MVCO Meadow Valley (MM)

Meadow Valley Corporation (NASDAQ:MVCO) today announced financial results for the third quarter and first nine months of 2006. "The cyclical dynamics in the construction industry are evident in Meadow Valley's third quarter results, with a slowdown in the materials segment related to the sharper-than-expected decline in residential construction in our core Phoenix and Las Vegas area markets offset by an increase in our construction services segment driven by higher contract backlog," said Bradley Larson, Chief Executive Officer. "Construction services backlog at September 30, 2006, was $100.7 million, compared to $73.9 million a year earlier and $71.6 million at the end of this year's second quarter. Because of the recent 33% increase in our bonding capacity to $200 million, a direct result of increased working capital of $6.5 million raised in our private equity sale completed on October 23, 2006, we believe we are well positioned to actively participate in the more than $500 million of new projects scheduled for bid in our target markets over the next few months," Larson added. Third Quarter Results For the three months ended September 30, 2006, consolidated revenue increased 9.8% to $51.7 million compared to $47.1 million for the third quarter of 2005. Construction services revenue increased 9.5% to $31.0 million compared to $28.3 million for last year's third quarter. Construction materials revenue increased 9.2% to $20.5 million from $18.7 million a year ago, reflecting a 16.4% increase in average sales price and a 5% decrease in units sold. Revenue from the Company's new construction materials testing segment, which began operations in the second quarter of 2006, was $0.2 million for this year's third quarter. Consolidated gross margin declined to 7.8% for the third quarter of 2006 versus 9.6% for the third quarter of 2005. Construction services gross margin was 6.7% compared to 7.4% last year. Construction materials gross margin was 9.4% compared to 13.0%, reflecting the decrease in unit volumes and higher costs associated with capacity expansion. General and administrative expenses increased to $2.4 million for the third quarter of 2006 compared to $1.8 million a year earlier. The primary reason for this increase was a $0.04 million credit for bad debt expense in this year's third quarter compared to a $0.4 million credit last year. Net income after minority interest for the third quarter of 2006 was $0.9 million, or $0.20 per diluted share. This compares to net income after minority interest for the third quarter of 2005 of $1.6 million, or $0.39 per share. Meadow Valley's construction materials subsidiary, Ready Mix, Inc. (AMEX:RMX), completed an initial public offering of its common stock in August 2005. Meadow Valley currently owns approximately 2.0 million shares, or approximately 53%, of the outstanding common stock of RMI. Accordingly, RMI's operating results are consolidated in Meadow Valley's financial statements for financial reporting purposes. At September 30, 2006, Meadow Valley reported working capital of $21.3 million, including cash and cash equivalents of $27.4 million. Shareholders' equity increased to $22.8 million compared to $19.8 million at December 31, 2005. Nine Months Results For the nine months ended September 30, 2006, consolidated revenue increased to $145.8 million from $140.5 million for the first nine months of 2005. Construction services revenue decreased to $80.9 million from $90.4 million for last year's first nine months. Construction materials revenue for the nine months ended September 30, 2006, increased to $64.5 million from $50.1 million for the same period in 2005. Consolidated gross margin for the first nine months of 2006 increased to 9.3% compared to 7.2% for the same period of 2005. Net income after minority interest for the first nine months of 2006 was $2.6 million, or $0.59 per diluted share. This compares to net income after minority interest for the first nine months of 2005 of $2.9 million, or $0.71 per diluted share. Conference�Call Meadow Valley has scheduled a conference call today at 12:00 p.m. EST. 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. EST at this same Internet address. For a telephone replay, dial 800-633-8284, reservation #21309281 after 2:00 p.m. EST. 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 southern 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 the Las Vegas and Phoenix metropolitan areas. Forward-Looking Statements Certain statements in this release are forward-looking statements within the meaning of the Private 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, 2005. 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 Nine months ended September 30, September 30, 2006� 2005� 2006� 2005� (as restated) (as restated) Revenue: Construction services $ 31,031,809� $ 28,342,155� $ 80,938,840� $ 90,401,480� Construction materials 20,458,570� 18,741,321� 64,548,814� 50,051,011� Construction materials testing � 213,643� � --� � 282,905� � --� Total revenue � 51,704,022� � 47,083,476� � 145,770,559� � 140,452,491� Cost of revenue: Construction services 28,963,601� 26,242,781� 74,873,337� 85,868,712� Construction materials 18,537,541� 16,297,634� 57,114,252� 44,456,056� Construction materials testing � 159,601� � --� � 224,851� � --� Total cost of revenue � 47,660,743� � 42,540,415� � 132,212,440� � 130,324,768� Gross profit 4,043,279� 4,543,061� 13,558,119� 10,127,723� General and administrative expenses � 2,350,451� � 1,816,941� � 7,822,562� � 5,628,965� Income from operations � 1,692,828� � 2,726,120� � 5,735,557� � 4,498,758� Other income (expense): Interest income 267,409� 115,580� 625,875� 352,542� Interest expense (93,267) (90,362) (247,000) (273,990) Other income (expense) � (5,025) � 2,321� � 40,378� � 129,754� � � 169,117� � 27,539� � 419,253� � 208,306� Income before income taxes and minority interest in consolidated subsidiary 1,861,945� 2,753,659� 6,154,810� 4,707,064� Income tax expense � (658,263) � (991,317) � (2,249,401) � (1,694,543) Income before minority interest in consolidated subsidiary 1,203,682� 1,762,342� 3,905,409� 3,012,521� Minority interest in consolidated subsidiary � 318,416� � 122,933� � 1,282,458� � 122,933� Net income $ 885,266� $ 1,639,409� $ 2,622,951� $ 2,889,588� Basic net income per common share $ 0.21� $ 0.43� $ 0.63� $ 0.78� Diluted net income per common share $ 0.20� $ 0.39� $ 0.59� $ 0.71� Basic weighted average common shares outstanding � 4,165,760� � 3,808,809� � 4,160,646� � 3,688,955� Diluted weighted average common shares outstanding � 4,470,241� � 4,198,742� � 4,475,994� � 4,066,387� MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS � � September 30, December 31, 2006� 2005� (Unaudited) Assets: Current assets: Cash and cash equivalents $ 27,398,945� $ 23,565,317� Restricted cash 673,478� 1,267,090� Accounts receivable, net 29,855,710� 25,139,640� Prepaid expenses and other 1,261,950� 3,171,670� Note receivable 105,445� --� Inventory, net 1,582,085� 776,978� Costs and estimated earnings in excess of billings on uncompleted contracts 2,410,310� 1,991,993� Deferred tax asset � 833,616� � 760,724� Total current assets 64,121,539� 56,673,412� � Property and equipment, net 34,565,637� 26,228,073� Note receivable, less current portion 562,383� --� Refundable deposits 678,080� 478,965� Claims receivable 1,729,676� 3,521,080� Other receivables � --� � 115,000� � Total assets $ 101,657,315� $ 87,016,530� � Liabilities and Stockholders' Equity: Current liabilities: Accounts payable $ 21,732,285� $ 18,521,558� Accrued liabilities 5,040,122� 5,878,595� Notes payable 4,227,543� 3,518,892� Obligations under capital leases 447,089� 546,801� Income tax payable 442,834� 391,202� Billings in excess of costs and estimated earnings on uncompleted contracts � 10,921,558� � 5,903,087� Total current liabilities 42,811,431� 34,760,135� � Notes payable, less current portion 14,080,642� 11,423,044� Obligations under capital leases, less current portion 127,775� 434,998� Deferred tax liability � 3,177,771� � 3,177,771� Total liabilities � 60,197,619� � 49,795,948� � Commitments and contingencies � � � Minority interest in consolidated subsidiary � 18,707,254� � 17,424,795� � 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, 4,165,963 and 4,136,912 issued and outstanding 4,166� 4,137� Additional paid-in capital 14,152,588� 13,818,913� Capital adjustments (799,147) (799,147) Retained earnings � 9,394,835� � 6,771,884� Total stockholders' equity � 22,752,442� � 19,795,787� � Total liabilities and stockholders' equity $ 101,657,315� $ 87,016,530� Meadow Valley Corporation (NASDAQ:MVCO) today announced financial results for the third quarter and first nine months of 2006. "The cyclical dynamics in the construction industry are evident in Meadow Valley's third quarter results, with a slowdown in the materials segment related to the sharper-than-expected decline in residential construction in our core Phoenix and Las Vegas area markets offset by an increase in our construction services segment driven by higher contract backlog," said Bradley Larson, Chief Executive Officer. "Construction services backlog at September 30, 2006, was $100.7 million, compared to $73.9 million a year earlier and $71.6 million at the end of this year's second quarter. Because of the recent 33% increase in our bonding capacity to $200 million, a direct result of increased working capital of $6.5 million raised in our private equity sale completed on October 23, 2006, we believe we are well positioned to actively participate in the more than $500 million of new projects scheduled for bid in our target markets over the next few months," Larson added. Third Quarter Results For the three months ended September 30, 2006, consolidated revenue increased 9.8% to $51.7 million compared to $47.1 million for the third quarter of 2005. Construction services revenue increased 9.5% to $31.0 million compared to $28.3 million for last year's third quarter. Construction materials revenue increased 9.2% to $20.5 million from $18.7 million a year ago, reflecting a 16.4% increase in average sales price and a 5% decrease in units sold. Revenue from the Company's new construction materials testing segment, which began operations in the second quarter of 2006, was $0.2 million for this year's third quarter. Consolidated gross margin declined to 7.8% for the third quarter of 2006 versus 9.6% for the third quarter of 2005. Construction services gross margin was 6.7% compared to 7.4% last year. Construction materials gross margin was 9.4% compared to 13.0%, reflecting the decrease in unit volumes and higher costs associated with capacity expansion. General and administrative expenses increased to $2.4 million for the third quarter of 2006 compared to $1.8 million a year earlier. The primary reason for this increase was a $0.04 million credit for bad debt expense in this year's third quarter compared to a $0.4 million credit last year. Net income after minority interest for the third quarter of 2006 was $0.9 million, or $0.20 per diluted share. This compares to net income after minority interest for the third quarter of 2005 of $1.6 million, or $0.39 per share. Meadow Valley's construction materials subsidiary, Ready Mix, Inc. (AMEX:RMX), completed an initial public offering of its common stock in August 2005. Meadow Valley currently owns approximately 2.0 million shares, or approximately 53%, of the outstanding common stock of RMI. Accordingly, RMI's operating results are consolidated in Meadow Valley's financial statements for financial reporting purposes. At September 30, 2006, Meadow Valley reported working capital of $21.3 million, including cash and cash equivalents of $27.4 million. Shareholders' equity increased to $22.8 million compared to $19.8 million at December 31, 2005. Nine Months Results For the nine months ended September 30, 2006, consolidated revenue increased to $145.8 million from $140.5 million for the first nine months of 2005. Construction services revenue decreased to $80.9 million from $90.4 million for last year's first nine months. Construction materials revenue for the nine months ended September 30, 2006, increased to $64.5 million from $50.1 million for the same period in 2005. Consolidated gross margin for the first nine months of 2006 increased to 9.3% compared to 7.2% for the same period of 2005. Net income after minority interest for the first nine months of 2006 was $2.6 million, or $0.59 per diluted share. This compares to net income after minority interest for the first nine months of 2005 of $2.9 million, or $0.71 per diluted share. Conference Call Meadow Valley has scheduled a conference call today at 12:00 p.m. EST. 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. EST at this same Internet address. For a telephone replay, dial 800-633-8284, reservation #21309281 after 2:00 p.m. EST. 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 southern 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 the Las Vegas and Phoenix metropolitan areas. Forward-Looking Statements Certain statements in this release are forward-looking statements within the meaning of the Private 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, 2005. 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. -0- *T MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three months ended Nine months ended September 30, September 30, -------------------------- --------------------------- 2006 2005 2006 2005 ------------ ------------- ------------- ------------- (as restated) (as restated) Revenue: Construction services $31,031,809 $ 28,342,155 $ 80,938,840 $ 90,401,480 Construction materials 20,458,570 18,741,321 64,548,814 50,051,011 Construction materials testing 213,643 -- 282,905 -- ------------ ------------- ------------- ------------- Total revenue 51,704,022 47,083,476 145,770,559 140,452,491 ------------ ------------- ------------- ------------- Cost of revenue: Construction services 28,963,601 26,242,781 74,873,337 85,868,712 Construction materials 18,537,541 16,297,634 57,114,252 44,456,056 Construction materials testing 159,601 -- 224,851 -- ------------ ------------- ------------- ------------- Total cost of revenue 47,660,743 42,540,415 132,212,440 130,324,768 ------------ ------------- ------------- ------------- Gross profit 4,043,279 4,543,061 13,558,119 10,127,723 General and administrative expenses 2,350,451 1,816,941 7,822,562 5,628,965 ------------ ------------- ------------- ------------- Income from operations 1,692,828 2,726,120 5,735,557 4,498,758 ------------ ------------- ------------- ------------- Other income (expense): Interest income 267,409 115,580 625,875 352,542 Interest expense (93,267) (90,362) (247,000) (273,990) Other income (expense) (5,025) 2,321 40,378 129,754 ------------ ------------- ------------- ------------- 169,117 27,539 419,253 208,306 ------------ ------------- ------------- ------------- Income before income taxes and minority interest in consolidated subsidiary 1,861,945 2,753,659 6,154,810 4,707,064 Income tax expense (658,263) (991,317) (2,249,401) (1,694,543) ------------ ------------- ------------- ------------- Income before minority interest in consolidated subsidiary 1,203,682 1,762,342 3,905,409 3,012,521 Minority interest in consolidated subsidiary 318,416 122,933 1,282,458 122,933 ------------ ------------- ------------- ------------- Net income $ 885,266 $ 1,639,409 $ 2,622,951 $ 2,889,588 ============ ============= ============= ============= Basic net income per common share $ 0.21 $ 0.43 $ 0.63 $ 0.78 ============ ============= ============= ============= Diluted net income per common share $ 0.20 $ 0.39 $ 0.59 $ 0.71 ============ ============= ============= ============= Basic weighted average common shares outstanding 4,165,760 3,808,809 4,160,646 3,688,955 ============ ============= ============= ============= Diluted weighted average common shares outstanding 4,470,241 4,198,742 4,475,994 4,066,387 ============ ============= ============= ============= *T -0- *T MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2006 2005 ---------------- --------------- (Unaudited) Assets: Current assets: Cash and cash equivalents $ 27,398,945 $ 23,565,317 Restricted cash 673,478 1,267,090 Accounts receivable, net 29,855,710 25,139,640 Prepaid expenses and other 1,261,950 3,171,670 Note receivable 105,445 -- Inventory, net 1,582,085 776,978 Costs and estimated earnings in excess of billings on uncompleted contracts 2,410,310 1,991,993 Deferred tax asset 833,616 760,724 ---------------- --------------- Total current assets 64,121,539 56,673,412 Property and equipment, net 34,565,637 26,228,073 Note receivable, less current portion 562,383 -- Refundable deposits 678,080 478,965 Claims receivable 1,729,676 3,521,080 Other receivables -- 115,000 ---------------- --------------- Total assets $ 101,657,315 $ 87,016,530 ================ =============== Liabilities and Stockholders' Equity: Current liabilities: Accounts payable $ 21,732,285 $ 18,521,558 Accrued liabilities 5,040,122 5,878,595 Notes payable 4,227,543 3,518,892 Obligations under capital leases 447,089 546,801 Income tax payable 442,834 391,202 Billings in excess of costs and estimated earnings on uncompleted contracts 10,921,558 5,903,087 ---------------- --------------- Total current liabilities 42,811,431 34,760,135 Notes payable, less current portion 14,080,642 11,423,044 Obligations under capital leases, less current portion 127,775 434,998 Deferred tax liability 3,177,771 3,177,771 ---------------- --------------- Total liabilities 60,197,619 49,795,948 ---------------- --------------- Commitments and contingencies ---------------- --------------- Minority interest in consolidated subsidiary 18,707,254 17,424,795 ---------------- --------------- 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, 4,165,963 and 4,136,912 issued and outstanding 4,166 4,137 Additional paid-in capital 14,152,588 13,818,913 Capital adjustments (799,147) (799,147) Retained earnings 9,394,835 6,771,884 ---------------- --------------- Total stockholders' equity 22,752,442 19,795,787 ---------------- --------------- Total liabilities and stockholders' equity $ 101,657,315 $ 87,016,530 ================ =============== *T