NEWS RELEASE FOR FEBRUARY 12, 2004 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
- ---------------
Contact: Aram Keith,
Chairman of the Board & CEO
THE KEITH COMPANIES REPORTS YEAR END RESULTS WITH YEAR OVER
YEAR INCREASES IN THE FOURTH QUARTER
IRVINE, CA (February 12, 2004)... 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, 2003.
Net revenue for the three months ended December 31, 2003 increased 1.9% to
$22.8 million, while income from continuing operations for the same period
increased to $1.9 million and resulted in diluted earnings per share from
continuing operations of $0.24. This compares to net revenue for the fourth
quarter of 2002 of $22.3 million with income from continuing operations of $1.8
million and diluted earnings per share from continuing operations of $0.23.
"We are very pleased with our year over year growth for the fourth quarter,
which was driven by increasing demand for our residential real estate services
in both Northern and Southern California," said Aram Keith, Chairman and CEO of
The Keith Companies. "In the fourth quarter, our real estate services generated
organic net revenue growth of approximately 10.6%. The net revenue growth in
this area was offset by continued weakness in the energy/industrial segment,
although we continue to be encouraged by the increased level of interest for
significant projects in this area in the future."
Net revenue for the twelve months ended December 31, 2003 decreased 0.9% to
$90.7 million, from $91.6 million for the twelve months ended December 31, 2002.
Income from continuing operations for the twelve months ended December 31, 2003
decreased to $7.2 million, and resulted in diluted earnings per share from
continuing operations of $0.91 compared to $8.4 million or diluted earnings per
share from continuing operations of $1.07 for the twelve months ended December
31, 2002. Two notable items impacted the previous year's results. Interest
expense and other income during 2002 was positively impacted by $498,000 (net of
income taxes) of purchase price adjustments associated with the Company's
acquisitions of Crosby, Mead, Benton & Associates and Hook & Associates
Engineering, Inc. Other income in the fourth quarter of 2003 was positively
impacted by a $45,000 (net of income taxes) purchase price adjustment associated
with the Company's acquisition of ALNM Group, Inc.
FINANCIAL POSITION
The Company's December 31, 2003 balance sheet remains strong with cash and
securities of $28.9 million, a current ratio of 4.7:1, a debt to equity ratio of
0.00:1 (excluding
THE KEITH COMPANIES REPORTS YEAR END RESULTS
Page 2 of 6
issuable common stock) and shareholders' equity of $72.0 million or $9.40 per
common share outstanding at December 31, 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 2004 remains unchanged from the
guidance previously provided. 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 energy/industrial segment.
"Our position as one of the leading residential real estate engineering
firms in California provides excellent opportunities in a rapidly growing
market," said Keith. "Overall, the beginning of an economic recovery,
infrastructure deficiencies, overdue capital spending and legislative
enticements, lead us to believe that the energy and industrial markets will
begin to experience growth in the not too distant future. In addition to our
planned organic growth, we are encouraged by the prospects for generating
incremental growth through the acquisition of complementary firms that can
expand our service offerings or enable us to achieve better penetration in
attractive markets. We are in various stages of performing due diligence on a
number of acquisition candidates. Following our due diligence review, if we
believe that the acquisition of any of these candidates would enhance
shareholder value, we intend to negotiate definitive purchase agreements to
acquire those candidates to drive additional growth in future years."
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 12, 2004
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
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.
THE KEITH COMPANIES REPORTS YEAR END RESULTS
Page 3 of 6
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 REPORTS YEAR END RESULTS
Page 4 of 6
THE KEITH COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
-------------- ------------- ------------- -------------
(Unaudited)
Gross revenue $ 25,031,000 $ 24,657,000 $ 99,950,000 $106,487,000
Subcontractor costs 2,264,000 2,323,000 9,206,000 14,889,000
-------------- ------------- ------------- -------------
Net revenue 22,767,000 22,334,000 90,744,000 91,598,000
Costs of revenue 14,537,000 14,597,000 58,837,000 59,716,000
-------------- ------------- ------------- -------------
Gross profit 8,230,000 7,737,000 31,907,000 31,882,000
Selling, general and administrative
expenses 5,271,000 4,859,000 20,592,000 19,105,000
-------------- ------------- ------------- -------------
Income from operations 2,959,000 2,878,000 11,315,000 12,777,000
Interest income, net 69,000 79,000 264,000 431,000
Other (income) expenses, net (71,000) 11,000 (259,000) (625,000)
-------------- ------------- ------------- -------------
Income before provision for income
taxes and discontinued operations 3,099,000 2,946,000 11,838,000 13,833,000
Provision for income taxes 1,208,000 1,149,000 4,617,000 5,397,000
-------------- ------------- ------------- -------------
Income from continuing operations 1,891,000 1,797,000 7,221,000 8,436,000
Loss from discontinued operations, net
of income taxes -- 97,000 -- 628,000
-------------- ------------- ------------- -------------
Net income $ 1,891,000 $ 1,700,000 $ 7,221,000 $ 7,808,000
============== ============= ============= =============
Earnings per share from continuing operations:
Basic $ 0.25 $ 0.24 $ 0.95 $ 1.15
============== ============= ============= =============
Diluted $ 0.24 $ 0.23 $ 0.91 $ 1.07
============== ============= ============= =============
Loss per share from discontinued operations,
net of income taxes:
Basic $ --- $ (0.01) $ --- $ (0.09)
============== ============= ============= =============
Diluted $ --- $ (0.01) $ --- $ (0.08)
============== ============= ============= =============
Earnings per share:
Basic $ 0.25 $ 0.23 $ 0.95 $ 1.06
============== ============= ============= =============
Diluted $ 0.24 $ 0.22 $ 0.91 $ 0.99
============== ============= ============= =============
Weighted average number of shares outstanding:
Basic 7,637,880 7,470,448 7,615,264 7,363,073
============== ============= ============= =============
Diluted 7,963,622 7,858,738 7,957,344 7,868,877
============== ============= ============= =============
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THE KEITH COMPANIES REPORTS YEAR END RESULTS
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THE KEITH COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, DECEMBER 31,
2003 2002
----------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $ 24,277,000 $ 20,333,000
Securities held-to-maturity 4,600,000 3,164,000
Contracts and trade receivables, net 19,844,000 18,771,000
Costs and estimated earnings in excess of billings 9,997,000 10,392,000
Prepaid expenses and other current assets 1,468,000 1,367,000
----------------- -----------------
Total current assets 60,186,000 54,027,000
Equipment and leasehold improvements, net 4,067,000 4,831,000
Goodwill, net 23,059,000 23,056,000
Other assets 224,000 312,000
----------------- -----------------
Total assets $ 87,536,000 $ 82,226,000
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of capital lease obligations $ -- $ 52,000
Trade accounts payable 1,640,000 1,818,000
Accrued employee compensation 4,037,000 3,722,000
Current portion of deferred tax liabilities 2,444,000 3,065,000
Other accrued liabilities 3,078,000 4,484,000
Billings in excess of costs and estimated earnings 1,571,000 1,273,000
----------------- -----------------
Total current liabilities 12,770,000 14,414,000
Capital lease obligations, less current portion -- 18,000
Issuable common stock 792,000 2,215,000
Deferred tax liabilities 1,560,000 1,675,000
Accrued rent 452,000 292,000
----------------- -----------------
Total liabilities 15,574,000 18,614,000
----------------- -----------------
Shareholders' equity:
Preferred stock -- --
Common stock 8,000 8,000
Additional paid-in-capital 45,295,000 44,166,000
Retained earnings 26,659,000 19,438,000
----------------- -----------------
Total shareholders' equity 71,962,000 63,612,000
----------------- -----------------
Total liabilities and shareholders' equity $ 87,536,000 $ 82,226,000
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THE KEITH COMPANIES REPORTS YEAR END RESULTS
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THE KEITH COMPANIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED
DECEMBER 31,
-------------------------------------
2003 2002
----------------- -----------------
Cash flows from operating activities:
Net income $ 7,221,000 $ 7,808,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 2,231,000 2,283,000
Loss on sale/impairment of equipment 29,000 93,000
Reduction in purchase price of acquired companies (137,000) (769,000)
Tax benefit from exercise of stock options 69,000 89,000
Stock compensation expense 37,000 --
Changes in operating assets and liabilities, net of
effects from acquisition in 2002:
Contracts and trade receivables, net (1,269,000) 3,369,000
Costs and estimated earnings in excess of billings 304,000 (1,545,000)
Prepaid expenses and other assets (53,000) 108,000
Trade accounts payable and accrued liabilities (652,000) (270,000)
Billings in excess of costs and estimated earnings 298,000 (1,042,000)
Deferred tax liabilities (728,000) (28,000)
----------------- -----------------
Net cash provided by operating activities $ 7,350,000 $ 10,096,000
----------------- -----------------
Cash flows from investing activities:
Net cash expended related to or for acquisitions (722,000) (8,048,000)
Additions to equipment and leasehold improvements (1,548,000) (1,872,000)
Proceeds from (purchases of) securities held-to-maturity (1,436,000) 8,357,000
Proceeds from sales of equipment 57,000 134,000
----------------- -----------------
Net cash used in investing activities $ (3,649,000) $ (1,429,000)
----------------- -----------------
Cash flow from financing activities:
Principal payments on long-term debt and capital lease
obligations, including current portion (52,000) (705,000)
Proceeds from exercise of stock options 295,000 159,000
----------------- -----------------
Net cash provided by (used in) financing activities $ 243,000 $ (546,000)
----------------- -----------------
Net increase in cash and cash equivalents 3,944,000 8,121,000
Cash and cash equivalents, beginning of period $ 20,333,000 $ 12,212,000
----------------- -----------------
Cash and cash equivalents, end of period $ 24,277,000 $ 20,333,000
================= =================
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