EX-99 2 exhibit_99-1.txt THE KEITH COMPANIES\TKC PRESS RELEASE NEWS RELEASE FOR NOVEMBER 4, 2004 AT 7:30 AM EST 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 www.keithco.com Contact: Aram Keith, Chairman of the Board & CEO THE KEITH COMPANIES REPORTS RECORD NET REVENUE AND GROSS PROFIT FOR BOTH THE THIRD QUARTER AND FIRST NINE MONTHS OF 2004 IRVINE, CA (November 4, 2004) - 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 THE KEITH COMPANIES REPORTS THIRD QUARTER RESULTS Page 2 of 7 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 THE KEITH COMPANIES REPORTS THIRD QUARTER RESULTS Page 3 of 7 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 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 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. THE KEITH COMPANIES REPORTS THIRD QUARTER RESULTS Page 4 of 7 TABLES FOLLOW THE KEITH COMPANIES REPORTS THIRD QUARTER RESULTS Page 5 of 7
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 ============ ============ ============ ============
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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 ================= =================
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THE KEITH COMPANIES, INC. AND SUBSIDIARIES 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 ================= =================
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