TRC Announces First-Quarter Fiscal 2013 Financial Results

Marketwired

LOWELL, MA--(Marketwire - Nov 5, 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 ended September 28, 2012.

Financial Highlights

  Three Months Ended  
  September 28,     September 30,  
(In millions, except per share data) 2012     2011  
Net service revenue(1) $ 75.2     $ 73.5  
Arena Towers litigation reversal (2) $ -     $ (11.2 )
Operating income $ 4.6     $ 15.5  
Federal and state income tax (provision) benefit (3) $ (0.2 )   $ 3.3  
Net income applicable to TRC Companies, Inc. $ 4.3     $ 18.7  
Diluted earnings per common share $ 0.15     $ 0.66  
Diluted weighted-average common shares outstanding   29.4       28.4  
               
(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

"We reported incremental growth and steady profitability in the first quarter of fiscal 2013," said Chairman and Chief Executive Officer Chris Vincze. "Net Service Revenue (NSR) was up 2%, and we achieved operating income of $4.6 million, up 7% excluding last year's litigation reversal."

"Our Energy segment continues to be our top performer with NSR up 25% and profit up 42%. Demand remains strong for electric transmission and distribution engineering services as our utility customers increase investments to modernize or replace outdated infrastructure and enhance energy efficiency performance. Our Energy segment is also benefiting from greater geographic reach as recent office startups are now rapidly expanding our ability to service clients in those areas."

"Our Environmental and Infrastructure segments both experienced a sluggish quarter. NSR was down 6% for both segments, while profit decreased 22% and 20%, respectively. Importantly, however, each segment continued to be profitable at the operating level. Our results are consistent with the overall state of the economy as many clients have delayed or postponed capital programs until there is more clarity surrounding federal policy and the direction of the economy in the new year. The long-term prospects for the infrastructure market are supported by Congress' recent passing of the MAP-21 Federal Transportation Bill, which will provide states with a stable funding source through 2014."

Business Outlook

"TRC's long-term opportunities remain promising with favorable underlying industry trends. We are seeing material capital spending in the energy and power markets where TRC has become a leader in providing integrated professional services. Proposal activity in these areas is strong, although funding commitments for some of these projects continues to be affected by economic and policy factors. In the interim, TRC is focused on enhancing our integrated service offerings -- such as RE Power, Shale Gas and Ports and Pipelines -- where we expect the activity levels to strengthen first. In addition, we are continuing to identify potential acquisition targets to support our geographic and service expansion strategy."

Conference Call Information

The Company will broadcast its financial results conference call today, November 5, 2012 at 5 p.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 Companies, Inc.  
Condensed Consolidated Statements of Operations  
(in thousands, except per share data)  
(Unaudited)  
    Three Months Ended  
    September 28,     September 30,  
    2012     2011  
                 
Gross revenue   $ 108,286     $ 103,735  
  Less subcontractor costs and other direct reimbursable charges     33,070       30,280  
Net service revenue     75,216       73,455  
                 
Interest income from contractual arrangements     45       78  
Insurance recoverables and other income     1,744       220  
                 
Operating costs and expenses:                
  Cost of services (exclusive of costs shown separately below)     63,686       60,162  
  General and administrative expenses     7,175       7,548  
  Provision for doubtful accounts     -       365  
  Depreciation and amortization     1,538       1,362  
  Arena Towers litigation reversal     -       (11,224 )
Total operating costs and expenses     72,399       58,213  
Operating income     4,606       15,540  
 Interest expense     (112 )     (181 )
Income from operations before taxes     4,494       15,359  
 Federal and state income tax (provision) benefit     (234 )     3,298  
Net income     4,260       18,657  
 Net loss applicable to noncontrolling interest     12       31  
Net income applicable to TRC Companies, Inc.     4,272       18,688  
                 
Basic earnings per common share   $ 0.15     $ 0.68  
Diluted earnings per common share   $ 0.15     $ 0.66  
                 
Weighted-average common shares outstanding:                
  Basic     28,460       27,472  
  Diluted     29,439       28,392  
                   
                   
                   
TRC Companies, Inc.  
Condensed Consolidated Balance Sheets  
(in thousands, except share data)  
(Unaudited)  
    September 28,     June 30,  
    2012     2012  
ASSETS            
Current assets:                
  Cash and cash equivalents   $ 14,852     $ 16,561  
  Accounts receivable, less allowance for doubtful accounts     103,667       95,215  
  Insurance recoverable - environmental remediation     26,396       25,744  
  Restricted investments     5,591       4,413  
  Prepaid expenses and other current assets     16,022       12,077  
    Total current assets     166,528       154,010  
                 
  Property and equipment     53,879       53,352  
  Less accumulated depreciation and amortization     (40,172 )     (39,621 )
    Property and equipment, net     13,707       13,731  
Goodwill     24,888       24,888  
Investments in and advances to unconsolidated affiliates and construction joint ventures     118       109  
Long-term restricted investments     32,643       35,265  
Long-term prepaid insurance     33,568       34,272  
Other assets     12,471       12,853  
    Total assets   $ 283,923     $ 275,128  
                 
LIABILITIES AND EQUITY                
Current liabilities:                
  Current portion of long-term debt   $ 4,404     $ 1,315  
  Current portion of capital lease obligations     326       267  
  Accounts payable     28,532       30,712  
  Accrued compensation and benefits     42,542       36,292  
  Deferred revenue     18,844       18,236  
  Environmental remediation liabilities     318       422  
  Other accrued liabilities     30,902       30,315  
    Total current liabilities     125,868       117,559  
Non-current liabilities:                
  Long-term debt, net of current portion     3,652       3,860  
  Capital lease obligations, net of current portion     575       462  
  Income taxes payable and deferred income tax liabilities     624       622  
  Deferred revenue     75,941       79,104  
  Environmental remediation liabilities     5,505       5,473  
    Total liabilities     212,165       207,080  
Commitments and contingencies                
Equity:                
    Common stock, $.10 par value; 40,000,000 shares authorized, 28,727,905 and 28,724,423 shares issued and outstanding, respectively, at September 28, 2012, and 28,130,702 and 28,127,220 shares issued and outstanding, respectively, at June 30, 2012     2,873       2,813  
  Additional paid-in capital     178,687       179,402  
  Accumulated deficit     (109,408 )     (113,680 )
  Accumulated other comprehensive loss     (79 )     (184 )
  Treasury stock, at cost     (33 )     (33 )
    Total shareholders' equity applicable to TRC Companies, Inc.     72,040       68,318  
  Noncontrolling interest     (282 )     (270 )
    Total equity     71,758       68,048  
    Total liabilities and equity   $ 283,923     $ 275,128  
                     
Contact:
Investor
Dennis Walsh
Sharon Merrill
(617) 542-5300
trr@investorrelations.com

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

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