EXHIBIT 99.1
(INSITUFORM-TECH)(INSU) Insituform Technologies, Inc. Reports Second Quarter
Earnings Per Share from Continuing Operations of $0.18
Chesterfield, MO - July 24, 2003 - Insituform Technologies, Inc.
(NASDAQ National Market: INSU) (the "Company") today announced second quarter
results.
Consolidated revenues from continuing operations were $124.8 million
for the three months ended June 30, 2003, a 5.3% increase compared to $118.5
million in revenues in the second quarter of 2002. Consolidated income from
continuing operations decreased by 40.8% to $4.9 million, or $0.18 per share,
compared to $8.2 million, or $0.31 per share, in the second quarter of the prior
year. Consolidated net income for the second quarter of 2003 was $4.6 million,
or $0.17 per share, including a loss of $0.3 million, or $0.01 per share, from
discontinued operations compared to $7.3 million of consolidated net income in
the second quarter of 2002, or $0.28 per share, including a loss of $0.03 per
share from discontinued operations.
For the first half of 2003, revenues increased 8.0% to $248.1 million
from $229.7 million in the first six months of 2002. Income from continuing
operations was $11.2 million, a decrease of 20.7% from $14.2 million in 2002, or
$0.42 and $0.53 per share, respectively. Discontinued operations had minimal
impact on earnings year-to-date but accounted for a $2.5 million loss, or $0.09
per share, in the first six months of 2002. Consequently, consolidated net
income decreased 3.6% to $11.2 million from $11.6 million for the first six
months of 2003 compared to the first six months of 2002.
As a reminder, the preliminary second quarter 2003 earnings discussed
by the Company on July 10 included initial estimates of accruals and reserves.
These were finalized as part of the closing process, and an additional $0.04 per
share of charges were recorded primarily for casualty losses, bad debt, and
severance.
The second quarter 2003 shortfall from the original forecast was due to
unanticipated contract completion costs in Elmore, lower margins and losses on
some contracts in Kinsel, and a revenue shortfall in two cured-in-place pipe
("CIPP") operations. Results were also impacted by higher-than-expected casualty
losses, healthcare claims and write-off of obsolete small diameter equipment and
inventory.
The following earnings presentation details unusual items and is
intended to provide insight into results of operations for the second quarter of
2003. The reconciling items highlighted below are the significant charges that
were not anticipated in original second quarter 2003 earnings guidance.
EPS from Continuing Operations Adjusted for
Unanticipated Items $0.28
Losses Incurred to Close-Out Elmore Jobs (0.04)
Revised Estimate of Insurance Liability (0.03)
Write-off of Obsolete Small Diameter Equipment and Inventory (0.02)
Other Accrual Adjustments and Severance (0.01)
Reported EPS from Continuing Operations $0.18
Loss from Discontinued Operations (0.01)
Net Income $0.17
Operating cash flow from continuing operations improved over the
already strong showing from the first quarter of this year. Operating cash flow
from continuing operations increased to over 2.5 times income from continuing
operations year-to-date. Net debt has fallen to $16.7 million at June 30
compared to $26.1 million at the end of March 2003, and cash on hand increased
41.0% to $117.6 million at June 30 from $83.4 million at March 31, 2003.
Continued focus on job close-out and receivable collection in domestic
rehabilitation and the collection of receivables from large tunneling projects
have yielded a reduction of 6.5% in days sales outstanding since the beginning
of the year.
Orders during the second quarter were strong, particularly in the
domestic CIPP business where orders exceeded revenues by 26.9%. However, the
distribution of backlog is not even. One of the domestic CIPP units, Kinsel, and
the Elmore division of Affholder face sub-optimal backlog levels. These units
will continue to confront the challenges posed by their backlog positions for
the balance of the year.
Due to recent management changes, the Company will incur severance
costs during the third quarter of 2003. Higher insurance costs are expected to
continue to impact margins into the future when compared with prior periods. The
combined impact of severance and insurance is expected to be $0.04 to $0.05 per
share in the third quarter of 2003.
The Company has decided that it will not give specific earnings
guidance for the third and fourth quarter of 2003.
Insituform Technologies, Inc. is a leading worldwide provider of
proprietary technologies and services for rehabilitating sewer, water and other
underground piping systems without digging and disruption. More information
about the Company can be found on its Internet site at www.insituform.com.
This news release contains forward-looking statements, which are
inherently subject to risks and uncertainties that could cause actual results to
differ materially from those projected. Factors that could affect results
include, among others, the competitive environment for the Company's products
and services, the geographical distribution and mix of the Company's work, and
other factors set forth in reports and documents filed by the Company with the
Securities and Exchange Commission from time to time. The Company does not
assume a duty to update forward-looking statements. Please use caution and do
not place reliance on forward-looking statements.
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
Revenues $ 124,778 $ 118,488 $ 248,126 $ 229,663
Cost of revenues 95,511 87,491 190,590 169,777
Gross profit 29,267 30,997 57,536 59,886
Selling, general and
administrative expenses 18,982 16,741 36,065 34,396
Operating income 10,285 14,256 21,471 25,490
Other expense:
Interest expense (2,175) (1,643) (3,372) (3,831)
Other income (expense) (189) 333 242 783
Total other expense (2,364) (1,310) (3,130) (3,048)
Income before
taxes on income 7,921 12,946 18,341 22,442
Taxes on income 3,089 4,899 7,153 8,595
Income before
minority interests,
equity in earnings and
discontinued operations 4,832 8,047 11,188 13,847
Minority interests in
net income (30) (37) (60) (68)
Equity in earnings of
affiliated companies 75 228 100 381
Income from continuing
operations $ 4,877 $ 8,238 $ 11,228 $ 14,160
Loss from discontinued
operations (292) (927) (16) (2,529)
Net income $ 4,585 $ 7,311 $ 11,212 $ 11,631
Earnings per share:
Basic:
Income from continuing
operations $ 0.18 $ 0.31 $ 0.42 $ 0.53
Loss from discontinued
operations ($0.01) ($0.03) ($0.00) ($0.09)
Net income $ 0.17 $ 0.28 $ 0.42 $ 0.44
Diluted:
Income from continuing
operations $ 0.18 $ 0.31 $ 0.42 $ 0.53
Loss from discontinued
operations ($0.01) ($0.03) ($0.00) ($0.09)
Net income $ 0.17 $ 0.27 $ 0.42 $ 0.43
Weighted average common
shares 26,445 26,543 26,487 26,548
Weighted average common
and equivalent shares 26,670 26,819 26,670 26,830
SEGMENT DATA
Revenues
Rehabilitation $ 93,883 $ 93,351 $ 186,250 $ 184,793
Tunneling 26,385 22,249 51,970 37,425
TiteLiner 4,510 2,888 9,906 7,445
Total revenues $ 124,778 $ 118,488 $ 248,126 $ 229,663
Gross profit
Rehabilitation $ 25,004 $ 26,080 $ 48,472 $ 50,386
Tunneling 2,773 4,224 5,934 7,275
TiteLiner 1,490 693 3,130 2,225
Total gross profit $ 29,267 $ 30,997 $ 57,536 $ 59,886
Operating income
Rehabilitation $ 8,589 $ 11,904 $ 17,403 $ 20,530
Tunneling 976 2,497 2,417 4,363
TiteLiner 720 (145) 1,651 597
Total operating income $ 10,285 $ 14,256 $ 21,471 $ 25,490
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share amounts)
June 30, 2003 December 31, 2002
ASSETS
CURRENT ASSETS
Cash and cash equivalents $117,552 $ 75,386
Receivables, net 87,258 82,962
Retainage 25,468 23,726
Costs and estimated earnings
in excess of billings 23,952 36,680
Inventories 12,481 12,402
Prepaid expenses and other assets 12,891 13,586
Assets held for disposal 4,054 7,909
TOTAL CURRENT ASSETS 283,656 252,651
PROPERTY AND EQUIPMENT, net 69,142 71,579
OTHER ASSETS 148,716 148,783
TOTAL ASSETS $501,514 $473,013
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of
long-term debt and notes
payable $ 18,192 $ 49,360
Accounts payable and accrued
expenses 68,413 69,776
Billings in excess of costs
and estimated earnings 8,690 5,992
Liabilities related to
discontinued operations 1,148 3,293
TOTAL CURRENT LIABILITIES 96,443 128,421
LONG-TERM DEBT, less current
maturities 116,078 67,014
OTHER LIABILITIES 3,327 3,530
TOTAL LIABILITIES 215,848 198,965
MINORITY INTEREST 1,521 1,430
STOCKHOLDERS' EQUITY 284,145 272,618
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $501,514 $473,013
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(In thousands, except per share amounts)
For the Six Months
Ended June 30,
2003 2002
Cash flow from operating activities:
Net income $ 11,212 $ 11,631
Loss from discontinued operations 16 2,529
Income from continuing operations 11,228 14,160
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation 7,247 7,197
Amortization 653 721
Other 1,510 (1,349)
Deferred income taxes (20) 42
Changes in operating assets and
liabilities, net of assets acquired:
Receivables, including costs and estimated
earnings in excess of billings 6,690 (6,098)
Inventories (63) 1,121
Prepaid expenses and other assets 341 (2,470)
Accounts payable and accrued expenses 1,574 3,240
Total changes in operating assets and
liabilities, net of assets acquired 8,542 (4,207)
Net cash provided by operating
activities of continuing operations 29,160 16,564
Net cash provided (used) by operating
activities of discontinued operations (1,299) 1,800
Net cash provided by operating activities 27,861 18,364
Cash flow from investing activities:
Capital expenditures (5,734) (11,561)
Proceeds from sale of fixed assets 349 2,520
Purchase of business, net of cash acquired (300) (8,484)
Cash from sale of business - 1,515
Other investing activities 397 (501)
Net cash used in investing activities (5,288) (16,511)
Cash flow from financing activities:
Proceeds from issuance of common stock 185 1,257
Purchases of treasury stock (1,417) (4,357)
Repayments of long-term debt (19,271) (17,870)
Issuance of long-term debt 65,000 -
Increase (decrease) in notes payable (25,778) 7,929
Net cash provided (used) by financing activities 18,719 (13,041)
Effect of exchange rate changes on cash 874 833
Net increase (decrease) in cash and cash
equivalents for the period 42,166 (10,355)
Cash and cash equivalents,
beginning of period 75,386 74,649
Cash and cash equivalents, end of period 117,552 64,294
INSITUFORM TECHNOLOGIES, INC.
BACKLOG
(Unaudited)
The following table highlights backlog for each of the segments and at
each date presented (in millions):
June 30, 2003:
Apparent
Apparent Unreleased Low Bid
Low Bid Term and Unreleased
Expected Expected Term Available
Contract in Next in Next beyond
Backlog 12 Months 12 Months 12 Months
Rehabilitation $102.9 $34.1 $21.3 $12.0
Tunneling 74.9 3.9 - -
TiteLiner 5.2 - - -
Total $183.0 $38.0 $21.3 $12.0
December 31, 2002:
Apparent
Apparent Unreleased Low Bid
Low Bid Term and Unreleased
Expected Expected Term Available
Contract in Next in Next beyond
Backlog 12 Months 12 Months 12 Months
Rehabilitation $112.1 $27.2 $34.3 $20.9
Tunneling 110.0 - - -
TiteLiner 5.1 - - -
Total $227.2 $27.2 $34.3 $20.9
Contract backlog is management's expectation of revenues to be generated from
received, signed, uncompleted contracts whose cancellation is not anticipated at
the time of reporting. Reported contract backlog excludes any term contract
amounts for which there is not specific and determinable work released. The
backlog at December 31, 2002 included $25.6 million of unreleased term contracts
associated with the Jacksonville Electric Authority ("JEA") term contract. At
December 31, 2002, the JEA term contract backlog was allocated $10 million to
unreleased term expected in the next 12 months and $15.6 million expected beyond
12 months. At June 30, 2003, all remaining JEA term contract backlog, amounting
to $15.5 million, was eliminated from backlog due to changes in planned releases
from the customer.
CONTACT: Insituform Technologies, Inc.
Joseph A. White, Vice President and CFO
(636) 530-8000