EX-99.1 2 l35769aexv99w1.htm EX-99.1 EX-99.1
Exhibit 99.1
(BAKER LOGO)
News Release
         
 
  Contact:   David Higie
 
  Phone:   (412) 269-6449
 
  Release:   Immediate (Mar. 10, 2009)
BAKER ANNOUNCES RECORD EARNINGS FOR 2008
     PITTSBURGH — Michael Baker Corporation (NYSE Alternext US:BKR) today reported record earnings for the year 2008, driven primarily by the performance of its Engineering business segment.
     For 2008, Baker reported record net income of $29.2 million, or $3.28 per diluted share, on total revenue of $699.4 million. This compares to net income of $19.3 million, or $2.18 per diluted share, on total revenue of $727 million in 2007. A number of positive factors in Engineering contributed to this improved earnings performance, including improved profitability on certain federal and state projects, both domestically and internationally, and the favorable impact of a non-recurring project settlement during the year. The Energy segment also added to the earnings increase, due primarily to a year-over-year decrease in self-insured general liability costs and favorable tax-related settlements in several international jurisdictions. The decrease in total revenue occurred despite a 14 percent increase in Engineering’s year-over-year revenue, as Energy’s revenue decreased 25 percent.
     The 14 percent increase in 2008 revenue in the Engineering business resulted primarily from work performed as support for the Department of Homeland Security’s efforts to secure U.S. borders, an increase in work performed for the Company’s unconsolidated joint venture in Iraq, growth in several existing transportation projects, and the project settlement mentioned previously. Operating income before corporate overhead allocations in Engineering increased 11 percent, with the major factor being the improved revenue volume compared to the year-ago period. Operating income before corporate overhead allocations expressed as a percentage of Engineering segment revenues was 11.2 percent for the current year, compared to 11.5 percent for 2007. This year-over-year reduction results from a decrease in project incentive awards from clients and an increase in incentive compensation expense to reward personnel for the record performance in 2008.
     The 25 percent decrease in 2008 revenue in the Energy business was due primarily to a client’s sale of properties and the resulting termination of a domestic managed services contract during the third quarter of 2007, changes in the scope of services provided to two existing managed services clients, and the cancellation of another managed services contract in the first half of 2008. This decline was partially offset by an increase in revenue from domestic offshore labor clients in the Gulf of Mexico during 2008, and an increase in international revenue, primarily in Nigeria. Energy’s operating income before corporate overhead allocations in the current year increased 66 percent over the same period last year due primarily to the lower self-insured liability costs and favorable tax-related settlements mentioned previously, and a non-recurring incentive award associated with a managed services contract. As a result, operating income before corporate overhead allocations expressed as a percentage of segment revenues was 4.2 percent for 2008, compared to 1.9 percent for 2007.
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ADD ONE — BAKER 2008 FINANCIAL RESULTS
     The effective tax rate for 2008 was 42 percent, slightly lower than the 43 percent for 2007.
     Total backlog for the Engineering and Energy businesses at December 31, 2008, was $1.22 billion, compared to $1.31 billion at December 31, 2007. Of these totals, $450 million and $426 million at December 31, 2008, and December 31, 2007, respectively, are considered funded backlog for the Engineering segment. Included in funded backlog at December 31, 2008, was $68 million related to the Company’s FEMA Map Modernization contract, compared to $57 million at December 31, 2007.
     On the balance sheet as of December 31, 2008, the Company had no long-term debt and a cash balance of approximately $49 million.
     In the fourth quarter of 2008, the company recorded net income of $3.0 million, or $0.33 per diluted common share, on total revenue of $172 million, compared with net income of $7.2 million, or $0.80 per diluted common share, on total revenue of $196 million in the fourth quarter of 2007. The year-over-year reduction in fourth quarter performance relates primarily to the aforementioned increase in incentive compensation expense in the Engineering segment, the recognition of a bad debt reserve related to a portion of a bankrupt Energy client’s receivables, and the settlement of a contract-related claim in the Energy business.
     Commenting on the results, President and Chief Executive Officer Bradley L. Mallory said, “Obviously, we are pleased with Engineering’s record performance in 2008, and recognize that Energy overcame some significant obstacles to make a significant contribution to the bottom line. 2009 will be a challenging year for America and the world, but Baker is well positioned to withstand the storm. With no debt and an increasing cash balance, our financial position is strong. And with a steady backlog level, carefully targeted project pursuits and the infrastructure stimulus spending, we are poised for continued success.”
     Michael Baker Corporation (http://www.mbakercorp.com) provides engineering and operations and maintenance 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, transportation, water, and oil & gas. With more than 4,500 employees in over 50 offices across the United States and internationally, 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 Wednesday, March 11, at 10:00 a.m. EDT, to discuss its 2008 financial results. Please call 800-860-2442 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 at www.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; late SEC filings; and, the restatement of financial results. 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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BAKER 2008 FINANCIAL RESULTS
FINANCIAL SUMMARY
(In thousands, except earnings per share)
Fourth Quarter Operating Results
                 
(Unaudited)   2008   2007
Revenues
   $ 172,406     $ 195,836  
 
                
Gross profit
     23,429       28,448  
 
                
Income from operations
     2,321       10,406  
 
                
Income before income taxes
     4,360       11,186  
 
                
Net income
   $ 2,987     $ 7,191  
 
                
Net income per share:
                
Basic
     0.33       0.82  
Diluted
   $ 0.33     $ 0.80  
 
Full Year Operating Results
                 
(Audited)   2008   2007
Revenues
   $ 699,395     $ 726,965  
 
                
Gross profit
     113,657       100,496  
 
                
Income from operations
     43,440       31,375  
 
                
Income before taxes
     50,401       33,725  
 
                
Net income
   $ 29,154     $ 19,340  
 
                
Net income per share:
                
Basic
     3.31       2.21  
Diluted
   $ 3.28     $ 2.18  
 

 

 

BAKER 2008 FINANCIAL RESULTS
Segment Results
                                 
    For the three months   For the year
    ended December 31,   ended December 31,
(In millions)   2008   2007   2008   2007
Revenues
                                
Engineering
   $ 114.6     $ 111.8     $ 455.9     $ 401.5  
Energy
     57.8       84.0       243.5       325.5  
 
Total revenues
   $ 172.4     $ 195.8     $ 699.4     $ 727.0  
 
 
                                
Income from operations before Corporate overhead
                                
Engineering
   $ 7.0     $ 12.5     $ 51.1     $ 46.2  
Energy
     0.2       2.7       10.3       6.2  
 
Total segment income from operations before Corporate overhead
     7.2       15.2       61.4       52.4  
 
Less: Corporate overhead
                                
Engineering
     (3.5 )     (3.3 )     (13.6 )     (14.0 )
Energy
     (1.3 )     (1.3 )     (5.2 )     (5.3 )
 
Total Corporate overhead
     (4.8 )     (4.6 )     (18.8 )     (19.3 )
 
Total income/(loss) from operations
                                
Engineering
     3.5       9.2       37.5       32.2  
Energy
     (1.1 )     1.4       5.1       0.9  
Other Corporate (expense)/income
     (0.1 )     (0.2 )     0.8       (1.7 )
 
Total income from operations
   $ 2.3     $ 10.4     $ 43.4     $ 31.4  
 
Backlog
                 
    As of December 31,
(In millions)   2008   2007
Engineering
               
Funded
   $ 449.5     $ 425.6  
Unfunded
     534.7       696.6  
 
Total Engineering
     984.2       1,122.2  
Energy
     233.4       191.7  
 
Total
   $ 1,217.6     $ 1,313.9  
 

 

 

BAKER 2008 FINANCIAL RESULTS
Condensed Balance Sheets
                 
    As of December 31,
(In thousands)   2008   2007
ASSETS
                
Cash and cash equivalents
   $ 49,050     $ 22,052  
Receivables, net
     113,676       109,453  
Unbilled revenues on contracts in progress
     70,455       88,214  
Prepaid expenses and other
     16,756       14,718  
 
Total current assets
     249,937       234,437  
 
                
Property, plant and equipment, net
     16,671       16,776  
Goodwill and other intangible assets, net
     17,254       17,367  
Other long-term assets
     8,200       7,770  
 
Total assets
   $ 292,062     $ 276,350  
 
 
                
LIABILITIES & SHAREHOLDERS’ INVESTMENT
                
Accounts payable
   $ 42,421     $ 55,940  
Accrued compensation and insurance
     47,162       41,974  
Other accrued expenses
     28,696       36,123  
Billings in excess of revenues on contracts in progress
     17,449       15,771  
 
Total current liabilities
     135,728       149,808  
 
                
Other long-term liabilities
     13,690       11,485  
 
Total liabilities
     149,418       161,293  
 
 
                
Common Stock
     9,351       9,306  
Additional paid-in capital
     48,405       47,356  
Retained earnings
     92,214       63,060  
Other comprehensive (loss)/income
     (2,565 )     96  
Less — Treasury shares
     (4,761 )     (4,761 )
 
Total shareholders’ investment
     142,644       115,057  
 
Total liabilities & shareholders’ investment
   $ 292,062     $ 276,350  
 
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