EXHIBIT 99.1
(INSITUFORM-TECH)(INSU) Insituform Technologies, Inc. Reports Third Quarter
Earnings Per Share of $0.12
Chesterfield, MO - October 30, 2003 - Insituform Technologies, Inc.
(NASDAQ National Market: INSU) (the "Company") today announced third quarter
results.
Consolidated revenues from continuing operations were $117.4 million
for the quarter ended September 30, 2003, a 6.5% decrease compared to $125.5
million of revenues in the third quarter of 2002. Consolidated income from
continuing operations decreased by 38.2% to $3.5 million, or $0.13 per share,
compared to $5.7 million, or $0.21 per share, in the third quarter of the prior
year. Consolidated net income for the third quarter of 2003 was $3.3 million, or
$0.12 per share, compared to $4.9 million, or $0.18 per share, in the third
quarter of 2002.
Year to date, revenues increased 2.9% to $365.5 million from $355.2
million in 2002. Income from continuing operations was $14.7 million, a decrease
of 25.7% from $19.8 million in 2002, or $0.55 and $0.74 per share, respectively.
Discontinued operations had minimal impact on 2003 earnings year-to-date, but
accounted for a $3.3 million net loss, or $0.12 per share, in the first nine
months of 2002. Discontinued operations are expected to be substantially
completed in the fourth quarter, and the impact from discontinued operations in
the fourth quarter is expected to be similar to the third quarter.
Thomas S. Rooney, Jr., who was appointed chief executive officer in
July, explained, "While the Company has indicated it will not provide earnings
per share guidance in the near term, we want to communicate basic information
about our operations that we believe may be useful to investors. As we had
previously indicated might be the case, some of the second quarter's negative
trends carried over into the third quarter."
The following earnings presentation details specific items included
within the GAAP earnings per share numbers and is intended to provide additional
insight into results of operations for the third quarter of 2003, which were
significantly lower than the third quarter of 2002. For consistency with prior
period presentations, we have included the restructuring reserve and its current
period elimination in the following table.
Third Quarter
2003 2002
Reported EPS $ 0.12 $ 0.18
Discontinued operations $ 0.01 $ 0.03
Restructuring and
intangible charges/(credits) $(0.01) $ 0.14
Severance for former CEO $ 0.03 $ -
Sale of real estate investment $ - $(0.03)
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EPS adjusted for specific items $ 0.15 $ 0.32
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As shown in the table above, poor operational results
negatively impacted earnings per share by $0.17. The largest
operational impact affecting the third quarter of 2003 compared to the third
quarter of 2002 was a 20% decrease in work volume and performance issues on
several jobs in our product lines acquired from Kinsel, which caused a $0.10 per
share decrease in third quarter 2003 earnings compared to the same quarter of
2002. The Company has taken overhead out of these product lines and is
integrating these products (pipebursting, microtunneling, horizontal directional
drilling, sliplining and open-cut) into other existing operations. Earnings in
two domestic cured-in-place pipe ("CIPP") rehabilitation units were similarly
adversely affected by volume issues, the net impact of which was a further
reduction of $0.04 per share in the domestic rehabilitation unit when comparing
this year's third quarter with the third quarter of 2002. Tunneling volumes were
lower by approximately 8% in the third quarter compared to the same quarter of
2002. Three tunneling jobs were delayed resulting in a decrease of $0.03 per
share when comparing the third quarters of 2003 and 2002. These delays do not
represent lost business, and in fact, the Company may realize more revenue than
originally anticipated because of change orders. However, the revenues will not
likely be significant in the fourth quarter.
Third quarter orders moderately outpaced revenue, contributing to an
increase in backlog compared to June 30, 2003. Backlog is not evenly distributed
by either product lines or geographic regions. While the Elmore division of
Affholder has struggled with low backlog, orders increased late in the second
quarter and continued into the third quarter. Therefore, under-absorption of
costs should not be as significant beginning in the fourth quarter.
Rooney noted that, as anticipated, margins remained under pressure
during the third quarter, and are expected to remain under pressure, reflecting
a highly competitive bidding environment.
Year-to-date operating cash flow remained strong at 1.7 times net
income. The Company invested approximately $18.9 million year-to-date on
businesses and capital assets, including $6.3 million for the purchase of
additional assets and territory rights in the United States and acquisitions in
Europe.
During the quarter, the Company announced that it completed its
purchase of the business of Insituform East, Inc. ("East"), including selected
assets. East was the final remaining independent licensee of the Insituform(R)
CIPP process and NuPipe(R) fold and form process in North America. Rooney
commented, "The integration of Insituform East is proceeding smoothly, and we
believe that we have taken the steps to sustain a competitive advantage in this
environment. This acquisition opens up attractive markets, notably Maryland,
Pennsylvania, Ohio and Washington, D.C. The acquisition is expected to be
accretive to earnings per share in the fourth quarter of 2003."
Commenting on the Company's outlook, Rooney observed, "Clearly, this is
an important time for Insituform. Over the past six months we have had an
opportunity to take a hard look and analyze our business from top to bottom. We
have identified several areas in which the Company can intelligently invest that
will contribute to significant improvement to revenue and earnings. We see the
next two years as a time that the Company will make well-thought-out, strategic
internal investments to improve performance and reposition the Company to
maintain our dominant status, leading the development in our industry rather
than pursuing industry trends. These investments will fall into three targeted
areas: operational expense reduction, product
innovation (which can cut costs and grow the business) and pure business growth.
While these investments will be made over the next two years, we expect to see
measurable impact to our results beginning in 12 to 18 months. Among other
things, Insituform is increasing its sales force, stepping up training,
consolidating manufacturing facilities and improving management of its truck
fleet." Rooney continued, "We are also committing significant dollars to making
our safety program world class. Not only is this the right thing to do, but I am
confident that in several years we can reduce our insurance costs
significantly."
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 Nine Months
Ended September 30, Ended September 30,
2003 2002 2003 2002
Revenues $ 117,360 $ 125,523 $ 365,486 $ 355,187
Cost of revenues 89,941 92,765 280,531 262,543
Gross profit 27,419 32,758 84,955 92,644
Selling, general and
administrative expenses 19,909 17,720 55,974 52,134
Restructuring charges
and intangible writeoffs (261) 5,957 (261) 5,957
Operating income 7,771 9,081 29,242 34,553
Other expense:
Interest expense (2,391) (2,103) (5,763) (5,935)
Other income 331 1,736 573 2,520
Total other expense (2,060) (367) (5,190) (3,415)
Income before
taxes on income 5,711 8,714 24,052 31,138
Taxes on income 2,228 3,326 9,381 11,921
Income before
minority interests,
equity in earnings and
discontinued operations 3,483 5,388 14,671 19,217
Minority interests in
net income (84) (56) (144) (124)
Equity in earnings of
affiliated companies 101 333 201 715
Income from continuing
operations $ 3,500 $ 5,665 $ 14,728 $ 19,808
Loss from discontinued
operations (215) (788) (231) (3,317)
Net income $ 3,285 $ 4,877 $ 14,497 $ 16,491
Earnings per share:
Basic:
Income from continuing
operations $ 0.13 $ 0.21 $ 0.56 $ 0.75
Loss from discontinued
operations ($0.01) ($0.03) ($0.01) ($0.13)
Net income $ 0.12 $ 0.18 $ 0.55 $ 0.62
Diluted:
Income from continuing
operations $ 0.13 $ 0.21 $ 0.56 $ 0.74
Loss from discontinued
operations ($0.01) ($0.03) ($0.01) ($0.12)
Net income $ 0.12 $ 0.18 $ 0.55 $ 0.62
Weighted average common
shares - basic 26,451 26,507 26,475 26,534
Weighted average common
and equivalent
shares - diluted 26,638 26,615 26,593 26,763
SEGMENT DATA
Revenues
Rehabilitation $ 89,456 $ 96,601 $ 275,706 $ 281,395
Tunneling 22,611 24,682 74,581 62,107
TiteLiner 5,293 4,240 15,199 11,685
Total revenues $ 117,360 $ 125,523 $ 365,486 $ 355,187
Gross profit
Rehabilitation $ 22,006 $ 25,963 $ 70,478 $ 76,348
Tunneling 3,791 4,776 9,725 12,052
TiteLiner 1,622 2,019 4,752 4,244
Total gross profit $ 27,419 $ 32,758 $ 84,955 $ 92,644
Operating income
Rehabilitation $ 5,090 $ 5,155 $ 22,493 $ 25,668
Tunneling 1,876 2,738 4,293 7,100
TiteLiner 805 1,188 2,456 1,785
Total operating income $ 7,771 $ 9,081 $ 29,242 $ 34,553
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
September 30, 2003 December 31, 2002
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 98,907 $ 75,386
Receivables, net 85,674 82,962
Retainage 23,398 23,726
Costs and estimated earnings
in excess of billings 31,846 36,680
Inventories 13,065 12,402
Prepaid expenses and other 15,056 13,586
Discontinued assets 3,884 7,909
TOTAL CURRENT ASSETS 271,830 252,651
PROPERTY AND EQUIPMENT, net 73,382 71,579
OTHER ASSETS 152,454 148,783
TOTAL ASSETS $ 497,666 $ 473,013
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of
long-term debt and notes
payable $ 16,900 $ 49,360
Accounts payable and accrued
expenses 66,762 69,776
Billings in excess of costs
and estimated earnings 6,011 5,992
Liabilities related to
discontinued operations 891 3,293
TOTAL CURRENT LIABILITIES 90,564 128,421
LONG-TERM DEBT, less current
maturities 114,276 67,014
OTHER LIABILITIES 3,069 3,530
TOTAL LIABILITIES 207,909 198,965
MINORITY INTEREST 1,361 1,430
STOCKHOLDERS' EQUITY 288,396 272,618
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 497,666 $ 473,013
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(In thousands)
For the Nine Months
Ended September 30,
2003 2002
Cash flow from operating activities:
Net income $ 14,497 $ 16,491
Loss from discontinued operations 231 3,317
Income from continuing operations 14,728 19,808
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation 11,213 10,861
Amortization 1,005 1,099
Other 2,237 3,450
Deferred income taxes (30) 61
Changes in operating assets and
liabilities, net of assets acquired:
Receivables, including costs and estimated
earnings in excess of billings 2,451 (1,442)
Inventories (415) 82
Prepaid expenses and other assets (3,693) (2,388)
Accounts payable and accrued expenses (1,065) (9,614)
Total changes in operating assets and
liabilities, net of assets acquired (2,722) (13,362)
Net cash provided by operating
activities of continuing operations 26,431 21,917
Net cash provided (used) by operating
activities of discontinued operations (1,558) 1,718
Net cash provided by operating activities 24,873 23,635
Cash flow from investing activities:
Capital expenditures (12,573) (18,174)
Proceeds from sale of fixed assets 780 1,605
Purchase of business, net of cash acquired (6,337) (8,459)
Cash from sale of business - 4,065
Other investing activities 1,406 1,548
Net cash used in investing activities (16,724) (19,415)
Cash flow from financing activities:
Proceeds from issuance of common stock 557 1,637
Purchases of treasury stock (1,597) (4,850)
Repayments of long-term debt (22,734) (19,959)
Issuance of long-term debt 65,000 -
Increase (decrease) in notes payable (25,835) 10,052
Deferred finance charges (692) -
Net cash provided (used) by
financing activities 14,699 (13,120)
Effect of exchange rate changes on cash 673 913
Net increase (decrease) in cash and cash
equivalents for the period 23,521 (7,987)
Cash and cash equivalents,
beginning of period 75,386 74,649
Cash and cash equivalents, end of period 98,907 66,662
CONTACT: Insituform Technologies, Inc.
Joseph A. White, Vice President and CFO
(636) 530-8000