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8-K - 8-K - TRC COMPANIES INC /DE/trcform8-kq2f13.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 Second-Quarter Fiscal 2013 Financial Results

Lowell, MA, February 6, 2013 - 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 and six months ended December 28, 2012.

Financial Highlights
 
Three Months Ended
 
Six Months Ended
 
December 28,
 
December 30,
 
December 28,
 
December 30,
(In millions, except per share data)
2012
 
2011
 
2012
 
2011
 
 
 
 
 
 
 
 
Net service revenue (1)
$
75.3

 
$
73.9

 
$
150.5

 
$
147.4

Arena Towers litigation expense (reversal) (2)
$

 
$
0.2

 
$

 
$
(11.1
)
Operating income
$
4.4

 
$
4.9

 
$
9.0

 
$
20.4

Federal and state income tax (provision) benefit (3)
$
(0.2
)
 
$
0.2

 
$
(0.4
)
 
$
3.5

Net income applicable to TRC Companies, Inc.
$
4.1

 
$
5.2

 
$
8.4

 
$
23.9

Diluted earnings per common share
$
0.14

 
$
0.18

 
$
0.28

 
$
0.84

Diluted weighted-average common shares outstanding
29.5

 
28.5

 
29.5

 
28.5


(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 in the first quarter of fiscal 2012. In the fourth quarter of fiscal 2011 the Company had recorded litigation expense of $17.3 million related to the verdict.
(3) The Company received approval of a federal tax settlement resulting in a one-time benefit in the first quarter of fiscal 2012.



Comments on the Results

“In the second quarter TRC delivered another solid performance as we continued to grow the business despite challenging market conditions,” said Chairman and Chief Executive Officer Chris Vincze. “Driven by higher demand for our Energy services, Net Service Revenue (NSR) increased 2% in the second quarter compared to the same quarter of the prior year. We also continued building our growth platform and finalized two

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



strategic acquisitions which closed at the beginning of our fiscal third quarter.”

“Energy segment NSR grew 9% in the second quarter compared to the same period of the prior year primarily due to increased activity on electric distribution projects for large utilities and the expansion of our geographic presence in the mid-Atlantic region. Segment profit for the quarter was down 14% compared to the second quarter of fiscal 2012 reflecting higher-than-expected contract costs on several fixed-price projects. The market demand for distribution and transmission services continues to be high, and we believe that capital spending programs underlying those markets represent a growth opportunity for TRC in the years ahead.”

“Our Environmental segment NSR grew 2% and profit was up 8% in the second quarter compared to the same period of the prior year due to increased utilization on certain large remediation projects. Natural gas pipeline development and regional gas transportation, as well as the potential for gas export, continue to represent major opportunities for TRC. Our Infrastructure segment, which is most affected by the lack of consistent government funding, saw NSR decrease 8% and profit 25% in the second quarter compared to the same period of the prior year, reflecting lower overall demand for our services. However, segment NSR backlog for the quarter was 14% higher than in the comparable period of the prior year.”

“We recently acquired GE's Air Emissions Testing business and the Heschong Mahone Group, Inc. (“HMG”), a California based energy efficiency consulting firm. The addition of the GE business to our Environmental segment strengthens our leadership position in the emissions testing market by adding technical resources and geographic reach, primarily in the upper Midwest, West Coast, and the South. Energy efficiency is a key growth market, and the HMG acquisition in our Energy segment augments our client base and service offerings while expanding our presence in the West Coast energy efficiency market. These acquisitions represent important steps in our profitable growth strategy and extend our momentum by focusing resources on our most attractive markets.”


Business Outlook

“As we have said before, we believe TRC is in the right markets at the right time. We are well-positioned to benefit as the ongoing transformation of the U.S. energy industry continues and capital spending patterns normalize in our target markets. We continue to maintain a strong balance sheet and will leverage that to pursue profitable growth both organically and through acquisitions.”


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


Exhibit 99.1

Conference Call Information

The Company will broadcast its financial results conference call today, February 6, 2013 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 may also be accessed by dialing (877) 709-8155 or (201) 689-8881. 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.

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

 
Three Months Ended
 
Six Months Ended
 
December 28,
2012
 
December 30,
2011
 
December 28,
2012
 
December 30,
2011
Gross revenue
$
104,470

 
$
105,378

 
$
212,756

 
$
209,113

Less subcontractor costs and other direct reimbursable charges
29,216

 
31,482

 
62,286

 
61,762

Net service revenue
75,254

 
73,896

 
150,470

 
147,351

Interest income from contractual arrangements
83

 
95

 
128

 
173

Insurance recoverables and other income
913

 
518

 
2,657

 
738

Operating costs and expenses:
 
 
 
 
 
 
 
Cost of services (exclusive of costs shown separately below)
64,564

 
61,173

 
128,250

 
121,335

General and administrative expenses
5,694

 
6,847

 
12,869

 
14,395

Provision for doubtful accounts

 

 

 
365

Depreciation and amortization
1,593

 
1,434

 
3,131

 
2,796

Arena Towers litigation expense (reversal)

 
163

 

 
(11,061
)
Total operating costs and expenses
71,851

 
69,617

 
144,250

 
127,830

Operating income
4,399

 
4,892

 
9,005

 
20,432

Interest expense
(80
)
 
(175
)
 
(192
)
 
(356
)
Income from operations before taxes
4,319

 
4,717

 
8,813

 
20,076

Federal and state income tax (provision) benefit
(215
)
 
206

 
(449
)
 
3,504

Income from operations before equity in earnings
4,104

 
4,923

 
8,364

 
23,580

Equity in earnings from unconsolidated affiliates, net of taxes

 
270

 

 
270

Net income
4,104

 
5,193

 
8,364

 
23,850

Net loss applicable to noncontrolling interest
19

 
18

 
31

 
49

Net income applicable to TRC Companies, Inc.
$
4,123

 
$
5,211

 
$
8,395

 
$
23,899

 
 
 
 
 
 
 
 
Basic earnings per common share
$
0.14

 
$
0.19

 
$
0.29

 
$
0.86

Diluted earnings per common share
$
0.14

 
$
0.18

 
$
0.28

 
$
0.84

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
Basic
28,874

 
27,845

 
28,668

 
27,657

Diluted
29,471

 
28,525

 
29,477

 
28,458



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)
 
December 28,
2012
 
June 30,
2012
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
10,830

 
$
16,561

Accounts receivable, less allowance for doubtful accounts
99,840

 
95,215

Insurance recoverable - environmental remediation
25,456

 
25,744

Restricted investments
6,615

 
4,413

Prepaid expenses and other current assets
12,998

 
12,077

Total current assets
155,739

 
154,010

Property and equipment
54,063

 
53,352

Less accumulated depreciation and amortization
(40,950
)
 
(39,621
)
Property and equipment, net
13,113

 
13,731

Goodwill
24,888

 
24,888

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

 
109

Long-term restricted investments
29,855

 
35,265

Long-term prepaid insurance
32,796

 
34,272

Other assets
12,071

 
12,853

Total assets
$
268,576

 
$
275,128

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Current portion of long-term debt
$
5,676

 
$
1,315

Current portion of capital lease obligations
371

 
267

Accounts payable
26,410

 
30,712

Accrued compensation and benefits
29,422

 
36,292

Deferred revenue
18,377

 
18,236

Environmental remediation liabilities
300

 
422

Other accrued liabilities
28,335

 
30,315

Total current liabilities
108,891

 
117,559

Non-current liabilities:
 
 
 
Long-term debt, net of current portion
994

 
3,860

Capital lease obligations, net of current portion
618

 
462

Income taxes payable and deferred income tax liabilities
626

 
622

Deferred revenue
75,395

 
79,104

Environmental remediation liabilities
5,439

 
5,473

Total liabilities
191,963

 
207,080

Commitments and contingencies
 
 
 
Equity:
 
 
 
Common stock, $.10 par value; 40,000,000 shares authorized, 28,898,252 and 28,894,770 shares issued and outstanding, respectively, at December 28, 2012, and 28,130,702 and 28,127,220 shares issued and outstanding, respectively, at June 30, 2012
2,890

 
2,813

Additional paid-in capital
179,420

 
179,402

Accumulated deficit
(105,285
)
 
(113,680
)
Accumulated other comprehensive loss
(78
)
 
(184
)
Treasury stock, at cost
(33
)
 
(33
)
Total shareholders' equity applicable to TRC Companies, Inc.
76,914

 
68,318

Noncontrolling interest
(301
)
 
(270
)
Total equity
76,613

 
68,048

Total liabilities and equity
$
268,576

 
$
275,128

 
 
 
 

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