The Keith Companies Reports a 21% Increase in Net Income and Record Gross Profit

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., [phone], or fax, [phone]; or
Investor Relations, Tricia Ross of Financial Relations Board, [phone],
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., [phone], or fax, [phone]; or investor relations, Tricia

Ross of Financial Relations Board, [phone], for The Keith Companies,

Inc.



Web site:  http://www.viavid.net/ 

Web site:  http://www.keithco.com/ 

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