Insituform Technologies, Inc. Reports Record Quarterly Revenue and Net Income as Third Quarter Earnings per Share Increase 42%

Business Wire, Oct 19, 2000

Business Editors

CHESTERFIELD, Mo.--(BUSINESS WIRE)--Oct. 19, 2000

Insituform Technologies, Inc. (NASDAQ/NM:INSUA) (the "Company") today announces record quarterly revenue and net income for the third quarter ended September 30, 2000.

Revenue for the third quarter of 2000 was $111.0 million compared to $93.3 million in the third quarter of 1999, an increase of 19%. For the first nine months of 2000, revenue was $304.7 million, which represents a 22% gain over $250.1 million for the same period of 1999. Record third quarter net income of $11.2 million represents a 40% increase over the $8.0 million of net income in the third quarter of 1999. Earnings per share for the third quarter of 2000 were $.44, an increase of 42% over the third quarter of 1999, or $.31 per share. For the nine months ended September 30, 2000, net income increased 38% to $25.6 million from $18.6 million for the same period in 1999 and earnings per share increased to $1.00, compared to $.71 for 1999.

Anthony W. Hooper, Chairman of the Board, President and Chief Executive Officer of the Company, stated, "We continue to consistently produce record quarterly results.

"Not only did we set all-time records for revenue and net income in the third quarter of 2000, we also reached a corporate goal of over 10% return on sales by achieving 10.1%. Our return on equity is also at an all-time high of 22.7%.

"All three of our business segments were strong in the third quarter of 2000. Titeliner(R) had a standout third quarter growing at over 100% compared to the third quarter of 1999. This strong 2000 growth fueled an 18% operating margin for the third quarter and 23% for the first nine months. Tunneling also produced outstanding growth at 32% for the third quarter and 16% for the nine months of 2000 compared to the same periods of 1999.

"Our Rehab segment continued its strong performance in the third quarter of 2000. Operating income was 18% of revenue for the third quarter of 2000, which represents the best quarter for 2000, and is less than one percentage point below the third quarter of 1999. Third quarter of 2000 Rehab revenue of $87.5 million represents a record and a 12% increase over the same period in 1999. For the nine months ended September 30, 2000, Rehab achieved $240.2 million in revenue or a 20% increase over the first nine months of 1999. The effect of weaker European currencies on 2000 revenue for the third quarter was $.9 million and $1.8 million for the first nine months. Our backlog at September 30, 2000 is up over the same period last year.

"I am extremely pleased to see our overall gross margin ratio continue to hold at a normal level of 34.2%. This rate for the third quarter of 2000 was the same as for the second quarter of 2000, and less than one percentage point below the comparable 1999 rate. Third quarter of 2000 operating margin improvement showed our ability to hold down costs while we grow. Third quarter of 2000 operating margin was nearly 18%, or almost one percentage point better than the third quarter of 1999, and over two percentage points better than the second quarter of 2000.

"Cash and cash equivalents at September 30, 2000 totaled $60.5 million. This represents a small increase of $1.2 million during the third quarter of 2000. Operating cash flow for the third quarter of 2000 was $3.1 million, which brings the first nine months of 2000 operating cash flow generation to $22.6 million.

"As previously disclosed, during the third quarter of 2000, we made several strategic investments. During this period, we spent almost $9 million on those strategic investments and the acquisition of real estate. At September 30, 2000, these investments were financed through use of our credit facility.

"During the third quarter of 2000, we repurchased 40,000 shares of stock at an average price of $23.99 per share. As of September 30, 2000, our repurchases for the year totaled 500,165 shares at an average price of $26.11 per share.

"As we look to the fourth quarter of 2000, our results should continue our path of revenue and profit growth. It is our belief that our markets continue to be strong and offer the opportunity for growth. I continue to feel our outlook is very positive, and our goals of not less than 15% revenue and 25% income growth can be realized."

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 press 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, and other factors set forth in reports and documents filed by the Company with the Securities and Exchange Commission from time to time. Please use caution and do not place reliance on forward-looking statements.