EXHIBIT 99.1
THE KEITH COMPANIES | TKC
NEWS RELEASE FOR FEBRUARY 13 , 2003 AT 7:30 AM ET
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Contact information:
The Keith Companies, Inc. FRB | Weber Shandwick
19 Technology Drive Tricia Ross
Irvine, CA. 92618 Investor Relations
(949) 923-6001 (310) 407-6540
(949) 923-6026 Fax
www.keithco.com
Contact: Aram Keith,
CEO & Chairman of the Board
THE KEITH COMPANIES REPORTS RECORD RESULTS FOR YEAR ENDED 2002
o 37% increase in net revenue for the year ended December 31, 2002
o 33% increase in net income for the year ended December 31, 2002
IRVINE, CA (February 13, 2003) ... The Keith Companies, Inc. (Nasdaq: TKCI), an
engineering and consulting services firm, today announced financial results for
the fourth quarter and year ended December 31, 2002 which included record net
revenue for the year driven by acquisitions along with internal growth of 3.3%,
from continuing operations.
Net revenue and net income for the twelve months ended December 31, 2002
increased 37 percent to $91.6 million and 33 percent to $7.8 million,
respectively, which resulted in diluted earnings per share of $0.99 (based upon
7.9 million diluted weighted average shares outstanding). This compares to net
revenue during 2001 of $66.8 million with net income of $5.8 million and diluted
earnings per share of $0.82 (based upon 7.1 million diluted weighted average
shares outstanding).
Net revenue for the fourth quarter of 2002 increased 31 percent to $22.3
million with net income up 42 percent to $1.7 million, and diluted earnings per
share of $0.22. This compares to net revenue for the fourth quarter of 2001 of
$17.1 million with net income of $1.2 million, and diluted earnings per share of
$0.16.
Net cash provided from operating activities for the year ended December 31,
2002 increased 29% to $10.1 million, compared to $7.8 million during 2001.
"Despite various challenging economic conditions, our fourth quarter
results capped a strong year for the Company," said Aram Keith, Chairman and CEO
of The Keith Companies, Inc. "The diversity of our engineering services and the
fact that we serve markets with different economic cycles resulted in overall
stable growth for the year. We continue to see strength in the residential real
estate and public works industries of our business, and maintain profitability
in the energy/industrial industry where demand has slowed. Importantly, we
continue to efficiently utilize our workforce and keep a watchful eye on
overhead helping the Company to maintain one of the highest operating margins in
our sector."
NET REVENUE CONTRIBUTIONS FROM ACQUISITIONS
Acquired companies (ALNM Group, Inc., acquired March 2002 and Universal
Energy, Inc., acquired November 2001) contributed approximately $4.1 million in
net revenue for the three months ended December 31, 2002 compared to the
corresponding prior year period.
For the year ended December 31, 2002, acquired companies contributed
approximately $22.5 million in net revenue compared to the year ended December
31, 2001. This $22.5 million includes one month of net revenue contributed by
Hook & Associates Engineering ("Hook") (acquired January 2001), nine months of
net revenue contributed by Pacific Engineering Corporation (acquired September
2001), ten months of net revenue contributed by ALNM Group, Inc., and eleven
months of net revenue contributed by Universal Energy, Inc.
STRONG FINANCIAL POSITION
The Company's December 31, 2002 balance sheet remains strong with cash and
securities of $23.5 million, a current ratio of 3.75:1, a debt to equity ratio
of 0.001:1 and shareholders' equity of $63.6 million or $8.47 per share
outstanding.
DISCONTINUED OPERATIONS
The Company made a decision to close three of its divisions during 2002.
Two of these divisions relate to the Company's Hook acquisition and were located
in Colorado and Wyoming. The third closure related to the Company's internally
created Communication division which was located in California. The closures
were primarily due to lower than expected operating results and continuing
difficult market conditions. In accordance with Generally Accepted Accounting
Principles ("GAAP"), the Company has changed the presentation of its
"Consolidated Statements of Income" to reflect the results of operations for
these discontinued divisions for all periods presented.
FINANCIAL GUIDANCE
In adherence to the U.S. Securities and Exchange Commission's (SEC)
Regulation Fair Disclosure, The Keith Companies provides the following guidance
for all investors and encourages all current and potential investors to review
the Disclosure Regarding Forward-Looking Statements in this press release as
well as all financial documents filed with the SEC. All guidance amounts are
before special items and exclude the impact of any potential future
acquisitions.
The Company reaffirms its financial guidance for 2003. For 2003, the
Company estimates net revenue to range from $95.5 million to $103.0 million.
During 2002, the Company's financial results were positively impacted by a
$498,000 (net of income taxes) purchase price adjustment related to its
acquisitions. Excluding this amount from 2002, diluted earnings per share from
continuing operations would have been $1.01. The Company forecasts diluted
earnings per share for 2003 to be flat to an eleven percent increase over the
adjusted $1.01 diluted earnings per share from continuing operations for 2002,
which results in a range for 2003 of $1.02 to $1.12 ($0.24 to $0.27 for the
first quarter; $0.25 to $0.28 for the second quarter; $0.28 to $0.30 for the
third quarter; and $0.25 to $0.27 for the fourth quarter) based upon an
estimated 8.1 million weighted average number of diluted shares outstanding. The
forecasted diluted earnings per share for 2003 of $1.02 to $1.12
represents between a five percent decline to a five percent increase over 2002
GAAP diluted earnings per share from continuing operations.
"Given the current trends in our markets, we believe that 2003 should be
another year of profitable growth for the Company," said Keith. "The demand for
housing throughout the Southwest continues to outpace the supply. Based on the
projects planned by our residential real estate clients, we expect to see
additional growth in this area. We are also seeing steady work flow in our
public works industry. Despite the continued negative news about public agency
budgets, we feel fortunate that we have mostly small to medium sized public
works contracts spread across a multitude of agencies and agency types (local,
state, special district, etc.), many of which get their finances through
end-user fees or pre-funded project budgets. This fact, I believe, makes us less
susceptible to any particular budget problems. Finally, we will continue to
internally build our presence in the energy/industrial market, which should
present good long-term opportunities given the need to replace or refurbish many
of the power plants within our geographic reach and the continued need for
corporations to enhance efficiency and the quality of their products through
automation and design."
CONFERENCE CALL TO BE BROADCAST LIVE OVER THE INTERNET
The Company will be hosting an earnings conference call, which will be
broadcast live over the Internet at 8:30 a.m. Pacific Time on February 13, 2003
and can be accessed by all interested parties at http://www.viavid.com. To
listen to the live call, please go to the Web site at least fifteen minutes
prior to the start of the call to register, download, and install any necessary
audio software. For those unable to participate during the live broadcast, a
replay will be available shortly after the call for approximately seven days.
ABOUT THE KEITH COMPANIES
The Keith Companies, Inc. is a fully integrated, multi-disciplined
engineering and consulting services company, with offices located throughout the
Western and Midwestern United States. The Keith Companies' professionals provide
a wide spectrum of skilled resources including land planning, engineering,
surveying, mapping, environmental studies, and water and cultural resources that
are needed to effectively plan, engineer, and design state-of-the-art private
and public facilities. Additionally, the Company provides mechanical,
electrical, chemical, power/energy engineering, and other industrial engineering
services to design and improve the efficiency and reliability of automated and
manufacturing processes, production lines, and fire protection systems. The
Keith Companies benefits from a diverse public and private client base varying
from residential and commercial real estate projects to institutional,
manufacturing, and processing facilities. For more information visit the
Company's website at www.keithco.com.
Certain statements in this news release may include forward-looking
statements that express our expectation, prediction, belief, or projection.
These statements involve known and unknown risks, uncertainties, and other
factors that may cause the actual results, performance, and achievement of The
Keith Companies to be materially and adversely different from any future
results, performance, or achievement expressed or implied by these
forward-looking statements. Factors that may cause actual results to differ from
the forward-looking statements contained in this release and that may affect the
Company's prospects in general include, but are not limited to: changes in the
economic growth in the United States (especially in California) and other major
international economies (especially Brazil), our ability to sustain our growth
and profitability, our ability to implement our acquisition strategy and to
successfully close and integrate acquired companies on a timely and
cost-effective basis, changes in the carrying value of our goodwill and other
long-term assets, our failure to accurately estimate costs on fixed-price
contracts or contracts with not-to-exceed provisions, the uncertain timing of
awards and contracts, the ability to maintain acquired companies' profit margins
and/or client base, outcomes of pending and future litigation, the ongoing
financing of public works and infrastructure
enhancements and refurbishment, our ability to attract and retain employees, the
demand for electricity and the impact on power providers' plans for expanding
generation facilities, increasing competition by foreign and domestic companies,
a downturn in the real estate market, risks inherent in doing business outside
the United States, including the difficulty of enforcing contracts, political
instability and foreign currency fluctuations and potential exchange
restrictions, the short- and long-term impact of terrorist activities and
resulting political and military policies, and other factors as are described in
the Company's filings with the Securities and Exchange Commission. The
forward-looking information set forth in this press release is as of the date
indicated above and we undertake no duty to update this information.
TABLES FOLLOW
The Keith Companies, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
------------------------------- -------------------------------
2002 2001 2002 2001
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(UNAUDITED)
Gross revenue $ 24,657,000 $ 19,778,000 $ 106,487,000 $ 74,314,000
Subcontractor costs 2,323,000 2,727,000 14,889,000 7,470,000
-------------- ------------- -------------- -------------
Net revenue 22,334,000 17,051,000 91,598,000 66,844,000
Costs of revenue 14,597,000 11,347,000 59,716,000 42,970,000
-------------- ------------- -------------- -------------
Gross profit 7,737,000 5,704,000 31,882,000 23,874,000
Selling, general and administrative
expenses 4,859,000 3,850,000 19,105,000 14,015,000
-------------- ------------- -------------- -------------
Income from operations 2,878,000 1,854,000 12,777,000 9,859,000
Interest income 80,000 174,000 384,000 552,000
Interest expense (income), net 1,000 31,000 (47,000) 263,000
Other (income) expenses, net 11,000 8,000 (625,000) 54,000
-------------- ------------- -------------- -------------
Income before provision for
income taxes and
discontinued operations 2,946,000 1,989,000 13,833,000 10,094,000
Provision for income taxes 1,149,000 678,000 5,397,000 3,916,000
-------------- ------------- -------------- -------------
Income from continuing operations 1,797,000 1,311,000 8,436,000 6,178,000
Loss from discontinued operations,
net of income taxes 97,000 111,000 628,000 329,000
-------------- ------------- -------------- -------------
Net income $ 1,700,000 $ 1,200,000 $ 7,808,000 $ 5,849,000
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Earnings per share from
continuing operations:
Basic $ 0.24 $ 0.18 $ 1.15 $ 0.94
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Diluted $ 0.23 $ 0.17 $ 1.07 $ 0.87
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Earnings (loss) per share from
discontinued operations,
net of income taxes:
Basic $ (0.01) $ (0.02) $ (0.09) $ (0.05)
============== ============= ============== =============
Diluted $ (0.01) $ (0.01) $ (0.08) $ (0.05)
============== ============= ============== =============
Earnings per share:
Basic $ 0.23 $ 0.16 $ 1.06 $ 0.89
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Diluted $ 0.22 $ 0.16 $ 0.99 $ 0.82
============== ============= ============== =============
Weighted average number of
shares outstanding:
Basic 7,470,448 7,303,836 7,363,073 6,604,367
============== ============= ============== =============
Diluted 7,858,738 7,683,367 7,868,877 7,092,505
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THE KEITH COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, DECEMBER 31,
2002 2001
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ASSETS
Current assets:
Cash and cash equivalents $ 20,333,000 $ 12,212,000
Securities held-to-maturity 3,164,000 11,521,000
Contracts and trade receivables, net 18,771,000 18,618,000
Costs and estimated earnings in excess of billings 10,392,000 8,270,000
Prepaid expenses and other current assets 1,367,000 1,458,000
-------------- --------------
Total current assets 54,027,000 52,079,000
Equipment and leasehold improvements, net 4,831,000 4,921,000
Goodwill, net 23,056,000 14,252,000
Other assets 312,000 240,000
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Total assets $ 82,226,000 $ 71,492,000
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and capital
lease obligations $ 52,000 $ 459,000
Trade accounts payable 1,818,000 2,376,000
Accrued employee compensation 3,722,000 3,091,000
Current portion of deferred tax liabilities 3,065,000 2,028,000
Other accrued liabilities 4,484,000 2,961,000
Billings in excess of costs and estimated earnings 1,273,000 2,383,000
-------------- --------------
Total current liabilities 14,414,000 13,298,000
Long-term debt and capital lease obligations,
less current portion 18,000 1,453,000
Issuable common stock 2,215,000 1,512,000
Deferred tax liabilities 1,675,000 1,271,000
Accrued rent 292,000 225,000
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Total liabilities 18,614,000 17,759,000
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Shareholders' equity:
Preferred stock -- --
Common stock 8,000 7,000
Additional paid-in-capital 44,166,000 42,096,000
Retained earnings 19,438,000 11,630,000
-------------- --------------
Total shareholders' equity 63,612,000 53,733,000
-------------- --------------
Total liabilities and shareholders' equity $ 82,226,000 $ 71,492,000
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The Keith Companies Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED
DECEMBER 31,
--------------------------------
2002 2001
-------------- --------------
Cash flows from operating activities:
Net income $ 7,808,000 $ 5,849,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 2,283,000 2,349,000
Loss on sale/ impairment of equipment 93,000 23,000
Reduction in purchase price of acquired companies (769,000) -
Tax benefit from exercise of stock options 90,000 879,000
Changes in operating assets and liabilities, net of
effects from acquisitions:
Contracts and trade receivables, net 3,368,000 659,000
Costs and estimated earnings in excess of billings (1,545,000) (1,807,000)
Prepaid expenses and other assets 108,000 (366,000)
Trade accounts payable and accrued liabilities (270,000) 277,000
Billings in excess of costs and estimated earnings (1,042,000) (341,000)
Deferred tax liabilities (28,000) 306,000
-------------- --------------
Net cash provided by operating activities $ 10,096,000 $ 7,828,000
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Cash flows from investing activities:
Net cash expended for acquisitions (8,048,000) (5,834,000)
Additions to equipment and leasehold improvements (1,872,000) (1,575,000)
Proceeds from (purchase of) securities held-to-maturity 8,357,000 (11,521,000)
Proceeds from sales of equipment 134,000 15,000
-------------- --------------
Net cash used in investing activities $ (1,429,000) $ (18,915,000)
-------------- --------------
Cash flow from financing activities:
Payments on line of credit, net - (2,294,000)
Principal payments on long-term debt and capital lease
obligations, including current portion (705,000) (3,528,000)
Repurchase of common stock - (433,000)
Proceeds from exercise of stock options 159,000 596,000
Net proceeds from stock offering - 27,915,000
-------------- --------------
Net cash (used in) provided by financing activities $ (546,000) $ 22,256,000
-------------- --------------
Net increase in cash and cash equivalents 8,121,000 11,169,000
Cash and cash equivalents, beginning of year $ 12,212,000 $ 1,043,000
-------------- --------------
Cash and cash equivalents, end of year $ 20,333,000 $ 12,212,000
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