The Keith Companies Reports an 18.5% Increase in Income From
Operations for the First Quarter of 2004 IRVINE, Calif., May 6
/PRNewswire-FirstCall/ -- The Keith Companies, Inc. , 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." 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 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. 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
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
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 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 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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