MVCO Meadow Valley (MM)

MEADOW VALLEY CORPORATION (NASDAQ:MVCO) today announced operating results for the second quarter and first half of 2008. Second Quarter Results For the three months ended June 30, 2008, total revenue increased 15.5% to $67.7 million compared to $58.7 million for the second quarter of 2007. Construction services revenue increased 39.0% to $50.5 million compared to $36.3 million for the same period last year, reflecting scheduled progress on the larger value of highway construction projects underway in the second quarter of 2008 versus the same period last year. Construction materials revenue decreased 23.5% to $16.9 million compared to $22.1 million for the same period last year, the result of continued weakness in residential construction in Meadow Valley's primary Phoenix, Arizona and Las Vegas, Nevada metropolitan markets. Construction materials testing revenue increased 49.8% to $0.3 million for this year's second quarter compared to $0.2 million for the same period last year. Gross margin for the second quarter of 2008 was 7.2%, versus 8.2% for the second quarter of 2007. Construction services gross margin was 8.9% compared to 6.8% for the same period last year, and construction materials gross margin was 1.7% compared to 10.7% for the same period last year. Net income after minority interest for the second quarter of 2008 rose 68.3% to $1.4 million, or $0.27 per diluted share. This compares to net income after minority interest for the second quarter of 2007 of $0.9 million, or $0.16 per diluted share. At June 30, 2008, Meadow Valley owned 2,645,212 shares, or approximately 69%, of the outstanding common stock of Ready Mix, Inc. (AMEX:RMX). Accordingly, Ready Mix, Inc.'s operating results are consolidated in Meadow Valley's financial statements for financial reporting purposes. Construction services backlog was $150.9 million at June 30, 2008 compared to $104.4 million at June 30, 2007. First Half Results For the six months ended June 30, 2008, total revenue increased 15.9% to $117.4 million compared to $101.3 million for the first six months of 2007. Construction services revenue increased 42.5% to $84.1 million compared to $59.1 million for the same period last year, construction materials revenue decreased 22.0% to $32.6 million compared to $41.8 million for the same period last year, and construction materials testing revenue increased 52.4% to $0.6 million compared to $0.4 million for the same period last year. Net income after minority interest for the six months ended June 30, 2008 increased 71.1% to $2.4 million, or $0.45 per diluted share. This compares to net income after minority interest of $1.4 million, or $0.26 per diluted share, for the six months ended June 30, 2007. Balance Sheet Highlights At June 30 2008, Meadow Valley reported working capital of $25.3 million, including cash, cash equivalents and restricted cash of $38.6 million. At December 31, 2007, working capital was $23.0 million, including cash, cash equivalents and restricted cash of $28.5 million. Shareholders' equity increased to $37.3 million at June 30, 2008 compared to $34.5 million at December 31, 2007. Definitive Agreement to be Acquired As announced on July 28, 2008, Meadow Valley has entered into a definitive merger agreement to be acquired by an affiliate of Insight Equity I LP, Dallas, Texas. Under the agreement, all of the outstanding shares of Meadow Valley Corporation will be acquired for $11.25 per share in cash. The transaction is expected to close prior to December 31, 2008, and is subject to several closing conditions, including the approval of Meadow Valley's shareholders. In accordance with the merger agreement, the Special Committee Meadow Valley's Board of Directors, with the assistance of its advisors, is conducting a market test until September 11, 2008 by soliciting superior proposals from other parties. There is no assurance that the solicitation of proposals will result in a superior proposal or an alternative transaction. Conference Call Meadow Valley has scheduled a conference call today at 11:00 a.m. EDT. To participate in the call, dial (212) 231-2902 and ask for the Meadow Valley conference call, reservation #21389296. 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. EDT at this same Internet address. For a telephone replay, dial (800) 633-8284, reservation # 21389296 after 1:00 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 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 southern Nevada and Arizona. 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 and its proposed acquisition 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, but not limited to, the following: (1)�the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement, (2)�the outcome of any legal proceedings that may be instituted against the Company and others following announcement of the merger agreement, (3)�the inability to complete the merger due to the failure to obtain stockholder approval or satisfy other conditions to the closing of the merger, (4)�failure of any party to the merger agreement to abide by the terms of that agreement, (5)�risks that the proposed transaction, including the uncertainty surrounding the closing of the transaction, will disrupt the current plans and operations of the Company, including as a result of undue distraction of management and personnel retention problems, (6)�conflicts of interest that may exist between members of management who will be participating in the ownership of the Company following the closing of the transaction and (7)�the amount of the costs, fees, expenses and charges related to the merger, including the impact of any termination fees the Company may incur, which may be substantial. Furthermore, the expectations expressed in forward-looking statements about the Company could materially differ from the actual outcomes because of changes in demand for the Company's products and services, the timing of new orders and contract awards, the Company's ability to successfully win contract bids, the impact of competitive products and pricing, excess or shortage of production capacity, bonding capacity and other risks discussed from time to time in the Company's Securities and Exchange Commission ("SEC") filings and reports, including the Company's Annual Report on Form 10-K for the year ended December�31, 2007. 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, except as may be required by law. Additional Information about the Merger and Where to Find It In connection with the proposed merger, a proxy statement of Meadow Valley and other materials will be filed with the SEC. WE URGE INVESTORS TO READ THE PROXY STATEMENT AND THESE OTHER MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT MEADOW VALLEY AND THE PROPOSED MERGER. Investors will be able to obtain free copies of the proxy statement (when available) as well as other documents filed with the SEC containing information about Meadow Valley at www.sec.gov, the SEC's free internet site. Free copies of Meadow Valley's SEC filings are also available on Meadow Valley's internet site at www.meadowvalley.com. Furthermore, investors may obtain free copies of Meadow Valley's SEC filings by directing such request to Meadow Valley Corporation, Attn: Corporate Secretary, 4602 East Thomas Road, Phoenix, Arizona 85018 or by requesting the same via telephone at (602)�437-5400. Participants in the Solicitation Meadow Valley and its executive officers and directors may be deemed, under SEC rules, to be participants in the solicitation of proxies from Meadow Valley's stockholders with respect to the proposed merger. Information regarding the officers and directors of Meadow Valley is included in its Annual Report on Form 10-K/A filed with the SEC on April�29, 2008. MORE DETAILED INFORMATION REGARDING THE IDENTITY OF POTENTIAL PARTICIPANTS, AND THEIR DIRECT OR INDIRECT INTERESTS, BY SECURITIES HOLDINGS OR OTHERWISE, WILL BE SET FORTH IN THE PROXY STATEMENT AND OTHER MATERIALS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER. � MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) � � � � � � � � � Three months ended Six months ended � � � June 30, June 30, � � � 2008 2007 2008 2007 Revenue: � � � � Construction services $ 50,508,185 $ 36,338,017 $ 84,140,914 $ 59,061,711 Construction materials 16,905,255 22,103,800 32,595,666 41,814,357 Construction materials testing � 313,431 � � 209,185 � � 645,381 � � 423,608 � � � � � � � � Total revenue � 67,726,871 � � 58,651,002 � � 117,381,961 � � 101,299,676 � � � � � � � � Cost of revenue: � � � � Construction services 46,003,051 33,852,768 76,260,633 54,665,443 Construction materials 16,621,747 19,746,381 32,314,843 37,355,924 Construction materials testing � 233,494 � � 253,552 � � 458,363 � � 527,039 � � � � � � � � Total cost of revenue � 62,858,292 � � 53,852,701 � � 109,033,839 � � 92,548,406 � � � � � � � � Gross profit 4,868,579 4,798,301 8,348,122 8,751,270 � � � � � � � General and administrative expenses � 2,964,886 � � 3,205,523 � � 5,465,095 � � 6,222,499 � � � � � � � � Income from operations � 1,903,693 � � 1,592,778 � � 2,883,027 � � 2,528,771 � � � � � � � � Other income (expense): � � � � Interest income 171,249 398,880 436,132 768,163 Interest expense (32,808 ) (68,001 ) (67,504 ) (146,265 ) Other income (expense) � (11,009 ) � 64,145 � � (77,980 ) � 165,850 � � � � � � � � � � � � 127,432 � � 395,024 � � 290,648 � � 787,748 � � � � � � � � Income before income taxes and minority interest in consolidated subsidiary 2,031,125 1,987,802 3,173,675 3,316,519 � � � � � � � Income tax expense � (732,339 ) � (757,884 ) � (1,143,603 ) � (1,229,677 ) � � � � � � � Income before minority interest in consolidated subsidiary 1,298,786 1,229,918 2,030,072 2,086,842 � � � � � � � Minority interest in consolidated subsidiary � 142,545 � � (373,445 ) � 341,319 � � (700,476 ) � � � � � � � Net income $ 1,441,331 � $ 856,473 � $ 2,371,391 � $ 1,386,366 � � � � � � � � Basic net income per common share $ 0.28 � $ 0.17 � $ 0.46 � $ 0.27 � Diluted net income per common share $ 0.27 � $ 0.16 � $ 0.45 � $ 0.26 � � � � � � � � Weighted average common shares outstanding � � � � Basic � 5,177,212 � � 5,128,793 � � 5,163,289 � � 5,124,545 � Diluted � 5,316,016 � � 5,314,305 � � 5,308,427 � � 5,305,079 � � MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS � � � � June 30, December 31, 2008 2007 (Unaudited) Assets: � Current assets: Cash and cash equivalents $ 38,271,058 $ 28,146,028 Restricted cash 377,588 327,886 Accounts receivable, net 35,236,248 28,565,983 Prepaid expenses and other 1,775,008 2,973,664 Inventory, net 1,626,225 1,232,478 Costs and estimated earnings in excess of billings on uncompleted contracts 297,365 567,013 Note receivable 84,365 110,824 Deferred tax asset � 648,219 � � 580,103 � � Total current assets 78,316,076 62,503,979 � Property and equipment, net 35,200,125 36,173,373 Refundable deposits 154,736 186,508 Note receivable, less current portion 396,134 424,536 Claims receivable � 2,463,880 � � 2,463,880 � � Total assets $ 116,530,951 � $ 101,752,276 � � � Liabilities and Stockholders' Equity: � Current liabilities: Accounts payable $ 23,052,510 $ 15,288,168 Accrued liabilities 4,729,017 6,907,633 Notes payable 5,029,394 4,216,498 Obligations under capital leases 57,733 102,100 Income tax payable 117,412 1,770,786 Billings in excess of costs and estimated earnings on uncompleted contracts � 20,068,160 � � 11,248,107 � � Total current liabilities 53,054,226 39,533,292 � Notes payable, less current portion 11,062,480 12,269,017 Deferred tax liability � 2,610,836 � � 2,610,836 � � Total liabilities � 66,727,542 � � 54,413,145 � � Commitments and contingencies � Minority interest in consolidated subsidiary � 12,471,084 � � 12,812,403 � � 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, 5,178,654 and 5,148,404 issued and outstanding 5,179 5,148 Additional paid-in capital 20,756,290 20,322,115 Capital adjustments (799,147 ) (799,147 ) Retained earnings � 17,370,003 � � 14,998,612 � � Total stockholders' equity � 37,332,325 � � 34,526,728 � � Total liabilities and stockholders' equity $ 116,530,951 � $ 101,752,276 �