Exhibit 99.1
Pike Electric Reports Fourth Quarter and Fiscal Year End 2006 Results
Record Revenues and Profits for Year
MOUNT AIRY, N.C., Sept. 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 fourth fiscal quarter and year ended June 30, 2006.
Fourth Quarter Results
For the fourth quarter of 2006, total revenues increased 0.7% to $156.1 million from $155.0 million for the same quarter in the prior year. Storm restoration revenues increased $8.0 million to $10.3 million from $2.3 million for the same quarter in the prior year. Fourth quarter net income totaled approximately $3.0 million, or $0.09 per diluted share, compared to a net loss of ($14.0 million), or ($0.65) per diluted share, for the fourth quarter of the prior year. The prior year loss included charges, net of tax, of approximately $16.2 million; which primarily consisted of $11.4 million for deferred compensation related to the Company’s acquisition of Red Simpson, Inc., $2.4 million related to the termination of the Company’s management agreement with Lindsay Goldberg Bessemer and $2.1 million related to Red Simpson acquisition integration expenses.
The Company’s fourth quarter results illustrate an improvement in gross profit percentage from both the third quarter of 2006 and fourth quarter of the prior year. Gross profit percentage for the fourth quarter of 2006 improved to 14.6% compared to 11.0% for the third quarter. The improvement in gross profit compared to the third quarter is related to changes in the mix of project types which lessened the Company’s need for specialized tools and materials and reduced its use of subcontractors. The Company’s gross profit for the fourth quarter of 2005 was negative primarily due to the deferred compensation charge discussed above. Excluding the deferred compensation charge, the Company’s gross profit percentage for the fourth quarter of 2005 would have been 9.4%. In addition, gross profit in the fourth quarter of 2006 was positively impacted by the increased mix of storm revenues as compared to the same quarter of the prior year. Partially offsetting the positive impact provided by the improved gross profit during the fourth quarter of 2006 were legal fees of approximately $2.5 million and expenses related to our Sarbanes- Oxley compliance efforts of approximately $0.5 million. The legal fees relate to litigation that the Company has initiated against certain former employees of Red Simpson for violation of non-compete agreements.
Twelve-Month Results
For the fiscal year ended June 30, 2006, revenues increased 7.1% to $727.5 million from $679.2 million for fiscal year 2005. This increase of $48.3 million was due to a $36.0 million increase in storm revenue and a $12.3 million increase in powerline revenue. Storm revenues represented 25.5% of revenues for fiscal year 2006 compared to 22.0% in the prior fiscal year. Pike Electric experienced record storm restoration revenues in the year ended June 30, 2006 due to the extremely active and intense 2005 hurricane season. For the year ended June 30, 2006, powerline revenues were $542.2 million, a 2.3% increase compared to powerline revenues of $529.9 million in the prior year.
For the fiscal year ended June 30, 2006, net income increased to $34.4 million, or $1.07 per diluted share, from a net loss of ($3.2 million), or ($0.11) per diluted share for the prior fiscal year. The increase in net income in the current fiscal year is primarily the result of increased powerline and storm revenues and the elimination of certain non-recurring expenses included in the prior year, partially offset by: (1) a charge of $3.0 million for non-cash compensation primarily related to the adoption of FAS 123R for fiscal 2006, and (2) increased professional fees of approximately $3.6 million related to legal and accounting services and the Company’s Sarbanes-Oxley compliance efforts. The prior year included non-recurring expenses of $43.1 million on an after-tax basis including: (1) $19.2 million related to the Red Simpson acquisition, (2) $14.0 million related to the redemption of preferred stock, (3) $4.0 million related to the write-off of deferred loan fees in connection with the July 2004 debt refinancing, (4) $3.3 million related to the termination of the Company’s management agreement with Lindsay Goldberg Bessemer, and (5) $2.6 million related to the repurchase of options in its December 2004 recapitalization transaction.
Debt Repayment
The Company repaid $159.0 million of its term debt during 2006, including $12.0 million during the fourth quarter, resulting in $249.0 million in term debt outstanding as of June 30, 2006. There was also $4.5 million outstanding balance on the revolving portion of the Company’s credit facility as of June 30, 2006.
Outlook
The Company remains optimistic about its long-term prospects. The Company intends to capitalize on the favorable industry trends of increased customer outsourcing and the significant upgrade requirements for the country’s distribution and transmission infrastructure. Additionally, the Company intends to gain market share through its operational excellence and storm restoration efforts. The timing and significance of storm restoration revenues are not predictable. Based on our workforce capabilities and geographical presence, we estimate normal storm restoration revenues for fiscal year 2007 to range from $40 to $50 million. We expect powerline revenues in the range of $590 to $600 million in fiscal year 2007 and for powerline revenues to increase at or near double-digit levels over the long term. However, significant storm restoration revenues may cause year-to-year fluctuations in powerline revenue growth.
Conference Call
Pike Electric’s conference call to discuss its fourth quarter and year ended June 30, 2006 results is scheduled for 10:30 a.m. EDT today, September 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. 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 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 as well as those related to our intention to vigorously enforce our rights under non-compete agreements and our expectation that we will incur additional legal fees in this effort. 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 it and these arrangements are generally terminable on short notice; 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; record high fuel costs could materially and adversely affect its operating results; and demand for its 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.
Tables Follow
PIKE ELECTRIC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
(unaudited)
| | Three months ended June 30, | | Year ended June 30, | |
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| | 2006 | | 2005 | | 2006 | | 2005 | |
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Revenues | | $ | 156,112 | | $ | 154,950 | | $ | 727,470 | | $ | 679,197 | |
Cost of operations | | | 133,278 | | | 157,281 | | | 599,247 | | | 585,354 | |
Gross profit (loss) | | | 22,834 | | | (2,331 | ) | | 128,223 | | | 93,843 | |
General and administrative expenses | | | 13,244 | | | 14,361 | | | 45,228 | | | 47,867 | |
Loss on sale of property and equipment | | | 345 | | | 329 | | | 2,250 | | | 585 | |
Income (loss) from operations | | | 9,245 | | | (17,021 | ) | | 80,745 | | | 45,391 | |
Other expense (income): | | | | | | | | | | | | | |
Interest expense | | | 4,936 | | | 5,952 | | | 24,272 | | | 40,217 | |
Other, net | | | (59 | ) | | (15 | ) | | (220 | ) | | (109 | ) |
Total other expense | | | 4,877 | | | 5,937 | | | 24,052 | | | 40,108 | |
Income (loss) before income taxes | | | 4,368 | | | (22,958 | ) | | 56,693 | | | 5,283 | |
Income tax expense | | | 1,373 | | | (8,960 | ) | | 22,324 | | | 8,469 | |
Net income (loss) | | $ | 2,995 | | $ | (13,998 | ) | $ | 34,369 | | $ | (3,186 | ) |
Earnings (loss) per common share: | | | | | | | | | | | | | |
Basic | | $ | 0.09 | | $ | (0.65 | ) | $ | 1.11 | | $ | (0.11 | ) |
Diluted | | $ | 0.09 | | $ | (0.65 | ) | $ | 1.07 | | $ | (0.11 | ) |
Weighted average common shares outstanding: | | | | | | | | | | | | | |
Basic | | | 32,097 | | | 21,484 | | | 31,023 | | | 27,709 | |
Diluted | | | 33,243 | | | 21,484 | | | 32,252 | | | 27,709 | |
PIKE ELECTRIC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value amount)
| | June 30
2006 | | June 30
2005 | |
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| | (Unaudited) | | (Audited) | |
ASSETS | | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | $ | 3,391 | | $ | 3,106 | |
Accounts receivable, net | | | 66,629 | | | 60,690 | |
Work completed not billed, net | | | 56,430 | | | 64,568 | |
Inventories | | | 8,041 | | | 7,321 | |
Prepaid and other | | | 5,928 | | | 11,205 | |
Deferred income taxes | | | 12,460 | | | 4,838 | |
Total current assets | | | 152,879 | | | 151,728 | |
Property and equipment, net | | | 284,452 | | | 281,842 | |
Goodwill | | | 94,402 | | | 91,826 | |
Other intangibles, net | | | 49,978 | | | 55,128 | |
Deferred loan costs, net | | | 6,265 | | | 9,879 | |
Other assets | | | 1,990 | | | 2,052 | |
Total assets | | $ | 589,966 | | $ | 592,455 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
Current liabilities: | | | | | | | |
Accounts payable and accrued expenses | | $ | 39,903 | | $ | 53,417 | |
Current portion deferred compensation | | | 10,614 | | | 12,202 | |
Current portion of insurance claim accruals | | | 18,867 | | | 4,938 | |
Current portion of long-term debt | | | — | | | 250 | |
Revolving credit facility | | | 4,500 | | | 11,500 | |
Total current liabilities | | | 73,884 | | | 82,307 | |
Long-term debt, net of current portion | | | 249,000 | | | 407,750 | |
Insurance and claim accruals, net of current portion | | | 13,439 | | | 13,484 | |
Deferred compensation, net of current portion | | | 10,378 | | | 16,904 | |
Deferred income taxes | | | 72,333 | | | 71,467 | |
Other liabilities | | | 200 | | | 60 | |
Commitments and contingencies | | | — | | | — | |
Stockholders’ equity: | | | | | | | |
Common stock, par value $0.001 per share; 100,000 shares authorized; 32,480 and 21,484 shares issued and outstanding at June 30, 2006 and 2005, respectively | | | 6,426 | | | 6,415 | |
Additional paid-in capital | | | 135,869 | | | 105 | |
Unearned compensation | | | — | | | (879 | ) |
Retained earnings (accumulated deficit) | | | 28,437 | | | (5,158 | ) |
Total stockholders’ equity | | | 170,732 | | | 483 | |
Total liabilities and stockholders’ equity | | $ | 589,966 | | $ | 592,455 | |
SOURCE Pike Electric Corporation
-0- 09/07/2006
/CONTACT: Anthony Slater, CFO of Pike Electric Corporation, +1-336-719-4237/
/Web site: http://www.pike.com/
(PEC)
