Global Power (NYSE:GEG)
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Global Power Equipment Group Inc. Reports First Quarter FY2005
Results; Firm Backlog at $321 Million, 60 Percent Above Prior Year
TULSA, Okla., May 9 /PRNewswire-FirstCall/ -- Global Power Equipment Group
Inc. (NYSE:GEG), a leading design, engineering and manufacturing firm providing
a broad array of equipment and services to the global energy, power
infrastructure and process industries, today reported financial results for the
first quarter ended March 31, 2005.
Global Power Equipment Group reported breakeven results for the first quarter
of fiscal 2005 or $0.00 per share, on revenues of $67.4 million. This compares
to net earnings of $0.8 million, or $0.02 per diluted share, on revenues of
$55.1 million for the first quarter of fiscal 2004. First quarter 2005
earnings include the effect of the previously announced restructuring charge of
approximately $0.2 million or $0.00 per share. First quarter 2004 earnings
included the effect of $2.0 million, or $0.03 per share, of restructuring
charges.
The Company's gross profit for the first quarter of 2005 totaled $9.8 million
representing a 14.5 percent gross margin compared to a gross profit of $11.8
million and a gross margin of 21.4 percent in the first quarter of last year.
A more competitive market environment coupled with cost pressures resulting
from continued higher steel and energy prices contributed to the lower gross
margin performance during the first quarter.
The Company generated EBITDA (earnings before income taxes, plus interest,
depreciation and amortization) of $1.8 million for the first quarter of 2005,
down from the $2.4 million recorded during the same period in 2004, which
included $2.0 million of restructuring charges. The decrease in EBITDA was
principally due to the lower gross profit.
The Company had total cash on hand of $99.4 million at March 31, 2005, $65.7
million of which was restricted for the acquisition of Williams Industrial
Services Group, which closed on April 11, 2005.
At the end of the first quarter, the Company's firm backlog totaled $321
million compared to $200 million at the end of March 2004 and $309 million at
the end of December 2004. Approximately 63 percent of the March 31, 2005
backlog consists of orders from international customers as compared to
approximately 72 percent at March 27, 2004.
Al Brousseau, Global Power Equipment Group's president and chief operating
officer, stated, "Clearly the activity being reported by the major gas turbine
manufacturers and our own recent awards and increased backlog point to a
stronger 2006." Mr. Brousseau further stated, "With the current cost
improvement initiatives we have underway, we believe we are well positioned to
improve our results."
Earnings Estimate
Based upon information management currently has evaluated, in conjunction with
this release, the Company estimates fiscal year 2005 revenue of between $440
and $490 million and diluted earnings per share of between $0.15 and $0.21,
excluding an estimated $0.03 per diluted share of restructuring charges for the
entire year related mainly to the retirement of the Company's CEO on June 30,
2005. Management estimates second quarter 2005 earnings of approximately $0.03
to $0.05 per share, excluding an estimated $0.02 per diluted share of
restructuring charges related to the CEO's retirement, on estimated revenues of
approximately $110 to $120 million and gross margins of 12.0% to 13.5%. These
estimates incorporate the recently completed acquisition of Williams Industrial
Services Group, which closed on April 11, 2005.
Non-GAAP Financial Measures
This release contains disclosure of EBITDA and estimated earnings per diluted
share for fiscal 2005 that exclude the effect of estimated restructuring
charges, which are non-GAAP financial measures within the meaning of Regulation
G promulgated by the Securities and Exchange Commission. The Company believes
that EBITDA is a useful measure of evaluating its financial performance because
of its focus on the Company's results from operations before interest, income
taxes, depreciation and amortization. EBITDA is not a measure of financial
performance under generally accepted accounting principles. However, EBITDA is
a common alternative measure of operating performance used by investors,
financial analysts and rating agencies. A reconciliation of EBITDA to net
income (loss) and of estimated earnings per diluted share excluding
restructuring charges to estimated earnings are included in the exhibits to
this release.
About Global Power Equipment Group
Oklahoma based Global Power Equipment Group Inc. is a leading design,
engineering and manufacturing firm providing a broad array of equipment and
services to the global energy, power infrastructure and process industries. The
Company designs, engineers and manufactures a comprehensive portfolio of
equipment for gas turbine power plants and power-related equipment for
industrial operations, and has over 30 years of power generation industry
experience. The Company's equipment is installed in power plants and in
industrial operations in more than 40 countries on six continents and believes,
in its product lines, it has one of the largest installed bases of equipment
for power generation in the world. In addition, the Company provides its
customers with value-added services including engineering, retrofit,
maintenance, repair and general plant services. Additional information about
Global Power Equipment Group may be found at http://www.globalpower.com/ .
Statements contained in this release regarding the Company's or management's
intentions, beliefs, expectations, or predictions for the future, including,
but not limited to, those regarding anticipated operating results, are
forward-looking statements within the meaning of U.S. federal securities laws
and are subject to a number of risks, assumptions and uncertainties that could
cause the Company's actual results to differ materially from those projected,
including decreased demand for new gas turbine power plants, the loss of any of
our major customers, the cancellation of projects, project cost overruns,
including increases in prices for energy or for materials such as steel, and
unforeseen schedule delays, competition for the sale of our products or
services, poor performance by our subcontractors, warranty and product
liability claims, delays in integrating the operations of Williams Industrial
Services Group and the Company, and changes in the economic, social and
political conditions in the countries in which we operate, including
fluctuations in foreign currency exchange rates. Information concerning some
of the other factors that could cause actual results to differ materially from
those in, or implied by, the forward-looking statements are set forth under
"Risk Factors" in the Company's Form 10-K for the period ended December 31,
2004, and other reports on file with the U.S. Securities and Exchange
Commission. The Company assumes no obligation to update publicly such
forward-looking statements, whether as a result of new information, future
events or otherwise.
Company Contact:
Bob Zwerneman
Director of Investor Relations
(918) 274-2398
GLOBAL POWER EQUIPMENT GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Three Months Ended
March 31, March 27,
2005 2004
Revenues $67,387 $55,126
Cost of sales 57,606 43,313
Gross profit 9,781 11,813
Selling and administrative expenses 8,916 10,261
Operating income 865 1,552
Interest expense 896 200
Income (loss) before income taxes
and minority interest (31) 1,352
Income tax provision (benefit) (11) 514
Income (loss) before minority interest (20) 838
Minority interest 10 ---
Net income (loss) $(30) $838
Basic income per common share
Weighted average shares
outstanding - basic 46,813 45,657
Net income (loss) $--- $0.02
Diluted income per common share
Weighted average shares
outstanding - diluted* 46,813 46,727
Net income (loss) $--- $0.02
* Diluted income per common share for the three months ended
March 31, 2005 excludes potentially dilutive common shares as the
inclusion of the shares would be anti-dilutive.
GLOBAL POWER EQUIPMENT GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
2005 2004
ASSETS
Current assets:
Cash and cash equivalents $24,682 $24,331
Restricted cash 16,720 16,669
Accounts receivable, net of
allowance of $882 and $894 37,693 40,260
Inventories 11,102 8,857
Costs and estimated earnings in
excess of billings 61,303 60,861
Deferred tax assets 10,189 10,576
Other current assets 17,459 15,966
Total current assets 179,148 177,520
Property, plant and equipment, net 22,409 22,983
Deferred tax assets 52,237 51,030
Goodwill, net 45,000 45,000
Restricted cash 58,000 57,688
Other assets 12,927 12,673
Total assets $369,721 $366,894
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt $18,054 $16,854
Accounts payable 28,130 27,852
Accrued compensation and employee
benefits 4,572 4,545
Accrued warranty 9,954 9,758
Billings in excess of costs and
estimated earnings 55,266 52,707
Other current liabilities 7,967 8,005
Total current liabilities 123,943 119,721
Other long-term liabilities 4,102 4,374
Long-term debt, net of current maturities 77,500 78,750
Commitments and contingencies
Minority interest 1,639 1,629
Stockholders' equity
Common stock 469 468
Paid-in capital deficit (17,034) (17,698)
Deferred compensation (77) (91)
Accumulated comprehensive income 3,104 3,636
Retained earnings 176,075 176,105
Total stockholders' equity 162,537 162,420
Total liabilities and equity $369,721 $366,894
GLOBAL POWER EQUIPMENT GROUP INC.
SUPPLEMENTAL STATISTICAL INFORMATION
(in thousands)
Three Months Ended
March 31, March 27,
2005 2004
Net income (loss) $(30) $838
Add back:
Income tax provision (benefit) (11) 514
Interest expense 896 200
Depreciation and amortization 978 838
EBITDA (A) $1,833 $2,390
(A) EBITDA represents net income plus income taxes, interest,
depreciation and amortization. While considered the most common
definition used by investors and financial analysts, the EBITDA
presented above may not be comparable to similarly titled measures
reported by other companies. The Company believes that EBITDA,
while providing useful information, should not be considered in
isolation or as an alternative to other financial measures
determined under GAAP.
GLOBAL POWER EQUIPMENT GROUP INC.
RECONCILIATION OF NON-GAAP ESTIMATED EARNINGS TO A GAAP BASIS
Three Months Ended Twelve Months Ended
June 30, 2005 December 31, 2005
(Low (High (Low (High
estimate) estimate) estimate) estimate)
Estimated earnings per
share on a non-GAAP basis $0.03 $0.05 $0.15 $0.21
Impact of estimated
restructuring charges (0.02) (0.02) (0.03) (0.03)
Estimated earnings per
share on a GAAP basis $0.01 $0.03 $0.12 $0.18
DATASOURCE: Global Power Equipment Group Inc.
CONTACT: Bob Zwerneman, Director of Investor Relations of Global Power
Equipment Group Inc., +1-918-274-2398
Web site: http://www.globalpower.com/