MVCO Meadow Valley (MM)

MEADOW VALLEY CORPORATION (NASDAQ:MVCO) today announced financial results for the second quarter and first six months of 2006. "Net income for the first half of 2006 increased 39%, as strength in our construction materials segment and continued profitable performance of our construction services segment more than offset the lower revenue in our construction services segment during the period," said Chief Executive Officer Bradley Larson. "We expect our construction materials segment to continue to perform well and our construction services segment to increase revenue in the second half. Contract backlog for our construction services segment at June 30, 2006 was approximately $71.6 million, including approximately $52.0 million scheduled to be completed in 2006. This compares to contract backlog at December 31, 2005 of $68.4 million and to contract backlog of $64.5 million at March 31, 2006. In July we were awarded an additional project totaling approximately $44.4 million, of which approximately $6.0 million is scheduled to be completed in 2006, as well as a smaller project valued at $3.2 million. This increased backlog enhances the outlook for our construction services segment going forward." Larson added, "Late in the second quarter we formed a construction materials testing company, Apex Testing Corp., which reported about $69,000 in revenue in its inaugural quarter. Apex Testing provides technical services to contracting companies, owners of construction projects and construction materials companies, including quality control and quality assurance testing for soils, concrete, asphalt and a variety of other testing needs in the construction industry. We began Apex because it is a good fit with our existing products and services and because of the profit potential we see in the business." Second Quarter Results For the three months ended June 30, 2006, consolidated revenue decreased 9.6% to $48.3 million from $53.4 million for the second quarter of 2005. Construction materials revenue increased 32.5% to $23.0 million for the second quarter of 2006 compared to $17.3 million for the same period last year, reflecting higher prices as well as increased volumes made possible by the addition of new concrete mixer trucks. As a result of the decrease in backlog in the prior quarter, construction services revenue decreased to $25.3 million for this year's second quarter from $36.1 million a year ago, reflecting this lower backlog at the beginning of this year's second quarter versus the prior year. Consolidated gross profit increased 31.0% to $4.8 million for this year's second quarter from $3.6 million a year ago, and consolidated gross margin improved to 9.9% of revenue from 6.8%. Construction materials gross margin increased to 12.4% from 11.9%, the result of higher prices and improved absorption of fixed costs associated with the increase in unit volumes. Construction services gross margin increased to 7.6% from 4.4%, primarily reflecting continued project profitability as well as claim settlement proceeds in excess of recorded claims receivable. Net income after minority interest for the second quarter of 2006 decreased 12.4% to $.9 million, or $0.19 per diluted share, from $1.0 million, or $0.25 per diluted share, for the second quarter of 2005. Meadow Valley's construction materials subsidiary, Ready Mix, Inc. (RMI) (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 June 30, 2006, Meadow Valley reported working capital of $21.6 million, including cash and cash equivalents of $17.9 million. Shareholders' equity increased to $21.8 million compared to $19.8 million at December 31, 2005. First Half Results For the six months ended June 30, 2006, consolidated revenue increased to $94.1 million from $93.4 million for the first six months of 2005. Construction materials revenue for the six months ended June 30, 2006 increased 40.8% to $44.1 million from $31.3 million for the same period in 2005, and construction services revenue decreased 19.6% to $49.9 million for the first six months of 2006 from $62.1 million for the first six months of 2005. Consolidated gross margin for the first six months of 2006 increased to 10.1% from 6.0% for 2005's first half. Net income after minority interest for the first six months of 2006 increased 39.0% to $1.7 million, or $0.39 per diluted share. This compares to net income after minority interest of $1.3 million, or $0.31 per diluted share, for 2005's first half. Conference Call Meadow Valley has scheduled a conference call today at 12:00 p.m. EDT. A simultaneous webcast of the conference call may be accessed online at the Investor Information link (http://www.meadowvalley.com/mv.php?p=investor) of www.MeadowValley.com or at www.CompanyBoardroom.com. A replay will be available after 2:00 p.m. EDT at these same Internet addresses. For a telephone replay, dial 800-633-8284, reservation # 21299440 after 2:00 p.m. EDT. 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 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 Six months ended June 30, June 30, ------------------------- ------------------------- 2006 2005 2006 2005 ------------ ------------ ------------ ------------ Revenue: Construction services $25,288,003 $36,112,492 $49,907,031 $62,059,325 Construction materials 22,959,604 17,330,510 44,090,244 31,309,690 Construction materials testing 69,262 -- 69,262 -- ------------ ------------ ------------ ------------ Total revenue 48,316,869 53,443,002 94,066,537 93,369,015 ------------ ------------ ------------ ------------ Cost of revenue: Construction services 23,365,663 34,543,158 45,909,736 59,625,931 Construction materials 20,119,029 15,261,292 38,576,711 28,158,422 Construction materials testing 65,250 -- 65,250 -- ------------ ------------ ------------ ------------ Total cost of revenue 43,549,942 49,804,450 84,551,697 87,784,353 ------------ ------------ ------------ ------------ Gross profit 4,766,927 3,638,552 9,514,840 5,584,662 General and administrative expenses 2,713,169 2,156,410 5,472,111 3,812,024 ------------ ------------ ------------ ------------ Income from operations 2,053,758 1,482,142 4,042,729 1,772,638 ------------ ------------ ------------ ------------ Other income (expense): Interest income 169,210 59,199 358,466 236,962 Interest expense (78,608) (91,832) (153,733) (183,628) Other income 24,665 109,373 45,403 127,433 ------------ ------------ ------------ ------------ 115,267 76,740 250,136 180,767 ------------ ------------ ------------ ------------ Income before income taxes and minority interest in consolidated subsidiary 2,169,025 1,558,882 4,292,865 1,953,405 Income tax expense (806,812) (561,198) (1,591,138) (703,226) ------------ ------------ ------------ ------------ Income before minority interest in consolidated subsidiary 1,362,213 997,684 2,701,727 1,250,179 Minority interest in consolidated subsidiary 488,486 -- 964,042 -- ------------ ------------ ------------ ------------ Net income $873,727 $997,684 $1,737,685 $1,250,179 ============ ============ ============ ============ Basic net income per common share $0.21 $0.27 $0.42 $0.34 ============ ============ ============ ============ Diluted net income per common share $0.19 $0.25 $0.39 $0.31 ============ ============ ============ ============ Weighted average common shares outstanding Basic 4,161,732 3,653,501 4,158,088 3,629,028 ============ ============ ============ ============ Diluted 4,481,183 4,040,282 4,478,871 4,000,210 ============ ============ ============ ============ MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31, 2006 2005 ------------ ------------ Assets: (Unaudited) Current assets: Cash and cash equivalents $17,862,483 $23,565,317 Restricted cash 3,298,979 1,267,090 Accounts receivable, net 30,142,962 25,139,640 Prepaid expenses 1,538,350 3,171,670 Note receivable 119,454 -- Inventory, net 1,332,701 776,978 Costs and estimated earnings in excess of billings on uncompleted contracts 2,743,941 1,991,993 Deferred tax asset 778,429 760,724 ------------ ------------ Total current assets 57,817,299 56,673,412 Property and equipment, net 34,150,648 26,228,073 Note receivable, less current portion 674,086 -- Refundable deposits 208,172 478,965 Claims receivable 1,729,676 3,521,080 Other receivables -- 115,000 ------------ ------------ Total assets $94,579,881 $87,016,530 ============ ============ Liabilities and Stockholders' Equity: Current liabilities: Accounts payable $17,014,370 $18,521,558 Accrued liabilities 4,146,878 5,878,595 Notes payable 4,075,204 3,518,892 Obligations under capital leases 556,406 546,801 Income tax payable 870,648 391,202 Billings in excess of costs and estimated earnings on uncompleted contracts 9,537,835 5,903,087 ------------ ------------ Total current liabilities 36,201,341 34,760,135 Notes payable, less current portion 14,880,575 11,423,044 Obligations under capital leases, less current portion 156,193 434,998 Deferred tax liability 3,177,771 3,177,771 ------------ ------------ Total liabilities 54,415,880 49,795,948 ------------ ------------ Commitments and contingencies Minority interest in consolidated subsidiary 18,388,837 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, 4,162,853 and 4,136,912 issued and outstanding 4,163 4,137 Additional paid-in capital 14,060,579 13,818,913 Capital adjustments (799,147) (799,147) Retained earnings 8,509,569 6,771,884 ------------ ------------ Total stockholders' equity 21,775,164 19,795,787 ------------ ------------ Total liabilities and stockholders' equity $94,579,881 $87,016,530 ============ ============ *T