TRC COMPANIES INC /DE/ - FORM 8-K - EX-99.1 - September 12, 2012

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8-K - FORM 8-K - TRC COMPANIES INC /DE/trcform8-kq4f12.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 Fourth-Quarter and Fiscal Year 2012 Financial Results
Fourth-Quarter Net Service Revenue Grows 13%;
Company Achieves Full-Year NSR Growth of 23% to More than $300 Million

Lowell, MA, September 12, 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 fiscal three months and year ended June 30, 2012.

Financial Highlights
 
Three Months Ended
 
Year Ended
 
June 30,
 
June 30,
 
June 30,
 
June 30,
(In millions, except per share data)
2012
 
2011
 
2012
 
2011
 
 
 
 
 
 
 
 
Net service revenue(1)
$
79.3

 
$
70.3

 
$
301.8

 
$
245.9

Arena Towers litigation expense (reversal)(2)
$
—

 
$
17.3

 
$
(11.1
)
 
$
17.3

Operating income (loss)
$
6.0

 
$
(15.0
)
 
$
30.0

 
$
(7.6
)
Federal and state income tax (provision) benefit
$
(0.1
)
 
$
(0.4
)
 
$
3.9

 
$
(1.1
)
Accretion charges on preferred stock
$
—

 
$
—

 
$
—

 
$
(7.3
)
Net income (loss) applicable to TRC Companies, Inc.'s common shareholders
$
5.8

 
$
(15.5
)
 
$
33.6

 
$
(16.6
)
Diluted earnings (loss) per common share
$
0.20

 
$
(0.57
)
 
$
1.16

 
$
(0.69
)
Diluted weighted-average common shares outstanding
29.4

 
27.3

 
28.8

 
24.1


(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 $11.1 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 litigation expense of $17.3 million related to the verdict.


Comments on the Results
“Fiscal 2012 was a milestone year for TRC,” said Chairman and Chief Executive Officer Chris Vincze. “We concluded the year with solid fourth-quarter results, generating NSR growth of 13% and $5.8 million of net income as we executed on our strategy to profitably grow the business and strengthen TRC as a

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


leader in the energy and power industries.”

“Our Energy segment has been a steady contributor to TRC's overall growth. In the fourth quarter, NSR for this segment increased 27% and profit was up 31% fueled by our utility clients' continued investment in their electric transmission and distribution systems. A renewed focus on capital programs for electric system reliability and energy efficiency, as well as our expanded geographic presence, are also contributing to our success in Energy”

“During the quarter, NSR for the Environmental segment was up 13%, and profit increased 55% as we benefited from the expanded geographic reach of acquired businesses. Organic growth in this segment was constrained by overall federal policy uncertainty, but opportunities are increasing related to regional shale-gas and other developments in the power/energy industry.”

“Throughout fiscal 2012, government funding constraints at all levels have challenged our Infrastructure segment. In the fourth quarter, NSR decreased 8% while profit was 12% lower. Nevertheless, Infrastructure finished the year with 3% NSR growth and 33% profit growth.”


Business Outlook
“We believe the outlook for each of TRC's segments is promising. Capital planning in the energy and power markets should drive demand for TRC's energy and environmental services once federal policy is clarified and stabilized. Some improvement in the infrastructure market should occur over the next few years with the recent passage of the MAP-21 Federal Transportation Bill, and long-term prospects remain strong due to urban population growth and the need to fix our nation's aging infrastructure.

“Our results in fiscal 2012 demonstrate that TRC is well positioned for further margin improvement and continued growth. We have the financial flexibility to execute our two-pronged profitable growth strategy. The first element of our strategy focuses on organic growth through national programs centered on key accounts and service bundling, such as our RE Power offering. The second element is targeting acquisitions that enhance our portfolio of services and continue geographic expansion, particularly in our Energy and Environmental segments. We are encouraged by our prospects as we enter fiscal 2013.”

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

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

Exhibit 99.1

www.TRCsolutions.com. The call may also 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 uncertainty of TRC's 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; the availability and adequacy of insurance; 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, 2012, 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.
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)

 
 
 
Three Months Ended
 
Year Ended
 
 
 
June 30,
 
June 30,
 
June 30,
 
June 30,
 
 
 
2012
 
2011
 
2012
 
2011
 
 
 
 
 
 
 
 
 
 
Gross revenue
 
$
109,728

 
$
94,029

 
$
419,959

 
$
333,209

 
Less subcontractor costs and other direct reimbursable charges
 
30,434

 
23,779

 
118,179

 
87,298

Net service revenue
 
79,294

 
70,250

 
301,780

 
245,911

 
 
 
 
 
 
 
 
 
 
Interest income from contractual arrangements
 
66

 
103

 
295

 
411

Insurance recoverables and other income
 
(678
)
 
(4,875
)
 
614

 
(1,573
)
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses:
 
 
 
 
 
 
 
 
 
Cost of services (exclusive of costs shown separately below)
 
62,261

 
55,064

 
246,506

 
202,265

 
General and administrative expenses
 
8,543

 
6,723

 
31,025

 
26,286

 
Provision for doubtful accounts
 
390

 
141

 
755

 
1,763

 
Depreciation and amortization
 
1,481

 
1,243

 
5,508

 
4,729

 
Arena Towers litigation expense (reversal)
 
—

 
17,278

 
(11,061
)
 
17,278

Total operating costs and expenses
 
72,675

 
80,449

 
272,733

 
252,321

Operating income (loss)
 
6,007

 
(14,971
)
 
29,956

 
(7,572
)
Interest expense
 
(84
)
 
(173
)
 
(668
)
 
(761
)
Income (loss) from operations before taxes and equity in earnings
 
5,923

 
(15,144
)
 
29,288

 
(8,333
)
Federal and state income tax (provision) benefit
 
(145
)
 
(425
)
 
3,930

 
(1,127
)
Income (loss) from operations before equity in earnings
 
5,778

 
(15,569
)
 
33,218

 
(9,460
)
Equity in earnings from unconsolidated affiliates, net of taxes
 
—

 
20

 
270

 
30

Net income (loss)
 
5,778

 
(15,549
)
 
33,488

 
(9,430
)
Net loss applicable to noncontrolling interest
 
17

 
19

 
87

 
58

Net income (loss) applicable to TRC Companies, Inc.
 
5,795

 
(15,530
)
 
33,575

 
(9,372
)
Accretion charges on preferred stock
 
—

 
—

 
—

 
(7,261
)
Net income (loss) applicable to TRC Companies, Inc.'s common shareholders
 
$
5,795

 
$
(15,530
)
 
$
33,575

 
$
(16,633
)
 
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per common share
 
$
0.21

 
$
(0.57
)
 
$
1.21

 
$
(0.69
)
Diluted earnings (loss) per common share
 
$
0.20

 
$
(0.57
)
 
$
1.16

 
$
(0.69
)
 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
 
27,921

 
27,284

 
27,781

 
24,107

 
Diluted
 
29,433

 
27,284

 
28,822

 
24,107



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


TRC Companies, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
 
June 30,
2012
 
June 30,
2011
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
16,561

 
$
10,829

Accounts receivable, less allowance for doubtful accounts
95,215

 
89,258

Insurance recoverable - environmental remediation
25,744

 
30,827

Restricted investments
4,413

 
12,413

Prepaid expenses and other current assets
11,119

 
9,878

Income taxes refundable
958

 
209

Total current assets
154,010

 
153,414

Property and equipment:
 
 
 
Land and building
480

 
480

Equipment, furniture and fixtures
47,819

 
43,093

Leasehold improvements
5,053

 
4,902

 
53,352

 
48,475

Less accumulated depreciation and amortization
(39,621
)
 
(36,825
)
Property and equipment, net
13,731

 
11,650

Goodwill
24,888

 
20,886

Investments in and advances to unconsolidated affiliates and construction joint ventures
109

 
111

Long-term restricted investments
35,265

 
38,753

Long-term prepaid insurance
34,272

 
37,410

Other assets
12,853

 
13,836

Total assets
$
275,128

 
$
276,060

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Current portion of long-term debt
$
1,315

 
$
3,139

Current portion of capital lease obligations
267

 
—

Accounts payable
30,712

 
26,510

Accrued compensation and benefits
36,292

 
28,252

Deferred revenue
18,236

 
22,709

Environmental remediation liabilities
422

 
505

Other accrued liabilities
30,315

 
59,718

Total current liabilities
117,559

 
140,833

Non-current liabilities:
 
 
 
Long-term debt, net of current portion
3,860

 
6,037

Capital lease obligations, net of current portion
462

 
—

Income taxes payable
622

 
4,912

Deferred revenue
79,104

 
88,865

Environmental remediation liabilities
5,473

 
5,741

Total liabilities
207,080

 
246,388

Commitments and contingencies
 
 
 
Equity:
 
 
 
Common stock, $.10 par value; 40,000,000 shares authorized, 28,130,702 and 28,127,220 shares issued and outstanding, respectively, at June 30, 2012, and 27,303,774 and 27,300,292 shares issued and outstanding, respectively, at June 30, 2011
2,813

 
2,730

Additional paid-in capital
179,402

 
173,984

Accumulated deficit
(113,680
)
 
(147,255
)
Accumulated other comprehensive income
(184
)
 
429

Treasury stock, at cost
(33
)
 
(33
)
Total shareholders' equity applicable to TRC Companies, Inc.
68,318

 
29,855

Noncontrolling interest
(270
)
 
(183
)
Total equity
68,048

 
29,672

Total liabilities and equity
$
275,128

 
$
276,060

 
 
 
 

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

TRC COMPANIES INC /DE/ Reports

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