The Keith Companies Reports Record Results for Fiscal Year 2004 *
Net Revenue Increased 6.6% in 2004 to $96.8 Million IRVINE, Calif.,
Feb. 10 /PRNewswire-FirstCall/ -- The Keith Companies, Inc.
(NASDAQ:TKCI), an engineering and consulting services firm, today
announced financial results for the fourth quarter and year ended
December 31, 2004, which included record annual net revenue and
income from continuing operations. Fourth Quarter and Year End 2004
Results Net revenue for the three months ended December 31, 2004
increased 6.6% to $24.3 million, while income from continuing
operations for the same period increased 20.7% to $2.3 million and
resulted in diluted earnings per share from continuing operations
of $0.28. This compares to net revenue for the fourth quarter of
2003 of $22.8 million, with income from continuing operations of
$1.9 million and diluted earnings per share from continuing
operations of $0.24. Our strong fourth quarter results were
positively impacted by $210,000, net of income taxes, related to a
business development agreement in our energy/industrial segment
entered into in early 2004 and terminated at year end. Net revenue
for the twelve months ended December 31, 2004 increased 6.6% to a
record $96.8 million, while income from continuing operations for
the same period increased 16.8% to a record $8.4 million and
resulted in diluted earnings per share from continuing operations
of $1.05. This compares to net revenue for the twelve months of
2003 of $90.7 million, with income from continuing operations of
$7.2 million and diluted earnings per share from continuing
operations of $0.91. Mainly due to stronger collections of accounts
receivables, net cash from operating activities for the year ended
December 31, 2004 increased 113% to $15.6 million, compared to $7.4
million during 2003. "Our real estate development segment continued
to drive strong net revenue gains in the fourth quarter," said Aram
Keith, Chairman and CEO of The Keith Companies. "This segment
achieved 8.9% year-over-year net revenue growth for the fourth
quarter of 2004, and 14.9% net revenue growth for the year. We
exited the year with a strong pipeline of projects in our real
estate development segment. We believe that the real estate market
will continue to grow in 2005. In addition, we are encouraged by
the continued improvement in the operating income of our public
works/infrastructure segment, and continue to pursue a variety of
opportunities in this area. Infrastructure concerns are one of the
biggest issues facing state, county and local governments and we
believe that we are well positioned to capitalize on infrastructure
improvement projects that receive funding. Year-over-year, our
energy/industrial segment showed an improvement in income from
operations in the fourth quarter, and as we stated previously, we
expect this segment to continue to improve partially due to
legislation extending production tax credits for power generating
projects that use renewable energy sources. We continue to see
improved proposal activity in this segment." "Gross margins
increased in all three of our business segments in 2004, primarily
as a result of improved employee utilization rate and higher fees.
This represents our second consecutive year of improved Company
wide gross margins, with this latest year improving by 190 basis
points to 37.6%," continued Keith. Financial Position The Company's
balance sheet at December 31, 2004 remained strong with cash and
securities of $42.1 million, no debt, a current ratio of 4.8:1, and
shareholders' equity of $81.9 million, or $10.34 per common share
outstanding at December 31, 2004. Discontinued Operations During
2004, the Company made an investment in a private entity in the
energy sector and, in return, received a controlling interest in
that entity. As a result of the Company's controlling interest, the
Company had consolidated the entity's operating results with that
of the Company. In December 2004, the Company made a decision to
shut down the operations of this entity primarily due to lower than
expected operating performance. In accordance with Generally
Accepted Accounting Principles, the Company has changed the
presentation of its "Consolidated Statements of Income" to reflect
as discontinued operations the results of this entity for 2004. The
total loss, including the impairment charge associated with this
entity, net of income taxes, totaled $273,000 and $430,000 for the
quarter and year ended December 31, 2004, respectively. 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 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 from continuing operations ranging from $1.09 to $1.25
($0.21 to $0.24 for the first quarter; $0.28 to $0.32 for the
second quarter; $0.33 to $0.38 for the third quarter; and $0.27 to
$0.31 for the fourth quarter) based upon an estimated 8.1 million
weighted average number of diluted shares outstanding for the year.
The previous annual 2005 guidance for diluted earnings per share
from continuing operations ranged from $1.04 to $1.22. 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. New accounting pronouncements, however,
will require the expensing of stock options effective for the first
interim period beginning after June 15, 2005. The Company has not
completed its analysis as to the effect the new pronouncement may
have on its overall 2005 financial results. Commenting on the
Company's financial guidance, Keith said, "Our revised upward
guidance for 2005 primarily reflects the on-going strength of our
real estate development segment, as well as expected improvement of
our energy/industrial segment and a lower estimated effective
corporate income tax rate of 38%. The recently opened San Diego and
Bakersfield offices are fully operational and we expect them to be
contributors to the Company's performance over the course of this
year. Our robust financial position enables us to explore various
acquisition opportunities, in addition to new office openings, that
will deliver strong operational performance, as well as solid
returns for our shareholders." Conference Call Webcast 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
February 10, 2005 and can be accessed by all interested parties at
http://www.keithco.com/ or 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
February 17, 2005 by dialing (800) 405-2236 and entering passcode
11022515. 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, a downturn in the real estate market,
the ongoing financing of public works and infrastructure
enhancements and refurbishments, the demand for electricity and the
impact on power providers' plans for expanding generation
facilities, our failure to accurately estimate costs on fixed-price
contracts or contracts with not-to-exceed provisions, changes in
the carrying value of our goodwill and other long-term assets, our
ability to implement our acquisition strategy and to successfully
close and integrate acquired companies on a timely and
cost-effective basis while maintaining their profit margins and/or
client base, our ability to attract and retain employees, the
uncertain timing of awards and contracts, outcomes of pending and
future litigation, increasing competition by domestic and foreign
companies, 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. 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
http://www.keithco.com/ Contact: Aram Keith, Chairman of the Board
& CEO The Keith Companies, Inc. and Subsidiaries Condensed
Consolidated Statements of Income Three Months Ended Twelve Months
Ended December 31, December 31, 2004 2003 2004 2003 Gross revenue
$26,471,000 $25,031,000 $105,346,000 $99,950,000 Subcontractor
costs 2,209,000 2,264,000 8,592,000 9,206,000 Net revenue
24,262,000 22,767,000 96,754,000 90,744,000 Costs of revenue
15,162,000 14,410,000 60,363,000 58,359,000 Gross profit 9,100,000
8,357,000 36,391,000 32,385,000 Selling, general and administrative
expenses 5,516,000 5,398,000 23,013,000 21,070,000 Income from
operations 3,584,000 2,959,000 13,378,000 11,315,000 Interest
income, net 208,000 69,000 481,000 264,000 Other income, net 23,000
71,000 46,000 259,000 Income before provision for income taxes and
discontinued operations 3,815,000 3,099,000 13,905,000 11,838,000
Provision for income taxes 1,532,000 1,208,000 5,468,000 4,617,000
Income from continuing operations 2,283,000 1,891,000 8,437,000
7,221,000 Loss from discontinued operations, net of income taxes
273,000 -- 430,000 -- Net income $2,010,000 $1,891,000 $8,007,000
$7,221,000 Earnings per share from continuing operations: Basic
$0.29 $0.25 $1.08 $0.95 Diluted $0.28 $0.24 $1.05 $0.91 Earnings
(loss) per share from discontinued operations, net of income taxes:
Basic $(0.03) $0.00 $(0.05) $0.00 Diluted $(0.03) $0.00 $(0.05)
$0.00 Earnings per share: Basic $0.26 $0.25 $1.03 $0.95 Diluted
$0.25 $0.24 $1.00 $0.91 Weighted average number of shares
outstanding: Basic 7,823,874 7,637,880 7,778,661 7,615,264 Diluted
8,093,006 7,963,622 8,039,457 7,957,344 The Keith Companies, Inc.
and Subsidiaries Condensed Consolidated Balance Sheets December 31,
December 31, 2004 2003 Assets Current assets: Cash and cash
equivalents $38,844,000 $24,277,000 Securities held-to-maturity
3,300,000 4,600,000 Contracts and trade receivables, net 16,452,000
19,844,000 Costs and estimated earnings in excess of billings
10,470,000 9,997,000 Prepaid expenses and other current assets
928,000 1,468,000 Total current assets 69,994,000 60,186,000
Equipment and leasehold improvements, net 4,643,000 4,067,000
Goodwill, net 23,059,000 23,059,000 Other assets 273,000 224,000
Total assets $97,969,000 $87,536,000 Liabilities and Shareholders'
Equity Current liabilities: Trade accounts payable $1,685,000
$1,640,000 Accrued employee compensation 5,445,000 4,037,000
Current portion of deferred tax liabilities 1,661,000 2,444,000
Other accrued liabilities 3,809,000 3,078,000 Billings in excess of
costs and estimated earnings 1,922,000 1,571,000 Total current
liabilities 14,522,000 12,770,000 Issuable common stock -- 792,000
Deferred tax liabilities 1,125,000 1,560,000 Accrued rent 401,000
452,000 Total liabilities 16,048,000 15,574,000 Shareholders'
equity: Preferred stock -- -- Common stock 8,000 8,000 Additional
paid-in-capital 48,114,000 45,464,000 Deferred stock compensation
(867,000) (169,000) Retained earnings 34,666,000 26,659,000 Total
shareholders' equity 81,921,000 71,962,000 Total liabilities and
shareholders' equity $97,969,000 $87,536,000 The Keith Companies,
Inc. and Subsidiaries Condensed Consolidated Statements of Cash
Flows For the Twelve Months Ended December 31, 2004 2003 Cash flows
from operating activities: Net income $8,007,000 $7,221,000
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 1,978,000
2,231,000 Loss on impairment/sale of equipment 413,000 29,000
Reduction in purchase price of acquired companies -- (137,000) Tax
benefit from stock options 299,000 69,000 Deferred stock
compensation expense 292,000 37,000 Changes in operating assets and
liabilities: Contracts and trade receivables, net 3,441,000
(1,269,000) Costs and estimated earnings in excess of billings
(473,000) 304,000 Prepaid expenses and other assets 475,000
(53,000) Trade accounts payable and accrued liabilities 2,074,000
(652,000) Billings in excess of costs and estimated earnings
351,000 298,000 Deferred tax liabilities (1,218,000) (728,000) Net
cash provided by operating activities 15,639,000 7,350,000 Cash
flows from investing activities: Net cash expended for acquisitions
-- (722,000) Additions to equipment and leasehold improvements
(3,017,000) (1,548,000) Proceeds from (purchases of) securities
held-to-maturity 1,300,000 (1,436,000) Proceeds from sales of
equipment 50,000 57,000 Net cash used in investing activities
(1,667,000) (3,649,000) Cash flow from financing activities:
Principal payments on capital lease obligations -- (52,000) Net
proceeds from stock options and restricted shares 595,000 295,000
Net cash provided by financing activities 595,000 243,000 Net
increase in cash and cash equivalents 14,567,000 3,944,000 Cash and
cash equivalents, beginning of period 24,277,000 20,333,000 Cash
and cash equivalents, end of period $38,844,000 $24,277,000
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 Tricia Ross, Investor
Relations, Financial Relations Board, +1-617-520-7064, for The
Keith Companies, Inc. Web site: http://www.viavid.net/ Web site:
http://www.keithco.com/
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