Integrated Electrical Services Reports Fiscal 2003 Fourth Quarter and Year-End Results
Integrated Electrical Services Reports Fiscal 2003 Fourth Quarter and Year-End Results
Nov 10, 2003 at 5:23 PM EST
HOUSTON, Nov 10, 2003 /PRNewswire-FirstCall via Comtex/ -- Integrated Electrical Services, Inc. (NYSE: IES) today announced results for its fiscal 2003 fourth quarter and year ended September 30, 2003. Highlights for the quarter and year include:
-- Revenues up 3.4% over the same quarter last year
-- Diluted EPS for the quarter was $0.20 which includes a $0.07 tax
valuation allowance
-- Diluted EPS for the year was $0.52
-- Completed two million share repurchase program announced in
August 2002
-- Received Board authorization for a new $13 million stock repurchase
program
-- Added $100 million of bonding capacity
Net income for the fourth quarter was $7.8 million or $0.20 per diluted share compared to $2.2 million, or $0.06 per diluted share, in the same quarter last year. Net income for the current fiscal quarter includes the reversal of $2.8 million, or $0.07 per share, of a tax valuation allowance. Deferred tax valuation allowances were established upon the adoption of SFAS 142 during fiscal 2002, and the remaining valuation allowance of $6.3 million will be evaluated periodically to determine adequacy. Earnings per share for the fourth quarter of 2002 included $0.16 of one-time charges related to divesting non-core or under-performing operations, reorganizing under- performing operations and increasing the accrual for self-insurance liabilities.
Revenues for the fourth quarter of fiscal 2003 were $381.5 million compared to revenues of $369.0 million for the fourth quarter a year ago. Fourth quarter segment revenues for commercial/industrial were $310.4 million in fiscal 2003 compared to $290.3 million in fiscal 2002. This increase is due to an increase in work on hotels, condominiums and airports and the increased activity on a nationwide project for the U. S. government. Residential revenues for the fourth quarter were $71.1 million in fiscal 2003 compared to $78.7 million in fiscal 2002. The decline in residential revenues is due to a drop in multi-family residential projects and high value custom single-family homes, offset by an increase in single-family residential work. According to the U.S. Commerce Department, single-family residential construction spending remains strong and was up 10.7% in the month of September versus last year.
IES president and chief executive officer H. Roddy Allen stated, "We are pleased with our performance for fiscal 2003. Fourth quarter revenues were up 3.4% over last year, which we believe is indicative of the beginning of a turnaround in the construction market. Our continued focus on our basic business initiatives continues to result in a lower cost structure for the firm. Our selling, general and administrative expenses for fiscal 2003 decreased $20.5 million from last year.
"We generated $40.1 million in cash flow from operations for fiscal 2003, which translated into free cash flow of $31.4 million. We define free cash flow as cash flow from operations less capital expenditures and use this measure because we believe it is a good gauge of operating efficiency. Backlog has declined over the last 12 months from $801 million to $708 million. This decrease is due to several factors, including progress toward the completion of several very large contracts. The actual number of projects in backlog has increased over 7% from last year, which positions us well for fiscal 2004."
Mr. Allen added, "We are pleased to have added $100 million of bonding capacity during the fourth quarter. Additionally, our board authorized a $13 million stock repurchase program."
Net income for fiscal 2003 was $20.4 million or $0.52 per diluted share versus $9.9 million or $0.25 per diluted share before the cumulative effect of change in accounting principle for fiscal 2002. Net income for the current fiscal year includes the reversal of $2.8 million, or $0.07 per share, for a tax valuation allowance. Earnings per diluted share for fiscal 2002 included $0.25 of one-time charges related to restructuring charges, divesting non-core or under-performing operations, reorganizing under-performing operations and increasing the accrual for self-insurance liabilities. IES adopted Accounting Standards SFAS 142 "Goodwill and Other Intangible Assets" during fiscal 2002. The non-cash charge associated with the adoption of SFAS 142 was $283.3 million, or $7.11 per share, and was recorded as a cumulative effect of change in accounting principle in the first quarter of fiscal 2002. The net loss for 2002 after one-time and restructuring charges and the adoption of SFAS 142 was $273.4 million, or $6.86 per share. Revenues for fiscal 2003 were $1.45 billion compared to $1.48 billion in fiscal 2002.
REVIEW OF NEW PROJECTS
Backlog is currently $708 million compared to $801 million at the end of the fourth quarter of 2002. IES added $148 million of new larger project work, which is defined as projects greater than $300,000, to backlog during the fourth quarter compared to $232 million added in the fourth fiscal quarter of 2002. New project work is down from last year for a number of factors including four large projects that were added in the fourth quarter of 2002, changes in the way industrial long-term maintenance contracts are accounted for, which removed them from the backlog calculation and the work associated with the large government project is not fully reflected in backlog due to the nature of the contract. New work includes:
-- $41 million of new work on hotels, condominiums and apartment
buildings
-- $22 million of new work at institutions including schools
-- $21 million of new work at hospitals and healthcare centers
-- $21 million of new work on utility projects and highway projects
-- $9 million of new work on manufacturing facilities
-- $8 million of new work at retail centers
-- $8 million of new office building work
-- $4 million of new work at distribution centers
OUTLOOK
H. Roddy Allen stated, "IES expects diluted earnings per share in the first fiscal quarter of 2004 to range between $0.10 and $0.15 per share. We expect earnings for all of fiscal 2004 to range between $0.55 and $0.75 per share."
CONFERENCE CALL
Integrated Electrical Services has scheduled a conference call for Tuesday, November 11, 2003, at 9:30 a.m. eastern time. To participate in the conference call, dial 303-262-2130 ten minutes before the call begins and ask for the Integrated Electrical Services conference call. A brief slide presentation will accompany the call and can be viewed by accessing the web cast on the company's web site. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until November 18, 2003. To access the replay, dial 303-590-3000 using a pass code of 558948.
Investors, analysts and the general public will also have the opportunity to listen to the conference call and view the slide presentation over the Internet by visiting www.ies-co.com . To listen to the live call on the web, please visit the company's web site at least fifteen minutes before the call begins to register, download and install any necessary audio software. For those who cannot listen to the live web cast, an archive will be available shortly after the call.
Integrated Electrical Services, Inc. is the leading national provider of electrical solutions to the commercial and industrial, residential and service markets. The company offers electrical system design and installation, contract maintenance and service to large and small customers, including general contractors, developers and corporations of all sizes. For additional corporate information, please visit our web site at www.ies-co.com .
This press release includes certain statements, including statements relating to the Company's expectations of its future operating results that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the Company's expectations and involve risks and uncertainties that could cause the Company's actual results to differ materially from those set forth in the statements. Such risks and uncertainties include, but are not limited to, the inherent uncertainties relating to estimating future results, fluctuations in operating results because of downturns in levels of construction, incorrect estimates used in entering into fixed price contracts, difficulty in managing the operation of existing entities, the high level of competition in the construction industry, difficulty in the integration of acquired companies, development and replacement of senior management in subsidiary companies, changes in banking industry affecting availability of funds, changes in surety relationships, negative results from litigation in excess of reserved amounts, changes in financial reporting rules established by New York Stock Exchange or under the Securities and Exchange Commission, interest rates, general level of the economy, changes in the level of competition from other major electrical contractors, changes in the price of stock affecting repurchase decisions and due to weather. The foregoing and other factors are discussed in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended September 30, 2002.
Tables to follow
INTEGRATED ELECTRICAL SERVICES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Year Ended
September 30, September 30,
2002 2003 2002 2003
Revenues $368,951 $381,502 $1,475,430 $1,448,553
Cost of services (including
depreciation) 317,786 328,149 1,253,844 1,241,330
Gross profit 51,165 53,353 221,586 207,223
Selling, general and
administrative expenses 41,101 39,379 174,184 153,651
Restructuring charge --- --- 5,556 ---
Income from operations 10,064 13,974 41,846 53,572
Other (income)/expense:
Interest expense 6,936 6,548 26,702 25,744
(Gain)/Loss on sale of assets 1,704 (166) 1,547 38
Other, net (3,035) (549) (2,511) (819)
5,605 5,833 25,738 24,963
Income before income taxes and
cumulative effect of change in
accounting principle 4,459 8,141 16,108 28,609
Provision for income taxes 2,256 298 6,175 8,179
Cumulative effect of change in
accounting principle, net of tax --- --- 283,284 ---
Net income (loss) $2,203 $7,843 $(273,351) $20,430
Earnings per share before
cumulative effect of change in
accounting principle:
Basic $0.06 $0.20 $0.25 $0.52
Diluted $0.06 $0.20 $0.25 $0.52
Earnings (loss) per share:
Basic $0.06 $0.20 $(6.86) $0.52
Diluted $0.06 $0.20 $(6.86) $0.52
Shares used in the computation of
earnings (loss) per share:
Basic 39,792 38,694 39,848 39,063
Diluted 39,908 39,163 39,848 39,225
Reconciliation of GAAP to EBIT and
EBITDA
Net income (loss) $2,203 $7,843 $(273,351) $20,430
Cumulative effect of change in
accounting principle, net of tax --- --- 283,284 ---
Provision for income taxes 2,256 298 6,175 8,179
Interest expense 6,936 6,548 26,702 25,744
EBIT $11,395 $14,689 $42,810 $54,353
Depreciation expense 4,146 3,699 16,853 14,630
EBITDA $15,541 $18,388 $59,663 $68,983
Selected Balance Sheet Data: 09/30/02 09/30/03
Cash and Cash Equivalents $32,779 $40,201
Working Capital 244,214 266,411
Goodwill, net 198,220 197,884
Total Assets 721,502 726,174
Total Debt 248,959 248,378
Total Stockholders' Equity 254,295 267,557
Selected Cash Flow Data: Three Months Ended Year Ended
09/30/02 09/30/03 09/30/02 09/30/03
Cash provided by operating
activities 6,094 3,397 53,367 40,117
Cash provided by (used in)
investing activities 3,227 (202) (4,334) (7,858)
Cash used in financing activities (9,497) (3,336) (19,729) (24,837)
Contacts: William W. Reynolds, CFO
Integrated Electrical Services, Inc.
713-860-1500
Ken Dennard / ksdennard@drg-e.com
Karen Roan / kcroan@drg-e.com
DRG&E / 713-529-6600
SOURCE Integrated Electrical Services, Inc.
William W. Reynolds, CFO of Integrated Electrical Services, Inc., +1-713-860-1500; or Ken Dennard, ksdennard@drg-e.com , or Karen Roan, kcroan@drg-e.com , both of DRG&E, +1-713-529-6600, for Integrated Electrical Services, Inc.
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