EXHIBIT 99.1
NEWS RELEASE FOR NOVEMBER 6, 2003 AT 7:30 AM EST
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
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Contact: Aram Keith,
Chairman of the Board & CEO
THE KEITH COMPANIES REPORTS THIRD QUARTER RESULTS AND
CONTINUED STRENGTH IN RESIDENTIAL REAL ESTATE SERVICES
IRVINE, CA (November 6, 2003)... The Keith Companies, Inc. (Nasdaq: TKCI), an
engineering and consulting services firm, today announced financial results for
the third quarter ended September 30, 2003.
Net revenue for the three months ended September 30, 2003 decreased 7.9% to
$22.9 million, while income from continuing operations for the same period
decreased to $2.2 million and resulted in diluted earnings per share from
continuing operations of $0.28. This compares to net revenue for the third
quarter of 2002 of $24.8 million with income from continuing operations of $3.0
million and diluted earnings per share from continuing operations of $0.38.
Two notable items impacted the previous year's results. Interest expense
and other income during the third quarter of 2002 were positively impacted by a
$498,000 (net of income taxes) purchase price adjustment associated with the
Company's acquisitions of Crosby, Mead, Benton & Associates and Hook &
Associates Engineering, Inc.
"We continue to have a growing flow of new projects for our residential
real estate services," said Aram Keith, Chairman and CEO of The Keith Companies.
"Internal growth in net revenue in this area was 8.5% for the third quarter of
2003 compared to 2002. Overall demand, however, in the industrial/energy segment
was significantly less than the prior year which creates challenging dynamics
for influencing our overall growth at this time. We do believe that the
industrial/energy segment may improve in the future.
"We remain extremely diligent in the areas of our business that are within
our control, and we believe this is reflected in our continued strong margins,"
said Keith.
Net revenue for the nine months ended September 30, 2003 decreased 1.9% to
$68.0 million, from $69.3 million for the nine months ended September 30, 2002.
Income from continuing operations for the nine months ended September 30, 2003
decreased to $5.3 million, and resulted in diluted earnings per share from
continuing operations of $0.67 compared to $6.6 million or diluted earnings per
share from continuing operations of $0.84 for the nine months ended September
30, 2002. As discussed above, interest expense and other income in 2002 were
positively impacted by a $498,000 (net of income taxes) purchase price
adjustment.
FINANCIAL POSITION
The Company's September 30, 2003 balance sheet remains strong with cash and
securities of $28.2 million, a current ratio of 4.7:1, a debt to equity ratio of
0.00:1 (excluding issuable common stock) and shareholders' equity of $69.9
million or $9.16 per common share outstanding at September 30, 2003.
FINANCIAL GUIDANCE
In adherence with 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, if any, and exclude the impact of any potential future
acquisitions.
The Company's financial guidance for diluted earnings per share for the
fourth quarter of 2003 remains unchanged from the guidance previously provided.
For the full year, the Company estimates net revenue to range from $89.0 million
to $94.0 million, and forecasts diluted earnings per share to range from $0.88
to $0.93 based upon an estimated 8.0 million weighted average number of diluted
shares outstanding. For the fourth quarter, the Company expects diluted earnings
per share to range from $0.21 to $0.26.
The Company also provided its initial guidance for 2004. The Company
estimates its full year 2004 net revenue may range from $90.0 million to $100.0
million with estimated diluted earnings per share ranging from $0.88 to $1.04
($0.19 to $0.22 for the first quarter; $0.22 to $0.26 for the second quarter;
$0.26 to $0.31 for the third quarter; and $0.21 to $0.25 for the fourth quarter)
based upon an estimated 8.1 million weighted average number of diluted shares
outstanding for the year. The higher range of the guidance is primarily based
upon significant improvements in the demand for services in the Company's
industrial/energy segment.
"We are encouraged by the trends in our markets, which should provide solid
opportunities for growth going forward," said Keith. "The inventory of available
housing in our core California markets remains well below the levels required to
meet demand, which bodes well for the residential real estate market in general
and the level of activity we expect to see in this business area. In addition,
we are very encouraged by the recent pick-up in proposal activity for our
services in the industrial/energy segment. The unprecedented power outage in the
Northeast in August has prompted both utilities and businesses to address
shortcomings in their power generating and transmission capabilities. This can
create opportunities for our industrial/energy segment, and we believe we can
generate meaningful growth in this area in the coming year if the proposals turn
into awarded contracts."
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 November 6, 2003
and can be accessed by all interested parties at HTTP://WWW.VIAVID.NET. 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
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audio software. For those unable to participate during the live broadcast, a
replay will be available shortly after the call. A copy of this press release
and a link to the Company's quarterly conference call will be available at the
Company's website under the headings "TKC News" and "Investor Relations,"
respectively, at WWW.KEITHCO.COM.
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.
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THE KEITH COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Gross revenue $25,175,000 $28,086,000 $74,919,000 $81,830,000
Subcontractor costs 2,321,000 3,276,000 6,942,000 12,566,000
------------ ------------ ------------ ------------
Net revenue 22,854,000 24,810,000 67,977,000 69,264,000
Costs of revenue 14,369,000 15,791,000 44,300,000 45,119,000
------------ ------------ ------------ ------------
Gross profit 8,485,000 9,019,000 23,677,000 24,145,000
Selling, general and administrative
expenses 4,906,000 4,937,000 15,321,000 14,246,000
------------ ------------ ------------ ------------
Income from operations 3,579,000 4,082,000 8,356,000 9,899,000
Interest income 68,000 87,000 207,000 304,000
Interest expense (income) 3,000 (114,000) 12,000 (48,000)
Other expenses (income), net 32,000 (676,000) (188,000) (636,000)
------------ ------------ ------------ ------------
Income before provision for income
taxes and discontinued operations 3,612,000 4,959,000 8,739,000 10,887,000
Provision for income taxes 1,409,000 1,935,000 3,408,000 4,248,000
------------ ------------ ------------ ------------
Income from continuing operations 2,203,000 3,024,000 5,331,000 6,639,000
Loss from discontinued operations, net
of income taxes -- 233,000 -- 531,000
------------ ------------ ------------ ------------
Net income $ 2,203,000 $ 2,791,000 $ 5,331,000 $ 6,108,000
============ ============ ============ ============
Earnings per share from continuing operations:
Basic $ 0.29 $ 0.41 $ 0.70 $ 0.91
============ ============ ============ ============
Diluted $ 0.28 $ 0.38 $ 0.67 $ 0.84
============ ============ ============ ============
Loss per share from discontinued operations,
net of income taxes:
Basic $ -- $ (.03) $ -- $ (.08)
============ ============ ============ ============
Diluted $ -- $ (.03) $ -- $ (.06)
============ ============ ============ ============
Earnings per share:
Basic $ 0.29 $ 0.38 $ 0.70 $ 0.83
============ ============ ============ ============
Diluted $ 0.28 $ 0.35 $ 0.67 $ 0.78
============ ============ ============ ============
Weighted average number of shares outstanding:
Basic 7,626,534 7,346,326 7,607,642 7,326,887
============ ============ ============ ============
Diluted 7,975,890 7,936,546 7,955,167 7,871,862
============ ============ ============ ============
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THE KEITH COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
2003 2002
----------------- -----------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 23,130,000 $ 20,333,000
Securities held-to-maturity 5,102,000 3,164,000
Contracts and trade receivables, net 17,494,000 18,771,000
Costs and estimated earnings in excess of billings 11,386,000 10,392,000
Prepaid expenses and other current assets 1,460,000 1,367,000
----------------- -----------------
Total current assets 58,572,000 54,027,000
Equipment and leasehold improvements, net 4,113,000 4,831,000
Goodwill, net 23,218,000 23,056,000
Other assets 221,000 312,000
----------------- -----------------
Total assets $ 86,124,000 $ 82,226,000
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of capital lease obligations $ -- $ 52,000
Trade accounts payable 1,413,000 1,818,000
Accrued employee compensation 4,406,000 3,722,000
Current portion of deferred tax liabilities 3,058,000 3,065,000
Other accrued liabilities 2,690,000 4,484,000
Billings in excess of costs and estimated earnings 1,011,000 1,273,000
----------------- -----------------
Total current liabilities 12,578,000 14,414,000
Capital lease obligations, less current portion -- 18,000
Issuable common stock 1,500,000 2,215,000
Deferred tax liabilities 1,675,000 1,675,000
Accrued rent 442,000 292,000
----------------- -----------------
Total liabilities 16,195,000 18,614,000
----------------- -----------------
Shareholders' equity:
Preferred stock -- --
Common stock 8,000 8,000
Additional paid-in-capital 45,152,000 44,166,000
Retained earnings 24,769,000 19,438,000
----------------- -----------------
Total shareholders' equity 69,929,000 63,612,000
----------------- -----------------
Total liabilities and shareholders' equity $ 86,124,000 $ 82,226,000
================= =================
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THE KEITH COMPANIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------------------
2003 2002
----------------- -----------------
Cash flows from operating activities:
Net income $ 5,331,000 $ 6,108,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 1,705,000 1,702,000
Loss on sale/impairment of equipment 37,000 139,000
Reduction in purchase price of acquired companies -- (769,000)
Tax benefit from exercise of stock options 36,000 73,000
Stock compensation expense 20,000 --
Changes in operating assets and liabilities, net of
effects from acquisition in 2002:
Contracts and trade receivables, net 1,277,000 1,952,000
Costs and estimated earnings in excess of billings (1,085,000) (3,265,000)
Prepaid expenses and other assets (57,000) 389,000
Trade accounts payable and accrued liabilities (687,000) 1,967,000
Billings in excess of costs and estimated earnings (262,000) (1,058,000)
----------------- -----------------
Net cash provided by operating activities $ 6,315,000 $ 7,238,000
----------------- -----------------
Cash flows from investing activities:
Net cash expended related to or for acquisitions (722,000) (7,987,000)
Additions to equipment and leasehold improvements (1,066,000) (1,354,000)
Proceeds from (purchases of) securities held-to-maturity (1,938,000) 5,994,000
Proceeds from sales of equipment 46,000 129,000
----------------- -----------------
Net cash used in investing activities $ (3,680,000) $ (3,218,000)
----------------- -----------------
Cash flow from financing activities:
Principal payments on long-term debt and capital lease
obligations, including current portion (53,000) (688,000)
Proceeds from exercise of stock options 215,000 147,000
----------------- -----------------
Net cash provided by (used in) financing activities $ 162,000 $ (541,000)
----------------- -----------------
Net increase in cash and cash equivalents 2,797,000 3,479,000
Cash and cash equivalents, beginning of period $ 20,333,000 $ 12,212,000
----------------- -----------------
Cash and cash equivalents, end of period $ 23,130,000 $ 15,691,000
================= =================
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