Michael Baker Corp. reported sharply lower third quarter profits, announced a cost-cutting plan, and said it will begin paying a dividend.
The Moon engineering company said net income for the quarter totalled $981,000, or 10 cents per share, vs. earnings of $7.2 million, or 77 cents per share, in the year-ago quarter. Sales rose 11 percent to $145.2 million. Baker said its acquisition of RBF Consulting, an Irvine, Calif., engineering firm, last October added $23.1 million to revenue, which was partially offset by a drop in revenue from the U.S. Department of Defense.
"General market conditions for many U.S. engineering firms remain challenging and we continue to see delays in major projects," President and CEO Bradley L. Mallory said in a prepared statement.
He said Baker has adopted a plan to reduce costs by $18 million to $20 million next year. The initiative will result in an estimated $1 million restructuring charge, substantially all of which will be recorded in the fourth quarter, Mr. Mallory said. The plan calls for Baker to focus on improving existing operations rather than pursuing acquisitions. Baker's acquisition of RBF and other firms under Mr. Mallory's tenure has been criticized by activist shareholders, including DC Capital Partners, an Alexandria, Va., private equity firm that owns 5.2 percent of Baker's stock.
Baker's board of directors approved initiating a quarterly dividend at the rate of 14 cents per share. The dividend is payable Dec. 19 to shareholders of record Nov. 28.
The third quarter results were disclosed after Wall Street closed Thursday. Baker shares finished the day at $20.50, down 69 cents. They are up 5 percent this year.businessnews
Len Boselovic: email@example.com or 412-263-1941.