Global Power (NYSE:GEG)
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Global Power Equipment Group Inc. Reports Fourth Quarter FY2004
Results
Year-end Backlog Rises 73% to $309 Million, Higher Steel Costs Continue to
Impact Gross Margins
TULSA, Okla., March 2 /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
fourth quarter and fiscal year ended December 31, 2004.
Global Power Equipment Group reported a loss for the fourth quarter of fiscal
2004 of ($1.9) million or ($0.04) per diluted share, on revenues of $61.8
million. This compares to net earnings of $5.1 million, or $0.11 per diluted
share, on revenues of $65.4 million for the fourth quarter of fiscal 2003. For
the fiscal year ended December 31, 2004, the Company reported a net loss of
($0.7) million, or ($0.02) per diluted share, on revenues of $233.7 million.
This compares to net earnings for the fiscal year ending December 27, 2003 of
$19.8 million, or $0.43 per diluted share, on revenues of $263.8 million.
Earnings for the fourth quarter of fiscal 2004 and the twelve months of 2004
include previously announced restructuring charges related to employee
severance programs and the closure of two Company-owned manufacturing
facilities, one in Mexico and one in South Carolina totaling $1.4 million and
$4.8 million, respectively or $0.02 and $0.06 per share, respectively, as well
as additional fourth quarter expenses totaling approximately $1.1 million or
$0.02 per share consisting of unrealized foreign exchange losses, additional
interest expense and the write-off of debt issuance costs.
The Company's gross profit for the fourth quarter of 2004 totaled $9.2 million
representing a 14.9 percent gross margin compared to a gross profit of $19.5
million and a gross margin of 29.8 percent in the fourth quarter last year.
Steel costs, which more than doubled during fiscal 2004, weighed heavily on the
Company's gross profit during the fourth quarter and throughout 2004. For the
fiscal year ended December 31, 2004, the Company's gross profit totaled $39.3
million representing a 16.8 percent gross margin compared to $71.5 million and
27.1 percent for the prior fiscal year.
The Company generated EBITDA (earnings plus income taxes, interest,
depreciation and amortization) of ($1.5) million for the fourth quarter of
2004, down from the $9.0 million recorded during the fourth quarter of 2003.
The decrease in EBITDA was principally due to the lower gross margin during the
fourth quarter of 2004, as well as previously announced restructuring charges.
EBITDA for the full fiscal year 2004 totaled $3.7 million compared to EBITDA of
$37.0 million for the 2003 fiscal year.
The Company had cash and cash equivalents of $98.7 million on hand at the end
of 2004, $74.4 million of which was restricted for the previously announced
acquisition of Williams Industrial Services Group, which is scheduled to close
in early April 2005. Including the $69 million of convertible senior
subordinated notes issued by the Company in November 2004, the Company's
long-term debt totaled $78.8 million at the end of 2004. At the end of 2003,
the Company had cash and cash equivalents of $51.3 million on hand and
long-term debt of $25.0 million.
"Our targeted sales efforts in a number of key markets produced very strong
bookings of $153 million during the fourth quarter," stated Larry Edwards,
Global Power Equipment Group's chairman and chief executive officer. "We
successfully secured large orders in Europe, the United States and Asia, which
we had been pursuing for many months."
Mr. Edwards further stated, "For a number of months we have anticipated more
robust market conditions outside of the United States and have shared this
outlook with our shareholders. Clearly our strong fourth quarter bookings
reflect the market upturn that we, along with others in our industry, have
predicted. Unquestionably, the market environment has improved significantly
and remains strong at the beginning of 2005. However, global steel prices
advanced beyond what we anticipated and continue to weigh on our profitability.
Our operating units are working diligently to manage this issue and we remain
hopeful that steel prices will stabilize or possibly soften during the present
year and help boost our gross margins. We are making every effort to pass on
as much as possible these higher steel costs in what remains a very competitive
market environment."
As of December 31, 2004, the Company's firm backlog totaled $309 million
compared to $218 million at the end of September 2004 and $179 million at the
end of fiscal 2003. Approximately 84 percent of the Company's bookings during
the fourth quarter were outside of the United States compared to 76 percent for
the fourth quarter of 2003. For the full year, 76 percent of the Company's
bookings originated from projects outside of the United States compared to 62
percent during 2003.
Earnings Estimate
Based upon information management currently has evaluated, in conjunction with
this release, and anticipating an early April 2005 closing of the Williams
Industrial Services Group (WISG) transaction, management estimates fiscal year
2005 revenue and earnings as follows: revenue of between $440 million and $490
million and diluted earnings per share of between $0.20 and $0.29, excluding
the expenses associated with the announced retirement of Larry Edwards, the
Company's present Chairman and CEO. These expenses are estimated to total
approximately $1.8 million or $0.02 per diluted share.
Incorporating the nine-month contribution of WISG for 2005, which is expected
to contribute approximately $90 million of revenue at a gross profit of between
$9.5 million to $10.4 million, and the impact of higher steel costs
incorporated into orders received during the fourth quarter of 2004, the
Company estimates that consolidated fiscal year 2005 gross profit could range
between $57 million and $69 million.
Excluding possible unrealized foreign currency gains or losses from currency
hedging activities on international projects, the Company estimates earnings
for the first quarter of 2005 should range between ($0.01) and $0.02 per
diluted share on revenues of between $70 million and $80 million and a gross
profit of between $9 million and $11 million.
Non-GAAP Financial Measures
This release contains disclosure of EBITDA, which is a non-GAAP financial
measure within the meaning of Regulation G promulgated by the Securities and
Exchange Commission. A reconciliation of EBITDA to net income available to
common stockholders is 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 and repair. 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 materials such as steel, and unforeseen
schedule delays, any delay or failure to close the acquisition of Williams
Industrial Services Group, competition for the sale of our products or
services, poor performance by our subcontractors, warranty and product
liability claims, 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 27, 2003, 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 Twelve Months Ended
Dec. 31, Dec. 27, Dec. 31, Dec. 27,
2004 2003 2004 2003
Revenues $61,825 $65,449 $233,692 $263,778
Cost of sales 52,609 45,967 194,435 192,281
Gross profit 9,216 19,482 39,257 71,497
Selling and administrative expenses 11,591 11,386 39,162 38,083
Operating income (loss) (2,375) 8,096 95 33,414
Interest expense 785 286 1,281 1,504
Income (loss) before income taxes
and minority interest (3,160) 7,810 (1,186) 31,910
Income tax provision (benefit) (1,201) 2,727 (451) 12,126
Income (loss) before minority
interest (1,959) 5,083 (735) 19,784
Minority interest (30) --- (30) ---
Net income (loss) available to
common stockholders $(1,929) $5,083 $(705) $19,784
Basic income (loss) per common share
Weighted average shares
outstanding- basic 46,432 45,100 46,195 44,521
Net income (loss) available
to common stockholders $(0.04) $0.11 $(0.02) $0.44
Diluted income (loss) per common share
Weighted average shares
outstanding- diluted 46,432 46,196 46,195 45,911
Net income (loss) available
to common stockholders $(0.04) $0.11 $(0.02) $0.43
GLOBAL POWER EQUIPMENT GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 27,
2004 2003
ASSETS
Current assets:
Cash and cash equivalents $24,331 $51,315
Restricted cash 74,357 ---
Accounts receivable, net of
allowance of $894 and $1,325 40,260 42,582
Inventories 8,857 3,013
Costs and estimated earnings in
excess of billings 60,861 40,706
Deferred tax assets 10,576 17,315
Other current assets 15,966 3,983
Total current assets 235,208 158,914
Property, plant and equipment, net 22,983 20,740
Deferred tax assets 51,030 55,094
Goodwill, net 45,000 45,000
Other assets 12,673 1,248
Total assets $366,894 $280,996
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt $16,854 $14
Accounts payable 27,852 18,974
Accrued compensation and employee benefits 4,545 7,285
Accrued warranty 9,758 15,004
Billings in excess of costs and
estimated earnings 52,707 53,293
Other current liabilities 8,005 5,203
Total current liabilities 119,721 99,773
Other long-term liabilities 4,374 1,888
Long-term debt, net of current maturities 78,750 24,949
Commitments and contingencies
Minority interest 1,629 ---
Stockholders' equity
Common stock 468 452
Paid-in capital deficit (17,698) (25,492)
Deferred compensation (91) ---
Accumulated comprehensive income 3,636 2,616
Retained earnings 176,105 176,810
Total stockholders' equity 162,420 154,386
Total liabilities and equity $366,894 $280,996
GLOBAL POWER EQUIPMENT GROUP INC.
SUPPLEMENTAL STATISTICAL INFORMATION
(in thousands)
Three Months Twelve Months
Ended Ended
Dec. 31, Dec. 27, Dec. 31, Dec. 27,
2004 2003 2004 2003
Net income (loss) $(1,929) $5,083 $(705) $19,784
Add back:
Income tax provision (benefit) (1,201) 2,727 (451) 12,126
Interest expense 785 286 1,281 1,504
Depreciation and amortization 810 883 3,583 3,563
EBITDA (A) $(1,535) $8,979 $3,708 $36,977
(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.
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/