The Keith Companies Reports Record Net Revenue and Gross Profit for
Both the Third Quarter and First Nine Months of 2004 IRVINE,
Calif., Nov. 4 /PRNewswire-FirstCall/ -- 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 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 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
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 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. 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, +1-617-520-7064, for The
Keith Companies, Inc. 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 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 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
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, +1-617-520-7064, for The
Keith Companies, Inc. Web site: http://www.viavid.net/ Web site:
http://www.keithco.com/
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