EXHIBIT 99.1
(INSITUFORM-TECH)(INSU) Insituform Technologies, Inc. Reports $0.13 Earnings Per
Share for Third Quarter 2004; Revenues Increase 23%
Chesterfield, MO - October 28, 2004 - Insituform Technologies, Inc. (Nasdaq
National Market: INSU) (the "Company") today reported third quarter 2004
earnings of $3.5 million, or $0.13 per diluted share, compared to $3.3 million,
or $0.12 per diluted share, for the same period last year.
Revenues increased 23.4% to $144.8 million for the third quarter of
2004 from $117.4 million in the same period last year. This reflects growth in
tunneling and several regional rehabilitation business units along with the
impact of 2003 acquisitions.
Year-to-date revenues increased 13.6% to $415.2 million from $365.5
million in the same period last year. As with third quarter revenues, this was
principally due to the effect of acquisitions and growth in certain North
American CIPP regions, as well as in Europe, Tite Liner (R) and tunneling.
Year-to-date earnings were $7.2 million, or $0.27 per diluted share, in 2004
compared to $14.5 million, or $0.55 per diluted share, in the first nine months
of 2003.
Gross profit increased 10.4% to $30.3 million in the third quarter of 2004
from $27.4 million in the third quarter of 2003. Gross profit margin for the
quarter for the Company's rehabilitation and Tite Liner segments increased from
24.5% to 25.2% and from 30.7% to 35.1%, respectively, compared with the third
quarter of 2003. Gross profit margin for the tunneling segment declined from
16.8% to 6.3% in the third quarter of 2004 compared with the same period in
2003, primarily as a result of project performance issues described below. Gross
profit margin for the Company as a whole declined from 23.4% to 20.9% due to the
tunneling segment's performance. For the first nine months of 2004, gross profit
increased 1.5% to $86.2 million from $85.0 million for the same period in 2003.
The above performance was achieved despite some unexpected challenges
during the quarter. A major tunneling job experienced a reduction in gross
profit of $3.7 million ($2.2 million after tax). While this project is expected
to remain profitable to the Company, it experienced a downward adjustment as a
result of revisions to original estimates and production delays. Partially
offsetting this performance in tunneling were the favorable resolutions of
several claims in the ordinary course of business.
The Company's operations in the southeast United States were interrupted by
the four hurricanes that struck the region in the third quarter. The combination
of deferred work and idled crew downtime costs resulted in an estimated $0.9
million ($0.5 million after tax) of unfavorable impact to gross profit.
Third quarter 2004 operating expenses increased 13.0% to $22.2 million from
$19.6 million in the third quarter of 2003. For the first nine months of 2004,
operating expenses increased 20.6% to $67.2 million from $55.7 million for the
same period last year. The higher level of operating expenses is consistent with
management's emphasis on key initiatives in the areas of growth, technological
innovation and operational excellence. The higher costs are primarily in the
areas of compensation and employee related costs combined with increased
professional and consulting fees. Acquisitions made in 2003 also added $0.7
million and $3.3 million, respectively, to operating expenses in the third
quarter and first nine months of 2004.
Interest and other expense was $2.2 million in the third quarter of 2004,
compared to $2.1 million in the third quarter of 2003. Year to date, interest
and other expense increased 29.6% to $6.7 million from $5.2 million a year ago,
which reflects the placement of $65.0 million in Senior Notes in April 2003,
causing higher interest expense during the first nine months of 2004 compared to
the same period of 2003.
The Company's unrestricted cash position was $77.7 million at September 30,
2004 compared to $93.9 million at December 31, 2003. Importantly, this is after
the Company made $18.9 million in debt repayments and $25.5 million in capital
expenditures during the nine-month period ended September 30, 2004. Capital
expenditures in the first nine months of 2003 were $12.6 million. The Company's
cash position at September 30, 2004 was also impacted by $3.0 million received
from the exercise of stock options, and $9.1 million in tax refunds received
earlier this year.
The Company will host a conference call at 9:30 a.m. EDT on Friday, October
29. 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 INCOME
(Unaudited)
(In thousands, except per share amounts)
<Table>
<Caption>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2004 2003 2004 2003
Revenues $ 144,821 $ 117,360 $ 415,169 $ 365,486
Cost of revenues 114,545 89,941 328,962 280,531
Gross profit 30,276 27,419 86,207 84,955
Selling, general and
administrative 22,201 19,648 67,167 55,713
Operating income 8,075 7,771 19,040 29,242
Other (expense) income:
Interest expense (2,318) (2,391) (7,113) (5,763)
Other 102 331 389 573
Total other expense (2,216) (2,060) (6,724) (5,190)
Income before taxes on income 5,859 5,711 12,316 24,052
Taxes on income 2,268 2,228 4,931 9,381
Income before minority
interests, equity in
earnings and discontinued
operations 3,591 3,483 7,385 14,671
Minority interests (65) (84) (166) (144)
Equity in earnings of
affiliated companies 0 101 (35) 201
Income from continuing
operations 3,526 3,500 7,184 14,728
Loss from discontinued
operations -- (215) -- (231)
Net income $ 3,526 $ 3,285 $ 7,184 $ 14,497
Earnings per share:
Basic:
Income from continuing
operations $ 0.13 $ 0.13 $ 0.27 $ 0.56
Loss from discontinued
operations -- (0.01) -- (0.01)
Net income $ 0.13 $ 0.12 $ 0.27 $ 0.55
Diluted:
Income from continuing
operations $ 0.13 $ 0.13 $ 0.27 $ 0.56
Loss from discontinued
operations -- (0.01) -- (0.01)
Net income $ 0.13 $ 0.12 $ 0.27 $ 0.55
Weighted average common
shares - basic 26,698 26,451 26,624 26,475
Weighted average common
and equivalent shares -
diluted 26,840 26,638 26,763 26,593
</Table>
<Table>
SEGMENT DATA
Revenues
Rehabilitation $ 102,924 $ 89,456 $ 303,178 $ 275,706
Tunneling 35,963 22,611 93,158 74,581
Tite Liner(R) 5,934 5,293 18,833 15,199
Total revenues $ 144,821 $ 117,360 $ 415,169 $ 365,486
Gross profit
Rehabilitation $ 25,935 $ 22,005 $ 70,997 $ 70,478
Tunneling 2,255 3,791 8,638 9,725
Tite Liner(R) 2,086 1,623 6,572 4,752
Total gross profit $ 30,276 $ 27,419 $ 86,207 $ 84,955
Operating income
Rehabilitation $ 7,309 $ 5,090 $ 14,400 $ 22,493
Tunneling (303) 1,876 1,028 4,293
Tite Liner(R) 1,069 805 3,612 2,456
Total operating income $ 8,075 $ 7,771 $ 19,040 $ 29,242
</Table>
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(In thousands)
<Table>
<Caption>
September 30, 2004 December 31, 2003
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 77,678 $ 93,865
Restricted cash 1,062 6,126
Receivables, net 95,616 90,814
Retainage 27,144 24,902
Costs and estimated earnings
in excess of billings 40,012 27,853
Inventories 15,902 12,935
Prepaid expenses and other assets 12,289 19,515
Assets held for disposal -- 1,263
TOTAL CURRENT ASSETS 269,703 277,273
PROPERTY, PLANT AND EQUIPMENT,
less accumulated depreciation 86,531 75,667
OTHER ASSETS
Goodwill 131,558 131,613
Other assets 22,949 23,807
TOTAL OTHER ASSETS 154,507 155,420
TOTAL ASSETS $ 510,741 $ 508,360
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term
debt and line of credit $ 15,856 $ 16,938
Accounts payable and accrued
expenses 89,762 82,670
Billings in excess of costs
and estimated earnings 9,995 8,495
Liabilities related to
discontinued operations -- 1,770
TOTAL CURRENT LIABILITIES 115,613 109,873
LONG-TERM DEBT, less current
maturities 96,528 114,323
OTHER LIABILITIES 3,501 3,530
TOTAL LIABILITIES 215,642 227,726
MINORITY INTERESTS 1,640 1,465
TOTAL STOCKHOLDERS' EQUITY 293,459 279,169
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 510,741 $ 508,360
</Table>
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<Table>
<Caption>
For the Nine Months
Ended September 30,
2004 2003
Cash flows from operating activities:
Net income $ 7,184 $ 14,497
Loss from discontinued operations -- 231
Income from continuing operations 7,184 14,728
Adjustments to reconcile net cash provided
by operating activities:
Depreciation 12,149 11,213
Amortization 1,570 1,005
Deferred income taxes 430 (30)
Loss on disposal of assets 717 518
Write-off of deferred financing fees 226 --
Loss (income) from equity investments 35 (201)
Minority interest in net income 166 144
Restructuring charge -- (261)
Other 3,759 2,037
Changes in operating assets and liabilities:
Change in restricted cash related to
operating activities 462 143
Receivables, including costs and estimated
earnings in excess of billings (18,359) 2,451
Inventories (2,966) (415)
Prepaid expenses and other assets 7,591 (3,693)
Accounts payable and accrued expenses 6,822 (1,065)
Net cash provided by operating
activities of continuing operations 19,786 26,574
Net cash used by operating activities of
discontinued operations -- (1,558)
Net cash provided by operating activities 19,786 25,016
Cash flows from investing activities:
Capital expenditures (25,521) (12,573)
Proceeds from the sale of fixed assets 1,904 780
Purchases of businesses, net of cash acquired -- (6,337)
Other investing activities (844) 1,406
Net cash used in investing activities (24,461) (16,724)
Cash flows from financing activities:
Proceeds from the issuance of common stock 3,042 557
Purchases of treasury stock -- (1,597)
Principal payments on long-term debt (18,914) (22,734)
Issuance of long-term debt -- 65,000
Increase (decrease) in line of credit -- (25,835)
Change in restricted cash related to
financing activities 4,602 (4,600)
Deferred financing charges (633) (692)
</Table>
<Table>
Net cash (used) provided in financing activities (11,903) 10,099
Effects of exchange rates on cash 391 673
Net increase (decrease) in cash and cash
equivalents (16,187) 19,064
Cash and cash equivalents, beginning of period 93,865 71,401
Cash and cash equivalents, end of period 77,678 90,465
</Table>
CONTACT: Insituform Technologies, Inc.
Christian G. Farman, Vice President and CFO
(636) 530-8000