Furmanite Corporation (FRM)

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Furmanite (FRM)

Q1 2013 Earnings Call

May 03, 2013 10:00 am ET


Charles R. Cox - Chairman of the Board and Chief Executive Officer

Robert S. Muff - Chief Financial Officer, Principal Accounting Officer and Controller

Joseph E. Milliron - President and Chief Operating Officer


Stephen Ragard - Stephens Inc., Research Division



Good morning, and thank you for joining the call. Before I introduce today's speakers, allow me to explain the format of the call. For your convenience, we have a set of slides available on our website that will closely follow the speakers' presentations this morning. Following the presentation today, we will invite questions from analysts and fund managers. [Operator Instructions] Now I would like to introduce Mr. Charles R. Cox, CEO of Furmanite Corporation. Mr. Cox, you may begin.

Charles R. Cox

Good morning. This is Charlie Cox, and I would like to welcome everyone to our first quarter call. Thank you all for joining us today.

Let me first direct your attention to the safe harbor statement in the presentation, which applies to this call as always. Next, let me explain that we will refer during our comments to slides, which may be found in our investor website under the tab labeled Events and Presentations.

With me today are Joe Milliron, Furmanite's President; and Bob Muff, our Principal Financial Officer.

Before we hear from Bob and Joe, I'd like to provide a bit of perspective regarding 2013 and our first quarter results. As you have seen in this morning's press release, our results were significantly improved over first quarter results a year ago. This has been our first quarter of performance with substantially all elements of the company-wide transformation we committed to 3 years ago now in place, and we are directionally pleased with our first scorecard. But these are very early days of marketing and executing as the new Furmanite, and frankly, we left some further upside both at the top line and at the bottom line on the table.

Our revenues of $89 million for the quarter were up 24% from 2012 first quarter results, and our $4.1 million operating income results were a very positive improvement over last year's first quarter loss.

But both results are well below our future potential as we mature our teamwork and work processes to earn more market share and take more of our revenue to the bottom line.

As will be obvious, as Bob and Joe discuss our numbers, the initial concentration of growth creation efforts thus far has been focused on the Americas. We are now expanding our efforts to drive accelerated growth from both a geographical and service line perspective in all of our other global operations.

A special concentration of support will be provided to our central European operations team to help them reestablish momentum and grow market share in a challenging market after the major restructuring completed there last year in response to poor macroeconomic conditions.

Our overall goal is to make the key results of our transformation, which fundamentally strengthen our competitive effectiveness, a permanent and vibrant reality for every Furmanite operation around the globe.

Those key results are vastly improved global teamwork and confidence across the world that we can sell and execute without constraints. Our vision continues to be world leadership in every aspect of our business, in safety, in customer responsiveness, in project execution excellence and, of course, in financial performance.

Now let me provide a brief update on our strategic direction. First of all, nothing has changed from the 5-year commitment we made back in 2010 to create substantial long-term global growth for Furmanite. We continue to have the same orange-coded values and priorities. We have the same change commitment, culture change commitment. We have the same growth strategies. We have the same transformation objectives and the same Orange Way of doing business as one global team. As you know, we have continuously shared our plans and progress openly with our investors, and yes, even with our competitors.

Second, we still enjoy a very small share of the global markets for our services, even though we have grown nicely since 2009, and our market share in the NDT, nondestructive testing, and inspection markets is only a surface scratch. Having the leading brand recognition and an unparalleled geographical footprint, we continue to believe that Furmanite has virtually unlimited growth potential in both our mechanical service lines and in the nondestructive testing and inspection service line we entered in 2012.

We are also well on our way to our vision of world leadership in each of our legacy service lines by the end of 2014, and we'll continue to expand our growth platform and market differentiation through internal investment, as well as synergistic M&A activity as appropriate.

We are also focused on broadening our customer interface as well, as one of -- as both the range and number of services that we provide to each one.

Finally, we plan to stay focused on the specialty industrial services market and the technical and management capabilities, which will further differentiate and add value to our service offerings.

Now with that, let me turn the floor over to Bob, who will take us through the numbers in more detail. Bob?

Robert S. Muff

Thank you, Charlie, and good morning, everyone. Okay. Let's take a look at our financial results for the quarter. As foreign currency effects were insignificant to all line items, we will not be presenting slides to show those impacts. Also, no restructuring costs were incurred in either first quarter.

Read the rest of this transcript for free on seekingalpha.com