The shadow of hurricanes Katrina and Rita hangs heavy over the Gulf Coast region nearly two years after the one-two punch devastated the area. It also has continued to impact industrial construction companies such as Matrix Service Co. (NASDAQ:MTRX), which saw its fiscal 2007 profits take a hit from lingering problems on a major Louisiana tank project.
The Tulsa, Okla., company reported Tuesday its financial results for the fiscal fourth quarter and year ended May 31, and outside of a one-time charge, results from a deep 18-month restructuring were clearly visible.
For the quarter, revenue climbed 28% to $177.9 million, but net income dropped to $1.9 million, or $0.08 per share, compared with $3.3 million, or $0.16 per share in the year-ago period. The company took a charge of $10.9 million, or $0.24 per share, for continued cost overruns on a liquefied natural gas construction project in the Gulf Coast region. Without the charge, the company would have handily beaten the consensus earnings estimate of analysts surveyed by Thomson Financial, which called for $0.26 EPS.
Despite the earnings miss on the one-time charge, analysts didn't take company executives to task over the lingering problems associated with the big tank project during a Tuesday morning conference call. Nor have they rushed to recommend that their clients dispose of Matrix shares. Outside of the problems on the one project, the company has quickly implemented a restructuring that has strengthened its operations.
Matrix Service, in collaboration with Mitsubishi Heavy Industries [MHVYF.PK], received a contract in 2005 from Bechtel Corp. for the engineering, fabrication and construction of three LNG tanks for Cheniere Energy (NYSEMKT:LNG) at its Sabine Pass facility in Cameron Parish, La. Now more than two-thirds completed, the LNG terminal will be the largest in the world when operations begin in mid-2008. The $1.5 billion tank project will have the capacity of sending out 4 billion cubic feet of liquefied natural gas per day.
MTRX 1-year chart