Greeting and welcome to the Matrix Service Company third quarter fiscal year ended February 28, 2009, earnings results conference call. (Operator Instructions) It is now my pleasure to introduce your host, Ms. Truc Nguyen, Investor Relations for Matrix Service Company.

I would now like to take a moment to read the following: Various remarks that the company may make about future expectations, plans, and prospects for Matrix Service Company constitute forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various factors, including those discussed in our annual report on Form 10-K for our last fiscal year and in subsequent filings made by the company with the SEC. In addition, some of our comments today include a non-GAAP financial measure. I encourage you to refer to the reconciliation of GAAP to non-GAAP financial results as posted on our website and included in our earnings release. Matrix Service has provided the necessary reconciliation in our press release to disclose a non-GAAP financial measure in this conference call. EBITDA is provided as we believe the financial and investment community utilizes this measure to assess our performance and evaluate the market value of companies considered to be in a business similar to ours. With that, I would now like to turn the call over to Michael Bradley, President and CEO of Matrix Service Company.

Good morning everyone. I have with me today Tom Long, our CFO, with me on the call, and always, we appreciate all of you joining us to discuss our recently completed third quarter of fiscal 2009. As I stated in our last earnings call, we expected an overall slowdown in our business during the latter part of calendar 2008 and extending into the first half of 2009. While the third quarter is typically our weakest quarter, there was definitely more caution as clients began to fully assess the economic environment and its impact on their business, with a particular emphasis on liquidity. This period of uncertainty correlates directly with the overall decline in the U.S. economy and commodity prices and was closely coupled with dramatic tightening in available credit, which directly impacted the industries we serve. While Matrix Service has developed a backlog of projects supported by financially strong clients, even this group of clients altered their spending initiatives and consequently our most recent quarter was more challenging than expected. Matrix Service experienced a significant slowdown with some cancellations and new capital spending initiatives and a postponement of some repair and maintenance programs. Having said that, we continue to be on track to deliver to our shareholders a year of record earnings, significantly improving our year-over-year earnings per share and doing so while achieving an excellent safety performance. In advancing our strategy, we closed on two important acquisitions in the third quarter, which further diversified our business. Our core companies today are strongly aligned with the many capital spending initiatives driven by government mandates and high-priority policy initiatives. For example, programs to diversify our nation’s energy supply, improve its electrical infrastructure, expand renewable energy, and reduce carbon and other emissions, which are all consistent with the expanding of portfolio services that Matrix can now deliver. We also continued to maintain a very strong balance sheet, stable backlog despite a cancellation of a large project, and have seen a nice uptick in our business in the fourth quarter, particularly in the turnaround business. There is no question that the general economic environment remains uncertain and difficult to predict at this time. Our customers continue to push for cost reductions and are proceeding cautiously with their spending plans, but I think more importantly is that we have better positioned the company for the long term. I will say more about our business and strategy after Tom gives a quick review of the quarterly results.

The specific details of the results of the third quarter and nine months of fiscal 2009 were disclosed in our press release this morning so I will hit this more from a highlight standpoint. We earned $0.16 per fully diluted share on revenues of $146.3 million in the third quarter. Moving to the segments, our construction services revenues declined primarily in the specialty market with the completion of the Gulf Coast LNG project in the last fiscal year. In addition, the above ground storage tank, as well as downstream petroleum markets, experienced a slowdown due to the project cancellations and deferrals as our customers managed their capital spending plans in response to the challenging economic environment. This segment did benefit from stronger revenues in the electrical and instrumentation market as a result of continued organic growth and the acquisition of SM Electric in the quarter. Our repair and maintenance services segment revenues increased in the third quarter compared to last fiscal year as a result of continued organic growth in the electrical and instrumentation market and the acquisition of SM Electric in the third quarter. We also experienced slightly higher revenues in the downstream petroleum market due to increased turnaround activity, specifically in the Northwest. Consolidated gross margins remained solid during the third quarter at 12.3% with gross margins of 11.7% in the construction services segment and 13% in the repair and maintenance services segment. Although the level of work in the third quarter did not allow us to fully cover our construction overhead costs, our strong project execution allowed us to once again achieve these solid gross margins. We did cut SG&A expenses by $1.0 million in the third quarter, primarily in the areas of personnel and other administrative costs. As a result, our SG&A costs remain flat compared…

During the third quarter we were pleased to announce the closing of two important acquisitions. As we discussed on our last call, we closed the acquisition of certain assets from CB&I in December 2009 and in February 2009 we completed the acquisition of SM Electric. As Tom mentioned, both of these acquisitions were acquired with cash on hand and represent significant steps towards advancing our long-term strategy that will allow us to capitalize on market opportunities. The acquisition from CB&I expands our engineering and construction resources to design, engineer, and construct single and full-containment LNG storage tanks, land locked storage tanks, LPG storage tanks, thermal vacuum chambers, and the next generation of nuclear containment vessels. The integration of this acquisition is on track and strengthens our key offerings in markets for highly specialized steel plate engineering and construction services. While the technology, personnel, and assets acquired bolsters our positions in these specialized markets, they will also be utilized to enhance the capabilities in our current business lines and will enable us to offer expanded services to our customers. The SM Electric acquisition positions us nicely to accelerate the execution of our electrical and instrumentation, or E&I, strategy in the Mid-Atlantic and Northeast regions. This market sector includes demonstrated expertise in the construction of high and extra high voltage substations and lower voltage distribution systems installed and maintained at all industrial facilities. SM Electric has been in business for more than 60 years and provides Matrix Service with a highly respected and talented workforce. The SM Electric business focus and safety culture fits exceptionally well with ours and when combined with our existing E&I business, allows us to capitalize on numerous opportunities associated with updating and expanding the high voltage electrical infrastructure in the U.S. The integration of SM Electric with…

(Operator Instructions) Your first question comes from Michael Harrison – First Analysis Corp. Michael Harrison – First Analysis Corp.: You quantified the impact of project cancellations on the backlog, and it sounds like it was really just one large project that was cancelled, but can you give us a ball park on what portion of the backlog those projects are still facing delays of some kind. And then maybe talk about what you think needs to happen in order for those projects to proceed. Is it more of a customer-by-customer issue, related to their ability to get financing for their specific projects, or is it a trend that’s more related to the overall macro and commodity price environment?

I think first of all, in terms of the projects that we currently have in backlog, they are continuing to move forward. I think what happened, during the Q3, which included December and January and obviously February, but I think in December and January a lot of people just went to the sidelines. As they tried to assess what happened with the financial markets and the impacts on their business. So there was some slowdown in Q3 on some of these but right now those projects continue to move forward. As I mentioned, we are starting to see some signs from clients that have indicated that they are getting authorization to proceed forward with the projects. They are discussing pricing, or re-pricing, particularly in the current market given the significant drop in commodity prices, and particularly steel. Which right now is a pretty good buy. So we are not sensing any delays in our current backlog. I think the other piece of it is, as I have stated in the past, is the repair and maintenance portion of our work. A lot of that work never shows up in backlog as it rolls in and out in any given quarter. And that is an area where we really saw, you know, some of the short-term maintenance projects really get put on hold in Q3. Michael Harrison – First Analysis Corp.: We have seen you do a couple of relatively small acquisitions recently. Given the current environment, can you talk a little bit about how you’re viewing the risk and reward trade off as you look at the acquisition opportunities out there?

As I stated, the CB&I acquisition, the technology capabilities that we got, really fit extremely well with the people and talent that have transitioned from the LNG project into our Gulf Coast region, which remains a region that we are focused on growing and making some good progress there. So that was a strategic, it just gives us a much broader range of services, adding more engineering and technology, but it also expanded our capabilities in cryogenics as well, as I mentioned, nuclear. So that was a strategic move and what we saw as a very nice fit. The electric and instrumentation acquisition, in terms of the SM Electric deal, we had an existing E&I business in the Northeast, this was a nice complimentary fit and a geographic expansion in a market that we see very significant spend occurring over the next several years. So this was a market that we were already in a position in, we saw a lot of opportunity going forward, and so this really advances our reach and capabilities to grow organically as well as look at some other potential acquisitions as well. So that is really how we targeted those two. And that’s what we’re looking at as we continue to look at acquisition opportunities, is ways to really advance our strategy and capabilities in the markets that we have currently and capabilities we have added to this company.

Your next question comes from Martin Malloy – Johnson Rice & Company. Martin Malloy – Johnson Rice & Company: Looking at your SG&A, you mentioned you’re undertaking some initiatives that could reduce the corporate costs by 10%. Is that from the third quarter run rate?

No, we had a forecast for fiscal year 2009 and as the market changed, we are taking steps to reduce our SG&A from that particular forecast, which will lower it about 10%. As you can see, we’re pretty well flat in the third quarter with our spend and a year-ago quarter. We are continuing to look at ways to pull costs out of the organization but I want to emphasize that we are not reacting to Q3. We started to take steps to reduce our cost structure back in October, just anticipating that this market was going to change. The other pieces of the equation that we look at before we start cutting a bunch of costs out are the discussions we’re having with clients and the opportunities that we see going forward and the long-term strategy that we are building for this company. So we will continue to look at sparing costs in certain areas but we still see a lot of opportunity down the road and we’re just not going to react to Q3 because really what we saw, and I think a lot of people saw, is that people just froze when this financial crisis hit and everybody started scrambling, looking at their spending and their capital plans and just really put everything on the sidelines. What we’re seeing now is indications of some of that working coming back. And so we’re positioned for the long term and we’re not going to make any drastic measures in this company. Obviously if the economy took a different step, then we would continue to look it. But we’re doing it on a measured approach while maintaining our capabilities for long term so we do feel this company is well positioned and there are a lot of opportunities for us down the road with larger scope and scale projects and much more diversified portfolio of business. Martin Malloy – Johnson Rice & Company: The SM Electric acquisition, now that you have owned the company for a couple of months now, any initial thoughts on opportunities there? In your guidance I think it said you did the acquisition with $70.0 million in revenue. I think they’ve done more than that in past years. Do you have any initial thoughts there on what that is looking like?

We were excited when we announced it and we remain very excited with what we’re seeing. We’re very pleased and it’s a great team of people, and as I have mentioned before, this is a group that some of our folks are very familiar with and it’s on track and presenting extremely well.

Your next question comes from Rich Wesolowski – Sidoti & Co. Rich Wesolowski – Sidoti & Co.: I want to make sure I have the numbers straight on the overhead reduction plan. Heading into the year, on the midpoint of your revenue, you were projecting $45.0 million to $50.0 million of SG&A expenses. You expect a 10% reduction from that range?

Yes. Let me say this, let me be careful here. We have, to date, the steps we have taken, we expect to reduce our annual spend by 10%. We haven’t stopped looking, it’s just to date, what we’ve put in place, has reduced that number. Rich Wesolowski – Sidoti & Co.: And you mentioned the Q3 gross margin, 12.3%, indeed solid, but that was based, in part, on work booked a few quarters ago when conditions were more favorable. Do the contracts you’re booking now offer the opportunity to target that 12% company-wide margin for the next year or so?

I think we lifted our margins during Q3. They were strong margins, but as Tom mentioned, like I said a lot of things just got put on hold. Even planned work was pushed out and so we did not fully recover our overheads during that time frame. As I say again, our work has picked up nicely in Q4. Going forward, we are in an environment where clients are looking for ways to cut their costs and contract structures are obviously something that are being looked at carefully. I think our focus right now is to remain disciplined in the types of projects that we take on and we contract for. And we have walked about from what I would consider projects in our fairway that, in our opinion, were just way underpriced. So we are going to keep focusing on that kind of discipline. So I think probably see some more lump-sum work in some areas, but as I stated before, there are a lot of projects that we are very comfortable with and sometimes prefer to take on a lump-sum basis. So I think it’s a little too early to tell, other than what we’re seeing is clients in general, companies in general, are looking for ways to push down costs and lower their spend. One thing I can tell you right now, as I said, is steel prices are a bargain. I don’t know how long they are going to stay at this level but right now it’s a good time to be buying steel.

Your next question comes from Tahira Afzal – Keybanc Capital Markets. Tahira Afzal – Keybanc Capital Markets: If I look at your fourth quarter fiscal guidance, what’s implied in your revised guidance, it seems to be fairly wide. Can you sort of run us through what you’re thinking in terms of the lower end versus the upper end?

I think everybody is giving wide guidance these days, just given the uncertainty. We didn’t expect a $33.0 million project cancellation in Q3. Our wide guidance is just being cautious. We’ve seen a nice uptick, we don’t anticipate any surprises, we’re just being a little cautious there. Tahira Afzal – Keybanc Capital Markets: If you look at the performance we’ve seen to date, over March, and you were to pro rate that over the next two months, where would you stand within that guidance?

What I would tell you is this. We have seen a nice uptick in our business. Man hours are up significantly and so far we are pleased with how the quarter has started out. Tahira Afzal – Keybanc Capital Markets: If I look at your nuclear side of the business, where would you stand in terms of accreditations and then I know CB&I, in terms of nuclear containment tanks, has sort of aligned itself with Westinghouse and I assume that means short to a great extent. Are you seeing, as you’re looking at sponsors out there, what types of sponsors are showing interest in your containment capabilities?

In terms of our accreditation, as I stated, we expect to complete that this summer. We’ve got a couple of phases to go through and we’re progressing right on schedule, based on how we looked at it when we started this process. I won’t name any particular clients other than to say that we are discussing with industry players about our nuclear capabilities and opportunities for containment vessels. I would call it serious discussions. We view this as a nice long-term addition to our business portfolio, so this isn’t just a pipe dream, we’ve got a resume of high-quality individuals in this company with nuclear experience, from engineering, construction, to project management; all the way down. We consider ourselves a real player and we are proceeding forward on that basis.

Your next question comes from Matt Duncan – Stephens Inc. Matt Duncan – Stephens Inc.: I want to get back to the margins for just a second. I don’t want to harp on this but I think it’s important to understand. On the gross margin pressure that we saw in this quarter, how much of that is unexpectedly low revenue plus seasonality leading to maybe margins being a little bit below where they actually ought to be on a go-forward basis, understanding that we’re not going to probably be seeing 14% margins but maybe 13% and not 12%.

I would say in Q3 all of it was due those things that you just laid out. So that really had the most impact on our gross margins in Q3. Going forward, we still have some respectable margins in our backlog. We continue to be disciplined in our contracting strategy, but as I said, and anybody is going to tell you the same thing in this business, clients are pushing hard on costs right now, for business. Part of strategy here that is important is our focus is more on looking at specialty-type services where there are unique skill sets and capabilities that are more complex, which historically provide stronger margins. And that’s how we work to try to differentiate Matrix in some of these markets. So I think when you look at some repair and maintenance capabilities, particularly in above-ground storage tanks, this company is capable of taking on complex repair projects. And we have got tremendous skill sets in that area. We are building our specialty turnaround business in the Gulf Coast and we’re starting to see some good progress there. And again, these are more highly complex projects and we will continue to look at ways that we can expand that capability to some of our existing markets. So I think in terms of margins, no question about it, everybody is pushing down costs. And we expect that to be challenging here for a while. I can’t predict margins but what I can say is that we’re trying to stay very disciplined in the type of work we contract and not get us into a situation where we have to take on work that margins we are going to be sorry about in the future. Matt Duncan – Stephens Inc.: Okay. So it’s safe to say the margins in your backlog are a bit higher than what you were quoting this quarter?

I would say that the margins, that’s a good statement, and again, I want to emphasize that in Q3 the biggest impact was the low volume of work and not able to fully recover our overheads. Matt Duncan – Stephens Inc.: And on that point, your repair and maintenance revenue grew year-over-year but your gross margin was down 270 basis points there. What was at play there? Is the mix shifting away from emergency work? Is that the problem? What’s causing that big of a decline with revenues up for that piece?

I would say two things. One, while revenues were up compared to last year, they were not up to the level that we had expected. And the reason for that is what I stated earlier, is we really saw companies just clamp down and defer and just put things on hold. The other thing I would say, and it’s probably related to this, is we did see less emergency call-out work during the quarter as well. So it was a combination.

Your next question comes from Michael N. Christodolou – Inwood Capital Management. Michael N. Christodolou – Inwood Capital Management: You mentioned you are responding to 30.0 million barrels of storage. Is that all AST?

Yes. Michael N. Christodolou – Inwood Capital Management: And that opportunity, that’s included in the $2.0 billion of opportunities in front of you? Yes. Michael N. Christodolou – Inwood Capital Management: And generally speaking, what is time frame on that $2.0 billion look like, based on feedback from the guys requesting bids?

I would say the timing right now looks better than it did. Again, what we saw happened towards the end of last year is companies just stopped and tried to assess what the impact was and we saw, as you saw, the headlines, companies reassessing their capital budgets. In fact, some companies pulled back their original plans and said they weren’t going to give out a capital budget until early this year. So I think that was an impact but now we are seeing indications some of these projects start to move forward and get authorized. So I see that as a positive sign. Michael N. Christodolou – Inwood Capital Management: And on the project where you had the balance of the backlog get cancelled, how would that have worked? You were paid for the work that you did? Was there any cancellation penalty or any kind of going-away kiss that the contract terms provided?

No. Obviously we were paid for work we did. But it was just cancelled. Michael N. Christodolou – Inwood Capital Management: And that happened in the quarter so is it fair to say that they may have also contributed to the low overhead absorption that you cited?

Yes.

Your next question is a follow-up from Rich Wesolowski – Sidoti & Co. Rich Wesolowski – Sidoti & Co.: The SM Electric backlog that you added, was that about $20.0 million?

We haven’t given out the exact backlog addition on that. What I will tell you is that we stated in our press release on CB&I that it was up to $20.0 million. Rich Wesolowski – Sidoti & Co.: And you recognized some CB&I revenue in the quarter?

Yes. Rich Wesolowski – Sidoti & Co.: Okay, so it was probably more than that. Is the SM Electric business a lot quicker turn than Matrix’s heritage operations? Does it run through backlog a lot faster?

I would say that they are a combination of repair maintenance and capital construction.

And as it relates to the repair and maintenance business, I would say it’s very similar to our existing E&I repair and maintenance business in that some projects will flow through backlog without ever showing up. And that’s pretty typical of that business. On the construction side, their capabilities are really, they have a lot more capabilities on the larger infrastructure projects, which would tend to be a little bit longer. But again, the repair and maintenance side is very similar. The rest of repair and maintenance business, a lot of it flows through in any given quarter and never shows up in the backlog. Rich Wesolowski – Sidoti & Co.: There seems to be a lot more electric line work going on now than there was a year or two ago but it still seems like we’re waiting for this big wave to hit. When is your view on when will the market begin to really get juiced up?

When you at what some of the Northeast utilities have stated, and I made those comments earlier, is they expect to spend—again, these are announcement, these have been their public announcement; we’re just pulling data—$10.0 billion through 2011. And the Northeast, Mid-Atlantic, is really our sweet spot—it is our spot—for the bulk of E&I business. So we see a pretty good spend potential, if their predictions are accurate, over the next couple of years.

Your next question is a follow-up from Tahira Afzal – Keybanc Capital Markets. Tahira Afzal – Keybanc Capital Markets: I just wanted to go back and get a sense of the revenue contribution from SM Electric in the third quarter if there was any.

There was some revenue contribution from SM but we closed that February 5 and had 28 days in February so it was not material. Tahira Afzal – Keybanc Capital Markets: But as we go forward should we be adding, you know, given they’ve done $70.0 million in revenues an annual basis last year, should we be prorating that and adding that in?

What we stated in our press release was we expected to add $70.0 million of annual revenue going forward. Tahira Afzal – Keybanc Capital Markets: And if I look at the fiscal stimulus package, given that one, there are a lot of stipulations that guide to Smart Grid, etc., I would like to get your thoughts on that. And then to get an idea of SM Electric from the point of view of other stimulus exposure. You know that could be seen, going forward, that would be great as well. And I’m hearing that, at least in the New Jersey, the fiscal stimulus stamp’s been drawn down already so I would love to get an idea of what your initial thoughts are on that.

My thought on the stimulus package, anything that’s related to the electric grid will be a positive to our business, particularly in the Mid-Atlantic and Northeast. Our capabilities in the E&I business is pretty broad. As I mentioned, we’ve got capabilities in high and ultra-high voltage. We’ve got low voltage distribution capabilities, we’ve got instrumentation capabilities. We are engaged in looking at security systems. So there’s a pretty broad range of capabilities in that business that I believe anything associated with Smart Grid or electric grid we view as very positive. Tahira Afzal – Keybanc Capital Markets: And who would be you main competitors within that region, for SM Electric?

I think that particular region is, right now I would say dominated by regional players. SM was a top player in New Jersey. We’ve got a good position in Pennsylvania. We are expanding that into other states. So I would say it’s more regional competitors, and particularly in what we’re looking at doing. Tahira Afzal – Keybanc Capital Markets: And going back to the nuclear side of the business, can you size up the size of the containment vessels, the opportunity that you could potentially be looking at? What the lead times are and when we can really start seeing some award activity, based on what you know right now.

I’m going to give you round numbers and these aren’t our numbers but I CB&I press-released a couple of containment vessels so you can look at their press releases and get the idea of the magnitude of dollars. I would say typically on some of the current ones that are being planned, you’re probably looking at four years. Awards to come much earlier and then there’s just a period of time to design, fabricate, and start bringing materials. The next wave is probably another four or five years down the road. Tahira Afzal – Keybanc Capital Markets: CB&I started getting awards and those seemed to be from the first wave, which is largely Westinghouse. If you look at the other opportunities, the ones that you might be playing in, would you say they’re in the first wave or the second wave?

We have opportunities in the first wave. Tahira Afzal – Keybanc Capital Markets: Just going on that, I would assume that the awards could happen potentially within a year.

I would say right now I’m not giving any guidance on awards for nuclear other than to say that there are opportunities for Matrix in the near term and we’re working those hard. I would say that the possibility of awards occurring in the next year for nuclear containment vessels, whether they’re us or somebody else, I would expect there could be some. Tahira Afzal – Keybanc Capital Markets: And apart from CB&I would there be any other competitors in that area for you?

My guess is there are probably three main competitors in that area today, if you include us.

Your next question is a follow-up from Matt Duncan – Stephens Inc. Matt Duncan – Stephens Inc.: Moving on to contract mix, can you talk about what you’re seeing on bids today? Is your contract mix starting to shift more to fixed price, lump-sum type arrangements? And maybe if you could tell us for the last year what has the mix done and then in your backlog what does the mix look like?

I would say that probably in the last couple of years our mix has been about one-third lump-sum, one-third cost plus, and one-third time and materials. There may be a few percentage changes in that right now. I don’t think anything major. Again, a lot of our repair and maintenance work tends to be time and material and that’s an area that we’re continuing to focus on growing, both in our above-ground storage tank as well as our refinery and power maintenance. Lump-sum work is probably up a little bit but I wouldn’t say that the mix has moved significantly in any direction right now. Matt Duncan – Stephens Inc.: And in terms of competition on bids that you’re putting together today, are you seeing more competitors in the bidding process and are they tacking rationally so far with pricing?

We are definitely seeing more competitors in the market today. There’s less capital spending so there’s more competitors, no question about that. I won’t comment if they’re rational or not. Our view is on the projects we’ve walked away from are projects that we have built multiple times and we just weren’t going to take on that kind of risk. I think it’s a strong, competitive market right now. For us what’s important is we’ve got a strong balance sheet, we’ve got bonding capacity, and we can offer letters of credit, so I think we can assure our clients that we are financially strong when we take on these projects, and that’s important.

This does conclude the Q&A session for today.

I really want to thank everybody for joining us on the call today. And in closing, while we have stated we expect the economic environment to remain challenging, I really want to leave you with the following take-aways: One, we have a very strong financial position; two, we have diversified our service offerings and customer base, I think which position us very well in this market and for the future; we have managed our business through a difficult market and are positioned to capitalize on the future opportunities; and finally, we continue demonstrate excellent project execution and safety. We look forward to talking with you again in the future.

This concludes today’s conference call.