SOUTH BEND, Ind., Aug. 21 /PRNewswire-FirstCall/ -- Industrial services provider MISCOR Group, Ltd. (OTC Bulletin Board: MIGL) reported its operating results for the second quarter ended July 5, 2009.
MISCOR, a supplier of mechanical and electrical industrial products and services, reported total revenues of $19.4 million in the second quarter of 2009, compared with total revenues of $30.6 million in the same quarter of 2008. The Company reported a net loss of $2.8 million, or $0.24 per diluted share, for the 2009 second quarter, versus net income of $0.6 million, or $0.05 per diluted share, for last year's second quarter.
MISCOR's decrease in consolidated revenues in the second quarter of 2009 resulted from declines in industrial services segment revenues of $6.9 million, or 50 percent, declines in construction and engineering services revenues of $0.6 million, or 7 percent, and declines in rail services revenue of $3.6 million, or 48 percent. All three segments were adversely affected by the economic recession and reductions in demand within the manufacturing, transportation and construction industries, as well as by liquidity pressures that led to production slowdowns.
"While we are disappointed in our quarter's results, which reflect the continued challenges of the economic slowdown and tightened credit markets, we do see some signs of stabilization and a slight upward turn in certain parts of the economy that should benefit us going forward," said John Martell, president and CEO of MISCOR. "In addition, as we manage our way through this downturn, we continue to implement cost-cutting measures and work diligently to position ourselves for the economy's eventual improvement. For example, our December 2008 investment in the Construction and Engineering group's Traffic Division is already starting to show benefits, including an increased backlog of profitable contracts."
Beginning in the fourth quarter of 2008 and continuing through the first half of 2009, the Company's Industrial Services and Rail Services segment experienced a decline in backlog and revenues as a result of deteriorating market conditions. To address the impact of the challenging economic environment on this segment, the Company has implemented several strategic changes. These include a 27 percent reduction in workforce, which has reduced payroll expense by almost 20 percent from the fourth quarter of 2008 and 6 percent from the first quarter of 2009. Additional cost-cutting initiatives in the Industrial Services segment have resulted in a 2.1 percent improvement in the segment's results in the second quarter of 2009 compared to the first quarter. The Company continues to evaluate additional production consolidations to enhance the segment's operational efficiency.
Total gross profit for the first quarter of 2009 was $1.5 million, or 7 percent of total revenues, compared to gross profit of $5.1 million, or 16 percent of total revenues in the same period of 2008. The Company attributed the decline to decreased unabsorbed overhead costs associated with lower revenues and cost overruns on a few of the Company's electrical contracts.
As of July 5, 2009, MISCOR had approximately $9.4 million of working capital, reflecting a decrease of approximately $7.1 million versus the prior year. The decline was primarily attributed to decreased accounts receivable, which resulted in reduced availability of the Company's revolving credit line.
Martell concluded: "We will continue to work aggressively to better align our core assets with our long-term vision for growth in key industries such as wind power, transformer repair, turbine repair, and traffic and telecommunication contracting. Looking ahead, we remain focused on prudently managing our business through disciplined cost containment and improving operational efficiencies throughout all of our business lines."
South Bend, Ind.-based MISCOR Group, Ltd. (OTC BB: MIGL) provides electrical and mechanical solutions to industrial, commercial and institutional customers through three segments: Industrial Services, consisting of the Company's maintenance and repair services to several industries including electric motor and wind power and repairing, manufacturing, and remanufacturing industrial lifting magnets for the steel and scrap industries, Construction and Engineering Services, consisting of MISCOR's electrical and mechanical contracting services, mainly to industrial, commercial, and institutional customers, and Rail services, consisting of the Company's manufacturing and rebuilding of power assemblies, engine parts, and other components related to large diesel engines and its locomotive maintenance, remanufacturing, and repair services for the rail industry.
In 2007, MISCOR entered the wind power industry through its acquisition of 3-D Service, Ltd., providing both onsite and in-shop maintenance and repair services for wind farms. MISCOR was ranked on the Inc. 500 in 2004 and 2005 and operates in 15 locations in the U.S. and Canada.
This press release includes "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "estimates," "expects," "intends," "should," "could," "will," or variations of such words and similar expressions are intended to identify forward-looking statements. These forward-looking statements reflect the Company's views, expectations and beliefs at the time such statements were made with respect to such matters, and may cover such items as the Company's future plans, objectives, events, contract pricing and results such as revenues, expenses, income, earnings per share, capital expenditures, operating margins, financial position, expected results of operations and other financial items. There are a number of factors, many of which are beyond the Company's control, which could cause actual results and outcomes to differ materially from those described in the forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Risk Factors") that make the timing, extent, likelihood and degree of occurrence of these matters difficult to predict. Risk Factors include, among others: price of raw materials, ability to win and service competitively priced new contracts in sufficient amounts to operate and expand effectively, employee turnover, ability to compete in highly competitive, geographically diverse marketplaces, and varying and sometimes volatile economic conditions. For further discussion of risks and uncertainties, individuals should refer to the Company's SEC filings. MISCOR Group, Ltd. undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release is issued. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement.
SOURCE MISCOR Group, Ltd.