TRC Announces First-Quarter Fiscal 2010 Financial Results

• Press Release
• Source: TRC Companies, Inc.
• On 7:00 am EST, Monday November 9, 2009

LOWELL, Mass.--(BUSINESS WIRE)--TRC Companies, Inc. (NYSE: TRR - News), a recognized leader in engineering, consulting, and construction management services to the energy, environmental and infrastructure markets, today announced financial results for its fiscal first quarter ended September 25, 2009.

Related Quotes

Symbol	Price	Change
TRR	2.99	-0.01

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First-Quarter Results

*The Company believes net service revenue (NSR), rather than gross revenue, best reflects the value of services provided to its customers and is the most meaningful indicator of TRC’s revenue performance.

Comments on the Results

“Our first-quarter results reflect the combination of the delayed effects of the recession in our key market segments and a reduction of large project revenue due to capital constraints that we have since addressed,” said Chairman and Chief Executive Officer Chris Vincze. “Project cycles in our industry are typically six to twelve months or more in length. We have seen a decrease in both backlog and near-term revenue resulting from the interruption of proposals and project awards that occurred at the height of the financial crisis in late calendar year 2008 and early 2009. At the same time, our lack of bonding capacity during the past two years hampered our ability to win large projects in our energy and environmental segments. Our decrease in NSR this quarter reflects these factors as well as lower year-over-year billable headcount stemming from our restructuring actions.”

“With the additional capital provided by the preferred stock issuance we completed in June, we now have secured an adequate bonding line. However, we believe the residual effects of insufficient bonding capacity in fiscal 2007 and 2008 may have negatively impacted our current project backlog. While near-term contributions from engineer, procure and construct (EPC) projects have been limited, we are benefiting from an increase in demand for our energy efficiency program management services. Within our environmental segment, we experienced the wind-down of several large environmental compliance projects in the first quarter, and we revised cost-to-complete estimates on certain Exit Strategy projects.”

“The restructuring actions we took within our infrastructure segment in fiscal 2009 are proving to be effective, as that business achieved its performance targets for the first quarter. We also experienced a seasonal boost within the infrastructure segment as state and local authorities pushed to complete weather-sensitive projects during the summer months.”

“We continued to pursue our cost reduction and efficiency initiatives in the first quarter. Through our three-year turnaround plan, we have streamlined our entire organization and steadily lowered both our fixed and variable cost structures. We experienced the first full quarter of those comprehensive efforts which resulted in a decline in our general and administrative expenses of 23 percent year-over-year, nearly double the rate of decline in our NSR. As a result, we managed to achieve a small operating profit for the quarter and concluded the fiscal first quarter with a healthy balance sheet.”

Business Outlook

“The near-term outlook for growth in our primary markets remains challenging. Larger scale projects that were delayed at the peak of the recession have been replaced with smaller, competitively bid projects. To fill the resulting gap in our revenue stream, we developed a strategy to help stimulate new contract award momentum and generate near-term NSR. Central to that strategy, we have launched an integrated national sales and marketing communications platform based on two primary missions. First, we are systematically and aggressively targeting opportunities within our top national accounts to cross-sell our services and build stronger client relationships. Second, we are bundling our service offerings in order to provide customers with innovative, single solutions to larger, more complex issues. Recently, we introduced our second bundled offering, Building RX, as a follow up to our successful RE Power product. The initial market response to these offerings has been decidedly positive. We believe our national sales platform approach has the potential to drive revenue in the near term.”

“Our long-term prospects remain strong as our core markets have significant upside potential. We expect our three segments to be primary beneficiaries of funding from major private capital markets, U.S. government policies and federal stimulus monies over the long-term. We are starting to see the initial flow of policy driven stimulus funding being released into the energy related markets. Through the American Recovery and Reinvestment Act of 2009 (ARRA), energy efficiency project activity is picking up considerably. Also in Energy, the bid-and-proposal process for several deferred utility projects has resumed, however the procurement process typically lasts several months until contact awards are finalized. As a result, we do not anticipate meaningful contributions to revenue from any new utility project and EPC awards until late fiscal 2010 or early fiscal 2011.”

“Going forward, TRC is positioned to capitalize on the eventual rebound in its core markets. In the meantime, we will continue to seek opportunities to further optimize our cost structure and maintain our margins. As we weather this difficult period, we remain focused on (1) improving margins and generating positive cash flow, (2) achieving profitable growth in our service lines and (3) attracting and retaining top talent,” Vincze concluded.

Conference Call Information

The Company will broadcast its first-quarter fiscal 2010 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) 407-5790 or (201) 689-8328 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.

About TRC

TRC creates and implements sophisticated and innovative solutions to the challenges facing America’s environmental, energy, and infrastructure markets. The Company also is a leading provider of engineering, consulting, and construction management services to commercial and government customers across the country. For more information, visit TRC’s website at www.TRCsolutions.com.

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 our future expectations, contain projections of our future results of operations or of our financial condition, or state other "forward-looking" information. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our 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, including potential payments related to our ongoing IRS audit, if not resolved successfully; regulatory uncertainty; the availability of funding for government projects; the level of demand for our 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 additional discussion in our Annual Report on Form 10-K for the fiscal year ended June 30, 2009, Quarterly Reports on Form 10-Q, and other factors detailed from time to time in our other filings with the Securities and Exchange Commission.

Investor Contact:
Sharon Merrill Associates
617-542-5300
trr@investorrelations.com
or
Company Contact:
TRC Companies, Inc.
Thomas W. Bennet, Jr., CFO, 978-970-5600
tbennet@trcsolutions.com