Turnkey Capital (PK) (USOTC:TKCI)
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The Keith Companies Reports Third Quarter Results and Continued Strength in
Residential Real Estate Services
IRVINE, Calif., Nov. 6 /PRNewswire-FirstCall/ -- The Keith Companies, Inc. , an
engineering and consulting services firm, today announced financial results for
the third quarter ended September 30, 2003.
Net revenue for the three months ended September 30, 2003 decreased 7.9% to
$22.9 million, while income from continuing operations for the same period
decreased to $2.2 million and resulted in diluted earnings per share from
continuing operations of $0.28. This compares to net revenue for the third
quarter of 2002 of $24.8 million with income from continuing operations of $3.0
million and diluted earnings per share from continuing operations of $0.38.
Two notable items impacted the previous year's results. Interest expense and
other income during the third quarter of 2002 were positively impacted by a
$498,000 (net of income taxes) purchase price adjustment associated with the
Company's acquisitions of Crosby, Mead, Benton & Associates and Hook &
Associates Engineering, Inc.
"We continue to have a growing flow of new projects for our residential real
estate services," said Aram Keith, Chairman and CEO of The Keith Companies.
"Internal growth in net revenue in this area was 8.5% for the third quarter of
2003 compared to 2002. Overall demand, however, in the industrial/energy
segment was significantly less than the prior year which creates challenging
dynamics for influencing our overall growth at this time. We do believe that the
industrial/energy segment may improve in the future.
"We remain extremely diligent in the areas of our business that are within our
control, and we believe this is reflected in our continued strong margins," said
Keith.
Net revenue for the nine months ended September 30, 2003 decreased 1.9% to $68.0
million, from $69.3 million for the nine months ended September 30, 2002. Income
from continuing operations for the nine months ended September 30, 2003
decreased to $5.3 million, and resulted in diluted earnings per share from
continuing operations of $0.67 compared to $6.6 million or diluted earnings per
share from continuing operations of $0.84 for the nine months ended September
30, 2002. As discussed above, interest expense and other income in 2002 were
positively impacted by a $498,000 (net of income taxes) purchase price
adjustment.
Financial Position
The Company's September 30, 2003 balance sheet remains strong with cash and
securities of $28.2 million, a current ratio of 4.7:1, a debt to equity ratio of
0.00:1 (excluding issuable common stock) and shareholders' equity of $69.9
million or $9.16 per common share outstanding at September 30, 2003.
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 financial guidance for diluted earnings per share for the fourth
quarter of 2003 remains unchanged from the guidance previously provided. For
the full year, the Company estimates net revenue to range from $89.0 million to
$94.0 million, and forecasts diluted earnings per share to range from $0.88 to
$0.93 based upon an estimated 8.0 million weighted average number of diluted
shares outstanding. For the fourth quarter, the Company expects diluted
earnings per share to range from $0.21 to $0.26.
The Company also provided its initial guidance for 2004. The Company estimates
its full year 2004 net revenue may range from $90.0 million to $100.0 million
with estimated diluted earnings per share ranging from $0.88 to $1.04 ($0.19 to
$0.22 for the first quarter; $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
industrial/energy segment.
"We are encouraged by the trends in our markets, which should provide solid
opportunities for growth going forward," said Keith. "The inventory of
available housing in our core California markets remains well below the levels
required to meet demand, which bodes well for the residential real estate market
in general and the level of activity we expect to see in this business area. In
addition, we are very encouraged by the recent pick-up in proposal activity for
our services in the industrial/energy segment. The unprecedented power outage
in the Northeast in August has prompted both utilities and businesses to address
shortcomings in their power generating and transmission capabilities. This can
create opportunities for our industrial/energy segment, and we believe we can
generate meaningful growth in this area in the coming year if the proposals turn
into awarded contracts."
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 6, 2003 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.
TABLES FOLLOW
The Keith Companies, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Gross revenue $25,175,000 $28,086,000 $74,919,000 $81,830,000
Subcontractor costs 2,321,000 3,276,000 6,942,000 12,566,000
Net revenue 22,854,000 24,810,000 67,977,000 69,264,000
Costs of revenue 14,369,000 15,791,000 44,300,000 45,119,000
Gross profit 8,485,000 9,019,000 23,677,000 24,145,000
Selling, general
and administrative
expenses 4,906,000 4,937,000 15,321,000 14,246,000
Income from
operations 3,579,000 4,082,000 8,356,000 9,899,000
Interest income 68,000 87,000 207,000 304,000
Interest expense
(income) 3,000 (114,000) 12,000 (48,000)
Other expenses
(income), net 32,000 (676,000) (188,000) (636,000)
Income before
provision for
income taxes
and discontinued
operations 3,612,000 4,959,000 8,739,000 10,887,000
Provision for
income taxes 1,409,000 1,935,000 3,408,000 4,248,000
Income from
continuing
operations 2,203,000 3,024,000 5,331,000 6,639,000
Loss from
discontinued
operations, net
of income taxes -- 233,000 -- 531,000
Net income $2,203,000 $2,791,000 $5,331,000 $6,108,000
Earnings per share
from continuing
operations:
Basic $0.29 $0.41 $0.70 $0.91
Diluted $0.28 $0.38 $0.67 $0.84
Loss per share
from discontinued
operations, net
of income taxes:
Basic $-- $(.03) $-- $(.08)
Diluted $-- $(.03) $-- $(.06)
Earnings per share:
Basic $0.29 $0.38 $0.70 $0.83
Diluted $0.28 $0.35 $0.67 $0.78
Weighted average
number of shares
outstanding:
Basic 7,626,534 7,346,326 7,607,642 7,326,887
Diluted 7,975,890 7,936,546 7,955,167 7,871,862
The Keith Companies, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, December 31,
2003 2002
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $23,130,000 $20,333,000
Securities held-to-maturity 5,102,000 3,164,000
Contracts and trade receivables, net 17,494,000 18,771,000
Costs and estimated earnings in excess
of billings 11,386,000 10,392,000
Prepaid expenses and other current assets 1,460,000 1,367,000
Total current assets 58,572,000 54,027,000
Equipment and leasehold improvements, net 4,113,000 4,831,000
Goodwill, net 23,218,000 23,056,000
Other assets 221,000 312,000
Total assets $86,124,000 $82,226,000
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of capital lease obligations $-- $52,000
Trade accounts payable 1,413,000 1,818,000
Accrued employee compensation 4,406,000 3,722,000
Current portion of deferred tax
liabilities 3,058,000 3,065,000
Other accrued liabilities 2,690,000 4,484,000
Billings in excess of costs and estimated
earnings 1,011,000 1,273,000
Total current liabilities 12,578,000 14,414,000
Capital lease obligations, less current
portion -- 18,000
Issuable common stock 1,500,000 2,215,000
Deferred tax liabilities 1,675,000 1,675,000
Accrued rent 442,000 292,000
Total liabilities 16,195,000 18,614,000
Shareholders' equity:
Preferred stock -- --
Common stock 8,000 8,000
Additional paid-in-capital 45,152,000 44,166,000
Retained earnings 24,769,000 19,438,000
Total shareholders' equity 69,929,000 63,612,000
Total liabilities and shareholders'
equity $86,124,000 $82,226,000
The Keith Companies Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
September 30,
2003 2002
Cash flows from operating activities:
Net income $5,331,000 $6,108,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,705,000 1,702,000
Loss on sale/impairment of equipment 37,000 139,000
Reduction in purchase price of acquired
companies -- (769,000)
Tax benefit from exercise of stock options 36,000 73,000
Stock compensation expense 20,000 --
Changes in operating assets and
liabilities, net of effects from
acquisition in 2002:
Contracts and trade receivables, net 1,277,000 1,952,000
Costs and estimated earnings in
excess of billings (1,085,000) (3,265,000)
Prepaid expenses and other assets (57,000) 389,000
Trade accounts payable and accrued
liabilities (687,000) 1,967,000
Billings in excess of costs and
estimated earnings (262,000) (1,058,000)
Net cash provided by operating
activities $6,315,000 $7,238,000
Cash flows from investing activities:
Net cash expended related to or for
acquisitions (722,000) (7,987,000)
Additions to equipment and leasehold
improvements (1,066,000) (1,354,000)
Proceeds from (purchases of) securities
held-to-maturity (1,938,000) 5,994,000
Proceeds from sales of equipment 46,000 129,000
Net cash used in investing
activities $(3,680,000) $(3,218,000)
Cash flow from financing activities:
Principal payments on long-term debt
and capital lease obligations,
including current portion (53,000) (688,000)
Proceeds from exercise of stock options 215,000 147,000
Net cash provided by (used in)
financing activities $162,000 $(541,000)
Net increase in cash and cash
equivalents 2,797,000 3,479,000
Cash and cash equivalents, beginning
of period $20,333,000 $12,212,000
Cash and cash equivalents, end of period $23,130,000 $15,691,000
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/