American Plumbing & Mechanical Inc. announced its second quarter 2002 revenues dropped to $148.8 million, a 7.4 percent decrease from 2001’s second quarter. Revenues for the six-month period dropped 4.5 percent. The most significant decreases for the year occurred in commercial operations in Ohio and San Diego ($15.6 million); Austin, Texas single family operations ($12.6 million); and Orlando, Fla., multifamily operations ($6.4 million).
The revenue decrease in these markets was attributable to the weaker economy and increased competition, which resulted in fewer contracts being awarded and lower contract prices. These decreases were partially offset by revenue increases for the first half of the year in startup operations of $12.3 million, excluding the commercial startup in Sacramento, Calif., which increased its revenue $17.4 million.
Gross profit decreased $11.9 million to $16.3 million for the second quarter; it decreased $13.4 million for the six months ending June 30. Gross margin dropped from 17.5 percent in the second quarter of 2001 to 11 percent in the current quarter; 12.9 percent for first half of 2002. The company reported an income loss of $3.6 million for the second quarter, $37.7 million for the year so far.
“We are obviously disappointed by our second quarter and are taking several measures to improve results,” said David Baggett, AMPAM president. “We all know the current economic environment is a difficult one. I could not be more proud of our employees’ dedication to the turnaround of our performance.”
One of the measures cited by Baggett is the shutdown of its commercial operations in Sacramento, Calif., and Pensacola, Fla., as well as its single-family residential operations in southern Virginia. This is a 12 percent reduction in workforce, about 700 employees. These operations collectively incurred net losses of $5.3 million for the first half of the year.
These operations will finish their currently contracted work. It is estimated that AMPAM will incur additional pretax costs of about $7.3 million to complete the current contracted work of these operations.
Also, the company amended various provisions of its bank credit agreement; certain fees were paid and interest rates were increased. AMPAM anticipates that interest expense will be increased by about $0.4 million in the second half of the year.