Lower Storm Rev Erodes Pike's Q2 Earnings - Analyst Blog

Energy solutions provider Pike Electric Corporation (PIKE) once again posted disappointing results for the fiscal second quarter 2014 (ended Dec 31, 2013). The company's earnings per share in the quarter were 18 cents, down considerably from 67 cents earned in the year-ago quarter. The bottom line, however, surpassed the Zacks Consensus Estimate of 8 cents.

Revenue

Revenues generated in the reported quarter were $210.9 million, down 23.0% year over year due primarily to a fall in core sales and storm-related services.

Revenues from the Construction segment fell 21.7% year over year to $178.7 million. Revenues derived from the Engineering segment declined 29.1% year over year to $32.1 million.

Costs/Margins

Cost of revenue in the fiscal second quarter went down 16.1% year over year and represented 85.3% of total revenue, up from 78.4% in the year-ago quarter. Gross margin in the quarter was 14.7%, a decrease of 690 basis points year over year.

General and administrative expenses, as a percentage of total revenue, stood at 9.4%, up 210 basis points year over year.

Balance Sheet/Cash Flow

Exiting the fiscal second quarter of 2014, Pike's cash and cash equivalents were $2.4 million versus $2.9 million recorded in the preceding quarter. The revolving credit facility stood at $220.5 million, roughly flat sequentially.

Outlook: Pike Corporation sees solid growth opportunities in its transmission and distribution services businesses.   

Pike Corporation currently has a $320.8 million market capitalization and carries a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering in the industry include NRG Yield, Inc. (NYLD), National Grid plc (NGG) and The AES Corporation (AES). While NRG Yield and National Grid hold a Zacks Rank #1 (Strong Buy), AES Corporation carries a Zacks Rank #2 (Buy).