Exhibit 99.1
| | | | | |
| | | Contact: | | David Higie |
| | | Phone: | | (412) 269-6449 |
| | | Release: | | Immediate (Nov. 4, 2010) |
BAKER ANNOUNCES FINANCIAL RESULTS FOR THIRD QUARTER AND FIRST NINE MONTHS OF 2010
PITTSBURGH — Michael Baker Corporation (NYSE Amex:BKR) today reported its financial results for the third quarter and first nine months of 2010.
As reported earlier, the Company acquired The LPA Group Inc. on May 3, 2010, and these financial results include LPA’s results from that date through September 30, 2010. In addition, in 2009 the Company sold its former Energy business and, as a result of this disposition, the financial results of the former Energy segment have been reclassified as discontinued operations for all periods presented in the consolidated financial statements. The information contained in this news release pertains to Baker’s continuing operations, while the Company’s Form 10-Q, which is being filed with the SEC concurrent with this announcement, presents a complete discussion of both continuing and discontinued operations.
For the quarter, Baker reported income from continuing operations of $5.0 million, or $0.54 per diluted share, on total contract revenues of $135.6 million. This compares to income from continuing operations of $7.0 million, or $0.78 per diluted share, on total contract revenues of $110.2 million in the third quarter of 2009. The 23 percent increase in revenues is driven primarily by $23.4 million in revenues from LPA and increases in revenue from other key Transportation projects, which was offset by a seven percent decrease in revenues from the Federal segment. The decline in Federal segment revenues results from a $3.2 million decrease in work performed for the Company’s unconsolidated subsidiary in Iraq, and a net decrease of $2.9 million in work performed for FEMA, compared to the third quarter of 2009. The decrease in income from continuing operations is attributable primarily to the aforementioned decreases in work performed in Iraq and for FEMA, a reduction in equity income from unconsolidated subsidiaries of $3.0 million resulting primarily from the decline of work in Iraq, and $1.4 million of amortization expense for intangible assets related to the LPA acquisition. This decline was partially offset by the addition of LPA’s margin and higher Transportation revenue volume compared to 2009, as well as a decrease in incentive compensation costs of $1.7 million.
Operating income from continuing operations before corporate overhead allocations in the Transportation business segment was $7.9 million, an 84 percent increase compared to the third quarter of 2009. This is due primarily to increased revenue volume and margin improvements in the current period and the addition of LPA’s margin, offset by amortization of $1.8 million for intangible assets related to the LPA acquisition. Operating income from continuing operations before corporate overhead allocations in the Federal segment for the third quarter of 2010 was $6.3 million, a decrease of 34 percent compared to the third-quarter 2009. This decline is mainly attributable to lower revenue volume and margin, including a net decrease in project incentive awards of $1.2 million. Overall, operating income before corporate overhead allocations was impacted favorably by decreases in incentive compensation costs in both business segments.
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ADD ONE — BAKER FINANCIAL RESULTS FOR THIRD QUARTER 2010
Selling, General and Administrative expenses totaled $22.5 million for the third quarter of 2010, compared to $14.7 million for the third quarter of 2009. This increase relates primarily to additional SG&A expenses of $5.5 million from LPA, which was partially offset by a reduction in incentive compensation accruals.
Total backlog for continuing operations at September 30, 2010, was $1.6 billion, compared to $1.4 billion at December 31, 2009. Of these totals, $566 million and $461 million, respectively, are considered funded backlog. Included in funded backlog at September 30, 2010, was $104 million from LPA. Also included in funded backlog at September 30, 2010, was $31 million related to the Company’s FEMA Risk MAP Program and $15 million related to the FEMA Map Modernization Program.
On the balance sheet as of September 30, 2010, the Company had cash and investment balances of $86 million and no debt.
For the first nine months of 2010, the Company reported income from continuing operations of $15.2 million, or $1.67 per diluted share, on total contract revenues of $379 million, compared with income from continuing operations of $18.7 million, or $2.10 per diluted share, on total contract revenues of $339 million in the first nine months of 2009. Year to date, the amortization expense for intangible assets related to the LPA acquisition is $3.0 million.
The full-year forecasted effective income tax rate from continuing operations was 39.0 percent at September 30, 2010 and 2009, respectively.
Commenting on the results, President and Chief Executive Officer Bradley L. Mallory said, “In spite of a difficult funding environment, we were able to beat back the headwinds facing our Transportation segment during the third quarter. And even though we were able to grow certain areas of our Federal business, it wasn’t enough to overcome the slower than expected ramp up and cuts in our FEMA work, and the lack of work in Afghanistan to replace our work in Iraq. We remain committed to resolving these operational challenges and executing on our acquisition strategy.”
Michael Baker Corporation (www.mbakercorp.com) provides architecture, engineering and construction services for its clients’ most complex challenges worldwide. The firm’s primary business areas are aviation, defense, environmental, facilities, geospatial, homeland security, municipal & civil, pipelines & utilities, rail & transit, transportation and water. With more than 2,900 employees in nearly 90 offices across the United States, Baker is focused on creating value by delivering innovative and sustainable solutions for infrastructure and the environment.
Conference Call
Michael Baker Corporation has scheduled a conference call and webcast for Thursday, November 4, at 10:00 a.m. EDT, 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 Baker’s website atwww.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: 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, including the Safe, Accountable, Flexible, Efficient Transportation Equity Act—A Legacy for Users (“SAFETEA-LU”); changes in loan relationships or sources of financing; changes in management; changes in information systems, and acquisition-related activity. Such forward-looking statements are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.)
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ADD TWO — BAKER FINANCIAL RESULTS FOR THIRD QUARTER 2010
FINANCIAL SUMMARY
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | For the three months | | | For the nine months | |
| Operating Results | | ended September 30, | | | ended September 30, | |
| (In thousands, except earnings per share) | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| | | |
| Revenues | | $ | 135,573 | | | $ | 110,153 | | | $ | 378,989 | | | $ | 338,560 | |
| | | | | | | | | | | | | | | | | |
| Gross profit | | | 30,262 | | | | 22,239 | | | | 80,379 | | | | 67,605 | |
| | | | | | | | | | | | | | | | | |
| Operating Income | | | 7,763 | | | | 7,523 | | | | 23,025 | | | | 23,648 | |
| | | | | | | | | | | | | | | | | |
| Income before noncontrolling interest and income taxes | | | 8,390 | | | | 10,919 | | | | 25,349 | | | | 30,129 | |
| | | | | | | | | | | | | | | | | |
| Net income from continuing operations attributable to Michael Baker Corporation | | | 5,031 | | | | 6,957 | | | | 15,201 | | | | 18,713 | |
| | | | | | | | | | | | | | | | | |
| (Loss)/income from discontinued operations | | | (682 | ) | | | 321 | | | | (1,478 | ) | | | 3,453 | |
| | | | | | | | | | | | | | | | | |
| Net income attributable to Michael Baker Corporation | | $ | 4,349 | | | $ | 7,278 | | | $ | 13,723 | | | $ | 22,166 | |
| | | | | | | | | | | | | | | | | |
| Earnings per share: | | | | | | | | | | | | | | | | |
| Basic-continuing operations | | $ | 0.56 | | | $ | 0.78 | | | $ | 1.70 | | | $ | 2.12 | |
| Diluted-continuing operations | | | 0.54 | | | | 0.78 | | | | 1.67 | | | | 2.10 | |
| Basic-net income | | | 0.49 | | | | 0.82 | | | | 1.54 | | | | 2.51 | |
| Diluted-net income | | $ | 0.47 | | | $ | 0.81 | | | $ | 1.51 | | | $ | 2.48 | |
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ADD THREE — BAKER FINANCIAL RESULTS FOR THIRD QUARTER 2010
| | | | | | | | | | | | | | | | | |
| Segment results (Unaudited) | | | | | | |
| (In millions) | | For the three months | | | For the nine months | |
| | | ended September 30, | | | ended September 30, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| |
Revenues | | | | | | | | | | | | | | | | |
| Transportation | | $ | 80.1 | | | $ | 50.3 | | | $ | 203.6 | | | $ | 147.1 | |
| Federal | | | 55.5 | | | | 59.9 | | | | 175.4 | | | | 191.5 | |
| |
Total revenues | | $ | 135.6 | | | $ | 110.2 | | | $ | 379.0 | | | $ | 338.6 | |
| |
| | | | | | | | | | | | | | | | | |
Gross Profit | | | | | | | | | | | | | | | | |
| Transportation | | $ | 18.6 | | | $ | 9.4 | | | $ | 43.3 | | | $ | 26.5 | |
| Federal | | | 12.2 | | | | 13.0 | | | | 38.0 | | | | 41.8 | |
| Corporate | | | (0.5 | ) | | | (0.2 | ) | | | (0.9 | ) | | | (0.7 | ) |
| |
Total gross profit | | | 30.3 | | | | 22.2 | | | | 80.4 | | | | 67.6 | |
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Less: SG&A | | | | | | | | | | | | | | | | |
| Transportation | | | (14.4 | ) | | | (8.0 | ) | | | (33.0 | ) | | | (22.2 | ) |
| Federal | | | (8.1 | ) | | | (6.7 | ) | | | (24.3 | ) | | | (21.7 | ) |
| Corporate | | | — | | | | — | | | | (0.1 | ) | | | (0.1 | ) |
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Total SG&A | | | (22.5 | ) | | | (14.7 | ) | | | (57.4 | ) | | | (44.0 | ) |
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Total income/(loss) from operations | | | | | | | | | | | | | | | | |
| Transportation | | | 4.2 | | | | 1.4 | | | | 10.3 | | | | 4.3 | |
| Federal | | | 4.1 | | | | 6.3 | | | | 13.7 | | | | 20.1 | |
| Corporate | | | (0.5 | ) | | | (0.2 | ) | | | (1.0 | ) | | | (0.8 | ) |
| |
Total operating income | | $ | 7.8 | | | $ | 7.5 | | | $ | 23.0 | | | $ | 23.6 | |
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| | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| Backlog | | As of | |
| (In millions) | | September 30, | | | December 31, | |
| | | 2010 | | | 2009 | |
| | | |
| Funded | | $ | 566.1 | | | $ | 461.3 | |
| Unfunded | | | 1,018.8 | | | | 963.9 | |
| |
Total | | $ | 1,584.9 | | | $ | 1,425.2 | |
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ADD FOUR — BAKER FINANCIAL RESULTS FOR THIRD QUARTER 2010
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| Condensed Balance Sheet | | As of | |
| (In thousands) | | September 30, | | | December 31, | |
| | | 2010 | | | 2009 | |
| | | |
ASSETS | | | | | | | | |
| Cash and cash equivalents | | $ | 75,619 | | | $ | 105,259 | |
| Short term investments and available for sale securities | | | 10,731 | | | | 4,655 | |
| Proceeds receivable — Energy sale | | | — | | | | 9,965 | |
| Receivables, net | | | 81,342 | | | | 76,455 | |
| Unbilled revenues on contracts in progress | | | 62,940 | | | | 49,605 | |
| Prepaid expenses and other | | | 7,175 | | | | 5,407 | |
| |
Total current assets | | | 237,807 | | | | 251,346 | |
| |
| | | | | | | | | |
| Property, plant and equipment, net | | | 17,133 | | | | 12,578 | |
| Goodwill and other intangible assets, net | | | 69,513 | | | | 9,702 | |
| Other long-term assets | | | 5,987 | | | | 5,218 | |
| |
Total assets | | $ | 330,440 | | | $ | 278,844 | |
| |
| | | | | | | | | |
LIABILITIES & SHAREHOLDERS’ INVESTMENT | | | | | | | | |
| Accounts payable | | $ | 42,425 | | | $ | 31,948 | |
| Accrued compensation and insurance | | | 35,974 | | | | 32,576 | |
| Billings in excess of revenues on contracts in progress | | | 21,102 | | | | 19,102 | |
| Other accrued expenses | | | 18,291 | | | | 13,363 | |
| |
Total current liabilities | | | 117,792 | | | | 96,989 | |
| |
| | | | | | | | | |
| Other long-term liabilities | | | 15,393 | | | | 8,115 | |
| |
Total liabilities | | | 133,185 | | | | 105,104 | |
| |
| | | | | | | | | |
| Common Stock | | | 9,718 | | | | 9,403 | |
| Additional paid-in capital | | | 59,163 | | | | 49,989 | |
| Retained earnings | | | 132,858 | | | | 119,135 | |
| Accumulated other comprehensive loss | | | (315 | ) | | | (333 | ) |
| Less — Treasury shares | | | (4,761 | ) | | | (4,761 | ) |
| |
Total Michael Baker Corporation shareholders’ investment | | | 196,663 | | | | 173,433 | |
| Noncontrolling interests | | | 592 | | | | 307 | |
| |
Total shareholders’ investment | | | 197,255 | | | | 173,740 | |
| |
Total liabilities & shareholders’ investment | | $ | 330,440 | | | $ | 278,844 | |
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