Turnkey Capital (PK) (USOTC:TKCI)
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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/