UniTek Q1 Loss Wider Than Expected - Analyst Blog

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Shares of UniTek Global Services, Inc. UNTK fell over 5% and closed at $1.51 as the company reported preliminary results for the first quarter of 2014. The company posted a loss of 45 cents per share in the reported quarter. It compared unfavorably with the prior year loss of 28 cents a share and was wider than the Zacks Consensus Estimate of a loss of 14 cents per share.

UniTek Global Services reported a 22% year-over-year decline in revenues to $88.6 million in the first quarter. Revenues also lagged the Zacks Consensus Estimate of $102 million.

Operational Updates

Gross profit during the quarter decreased 28.6% to $13 million from $18.6 million in the prior-year. Consequently, gross margin contracted 100 basis points to 15% in the quarter.

Selling, general and administrative expenses decreased 22% year over year to $10 million. Adjusted operating profit was $3 million, compared with year-ago figure of $5.4 million. The company reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) went down 41.3% to $3.7 million from the earlier year figure of $6.3 million.

Segment Performance

Fulfillment segment: The segment reported sales of $63.2 million in the first quarter, down from $74.4 million a year-ago. The decrease in revenues was primarily owing to declines in both cable and satellite home installations because of weather disruptions and also for exiting certain low or negative margin cable markets.

Engineering and Construction segment: Net sales in the reported quarter went down 35.6% year over year to $25.4 million. The decrease was due to reduced work for AT&T as the Company's Northeastern turf agreement is coming to an end.

Financial Update

As of Mar 29, 2014, UniTek Global Services had cash and cash equivalents of $0.7 million, down from $1.8 million as of Dec 31, 2013. Long-term debt was $157 million as of Mar 29, 2014 against $174 million as of Dec 31, 2013. Cash used in operating activities was $2.3 million in the first quarter, ended Mar 29, 2014, compared to cash provided by operating activities of $6.6 million in the prior-year comparable period.

Guidance

UniTek Global Services believes that its continuous focus on safety and higher margin business, along with its strategy of diversifying customer base, will serve as the cornerstone of the company's future. The company remains committed to deliver consistent, high-value and quality service to customers. Positive cash flow generation and reduction in debt level will also drive growth.

Blue Bell, PA-based UniTek is a provider of engineering, construction management, installation and technical services to wireless and wireline telecommunications, satellite television as well as broadband cable industries in the U.S. and Canada. At present, the company is focusing on completing its financial reporting obligations.

UniTek currently carries a Zacks Rank #4 (Sell).

Better-ranked companies in the building-heavy construction industry include EMCOR Group Inc. EME, Sterling Construction Co. Inc. STRL and Tutor Perini Corporation TPC. All of these stocks carry a Zacks Rank #2 (Buy).


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