Exhibit 99.1
Pike Electric Reports Second Quarter and First Half Fiscal 2006 Results
Record Storm Restoration Revenues; Record Earnings
MOUNT AIRY, N.C., Feb. 7 /PRNewswire-FirstCall/ -- Pike Electric Corporation (NYSE: PEC), one of the nation’s largest providers of outsourced electric distribution and transmission services, today announced its financial results for the three and six months ended December 31, 2005. Revenues increased 31% to $195.7 million and earnings increased to $0.41 per diluted share for the quarter ended December 31, 2005 and for the six months, revenues increased 12% to $414.2 million and earnings increased to $0.99 per diluted share compared to the same periods in the prior year.
“Our record second quarter and six month results exceeded our expectations due to the extraordinary storms that affected our customers during the past six months,” said J. Eric Pike, chairman and chief executive officer. “We remain optimistic about our prospects for the remainder of fiscal 2006 as we continue to leverage our industry leading position. We intend to do this by capitalizing on the favorable industry trends of increased customer outsourcing, upgrade requirements for the country’s distribution and transmission infrastructure and by market share gains through operational excellence and our storm restoration efforts.”
Second Quarter Results
For the second quarter, revenues increased 31.0% to $195.7 million from $149.4 million for the same quarter a year ago. This increase was due to a $51.5 million increase in storm revenue, offset by a slight decrease of $5.2 million in powerline revenue for the second quarter of fiscal 2006 compared to the same period in the prior year. Storm revenues represented 36.5% of revenues for the quarter compared to 13.4% in the prior year. Pike Electric experienced record storm restoration revenues in the current year’s second quarter as a result of continued restoration efforts relating to Hurricanes Katrina and Rita, which hit in September, and Hurricane Wilma in October, as well as ice storms affecting Pennsylvania, Georgia, South Carolina and North Carolina. Powerline revenues were $124.2 million for the second quarter, a 4.0% decrease compared to powerline revenues of $129.4 million in the quarter a year ago, as a result of the displacement of labor from powerline to the significant storm work experienced in the quarter.
Second quarter net income totaled $13.6 million, or $0.41 per diluted share, compared to a net loss of ($1.5) million, or ($0.05) per diluted share, for the second quarter of the prior year. The prior year loss included charges related to our common stock recapitalization in December 2004 and discontinued deferred compensation related to our Red Simpson acquisition of $4.6 million on an after tax basis. The increase in net income in the second quarter of fiscal 2006 over 2005 is primarily the result of increased storm revenues.
The Company completed an amendment of its credit facility in December 2005, which increased availability under its revolving line of credit to $90 million from $70 million as well as included an immediate 50 basis point reduction in borrowing costs on both the revolving and term portions of the credit facility. This amendment also provides for an increased level of lease expense and allows the Company to make cash dividends to shareholders upon achieving certain defined leverage ratios.
Six Month Results
For the six months ended December 31, 2005, revenues increased 12.0% to $414.2 million from $369.8 million for the six months ended December 31, 2004. This increase of $44.4 million was due to a $34.0 million increase in storm revenue and a $10.4 million increase in powerline revenue for the six months ended December 2005 compared to the same period in the prior year. Storm revenues represented 40.1% of revenues for the six months compared to 35.8% in the prior year. Pike Electric experienced record storm restoration revenues in the current year’s six months ended December 31, 2005 due to the extremely active and intense hurricane season. For the six months ended December 31, 2005, powerline revenues were $248.0 million, a 4.4% increase compared to powerline revenues of $237.6 million in the prior year’s six months.
For the six months ended December 31, 2005, net income increased 36.8% to $31.1 million, or $0.99 per diluted share, compared to net income of $22.7 million, or $0.66 per diluted share for the six months of the prior year. The increase in net income in the current year six months is primarily the result of increased powerline and storm revenues compared to the prior year.
Outlook
“We exceeded our previous storm revenue estimates for the year and now expect total revenues for the fiscal year of between $730-$740 million, with minimal storm revenues for the remainder of the fiscal year,” Mr. Pike said. “We cannot accurately predict our storm revenues in terms of which quarter they will occur or the level of revenues generated from storm events. We continue to expect to grow revenues and earnings at or near double digit levels over the long term, while maintaining our industry-leading operating margins.”
Conference Call
Pike Electric’s conference call to discuss its second quarter and six months results is scheduled for 10:30 a.m. EST today, February 7, 2006. This call will be available live and by replay over the Internet at http:///www.pike.com in the Investor Relations section.
About Pike Electric
Pike Electric is one of the largest providers of outsourced electric distribution and transmission services in the United States. Our 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. Our 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 estimates. The terms “should,” “believe,” “plan,” “expect,” “anticipate,” “estimate,” “intend” and “project” and similar words or expressions are intended to identify forward-looking statements. Forward-looking statements include those contained in the “Outlook” section of this release. 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. Pike Electric’s business is subject to numerous risks and uncertainties, including: that a significant portion of revenues are from a small group of customers and these customers have no obligation to assign work to us and these arrangements are generally terminable on short notice; it may not be able to realize the anticipated benefits of its acquisition in 2004 of Red Simpson; its storm restoration revenues are highly volatile and unpredictable; its business is subject to numerous hazards that could materially affect business results and current insurance may not be adequate; and demand for services may be cyclical and vulnerable to industry and economic downturn. These and other risks and uncertainties detailed in the Risk Factor section of its Annual Report on Form 10-K for the fiscal year ending June 30, 2005 and in other filings with the Securities and Exchange Commission could cause actual results and experience to differ materially from those expressed or implied by any of these forward- looking statements. To the extent permitted by applicable law, 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.
PIKE ELECTRIC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
(unaudited)
| | Quarter ended
December 31, | | Six months ended
December 31, | |
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| | 2005 | | 2004 | | 2005 | | 2004 | |
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Revenues | | $ | 195,725 | | $ | 149,404 | | $ | 414,156 | | $ | 369,774 | |
Cost of operations | | | 156,291 | | | 133,048 | | | 326,067 | | | 291,459 | |
Gross profit | | | 39,434 | | | 16,356 | | | 88,089 | | | 78,315 | |
General and administrative expenses | | | 11,084 | | | 13,130 | | | 22,149 | | | 25,322 | |
Loss on sale of property and equipment | | | 204 | | | 33 | | | 349 | | | 46 | |
Income from operations | | | 28,146 | | | 3,193 | | | 65,591 | | | 52,947 | |
Other expense (income): | | | | | | | | | | | | | |
Interest expense | | | 5,705 | | | 4,960 | | | 13,853 | | | 14,844 | |
Other, net | | | (84 | ) | | (22 | ) | | (105 | ) | | (79 | ) |
Total other expense | | | 5,621 | | | 4,938 | | | 13,748 | | | 14,765 | |
Income before income taxes | | | 22,525 | | | (1,745 | ) | | 51,843 | | | 38,182 | |
Income tax expense | | | 8,954 | | | (275 | ) | | 20,757 | | | 15,453 | |
Net income | | $ | 13,571 | | $ | (1,470 | ) | $ | 31,086 | | $ | 22,729 | |
Earning per common share: | | | | | | | | | | | | | |
Basic | | $ | 0.43 | | $ | (0.05 | ) | $ | 1.03 | | $ | 0.67 | |
Diluted | | $ | 0.41 | | $ | (0.05 | ) | $ | 0.99 | | $ | 0.66 | |
Weighted average common shares outstanding: | | | | | | | | | | | | | |
Basic | | | 31,833 | | | 32,275 | | | 30,314 | | | 33,898 | |
Diluted | | | 33,025 | | | 32,275 | | | 31,488 | | | 34,355 | |
PIKE ELECTRIC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| | December 31,
2005 | | June 30,
2005 | |
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| | (Unaudited) | | (Audited) | |
ASSETS | | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | $ | 1,814 | | $ | 3,106 | |
Accounts receivable, net | | | 123,006 | | | 60,690 | |
Work completed not billed | | | 52,215 | | | 64,568 | |
Inventories | | | 8,699 | | | 7,321 | |
Prepaid and other | | | 3,924 | | | 11,205 | |
Deferred income taxes | | | 5,162 | | | 4,838 | |
Total current assets | | | 194,820 | | | 151,728 | |
Property and equipment, net | | | 287,835 | | | 281,842 | |
Goodwill | | | 94,400 | | | 91,826 | |
Other intangibles, net | | | 52,580 | | | 55,128 | |
Deferred loan costs, net | | | 7,563 | | | 9,879 | |
Other assets | | | 2,375 | | | 2,052 | |
Total assets | | $ | 639,573 | | $ | 592,455 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
Current liabilities: | | | | | | | |
Accounts payable and accrued expenses | | $ | 41,506 | | $ | 53,417 | |
Income taxes payable | | | 11,711 | | | — | |
Current portion deferred compensation | | | 10,185 | | | 12,202 | |
Current portion of insurance claim accruals | | | 10,912 | | | 4,938 | |
Current portion of long-term debt | | | — | | | 250 | |
Revolving credit facility | | | 20,500 | | | 11,500 | |
Total current liabilities | | | 94,814 | | | 82,307 | |
Long-term debt, net of current portion | | | 286,050 | | | 407,750 | |
Deferred compensation, net of current portion | | | 12,082 | | | 16,904 | |
Insurance and claim accruals, net of current portion | | | 13,759 | | | 13,484 | |
Redeemable preferred stock | | | | | | | |
Deferred income taxes | | | 69,474 | | | 71,467 | |
Other liabilities | | | 2,416 | | | 60 | |
Stockholders’ equity: | | | | | | | |
Common stock, par value $0.001 per share; 100,000 shares authorized; 21,484 and 32,005 shares issued and outstanding at June 30, 2004 and December 31, 2005, respectively | | | 6,425 | | | 6,415 | |
Additional paid-in capital | | | 129,399 | | | 105 | |
Unearned compensation | | | — | | | (879 | ) |
Retained earnings (accumulated deficit) | | | 25,154 | | | (5,158 | ) |
Total stockholders’ equity | | | 160,978 | | | 483 | |
Total liabilities and stockholders’ equity | | $ | 639,573 | | $ | 592,455 | |
SOURCE Pike Electric Corporation
-0- 02/07/2006
/CONTACT: Mark Castaneda, CFO of Pike Electric Corporation, +1-336-719-4379/
/Web site: http://www.pike.com /
(PEC)
