The Keith Companies Reports Third Quarter Results and Continued
Strength in Residential Real Estate Services IRVINE, Calif., Nov. 6
/PRNewswire-FirstCall/ -- The Keith Companies, Inc. , 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 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 http://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
http://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. For further information, please contact: Aram Keith,
Chairman of the Board & CEO of The Keith Companies, Inc.,
+1-949-923-6001, or Fax, +1-949-923-6026; or Investor Relations,
Tricia Ross of Financial Relations Board, +1-310-407-6540, for The
Keith Companies, Inc. TABLES FOLLOW 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 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 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 DATASOURCE: The Keith Companies, Inc.
CONTACT: Aram Keith, Chairman of the Board & CEO of The Keith
Companies, Inc., +1-949-923-6001, or Fax, +1-949-923-6026; or
Investor Relations, Tricia Ross of Financial Relations Board,
+1-310-407-6540, for The Keith Companies, Inc. Web site:
http://www.keithco.com/
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