Baker Files Form 10-Q for Second Quarter of 2006
Michael Baker Corporation (Amex: BKR) has filed its Form 10-Q with the Securities and Exchange Commission (SEC) for the second quarter of 2006. The filing of this document brings the Company current with its SEC filings for the year and into full compliance with the listing standards of the American Stock Exchange. The financial results contained in the filing are summarized here.
As outlined in the filing, Baker reported net income of $1.1 million, or $0.13 per diluted share, on total contract revenues of $156 million for the second quarter of 2006, compared to net income of $42,000, or $0.00 per diluted share, on total contract revenues of $143 million in the second quarter 2005.
Second quarter 2006 revenues in the Engineering business increased six percent from the same period last year, due largely to an increase in transportation-related revenues as a result of the SAFETEA-LU transportation infrastructure legislation enacted in August 2005, as well as approximately $2 million gained through the acquisition of Buck Engineering in April 2006. Additionally, the Company recognized revenue associated with incentive awards under the FEMA Map Modernization contract of $0.7 million, identical to the incentive awards in second quarter 2005. Operating income before corporate overhead allocations in Engineering declined, with the major factors being lower labor utilization rates in the current period compared to the year-ago quarter, and a $0.5 million accrual for legal fees in relation to a protest by a competitor of Baker's initial selection by FEMA for the disaster-related housing inspection contract. FEMA is currently conducting a re-selection process on this contract. Operating income before corporate overhead allocations expressed as a percentage of Engineering segment revenues was 8.1 percent for second quarter 2006, compared to 12.2 percent in second quarter 2005.
Second quarter 2006 revenues in the Energy business increased 15 percent compared to the second quarter of 2005 due to higher volumes of domestic operations and maintenance activity with existing clients, and the addition of new domestic onshore and offshore contracts. Operating income before corporate overhead allocations also increased in the current period from an operating loss in second quarter 2005. As a result, operating income before corporate overhead allocations expressed as a percentage of segment revenues was 1.9 percent for the current quarter 2006.
Professional fees related to the Company's recent restatement of financial results were approximately $0.9 million for the second quarter of 2006, and these costs are expected to conclude in the third quarter of 2006. Overall, the impact of these fees to date in 2006 is approximately $1.4 million.
The provision for income tax rate for the first six months of 2006 was 52 percent, compared to 66 percent for the same period last year. The decrease in the tax rate is attributable to a more favorable mix of domestic versus foreign taxable income in 2006 compared to 2005.
Total backlog for the Company was $1.37 billion at June 30, 2006, compared to $1.32 billion at year-end 2005. The second quarter 2006 backlog includes approximately $517 million related to the FEMA Map Modernization contract, compared to $566 million at December 31, 2005. Both of the Company's business segments recorded slight increases in backlog during the current period.
For the first six months of 2006, the Company recorded net income of $2.9 million, or $0.33 per diluted share, on total contract revenues of $301 million, compared with net income of $2.9 million, or $0.33 per diluted share, on total contract revenues of $287 million in the first half of 2005.
Commenting on the results, Chairman and Chief Executive Officer Richard L. Shaw, said, "While we are pleased with the revenue growth in both of our business segments, and expect it to continue for the remainder of the year, we are disappointed with our inability to maximize our profitability on that higher revenue. Our focus over the near term will be to improve project performance, reduce overhead costs, and increase labor utilization. We will continue to pursue large, complex projects where we have the skills and the support infrastructure in place. Our strategy continues to be on growing the business, both organically and through acquisition, and on increasing shareholder value." He added that the Company will hold its Annual Shareholders Meeting on Wednesday, November 29, 2006, at 10:00 a.m. EST, at the Doubletree Hotel on University Boulevard in Moon Township, Pa.
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