Underground Solutions set a new record for booked business in 2011. We finished the year as we had begun, realizing a fourth straight quarter of strong bookings. Overall, 2011 bookings increased by more than 40% over 2010. More importantly, we entered 2012 with a record-high level of backlog, more than double the amount at this time last year. While our revenue recognition suffered during the first half of 2011, strong bookings throughout the year enabled us to increase revenue year-over-year; though not at the heady rate of our bookings growth. With our strong year-end backlog, we will not have a recurrence in 2012 of the slow revenue start and the resultant under-utilization of our fusion technicians that we experienced in the first quarter of last year.
The results discussed above exclude any contribution from our newly acquired pipe coating and lining business, which exceeded expectations for our first six months of ownership. Although we have some work ahead of us to fully develop the selling synergies available from our ownership of Mobile Pipe, we have experienced early success cross-selling Mobile Pipe’s services in conjunction with our Fusible PVC™ pipe offering.
New areas of strength in 2011, that we expect to provide continued growth in 2012, are: • Federal base re-alignment work; • Industrial (including shale-gas water conveyance); • Investor-owned utilities; and • Repeat municipal customers.
While 2011 was an improved year for the pipe industry, early signs for 2012 are mixed. Some pipe manufacturers have already announced downsizing plans in anticipation of a slowing order book. Moreover, historically low natural gas prices are likely to slow the development of newly discovered natural gas fields in the U.S. Development of natural gas and oil resources accounted for a significant part of the overall pipe industry growth in 2011.
Notwithstanding these macro-developments, the first quarter is starting out strong for Underground Solutions. Moreover, we continue to receive accolades and recognition from industry trade journals, including this recent cover story in UIM magazine: http://www.uimonline.com/index/cover and this cover story about our company in general in Trenchless Technology magazine: http://www.trenchlessonline.com/ (it has a great picture of our 30” pipe on a job near Chicago).
Thanks for your continued support.
Sincerely, Andy Seidel Chairman and Chief Executive Officer
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