Pernix Group, Inc. Announces Third Quarter 2013 Financial Results
23 November 2013 - 1:00AM
Pernix Group, Inc. (OTCBB:PRXG) today announced its financial
results for the third quarter ended September 30, 2013.
The Company generated consolidated revenue from continuing
operations in the third quarter of 2013 of $21.4 million, as
compared to $34.7 million in the comparable period of 2012. The
reduction was primarily attributable to the completion of a large
construction project in late 2012, coupled with lower activity on
another project nearing substantial completion. These decreases
were partially offset by the increase in activity on two embassy
rehabilitation projects, one of which was recently commenced.
Activity is expected to commence during the fourth quarter of 2013
on a rainwater recapture embassy upgrade project awarded to Pernix
Serka Joint Venture (PS JV) during the third quarter of 2013. The
construction revenue decrease was partially offset by the $0.2
million increase in revenue generated by our power operations as
compared to the third quarter of 2012, as our Fiji power operations
continued to experience higher demand for diesel-based power
necessitated by lower hydro power production.
Gross profit from continuing operations was $3.3 million in the
third quarter of 2013, as compared to $5.3 million in the
comparable period in 2012. The lower gross profit reflects the
aforementioned decline in construction revenue, slightly offset by
higher gross profit in our power generation segment due to higher
power production in Fiji. Operating income from continuing
operations for the third quarter ended September 30, 2013 was $1.5
million compared to $3.7 million in the comparable period last
year, reflecting both lower gross profit and higher salary and
general and administrative expense incurred to build our business
development and project infrastructures and support our strategic
growth objectives. Management does not anticipate significant new
hiring activity prior to any new contract awards as the requisite
organizational framework is largely in place at this time.
Income from continuing operations was $0.4 million for the third
quarter of 2013 before income taxes and after minority interest,
compared to $1.4 million in last year's third quarter. The
reduction was driven by lower gross profit, coupled with higher
operating expenses, and partially offset by the decrease in income
attributable to non-controlling interest.
The Company recorded a net loss of $4.6 million, or ($0.49) per
share, for the third quarter, as compared to net income of $1.2
million last year, or $0.12 per share, due to management's decision
to increase the valuation allowance on its deferred tax assets by
$4.9 million. As a result of the increase in valuation allowance,
all of the Company's deferred tax assets are now fully reserved,
and all future taxable income would be expected to have a
dollar-for-dollar additive impact to stockholders' equity.
Furthermore, the increase in valuation allowance is a non-cash
expense and has no impact on the Company's liquidity, cash flows or
its ability to execute projects or conduct ongoing operations. The
decision to increase the valuation allowance was driven partly by a
lower level of new business awards in 2013 compared to the prior
year along with various other considerations. Future adjustments to
the valuation allowance will be assessed each quarter as a function
of new business, tax planning strategies and other factors.
"We are pleased with our operating performance in the third
quarter, and both of our business segments are operating
efficiently and effectively at this time," commented Nidal Z.
Zayed, President and CEO of Pernix Group. "We have identified and
are actively competing for attractive new business opportunities on
an ongoing basis, and we continue to believe that our investment in
high caliber business development and operations professionals will
lead to renewed growth and ultimately result in a stronger and more
profitable Pernix in the future."
The Company's consolidated balance sheet at September 30, 2013
reflected cash of $17.8 million, as compared to $19.8 million at
June 30, 2013, as cash generated from operations was more than
offset by the distribution of our partner's share of year-to-date
Pernix-Serka L.P. earnings and reduction of our total debt from
$2.7 million to $2.5 million, reflecting repayment of the a portion
of debt incurred in connection with the purchase of our corporate
headquarters property in March of this year. Total stockholders'
equity decreased to $7.9 million at September 30, 2013 from $15.0
million at June 30, 2013, reflecting the net loss generated by the
increase in the valuation allowance on deferred tax assets (a
non-cash item), as well as the aforementioned distribution of our
partner's share of earnings in Pernix-Serka L.P. Construction
backlog declined slightly to $53.0 million, as compared to $59.6
million at the end of the second quarter, reflecting significant
progress on our existing construction contracts, net of additional
contractual commitments in our construction segment. The Company
recently began performance on two new contracts and will begin work
on a third recent award in the fourth quarter of 2013, which will
generate opportunities to penetrate new geographic areas, diversify
our customer base, and broaden strategic relationships.
"Our financial condition remains solid, both in terms of
liquidity and debt levels. Management continues to focus on
strengthening our balance sheet with additional capital and
executing our strategic plan within both business segments to drive
growth and continued operating profitability," said Zayed. "We have
a long-term perspective and remain committed to creating value for
our shareholders, and we will continue to pursue attractive
opportunities that will be accretive to our earnings."
The Company filed its Form 10-Q with the Securities and Exchange
Commission on November 19, 2013, which incorporates its unaudited
financial statements and notes thereto for the quarter and nine
months ended September 30, 2013.
About Pernix Group, Inc.
Pernix Group, Inc. is a global company with its headquarters in
Lombard, Illinois. The Company is engaged in two primary operating
business segments: construction services as a Design-Build General
Contractor in the Federal and Government market; and building,
managing and investing in Power Generation Projects as an
Independent Power Producer. Pernix has full-scale construction and
management capabilities, with operations in Africa, the Middle
East, and the South Pacific. Pernix Group, Inc. common stock is
traded on the over-the-counter bulletin board (OTCBB) under the
symbol PRXG. Additional information is available at
www.pernixgroup.com.
Forward-Looking Statement
Certain of the statements made in this press release are
forward-looking statements within the meaning of the Securities
Litigation Reform Act of 1995. Such statements involve certain
risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Potential
risks and other factors that could cause or contribute to actual
results differing materially from such forward-looking statements
are discussed in greater detail in the Company's filings with the
U.S. Securities and Exchange Commission.
CONTACT: Gregg Pollack
Chief Financial Officer & Vice President - Administration
Pernix Group, Inc.
Tel: (630) 620-4787
gpollack@pernixgroup.com
Carol Groeber
Corporate Controller and Principal Accounting Officer
Pernix Group, Inc.
Tel: (630) 620-4787
cgroeber@pernixgroup.com
Casey Stegman
Director of Investor Relations
Stonegate Securities
Tel: (214) 987-4121
casey@stonegateinc.com
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