Attached files

file filename
8-K - FORM 8-K - TRC COMPANIES INC /DE/trcform8-kearningsreleaseq.htm
Exhibit 99.1


Investor Contact:
 
Company Contact:
Dennis Walsh
Thomas W. Bennet, Jr., CFO
Sharon Merrill
(978) 970-5600
(617) 542-5300
tbennet@trcsolutions.com
trr@investorrelations.com
 
TRC Announces Third-Quarter Fiscal 2012 Financial Results
Net Service Revenue Increase of 30% and
Margin Improvement Drive Strong Operating Income Growth

Lowell, MA, May 9, 2012 - TRC Companies, Inc. (NYSE: TRR), a recognized leader in engineering, consulting and construction management services to the energy, environmental and infrastructure markets, today announced financial results for the three and nine month periods ended March 30, 2012.

Financial Highlights
 
Three Months Ended
 
Nine Months Ended
 
March 30,
 
March 25,
 
March 30,
 
March 25,
(In millions, except per share data)
2012
 
2011
 
2012
 
2011
 
 
 
 
 
 
 
 
Net service revenue (1)
$
75.1

 
$
57.7

 
$
222.5

 
$
175.7

Arena Towers litigation expense (reversal) (2)
$

 
$

 
$
(11.1
)
 
$

Operating income
$
3.5

 
$
1.1

 
$
23.9

 
$
7.4

Federal and state income tax benefit (provision)
$
0.6

 
$ 0.0

 
$
4.1

 
$
(0.7
)
Accretion charges on preferred stock
$

 
$

 
$

 
$
(7.3
)
Net income (loss) applicable to TRC Companies, Inc.'s common shareholders
$
3.9

 
$
1.0

 
$
27.8

 
$
(1.1
)
Diluted earnings (loss) per common share
$
0.13

 
$
0.03

 
$
0.97

 
$
(0.05
)
Diluted weighted-average common shares outstanding
28.9

 
27.9

 
28.6

 
23.0

(1)The Company believes net service revenue best reflects the value of services provided to its customers and is the most meaningful indicator of TRC's revenue performance.
(2) On October 5, 2011 a post-trial motion was granted to disregard a substantial portion of the verdict in this matter resulting in an $11.2 million reduction of the litigation accrual. A judgment was entered in the case on October 10, 2011, and on January 3, 2012 the Company paid $8.7 million in full satisfaction of the judgment and interest. In the fourth quarter of fiscal 2011 the Company had recorded a litigation accrual of $17.3 million related to the verdict.










TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995



Comments on Fiscal Third-Quarter Results
“In the third quarter, we delivered another solid performance, growing net service revenue (NSR) by 30% and more than tripling our operating income,” said Chairman and Chief Executive Officer Chris Vincze. “The revenue increase is primarily the result of executing our organic growth strategy in the Energy segment, combined with contributions from our recent acquisitions in the Environmental segment. In addition, our ongoing margin improvement initiatives are proving to be successful - resulting in enhanced operating margins in the quarter.”

“TRC's Energy segment continues to be our largest contributor to growth. For the quarter, NSR for this segment was up 40%, and segment profit increased 57%. Demand in this segment has strengthened as utilities have enhanced capital investments to upgrade their electrical transmission and distribution systems. We also continue to see healthy levels of activity in the energy efficiency related markets.”

“The acquisitions we have made in our Environmental segment are contributing meaningfully to our overall results. NSR for this segment grew 30%, with a large majority of that growth coming from acquisitions. Higher project volume and improvements to our cost structure resulted in an impressive 81% increase in segment profit.”

“Infrastructure segment NSR for the quarter was up 8% despite the headwinds presented by the lack of a federal transportation bill and tight state and municipal funds. Part of our successful strategy for this segment has been to focus on TRC niche markets, such as construction engineering inspection, where TRC provides cost-effective services in high volume for many state transportation departments. In addition to the NSR growth, improved project execution across the segment and a lower expense structure translated into a 57% increase in segment profit for the third quarter.”



TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995



Business Outlook
“The long-term outlook for all three of TRC's operating segments remains promising. In the near-term, we will benefit from the increasing demand for our Energy services, while the Environmental and Infrastructure markets are expected to regain momentum in the mid- to longer-term. The nation's focus on developing more efficient and cleaner power generation sources, as well as renewable energy initiatives, will create material opportunities for our Energy segment. In our Environmental segment, TRC has the capabilities to support all phases of the development of the natural gas markets. Two years ago, we launched our shale initiative to better capitalize on our multifaceted expertise in that market. We will continue to focus on profitable growth for our Infrastructure segment through organic growth initiatives, cross-selling opportunities and margin improvement.”

“Overall, TRC has created a highly scalable business model that enables us to pursue strategic niche acquisitions while continuing to invest in internal growth. We have minimal long-term debt and a healthy balance sheet, which provides us with the financial flexibility to execute both elements of our growth strategy. We remain confident that our unique blend of specialized services, talented staff of professionals and reputation for excellence will continue to differentiate TRC in our markets. As the business and economic environments gradually improve, we are optimistic about achieving our goal of delivering consistent profitable growth.”


Conference Call Information
The Company will broadcast its financial results conference call today, at 9 a.m. ET. Those who wish to listen to the conference call should visit the “Investor Center” section of TRC's website at www.TRCsolutions.com. The call also may be accessed by dialing (877) 709-8155 or (201) 689-8881 prior to the start of the call. For interested individuals unable to join the live conference call, a webcast replay will be available on the Company's website for one year.

About TRC
A pioneer in groundbreaking scientific and engineering developments since the 1960s, TRC is a national engineering, consulting and construction management firm that provides integrated services to the energy, environmental and infrastructure markets. TRC serves a broad range of clients in government and industry, implementing complex projects from initial concept to delivery and operation. TRC delivers results that enable clients to achieve success in a complex and changing world. For more information and updates from the Company, visit TRC's website at www.TRCsolutions.com and follow TRC on Twitter at @TRC_Companies and on LinkedIn.

TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995



Forward-Looking Statements
Certain statements in this press release may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify these statements by forward-looking words such as "may," "expects," "plans," "anticipates," "believes," "estimates," or other words of similar import. You should consider statements that contain these words carefully because they discuss TRC's future expectations, contain projections of the Company's future results of operations or of its financial condition, or state other "forward-looking" information. TRC believes that it is important to communicate its future expectations to its investors. However, there may be events in the future that the Company is not able to accurately predict or control and that may cause its actual results to differ materially from the expectations described in its forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainties, and actual results may differ materially from those discussed as a result of various factors, including, but not limited to, the availability and adequacy of insurance; the uncertainty of our operational and growth strategies; circumstances which could create large cash outflows, such as contract losses, litigation, uncollectible receivables and income tax assessments; regulatory uncertainty; the availability of funding for government projects; the level of demand for TRC's services; product acceptance; industry-wide competitive factors; the ability to continue to attract and retain highly skilled and qualified personnel; and general political or economic conditions. Furthermore, market trends are subject to changes, which could adversely affect future results. See the risk factors and additional discussion in TRC's Annual Report on Form 10-K for the fiscal year ended June 30, 2011, Quarterly Reports on Form 10-Q, and other factors detailed from time to time in the Company's other filings with the Securities and Exchange Commission.


TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995



TRC Companies, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)


 
Three Months Ended
 
Nine Months Ended
 
March 30,
2012
 
March 25,
2012
 
March 30,
2012
 
March 25,
2012
Gross revenue
$
101,118

 
$
76,071

 
$
310,231

 
$
239,180

Less subcontractor costs and other direct reimbursable charges
25,983

 
18,323

 
87,745

 
63,519

Net service revenue
75,135

 
57,748

 
222,486

 
175,661

Interest income from contractual arrangements
56

 
95

 
229

 
308

Insurance recoverables and other income
554

 
392

 
1,292

 
3,302

Operating costs and expenses:
 
 
 
 
 
 
 
Cost of services (exclusive of costs shown separately below)
62,910

 
48,912

 
184,245

 
147,201

General and administrative expenses
8,087

 
6,713

 
22,482

 
19,563

Provision for doubtful accounts

 
449

 
365

 
1,622

Depreciation and amortization
1,231

 
1,025

 
4,027

 
3,486

Arena Towers litigation expense (reversal)

 

 
(11,061
)
 

Total operating costs and expenses
72,228

 
57,099

 
200,058

 
171,872

Operating income
3,517

 
1,136

 
23,949

 
7,399

Interest expense
(228
)
 
(173
)
 
(584
)
 
(588
)
Income from operations before taxes and equity in earnings
3,289

 
963

 
23,365

 
6,811

Federal and state income tax benefit (provision)
571

 
(16
)
 
4,075

 
(702
)
Income from operations before equity in earnings
3,860

 
947

 
27,440

 
6,109

Equity in earnings from unconsolidated affiliates, net of taxes

 

 
270

 
10

Net income
3,860

 
947

 
27,710

 
6,119

Net loss applicable to noncontrolling interest
21

 
5

 
70

 
39

Net income applicable to TRC Companies, Inc.
3,881

 
952

 
27,780

 
6,158

Accretion charges on preferred stock

 

 

 
(7,261
)
Net income (loss) applicable to TRC Companies, Inc.'s common shareholders
$
3,881

 
$
952

 
$
27,780

 
$
(1,103
)
 
 
 
 
 
 
 
 
Basic earnings (loss) per common share
$
0.14

 
$
0.04

 
$
1.00

 
$
(0.05
)
Diluted earnings (loss) per common share
$
0.13

 
$
0.03

 
$
0.97

 
$
(0.05
)
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
Basic
27,887

 
27,190

 
27,733

 
22,957

Diluted
28,943

 
27,921

 
28,619

 
22,957



TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995



TRC Companies, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
 
March 30,
2012
 
June 30,
2011
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
13,270

 
$
10,829

Accounts receivable, less allowance for doubtful accounts
91,410

 
89,258

Insurance recoverable - environmental remediation
27,232

 
30,827

Restricted investments
6,755

 
12,413

Prepaid expenses and other current assets
13,891

 
10,087

Total current assets
152,558

 
153,414

Property and equipment
52,304

 
48,475

Less accumulated depreciation and amortization
(38,685
)
 
(36,825
)
Property and equipment, net
13,619

 
11,650

Goodwill
24,888

 
20,886

Investments in and advances to unconsolidated affiliates and construction joint ventures
114

 
111

Long-term restricted investments
34,838

 
38,753

Long-term prepaid insurance
35,056

 
37,410

Other assets
14,677

 
13,836

Total assets
$
275,750

 
$
276,060

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Current portion of long-term debt
$
6,383

 
$
3,139

Accounts payable
25,110

 
26,510

Accrued compensation and benefits
35,488

 
28,252

Deferred revenue
16,650

 
22,709

Environmental remediation liabilities
475

 
505

Other accrued liabilities
37,478

 
59,718

Total current liabilities
121,584

 
140,833

Non-current liabilities:
 
 
 
Long-term debt, net of current portion
4,162

 
6,037

Income taxes payable
109

 
4,912

Deferred revenue
83,513

 
88,865

Environmental remediation liabilities
5,450

 
5,741

Total liabilities
214,818

 
246,388

Commitments and contingencies
 
 
 
Equity:
 
 
 
Common stock, $.10 par value; 40,000,000 shares authorized, 27,910,904 and 27,907,422 shares issued and outstanding, respectively, at March 30, 2012, and 27,303,774 and 27,300,292 shares issued and outstanding, respectively, at June 30, 2011
2,791

 
2,730

Additional paid-in capital
177,907

 
173,984

Accumulated deficit
(119,475
)
 
(147,255
)
Accumulated other comprehensive income
(5
)
 
429

Treasury stock, at cost
(33
)
 
(33
)
Total shareholders' equity applicable to TRC Companies, Inc.
61,185

 
29,855

Noncontrolling interest
(253
)
 
(183
)
Total equity
60,932

 
29,672

Total liabilities and equity
$
275,750

 
$
276,060

 
 
 
 

TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995