Baker Corp Reports Operating Results (10-Q)

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May 06, 2010
Baker Corp (BKR, Financial) filed Quarterly Report for the period ended 2010-03-31.

Baker Corp has a market cap of $327.9 million; its shares were traded at around $36.82 with a P/E ratio of 11.9 and P/S ratio of 0.7. Baker Corp had an annual average earning growth of 12.4% over the past 10 years.BKR is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Our earnings per diluted common share for continuing operations were $0.52 for the three months ended March 31, 2010, compared to $0.70 per diluted common share reported for 2009. Our total Company earnings per diluted common share were $0.45 for the three months ended March 31, 2010, compared to $0.88 per diluted common share reported for the same period in 2009. Income from continuing operations for the three months ended March 31, 2010 was $4.6 million, compared to $6.3 million for the same period in 2009. These results were

Our gross profit totaled $21.5 million for 2010 compared to $22.7 million for 2009, reflecting a decrease of $1.2 million or 5%. Gross profit expressed as a percentage of revenues was 19.3% for 2010 compared to 19.7% for 2009. The decrease in gross profit for 2010 is primarily attributable to our Federal segments decreased revenue volume, the unfavorable impact of workers compensation and general liability costs totaling $0.5 million and a decrease in utilization compared to 2009, partially offset by a $0.5 million increase in project incentive awards.

Federal. Gross profit was $12.8 million for 2010 compared to $14.6 million for 2009, reflecting a decrease of $1.8 million or 13%. Gross profit expressed as a percentage of revenues was 21.0% in 2010 compared to 21.5% in 2009. Gross profit expressed as a percentage of revenues was unfavorably impacted by a decrease in utilization, decreased margin related to project mix and the unfavorable impact of workers compensation and general liability costs totaling $0.2 million, compared to 2009, partially offset by an increase in project incentive awards of $0.5 million.

Our SG&A expenses totaled $14.6 million for 2010 compared to $13.4 million for 2009, reflecting an increase of $1.2 million or 9%. SG&A expenses increased period-over-period due to an increase in overhead costs primarily attributable to acquisition-related costs. SG&A expenses expressed as a percentage of revenues increased to 13.1% for 2010 from 11.7% for 2009. This overall increase in SG&A expenses expressed as a percentage of revenues is primarily driven by the aforementioned increased acquisition-related costs of $0.5 million and the 3% decrease in revenues during 2010. We are anticipating recognizing additional costs of approximately $1.1 million for legal and investment banker fees related to the LPA acquisition in the second quarter of 2010.

We have three principal sources of liquidity to fund our operations: our existing cash, cash equivalents, and investments; cash generated by operations; and our available capacity under our Unsecured Credit Agreement (Credit Agreement), which is with a consortium of financial institutions and provides for a commitment of $60 million through October 1, 2011. As of March 31, 2010 and December 31, 2009, we had $105.1 million and $105.3 million of cash and cash equivalents, respectively, and $157.5 million and $154.4 million in working capital, respectively. As of March 31, 2010 and December 31, 2009, we had $2.8 million and $2.5 million of short-term investments, respectively, and $12.3 million and $2.2 million of available for sale securities, respectively. Our available capacity under our $60.0 million Credit Agreement, after consideration of outstanding letters of credit, was approximately $52.0 million (87% availability) and $50.6 million (84% availability) as of March 31, 2010 and December 31, 2009, respectively. Our current ratios were 2.65 to 1 and 2.59 to 1 as of March 31, 2010 and December 31, 2009, respectively.

Cash used in investing activities was $2.6 million and $1.5 million for the three months ended March 31, 2010 and 2009, respectively. Cash of $10.0 million related to the net asset adjustment provision in the Energy business Stock Purchase Agreement was received in 2010, and is reflected as an inflow for the three months ended March 31, 2010. Cash used in investing activities for 2010 also included $0.3 million and $10.2 million related to the purchase of short-term investments and available-for-sale securities, respectively.

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