Good day ladies and gentlemen, and welcome to the Matrix Service Company Conference Call to discuss results for the Fourth Quarter and Fiscal Year-end. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session and instruction will follow at that time. (Operator Instructions). As a reminder today’s conference is being recorded. I would now like to turn the call over to Mr. Kevin Cavanah, Vice President and CFO. Sir you may begin.

Thank you. 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 fiscal year ended June 30, 2014, and in subsequent filings made by the company with the SEC. To the extent the company utilizes non-GAAP measures, reconciliations will be provided in various press releases and on the company's website. I will now turn the call over to John Hewitt, President and CEO of Matrix Service Company.

Thank you, Kevin and good morning, everyone. We have prepared our usual remarks for the business which are focused on the exceptional year Matrix Service Company had, while highlighting the significant strength in our markets. The stock market today seems to be demonstrating a different view on this record performance and the guidance that we have laid out. I hope we’ll be able to clear up any misconceptions on the company performance in 2014 and growth expectations for 2015 relative to 2014. As we closed our fiscal year of 2014 and our 30th year in business, I want to take a moment to reflect on our growth from a small tank repair company to who we are today, a top tier engineering, construction and maintenance company that designs, builds and maintains infrastructure that are critical to North Americas energy, power and industrial markets. When our company was founded back in 1984, we had 14 employees. Today, we employ nearly 5000 people across the US and Canada and service our customers through more than 30 regional offices. Just this year, we were named one of Forbes 100 Most Trustworthy Public Companies and Fortune’s Top 100 Fastest Growing Companies. We are also ranked 56 on Engineering News-Record’s annual top 400 contractors list, the seventh consecutive year that we’ve been named within the top 100. We’ve experienced a record setting year in revenue, backlog and earnings per share, which we’ll talk in more detail about in just a moment; and with the opportunities across our markets, we are very excited about the future and position of Matrix Service Company. Critical to our success has been the solved execution of our five year strategic plan. This plan which focuses on a zero incidence safety performance, growing and diversifying our business, building the internal infrastructure…

Thanks John. Our fourth quarter revenues were 344.4 million compared to 235.6 million in the fourth quarter of fiscal 2013, an increase of 46.2%. Electrical Infrastructure, Storage Solutions and Industrial segments provided strong growth, while the Oil, Gas and Chemical segment was down as compared to the prior year. Our fourth quarter net income was 7.6 million and our fully diluted earnings per share was $0.28, as compared to the fourth quarter of last year, and the company produced net income of 7.4 million and EPS of $0.28. While the quarter results helped us achieve a record year in fiscal 2014, they were dampened by a charge of $3 million on our Storage Solutions project. While we can’t discuss the specifics of the project, we are confident that the challenges of the project are in hand and major construction completion is scheduled for the end of this calendar year. We also incurred approximately 1.3 million of integration cost in the quarter, including severance and system migration cost. These two items reduced our earnings per share by $0.10 per share. Consolidated gross profit was 36.9 million in the three months ended June 30, 2014 versus 27 million in the three months ended June 30, 2013. The performance of our overall business produced 10.7% consolidated gross margins as compared to 11.5% in the fourth quarter of fiscal 2013, as the project charge negatively impacted 2014 gross margins by 0.9%. SG&A expenses were 22.7 million in the three months ended June 30, 2014, compared to 15.4 million in the same period last year. The increase was a result of the addition of SG&A cost related to the acquired business, higher amortization expense related to intangibles, as well as increased incentive accruals recorded in the connection with a strong performance of the company, and…

Thanks Kevin. So I want to spend a few minutes on our overall strategy and the market opportunities before us. It is our vision to be the best of the best, be respected by our peers, wanted by our clients, and viewed as an employer of choice by our current and future employees. Matrix Service Company is a values lead company and our goal is to deliver great results for our shareholders for many years to come. We refreshed a five-year strategic plan this year, which runs through fiscal 2017. This plan continues to be focused on the following overarching elements: continuous improvement to achieve zero incident and safety performance; capitalize our market position, brand strength and service quality to achieve continued growth and diversification; a focus on people and organizational development, with an emphasis on structure, leadership development, training, recruiting and retention; business value enhancement through process improvement, goal setting, key strategic acquisitions and earnings consistency; and employee engagement to the plant proactive communication and changed leadership. Some of the key strategic and tactical focus areas are to achieve a reputation as a premier provider of EPC solutions for the next-generation gas fire power plants in North America. Transform our AST brand from tanks to a full terminal provider. Elevate and expand our large capital construction brand and cover major elements of the gas value chain, such as LNG, fertilizer plants, gas to liquid export facilities, and transportation fuels to name a few. Leverage the brand and skills of our Matrix PDA Engineering group and all aspects of storage and terminals in both standard and cryogenic services. With a strong position in the downstream and midstream energy markets move upstream through a combination of organic and acquisitive means. Remain flexible to changing market conditions through diversified service offering and…

(Operator Instructions) And our first question comes from the line of Matt Duncan of Stephens. Your line is now open.

I want to start by talking about guidance for a second. Kevin you give us segment gross margin guidance for the year, what do you expect quarterly SG&A cost to look like. It sounds like there was some one-time stuff with the severance and integration stuff at Kvaerner. There in the fourth quarter so just helping us know what the go-forward run rate there is would be helpful.

Yes, the SG&A was a little bit higher in the fourth quarter than we probably would have expected. I think we’re still looking at 21 to 22 when we are going into fiscal ‘15 for the quarter.

So if I use that number and I go to the midpoint of your revenue guidance, and the midpoint of segment margin guidance for each of the segments, I’m getting an earnings number closer to $1.70 and the guide is $1.40 to $1.60. So what am I missing and then maybe as simple as you’re just trying to be a little conservative to start the year and hoping to do better, but I’m curious if there is something I am missing there?

I don’t have all the model that you’ve got there. I don’t know what your growth expectations are for each of your four segments and the mix is different. So it’s hard for me to answer that question without seeing the model. I can tell you, we’ve gone through a lot of review of our prospects, our budget, our funnel of projects and feel like we’ve done a thorough job in budgeting fiscal ‘15 and even said in the guidance.

Another way to look at this Kevin might be if you look at the fourth quarter gross margin and you back out the $3 million expense for the charge you took. I think you said it hurt gross margin by 90 basis points, so it would have been 11.6%. I don’t know if that’s a little higher than what you might expect going forward, but again, using that number and applying it to the revenue guidance range and using the SG&A number you just gave, that also implies something like $1.65 to $1.85, so again above the range. So I guess what I’m getting at is it feels like, and correct me if I’m wrong, but it feels like you guys are being a little conservative with the first pass, and I get it because project charges happen from time to time in your business. But I just want to make sure there is not any other expense that we don’t yet know about that way be coming.

So Matt let me chime in here a little bit from a non-numbers perspective. So we are integrating Matrix NAC and Matrix SME through the course of this year, we’re bringing together those businesses into a full union delivery. We have not consciously built any conservativeness either into the outcome of that or in to other parts of our business. You know that the growth in our business is dependent very much on the timing of our awards, how we see the market, and how we see the timing of those awards can impact the outcome of the year for us. So there has been no conscious build in of conservativeness into the numbers. We’ve been through the numbers quite a bit and laid out how we see the revenue coming in and how we see the gross margin on certain pieces of the revenue coming in. So I appreciate you trying to tie the dots together and Kevin can do some homework here when we get off the call maybe and try and help you guys with the comment on your view of the numbers. But we have not come up with one number and said, okay we are going to haircut that by a certain percentage to be conservative.

The other thing I wanted to talk about is this whole balance of plant work opportunity and you mentioned this in your prepared comments John and going from doing just the tanks to doing the entire terminal, I think you guys wrapped up the big job you were doing in Cushing there roughly the month of May. How did the performance turn out on that job in the customers’ eyes and are you guys booking more of that work in to your backlog at this point?

Just to give a little perspective there, and maybe we weren’t as we thought we were as transparent as we could be and needed to be, but on that project when it entered in to the company, but late last fall we get a phone call from a key client that says, hey we’ve got a project that’s in trouble, we are not happy with the existing construction team that’s there, will you guys step in and take it over. And they gave us a representation of what they thought the volume of that was going to be and that turned out be significantly bigger that what we stepped in to. So it’s done a lot of things for us. One, is that it drove a very strong top line and bottom line year for 2014, it further strengthened our relationship with this client, because we stepped in and really helped them considerably on getting this project done, and to meet their delivery demands, and it’s improved our reputation, our resume and our business. So one of the backlog projects that Kevin mentioned to you is a full tank and terminal project for this particular client in Houston, and so it is opening up doors for us to provide full terminal work and potentially on an EPC basis in other parts of North America. So it was a key project for us in a lot of ways. It unfortunately probably created a tough comp on some cases for us coming into 2015, but we think that that’s long term, that’s a momentarily tough comp, as it builds our brand awareness and allows us to move into other aspects of the market. I mean that terminal business, the tank business for us, we see us continued to be very strong over the next three to five years.

What is the timing of that job in Houston and how does the size relate to the one in Cushing?

With the tanks and terminal it’s a sub $100 million project. We have started the dirt work, and down there in the fourth quarter of 2014, and a majority of that work will be done in 2015.

Okay, and the last thing from me and I will hop back in the queue, just on Kvaerner, what was the revenue from Kvaerner this quarter and can you break that out Kevin by segment and how much did it contribute to your earnings in the quarter.

The acquisition of Kvaerner continues to in our eyes be a very good acquisition for the company. We are pleased with the integration of that business with our legacy union business, and as I mentioned in the comments, that’s progressing well, and probably quicker than we had probably initially anticipated. The revenues for that business were strong, it contributed about 85 million in the quarter and that kind of split 60% industrial, majority the rest of it is in electrical just a small amount in oil, gas and chemical. But I don’t think that’s probably going to be representative of the long term split of their business. It’s probably going to be higher on the electrical side and a little bit less on the industrial going forward. As you would recall, that business brings power generation to our portfolio and we are pursuing a lot of projects related to power generation right now.

And then the [all in] [ph] contribution Kevin.

It has been accretive. It added around $0.04 in the quarter to our EPS.

And our next question comes from the line of Mike Harrison of First Analysis. Your line is now open.

Just looking at the backlog as it stands today, what can you tell us about the contract structure of some of the projects you have in there, how much risk you are taking on, and are the direct margin implicit in those contracts, are they better than fiscal ’14 or worse, assuming that the execution is where you want it?

When you look at the backlog I think first of all from a contract structure perspective, I don’t think we are taking on undue risk in those projects. We’ve got a pretty diligent risk management process that we go through to try to make sure we’re understanding the risk of the projects were taking on and mitigating risk as we go through the estimation and bidding process. So I think the risk profile is fine, and when you look at the margin perspective of those projects and backlog, I think it does support the margin guidance that we have provided in each of the segments, and it’s not worse, [similarly] I’ve gotten worse from the prior year. So we feel like the backlogs are a good indicator with strong growth there throughout the year, and I feel good about the prospects we’ve already booked.

Maybe if I can, just kind of ask it a different way or a different twist, how much of an increase in labor costs are you expecting in fiscal ‘15, and how much of that can pass along to your customers based on the contract structure, and how much of it could we see pressure the margins.

We’ve talked before on previous calls that there is over the next 2 to 3 years we expect to see a continued pressure on labor availability, that labor availability will have a tendency to drive up costs. For the most part we, and our contracts either through providing on a fixed-price contract providing escalation, negotiating escalation values or negotiating our escalation responsibility; we are been pretty effective in doing that. Certainly on a lot of four reimbursable work that is in the merit area, we have the right in general under contracts to raise our rates as the market forces drive that. On the union side of our business, the labor increases are preset by those contracts, so we know in some cases 2 to 3 years out in the future what those labor rates are going to be. Now saying all that in both cases there will be points in time where we may have to do, either provide travel or subsistence or other living expenses or other incentives in certain areas of the continent to bring people to our track field or our jobsites.

And then just looking at the revenue guidance for next year, a looking at mid to high teens growth overall. Which segments are you most confident that you’re going to see strong growth kind of above that average rate and where are you may be expecting more moderate growth?

I think a lot of it depends on the, as I mentioned before, on the timing of awards. I would say coming out of the box we would expect Storage Solutions to be a strong growth area, if you make it relative to the project we talked about within that happened this year, the sort of surprise project. Electrical Infrastructure, we would expect to be a high growth area, again depending on the timing of awards, particularly on our next large power project, and I think Oil, Gas and Chemical could be a little flat to up depending on scope growth on our projects, and Industrial we expect some strong growth in Industrial.

And our next question comes from the line of Martin Malloy of Johnson Rice. Your line is now open.

With respect to the guidance that you have provided, if I take the midpoint of the revenue range, it looks like it’s about 17% growth from fiscal ‘13 to fiscal ‘14, and I look at the midpoint of the EPS guidance range and it’s about 13% growth. What would be the reasons behind having a lower earnings growth rate than a revenue growth rate? Why would you have negative leverage of SG&A?

It’s not a matter of negative leverage of SG&A, it’s a matter of which segments are growing, and one of the large growth areas as John mentioned will be the Industrial segment. And as I mentioned with the high amount of reimbursable, low-risk work we have in that segment, we don’t expect that segment to be over 10%, it’s going to be 8% to 10% next year. So that has an impact on the overall operating margins.

With respect to the billing environment on the Storage Solutions side, is there any qualitative or quantitative way that you could help us with just the size of the [bid] funnel may be and how it’s changed over the last 6 to 12 months.

And don’t have that number specifically, but I would tell you that the bid funnel has not decreased. So we’re still seeing extremely strong activity from all of our major clients. We are also booking some projects with some not necessary new clients to us, but clients that we haven’t done work for in the last 12 to 18 months. So for us we still see a lot of extremely strong activity throughout North America.

And if you look at the book-to-bill in the fourth quarter for that segment it was about 1.5. So we have almost 210 million of project towards in the [curve], and it’s a variety of projects. It just wasn’t aboveground crude tanks, we had balance of plant terminal work, we had natural gas, we had a LNG in those awards, so I’ll agree with John looks like the strong environment right now.

And our next question comes from the line of Tahira Afzal of KeyBanc. Your line is now open.

First question is on just midstream timing and competitive dynamics you guys might be seeing. This earnings season we’ve seen a lot of [job fairs] on the larger side really cautioning on how some of the cycle is playing out. So we’d like to get your thoughts on how you’ve taken that into your outlook.

So we just commented on the midstream piece which we would say is tanks and terminals. We continue to see that strong, we don’t see any softening there, the downstream markets and say refining. We don’t necessarily see a weakening there. Again it’s all timing for our key clients, so when they’re going to do their turnarounds or their repairs, and so there can be flash spots in the growth of that market from quarter-to-quarter, but there is nothing that we’re seeing that has given us any cause for a pause.

Got it. So I guess what I’m asking is, if you rewind back let’s say six months ago versus today, what has changed in terms of the timing of your end markets? Would it be fair to say may be some of the [final] awards based on your commentary today are taking a little longer to come through, and if that’s the case, are you seeing a more competitive environment in the data.

I don’t think it’s the timing of awards or how long it takes to get from proposal to contract. I don’t think there is any significant change there one way or the other. I think our clients are continuing to behave as they have behaved over the last 12 to 18 months. I would tell you that because of our push to take, as we said in the prepared remarks, larger capital construction positions on some of the bigger jobs in NGLs and power, those things have added a different sort of timing complexity to our estimating portfolio where those projects which were much more permit driven will have a tendency to drive out the amount of time between proposal to award. But even on those, we are seeing opportunities for us where we can still source those on other ones, where we are in a competitive basis where the opportunities have a what I would say as an acceptable amount of competitors. There is not an excessive amount of competitors on those jobs.

Second question is in regards to pricing and again folks I know you’ve kind of talked about this, but I am at a trade show event where in fact a lot of your clients and a lot of your peers and in fact some Matrix folks are here as well, and the big bet is on really welding cost and how much they are going up. So can you tell you, you’ve chartered out higher contractual structures where in terms of your guidance in terms of the margin guidance you’ve now provided. Can you talk a bit about what type of inflation you are baking in for our welders as well?

I don’t know that we’ve baked in any inflation to be honest with you, because the majority of our contracts position us in to a no risk situation whereas if we have a reimbursable project or with a client or even on some projects where we’ve excluded escalation, those costs will be borne by our clients under those agreements. So we’ll pass those costs on, and I can’t speak from contract to contract, some of those contracts will have the ability for us to mark those up, those costs up; some of those may be not and everywhere in between. But we have baked the growth in labor cost in to our pricing.

And when you look at lump sum projects, whenever we are doing a lump sum bid, we are considering the risk and all of the various costs that hit those jobs and we’ll [pack] during the contingency in our estimates to cover those unknowns or uncertainties related to each of the various cost line items which would include the side that you referenced.

Got it, that’s very helpful. Last question is on the electric infrastructure side, outside of power-gen looking at transmission et cetera which you have talked about in the past, is that still an area that you folks are looking at in terms of inorganic growth, and could you talk a bit about how the valuations that are shaping up, I know we’ve had a couple of transactions recently in the space, also would love to get your thoughts.

As we said in our prepared remarks, we still see strength in that market, we still see opportunities for us to grow our business, we are actively moving in to – we’ve had a really strong position in the New Jersey, eastern Pennsylvania area. We are actively moving to have a more presence in the Long Island, we are actually moving to have a more active presence up in New England. We have opened up last year in about 16 months ago an operation in Southern California and service the southwest. Our move with Kvaerner which opens up the door for us in to Ontario and strongly in to the Midwest, the Chicago region, provides us a platform to expand our electrical services. So we still see that as a growth area for us, an opportunity. So whether we are going to do that through acquisitions which we are actively continuing to actively look for or we are going to do that organically, it’s a focus area for us and we continue to have it as our growth and we will. We will do that in an appropriate and measured way so we don’t change the risk and operating margins what we see in that business. I want to quickly open the door to acquisitions. Like we said, we completed the HDB acquisition. HDB for us while it’s a relatively small acquisition creates a foundation for us, in the central valley of California to move more upstream, and then once building our reputation with those clients, take those services and other upstream locations through out the US. So all that acquisition was small in nature, it’s our intention to add our leadership and financial strength there as well as knowledge of the clients and customer base with our leadership teams to join leadership teams to expand that business. So we are actively continuing to look at acquisitions throughout North American and throughout all of our segments and we still expect acquisitions to be a key part of our growing the business.

Our next question comes from the line of Tristan Richardson of D. A. Davidson. Your line is now open.

Most of my questions have been answered, but I’m just very curious about the schedule on backlog and in terms of your visibility, with backlog where it is now pretty elevated levels. I mean, can you see beyond ’15, I mean is there some work in hand now that is executed in ‘16 or is most of this ‘15 work.

I’ll tell you, it’s probably, let’s say 80% of the backlog gets worked off within the year, 75% to 80%. So we’ve got some visibility, we’ve also got a lot of visibility into the project that we’re tracking through our funnel and a lot of projects we are pursuing right now will definitely be longer term in nature and will impact fiscal ‘15 some but also fiscal ‘16 and ’17.

On exclusive agreement on the tank side, you sort of constantly in discussion and sharing information about what the customer is seeing for ‘15 and beyond, or is it more sort of a as these projects come up and more just kind of normal project type discussion.

We have a couple of midstream clients that we work in partnership with. One of them that I can speak personally about which I am on the steering committee for what the clients exactly obtained, because we have visibility on five years. There are spending plans for the infrastructure the US and Canada. So we have some pretty long-term visibility there, we know what they’re going to put in place, and it’s pretty extensive. So these are projects that are – they woke up one morning and had a great idea and decided to go put some tanks and cover it over into Saskatchewan one day. They know what they’re going to do and where they will spend their money and in what year they are going to do it in.

So it’s fair to say that you guys have visibility beyond just the work in hand, as opposed to backlog number.

Absolutely.

And then just a little bit on the electrical business, and sort of the margin assumptions that you guys have there. How do you guys plan for strong work, I know that’s highly, unpredictable, do you include some normalized level of storm work in your outlook or any storm work would be entirely incremental.

We include a very small amount of storm work in our numbers. That’s a feast or famine kind of business, and so we’ve seen, we will track it long enough. We had a couple of years ago hurricane Sandy, it had a huge impact on the quarter, but this year we had minimal storm work. So we take a pretty conservative view on how potential storm work will effect our year.

That’s helpful, and then just lastly on HDB, it seems like dipping a toe in to the upstream side of things. I am curious sort of what does that become longer term for Matrix, how quickly does that grow and does that go in to other areas North Dakota or west Texas. Could talk a little bit about what you see longer term for HDB.

HDB will become and immediately became Matrix Service Company, so we rolled it immediately into our organization. So we think what that does is gives as an instant resume with the upstream clients, clients that are operating in the Central Valley there like [Oxy] are also operating in the Permian and West Texas. So we see our ability here over time as they gain comfort with us, as they are able to give, they would give us larger projects and then we give HDB just because of our size and bench strength and we execute on those projects, that will open the door for us to move in to some of the other areas with say that client. So we as that as certainly as a spring board in to other areas where those clients are working. All the major clients are there like I said Oxy, Chevron, but I would also say that we are continuing to look for acquisitions in those other regions that would be accelerate that springboard.

And our next question comes from the line of Robert Connors of Stifel. Your line is now open.

If I exclude the charges taken in fiscal 2014 from the Storage Solutions segment, I calculate that it did a gross profit margin of about 12.6 versus the reported 11.2. So I’m just wondering if you are seeing the opportunity for margins to sort of step up into that segment, not necessarily in to ‘15, but as we step up further and get past probably some of this problem projects we are in right now.

As I said in my comments, I believe we can achieve the upper end of our 11% to 13% range going above that. At this point I’m not ready to say we’re going to hit above that. It is possible with good execution. The markets definitely strong as we’ve said, so nothing is out of the realm of possibility, but we feel good forecast at the upper end of the range.

I guess it’s sort of strikes me to with given the revenue guidance and fairly decent margins in the quarter with what you guys see for 2015 earnings, but is there anything sort of below the operating line that could pop up as a surprise. I know that over the past couple of quarters, maybe minority tend to just spike up, whereas in the past it’s never really been an issue with you guys.

The minority interest relates to one joint venture project and we kind of have a pretty good handle on what that’s going to be. I don’t think there’s really anything below the line, other than tax, tax can create a bit of volatility. You may notice this quarter the tax rate was a little bit higher than it had been, it was still less than 40%, but it was above our guidance of 37. So is dependent on when tax legislation gets approved assuming warranty gets renewed at the end of December again, if that will have an impact that would be positive. Depending on the level, the mix of work we have, how much of our work is new construction versus repair and maintenance. If it’s more new construction that can have a positive impact on the tax rate, and plus how much is in Canada versus the US can also have an impact. So we forecast 37% on the tax rate, I think that’s a good forecast, but it does have a risk through variability. That’s really the only thing below the line that I think has a big risk, since we don’t have a lot of debt outstanding.

The other thing I would add to Kevin’s comment, there is that, during the course of any year and into the budgets of the following year, we don’t add in any improved performance on any of our projects. So we don’t make any assumptions going in that we are going to have a massive overall absorption out of one of our operating units or that we are going to convert a lot of contingency in the margin. So those can have a tendency to skew the gross margins positively, but they are not a slam-dunk. Those things are dependent very highly on performance, they are dependent very highly on the amount of extra work, the clients give us, and so they can have a tendency to move those gross margins around inside that range, we give you.

How is your outlook for contingency, are there quite a bit of opportunities for it to roll it back in to the numbers in 2015?

So it depends on who you talk to. So if you talk to our project managers, they would say no. If you talk to the guys sitting in this room, we would say yes. So I don’t think we can comment on that. I mean it’s our markets and our construction work has got a lot of variables in it and there’s a lot of thing that can happen. So we don’t count on that happening when we go into a year. So as we get closer closing jobs out and understand where the progress has been made on the sites against the budgets then were able to make a determination whether any contingency can be converted.

Just for a quick, you mention that a minority what would be the run rate on that on a quarterly basis?

Let me think about that a second. Is bound to be less than 2 million quarter, I would think. It’s success is one project. I think it’s probably going to be a 1.5 million to 2 million a quarter.

For the minority line.

Yes.

And our next question comes from the line of Mike Shlisky of Global Hunter Securities. Your line is now open

Most of them have actually been answered, but a few questions earlier were about constraints on the labor force. I was just kind of wondering, especially in the Gulf area can you see constraints on obtaining trucking services or obtaining trucks, as well as any constraints on obtaining the actual like creams and things like equipment to actually get the contracts done or is that still not going to be a issue for you guys.

I can’t say that that’s right or wrong, that has not bubbled up to me that that’s an issue, we have not heard of that, at any of our project reviews or operations reviews. That’s not to say that that’s not an issue and our guys are doing a phenomenal job or working through it and planning ahead. So I can’t tell you whether that’s right or wrong.

So if that were to take place in ‘15 and your contract structure is it similar to the labor where you couldn’t put in an escalator or other [clause] to kind of insulate you from any increased trucking cost, well that may be, that could be an issue if it were to actually take place.

So a lot of our trucking, for instance in our storage business, we don’t own our trucking to truck our fabricated parts, we go by truck or rail, and we’ve got long term agreements with those transportation companies to provide us that services, so I am not sure how much risk we have there. And then a lot of our other projects, the delivery of the key pieces of equipment to the side is by the vendor and so I don’t know that that’s a huge risk for us, trucking.

Hey John while we got this quick break, I want to go back to the previous question. I was just been informed in air in my forecast. I gave an annual forecast of 1.5 million to 2 million on the minority interest, so that was a quarterly forecast that was really the amounts. So the quarterly is 0.5 million a quarter.

And next question comes from the line of Fran Okoniewski of Friess Associates. Your line is open.

I put wanted to circle back to the Q4 project charges. Is there any possibility for any recourse or negotiations for any potential reversal of the charge given that you guys at least in my impression were brought in by the customer to fix some construction related issues, is that possible?

No, no, those are two separate projects, so the project that’s associated with the charge is a project only unrelated to the extremely large balance of plant project we talked about. So they are two different projects. To answer your question is that we assume and while we are not talking a lot about it, but we assumed within our development of the project forecast that there would be some change of orders from the client that we would recover, and that those I would say are conservative assumptions, but they are assumptions on how we think that those negotiations of those change of orders will go. It will not be our expectation to have a windfall recovery beyond those expectations.

And our next question comes from the line of Mike Harrison of First Analysis. Your line is now open.

Sorry I did have another clarification on the non-controlling interest, but you cleared it up. So maybe just wanted to ask with everything that we’re hearing about real capacity and some of the difficulty that people are having getting crude oil transported from where it’s produced to where it’s needed. Is that helping or hindering your business right now in terms of projects going forward?

I think there was an overall logjam in the logistics of moving oil from belt of the new producing regions to the users and the distribution networks as a positive thing for us. I think that’s one of the reasons, one of the things that’s driving demand.

(Operator Instructions) and our next question comes from the line of Matt Duncan of Stephens. Your line is now open.

Hey Kevin, I think you clarified the issue on the minority interest, but just how much longer is the project going on. So it’s 1 million probably 2 million a year for how long?

Well I think that’s completed in this fiscal year is it not John?

Yes. Well a majority of the heavy construction we are anticipating to be complete in this calendar year with other elements of the project continuing on until next spring. But what we consider the higher risk elements to be completed this calendar year.

So John the FY ’16 year then we shouldn’t be modeling anything for the non-controlling interest, it’s gone by then.

Yes.

The last thing from me on the just on the M&A funnel, what’s that looking like at this point.

So the M&A funnel looks pretty strong, we’ve got continued at all time, it seems to have three or four companies that fit our strategic goals, in-house we are turning through. We are not looking at any currently have any transformative or large deals, most of them would be of the smaller nature may be not HDB size. But we’ve got what we think is a very good pipeline, a very good a desiccation going of about contract or opportunities that fit our profile, and so we are pretty excited about where we are at on that, and our ability to - everyone of these we do, we get better at it, and we have the financial resources to close those deals and so again we think that we’ll continue to be part of our growth and diversification strategy.

And I’m showing no further questions at this time. I would now like to turn the call back over to management for any closing remarks.

Thank you everybody for participating on today’s call. As we close this call. I would leave you with this. We’re very confident in our strategy, it has proven to be effective. We have demonstrated our ability to deliver on that strategy, and we are going to continue to make the necessary investments in our own infrastructure to support the current and future growth. So Matrix Service Company you solid investment opportunity and one that will continue to deliver a long-term sustainable and strong shareholder value. So we look forward to talking with all of you in the future, thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Have a great day everyone.