Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Curt Woodworth with J.P. Morgan.
Curt Woodworth - J.P. Morgan
Eric, can you comment on why there is such a big discrepancy between the EDS margin and your margin given the fact that they do have this renewable platform that seems to be promising as well as a engineering and design capability which tend to be relatively high margin too. Is it gross margin issue? Is the SG&A much different than yours and then if you could provide a little bit more details or quantitative numbers around the cost synergies and sales synergies you see with EDS, that will be great.
Eric Pike
Yes, Curt I think the biggest area and the reason that this looked promising to us and we believe it ultimately will be; the two parts that you’ve mentioned that did have typically higher margins do as best we can tell, but they are the smaller pieces of the work.
As we mentioned in the earlier part, approximately 60% of their work was in the T&D construction business; that was the business that we’re struggling and pulling down margins, thus the reason we think that we can provide some synergies there on a cost basis, a back office G&A basis and perhaps a fleet basis that brings those back more inline with Pike’s core profitability levels; that’s certainly our assumption.
In terms of going through the SG&A and pieces that build up their margin, really with the acquisition just fully closing earlier in the week, we have some ideas and some modeling, but until we have sometime to put that in actual Pike’s cost basis, I’m not sure I could give you an accurate number there.
Curt Woodworth - J.P. Morgan
Okay great; and then Anthony in terms of the ’09 sales outlook if you strip out the 10 months you’re including for EDS, what would that equate to on a core basis in terms of core sales growth and if you add visibility down to what you think the billable hours would be down relative to what pricing would be up, would be very helpful?
Anthony Slater
Ultimately as we mentioned in the script we still do see some softness on the core distribution business and so we’re modeling in within the range a small amount of variance plus or minus from the current year core revenues.
Curt Woodworth - J.P. Morgan
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