IES (IESC) Q4 2002 earnings summary

Executive summary

• FY02 revenue fell 13% YoY to $1.475B as commercial and industrial activity weakened; reported operating income declined 48% to $41.8M.

• A $283.3M goodwill impairment drove a reported net loss of $273.4M; adjusted net income under the SFAS 142 comparison was $9.9M, or $0.25 diluted EPS.

• Operations spanned ~150 locations in 44 states; no customer represented more than 10% of FY02 revenue.

Financial highlights

• Revenue was $1.475B, down 13% YoY; gross profit fell 28% to $221.6M.

• SG&A declined 19% to $174.2M, remaining 12% of revenue; workforce reductions helped lower overhead.

• Operating income was $41.8M, down 48% YoY and 3% of revenue; reported net loss was $273.4M after the goodwill impairment.

• Operating cash flow was $53.4M; year-end cash was $32.8M and working capital was $244.2M.

Outlook and guidance

• FY03 diluted EPS guidance was $0.53–$0.60, excluding potential goodwill impairment charges; Q1 FY03 EPS guidance was $0.06–$0.10.

• Cash flow from operations was expected to cover working capital, debt service and planned property and equipment capital expenditures for the next 12 months.

• FY03 outlook remained uncertain amid challenging economic conditions; priorities included receivables collection, lower days sales outstanding and further cost cuts.