Pike Corporation Q1 Earnings and Revenues Lag Estimates

Energy solutions provider Pike Corporation (PIKE) reported adjusted loss of 5 cents per share for fiscal first-quarter 2015 (ended Sep 30, 2014). The results compared unfavourably with earnings of 3 cents per share recorded in the year-ago quarter and the Zacks Consensus Estimate of 14 cents per share.

Revenue

Pike generated revenues of $212.2 million, reflecting an increase of 9.8% year over year. However, the top line came below the Zacks Consensus Estimate of $216 million.

The company reports its revenue results under two segments — Construction and Engineering. A brief discussion of the results is provided below:

The Construction segment’s revenues totaled $167.7 million, increasing 6.5% year over year. It represents 79% of total revenues.

Revenues from the Engineering segment were $44.5 million, up 24.1% year over year. It contributed 21% of total revenues.

Costs/Margins

Pike’s costs of operations expanded 13.2% year over year and represented 92.5% of total revenue as against 89.7% in the year-ago quarter. Gross margin declined by 280 basis points (bps) to 7.5%. General and administrative expenses, as a percentage of total revenue, were 8.2% versus 9% in the year-ago quarter.

Balance Sheet and Cash Flow

Exiting fiscal first-quarter 2015, Pike Electrical had cash and cash equivalents of $24.7 million, significantly above the approximate figure of $1 million recorded in the preceding quarter. The company’s revolving credit facility was nil as compared with $19 million in fiscal fourth-quarter 2014.

In the quarter, Pike generated cash of $10 million from its operating activities, slightly below $11.5 million generated in the year-ago quarter. Capital spending totaled $4.2 million, down 65.8% from $12.3 million in fiscal first-quarter 2014.

Pike Corporation, in Aug 2014, agreed to merge with the investment firm, Court Square Capital Partners. Pike’s shareholders will receive $12.00 in cash for each share held by them. The transaction will be complete in second-quarter fiscal 2015.

With a market capitalization of $381 million, Pike Corporation currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Black Hills Corporation (BKH), PG&E Corporation (PCG) and Unitil Corp. (UTL). All these stocks sport a Zacks Rank #1 (Strong Buy).

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