MT. AIRY, N.C., May 8 /PRNewswire-FirstCall/ -- Pike Electric Corporation
(NYSE: PEC) today announced the results for its fiscal third quarter ended
March 31, 2008.
Fiscal 2008 Third Quarter Results
Total revenues for the third quarter of fiscal 2008 were $131.4 million,
compared to $154.3 million in the third quarter of fiscal 2007. Core powerline
revenues for the third quarter of fiscal 2008 were $120.3 million, as compared
to $135.1 million for the third quarter of fiscal 2007. Core powerline
revenue per billable hour increased 2.7% year over year, reflecting more
favorable pricing from contract renegotiations and the elimination of certain
accounts that did not meet the Company's profitability goals. Core powerline
billable hours decreased 13.3% year over year in the quarter primarily due to
reduced headcount as a result of the exiting of certain contracts and a
moderation in utility customer spending. Storm restoration revenues totaled
$11.1 million for the third quarter of fiscal 2008, compared to $19.2 million
for the third quarter of fiscal 2007.
Gross profit for the third quarter of fiscal 2008 was $20.8 million, or
15.8% of revenue, compared to $27.5 million, or 17.8% of revenue, for the
third quarter of fiscal 2007. The 200 basis point decline in gross margin
year over year was primarily due to a lower contribution from higher margin
storm restoration revenues, higher fuel prices, and the impact of lower
revenue on direct overhead costs.
General and administrative expenses for the third quarter of fiscal 2008
were $10.4 million, or 7.9% of revenue, compared to $12.4 million, or 8.1% of
revenue, for the third quarter of fiscal 2007. This decrease is primarily
related to lower legal fees and a decrease in Sarbanes-Oxley compliance
expenses. Interest expense decreased 34.1% to $3.3 million compared to the
third quarter of fiscal 2007 primarily due to lower debt balances.
Net income for the third quarter of fiscal 2008 totaled $4.3 million, or
$0.13 per diluted share, compared to net income of $6.0 million, or $0.18 per
diluted share, for the third quarter of fiscal 2007.
The Company continued its significant debt reduction initiative with
payments of $27.0 million in the third quarter. Pike Electric has reduced
total debt by $51.0 million during the first nine months of fiscal 2008 and
$74.0 million during the last twelve months.
"The challenging economic environment that has impacted Company results
over the past few quarters continued in the fiscal third quarter as utility
customers further reduced distribution spending," stated J. Eric Pike,
Chairman and Chief Executive Officer of Pike Electric. "While our core
powerline revenues remained under pressure, we were encouraged by growth in
new business across our service territories that will start to contribute as
we progress through the coming year. We believe the strength of our business
model and our dedication to service excellence continue to differentiate us
from our competition. This model allows Pike the flexibility to provide our
customers budgetary assistance during down economic cycles and construction
crew growth during economic up cycles. This short term revenue flexibility is
a key to our long term partnerships. In addition, we continue to focus our
efforts in this environment on maintaining profitability, building the quality
of our workforce, and paying down debt, so we are well positioned to
capitalize on the long-term growth opportunities we expect our customers to
need as their historic workloads return."
"Early indications from our customers suggest that maintenance and new
construction spending on overhead distribution work is starting to show early
signs of recovery as we had anticipated," continued Mr. Pike. "Looking ahead,
we expect to begin to modestly increase our headcount towards the end of the
fiscal fourth quarter and anticipate a gradual improvement in customer
spending levels as we progress through fiscal 2009."
Nine Months Ended March 31, 2008 Results
Total revenues for the nine months ended March 31, 2008 were $414.2
million, as compared to $452.5 million for the nine months ended March 31,
2007. Core powerline revenues were $378.7 million for the nine months ended
March 31, 2008, as compared to $406.9 million for the same period in fiscal
2007, as a 6.7% increase in core powerline revenue per billable hour was
offset by the 12.8% decline in core powerline billable hours. Storm
restoration revenues totaled $35.5 million for the nine-month period ended
March 31, 2008 compared to $45.6 million in fiscal 2007. Gross profit totaled
$68.5 million for the nine months ended March 31, 2008, as compared to $71.8
million for the same period in fiscal 2007. Gross profit as a percentage of
revenue was 16.5% for the first nine months of fiscal 2008, as compared to
15.9% for the same period in fiscal 2007 due to operational efficiency
improvements and the successful elimination of certain lower margin accounts
and services during fiscal 2007, partially offset by a lower contribution from
higher margin storm restoration revenues, higher fuel prices, and the impact
of lower revenue on direct overhead costs.
General and administrative expenses for the first nine months of fiscal
2008 were $31.3 million, or 7.5% of revenue, compared to $34.7 million, or
7.7% of revenue, for the first nine months of fiscal 2007. This decrease is
primarily related to lower legal fees and a decrease in Sarbanes-Oxley
compliance expenses. Interest expense decreased 24.9% to $11.5 million
compared to the first nine months of fiscal 2007 primarily due to lower debt
balances.
Net income for the first nine months of fiscal 2008 totaled $14.6 million,
or $0.44 per diluted share, compared to net income of $12.8 million, or $0.38
per diluted share, for the first nine months of fiscal 2007.
Outlook
The Company now expects fiscal year 2008 core powerline revenues to range
from $500 million to $510 million revised from its prior expectation of $520
million to $530 million. This revision is primarily due to higher than
anticipated storm work in the fiscal third quarter, which temporarily diverted
some core powerline revenues, and a slower than expected recovery in customer
spending. The Company continues to expect total gross profit margins for the
full year of fiscal 2008 to be in the range of 16% to 17% and general and
administrative expenses to be in a range of 7% to 8% of revenues.
Storm restoration revenues are unpredictable from year-to-year, and are
entirely dependant on the weather. The Company's fiscal year 2008 core
powerline revenue guidance assumes no storm work for the balance of the year.
Any significant variations in storm restoration revenues may result in
year-to-year fluctuations in core powerline revenue growth.
Conference Call
Pike Electric will host a conference call today to discuss financial
results for its fiscal third quarter ended March 31, 2008 at 5:00 p.m. EDT on
May 8, 2008. This call is being web cast and can be accessed by visiting the
Investor Relations section of the Company's website at www.pike.com. The call
can be accessed live over the phone by dialing (888) 228-5293, or for
international callers, (913) 312-0422. A replay will be available shortly
after the call and can be accessed by dialing (888) 203-1112, or for
international callers, (719) 457-0820. The passcode is 7654247. The replay
will be available until May 15, 2008.
About Pike Electric
Pike Electric is one of the largest providers of outsourced electric
distribution and transmission services in the United States. Its core
activities consist of the maintenance, upgrade and extension of electric
distribution and sub-500 kilovolt transmission powerlines for more than 150
electric utilities, cooperatives and municipalities. Pike Electric services a
contiguous 19-state region that stretches from Pennsylvania in the north to
Florida in the southeast and Texas in the southwest and is a recognized leader
in storm restoration services. The Company's common stock is traded on the New
York Stock Exchange under the symbol PEC. For further information regarding
Pike Electric, visit the Company's website at www.pike.com.
Safe Harbor
This press release contains forward-looking statements that relate to Pike
Electric's plans, objectives and estimate, and include those in the "Outlook"
section above. These statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and speak
only as of the date of this release. The terms "should," "believe," "plan,"
"expect," "anticipate," "estimate," "intend" and "project" and similar words
or expressions are intended to identify forward-looking statements. Various
risks, uncertainties and other factors could cause actual results to differ
materially from those expressed in any forward-looking statements. For a more
detailed list of such risks, uncertainties and factors, please refer to the
Risk Factor section of Pike Electric's Annual Report on Form 10-K for the
fiscal year ending June 30, 2007 and in its other filings with the Securities
and Exchange Commission. Pike Electric makes no commitment to update any
forward-looking statement or to disclose any facts, events, or circumstances
after the date of this release that may affect the accuracy of any
forward-looking statement, except as may be required by applicable law.
PIKE ELECTRIC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three months ended Nine months ended
March 31, March 31,
2008 2007 2008 2007
Revenues $131,362 $154,272 $414,213 $452,496
Cost of operations 110,607 126,751 345,717 380,723
Gross profit 20,755 27,521 68,496 71,773
General and administrative
expenses 10,377 12,428 31,253 34,706
Loss on sale and impairment
of property and equipment 93 349 2,076 847
Income from operations 10,285 14,744 35,167 36,220
Other expense (income):
Interest expense 3,327 5,053 11,473 15,275
Other, net (43) (83) (168) (199)
Total other expense 3,284 4,970 11,305 15,076
Income before income taxes 7,001 9,774 23,862 21,144
Income tax expense 2,718 3,810 9,217 8,358
Net income $4,283 $5,964 $14,645 $12,786
Earnings per share:
Basic $0.13 $0.18 $0.45 $0.40
Diluted $0.13 $0.18 $0.44 $0.38
Shares used in computing
earnings per share:
Basic 32,844 32,505 32,791 32,359
Diluted 33,605 33,377 33,655 33,278
PIKE ELECTRIC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
March 31, June 30,
2008 2007
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $4,466 $1,467
Accounts receivable from customers, net 47,708 59,603
Work completed not billed 42,360 44,527
Inventories 8,709 8,535
Prepaid expenses and other 6,646 6,219
Deferred income taxes 15,440 13,633
Total current assets 125,329 133,984
Property and equipment, net 235,627 267,740
Goodwill 94,402 94,402
Other intangibles, net 40,855 43,228
Deferred loan costs, net 2,983 4,482
Other assets 1,463 1,661
Total assets $500,659 $545,497
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $8,624 $8,503
Accrued compensation 20,568 20,597
Accrued expenses and other 4,147 4,447
Income taxes payable 1,112 6,146
Current portion deferred compensation 4,717 3,544
Current portion of insurance claim accruals 27,742 26,669
Total current liabilities 66,910 69,906
Long-term debt, net of current portion 140,500 191,500
Insurance and claim accruals, net of current
portion 9,595 10,894
Deferred compensation, net of current portion 6,168 9,315
Deferred income taxes 62,265 67,259
Other liabilities 1,948 562
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.001 per share;
100,000 shares authorized; no shares issued and
outstanding - -
Common stock, par value $0.001 per share; 100,000
shares authorized; 33,147 and 32,916 shares
issued and outstanding at March 31, 2008 and
June 30, 2007, respectively 6,427 6,426
Additional paid-in capital 147,255 142,849
Accumulated other comprehensive income (loss),
net of taxes (1,849) (8)
Retained earnings 61,440 46,794
Total stockholders' equity 213,273 196,061
Total liabilities and stockholders' equity $500,659 $545,497
SOURCE Pike Electric Corporation
