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Released September 11, 2012 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--In today's uncertain economic climate, consumers expect more bang for their buck and competition is fierce. Some companies have been able to survive the post-recession times better than others. Apparently, Pike Electric Corporation (NYSE:PIKE) (Mount Airy, North Carolina) is one of those companies.
The executives mentioned how pleased they were when they shared the company's fourth-quarter and full-year financial results in a conference call on September 5, 2012. According to Eric Pike, chairman and CEO of Pike, "Fiscal 2012 was a good year. It was solid across the board." Pike mentioned that the improvement in the company's full-year results was "primarily driven by growth in distribution revenue," which increased 26% year-over-year. He also said that "the sustained growth in all areas of the company's engineering and construction business reflects improving demand across the U.S."
Although Pike experienced significant gains in full-year performance, it also experienced some losses from the third quarter of 2012 to the fourth. The CEO also said that he thought there would have been even more growth in the fourth quarter had it not been an election year.
Some storms are easier to weather than others. This energy solutions company has successfully weathered the storm of an economy that is not growing fast enough. And speaking of storms, the executives see them as a big business. Hurricanes specifically tend to generate high profits for the company. Although Pike expects to see an increase in revenue because of the services the company provided for individuals who got hit by Hurricane Isaac, they did say that Isaac was no Rita or Katrina. Although the company expects to see revenue growth after repairing residential power lines, which were damaged by Isaac in the first quarter of 2013, the mild winter in 2012 led to a significant drop in storm repair revenue. This is one of the few areas where the company experienced significant revenue decreases.
Storm restoration revenue totaled $7.6 million in the fourth quarter of 2012. This was a significant drop from the same period last year, when storm revenue was $40.7 million. According to a press release from Pike, the rise in storm revenue in the fourth quarter of 2011 can be attributed to the massive tornadoes that swept through Alabama and Tennessee that year.
Acquisitions and Projects
Acquisitions and projects have contributed to Pike's significant full-year revenue growth, and they are part of the company's long-term growth strategy. Industrial Info has been tracking some of the projects that Pike is involved in. According to Industrial Info's database, Pike is working with Clean Line Energy (Houston, Texas), Power Engineers Incorporated (Hailey, Idaho) and Fluor Corporation (NYSE:FLR) (Irving, Texas) to construct 800 miles of two overhead high-voltage direct current transmission lines from Texas County, Oklahoma, to Memphis, Tennessee, in 2013. The companies involved in this project (which has a total investment of $3.5 billion) plan to transport renewable energy, which will be 7,000 megawatts (MW) of wind-generated power. Construction is expected to start in 2013.
Industrial Info is also tracking a project that Pike is involved in that has a total investment value of $15 billion. South Carolina Electric & Gas Company (Jenkinsville, South Carolina), The Shaw Group Incorporated (NYSE:SHAW) (Baton Rouge, Louisiana), Westinghouse Nuclear Services (Cranberry Township, Pennsylvania) and Pike are conducting site preparation for a two-unit (2,200 MW) nuclear addition at the Virgil C. Summer Nuclear Power Station. Both units are expected to be completed by 2019.
In addition to the projects that Industrial Info is tracking, Pike has been bringing reliable power to Tanzania. The company specifically wired a school for electricity and lights, and the electricity has allowed about 800 students to learn in a well-lit environment, as well as use computers, charge cell phones and watch television. The executives are under the impression that this project in Tanzania will be a catalyst for future business projects outside the U.S.
The company also has been involved in more solar installation projects in Southern California. And the executives think that they will see even more solar projects in that particular area in the future.
Acquisitions have contributed to Pike's successful year. The purchase of Synergetic Design Holdings Incorporated and its wholly owned subsidiary UC Synergetic Incorporated for approximately $70 million significantly increased the company's ability to provide outsourced engineering and other technical services to its customers.
In addition to the Synergetoc acquisitions, the executives also mentioned that the company's acquisitions of Klondyke and Pine Valley has allowed the company to continue to expand its engineering, procurement and construction services in the Western portion of the U.S.
Fiscal Performance
Pike's full-year total revenue was $685.2 million, and it was up 15% compared to the fiscal-year 2011. In the fourth quarter of 2012, revenue totaled $178.6 million, which was a 10% increase from the same period last year. Net income was $10.9 million or $0.31 per diluted share for the full year. In 2011, net income was $1.4 million, or $0.04 per diluted share. Income from operations soared from 2011 (when it was $9.5 million) to 2012 (when it became $26.1 million).
Gross profit for the full-year totaled $91.7 million, which was 13.4% of the company's revenue. 2011 full-year gross profit was $67.9 million. Clearly, gross profit climbed from 2011 to 2012; however, it was down in the fourth quarter of 2012 when compared to the fourth quarter of 2011.
According to Pike, "All of the operating companies were delivering on revenue and growth." Full-year core service revenue increased to a record high of $614.6 million. It was up 16% year-over-year. In 2011, core service revenue stood at $529.3 million. Pike's core services have been performing well quarterly as well. For four consecutive quarters, the company saw increases in its core services revenue. In the fourth quarter of 2012, the core services revenue stood at $171 million, and this amount was up 40% compared to the same period last year.
Year-over-year, transmission revenue was up 25%, distribution and other revenue was up 46% and engineering and substation revenue went up 35%. For the transmission side of the business, the CEO said that he has been seeing good growth opportunities in California specifically; however, growth in distribution maintenance "has not gotten to its historical rate but it's still growing."
Looking Forward
The executives of Pike have high expectations for 2013. They expect to see continued growth in transmission projects, which have been the company's bread and butter in the past. In terms of bidding activity, the company is still seeing good bid buying and expects this trend to continue. The CEO mentioned that he expects capital expenditures to reach between $35 million and $45 million in 2013.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
The executives mentioned how pleased they were when they shared the company's fourth-quarter and full-year financial results in a conference call on September 5, 2012. According to Eric Pike, chairman and CEO of Pike, "Fiscal 2012 was a good year. It was solid across the board." Pike mentioned that the improvement in the company's full-year results was "primarily driven by growth in distribution revenue," which increased 26% year-over-year. He also said that "the sustained growth in all areas of the company's engineering and construction business reflects improving demand across the U.S."
Although Pike experienced significant gains in full-year performance, it also experienced some losses from the third quarter of 2012 to the fourth. The CEO also said that he thought there would have been even more growth in the fourth quarter had it not been an election year.
Some storms are easier to weather than others. This energy solutions company has successfully weathered the storm of an economy that is not growing fast enough. And speaking of storms, the executives see them as a big business. Hurricanes specifically tend to generate high profits for the company. Although Pike expects to see an increase in revenue because of the services the company provided for individuals who got hit by Hurricane Isaac, they did say that Isaac was no Rita or Katrina. Although the company expects to see revenue growth after repairing residential power lines, which were damaged by Isaac in the first quarter of 2013, the mild winter in 2012 led to a significant drop in storm repair revenue. This is one of the few areas where the company experienced significant revenue decreases.
Storm restoration revenue totaled $7.6 million in the fourth quarter of 2012. This was a significant drop from the same period last year, when storm revenue was $40.7 million. According to a press release from Pike, the rise in storm revenue in the fourth quarter of 2011 can be attributed to the massive tornadoes that swept through Alabama and Tennessee that year.
Acquisitions and Projects
Acquisitions and projects have contributed to Pike's significant full-year revenue growth, and they are part of the company's long-term growth strategy. Industrial Info has been tracking some of the projects that Pike is involved in. According to Industrial Info's database, Pike is working with Clean Line Energy (Houston, Texas), Power Engineers Incorporated (Hailey, Idaho) and Fluor Corporation (NYSE:FLR) (Irving, Texas) to construct 800 miles of two overhead high-voltage direct current transmission lines from Texas County, Oklahoma, to Memphis, Tennessee, in 2013. The companies involved in this project (which has a total investment of $3.5 billion) plan to transport renewable energy, which will be 7,000 megawatts (MW) of wind-generated power. Construction is expected to start in 2013.
Industrial Info is also tracking a project that Pike is involved in that has a total investment value of $15 billion. South Carolina Electric & Gas Company (Jenkinsville, South Carolina), The Shaw Group Incorporated (NYSE:SHAW) (Baton Rouge, Louisiana), Westinghouse Nuclear Services (Cranberry Township, Pennsylvania) and Pike are conducting site preparation for a two-unit (2,200 MW) nuclear addition at the Virgil C. Summer Nuclear Power Station. Both units are expected to be completed by 2019.
In addition to the projects that Industrial Info is tracking, Pike has been bringing reliable power to Tanzania. The company specifically wired a school for electricity and lights, and the electricity has allowed about 800 students to learn in a well-lit environment, as well as use computers, charge cell phones and watch television. The executives are under the impression that this project in Tanzania will be a catalyst for future business projects outside the U.S.
The company also has been involved in more solar installation projects in Southern California. And the executives think that they will see even more solar projects in that particular area in the future.
Acquisitions have contributed to Pike's successful year. The purchase of Synergetic Design Holdings Incorporated and its wholly owned subsidiary UC Synergetic Incorporated for approximately $70 million significantly increased the company's ability to provide outsourced engineering and other technical services to its customers.
In addition to the Synergetoc acquisitions, the executives also mentioned that the company's acquisitions of Klondyke and Pine Valley has allowed the company to continue to expand its engineering, procurement and construction services in the Western portion of the U.S.
Fiscal Performance
Pike's full-year total revenue was $685.2 million, and it was up 15% compared to the fiscal-year 2011. In the fourth quarter of 2012, revenue totaled $178.6 million, which was a 10% increase from the same period last year. Net income was $10.9 million or $0.31 per diluted share for the full year. In 2011, net income was $1.4 million, or $0.04 per diluted share. Income from operations soared from 2011 (when it was $9.5 million) to 2012 (when it became $26.1 million).
Gross profit for the full-year totaled $91.7 million, which was 13.4% of the company's revenue. 2011 full-year gross profit was $67.9 million. Clearly, gross profit climbed from 2011 to 2012; however, it was down in the fourth quarter of 2012 when compared to the fourth quarter of 2011.
According to Pike, "All of the operating companies were delivering on revenue and growth." Full-year core service revenue increased to a record high of $614.6 million. It was up 16% year-over-year. In 2011, core service revenue stood at $529.3 million. Pike's core services have been performing well quarterly as well. For four consecutive quarters, the company saw increases in its core services revenue. In the fourth quarter of 2012, the core services revenue stood at $171 million, and this amount was up 40% compared to the same period last year.
Year-over-year, transmission revenue was up 25%, distribution and other revenue was up 46% and engineering and substation revenue went up 35%. For the transmission side of the business, the CEO said that he has been seeing good growth opportunities in California specifically; however, growth in distribution maintenance "has not gotten to its historical rate but it's still growing."
Looking Forward
The executives of Pike have high expectations for 2013. They expect to see continued growth in transmission projects, which have been the company's bread and butter in the past. In terms of bidding activity, the company is still seeing good bid buying and expects this trend to continue. The CEO mentioned that he expects capital expenditures to reach between $35 million and $45 million in 2013.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
