TKCI Turnkey Capital Inc (PK)

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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