Pike Electric Corporation (PIKE)
F4Q09 Earnings Call
September 1, 2009 5:00 pm ET
Frank Milano – Investor Relations, ICR
J. Eric Pike – Chairman and Chief Executive Officer
Anthony K. Slater – Executive Vice President and Chief Financial Officer
[Rich Waslowski] – Sidoti and Company
Tahira Afzal - Keybanc Capital Markets
Andrea Wirth - Robert W. Baird & Co., Inc.
Adam Thalhimer - BB&T Capital Markets
Scott Levine - J.P. Morgan
[Jonathan Barrett] – Luminous
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Now for opening remarks and introductions I’d like to turn the call over to Frank Milano, Pike Electric’s IR contact with ICR. Please go ahead.
Thank you. Good afternoon. Welcome to Pike Electric’s conference call to review our fiscal 2009 fourth quarter results.
Joining us this afternoon are Eric Pike, our Chairman and Chief Executive Officer and Anthony Slater, our Executive Vice President and Chief Financial Officer.
Before I turn the call over to Eric and Anthony, I will review the necessary disclosure. During this call we will make forward-looking statements. These are statements that are either not historical facts or statements regarding our attempts, beliefs or expectations with respect to trends affecting the company’s operation, financial, general economic and market conditions and growth and operating strategies. Financial expectations and estimates for example are forward-looking statements. We filed our earnings release on Form 8-K earlier today. The risk factors and management discussion and analysis sections of our annual reports on Form 10-K and other SEC filings describe the factors that may affect future results of our operations. Any forward-looking statements made today contained in Pike’s public statements or made by our management should be considered in light of these factors. We undertake no obligation to revise these forward-looking statements to reflect events or circumstances after today’s call.
A replay of today’s call will be available this evening in the Investor section of our website at www.pike.com. Investor Relations questions can be directed to us at 336-719-4622 and financial news alerts are available via email.
I’ll now turn the call over to Eric Pike, Chairman and Chief Executive Officer, who will begin this call with a business update.
J. Eric Pike
Thanks, Frank. Good afternoon everyone. To start the call today I’m going to provide a general overview of our fiscal 2009 and fourth quarter results, our perspective on the national economy, the trends within our industry and an update on Pike’s business strategy. Afterwards Anthony will then review our financial results in detail, and as always when we finish we will welcome your questions following our remarks.
Revenues for our fourth quarter were $128.5 million compared to $137.8 million for the fourth quarter of fiscal 2008. Revenues were negatively impacted by the ongoing softness in the distribution markets as our customers continued to defer necessary maintenance spending. We continue to see growth, however, in our engineering, transmission and substation work. Our transmission revenues were up 71% year-over-year in the fourth quarter and 24% sequentially. Engineering, which is a new service this year, was up 14% sequentially in the fourth quarter from the third quarter. And substation revenues increased 18% sequentially. Combined, these services still represent a minority of our business today, but we are confident they will continue to grow at an accelerated rate.
Net income was $2.5 million or $0.07 per diluted share, which was in line with our expectations for the quarter. For the full fiscal year 2009, we delivered double-digit revenue and earnings growth as revenues increased to $613.5 million from $552 million, and we increased earnings per diluted share by 56% to $0.94 of EPS. This growth would be considerable in any environment, but it is certainly an accomplishment in light of the ongoing economic challenges.
Fiscal 2009 was our second highest storm restoration year. In September we responded to Hurricane Gustav and right on its heels we responded to Hurricane Ike. Then, in February, Kentucky and Missouri experienced the biggest ice storms in their recorded history. Based on our efforts, and as our reputation spread, we picked up four new accounts immediately following our storm restoration efforts in Missouri. Although our storm restoration revenues might be considered non-recurring, this portion of our business does actually generate recurring revenue for us year-in and year-out. The annual contribution to revenue is not predictable, but we are able to consistently maximize the opportunity with our flexible business model and efficient response.
The diversity of our customer base and the strength of our customer relationships is the key to our ability to withstand the current economic environment. We have emerged as an even stronger company. For fiscal 2009, our largest customer made up 20% revenues and our top ten customers were 55% of total revenues. Most of our customer relationships are long-standing, with over 90% of our services provided under master service agreements. As a result, we are positioned to benefit as the broader economy recovers.
We will also benefit as utilities catch up on necessary distribution maintenance spending that has been deferred for several years. We have also focused on aligning the company’s cost structure to the realities of the market. We have reduced crew levels where appropriate, and our flexible staffing model allows us to retain our most experienced linemen. This model provides us the ability to rebuild our crews as the economy rebounds.