Baker Announces Financial Results for Third Quarter and First Nine Months of 2012
Company Adopts Comprehensive Plan to Improve Performance and Deliver Value to Shareholders, Including a $0.14 /Share Quarterly Dividend
PITTSBURGH--(BUSINESS WIRE)-- Michael Baker Corporation (BKR) today reported its financial results for the third quarter and first nine months of 2012. The Company also announced that its Board of Directors had adopted a comprehensive plan to improve performance and deliver value to shareholders, including a $0.14 per share quarterly dividend payable on December 19, 2012, to shareholders of record on November 28, 2012.
Results of Operations
For the quarter, Baker reported net income from continuing operations of $0.7 million, or $0.07 per diluted share, on total contract revenues of $145.2 million. This compares to net income from continuing operations of $7.1 million, or $0.76 per diluted share, on total contract revenues of $131.1 million in the third quarter of 2011.
The $14.1 million period-over-period increase in revenues was driven primarily by the addition of $23.1 million in revenues from RBF, which Baker acquired on October 1, 2011, partially offset by a decrease in work performed for the Department of Defense. The decrease in net income is attributable primarily to lower utilization, the impact of unfavorable project mix, and an increase in acquisition-related amortization expenses. This was partially offset by the addition of RBFs gross profit and the recognition of certain non-recurring overhead adjustments related to the Companys FEMA contracts for several prior contract years.
Total backlog for continuing operations at September 30, 2012, increased to $1.65 billion, as compared to $1.59 billion at December 31, 2011. Of these totals, $635 million and $685 million, respectively, are considered funded backlog.
For the first nine months of 2012, the Company reported income from continuing operations of $4.3 million, or $0.45 per diluted share, on total contract revenues of $452.2 million, compared with income from continuing operations of $12.8 million, or $1.38 per diluted share, on total contract revenues of $382.2 million in the first nine months of 2011.
The full-year forecasted effective income tax rate for continuing operations was 44.0 percent and 37.5 percent at September 30, 2012 and 2011, respectively.
As we have said previously, general market conditions for many U.S. engineering firms remain challenging and we continue to see delays in major projects, said Bradley L. Mallory, president and chief executive officer. While we remain cautiously optimistic that the business environment will improve going forward, we are not content to wait for that improvement. Instead, we have adopted a comprehensive plan to improve our performance and deliver value to our shareholders.
Performance Improvement Plan
During the third quarter, Baker completed an organizational realignment designed to increase work sharing, enhance cross selling and improve utilization. The Company also adopted a performance improvement plan designed to reduce its cost structure by approximately $18.0 to $20.0 million in 2013, with estimated one-time expense costs to achieve these savings of $1.0 million, substantially all of which will be incurred in the fourth quarter of 2012. Progress against this Performance Improvement Plan will be monitored by a special committee of the Board of Directors.
With the completion of our acquisitions of LPA in 2010 and RBF in 2011, we successfully expanded our geographic footprint in the U.S., and we intend to focus on maximizing the potential cost and revenue synergies that we believe those firms present, added Mallory. While we may consider other potentially accretive add-on acquisitions, we expect to focus squarely in the near and intermediate term on furthering integrating LPA and RBF, as well as on the improvement of our overall results of current operations.
Delivering Value to Shareholders
At September 30, 2012, Baker had a cash balance of $67.1 million and no debt, demonstrating that it continues to generate positive cash flow from operations despite difficult business conditions. In consideration of the Companys financial resources and its focus on improving organic results rather than pursuing significant acquisitions, the Board of Directors has adopted a policy to pay regular quarterly dividends. Accordingly, the Board declared a cash dividend of $0.14 per share, payable on December 19, 2012, to shareholders of record on November 28, 2012.
Additionally, the Board authorized the repurchase of up to $10.0 million of the Companys common shares. Shares may be repurchased from time to time for cash in open-market or privately-negotiated transactions in accordance with applicable securities laws. The Company will determine the timing and amount of any repurchase based on its evaluation of market conditions, share price and other factors. The share repurchase program has no pre-established closing date and may be initiated, suspended or discontinued at any time.
The Board believes in Bakers long-term prospects and is committed to seeking to deliver value to shareholders, said Richard L. Shaw, chairman. The Board will actively monitor the progress of the Performance Improvement Plan and take whatever actions we can to assure that its objectives are met.
Michael Baker Corporation (www.mbakercorp.com) provides engineering, design, planning and construction services for its clients most complex challenges worldwide. The firms primary business areas are architecture, aviation, defense, environmental, geospatial, homeland security, municipal & civil, oil & gas, rail & transit, telecommunications & utilities, transportation, urban development and water. With more than 3,000 employees in over 100 offices across the United States, Baker is focused on creating value by delivering innovative and sustainable solutions for infrastructure and the environment.
Michael Baker Corporation has scheduled a conference call and webcast for Friday, November 9, at 9:00 a.m. EST, to discuss the third quarter and first nine months results. Please call 877-769-6805 at least 10 minutes prior to the start of the call. To access the webcast, please visit the investor relations portion of Bakers website at www.mbakercorp.com.
(The above information contains forward-looking statements concerning our future operations and performance. Forward-looking statements are subject to market, operating and economic risks and uncertainties that may cause our actual results in future periods to be materially different from any future performance suggested herein. Factors that may cause such differences include, among others: the events described in the Risk Factors section of our 2011 Form 10-K; increased competition; increased costs; changes in general market conditions; changes in industry trends; changes in the regulatory environment; changes in our relationship and/or contracts with the Federal Emergency Management Agency (FEMA); changes in anticipated levels of government spending on infrastructure; changes in loan relationships or sources of financing; changes in management; changes in information systems; and divestitures and acquisitions. Such forward-looking statements are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.)
|For the three months||For the nine months|
|ended September 30,||ended September 30,|
|(In thousands, except earnings per share)||2012||2011||2012||2011|
|Income before income taxes and noncontrolling interests||$||1,617||$||9,673||$||7,920||$||19,218|
|Net income from continuing operations before noncontrolling interests||$||838||$||7,295||$||4,888||$||13,631|
|Income from discontinued operations, net of tax||322||116||822||101|
|Less: Income attributable to noncontrolling interests||179||178||585||814|
|Net income attributable to Michael Baker Corporation||$||981||$||7,233||$||5,125||$||12,918|
|Earnings per share:|
|(In millions)||For the three months||For the nine months|
|ended September 30,||ended September 30,|
|Total gross profit||22.8||27.1||72.1||75.7|
|Total operating income||$||1.4||$||9.4||$||6.0||$||18.7|
|(In millions)||September 30,||December 31,|
Condensed Balance Sheet
|(In thousands)||September 30,||December 31,|
|Cash and cash equivalents||$||67,055||$||36,050|
|Available for sale securities||-||12,323|
|Unbilled revenues on contracts in progress||73,087||77,713|
|Prepaid expenses and other||15,796||16,100|
|Total current assets||260,115||246,277|
|Property, plant and equipment, net||17,346||20,903|
|Goodwill and other intangible assets, net||96,772||104,505|
|Other long-term assets||8,132||8,189|
|LIABILITIES & SHAREHOLDERS' INVESTMENT|
|Accrued compensation and insurance||38,400||36,366|
|Billings in excess of revenues on contracts in progress||24,588||24,064|
|Other accrued expenses||24,741||27,677|
|Total current liabilities||127,246||132,541|
|Other long-term liabilities||27,043||26,704|
|Additional paid-in capital||68,600||66,218|
|Accumulated other comprehensive loss||-||(90||)|
|Less - Treasury shares||(5,160||)||(4,888||)|
|Total Michael Baker Corporation shareholders' investment||227,329||219,912|
|Total shareholders' investment||228,076||220,629|
|Total liabilities & shareholders' investment||$||382,365||$||379,874|
Michael Baker Corporation
David Higie, 412-269-6449
Source: Michael Baker CorporationCopyright Business Wire 2012