SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
Commission File Number 0-26561
THE KEITH COMPANIES, INC.
| California | 33-0203193 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
19 TECHNOLOGY DRIVE, IRVINE, CALIFORNIA 92618
Registrant’s telephone number, including area code: (949) 923-6001
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
The number of outstanding shares of the registrant’s common stock as of July 30, 2004 was 7,832,618.
THE KEITH COMPANIES, INC. AND SUBSIDIARIES
INDEX
1
PART I. FINANCIAL INFORMATION
THE KEITH COMPANIES, INC. AND SUBSIDIARIES
| 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 of allowance
for doubtful accounts of $1,319,000 and $1,328,000
at June 30, 2004 and December 31, 2003,
respectively |
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 of accumulated amortization of $761,000 at
June 30, 2004 and December 31, 2003 |
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, $0.001 par value. Authorized
5,000,000 shares; no shares issued or outstanding |
— | — | ||||||
Common stock, $0.001 par value. Authorized
100,000,000 shares; issued and outstanding
7,829,597 and 7,653,935 shares at June 30, 2004
and December 31, 2003, respectively |
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 | ||||
See accompanying notes to the consolidated financial statements.
2
THE KEITH COMPANIES, INC. AND SUBSIDIARIES
| For the Three Months Ended | For the 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 | ||||||||||||
See accompanying notes to the consolidated financial statements.
3
THE KEITH COMPANIES, INC. AND SUBSIDIARIES
| 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 flows 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 | ||||
See supplemental cash flow information at Note 7.
See accompanying notes to the consolidated financial statements.
4
THE KEITH COMPANIES, INC. AND SUBSIDIARIES
| 1. | Basis of Presentation | |||
| The accompanying consolidated balance sheet as of June 30, 2004, the consolidated statements of income for the three and six months ended June 30, 2004 and 2003, and the consolidated statements of cash flows for the six months ended June 30, 2004 and 2003 are unaudited and in the opinion of management include all adjustments necessary to present fairly the information set forth therein, which consist solely of normal recurring adjustments. All significant intercompany transactions have been eliminated and certain reclassifications have been made to prior periods’ consolidated financial statements to conform to the current period presentation. The results of operations for these interim periods are not necessarily indicative of results for the full year. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of The Keith Companies, Inc. (together with its subsidiaries, the “Company” or “TKCI”) for the year ended December 31, 2003 as certain disclosures which would substantially duplicate those contained in such audited financial statements have been omitted from this report. | ||||
| 2. | Accounting for Stock Options | |||
| The Company accounts for its stock options and restricted shares in accordance with the provisions of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. The Company has not recorded any compensation expense related to the granting of options. The Company, however, has recorded approximately $36,000 and $56,000, net of taxes, of compensation expense related to restricted shares for the three and six months ended June 30, 2004, respectively. Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock Based Compensation,” permits entities to recognize the fair value of all stock-based awards on the date of grant as an expense over the vesting period. Alternatively, SFAS No. 123 allows entities to continue to apply the provisions of APB Opinion No. 25; however, SFAS No. 148, “Accounting for Stock Based Compensation – Transition and Disclosure,” requires pro forma net income disclosures as if the fair-value-based method defined in SFAS No. 123 had been applied. The Company has elected to continue to apply the provisions of APB Opinion No. 25 and to provide the pro forma disclosure specified by SFAS No. 148. | ||||
| Had the Company determined compensation cost based on the fair value at the grant date for its stock options (using the Black-Scholes method) and restricted shares under SFAS No. 123, the Company’s net income would have been adjusted to the pro forma amounts indicated below: | ||||
| For the Three Months | For the Six Months | |||||||||||||||
| Ended June 30, |
Ended June 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
Net income: |
||||||||||||||||
Net income, as reported |
$ | 2,088,000 | $ | 1,729,000 | $ | 3,587,000 | $ | 3,128,000 | ||||||||
Add: Employee compensation expense
related to restricted shares, included
in net income, net of taxes |
36,000 | — | 56,000 | — | ||||||||||||
Deduct: Stock-based employee
compensation expense determined
under the fair-value based method,
net of taxes |
(154,000 | ) | (110,000 | ) | (286,000 | ) | (219,000 | ) | ||||||||
Pro forma net income |
$ | 1,970,000 | $ | 1,619,000 | $ | 3,357,000 | $ | 2,909,000 | ||||||||
Basic earnings per share: |
||||||||||||||||
As reported |
$ | 0.27 | $ | 0.23 | $ | 0.46 | $ | 0.41 | ||||||||
Pro forma |
$ | 0.25 | $ | 0.21 | $ | 0.43 | $ | 0.38 | ||||||||
Diluted earnings per share: |
||||||||||||||||
As reported |
$ | 0.26 | $ | 0.22 | $ | 0.45 | $ | 0.39 | ||||||||
Pro forma |
$ | 0.25 | $ | 0.20 | $ | 0.42 | $ | 0.37 | ||||||||
5
THE KEITH COMPANIES, INC. AND SUBSIDIARIES
| 3. | Earnings Per Share | |||
| Basic earnings per share (“EPS”) is computed by dividing net income during the period by the weighted average number of common shares outstanding during each period. Diluted EPS is computed by dividing net income during the period by the weighted average number of shares that would have been outstanding assuming the issuance of dilutive potential common shares as if outstanding during the reporting period, net of shares assumed to be repurchased using the treasury stock method. | ||||
| The following is a reconciliation of the denominator for the basic EPS computation to the denominator of the diluted EPS computation: | ||||
| For the Three Months | For the Six Months | |||||||||||||||
| Ended June 30, |
Ended June 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
Weighted average
shares used for the
basic EPS
computation |
7,782,149 | 7,607,374 | 7,742,858 | 7,598,040 | ||||||||||||
Incremental shares
from the assumed
exercise of
dilutive stock
options, restricted
shares and
contingently
issuable shares |
238,695 | 332,888 | 270,015 | 346,610 | ||||||||||||
Weighted average
shares used for the
diluted EPS
computation |
8,020,844 | 7,940,262 | 8,012,873 | 7,944,650 | ||||||||||||
| In conjunction with certain acquisitions, the Company agreed to pay consideration consisting of shares of its common stock. As a result, the Company estimated and included 8,730 and 30,227 weighted average contingently issuable shares in its weighted average shares used for the diluted EPS computation for the three and six months ended June 30, 2004, respectively, and 142,816 for both the three and six months ended June 30, 2003. | ||||
| There were 153,624 and 150,174 anti-dilutive weighted stock options excluded from the above calculations for the three and six months ended June 30, 2004, respectively, and 189,494 and 169,838 for the three and six months ended June 30, 2003, respectively. | ||||
| 4. | Segment and Related Information | |||
| The Company evaluates performance and makes resource allocation decisions based on the overall type of services provided to customers. Prior to January 1, 2004, the Company had grouped its operations, for financial reporting purposes, into two primary segments: Real Estate Development and Public Works/Infrastructure (“REPWI”) and Energy/Industrial (“EI”). Effective January 1, 2004, the Company groups its operations into three primary reportable segments: Real Estate Development (“RE”), Public Works/Infrastructure (“PWI”) and Energy/Industrial (“EI”). All prior period segment information has been adjusted to conform to the current period presentation. The RE segment primarily provides engineering and consulting services for the development of private projects, such as residential communities, commercial and industrial properties, and recreational facilities. The PWI segment primarily provides services for the development of public works/infrastructure projects, such as water/sewage facilities and transportation systems, and institutional projects, such as schools, hospitals and other public facilities. The EI segment primarily provides the technical expertise and management to design and test manufacturing facilities and processes, design mechanical and electrical systems solutions, and design, test and start-up primary and alternate electrical power systems for power generators and large scale power consumers. | ||||
6
THE KEITH COMPANIES, INC. AND SUBSIDIARIES
| The following tables set forth certain information regarding the Company’s reportable segments as of and for the three and six months ended June 30, 2004 and 2003: |
| As of and for the Three Months Ended June 30, 2004 |
||||||||||||||||||||
| RE |
PWI |
EI |
Corporate |
Consolidated |
||||||||||||||||
Net revenue |
$ | 18,853,000 | $ | 3,670,000 | $ | 1,989,000 | $ | — | $ | 24,512,000 | ||||||||||
Income (loss) from
operations |
$ | 5,627,000 | $ | 512,000 | $ | (274,000 | ) | $ | (2,541,000 | ) | $ | 3,324,000 | ||||||||
Identifiable assets |
$ | 35,900,000 | $ | 13,573,000 | $ | 9,106,000 | $ | 33,369,000 | $ | 91,948,000 | ||||||||||
| As of and for the Three Months Ended June 30, 2003 |
||||||||||||||||||||
| RE |
PWI |
EI |
Corporate |
Consolidated |
||||||||||||||||
Net revenue |
$ | 15,863,000 | $ | 3,685,000 | $ | 3,229,000 | $ | — | $ | 22,777,000 | ||||||||||
Income (loss) from
operations |
$ | 4,070,000 | $ | 566,000 | $ | 315,000 | $ | (2,191,000 | ) | $ | 2,760,000 | |||||||||
Identifiable
assets |
$ | 33,364,000 | $ | 15,533,000 | $ | 9,025,000 | $ | 25,718,000 | $ | 83,640,000 | ||||||||||
| As of and for the Six Months Ended June 30, 2004 |
||||||||||||||||||||
| RE |
PWI |
EI |
Corporate |
Consolidated |
||||||||||||||||
Net revenue |
$ | 35,790,000 | $ | 6,936,000 | $ | 4,249,000 | $ | — | $ | 46,975,000 | ||||||||||
Income (loss) from
operations |
$ | 10,336,000 | $ | 675,000 | $ | (381,000 | ) | $ | (4,916,000 | ) | $ | 5,714,000 | ||||||||
| As of and for the Six Months Ended June 30, 2003 |
||||||||||||||||||||
| RE |
PWI |
EI |
Corporate |
Consolidated |
||||||||||||||||
Net revenue |
$ | 30,936,000 | $ | 7,193,000 | $ | 6,994,000 | $ | — | $ | 45,123,000 | ||||||||||
Income (loss) from
operations |
$ | 7,667,000 | $ | 856,000 | $ | 584,000 | $ | (4,329,000 | ) | $ | 4,778,000 | |||||||||
| 5. | Goodwill | |||
| The changes in the carrying amount of goodwill as reported by each reportable segment as of and for the three and six months ended June 30, 2004 are as follows: | ||||
| As of and for the Three Months Ended June 30, 2004 |
||||||||||||||||
| RE |
PWI |
EI |
Total |
|||||||||||||
Balance as of April 1, 2004 |
$ | 8,828,000 | $ | 9,329,000 | $ | 4,902,000 | $ | 23,059,000 | ||||||||
Purchase price adjustments |
— | — | — | — | ||||||||||||
Balance as of June 30, 2004 |
$ | 8,828,000 | $ | 9,329,000 | $ | 4,902,000 | $ | 23,059,000 | ||||||||
| As of and for the Six Months Ended June 30, 2004 |
||||||||||||||||
| RE |
PWI |
EI |
Total |
|||||||||||||
Balance as of January 1, 2004 |
$ | 8,828,000 | $ | 9,329,000 | $ | 4,902,000 | $ | 23,059,000 | ||||||||
Purchase price adjustments |
— | — | — | — | ||||||||||||
Balance as of June 30, 2004 |
$ | 8,828,000 | $ | 9,329,000 | $ | 4,902,000 | $ | 23,059,000 | ||||||||
7
THE KEITH COMPANIES, INC. AND SUBSIDIARIES
| 6. | Indebtedness | |||
| The Company has available a $10.0 million unsecured line of credit consisting of four components: (i) an acquisition component, (ii) an equipment and vehicle financing component, (iii) a standby letter of credit component, and (iv) a working capital component. The line provides up to a maximum of $5.0 million to finance acquisitions, up to a maximum of $3.0 million to finance equipment and vehicle purchases, up to a maximum of $1.0 million for standby letters of credit, and up to a maximum of $10.0 million less the aggregate outstanding principal balance of the acquisition, equipment and vehicle, and standby letter of credit components for working capital. The line bears interest at either a range of 0.25% below prime to prime, or a range of 1.25% to 1.75% over LIBOR depending on the Company’s ability to meet certain financial covenants. As of June 30, 2004, the Company was in compliance with the financial covenants under this line of credit agreement. All components of the line of credit mature in June 2005. This line of credit agreement restricts the payment of dividends without the bank’s consent. There were no amounts outstanding under this line of credit agreement as of June 30, 2004. As of December 31, 2003, the Company had utilized the letter of credit component to issue a $229,000 stand-by letter of credit, which expired in February 2004. | ||||
| 7. | Supplemental Cash Flow Information | |||
| For the Six Months | ||||||||
| Ended June 30, |
||||||||
| 2004 |
2003 |
|||||||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid for interest |
$ | 7,000 | $ | 9,000 | ||||
Cash paid for income taxes |
$ | 2,740,000 | $ | 3,319,000 | ||||
Non-cash financing and investing activities: |
||||||||
Issuable common stock issued |
$ | 779,000 | $ | 715,000 | ||||
Restricted shares granted |
$ | 665,000 | $ | — | ||||
Purchase price adjustment to goodwill |
$ | — | $ | 154,000 | ||||
8
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The following discussion should be read in conjunction with the consolidated financial statements of the Company and the related notes included elsewhere in this Form 10-Q and the Annual Report on Form 10-K for the fiscal year ended December 31, 2003 filed by the Company. This Quarterly Report on Form 10-Q contains certain forward-looking statements, including among others:
| • | forecasts of earnings, revenue or other financial items; | |||
| • | anticipated activity in the real estate development, public works/infrastructure and the energy/industrial industries; | |||
| • | our business strategy for expanding our presence in these industries; | |||
| • | anticipated growth and economic expansion in the Western and Midwestern United States; | |||
| • | anticipated trends in our financial condition and results of operations; | |||
| • | anticipated growth in the pace and size of our acquisitions; | |||
| • | anticipated impact of future acquisitions and/or new divisions on the condition of our business by industry and geographic location; | |||
| • | the long-term nature of some of our projects; | |||
| • | our ability to attract and retain employees; | |||
| • | our business strategy for integrating businesses that we acquire and/or internally create; | |||
| • | our ability to sustain our growth and profitability; and | |||
| • | our ability to distinguish ourselves from our current and future competitors. | |||
We generally identify forward-looking statements in this Report using words like “believe,” “expect,” “estimate,” “may,” “plan,” “should plan,” “project,” “contemplate,” “anticipate,” “predict” or similar expressions. You may find some of these statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere is this Report. These statements involve known and unknown risks, uncertainties and other factors, including those described in the “Risk Factors” section, that may cause our or our industry’s actual results, levels of activity, performance or achievements to differ from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Except as required by applicable laws, rules or regulations, including the securities laws of the United States, and the rules and regulations of the Securities and Exchange Commission, we do not plan to publicly update or revise any forward-looking statements after we file this Report, whether as a result of any new information, future events or otherwise.
9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis together with our consolidated financial statements and related notes included elsewhere in this Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information with respect to our plans and strategies for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this Report.
Overview
Business
We are a full service engineering and consulting services firm providing professional services on a wide range of projects to the real estate development, public works/infrastructure, and energy/industrial industries. In this report, we refer to these industries as the RE, PWI, and EI industries. For the six months ended June 30, 2004, our net revenue generated from services related to our RE, PWI, and EI groups was approximately 76%, 15%, and 9%, respectively. Excluding corporate overhead/expenses, our RE group contributed over 97% of our total income from operations for the six months ended June 30, 2004. In an effort to diversify our revenue base, we intend to expand our presence in the PWI and EI industries. See “Diversification Strategy” section below for additional information.
We currently have approximately 800 employees/project workers and provide our engineering and consulting services from 15 primary divisions located in seven states: Arizona, California, Michigan, Nevada, Oregon, Texas and Utah. In addition to these 15 primary divisions, we also have small energy operations in Brazil and in the second quarter of 2004, we contributed $0.2 million to a non-public entity in the energy sector with respect to which we received a controlling interest. For the six months ended June 30, 2004, approximately 77% of our net revenue was generated from services rendered in California.
Services Provided
We provide a broad range of services. In the RE and PWI industries, our primary services include civil engineering, surveying and mapping, land planning, environmental services, cultural resources services, construction management, site acquisition, and water resource engineering. The services we provide to the EI industry primarily include instrumentation and controls systems engineering, fire protection engineering, electrical engineering, mechanical engineering, chemical process engineering, start-up and testing, and operations and maintenance.
For a more detailed discussion of the services we provide, please refer to our Annual Report on Form 10-K.
Industries Served
As mentioned above, we provide a wide range of engineering and consulting services to the RE, PWI and EI industries. The following is a brief description of the nature of the work associated with each industry that we serve:
Real Estate Development
Our RE group primarily provides engineering and consulting services for the development of private projects, such as residential communities, commercial and industrial properties, and recreational facilities.
Residential, commercial, golf, and other recreational developers use professional and technical consultants to provide planning and environmental services to create land use plans, write the supporting planning and environmental documents and process entitlements and permits through governmental authorities. Consultants also assist clients with obtaining approvals and permits from federal, state and local agencies. After projects are approved by governmental agencies, developers need surveying, mapping, and civil engineering services to survey development sites, create accurate boundary and base maps, and provide engineering designs for grading, streets, sewer and water pipelines and facilities, utilities and drainage facilities. Upon completion of the design phase, surveyors provide construction staking services to identify the precise locations of streets, utilities, pipelines, and other facilities to be constructed. In culturally sensitive areas, developers may also require environmental and archaeology services for planning and assistance with environmental approvals as well as construction and post-construction phase monitoring services.
Residential development includes large-scale communities, senior citizen and retirement communities, single family homes, condominiums and apartments. Commercial develop