Firm Backlog Doubles From Prior Year to $388 Million; Higher Than
Anticipated Manufacturing Costs Impact Gross Margin TULSA, Okla.,
Aug. 8 /PRNewswire-FirstCall/ -- Global Power Equipment Group Inc.
(NYSE:GEG), a leading design, engineering and manufacturing firm
providing a broad array of equipment and services to the global
energy, power infrastructure and process industries, today reported
financial results for the second quarter ended June 30, 2005.
Global Power Equipment Group reported a net loss of $1.3 million
for the second quarter of fiscal 2005 or $0.03 per diluted share,
on revenues of $113.6 million. This compares to net earnings of
$0.3 million, or $0.01 per diluted share, on revenues of $57.0
million for the second quarter of fiscal 2004. For the six months
ended June 30, 2005, the Company reported a net loss of $1.3
million, or $0.03 per diluted share, on revenues of $181.0 million.
This compares to net earnings for the same period last year of $1.1
million, or $0.02 per diluted share, on revenues of $112.1 million.
Second quarter 2005 and year-to-date earnings included the effect
of the previously announced pre- tax charge of $1.3 million, or
$0.02 per diluted share related to the retirement of the Company's
former CEO. The Company's gross profit for the second quarter of
2005 totaled $11.7 million, representing a 10.3 percent gross
margin compared to a gross profit of $9.1 million and a gross
margin of 16.0 percent in the second quarter of last year. The
effect of sharply higher than expected steel costs related to
projects booked in 2004, coupled with unanticipated additional
engineering and manufacturing costs on these projects, adversely
impacted the Company's gross profit during the quarter. In
addition, the one-week delay in closing the Williams Industrial
Services Group (WISG) acquisition, and some minor non-cash charges,
had a more than expected impact on the Company's reported earnings
during the second quarter. For the first six months of 2005, the
Company's gross margin was 11.9 percent compared to 18.7 percent in
the same period of 2004. The Company will comment more fully on
gross margin trends, including a presentation of the impact to
estimated 2005 earnings per share, during its conference call on
August 9, 2005 at 9:00 AM EDT. To listen to the conference call and
view the presentation, please visit the Company's home page at
http://www.globalpower.com/ . The Company generated EBITDA
(earnings before interest, income taxes, depreciation and
amortization) of $ 0.5 million for the second quarter of 2005, down
from the $1.4 million recorded during the same period in 2004. The
decrease in EBITDA was principally due a greater increase in
operating expenses than the rise in gross profit. The Company had
total cash, including restricted cash, of $41.6 million at June 30,
2005. At the end of the second quarter, the Company's firm backlog
rose to $388 million compared to $171 million at the end of June
2004 and $321 million at the end of March 2005. With the
acquisition of WISG on April 11, 2005, WISG contributed
approximately $67 million to the Company's firm backlog as of that
date. Included in the June 30, 2005 firm backlog is the revenue
WISG expects to record over the next twelve months from a new
five-year alliance agreement the Company recently entered into with
a major customer for maintenance and modifications services.
Commenting on the new agreement, Al Brousseau, Global Power
Equipment Group's president and chief executive officer stated,
"This new five-year contract represents a total of at least $150
million of business with one of the largest power generating firms
in the country and cements our relationship with a long-standing
customer. This new alliance-based contract, which aligns our common
interests, is one of the ways we are willing to demonstrate our
commitment to our customers and enhance the value of long-term
relationships." Earnings Estimate Based upon information management
currently has evaluated, in conjunction with this release, the
Company estimates fiscal year 2005 revenue of between $410 and $430
million and diluted earnings per share of between $0.02 and $0.08,
excluding an estimated $0.03 per diluted share of restructuring
charges for the entire year related mainly to the retirement of the
Company's former CEO. Commenting on the outlook, Al Brousseau
stated, "Unfavorable steel price related adjustments and booking
delays in our Heat Recovery Segment, despite a strong pipeline of
international opportunities, require us to revise our current
fiscal year earnings guidance. With the volatility in steel
markets, we have tightened our processes to manage our costs for
this important input, including pricing and lead times. We continue
to see strong international demand for new power projects in Asia,
the Middle East and Europe, as well as LNG and desalination
projects in the Middle East that are powered by gas turbines.
Because of this, we continue to believe our forward bookings and
earnings prospects are bright." Non-GAAP Financial Measures This
release contains disclosure of EBITDA and estimated earnings per
diluted share for fiscal 2005 that exclude the effect of estimated
restructuring charges, which are non-GAAP financial measures within
the meaning of Regulation G promulgated by the Securities and
Exchange Commission. The Company believes that EBITDA is a useful
measure of evaluating its financial performance because of its
focus on the Company's results from operations before interest,
income taxes, depreciation and amortization. EBITDA is not a
measure of financial performance under generally accepted
accounting principles. However, EBITDA is a common alternative
measure of operating performance used by investors, financial
analysts and rating agencies. A reconciliation of EBITDA to net
income (loss) and of estimated earnings per diluted share excluding
restructuring charges to estimated earnings is included in the
exhibits to this release. About Global Power Equipment Group
Oklahoma based Global Power Equipment Group Inc. is a leading
design, engineering and manufacturing firm providing a broad array
of equipment and services to the global energy, power
infrastructure and process industries. The Company designs,
engineers and manufactures a comprehensive portfolio of equipment
for gas turbine power plants and power-related equipment for
industrial operations, and has over 30 years of power generation
industry experience. The Company's equipment is installed in power
plants and in industrial operations in more than 40 countries on
six continents and believes, in its product lines, it has one of
the largest installed bases of equipment for power generation in
the world. In addition, the Company provides its customers with
value-added services including engineering, retrofit, maintenance,
repair and general plant services. Additional information about
Global Power Equipment Group may be found at
http://www.globalpower.com/ . Statements contained in this release
regarding the Company's or management's intentions, beliefs,
expectations, or predictions for the future, including, but not
limited to, those regarding anticipated operating results, are
forward-looking statements within the meaning of U.S. federal
securities laws and are subject to a number of risks, assumptions
and uncertainties that could cause the Company's actual results to
differ materially from those projected, including decreased demand
for new gas turbine power plants, the loss of any of our major
customers, the cancellation of projects, project cost overruns,
including increases in prices for energy or for materials such as
steel, and unforeseen schedule delays, competition for the sale of
our products or services, poor performance by our subcontractors,
warranty and product liability claims, delays in integrating the
operations of Williams Industrial Services Group and the Company,
and changes in the economic, social and political conditions in the
countries in which we operate, including fluctuations in foreign
currency exchange rates. Additional information concerning these
factors and some of the other factors that could cause actual
results to differ materially from those in, or implied by, the
forward looking statements are set forth under "Risk Factors" in
the Company's Form 10-K for the period ended December 31, 2004, and
other reports on file with the U.S. Securities and Exchange
Commission. The Company assumes no obligation to update publicly
such forward-looking statements, whether as a result of new
information, future events or otherwise. Company Contact: Bob
Zwerneman Director of Investor Relations (918) 274-2398 GLOBAL
POWER EQUIPMENT GROUP INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) June 30, December 31, 2005 2004 ASSETS Current
assets: Cash and cash equivalents $ 32,458 $ 24,331 Restricted cash
9,134 16,669 Accounts receivable, net of allowance of $838 and $894
51,761 40,260 Inventories 9,342 8,857 Costs and estimated earnings
in excess of billings 73,543 60,861 Deferred income taxes 9,147
10,576 Other current assets 19,956 15,966 Total current assets
205,341 177,520 Property, plant and equipment, net 22,884 22,983
Deferred income taxes 53,763 51,030 Goodwill 80,573 45,000
Intangible assets, net 27,598 4,736 Restricted cash --- 57,688
Other assets 7,558 7,937 Total assets $397,717 $366,894 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of
long-term debt $ 18,071 $ 16,854 Accounts payable 41,475 27,852
Accrued compensation and employee benefits 8,195 4,545 Accrued
warranty 9,581 9,758 Billings in excess of costs and estimated
earnings 61,185 52,707 Other current liabilities 14,755 8,005 Total
current liabilities 153,262 119,721 Other long-term liabilities
5,238 4,374 Long-term debt, net of current maturities 76,250 78,750
Minority interest 1,677 1,629 Commitments and contingencies
Stockholders' equity: Preferred stock --- --- Common stock 469 468
Paid-in capital deficit (16,505) (17,698) Deferred compensation
(63) (91) Accumulated comprehensive income 2,625 3,636 Retained
earnings 174,764 176,105 Total stockholders' equity 161,290 162,420
Total liabilities and stockholders' equity $397,717 $366,894 GLOBAL
POWER EQUIPMENT GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (in thousands, except per share amounts) Three Months Ended
Six Months Ended June 30, June 26, June 30, June 26, 2005 2004 2005
2004 Product revenues $77,500 $57,021 $144,887 $112,147 Service
revenues 36,086 --- 36,086 --- Total revenues 113,586 57,021
180,973 112,147 Cost of Product revenues 69,413 47,892 127,019
91,205 Cost of Service revenues 32,426 --- 32,426 --- Gross profit
11,747 9,129 21,528 20,942 Selling and administrative expenses
12,641 8,541 21,557 18,802 Operating income (loss) (894) 588 (29)
2,140 Interest expense 1,163 111 2,059 311 Income (loss) before
income taxes and minority interest (2,057) 477 (2,088) 1,829 Income
tax provision (benefit) (783) 181 (794) 695 Income (loss) before
minority interest (1,274) 296 (1,294) 1,134 Minority interest 37
--- 47 --- Net income (loss) $(1,311) $296 $(1,341) $1,134 Earnings
(loss) per weighted average common share: Basic $(0.03) $0.01
$(0.03) $0.02 Weighted average number of shares of common stock
outstanding-basic 46,918 46,325 46,866 45,991 Diluted $(0.03) $0.01
$(0.03) $0.02 Weighted average number of shares of common stock
outstanding-diluted 46,918 46,949 46,866 46,839 GLOBAL POWER
EQUIPMENT GROUP INC. SUPPLEMENTAL STATISTICAL INFORMATION (in
thousands) Three Months Ended Six Months Ended June 30, June 26,
June 30, June 26, 2005 2004 2005 2004 Net income (loss) $(1,311)
$296 $(1,341) $1,134 Add back: Income tax provision (benefit) (783)
181 (794) 695 Interest expense 1,163 111 2,059 311 Depreciation and
amortization 1,402 825 2,380 1,663 EBITDA (A) $471 $1,413 $2,304
$3,803 (A) EBITDA represents earnings before interest, income
taxes, depreciation and amortization. While considered the most
common definition used by investors and financial analysts, the
EBITDA presented above may not be comparable to similarly titled
measures reported by other companies. The Company believes that
EBITDA, while providing useful information, should not be
considered in isolation or as an alternative to other financial
measures determined under GAAP. GLOBAL POWER EQUIPMENT GROUP INC.
RECONCILIATION OF NON-GAAP ESTIMATED EARNINGS TO A GAAP BASIS
Twelve Months Ended December 31, 2005 (Low estimate) (High
estimate) Estimated earnings per share on a non-GAAP basis $0.02
$0.08 Impact of estimated restructuring charges (0.03) (0.03)
Estimated earnings (loss) per share on a GAAP basis $(0.01) $0.05
DATASOURCE: Global Power Equipment Group Inc. CONTACT: Bob
Zwerneman, Director of Investor Relations of Global Power Equipment
Group Inc., +1-918-274-2398 Web site: http://www.globalpower.com/
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