THE KEITH COMPANIES/TKC
NEWS RELEASE FOR AUGUST 5, 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 A 21% INCREASE IN NET INCOME AND
RECORD GROSS PROFIT
HIGHLIGHTS:
>> Diluted EPS for the quarter increases to $0.26 from $0.22 in the prior
year period
>> Increase in Financial Guidance
IRVINE, CA (August 5, 2004) - The Keith Companies, Inc. (Nasdaq: TKCI), an
engineering and consulting services firm, today announced financial results for
the second quarter ended June 30, 2004.
Net revenue for the three months ended June 30, 2004 increased 7.6% to
$24.5 million, while net income for the same period increased 20.8% to $2.1
million and resulted in diluted earnings per share of $0.26. This compares to
net revenue for the second quarter of 2003 of $22.8 million, with net income of
$1.7 million and diluted earnings per share of $0.22. All growth in net revenue
in the second quarter of 2004 was organic.
"We continue to attract more business from our long-time and new clients in
the homebuilding industry, which drove the largest year-over-year increase in
net income that we have had in six quarters," said Aram Keith, Chairman and CEO
of The Keith Companies. "The demand for real estate development services is
particularly strong in Southern California, which drove the Company's growth in
net revenue. Our real estate development segment experienced net revenue growth
of 18.8% for the second quarter of 2004 over the same period in 2003. We also
increased the utilization of our real estate development staff, which helped to
increase our already strong operating margin. Net revenue from our public
works/infrastructure segment was essentially flat year over year for the second
quarter of 2004. Business activity in the energy/industrial segment remains a
challenge and our results were significantly below the prior year. We believe,
however, that the year-over-year comparisons can improve in the future."
Net revenue for the six months ended June 30, 2004 increased 4.1% to $47.0
million, while net income for the same period increased 14.7% to $3.6 million
and resulted in diluted earnings per share of $0.45. This compares to net
revenue for the six months of 2003 of $45.1 million with net income of $3.1
million and diluted earnings per share of $0.39. Income from operations for the
six months ended June 30, 2004 was $5.7 million, an increase of 19.6% over
income from operations of $4.8 million for the same period in 2003.
THE KEITH COMPANIES REPORTS SECOND QUARTER RESULTS
Page 2 of 6
The Company reported record gross profit of $9.2 million and $17.2 million
for the three and six months ended June 30, 2004.
FINANCIAL POSITION
The Company's June 30, 2004 balance sheet remains strong with cash and
securities of $33.9 million, no debt, a current ratio of 4.9:1, and
shareholders' equity of $77.0 million or $9.83 per common share outstanding at
June 30, 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 is increasing the low end of its financial guidance for diluted
earnings per share by $0.01 for the third and fourth quarters of 2004.
Accordingly, the Company estimates its full year 2004 net revenue may range from
$95.0 million to $97.0 million with estimated diluted earnings per share ranging
from $0.93 to $1.01 ($0.27 to $0.31 for the third quarter; and $0.22 to $0.25
for the fourth quarter) based upon an estimated 8.05 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.
"The disciplined manner in which our major homebuilding clients are
acquiring new land for development and initiating construction projects
indicates that we should see steady, consistent growth in our real estate
development segment for the foreseeable future," said Keith. "We see good
opportunities to continue generating organic growth in this segment, and we
intend to open two new real estate offices in California, one in downtown San
Diego and one in the Central Valley of California. We remain cautiously
optimistic that we will see improvement in demand in our other two business
areas, particularly given the growing interest in renewable and alternative
energy projects, such as wind, solar, waste wood and in LNG.
"We continue to generate strong cash flow and strengthen our balance sheet
which increases our capital resources to complete potential acquisitions. As we
move forward, we intend to continue exploring acquisition opportunities that can
complement the strong organic growth we are experiencing," said Keith.
THE KEITH COMPANIES REPORTS SECOND QUARTER RESULTS
Page 3 of 6
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 August 5, 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.
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 refurbishments,
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 SECOND QUARTER RESULTS
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THE KEITH COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2004 2003 2004 2003
------------ ------------ -------------- ------------
Gross revenue $26,840,000 $25,093,000 $51,336,000 $49,745,000
Subcontractor costs 2,328,000 2,316,000 4,361,000 4,622,000
------------ ------------ ------------ ------------
Net revenue 24,512,000 22,777,000 46,975,000 45,123,000
Costs of revenue 15,287,000 14,883,000 29,769,000 29,715,000
------------ ------------ ------------ ------------
Gross profit 9,225,000 7,894,000 17,206,000 15,408,000
Selling, general and administrative
expenses 5,901,000 5,134,000 11,492,000 10,630,000
------------ ------------ ------------ ------------
Income from operations 3,324,000 2,760,000 5,714,000 4,778,000
Interest income, net 74,000 67,000 143,000 130,000
Other income, net 25,000 8,000 24,000 220,000
------------ ------------ ------------ ------------
Income before provision for income
taxes 3,423,000 2,835,000 5,881,000 5,128,000
Provision for income taxes 1,335,000 1,106,000 2,294,000 2,000,000
------------ ------------ ------------ ------------
Net income $2,088,000 1,729,000 3,587,000 3,128,000
============ ============ ============ ============
Earnings per share:
Basic $ 0.27 $ 0.23 $ 0.46 $ 0.41
============ ============ ============ ============
Diluted $ 0.26 $ 0.22 $ 0.45 $ 0.39
============ ============ ============ ============
Weighted average number of shares
outstanding:
Basic 7,782,149 7,607,374 7,742,858 7,598,040
============ ============ ============ ============
Diluted 8,020,844 7,940,262 8,012,873 7,944,650
============ ============ ============ ============
-MORE-
THE KEITH COMPANIES REPORTS SECOND QUARTER RESULTS
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The Keith Companies, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
2004 2003
----------------- -----------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 30,382,000 $ 24,277,000
Securities held-to-maturity 3,500,000 4,600,000
Contracts and trade receivables, net 15,993,000 19,844,000
Costs and estimated earnings in excess of billings 12,354,000 9,997,000
Prepaid expenses and other current assets 1,714,000 1,468,000
----------------- -----------------
Total current assets 63,943,000 60,186,000
Equipment and leasehold improvements, net 4,723,000 4,067,000
Goodwill, net 23,059,000 23,059,000
Other assets 223,000 224,000
----------------- -----------------
Total assets $ 91,948,000 87,536,000
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 2,081,000 $ 1,640,000
Accrued employee compensation 4,908,000 4,037,000
Current portion of deferred tax liabilities 2,444,000 2,444,000
Other accrued liabilities 1,928,000 3,078,000
Billings in excess of costs and estimated earnings 1,606,000 1,571,000
----------------- -----------------
Total current liabilities 12,967,000 12,770,000
Issuable common stock -- 792,000
Deferred tax liabilities 1,560,000 1,560,000
Accrued rent 440,000 452,000
----------------- -----------------
Total liabilities 14,967,000 15,574,000
----------------- -----------------
Shareholders' equity:
Preferred stock -- --
Common stock 8,000 8,000
Additional paid-in-capital 47,468,000 45,464,000
Deferred stock compensation (741,000) (169,000)
Retained earnings 30,246,000 26,659,000
----------------- -----------------
Total shareholders' equity 76,981,000 71,962,000
----------------- -----------------
Total liabilities and shareholders' equity $ 91,948,000 $ 87,536,000
================= =================
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THE KEITH COMPANIES REPORTS SECOND QUARTER RESULTS
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THE KEITH COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 30,
-------------------------------------
2004 2003
----------------- -----------------
Cash flows from operating activities:
Net income $ 3,587,000 $ 3,128,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 991,000 1,159,000
Loss (gain) on sale of equipment (11,000) 21,000
Tax benefit from stock options and restricted shares 197,000 19,000
Deferred compensation expense 92,000 --
Changes in operating assets and liabilities:
Contracts and trade receivables, net 3,829,000 2,800,000
Costs and estimated earnings in excess of billings (2,357,000) (973,000)
Prepaid expenses and other assets (260,000) (180,000)
Trade accounts payable and accrued liabilities 161,000 (1,043,000)
Billings in excess of costs and estimated earnings 35,000 (63,000)
----------------- -----------------
Net cash provided by operating activities 6,264,000 4,868,000
----------------- -----------------
Cash flows from investing activities:
Net cash expended for acquisitions -- (714,000)
Additions to equipment and leasehold improvements (1,652,000) (764,000)
Proceeds from (purchases of) securities held-to-maturity 1,100,000 (3,184,000)
Proceeds from sales of equipment 16,000 36,000
----------------- -----------------
Net cash used in investing activities (536,000) (4,626,000)
----------------- -----------------
Cash flow from financing activities:
Principal payments on long-term debt and capital
lease obligations, including current portion -- (52,000)
Net proceeds from stock options and restricted shares 377,000 146,000
----------------- -----------------
Net cash provided by financing activities 377,000 94,000
----------------- -----------------
Net increase in cash and cash equivalents 6,105,000 336,000
Cash and cash equivalents, beginning of period 24,277,000 20,333,000
----------------- -----------------
Cash and cash equivalents, end of period $ 30,382,000 $ 20,669,000
================= =================
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