EXHIBIT 99.1
(INSITUFORM-TECH)(INSU) Insituform Technologies, Inc. Reports Fourth Quarter and
2003 Year-End Results and Resumption of Compliance with Debt Covenants
Chesterfield, MO - March 15, 2004 - Insituform Technologies, Inc.
(Nasdaq National Market: INSU) (the "Company") today reported fourth quarter and
2003 year-end results and resumption of compliance with debt covenants.
Revenues from continuing operations for the fourth quarter of 2003 were
$121.8 million, compared to $125.2 million in the fourth quarter of 2002. The
Company reported a net loss of $11.0 million, or $(0.41) per diluted share,
which included an after-tax loss of $3.0 million, or $(0.11) per diluted share,
on a single cured-in-place-pipe process (CIPP) project in Boston. In addition,
there were certain adjustments for reserves, write-down of assets, other charges
and tax reserves which adversely affected earnings by $6.6 million, or $(0.25)
per diluted share. The fourth quarter 2003 results, when compared with the same
period from the prior year, reflected operational challenges in two areas of the
North American rehabilitation business as well as delays on certain jobs in the
tunneling area. In the year-earlier quarter, the Company reported net income of
$6.2 million, or $0.23 per diluted share. Discontinued operations for the fourth
quarter of 2003, which were included in the Company's net loss, reported a net
loss of $0.9 million, or $(0.03) per diluted share, compared to a net loss of
$2.6 million, or $(0.10) per diluted share, in the fourth quarter of 2002.
Significant fourth quarter issues and adjustments included:
Description After-Tax Impact
- ----------- ----------------
Removal and re-installation of CIPP liner
in Boston $ (2,982)
Increase in casualty insurance and
healthcare reserves (2,117)
Increase in reserve for potentially
uncollectible accounts and claims (785)
Write-downs and reserves against certain
assets and discontinued operations (1,490)
Tax provision and charges (1,780)
Other charges (464)
--------
Total $ (9,618)
========
Thomas S. Rooney, Jr., President and Chief Executive Officer of the
Company, explained, "We identified and addressed several operational and balance
sheet issues. These steps, among other
things, reflect management's commitment to more rigorous financial controls and
resulted in our entering 2004 as a much stronger company."
In August 2003, the Company began a CIPP installation in Boston. The $1
million project required the Company to line 5,400 feet of a 109-year-old 36 to
41-inch diameter unusually-shaped hand-laid rough brick pipe. Many aspects of
this project were atypical of the Company's CIPP installations. The loss on the
Boston project reflects estimated costs for removing and re-installing
approximately 4,500 feet of CIPP liner. The pre-tax charge of $5.1 million is
net of $750,000 of insurance recovery proceeds expected to be received in 2004.
The Company has filed a lawsuit against its excess insurance carrier for its
failure to acknowledge coverage and to indemnify the Company for the loss in
excess of the primary coverage. "In terms of magnitude, the loss on the Boston
project is unique in Insituform's history," Rooney pointed out. "We believe this
represents an isolated incident."
For the full year, the Company's revenues rose to $487.3 million from
$480.4 million in 2002. The Company earned $4.6 million from continuing
operations, or $0.17 per diluted share, compared with $28.6 million, or $1.07
per diluted share, in 2002. Net income was $3.5 million, or $0.13 per diluted
share, compared with $22.7 million, or $0.85 per diluted share, in the prior
year.
Due to the results in the fourth quarter, the Company was not in
compliance with certain financial covenants under its Senior Notes, its Credit
Facility and an insurance collateral agreement. The Company obtained amendments
to the various debt agreements with more flexible financial covenants in place,
but additional restrictions on the use of cash. Management feels confident that
it will be in compliance with the amended covenants in 2004 and beyond.
"While results for 2003 were certainly both disappointing and
unacceptable, we are confident that our strategic initiatives will lead to
improved financial performance," Rooney said. He added, "We have already made,
and will continue to make, investments aimed at enhancing our quality control,
safety, sales and logistics programs. One of my highest priorities since taking
over as CEO was to focus on the financial area. I was particularly pleased to
bring Chris Farman on board as CFO in December, and I feel that the Company has
already improved its internal financial controls."
He added that the Company's focus remains directed toward achieving
operational excellence, developing competitive advantages through technological
innovation, and growing the business.
Although competition remains intense, the operating environment shows
signs of improvement, Rooney noted. "The outlook for tunneling remains robust,
and during the first two months of 2004, the Company bid on approximately $500
million of
business," he said. "Moreover, I'm pleased to report that the poor performing
contracts we acquired with the Elmore purchase are behind us, and that division
is building a solid backlog," he added. "And according to UNDERGROUND
CONSTRUCTION magazine's Municipal Infrastructure Survey, sewer rehabilitation
spending this year is projected to increase by nearly 7%."
Nonetheless, Rooney emphasized, "As we have consistently stated, we
don't expect our initiatives to produce much positive impact on our bottom line
until 2005. Further, our investments in these initiatives will be tempered by
the fact that the Company's most recent financial performance resulted in new
debt covenants that place additional temporary restrictions on the use of cash.
We are truly investing in the future. As the clear-cut industry leader, we are
well-positioned to capitalize on significant growth opportunities, assuming, of
course, that we can execute our strategies, and we will."
The Company's Form 10-K was timely filed on March 15, 2004. The Company
will host a conference call at 9:30 a.m. EST on Tuesday, March 16. The call can
be accessed by clicking on the Presentations tab on the Investor Relations page
of the Company's Web site (www.insituform.com) or by using the following link:
http://www.shareholder.com/insituform/MediaList.com.
An audio archive of the webcast will be available approximately two
hours after the call through www.insituform.com. The archive will be available
for one week.
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 which 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
(In thousands, except per share amounts)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
2003 2002 2003 2002
Revenues $ 121,786 $ 125,171 $ 487,272 $ 480,358
Cost of revenues 104,083 92,193 384,614 354,736
Gross profit 17,703 32,978 102,658 125,622
Selling, general and
administrative 24,764 17,014 79,733 68,049
Amortization expense 590 334 1,595 1,433
Restructuring charges - - (261) 2,458
Impairment charge - - - 3,499
Operating income (loss) (7,651) 15,630 21,591 50,183
Other expense:
Interest expense (2,472) (1,975) (8,235) (7,911)
Other (1,847) 534 (1,274) 3,055
Total other expense (4,319) (1,441) (9,509) (4,856)
Income (loss) before taxes
on income (11,970) 14,189 12,082 45,327
Taxes on income (2,572) 5,530 6,809 17,451
Income (loss) before
minority interests and
equity in earnings (9,398) 8,659 5,273 27,876
Minority interests (67) (26) (211) (150)
Equity in earnings (loss)
of affiliated companies (635) 119 (434) 834
Income (loss) from
continuing operations (10,100) 8,752 4,628 28,560
Loss from discontinued
operations (872) (2,551) (1,103) (5,869)
Net income (loss) (10,972) 6,201 3,525 22,691
Earnings (loss) per share:
Basic:
Income (loss) from
continuing operations $ (0.38) $ 0.33 $ 0.17 $ 1.08
Loss from discontinued
operations (0.03) (0.10) (0.04) (0.22)
Net income (loss) $ (0.41) $ 0.23 $ 0.13 $ 0.86
Diluted:
Income (loss) from
continuing operations $ (0.38) $ 0.33 $ 0.17 $ 1.07
Loss from discontinued
operations (0.03) (0.10) (0.04) (0.22)
Net income (loss) $ (0.41) $ 0.23 $ 0.13 $ 0.85
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, 2003 December 31, 2002
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 99,991 $ 75,386
Receivables, net 90,814 82,962
Retainage 24,902 23,726
Costs and estimated earnings
in excess of billings 27,853 36,680
Inventories 12,935 12,402
Prepaid expenses and other assets 19,515 13,586
Assets held related to
discontinued operations 1,263 7,909
TOTAL CURRENT ASSETS 277,273 252,651
PROPERTY, PLANT AND EQUIPMENT, net 75,667 71,579
OTHER ASSETS:
Goodwill 131,613 131,032
Other assets 23,807 17,751
TOTAL OTHER ASSETS 155,420 148,783
TOTAL ASSETS $508,360 $473,013
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of
long-term debt and line of
credit $ 16,938 $ 49,360
Accounts payable and accrued
expenses 82,670 69,776
Billings in excess of costs
and estimated earnings 8,495 5,992
Liabilities related to
discontinued operations 1,770 3,293
TOTAL CURRENT LIABILITIES 109,873 128,421
LONG-TERM DEBT, less current
maturities 114,323 67,014
OTHER LIABILITIES 3,530 3,530
TOTAL LIABILITIES 227,726 198,965
MINORITY INTERESTS 1,465 1,430
STOCKHOLDERS' EQUITY 279,169 272,618
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $508,360 $473,013
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Twelve Months
Ended December 31,
2003 2002
Cash flows from operating activities:
Net income $ 3,525 $ 22,691
Loss from discontinued operations 1,103 5,869
Income from continuing operations 4,628 28,560
Adjustments to reconcile net income
of net cash provided by operating activities,
excluding the effects of acquisitions:
Depreciation 15,521 14,397
Amortization 1,595 1,433
Gain on sale of investment 1,375 (1,225)
Reserve for notes receivable 1,090 -
Other 1,912 227
Asset impairment charge - 3,499
Restructuring charges (261) 2,458
Deferred income taxes (1,624) (4,364)
Changes in operating assets and
liabilities, net of purchased
businesses 5,157 (19,657)
Net cash provided by operating activities
of continuing operations 29,393 25,328
Net cash provided by operating activities
of discontinued operations 5,192 853
Net cash provided by operating activities 34,585 26,181
Cash flows from investing activities:
Capital expenditures (19,929) (21,782)
Proceeds from sale of fixed assets 1,365 10,503
Proceeds from sale of investment - 1,920
Net proceeds from sale of businesses
(discontinued operations) - 5,430
Purchases of businesses, net of cash acquired (7,776) (8,459)
Other investing activities - (960)
Net cash used in investing activities (26,340) (13,348)
Cash flows from financing activities:
Proceeds from issuance of common stock 430 2,517
Purchases of treasury stock (1,597) (5,182)
Proceeds from long-term debt 65,112 -
Principal payments on long-term debt (24,224) (20,938)
Changes in notes payable (26,000) 10,246
Deferred financing charges (867) -
Net cash used in financing activities 12,854 (13,357)
Effect of exchange rate changes on cash 3,506 1,261
Net increase (decrease) in cash and cash
equivalents 24,605 737
Cash and cash equivalents,
beginning of year 75,386 74,649
Cash and cash equivalents, end of year $ 99,991 $ 75,386
CONTACT: Insituform Technologies, Inc.
Christian G. Farman, Vice President and CFO
(636) 5300-8000