-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UNvoE1nSCpdVNqo1lSuxEYpWEUb4MEbZRZ47//T/3c6Bn83N0ddIUGClT11te0sT vlk86oNR0tOgPFN0TqcT0w== 0000950137-05-003422.txt : 20050322 0000950137-05-003422.hdr.sgml : 20050322 20050322155608 ACCESSION NUMBER: 0000950137-05-003422 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050316 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050322 DATE AS OF CHANGE: 20050322 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INSITUFORM TECHNOLOGIES INC CENTRAL INDEX KEY: 0000353020 STANDARD INDUSTRIAL CLASSIFICATION: WATER, SEWER, PIPELINE, COMM AND POWER LINE CONSTRUCTION [1623] IRS NUMBER: 133032158 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-10786 FILM NUMBER: 05696835 BUSINESS ADDRESS: STREET 1: 702 SPIRIT 40 PARK DRIVE CITY: CHESTERFIELD STATE: MO ZIP: 63005 BUSINESS PHONE: 6365308000 MAIL ADDRESS: STREET 1: 702 SPIRIT 40 PARK DRIVE CITY: CHESTERFIELD STATE: MO ZIP: 63005 FORMER COMPANY: FORMER CONFORMED NAME: INSITUFORM OF NORTH AMERICA INC/TN/ DATE OF NAME CHANGE: 19930617 FORMER COMPANY: FORMER CONFORMED NAME: INSITUFORM OF NORTH AMERICA INC DATE OF NAME CHANGE: 19921217 8-K 1 c93544e8vk.txt CURRENT REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 16, 2005 ---------------------- INSITUFORM TECHNOLOGIES, INC. ------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 0-10786 13-3032158 - ------------------------------- ------------------------ ------------------ (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation) Identification No.)
702 Spirit 40 Park Drive, Chesterfield, Missouri 63005 - ----------------------------------------------------- ------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (636) 530-8000 -------------- Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. On March 16, 2005, Insituform Technologies, Inc. (the "Company") issued an earnings release announcing its financial results for the fiscal quarter and year ended December 31, 2004, and debt covenant resolution. A copy of the earnings release is furnished herewith as Exhibit 99.1. The information in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended. Item 7.01. Regulation FD Disclosure. On March 16, 2005, the Company issued an earnings release announcing its financial results for the fiscal quarter and year ended December 31, 2004, and debt covenant resolution. A copy of the earnings release is furnished herewith as Exhibit 99.1. The information in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended. Item 9.01. Financial Statements and Exhibits. (c) Exhibits. See the Index to Exhibits attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. INSITUFORM TECHNOLOGIES, INC. By: /s/ DAVID F. MORRIS ---------------------------------------------- David F. Morris Vice President, General Counsel and Secretary Date: March 22, 2005 INDEX TO EXHIBITS
Exhibit Description - ------- ----------- 99.1 Earnings Release of Insituform Technologies, Inc., dated March 16, 2005, announcing its financial results for the fiscal quarter and year ended December 31, 2004, and debt covenant resolution.
EX-99.1 2 c93544exv99w1.txt EARNINGS RELEASE EXHIBIT 99.1 (INSITUFORM-TECH)(INSU) Insituform Technologies, Inc. Reports Fourth Quarter and Year-End 2004 Results Chesterfield, MO - March 16, 2005 - Insituform Technologies, Inc. (Nasdaq National Market: INSU) today reported fourth quarter and 2004 year-end results and debt covenant resolution. The Company posted a fourth quarter net loss of $6.6 million, or $(0.25) per diluted share, primarily reflecting losses in its tunneling segment. The Company reported a net loss of $11.0 million, or $(0.41) per diluted share, in the fourth quarter of 2003. For the year ended December 31, 2004, net income was $0.6 million, or $0.02 per share, compared to $3.5 million, or $0.13 per share, reported a year ago. The fourth quarter net loss was greater than the estimate previously reported on January 27, 2005 due primarily to the results of a comprehensive project-by-project review of all the work in the tunneling segment during the fourth quarter of 2004 and the early part of 2005. As a result of this review, the estimated margins on the projects referred to above were evaluated and adjusted accordingly. Primarily as a result of the tunneling losses, the Company violated one of its debt covenants under its debt agreements at December 31, 2004. The Company has negotiated amendments to its debt agreements with less restrictive financial covenants in place. The Company believes it will maintain compliance with these new covenants throughout 2005 and beyond. The Company's other businesses, Rehabilitation and Tite Liner(R), performed generally within expectations during 2004, except for two North American regional operations. For the year, Rehabilitation revenues increased 11.6% to $409.4 million compared to $366.7 million in 2003. Gross profit similarly increased 12.0% to $94.3 million compared to $84.2 million in 2003. The gross profit margin remained stable at 23.0% in both 2004 and 2003. Despite a revenue increase from the third quarter of 2004 to the fourth quarter of 2004, the Rehabilitation segment experienced a decline in gross profit of $2.6 million from quarter to quarter, which represented a 3.3 basis point decrease in gross margin percentage. Two regions in North America experienced a decline in profitability due to higher subcontractor utilization, which carried lower margins, coupled with the effects of under-utilized labor and equipment resulting from temporary backlog shortfalls and work release delays. In addition, the Company experienced an increase in fuel and resin costs in the fourth quarter of 2004 of approximately $1.1 million compared to the third quarter of 2004. This increase in raw materials is expected to continue in 2005, as the underlying commodity prices remain at higher levels. Tite Liner(R) improved its 2004 results over 2003. Revenues were up 19.0% to $24.5 million in 2004 compared to $20.6 million in 2003. Gross profit increased 28.1% to $8.3 million compared to $6.5 million in 2003. Gross profit margins improved to 34.0% in 2004 from 31.6% in 2003. The successful completion of a significant foreign project along with improved pricing contributed to Tite Liner(R)'s success in 2004. Total contract backlog at December 31, 2004 was $328.3 million, an increase of $120.2 million from December 31, 2003. In the Rehabilitation segment, contract backlog was $190.4 million, reflecting an increase of $78.6 million, or 70.3%, from the prior year, and an increase of $28.8 million, or 17.8%, from September 30, 2004. This increase is reflective of stronger markets in the United States and Europe, along with management's investment in business development and expanding the Company's sales force during the year. Contract backlog also increased during 2004 from the prior year in the tunneling and Tite Liner(R) segments by $40.0 million and $1.6 million, respectively. As previously reported on January 27, 2005, the Company's unrestricted cash balance was $93.2 million at December 31, 2004 compared to $93.9 million at the end of 2003. This position was achieved after $35.2 million in capital expenditures and $19.0 million in debt repayments in 2004. The Company also received $9.1 million in tax refunds and $3.6 million from the exercise of stock options during the year. The Company expects to use these funds for a variety of purposes including, among other things, working capital to fund growth, capital and operating expenses, research and development of new products and development of new markets. A regularly scheduled debt amortization payment of $17.7 million, inclusive of interest, was made on February 14, 2005. The losses in the tunneling segment discussed above primarily stem from a significant adverse gross margin adjustment on one large tunneling project in Chicago. The total gross adjustment was $7.3 million during the fourth quarter of 2004, and $11.0 million for the year ended December 31, 2004. During the third quarter of 2004, the Company recorded a downward adjustment to the gross margin on this project of $3.7 million. These margin adjustments stem from additional labor and related overhead costs due to delays and issues encountered while completing concrete finishing work. In addition, the project suffered from higher-than-anticipated material costs related to inflationary increases including increased concrete and steel pricing. The project had been essentially on target until the later stages. There also were unexpected job costs on a number of other tunneling projects during the fourth quarter of 2004 caused by higher-than-expected material costs and unfavorable labor productivity issues. Several projects incurred costs related to changed or differing site conditions, which will likely have associated claims that may benefit future periods. The Company has successfully implemented certain strategic initiatives over the past year. A few examples include: o A study of the Company's logistics was conducted, and improvements were implemented, which are expected to yield meaningful cost savings in the coming years. o The manufacturing facility in Batesville, Mississippi, completed its expansion and consolidation during the year and, in the second half of 2004, delivered cost savings due to efficiency gains and reductions from the elimination of higher third-party supply costs. o Due to stepping up crew training and continuing safety efforts, a 30% improvement in our safety recordable incident rate was achieved during the year in North America. o Quality was improved during the year, with sewer back-ups down by more than 40% in 2004 compared to 2003. o The research and development team made significant strides in developing and commercializing the highly efficient use of steam in the CIPP curing process. These advances allowed the Company to install more than 400,000 feet of CIPP using steam in 2004, while advancing the technical envelope for the use of steam in varying conditions. o The growth in two of our core businesses (Rehabilitation and Tite Liner(R)) is encouraging and reflects our increased professional sales group and the increased number of Insituform CIPP Process crews employed. Finally, the outlook for 2005 is encouraging, but not without challenges. Already in the first quarter of 2005, the Company has experienced continued margin pressure from increased resin costs as well as low crew productivity as a result of severe weather conditions in certain regions. The Company also expects to continue to work through various issues in the tunneling business. However, in the core businesses, the Company expects to benefit from an estimated 9.0% increase in 2005 in sewer rehabilitation spending compared to 2004, as reported in Underground Construction Magazine (February 2005). Insituform Technologies, Inc. is a leading worldwide provider of proprietary technologies and services for rehabilitating sewer, water and other underground piping systems without digging and disruption. More information about the Company can be found on its Internet site at www.insituform.com. This news release contains forward-looking statements, which are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors which could affect results include, among others, the competitive environment for the Company's products and services, the geographical distribution and mix of the Company's work, the ability of the Company to attract business at acceptable margins, foreseeable and unforeseeable issues in projects that make it difficult or impossible to meet projected margins and other factors set forth in reports and documents filed by the Company with the Securities and Exchange Commission from time to time. The Company does not assume a duty to update forward-looking statements. Please use caution and do not place reliance on forward-looking statements. INSITUFORM TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (In thousands, except per share amounts)
For the Three Months For the Twelve Months Ended December 31, Ended December 31, 2004 2003 2004 2003 Revenues $ 127,429 $ 121,786 $ 542,598 $ 487,272 Cost of revenues 114,137 104,083 443,099 384,614 Gross profit 13,292 17,703 99,499 102,658 Operating expenses 24,154 25,354 91,321 81,067 Operating income (loss) (10,862) (7,651) 8,178 21,591 Other (expense) income: Interest expense (2,192) (2,472) (9,305) (8,235) Other 822 (1,847) 1,212 (1,274) Total other expense (1,370) (4,319) (8,093) (9,509) Income (loss) before taxes on income (12,232) (11,970) 85 12,082 Taxes (benefit) (5,766) (2,572) (835) 6,809 Income (loss) before minority interests, equity in earnings (loss) and discontinued operations (6,466) (9,398) 920 5,273 Minority interests 60 (67) (107) (211) Equity in losses of affiliated companies (181) (635) (216) (434) Income (loss) from continuing operations (6,587) (10,100) 597 4,628 Loss from discontinued operations -- (872) -- (1,103) Net income (loss) $ (6,587) $ (10,972) $ 597 $ 3,525 Earnings per share: Basic: Income (loss) from continuing operations $ (0.25) $ (0.38) $ 0.02 $ 0.17 Loss from discontinued operations -- (0.03) -- (0.04) Net income (loss) $ (0.25) $ (0.41) $ 0.02 $ 0.13 Diluted: Income (loss) from continuing operations $ (0.25) $ (0.38) $ 0.02 $ 0.17 Loss from discontinued operations -- (0.03) -- (0.04) Net income (loss) $ (0.25) $ (0.41) $ 0.02 $ 0.13 Weighted-average common shares- basic 26,726 26,457 26,649 26,471 Weighted-average common and equivalent shares- diluted 26,993 26,606 26,810 26,621
SEGMENT DATA Revenues Rehabilitation $ 106,230 $ 90,984 $ 409,408 $ 366,690 Tunneling 15,571 25,439 108,729 100,020 Tite Liner 5,628 5,363 24,461 20,562 Total revenues $ 127,429 $ 121,786 $ 542,598 $ 487,272 Gross profit (loss) Rehabilitation $ 23,309 $ 13,737 $ 94,305 $ 84,215 Tunneling (11,767) 2,221 (3,128) 11,946 Tite Liner 1,750 1,745 8,322 6,497 Total gross profit $ 13,292 $ 17,703 $ 99,499 $ 102,658 Operating income (loss) Rehabilitation $ 2,733 $ (8,028) $ 17,132 $ 14,465 Tunneling (14,238) (337) (13,208) 3,956 Tite Liner 643 714 4,254 3,170 Total operating income (loss) $ (10,862) $ (7,651) $ 8,178 $ 21,591
INSITUFORM TECHNOLOGIES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands)
December 31, 2004 December 31, 2003 ASSETS CURRENT ASSETS Cash and cash equivalents $ 93,246 $ 93,865 Restricted cash 1,705 6,126 Receivables, net 78,665 90,814 Retainage 25,655 24,902 Costs and estimated earnings in excess of billings 34,789 27,853 Inventories 13,339 12,935 Prepaid expenses and other assets 21,469 19,515 Assets related to discontinued operations -- 1,263 TOTAL CURRENT ASSETS 268,868 277,273 PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation 90,846 75,667 OTHER ASSETS Goodwill 131,540 131,613 Other assets 17,567 23,807 TOTAL OTHER ASSETS 149,107 155,420 TOTAL ASSETS $ 508,821 $ 508,360 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt and line of credit $ 15,778 $ 16,938 Accounts payable and accrued expenses 85,398 82,670 Billings in excess of costs and estimated earnings 12,809 8,495 Liabilities related to discontinued operations -- 1,770 TOTAL CURRENT LIABILITIES 113,985 109,873 LONG-TERM DEBT, less current maturities 96,505 114,323 OTHER LIABILITIES 6,848 3,530 TOTAL LIABILITIES 217,338 227,726 MINORITY INTERESTS 1,647 1,465 TOTAL STOCKHOLDERS' EQUITY 289,836 279,169 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 508,821 $ 508,360
INSITUFORM TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
For the Twelve Months Ended December 31, 2004 2003 Cash flows from operating activities: Net income $ 597 $ 3,525 Loss from discontinued operations -- 1,103 Income from continuing operations 597 4,628 Adjustments to reconcile net cash provided by operating activities: Depreciation 17,502 15,521 Amortization 1,936 1,595 (Gain) loss on sale of assets/investment 610 1,375 Write-off of debt issuance costs 226 -- Change in restricted cash related to operating activities (181) 2,461 Reserve for notes receivable -- 1,090 Other 4,922 1,912 Asset impairment and restructuring charge -- (261) Deferred income taxes 1,481 (1,624) Changes in operating assets and liabilities, net of purchased businesses 15,464 5,157 Net cash provided by operating activities of continuing operations 42,557 31,854 Net cash provided by operating activities of discontinued operations -- 5,192 Net cash provided by operating activities 42,557 37,046 Cash flows from investing activities: Capital expenditures (35,195) (19,929) Proceeds from sale of fixed assets 1,904 1,365 Proceeds from sale of investment -- -- Net proceeds from sale of businesses (discontinued operations) -- -- Purchases of businesses, net of cash acquired -- (7,776) Other investing activities (844) -- Net cash used by investing activities (34,135) (26,340) Cash flows from financing activities: Proceeds from the issuance of common stock 3,580 430 Purchases of treasury stock -- (1,597) Proceeds from long-term debt -- 65,112 Principal payments on long-term debt and lines of credit, net (18,978) (50,224) Change in restricted cash related to financing activities 4,602 (4,602) Deferred financing costs paid (633) (867) Net cash (used) provided in financing activities (11,429) 8,252 Effect of exchange rate changes on cash 2,388 3,506 Net increase (decrease) in cash and cash equivalents (619) 22,464 Cash and cash equivalents, beginning of period 93,865 71,401 Cash and cash equivalents, end of period 93,246 93,865
CONTACT: Insituform Technologies, Inc. Christian G. Farman, Senior Vice President and CFO (636) 530-8000 -----END PRIVACY-ENHANCED MESSAGE-----