EXHIBIT 99.1
NEWS RELEASE FOR MAY 6, 2004 AT 7:30 AM EST
Contact information:
THE KEITH COMPANIES, INC. FINANCIAL RELATIONS BOARD
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 AN 18.5% INCREASE
IN INCOME FROM OPERATIONS FOR THE FIRST QUARTER OF 2004
IRVINE, CA (May 6, 2004)...The Keith Companies, Inc. (Nasdaq: TKCI), an
engineering and consulting services firm, today announced financial results for
the quarter ended March 31, 2004.
Net revenue for the three months ended March 31, 2004 increased 0.5% to
$22.5 million, while net income for the same period increased 7.2% to $1.5
million and resulted in diluted earnings per share of $0.19. This compares to
net revenue for the first quarter of 2003 of $22.3 million with net income of
$1.4 million and diluted earnings per share of $0.18. Income from operations for
the three months ended March 31, 2004 was $2.4 million, an increase of 18.5%
over income from operations of $2.0 million for the same period in 2003.
"We were very pleased with the second consecutive quarter of year-over-year
growth in net revenue, income from operations, and earnings per share" said Aram
Keith, Chairman and CEO of The Keith Companies. "We continue to win new business
with our long-time clients in the homebuilding industry, which helped our real
estate development segment generate organic net revenue growth of 12.4% from
first quarter 2003 to first quarter 2004. We also improved the utilization of
our real estate development segment staff, which contributed to our improvement
in operating margin over the prior year. Conditions remain challenging in our
energy/industrial and public works/infrastructure segments. Our
energy/industrial segment experienced a 40% decrease in net revenue from first
quarter 2003 to first quarter 2004. However, we believe the level of
deterioration in these two segments will moderate as the year progresses."
THE KEITH COMPANIES REPORTS FIRST QUARTER RESULTS
Page 2 of 6
FINANCIAL POSITION
The Company's March 31, 2004 balance sheet remains strong with cash and
securities of $32.4 million, a current ratio of 5.1:1, a debt to equity ratio of
0.00:1 (excluding issuable common stock) and shareholders' equity of $74.5
million or $9.61 per common share outstanding at March 31, 2004.
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 quarterly financial guidance for the remainder of 2004
remains unchanged from the guidance previously provided. The Company estimates
its full year 2004 net revenue may range from $90.0 million to $98.0 million
with estimated diluted earnings per share ranging from $0.88 to $1.01 ($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 homebuilding clients are continuing to purchase large amounts of new
land for development. This bodes well for our real estate development services,"
said Keith. "One of our main challenges is to actively recruit additional
engineers and staff that meet our standards in order to attempt to capitalize on
the available opportunities that we have in this area. We also continue to be
encouraged by the emerging demand for proposals for engineering services in the
energy/industrial area, both domestically and internationally. We are actively
involved in discussions for a number of energy projects, and we believe that our
level of activity in this area will increase later in the year.
"In addition, we are pleased with the acquisition candidates we are
currently considering, and as we find transactions that can deliver a strong
return on our investment, we expect to move forward on these attractive
opportunities," said Keith.
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 May 6, 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 FIRST QUARTER 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 FIRST QUARTER RESULTS
Page 4 of 6
The Keith Companies, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
2004 2003
Gross revenue $24,496,000 $ 24,651,000
Subcontractor costs 2,033,000 2,305,000
------------ ------------
Net revenue 22,463,000 22,346,000
Costs of revenue 14,482,000 14,832,000
------------ ------------
Gross profit 7,981,000 7,514,000
Selling, general and administrative
expenses 5,591,000 5,497,000
------------ ------------
Income from operations 2,390,000 2,017,000
Interest income, net 69,000 63,000
Other expenses (income), net 1,000 (212,000)
------------ ------------
Income before provision for income
taxes 2,458,000 2,292,000
Provision for income taxes 959,000 894,000
------------ ------------
Net income $ 1,499,000 $ 1,398,000
============ ============
Earnings per share:
Basic $ 0.19 $ 0.18
============ ============
Diluted $ 0.19 $ 0.18
============ ============
Weighted average number of shares outstanding:
Basic 7,703,566 7,588,601
============ ============
Diluted 8,004,901 7,948,933
============ ============
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THE KEITH COMPANIES REPORTS FIRST QUARTER RESULTS
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THE KEITH COMPANIES, INC. AND SUBSIDIARIES
Condensed CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
2004 2003
----------------- -----------------
(UNAUDITED)
Assets
Current assets:
Cash and cash equivalents $ 28,910,000 $ 24,277,000
Securities held-to-maturity 3,500,000 4,600,000
Contracts and trade receivables, net 15,817,000 19,844,000
Costs and estimated earnings in excess of billings 10,900,000 9,997,000
Prepaid expenses and other current assets 2,212,000 1,468,000
----------------- -----------------
Total current assets 61,339,000 60,186,000
Equipment and leasehold improvements, net 4,001,000 4,067,000
Goodwill, net 23,059,000 23,059,000
Other assets 238,000 224,000
----------------- -----------------
Total assets $ 88,637,000 $ 87,536,000
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 1,903,000 $ 1,640,000
Accrued employee compensation 3,923,000 4,037,000
Current portion of deferred tax liabilities 2,444,000 2,444,000
Other accrued liabilities 2,294,000 3,078,000
Billings in excess of costs and estimated earnings 1,354,000 1,571,000
----------------- -----------------
Total current liabilities 11,918,000 12,770,000
Issuable common stock 162,000 792,000
Deferred tax liabilities 1,560,000 1,560,000
Accrued rent 454,000 452,000
----------------- -----------------
Total liabilities 14,094,000 15,574,000
----------------- -----------------
Shareholders' equity:
Preferred stock -- --
Common stock 8,000 8,000
Additional paid-in-capital 46,792,000 45,464,000
Deferred stock compensation (415,000) (169,000)
Retained earnings 28,158,000 26,659,000
----------------- -----------------
Total shareholders' equity 74,543,000 71,962,000
----------------- -----------------
Total liabilities and shareholders' equity $ 88,637,000 $ 87,536,000
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THE KEITH COMPANIES REPORTS FIRST QUARTER RESULTS
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THE KEITH COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 31,
-------------------------------------
2004 2003
----------------- -----------------
Cash flows from operating activities:
Net income $ 1,499,000 $ 1,398,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 502,000 593,000
Loss on sale of equipment -- 16,000
Tax benefit from exercise of stock options 118,000 --
Stock compensation expense 33,000 --
Changes in operating assets and liabilities:
Contracts and trade receivables, net 4,006,000 2,476,000
Costs and estimated earnings in excess of billings (903,000) (1,060,000)
Prepaid expenses and other assets (753,000) (926,000)
Trade accounts payable and accrued liabilities (610,000) (1,166,000)
Billings in excess of costs and estimated earnings (217,000) (116,000)
----------------- -----------------
Net cash provided by operating activities 3,675,000 1,215,000
----------------- -----------------
Cash flows from investing activities:
Additions to equipment and leasehold improvements (438,000) (498,000)
Proceeds from (purchases of) securities held-to-maturity 1,100,000 (3,292,000)
Proceeds from sales of equipment 2,000 31,000
----------------- -----------------
Net cash provided by (used in) investing activities 664,000 (3,759,000)
----------------- -----------------
Cash flow from financing activities:
Principal payments on long-term debt and capital lease
obligations, including current portion -- (53,000)
Proceeds from exercise of stock options 294,000 27,000
----------------- -----------------
Net cash provided by (used in) financing activities 294,000 (26,000)
----------------- -----------------
Net increase (decrease) in cash and cash equivalents 4,633,000 (2,570,000)
Cash and cash equivalents, beginning of period 24,277,000 20,333,000
----------------- -----------------
Cash and cash equivalents, end of period $ 28,910,000 $ 17,763,000
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