MISCOR Group Reports Sharply Higher Third-Quarter Sales, Net Income
Tuesday November 13, 9:15 am ET
SOUTH BEND, Ind., Nov. 13 /PRNewswire-FirstCall/ -- Industrial services provider MISCOR Group, Ltd. (OTC Bulletin Board: MCGL - News) reported sharply higher net income and strong sales growth in the third quarter of 2007. MISCOR's performance in the quarter was highlighted by strong top line growth, continued debt reduction and increased product sales.
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South Bend, Ind.-based MISCOR, a supplier of mechanical and electrical industrial products and services, said net sales increased 14 percent to $17.7 million for the third quarter ended Sept. 30, 2007, compared with net sales of $15.5 million in the same period last year. The Company said product sales increased 46 percent to $6.1 million in the 2007 third quarter, reflecting growth in sales of motors, magnets and other industrial products as well as a 48 percent improvement in sales of diesel engine components.
MISCOR reported a $1.3 million improvement in profitability in the most recent third-quarter, reversing a loss in last year's comparable period. The Company reported net income of $64,000, or $0.00 per diluted share, for the third quarter of 2007, compared with a net loss of $1.2 million, or $0.01 per diluted share. MISCOR attributed the improvement to key operating initiatives that yielded increased sales, lower interest costs and improved expense controls. Last year's third-quarter included approximately $0.8 million in interest costs and a $1.0 million loss related to warrants issued by the Company. Interest expense declined to $0.3 million in 2007.
"The third quarter continues our 2007 trend of improved quarterly results and double-digit sales growth," said John Martell, president and CEO of MISCOR. "We are continuing to expand our market presence and are focused on executing from an operations standpoint. Additionally, our results are a testament to our employees' breadth of industry experience as we continue to focus on delivering unmatched products and services to our growing roster of blue chip clients."
Operating income decreased in the quarter, due primarily to a decrease in gross margin. MISCOR said it expects gross margin to improve as capacity utilization improves. Since Dec. 31, 2006, MISCOR's long-term debt has decreased to $15,000 from $5.8 million and total liabilities have declined 44 percent as of Sept. 30, 2007.
For the first nine months of 2007, MISCOR reported strong top-line growth, posting a 17 percent increase in net sales to $50.6 million, as compared to net sales of $43.3 million in the first nine months of 2006. MISCOR's growing geographic presence in the Gulf States and new customers, resulting from the Company's acquisition last year in Saraland, Ala and the recently opened Mobile, Ala magnet repair and remanufacturing center, helped drive the increase in its industrial repair business. The Company said its net loss narrowed to $2.3 million for the nine months ended Sept. 30, 2007, compared to a net loss of $3.1 million in the same period of 2006.
Martell added: "I'm pleased with our positive momentum and expect that we will finish 2007 on a strong note, helped by new revenue from our recent acquisition of Ideal Consolidated and the groundwork we have laid in both our divisions. Our recent acquisitions are gaining market share, and we are seeing the desired effect of offering a growing array of industrial services to our customers."
MISCOR recently announced the acquisition of privately held Ideal Consolidated, a South Bend, Ind.-based provider of mechanical contracting services, including HVAC, plumbing and industrial piping. The acquisition, completed on Oct. 19, 2007, is expected to be accretive to the Company's fourth-quarter earnings.
Segment Results
In the first quarter of 2007, MISCOR completed an internal realignment process as it relates to the Company's former three operating segments in order to better serve customers across its markets. In an effort to bring further clarity to the business, MISCOR realigned its segment reporting and now operates two segments: Repair, Remanufacturing and Manufacturing (RRM), which provides maintenance and repair services for industrial motors, generators and lifting magnets, as well as diesel engine component manufacturing, remanufacturing and repair services; and the Construction and Engineering Services (CES) segment, which provides a wide range of electrical contracting, engineering and repair services for electrical power distribution systems to industrial, commercial and institutional customers.
For the third quarter of 2007, RRM nearly doubled its net income, posting an 83 percent increase to $1.1 million, as compared to $0.6 million, including a 26 percent increase in sales in the same quarter last year. Strong growth led by increased sales of motors, magnets and other industrial products and a double-digit increase in sales of diesel engine components and larger service- based contacts helped to offset CES' loss in the quarter. CES reported a net loss of $39,000, compared to a profit of $480,000 in the year-ago period. MISCOR reported the loss was due primarily to a decrease in revenues directly related to its power distribution systems contracts and flat electrical contracting revenues in the quarter.
Conclusion
"Our results reflect the strides we've made expanding our product and service offerings, as well as our efforts to manage the business more efficiently," said Rich Mullin, chief financial officer of MISCOR. "With our improvements in sales and operations, combined with the strength of our balance sheet, we will continue to explore acquisition opportunities that will bolster our growing brand recognition and customer base."
Martell concluded: "Since our founding in 2000, and our becoming a public company in 2006, we have put in place the proper framework to help us evolve into a national service provider with an international presence. Our strong results this quarter and year-to-date, along with our ongoing acquisition activity and disciplined approach to spending, have created a strong base from which we expect to continue growing in 2008."
