Baker Posts Higher Profit for First Quarter
Michael Baker Corporation on Tuesday announced its financial results for the first quarter of 2007, including a year-over-year increase of 17 percent in total contract revenues and higher earnings per share, resulting primarily from a 37 percent increase in Energy segment revenue.
For the quarter, Baker reported net income of $3.1 million, or $0.35 per diluted share, on total contract revenues of $171 million. This compares with net income of $1.7 million, or $0.20 per diluted share, on total contract revenues of $146 million in first-quarter 2006.
The previously mentioned first quarter 2007 revenue increase in Energy is attributable primarily to the addition of two large onshore managed services contract awards during the second half of 2006 in Alabama and Alaska, and a significant increase in work in the Powder River Basin during the second half of 2006 and the first quarter of 2007. The Energy segment's operating income before corporate overhead allocations of $2.4 million in the current period represented a 60 percent increase from the $1.5 million in the first quarter of 2006. As a result, operating income before corporate overhead allocations expressed as a percentage of segment revenues were 3.0 percent for the current quarter of 2007, compared to 2.5 percent in the first quarter of 2006.
First-quarter 2007 revenues in the Engineering business increased four percent from the same period last year, primarily reflecting a $3.0 million contribution from an acquisition made in the second quarter of 2006. Operating revenues associated with the map modernization contract with FEMA were consistent with the first quarter of 2006; however, incentive awards related to this contract increased $0.3 million on a quarter over quarter basis. The Engineering segment's operating income before corporate overhead allocations grew 25 percent, with the major factor being the higher revenues, including incentive award revenues. Operating income before corporate overhead allocations expressed as a percentage of Engineering's revenues was 10.6 percent for the first of quarter 2007, compared to 8.9 percent in the first quarter of 2006.
The provision for income tax rate for both the first quarter of 2007 and 2006 was 47 percent.
Total backlog for the company was $1.37 billion at March 31, 2007, compared to $1.32 billion at year-end 2006. The first-quarter 2007 backlog includes approximately $442 million related to the FEMA contract, compared to $467 million at December 31, 2006. Both of the company's business segments recorded increases in backlog during the current period.
Commenting on the results, Chairman and Chief Executive Officer Richard L. Shaw, said, "We are encouraged by our financial performance in the first quarter, particularly the significant improvement in our Energy segment and margin improvement in Engineering. The steps we have taken over the past several months, and continue to take, to make both of our businesses more competitive are beginning to produce results. We remain focused on producing continued improvement in revenue and profitability." He added that the Board of Directors has not identified a new chief executive officer candidate on whom it could arrive at a consensus. He also said that the Board has sought the assistance of an investment banker as it considers future strategic options for the Energy segment. "The Board is also considering on a very preliminary basis whether there may be available acquisition or merger opportunities with engineering firms of comparable size that would broaden the company's geographic and service base. However, the company does not intend to abandon its western Pennsylvania roots, and has not determined that such a transaction would be feasible or desirable," Shaw said.
Michael Baker Corporation provides engineering and operations and maintenance services for its clients' most complex challenges worldwide. The firm's primary practice areas are aviation, environmental, facilities, geospatial information technologies, pipelines & telecommunications, transportation, water/wastewater, and oil & gas. With more than 5,000 employees in over 40 offices across the United States and internationally, Baker is focused on providing services that span the complete life cycle of infrastructure and managed asset projects.
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