Turnkey Capital (PK) (USOTC:TKCI)
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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/