THE KEITH COMPANIES\TKC
PRESS RELEASE
NEWS RELEASE FOR NOVEMBER 4, 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 (617) 520-7064
(949) 923-6026 Fax
www.keithco.com
Contact: Aram Keith,
Chairman of the Board & CEO
THE KEITH COMPANIES REPORTS RECORD NET REVENUE AND GROSS
PROFIT FOR BOTH THE THIRD QUARTER AND FIRST NINE MONTHS OF 2004
IRVINE, CA (November 4, 2004) - The Keith Companies, Inc. (Nasdaq: TKCI), an
engineering and consulting services firm, today announced financial results for
the third quarter ended September 30, 2004.
Net revenue for the three months ended September 30, 2004 reached a record
level by increasing 11.9% to $25.6 million, while net income for the same period
increased 9.4% to $2.4 million and resulted in diluted earnings per share of
$0.30. This compares to net revenue for the third quarter of 2003 of $22.9
million, with net income of $2.2 million and diluted earnings per share of
$0.28. All growth in net revenue and income in the third quarter of 2004 was
organic.
"Record third quarter net revenue and gross profit was primarily the result
of another strong quarter for our real estate development segment," said Aram
Keith, Chairman and CEO of The Keith Companies. "This segment experienced net
revenue growth of 19.3% for the third quarter of 2004 over the same period in
2003 driven by ongoing and new work with leading homebuilders and other clients
in the Southwest mainly due to the robust California housing market. With our
recent opening of two new real estate development offices in San Diego and
Bakersfield, California, coupled with a strong real estate market, we expect
that our solid organic growth should continue and should lead to consistent
strong performance in this segment of our business. Even though net revenue from
our public works/infrastructure segment decreased slightly from year over year
for the third quarter, it had an increase in income from operations. While we
experienced continued weakness in our energy/industrial operating results during
the third quarter, we are encouraged by a number of industry catalysts that
support an improving outlook for industrial work and renewable and alternative
energy related projects in the coming quarters."
Net revenue for the nine months ended September 30, 2004 increased 6.7% to
a record $72.6 million, while net income for the same period increased 12.5% to
$6.0 million and resulted in diluted earnings per share of $0.75. This compares
to net revenue for the nine months of 2003
THE KEITH COMPANIES REPORTS THIRD QUARTER RESULTS
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of $68.0 million with net income of $5.3 million and diluted earnings per share
of $0.67. All growth in net revenue and income in the first nine months of 2004
was organic.
The Company reported record gross profit of $10.0 million and $27.2 million
for the three and nine months ended September 30, 2004, respectively.
FINANCIAL POSITION
The Company's September 30, 2004 balance sheet remains strong with cash and
securities of $37.8 million, no debt, a current ratio of 4.7:1, and
shareholders' equity of $79.5 million or $10.08 per common share outstanding at
September 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 its financial guidance for diluted earnings per
share for the fourth quarter and year end 2004. The Company estimates its full
year 2004 net revenue may range from $96.5 million to $97.5 million with
estimated diluted earnings per share ranging from $0.98 to $1.01 based upon an
estimated 8.03 million weighted average number of diluted shares outstanding for
the year. The previous annual 2004 estimated diluted earnings per share ranged
from $0.93 to $1.01. For the fourth quarter, the Company expects diluted
earnings per share to range from $0.23 to $0.26.
The Company also provided its initial guidance for 2005. The Company
estimates its full year 2005 net revenue may range from $106.5 million to $111.5
million with estimated diluted earnings per share ranging from $1.04 to $1.22
($0.20 to $0.23 for the first quarter; $0.27 to $0.31 for the second quarter;
$0.32 to $0.38 for the third quarter; and $0.25 to $0.30 for the fourth quarter)
based upon an estimated 8.1 million weighted average number of diluted shares
outstanding for the year. Consistent with the Company's past accounting
treatment of stock options, the 2005 diluted earnings per share amounts exclude
the effect of expensing stock options. The expensing of stock options may be
required as early as the third quarter of 2005 under proposed accounting rules.
Commenting on the Company's financial guidance, Keith said, "We are
increasing the low range of our fiscal 2004 guidance, which includes an expected
sequential decline in fourth quarter results relative to typical seasonal
trends. Overall, our fiscal 2005 guidance reflects a sustainable growth outlook
for our real estate development segment coupled with an improvement in our
energy/industrial segment. We are continuing to expand our real estate
development service offerings with new offices and additional staffing to meet
the substantial demand we are experiencing. Our preliminary participation in a
number of important new projects including wind energy indicates that the
energy/industrial sector may be improving. Our abundant financial resources
including strong free cash flow and ample cash balances continue to
THE KEITH COMPANIES REPORTS THIRD QUARTER RESULTS
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position our Company well for potential acquisitions and additional organic
growth opportunities."
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 4, 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, an
online archive will be available shortly after the call. A telephone replay will
be available through November 11, 2004 by dialing (800) 405-2236 and entering
passcode 11013789. 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.
THE KEITH COMPANIES REPORTS THIRD QUARTER RESULTS
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TABLES FOLLOW
THE KEITH COMPANIES REPORTS THIRD QUARTER RESULTS
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THE KEITH COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ - ------------
Gross revenue $27,599,000 $25,175,000 $78,935,000 $74,919,000
Subcontractor costs 2,022,000 2,321,000 6,384,000 6,942,000
------------ ------------ ------------ ------------
Net revenue 25,577,000 22,854,000 72,551,000 67,977,000
Costs of revenue 15,617,000 14,234,000 45,386,000 43,949,000
------------ ------------ ------------ ------------
Gross profit 9,960,000 8,620,000 27,165,000 24,028,000
Selling, general and administrative
expenses 6,118,000 5,041,000 17,610,000 15,672,000
------------ ------------ ------------ ------------
Income from operations 3,842,000 3,579,000 9,555,000 8,356,000
Interest income, net 113,000 65,000 257,000 195,000
Other expenses (income), net 4,000 32,000 (20,000) (188,000)
------------ ------------ ------------ ------------
Income before provision for income
taxes 3,951,000 3,612,000 9,832,000 8,739,000
Provision for income taxes 1,541,000 1,409,000 3,834,000 3,408,000
------------ ------------ ------------ ------------
Net income $ 2,410,000 $ 2,203,000 $ 5,998,000 $ 5,331,000
============ ============ ============ ============
Earnings per share:
Basic $ 0.31 $ 0.29 $ 0.77 $ 0.70
============ ============ ============ ============
Diluted $ 0.30 $ 0.28 $ 0.75 $ 0.67
============ ============ ============ ============
Weighted average number of shares
outstanding:
Basic 7,804,274 7,626,534 7,763,480 7,607,642
============ ============ ============ ============
Diluted 8,038,295 7,975,890 8,021,497 7,955,167
============ ============ ============ ============
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THE KEITH COMPANIES REPORTS THIRD QUARTER RESULTS
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THE KEITH COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
2004 2003
----------------- -----------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 34,399,000 $ 24,277,000
Securities held-to-maturity 3,400,000 4,600,000
Contracts and trade receivables, net 16,621,000 19,844,000
Costs and estimated earnings in excess of billings 12,309,000 9,997,000
Prepaid expenses and other current assets 1,382,000 1,468,000
----------------- -----------------
Total current assets 68,111,000 60,186,000
Equipment and leasehold improvements, net 4,524,000 4,067,000
Goodwill, net 23,059,000 23,059,000
Other assets 301,000 224,000
----------------- -----------------
Total assets $ 95,995,000 $ 87,536,000
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 1,184,000 $ 1,640,000
Accrued employee compensation 5,643,000 4,037,000
Current portion of deferred tax liabilities 2,444,000 2,444,000
Other accrued liabilities 3,493,000 3,078,000
Billings in excess of costs and estimated earnings 1,756,000 1,571,000
----------------- -----------------
Total current liabilities 14,520,000 12,770,000
Issuable common stock -- 792,000
Deferred tax liabilities 1,560,000 1,560,000
Accrued rent 423,000 452,000
----------------- -----------------
Total liabilities 16,503,000 15,574,000
----------------- -----------------
Shareholders' equity:
Preferred stock -- --
Common stock 8,000 8,000
Additional paid-in-capital 47,806,000 45,464,000
Deferred stock compensation (979,000) (169,000)
Retained earnings 32,657,000 26,659,000
----------------- -----------------
Total shareholders' equity 79,492,000 71,962,000
----------------- -----------------
Total liabilities and shareholders' equity $ 95,995,000 $ 87,536,000
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THE KEITH COMPANIES REPORTS THIRD QUARTER RESULTS
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THE KEITH COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------------------
2004 2003
----------------- -----------------
Cash flows from operating activities:
Net income $ 5,998,000 $ 5,331,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 1,486,000 1,705,000
Loss on sale/impairment of equipment 48,000 37,000
Tax benefit from stock options and restricted shares 200,000 36,000
Deferred stock compensation expense 180,000 20,000
Changes in operating assets and liabilities:
Contracts and trade receivables, net 3,262,000 1,277,000
Costs and estimated earnings in excess of billings (2,312,000) (1,085,000)
Prepaid expenses and other assets (5,000) (57,000)
Trade accounts payable and accrued liabilities 1,485,000 (687,000)
Billings in excess of costs and estimated earnings 185,000 (262,000)
----------------- -----------------
Net cash provided by operating activities 10,527,000 6,315,000
----------------- -----------------
Cash flows from investing activities:
Net cash expended for acquisitions -- (722,000)
Additions to equipment and leasehold improvements (2,018,000) (1,066,000)
Proceeds from (purchases of) securities held-to-maturity 1,200,000 (1,938,000)
Proceeds from sales of equipment 26,000 46,000
----------------- -----------------
Net cash used in investing activities (792,000) (3,680,000)
----------------- -----------------
Cash flow from financing activities:
Principal payments on capital lease obligations -- (53,000)
Net proceeds from stock options and restricted shares 387,000 215,000
----------------- -----------------
Net cash provided by financing activities 387,000 162,000
----------------- -----------------
Net increase in cash and cash equivalents 10,122,000 2,797,000
Cash and cash equivalents, beginning of period 24,277,000 20,333,000
----------------- -----------------
Cash and cash equivalents, end of period $ 34,399,000 $ 23,130,000
================= =================
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