SOUTH BEND, Ind., Mar. 31 /PRNewswire-FirstCall/ -- Industrial services provider MISCOR Group, Ltd. reported a sharp increase in operating income for the fiscal year ended Dec. 31, 2007, driven by a 20.6 percent increase in net sales. The results were primarily attributable to product and services gains in both of the Company's two operating segments: Repair, Remanufacturing and Manufacturing (RRM) and Construction and Engineering Services (CES).
South Bend, Ind.-based MISCOR, a supplier of mechanical and electrical industrial products and services, said net sales in 2007 increased to $73.2 million compared to $60.7 million for fiscal 2006 due to increased market penetration, an expanded geographic service area and the acquisitions of 3-D Service and Ideal Consolidated. Operating income for fiscal 2007 increased 21.7 percent to approximately $1.5 million, up from $1.2 million in the prior year. The top-line gains helped reduce MISCOR's 2007 net loss to $2.0 million, or $0.26 per diluted share, compared with a net loss of $2.6 million, or $0.61 per diluted share for fiscal 2006. The net loss was attributed to a $2.3 million loss on debt extinguishment absorbed in the first quarter of 2007 concurrent with the Company's $12.5 million private placement. The private placement was completed in order to increase working capital $5.8 million and reduce long-term debt by approximately $6.7 million. In addition, higher sales and lower interest expenses helped to narrow the year-end loss.
"We are pleased with our progress and the solid performance delivered by our entire team in 2007," said John Martell, president and CEO of MISCOR. "The 20-plus percent growth we drove in sales and operating income is a direct result of our ability to attract new customers while growing our existing customer base and our dedication to building the business on the platform we established in 2006. While we experienced a net loss on the year, we continued to close the gap toward profitability, setting our family of companies up for continued success in 2008."
For the fourth quarter of 2007, MISCOR posted a 29.7 percent increase in net sales to $22.6 million, compared to net sales of $17.4 million in the fourth quarter of 2006. Strong product sales to both new and existing customers across MISCOR's two segments helped to drive growth in the quarter, increasing product sales 30.8 percent to $5.1 million, compared to $3.9 million in the year-ago period. Service revenues benefited from MISCOR's expanding geographic presence and increasing industry recognition, climbing 29.6 percent to $17.5 million compared to $13.5 million in the year-ago period.
MISCOR's operating income in the fourth quarter rose sharply, increasing more than 1,800 percent to $557,000 compared to $29,000 in the fourth quarter of 2006. The Company also recorded its third consecutive profitable quarter, posting net income of $289,000, or $0.03 per diluted share, compared to $452,000, or $0.10 per diluted share in the 2006 fourth quarter. The 39.6 percent decline in quarter-over-quarter net income was primarily due to the gain in warrant liability of $1.3 million in 2006, offset by higher operating income and lower interest expense in 2007.
Segment Results
In the first quarter of 2007, MISCOR completed an internal realignment process as it relates to the Company's former three operating segments in order to better serve customers across its markets. In an effort to bring further clarity to the business, MISCOR realigned its segment reporting and now operates two segments: Repair, Remanufacturing and Manufacturing (RRM), which provides maintenance and repair services for industrial motors, generators and lifting magnets, as well as diesel engine component manufacturing, remanufacturing and repair services; and the Construction and Engineering Services (CES) segment, which provides a wide range of electrical contracting, engineering and repair services for electrical power distribution systems to industrial, commercial and institutional customers.
For fiscal 2007, total revenues for the two segments increased $12.5 million. RRM contributed $8.5 million to the overall increase due to a 23 percent increase in product sales to $22.2 million primarily attributed to an increase in the sale of diesel engine components, as well as product revenue from the acquisition of 3-D. In addition, service revenues grew 17 percent to $29.4 million on an increasing demand for motor repair, testing and maintenance services. Total sales for RRM for 2007 were $51.6 million. CES added $4 million to the overall revenue growth due to a strong local construction market and the acquisition of Ideal Consolidated, which also contributed on the year. Total sales for CES for 2007 were $21.6 million.
"Thanks to our increasing name recognition and growing reputation for product and service excellence, coupled with our sales teams' growing ability to attract new business, we drove significant top-line increases in both the quarter and the year, while making strides towards overall profitability," said Rich Mullin, chief financial officer of MISCOR. "With our ability to attract significant new business contracts, a roster of existing blue chip customers, and one of the most experienced management teams in the multi- industrial industry at the helm, we are well positioned for growth in 2008."
Conclusion
Martell concluded: "A number of key events in 2007, including moving into the wind generation repair business, helped put us one step closer to our goal of becoming the national industrial service provider of choice. Our initiatives to recapitalize our balance sheet and add key industry veterans to our bench, combined with our ongoing acquisition strategy, have helped solidify our position within the multi-industrial services industry and drives us towards our goal of long-term profitability."
About MISCOR
South Bend, Ind.-based MISCOR Group, Ltd. provides electrical and mechanical solutions to industrial, commercial and institutional customers through two segments: RRM (repair, remanufacturing and manufacturing) segment, which provides maintenance and repair services for industrial motors, generators and lifting magnets, and diesel engine component manufacturing, remanufacturing and repair services; and CES (construction and engineering services) segment, which provides a wide range of electrical and mechanical contracting services and engineering and repair services for electrical power distribution systems. 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 has grown to more than 600 employees in 14 locations nationwide.
Forward-Looking Statements
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. These forward-looking statements involve certain risks and uncertainties that ultimately may not prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. 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. 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.