TRC COMPANIES INC /DE/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - May 8, 2013

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8-K - 8-K - TRC COMPANIES INC /DE/trcform8-kq3f13.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 2013 Financial Results

11% Revenue Growth Driven by Acquisitions and
Continued Expansion in Utility Markets
Lowell, MA, May 8, 2013 - TRC Companies, Inc. (NYSE: TRR), a recognized leader in engineering, consulting and construction management services to the energy, environmental and infrastructure markets, announced today financial results for the fiscal three and nine months ended March 29, 2013.

Financial Highlights
 
Three Months Ended
 
Nine Months Ended
 
March 29,
 
March 30,
 
March 29,
 
March 30,
(In millions, except per share data)
2012
 
2011
 
2012
 
2011
 
 
 
 
 
 
 
 
Net service revenue (1)
$
83.0

 
$
75.1

 
$
233.5

 
$
222.5

Arena Towers litigation reversal (2)
$
—

 
$
—

 
$
—

 
$
(11.1
)
Operating income
$
3.4

 
$
3.5

 
$
12.4

 
$
23.9

Federal and state income tax (provision) benefit (3)
$
(0.2
)
 
$
0.6

 
$
(0.7
)
 
$
4.1

Net income applicable to TRC Companies, Inc.
$
3.1

 
$
3.9

 
$
11.5

 
$
27.8

Diluted earnings per common share
$
0.10

 
$
0.13

 
$
0.39

 
$
0.97

Diluted weighted-average common shares outstanding
29.7

 
28.9

 
29.5

 
28.6


(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.
(3) The Company received approval of a federal tax settlement resulting in an income tax benefit in the first quarter of fiscal 2012.



Comments on the Results

“TRC had a strong third quarter with solid top line contributions from all three segments,” said Chairman and Chief Executive Officer, Chris Vincze. “Overall Net Service Revenue (NSR) was up 11% compared

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


with the same quarter last year.”

“NSR growth was fairly balanced with two-thirds coming from organic sources, while acquisitions provided the other third. Strong demand for electric distribution services and further expansion into the mid-Atlantic region led to a 16% increase in Energy segment NSR, while in the Environmental segment, NSR increased 7% due to increased utilization on large remediation projects. Profit in these segments was lower than the same quarter of the prior year, primarily due to increased costs on several fixed price projects, acquisition integration costs, and growth-related staffing costs. Infrastructure segment NSR was up 14% and profit was sharply higher compared with the same period of the prior year, largely due to improving market conditions and initiatives focused on higher margin work.”

“We continued to benefit from our efficient cost structure. G&A expenses were flat in the quarter compared with the prior year, while the ratio of G&A costs to NSR decreased to 9.7% from 10.8% in the prior year period. The income tax expense in the quarter reflects continued federal alternative minimum tax and state income tax costs, compared with a tax benefit of $0.02 per diluted share in the prior year period.”

Recent Developments

TRC also announced today that it has acquired the Covina, California operations of Ocampo-Esta Corporation, a power delivery engineering company, thus increasing its presence in the very active southern California utility market. “Ocampo-Esta has an outstanding reputation, and we welcome their talented staff of professionals to TRC. This acquisition, combined with the two acquisitions we closed last quarter - the GE Air Emissions Testing business and the Sacramento-based energy efficiency consulting firm Heschong-Mahone Group - furthers our growth strategy and expands our geographic presence and service offerings, particularly to the utility industry.”

Business Outlook

“We are optimistic about the long-term prospects for our markets and believe we are uniquely positioned to serve them. Our NSR backlog grew 1.2% to $245 million compared with the third quarter of the prior year and was up sequentially by $20 million or 8.9% over the second quarter of this fiscal year. The demand for electric utility and energy efficiency services will continue. America's transportation infrastructure is in critical need of upgrade and repair and we are beginning to see signs of recovery in the environmental marketplace. Our strong financial position, including our new revolving credit facility, will serve our long-term strategy, allowing us to focus on our clients' needs and seek out growth opportunities,” concluded Vincze.

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



Conference Call Information

The Company will broadcast its financial results conference call today, May 8, 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
 
Nine Months Ended
 
March 29,
2013
 
March 30,
2012
 
March 29,
2013
 
March 30,
2012
Gross revenue
$
109,806

 
$
101,118

 
$
322,562

 
$
310,231

Less subcontractor costs and other direct reimbursable charges
26,762

 
25,983

 
89,048

 
87,745

Net service revenue
83,044

 
75,135

 
233,514

 
222,486

Interest income from contractual arrangements
58

 
56

 
186

 
229

Insurance recoverables and other income
1,068

 
554

 
3,725

 
1,292

Operating costs and expenses:
 
 
 
 
 
 
 
Cost of services (exclusive of costs shown separately below)
70,446

 
62,910

 
198,696

 
184,245

General and administrative expenses
8,096

 
8,087

 
20,965

 
22,482

Provision for doubtful accounts
408

 
—

 
408

 
365

Depreciation and amortization
1,828

 
1,231

 
4,959

 
4,027

Arena Towers litigation reversal
—

 
—

 
—

 
(11,061
)
Total operating costs and expenses
80,778

 
72,228

 
225,028

 
200,058

Operating income
3,392

 
3,517

 
12,397

 
23,949

Interest expense
(78
)
 
(228
)
 
(270
)
 
(584
)
Income from operations before taxes and equity in earnings
3,314

 
3,289

 
12,127

 
23,365

Federal and state income tax (provision) benefit
(231
)
 
571

 
(680
)
 
4,075

Income from operations before equity in earnings
3,083

 
3,860

 
11,447

 
27,440

Equity in earnings from unconsolidated affiliates, net of taxes
—

 
—

 
—

 
270

Net income
3,083

 
3,860

 
11,447

 
27,710

Net loss applicable to noncontrolling interest
18

 
21

 
49

 
70

Net income applicable to TRC Companies, Inc.
$
3,101

 
$
3,881

 
$
11,496

 
$
27,780

 
 
 
 
 
 
 
 
Basic earnings per common share
$
0.11

 
$
0.14

 
$
0.40

 
$
1.00

Diluted earnings per common share
$
0.10

 
$
0.13

 
$
0.39

 
$
0.97

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
Basic
28,998

 
27,887

 
28,778

 
27,733

Diluted
29,654

 
28,943

 
29,547

 
28,619



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 29,
2013
 
June 30,
2012
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
9,997

 
$
16,561

Accounts receivable, less allowance for doubtful accounts
107,951

 
95,215

Insurance recoverable - environmental remediation
25,899

 
25,744

Restricted investments
6,208

 
4,413

Prepaid expenses and other current assets
13,714

 
12,077

Total current assets
163,769

 
154,010

Property and equipment
55,781

 
53,352

Less accumulated depreciation and amortization
(41,989
)
 
(39,621
)
Property and equipment, net
13,792

 
13,731

Goodwill
28,360

 
24,888

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

 
109

Long-term restricted investments
28,654

 
35,265

Long-term prepaid insurance
32,033

 
34,272

Other assets
14,509

 
12,853

Total assets
$
281,226

 
$
275,128

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Current portion of long-term debt
$
5,521

 
$
1,315

Current portion of capital lease obligations
560

 
267

Accounts payable
29,469

 
30,712

Accrued compensation and benefits
34,963

 
36,292

Deferred revenue
19,573

 
18,236

Environmental remediation liabilities
290

 
422

Other accrued liabilities
31,158

 
30,315

Total current liabilities
121,534

 
117,559

Non-current liabilities:
 
 
 
Long-term debt, net of current portion
767

 
3,860

Capital lease obligations, net of current portion
956

 
462

Income taxes payable and deferred income tax liabilities
777

 
622

Deferred revenue
70,548

 
79,104

Environmental remediation liabilities
5,421

 
5,473

Total liabilities
200,003

 
207,080

Commitments and contingencies
 
 
 
Equity:
 
 
 
Common stock, $.10 par value; 40,000,000 shares authorized, 29,025,522 and 29,022,040 shares issued and outstanding, respectively, at March 29, 2013, and 28,130,702 and 28,127,220 shares issued and outstanding, respectively, at June 30, 2012
2,903

 
2,813

Additional paid-in capital
180,812

 
179,402

Accumulated deficit
(102,184
)
 
(113,680
)
Accumulated other comprehensive income (loss)
44

 
(184
)
Treasury stock, at cost
(33
)
 
(33
)
Total shareholders' equity applicable to TRC Companies, Inc.
81,542

 
68,318

Noncontrolling interest
(319
)
 
(270
)
Total equity
81,223

 
68,048

Total liabilities and equity
$
281,226

 
$
275,128

 
 
 
 

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

TRC COMPANIES INC /DE/ Reports