TRC Announces First-Quarter Fiscal 2014 Financial Results

Growth in All Three Segments Drives 8% NSR Increase

Marketwired

LOWELL, MA--(Marketwired - Nov 6, 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 months ended September 27, 2013.

Financial Highlights

       
    Three Months Ended  

(In millions, except per share data)
  September 27,
2013
    September 28,
2012
 
                 
Net service revenue(1)   $ 81.3     $ 75.2  
                 
Insurance recoverables and other income   $ 12.3     $ 1.7  
                 
Operating income   $ 4.3     $ 4.6  
                 
Federal and state income tax provision   $ (1.7 )   $ (0.2 )
                 
Net income applicable to TRC Companies, Inc.   $ 2.5     $ 4.3  
                 
Diluted earnings per common share   $ 0.08     $ 0.15  
                 
Diluted weighted-average common shares outstanding     30.0       29.4  
                 
                 

(1) The Company believes net service revenue (NSR) best reflects the value of services provided and is the most meaningful indicator of revenue performance.

Comments on the Results
"TRC began fiscal 2014 with a strong first quarter highlighted by NSR growth in all segments," said Chris Vincze, Chairman and Chief Executive Officer. "For the first quarter of fiscal 2014, NSR grew by 8%, primarily driven by strength in our Energy and Infrastructure segments.

"NSR growth of 3% in our Environmental segment was affected by an Exit Strategy project cost estimate adjustment, which reduced the segment's NSR growth in the first quarter of fiscal 2014. The adjustment did not impact sector profit, which was up 35%. NSR grew 12% in our Energy segment reflecting increased transmission and distribution activities from our utility clients, however profit decreased 32%, primarily due to acquisition integration related expenses, as well as an estimated cost overrun on a new project. In our Infrastructure segment, increased work on several large transportation design projects and strong project execution drove 12% NSR and 36% profit growth."

Business Outlook
"TRC is well-positioned to capitalize on the long-term growth opportunities across each of our markets. Demand for our services is stable, driven by increased capital spending for electric transmission and distribution activities, energy efficiency initiatives, decommissioning and infrastructure repairs and upgrades. Our strategic relationships with key clients remain strong. New project momentum continues to contribute to our healthy backlog which we expect will grow over the next several quarters. Supported by our strong balance sheet and cash position, we will continue to drive profitable growth both organically and through acquisitions," concluded Vincze.

Conference Call Information

TRC will broadcast its financial results conference call today, November 6, 2013 at 9 a.m. ET. To listen to the live webcast and access the accompanying presentation slides, 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. A webcast replay will be available on the Company's website for approximately 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 and StockTwits 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, 2013, 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 Companies, Inc.  
Condensed Consolidated Statements of Operations  
(in thousands, except per share data)  
(Unaudited)  
   
    Three Months Ended  
    September 27,
2013
    September 28,
2012
 
                 
Gross revenue   $ 106,574     $ 108,286  
  Less subcontractor costs and other direct reimbursable charges     25,322       33,070  
Net service revenue     81,252       75,216  
                 
Interest income from contractual arrangements     47       45  
Insurance recoverables and other income     12,300       1,744  
                 
Operating costs and expenses:                
  Cost of services (exclusive of costs shown separately below)     78,398       63,686  
  General and administrative expenses     8,771       7,175  
  Depreciation and amortization     2,176       1,538  
Total operating costs and expenses     89,345       72,399  
Operating income     4,254       4,606  
Interest expense     (92 )     (112 )
Income from operations before taxes     4,162       4,494  
Federal and state income tax provision     (1,702 )     (234 )
Net income     2,460       4,260  
Net loss applicable to noncontrolling interest     27       12  
Net income applicable to TRC Companies, Inc.   $ 2,487     $ 4,272  
                 
Basic earnings per common share   $ 0.08     $ 0.15  
Diluted earnings per common share   $ 0.08     $ 0.15  
                 
Weighted-average common shares outstanding:                
  Basic     29,298       28,460  
  Diluted     30,027       29,439  
                 
                 
   
TRC Companies, Inc.  
Condensed Consolidated Balance Sheets  
(in thousands, except share data)  
(Unaudited)  
   
 
 
 
 
September 27,
2013
 
 
 
 
June 30,
2013
 
 
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 21,988     $ 18,136  
  Accounts receivable, less allowance for doubtful accounts     112,721       109,320  
  Insurance recoverable - environmental remediation     37,747       26,305  
  Restricted investments     5,632       5,582  
  Deferred income tax assets     11,979       12,518  
  Income taxes refundable     3,980       1,444  
  Prepaid expenses and other current assets     16,205       12,045  
    Total current assets     210,252       185,350  
                 
Property and equipment     58,343       57,005  
  Less accumulated depreciation and amortization     (44,327 )     (43,171 )
    Property and equipment, net     14,016       13,834  
Goodwill     30,977       28,797  
Investments in and advances to unconsolidated affiliates and construction joint ventures     109       113  
Long-term deferred income tax assets     6,328       6,601  
Long-term restricted investments     25,536       27,580  
Long-term prepaid insurance     30,725       31,497  
Other assets     15,226       13,992  
    Total assets   $ 333,169     $ 307,764  
                 
LIABILITIES AND EQUITY                
Current liabilities:                
  Current portion of long-term debt   $ 8,325     $ 4,745  
  Current portion of capital lease obligations     524       568  
  Accounts payable     27,444       32,238  
  Accrued compensation and benefits     41,717       34,040  
  Deferred revenue     18,289       20,094  
  Environmental remediation liabilities     134       291  
  Other accrued liabilities     42,565       31,737  
    Total current liabilities     138,998       123,713  
Non-current liabilities:                
  Long-term debt, net of current portion     366       568  
  Capital lease obligations, net of current portion     630       789  
  Income taxes payable and deferred income tax liabilities     531       310  
  Deferred revenue     74,014       68,514  
  Environmental remediation liabilities     6,479       6,973  
    Total liabilities     221,018       200,867  
Commitments and contingencies                
Equity:                
    Common stock, $.10 par value; 40,000,000 shares authorized, 29,534,240 and 29,530,758 shares issued and outstanding, respectively, at September 27, 2013, and 29,053,301 and 29,049,819 shares issued and outstanding, respectively, at June 30, 2013     2,953       2,905  
  Additional paid-in capital     184,589       181,874  
  Accumulated deficit     (74,918 )     (77,405 )
  Accumulated other comprehensive loss     (78 )     (109 )
  Treasury stock, at cost     (33 )     (33 )
    Total shareholders' equity applicable to TRC Companies, Inc.     112,513       107,232  
  Noncontrolling interest     (362 )     (335 )
    Total equity     112,151       106,897  
    Total liabilities and equity   $ 333,169     $ 307,764  
                 
                 
Contact:
Investor
Dennis Walsh
Vice President
Sharon Merrill
(617) 542-5300
trr@investorrelations.com

Company
Thomas W. Bennet, Jr.
CFO
(978) 970-5600
tbennet@trcsolutions.com

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