Fiscal 2009 Second Quarter Results
Core revenues for the second quarter of fiscal 2009 increased $10.2 million to $133.7 million, compared to $123.5 million for the second quarter of fiscal 2008, including a $23.8 million contribution from EDS which was acquired on September 1, 2008. Transmission revenues were up $4.3 million or 42%. Distribution revenues were negatively impacted by reduced maintenance spending across Pike’s operating territory. Storm restoration revenues totaled $10.9 million for the second quarter of fiscal 2009, down 44.4% from the second quarter of fiscal 2008.
Gross profit for the second quarter of fiscal 2009 was $18.4 million, or 12.8% of revenue, compared to $24.5 million or 17.1% of revenue, for the second quarter of fiscal 2008. The gross profit percentage decrease is due to a decrease in equipment utilization due to a continued drop in utility distribution projects, an increase in fuel costs primarily related to non-cash mark-to-market derivative charges and lower storm revenues.
General and administrative expenses for the second quarter of fiscal 2009 were $11.2 million, or 7.7% of revenue, compared to $10.6 million, or 7.4% of revenue, for the second quarter fiscal 2008. Second quarter included the first full quarter of administrative costs related to the recently acquired EDS business. Our general and administrative expenses were favorably impacted in the quarter by the voluntary forfeiture of the 2009 fiscal year cash incentives for our top seven management members. Those cash incentives would have been due based on the established targets and estimated 2009 results. The favorable impact of the forfeited cash incentives in the quarter totaled $1.3 million and included a reversal of $1.1 million in incentives recorded during first quarter. Based on current estimates, the forfeiture will total an additional savings of $0.6 million for the second half of fiscal 2009.
Interest expense decreased 27.7% to $2.7 million compared to the second quarter of fiscal 2008 due to lower debt balances and lower interest rates.
Our second quarter was very challenging, as we had anticipated and communicated, said J. Eric Pike, chairman and chief executive officer of Pike. The economic environment and tight credit markets continued to have a strong impact on almost every industry in the country and our customers were impacted as well.
In light of these challenges, we remain focused on affecting the areas of our business we can control, Pike added. We continue to position ourselves as a leading national Energy Solutions company and have made progress on marketing the additional services we are able to offer since the EDS acquisition. We have also taken further actions to reduce costs and improve efficiencies in every aspect of the business.
We are confident the steps we have been taking will allow us to enhance our market position when spending returns to historical levels, Pike continued. While we expect the near term to remain difficult, particularly in the distribution sector, we are confident in our newly diversified business strategy. The drivers of long-term growth are still evident with the nation’s electrical infrastructure in need of upgrades and maintenance. We see the outsourcing trend of our customers continuing, along with an increasing demand for renewable energy solutions. Pike remains flexible and poised to take advantage of these growth opportunities.
Six Months Ended December 31, 2008 Results
Total revenues for the six months ended December 31, 2008 were $330.1 million, as compared to $282.9 million for the first six months of fiscal 2008. Core powerline revenues were $241.5 million for the six months ended December 31, 2008, as compared to $258.4 million for the same period in fiscal 2008. Storm restoration revenues totaled $88.6 million for the six-month period compared to $24.5 million for the same period in fiscal 2008. Gross profit totaled $63.4 million for the six months ended December 31, 2008, as compared to $47.7 million for the same period in fiscal 2008. Gross profit as a percentage of revenue increased to 19.2% from 16.9% in fiscal year 2008 due primarily to the significant increase in higher-margin storm restoration revenues. Net income for the first six months of fiscal 2009 totaled $20.8 million, or $0.62 per diluted share, compared to net income of $10.4 million, or $0.31 per diluted share, for the first six months of fiscal 2008.
