ 1,451,623 | $ 1,919,054 |
Billings on uncompleted contracts | 1,451,229 | 1,903,001 |
Total | 394 | 16,053 |
Shown on balance sheet as: | ||
Costs and estimated earnings in excess of billings on uncompleted contracts | 65,953 | 91,180 |
Billings on uncompleted contracts in excess of costs and estimated earnings | 65,559 | 75,127 |
Total | $ 394 | $ 16,053 |
Uncompleted Contracts - Additional Information (Detail) - USD ($) $ in Millions |
Sep. 30, 2017 |
Jun. 30, 2017 |
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Customer Contracts [Line Items] | ||
Contract Receivable Retainage, Due in Next Twelve Months | $ 43.7 | $ 54.3 |
Contract Receivable Retainage, Due after Next Twelve Months | $ 3.5 | $ 1.9 |
Intangible Assets Including Goodwill Future Expected Amortization Expense (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Jun. 30, 2017 |
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Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Amortization Expense, Remainder of Fiscal Year | $ 4,092 | |
Finite-Lived Intangible Assets, Amortization Expense, Next Year | 3,522 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 3,505 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 3,445 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 2,337 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 2,045 | |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | 5,885 | |
Finite-Lived Intangible Assets, Net | $ 24,831 | $ 26,296 |
Debt - Availability Under The Senior Credit Facility (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
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Debt Disclosure [Abstract] | |||
Senior credit facility | $ 300,000 | $ 300,000 | $ 250,000 |
Capacity Constraint Due To Senior Leverage Ratio | 164,084 | 169,092 | |
Line Of Credit Facility Maximum Borrowing Capacity After Consideration Of Capacity Constraint | 135,916 | 130,908 | |
Line of Credit Facility, Amount Outstanding | 42,076 | 44,682 | |
Letters of credit subject to the credit facility | 8,133 | 7,825 | |
Availability under the senior credit facility | $ 85,707 | $ 78,401 |
Income Taxes Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
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Income Tax Disclosure [Abstract] | ||
Effective Income Tax Rate Reconciliation, Percent | 44.50% | 33.60% |
Effective Income Tax Rate Reconciliation, Other Adjustments, Amount | $ 0.5 | $ 0.4 |
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions |
Sep. 30, 2017 |
Jun. 30, 2017 |
---|---|---|
Power Generation Project Unapproved Change Orders and Claims [Line Items] | ||
Unapproved change orders and claims | $ 12.4 | $ 11.0 |
Earnings per Common Share - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Earnings Per Share, Basic [Abstract] | ||
Net income | $ 3,824 | $ 9,342 |
Weighted average shares outstanding - basic (shares) | 26,655 | 26,387 |
Basic EPS (US$ per share) | $ 0.14 | $ 0.35 |
Earnings Per Share, Diluted [Abstract] | ||
Dilutive stock options | 10 | 50 |
Dilutive nonvested deferred shares | 97 | 359 |
Diluted weighted average shares (shares) | 26,762 | 26,796 |
Diluted EPS (US$ per share) | $ 0.14 | $ 0.35 |
Earnings per Common Share - Antidilutive Securities Excluded from the Calculation of Diluted Earnings Per Share (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
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Nonvested Deferred Shares [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total antidilutive securities | 718 | 78 |