The Keith Companies Reports a 21% Increase in Net Income and Record
Gross Profit Highlights: IRVINE, Calif., Aug. 5
/PRNewswire-FirstCall/ -- The Keith Companies, Inc. (NASDAQ:TKCI),
an engineering and consulting services firm, today announced
financial results for the second quarter ended June 30, 2004. Net
revenue for the three months ended June 30, 2004 increased 7.6% to
$24.5 million, while net income for the same period increased 20.8%
to $2.1 million and resulted in diluted earnings per share of
$0.26. This compares to net revenue for the second quarter of 2003
of $22.8 million, with net income of $1.7 million and diluted
earnings per share of $0.22. All growth in net revenue in the
second quarter of 2004 was organic. "We continue to attract more
business from our long-time and new clients in the homebuilding
industry, which drove the largest year-over-year increase in net
income that we have had in six quarters," said Aram Keith, Chairman
and CEO of The Keith Companies. "The demand for real estate
development services is particularly strong in Southern California,
which drove the Company's growth in net revenue. Our real estate
development segment experienced net revenue growth of 18.8% for the
second quarter of 2004 over the same period in 2003. We also
increased the utilization of our real estate development staff,
which helped to increase our already strong operating margin. Net
revenue from our public works/infrastructure segment was
essentially flat year over year for the second quarter of 2004.
Business activity in the energy/industrial segment remains a
challenge and our results were significantly below the prior year.
We believe, however, that the year-over- year comparisons can
improve in the future." Net revenue for the six months ended June
30, 2004 increased 4.1% to $47.0 million, while net income for the
same period increased 14.7% to $3.6 million and resulted in diluted
earnings per share of $0.45. This compares to net revenue for the
six months of 2003 of $45.1 million with net income of $3.1 million
and diluted earnings per share of $0.39. Income from operations for
the six months ended June 30, 2004 was $5.7 million, an increase of
19.6% over income from operations of $4.8 million for the same
period in 2003. The Company reported record gross profit of $9.2
million and $17.2 million for the three and six months ended June
30, 2004. Financial Position The Company's June 30, 2004 balance
sheet remains strong with cash and securities of $33.9 million, no
debt, a current ratio of 4.9:1, and shareholders' equity of $77.0
million or $9.83 per common share outstanding at June 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 the low end of its financial guidance for diluted
earnings per share by $0.01 for the third and fourth quarters of
2004. Accordingly, the Company estimates its full year 2004 net
revenue may range from $95.0 million to $97.0 million with
estimated diluted earnings per share ranging from $0.93 to $1.01
($0.27 to $0.31 for the third quarter; and $0.22 to $0.25 for the
fourth quarter) based upon an estimated 8.05 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. "The disciplined manner in which our
major homebuilding clients are acquiring new land for development
and initiating construction projects indicates that we should see
steady, consistent growth in our real estate development segment
for the foreseeable future," said Keith. "We see good opportunities
to continue generating organic growth in this segment, and we
intend to open two new real estate offices in California, one in
downtown San Diego and one in the Central Valley of California. We
remain cautiously optimistic that we will see improvement in demand
in our other two business areas, particularly given the growing
interest in renewable and alternative energy projects, such as
wind, solar, waste wood and in LNG. "We continue to generate strong
cash flow and strengthen our balance sheet which increases our
capital resources to complete potential acquisitions. As we move
forward, we intend to continue exploring acquisition opportunities
that can complement the strong organic growth we are experiencing,"
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
August 5, 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 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, +1-310-407-6540, for The
Keith Companies, Inc. The Keith Companies, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited) Three
Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003
Gross revenue $26,840,000 $25,093,000 $51,336,000 $49,745,000
Subcontractor costs 2,328,000 2,316,000 4,361,000 4,622,000 Net
revenue 24,512,000 22,777,000 46,975,000 45,123,000 Costs of
revenue 15,287,000 14,883,000 29,769,000 29,715,000 Gross profit
9,225,000 7,894,000 17,206,000 15,408,000 Selling, general and
administrative expenses 5,901,000 5,134,000 11,492,000 10,630,000
Income from operations 3,324,000 2,760,000 5,714,000 4,778,000
Interest income, net 74,000 67,000 143,000 130,000 Other income,
net 25,000 8,000 24,000 220,000 Income before provision for income
taxes 3,423,000 2,835,000 5,881,000 5,128,000 Provision for income
taxes 1,335,000 1,106,000 2,294,000 2,000,000 Net income $2,088,000
$1,729,000 $3,587,000 $3,128,000 Earnings per share: Basic $0.27
$0.23 $0.46 $0.41 Diluted $0.26 $0.22 $0.45 $0.39 Weighted average
number of shares outstanding: Basic 7,782,149 7,607,374 7,742,858
7,598,040 Diluted 8,020,844 7,940,262 8,012,873 7,944,650 The Keith
Companies, Inc. and Subsidiaries Condensed Consolidated Balance
Sheets June 30, December 31, 2004 2003 (Unaudited) Assets Current
assets: Cash and cash equivalents $30,382,000 $24,277,000
Securities held-to-maturity 3,500,000 4,600,000 Contracts and trade
receivables, net 15,993,000 19,844,000 Costs and estimated earnings
in excess of billings 12,354,000 9,997,000 Prepaid expenses and
other current assets 1,714,000 1,468,000 Total current assets
63,943,000 60,186,000 Equipment and leasehold improvements, net
4,723,000 4,067,000 Goodwill, net 23,059,000 23,059,000 Other
assets 223,000 224,000 Total assets $91,948,000 $87,536,000
Liabilities and Shareholders' Equity Current liabilities: Trade
accounts payable $2,081,000 $1,640,000 Accrued employee
compensation 4,908,000 4,037,000 Current portion of deferred tax
liabilities 2,444,000 2,444,000 Other accrued liabilities 1,928,000
3,078,000 Billings in excess of costs and estimated earnings
1,606,000 1,571,000 Total current liabilities 12,967,000 12,770,000
Issuable common stock -- 792,000 Deferred tax liabilities 1,560,000
1,560,000 Accrued rent 440,000 452,000 Total liabilities 14,967,000
15,574,000 Shareholders' equity: Preferred stock -- -- Common stock
8,000 8,000 Additional paid-in-capital 47,468,000 45,464,000
Deferred stock compensation (741,000) (169,000) Retained earnings
30,246,000 26,659,000 Total shareholders' equity 76,981,000
71,962,000 Total liabilities and shareholders' equity $91,948,000
$87,536,000 The Keith Companies, Inc. and Subsidiaries Condensed
Consolidated Statements of Cash Flows (Unaudited) For the Six
Months Ended June 30, 2004 2003 Cash flows from operating
activities: Net income $3,587,000 $3,128,000 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 991,000 1,159,000 Loss (gain) on sale
of equipment (11,000) 21,000 Tax benefit from stock options and
restricted shares 197,000 19,000 Deferred compensation expense
92,000 -- Changes in operating assets and liabilities: Contracts
and trade receivables, net 3,829,000 2,800,000 Costs and estimated
earnings in excess of billings (2,357,000) (973,000) Prepaid
expenses and other assets (260,000) (180,000) Trade accounts
payable and accrued liabilities 161,000 (1,043,000) Billings in
excess of costs and estimated earnings 35,000 (63,000) Net cash
provided by operating activities 6,264,000 4,868,000 Cash flows
from investing activities: Net cash expended for acquisitions --
(714,000) Additions to equipment and leasehold improvements
(1,652,000) (764,000) Proceeds from (purchases of) securities
held-to-maturity 1,100,000 (3,184,000) Proceeds from sales of
equipment 16,000 36,000 Net cash used in investing activities
(536,000) (4,626,000) Cash flow from financing activities:
Principal payments on long-term debt and capital lease obligations,
including current portion -- (52,000) Net proceeds from stock
options and restricted shares 377,000 146,000 Net cash provided by
financing activities 377,000 94,000 Net increase in cash and cash
equivalents 6,105,000 336,000 Cash and cash equivalents, beginning
of period 24,277,000 20,333,000 Cash and cash equivalents, end of
period $30,382,000 $20,669,000 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.viavid.net/ Web site: http://www.keithco.com/
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