MVCO Meadow Valley (MM)

MEADOW VALLEY CORPORATION (NASDAQ:MVCO) today announced financial results for the second quarter of 2007, highlighted by a 43.7% increase in construction services revenue and a 21.4% increase in total revenue. Second Quarter Results For the three months ended June 30, 2007, consolidated revenue increased 21.4% to $58.7 million compared to $48.3 million for the three months ended June 30, 2006. Construction services revenue increased 43.7% to $36.3 million compared to $25.3 million last year, as the Company began work on many of the heavy highway construction projects added to backlog this year. Contract backlog at June 30, 2007 was $104.4 million, 45.9% greater than a year ago and 15.7% greater than backlog at the end of this year's first quarter. Construction materials revenue decreased 3.7% to $22.1 million compared to $23.0 million last year, as weakness in the housing industry offset continued growth in demand for ready mix concrete in non-residential construction. Cubic yards of concrete sold decreased 6.9% compared to last year's second quarter, while average unit sales price increased 4.8%. Consolidated gross margin was 8.2% for the second quarter of 2007 compared to 9.9% for the second quarter of 2006. Construction services gross margin was 6.8% for this year's second quarter compared to 7.6% for the second quarter of 2006, reflecting conservative margins projected in the early phases of new construction projects. Construction materials gross margin was 10.7% compared to 12.4% for the second quarter 2007 and 2006, respectively, reflecting lower volume and higher fixed costs associated with capacity expansion programs initiated in 2006. General and administrative expenses were $3.2 million for the second quarter of 2007 compared to $2.7 million for the second quarter 2006. This increase primarily reflected higher business development and Sarbanes-Oxley compliance costs. Net income after minority interest for the second quarter of 2007 was $0.86 million, or $0.16 per diluted share, based on approximately 5.3 million diluted shares outstanding. This compares to net income after minority interest for the second quarter of 2006 of $0.87 million, or $0.19 per diluted share, based on approximately 4.5 million diluted shares outstanding. Meadow Valley's construction materials subsidiary, Ready Mix, Inc. (AMEX:RMX), completed an initial public offering of its common stock in August 2005. At June 30, 2007, Meadow Valley owned 2,501,550 shares, or approximately 66%, of the outstanding common stock of RMI after purchasing 476,550 shares on June 29, 2007. Accordingly, RMI's operating results are consolidated in Meadow Valley's financial statements for financial reporting purposes. Meadow Valley subsequently purchased 89,662 additional shares of RMI in negotiated transactions. At June 30, 2007, Meadow Valley reported working capital of $22.4 million, including cash and cash equivalents of $27.7 million. At December 31, 2006, working capital was $27.3 million, including cash and cash equivalents and restricted cash of $30.0 million. Shareholders' equity increased to $31.6 million at June 30, 2007 compared to $31.3 million at December 31, 2006. Six Months Results For the six months ended June 30, 2007, consolidated revenue increased 7.7% to $101.3 million compared to $94.1 million for the six months ended June 30, 2006. Construction services revenue increased 18.3% to $59.1 million for the six months ended June 30, 2007, compared to $49.9 million for the six months ended June 30, 2006, and construction materials revenue decreased 5.2% to $41.8 million compared to $44.1 million for the same respective periods. Net income after minority interest for the first six months of 2007 was $1.4 million, or $0.26 per diluted share, based on approximately 5.3 million diluted shares outstanding. This compares to net income after minority interest for the first six months of 2006 of $1.7 million, or $0.39 per diluted share, based on approximately 4.5 million diluted shares outstanding. Discussion and Analysis "The increase in contract backlog provides a solid foundation for our construction services business for the balance of 2007. Our heavy highway construction work is performing well, and delivering margins consistent with our bid estimates. The increase in our bonding capacity, which now stands at approximately $200 million in the aggregate and $60 million for a single project, is the primary driver for this improvement in our construction services segment. Year to date, we have bid on more than twice as much work in contract dollars compared to the same period last year, and we have maintained a win rate consistent with our historical performance. Between now and October 1st, we plan to bid on projects valued at more than $200 million," said Chief Executive Officer Bradley Larson. Larson continued, "In our materials segment, non-residential construction in our primary markets in Las Vegas and Phoenix has remained strong, but the persistent weakness in residential construction that became evident in 2006 has reduced total demand for ready mix concrete, put downward pressure on prices, and reduced our ability to pass on rising costs associated with our expansion initiatives and materials cost increases. While we expect these market forces to continue to affect the performance of our materials segment in this year's second half, the underlying factors that drive demand for our products, such as population and job growth, continue unabated in both of the geographic markets we serve, and we remain confident that the business is on the right track for the future." Conference�Call Meadow Valley has scheduled a conference call today at 12:00 p.m. ET. A simultaneous webcast of the conference call may be accessed online at the Investor Information link of www.meadowvalley.com. A replay will be available after 2:00 p.m. ET at these same Internet addresses. For a telephone replay, dial (800) 633-8284, reservation # 21344603 after 2:00 p.m. ET. About Meadow Valley Meadow Valley Corporation, based in Phoenix, Arizona, is engaged in the construction industry as both a contractor and a supplier of construction materials. The Company's construction services segment specializes in structural concrete construction of highway bridges and overpasses, and the paving of highways and airport runways, primarily in Nevada and Arizona. The Company's construction materials operations provide concrete and gravel products primarily to other contractors. The Company's materials operations are concentrated in southern Nevada and Arizona. Forward-Looking Statements Certain statements in this release are forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. Such statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including the following: changes in demand for the Company's products and services, product mix, the timing of new orders and contract awards, the impact of competitive products and pricing, excess or shortage of production capacity, and other risks discussed from time to time in the Company's Securities and Exchange Commission filings and reports, including the Company's Annual Report on Form 10-K for the year ended December 31, 2006. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic economic conditions. Such forward-looking statements speak only as of the date on which they are made and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release. MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) � � � � � � � � � � � � � � � � � � � Three Months Ended � Six Months Ended � � � June 30, � June 30, � � � 2007 � 2006 � 2007 � 2006 Revenue: � � � � � � � � Construction services $ 36,338,017 � $ 25,288,003 � $ 59,061,711 � $ 49,907,031 � Construction materials 22,103,800 � 22,959,604 � 41,814,357 � 44,090,244 � Construction materials testing � 209,185 � � � 69,262 � � � 423,608 � � � 69,262 � � � � � � � � � � � Total revenue � 58,651,002 � � � 48,316,869 � � � 101,299,676 � � � 94,066,537 � � � � � � � � � Cost of revenue: � � � � � � � � Construction services 33,852,768 � 23,365,663 � 54,665,443 � 45,909,736 � Construction materials 19,746,381 � 20,119,029 � 37,355,924 � 38,576,711 � Construction materials testing � 253,552 � � � 65,250 � � � 527,039 � � � 65,250 � � � � � � � � � � � Total cost of revenue � 53,852,701 � � � 43,549,942 � � � 92,548,406 � � � 84,551,697 � � � � � � � � � Gross profit: � � � � � � � � Construction services 2,485,249 � 1,922,340 � 4,396,268 � 3,997,295 � Construction materials 2,357,419 � 2,840,575 � 4,458,433 � 5,513,533 � Construction materials testing � (44,367 ) � � 4,012 � � � (103,431 ) � � 4,012 � � � � � � � � � � � Total gross profit 4,798,301 � 4,766,927 � 8,751,270 � 9,514,840 � � � � � � � � General and administrative expenses � 3,205,523 � � � 2,713,169 � � � 6,222,499 � � � 5,472,111 � � � � � � � � � Income from operations � 1,592,778 � � � 2,053,758 � � � 2,528,771 � � � 4,042,729 � � � � � � � � � Other income (expense): � � � � � � � � � Interest income 398,880 � 169,210 � 768,163 � 358,466 � � Interest expense (68,001 ) � (78,608 ) � (146,265 ) � (153,733 ) � � Other income � 64,145 � � � 24,665 � � � 165,850 � � � 45,403 � � � � � � � � � � � � � 395,024 � � � 115,267 � � � 787,748 � � � 250,136 � � � � � � � � � Income before income taxes 1,987,802 � 2,169,025 � 3,316,519 � 4,292,865 Income tax expense � (757,884 ) � � (806,812 ) � � (1,229,677 ) � � (1,591,138 ) � � � � � � � � Income before minority � � � � � � � interest in consolidated subsidiary 1,229,918 � 1,362,213 � 2,086,842 � 2,701,727 � � � � � � � � Minority Interest in consolidated subsidiary � 373,445 � � � 488,486 � � � 700,476 � � � 964,042 � � � � � � � � � Net income $ 856,473 � � $ 873,727 � � $ 1,386,366 � � $ 1,737,685 � � � � � � � � � Basic net income per common share $ 0.17 � � $ 0.21 � � $ 0.27 � � $ 0.42 � Diluted net income per common share $ 0.16 � � $ 0.19 � � $ 0.26 � � $ 0.39 � � � � � � � � � Basic weighted average � � � � � � � common shares outstanding � 5,128,793 � � � 4,161,732 � � � 5,124,545 � � � 4,158,088 � Diluted weighted average � � � � � � � common shares outstanding � 5,314,305 � � � 4,481,183 � � � 5,305,079 � � � 4,478,871 � MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS � � June 30, December 31, 2007 2006 (Unaudited) Assets: � Current assets: Cash and cash equivalents $ 27,670,133 $ 29,354,582 Restricted cash -- 605,243 Accounts receivable, net 33,651,974 25,990,763 Prepaid expenses and other 1,668,567 2,820,768 Inventory, net 1,251,055 1,366,534 Costs and estimated earnings in excess of billings on uncompleted contracts 462,015 1,254,860 Note receivable 108,640 106,499 Deferred tax asset � 580,474 � � 561,199 � � Total current assets 65,392,858 62,060,448 � Property and equipment, net 36,493,390 35,553,000 Refundable deposits 884,141 1,492,967 Note receivable, less current portion 480,500 535,360 Claims receivable � 2,463,880 � � 2,463,880 � � Total assets $ 105,714,769 � � $ 102,105,655 � � � Liabilities and Stockholders' Equity: � Current liabilities: Accounts payable $ 18,985,232 $ 13,298,114 Accrued liabilities 5,365,318 7,569,928 Notes payable 4,638,325 4,837,628 Obligations under capital leases 148,428 332,898 Income tax payable 93,414 399,536 Billings in excess of costs and estimated earnings on uncompleted contracts � 13,791,995 � � 8,366,754 � � Total current liabilities 43,022,712 34,804,858 � Notes payable, less current portion 13,730,386 13,894,382 Obligations under capital leases, less current portion 7,765 102,100 Deferred tax liability � 2,974,857 � � 2,974,857 � � Total liabilities � 59,735,720 � � 51,776,197 � � Commitments and contingencies � � � Minority interest in consolidated subsidiary � 14,424,956 � � 18,988,244 � � Stockholders' equity: Preferred stock - $.001 par value; 1,000,000 shares authorized, none issued and outstanding -- -- Common stock- $.001 par value; 15,000,000 shares authorized, 5,129,760 and 5,098,679 issued and outstanding 5,130 5,099 Additional paid-in-capital 20,023,938 21,197,456 Capital adjustments (799,147 ) (799,147 ) Retained earnings � 12,324,172 � � 10,937,806 � � Total stockholders' equity � 31,554,093 � � 31,341,214 � � Total liabilities and stockholders' equity $ 105,714,769 � � $ 102,105,655 �