Baker Announces Financial Results for Third Quarter and First Nine Months of 2009

November 9, 2009 4:46 PM EST

PITTSBURGH--(BUSINESS WIRE)-- Michael Baker Corporation (NYSE Amex: BKR) today reported its financial results for the third quarter and first nine months of 2009.

As announced earlier, on September 30, 2009, the Company sold its former Energy business segment for $37.9 million, plus a net asset adjustment which is estimated to be $9.3 million. As a result of this disposition, the financial results of the former Energy segment have been reclassified as discontinued operations for all periods presented in the condensed consolidated financial statements. The information contained in this news release pertains to Baker's continuing operations, while the Company's 10-Q, which is being filed with the SEC concurrent with this announcement, presents a complete discussion of both continuing and discontinued operations.

For the quarter, Baker reported income from continuing operations of $7.0 million, or $0.78 per diluted share, on total contract revenues of $110 million. This compares to income from continuing operations of $6.9 million, or $0.78 per diluted share, on total contract revenues of $119 million in the third quarter of 2008. The higher income from continuing operations, on lower revenue, is attributable primarily to an increase in equity income from the Company's unconsolidated joint venture operating in Iraq. The decrease in revenue for the current period relates to a net decline of $7.3 million in work performed for the Federal Emergency Management Agency (FEMA) and a decrease of $0.9 million in work directly performed by Baker as a subcontractor to the previously mentioned unconsolidated joint venture operating in Iraq. This was partially offset by a $0.6 million increase in project incentive awards compared to the third quarter of 2008, and increases on several existing transportation projects.

Operating income in the third quarter of 2009 was $7.5 million, compared to $10.2 million in the same period in 2008. This year-over-year decrease is attributable primarily to the lower revenue mentioned earlier and an increase in incentive compensation accruals based on year-to-date achievement toward the plan targets. Other income was $3.4 million in the current quarter compared to $1.1 million in the prior period, primarily due to a $2.8 million increase in equity income from the unconsolidated joint venture operating in Iraq.

Total backlog for continuing operations at September 30, 2009 was $1.43 billion, compared to $984 million at December 31, 2008. Of these totals, $438 million and $450 million are considered funded backlog. Included in funded backlog at September 30, 2009, was $47 million related to the Company's FEMA Map Modernization contract, compared to $68 million at December 31, 2008.

On the balance sheet as of September 30, 2009, the Company had a cash balance of approximately $73 million and no long-term debt. In addition, at September 30, 2009, the Company had a receivable related to the sale of the Energy segment of $47.2 million, consisting of $37.9 million, which was received shortly after the close of the transaction, and an estimated $9.3 million for net asset adjustments, which the Company expects to realize before the end of 2009.

For the first nine months of 2009, the Company reported income from continuing operations of $18.7 million, or $2.10 per diluted share, on total contract revenues of $339 million, compared with income from continuing operations of $20.6 million, or $2.32 per diluted share, on total contract revenues of $341 million in the first nine months of 2008.

The full-year forecasted effective income tax rate from continuing operations was 38.0 percent and 39.0 percent at September 30, 2009 and 2008, respectively.

Commenting on the results, President and Chief Executive Officer Bradley L. Mallory said, "It is never easy to achieve the clarity of focus necessary to ensure the continued success of a strong and viable core business, but with the recent sale of our Energy segment, we have done just that. These financial results partially mask this overarching truth. Our core Engineering business has been solidly profitable, and we expect continued growth in profitability going forward, despite the slight flattening of revenues resulting from the changing nature of our work for FEMA."

Michael Baker Corporation provides architecture, engineering and construction services for its clients' most complex challenges worldwide. The firm's primary business areas are aviation, defense, environmental, facilities, geospatial, homeland security, municipal & civil, pipelines & utilities, transportation and water. With more than 2,300 employees in over 40 offices across the United States, Baker is focused on creating value by delivering innovative and sustainable solutions for infrastructure and the environment.

Conference Call

Michael Baker Corporation has scheduled a conference call and webcast for Tuesday, November 10, at 10:00 a.m. EST, to discuss the third quarter and first nine months' results. Please call 800-860-2442 at least 10 minutes prior to the start of the call. To access the webcast, please visit the investor relations portion of Baker's website at www.mbakercorp.com

(The above information contains forward-looking statements concerning our future operations and performance. Forward-looking statements are subject to market, operating and economic risks and uncertainties that may cause our actual results in future periods to be materially different from any future performance suggested herein. Factors that may cause such differences include, among others: increased competition; increased costs; changes in general market conditions; changes in industry trends; changes in the regulatory environment; changes in our relationship and/or contracts with the Federal Emergency Management Agency ("FEMA"); changes in anticipated levels of government spending on infrastructure, including the Safe, Accountable, Flexible, Efficient Transportation Equity Act--A Legacy for Users ("SAFETEA-LU"); changes in loan relationships or sources of financing; changes in management; changes in information systems; late SEC filings; and, the restatement of financial results. Such forward-looking statements are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.)

FINANCIAL SUMMARY

(Unaudited)

                           For the three months  For the nine months

Operating Results          ended September 30,   ended September 30,

(In thousands, except      2009       2008       2009             2008
earnings per share)

Revenues                   $ 110,153  $ 119,155  $ 338,560        $ 341,317

Gross profit                 22,239     23,788     67,605           68,456

Operating income             7,523      10,201     23,648           30,923

Income before income         10,919     11,317     30,129           33,799
taxes

Income from continuing       6,962      6,903      18,680           20,617
operations

Income from discontinued     355        4,900      3,622            5,649
operations

Net income attributable
to Michael Baker           $ 7,278    $ 11,793   $ 22,166         $ 26,166
Corporation

Weighted average shares
outstanding:

 Basic                       8,859      8,812      8,849            8,805

 Diluted                     8,939      8,898      8,928            8,887

Earnings per share:

 Basic-continuing          $ 0.78     $ 0.78     $ 2.12           $ 2.34
 operations

 Diluted-continuing          0.78       0.78       2.10             2.32
 operation

 Basic-net income            0.82       1.34       2.51             2.97

 Diluted-net income        $ 0.81     $ 1.33     $ 2.48           $ 2.94

Backlog                                          As of

(In millions)                                    September 30,    December 31,

                                                 2009             2008

Funded                                           $ 437.7          $ 449.5

Unfunded                                           991.4            534.7

Total                                            $ 1,429.1        $ 984.2

Condensed Balance Sheet                          As of

(In thousands)                                   September 30,    December 31,

                                                 2009             2008

ASSETS

Cash and cash equivalents                        $ 73,361         $ 49,050

Proceeds receivable -                              47,234           -
Energy sale

Receivables, net                                   64,847           113,676

Unbilled revenues on                               52,238           70,455
contracts in progress

Prepaid expenses and                               14,796           16,756
other

 Total current assets                              252,476          249,937

Property, plant and                                13,201           16,671
equipment, net

Goodwill and other                                 9,723            17,254
intangible assets, net

Other long-term assets                             6,792            8,200

 Total assets                                    $ 282,192        $ 292,062

LIABILITIES & SHAREHOLDERS'
INVESTMENT

Accounts payable                                 $ 31,460         $ 42,421

Accrued compensation and                           38,435           47,162
insurance

Other accrued expenses                             18,859           28,696

Billings in excess of revenues on contracts in     16,355           17,449
progress

 Total current                                     105,109          135,728
 liabilities

Other long-term                                    8,586            13,418
liabilities

 Total liabilities                                 113,695          149,146

Common Stock                                       9,389            9,351

Additional paid-in                                 49,426           48,405
capital

Retained earnings                                  114,380          92,214

Accumulated other                                  (306        )    (2,565     )
comprehensive loss

Less - Treasury shares                             (4,761      )    (4,761     )

 Total Michael Baker Corporation shareholders'     168,128          142,644
 investment

Noncontrolling interests                           369              272

 Total shareholders'                               168,497          142,916
 investment

 Total liabilities & shareholders'               $ 282,192        $ 292,062
 investment

    Source: Michael Baker Corporation

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