LOWELL, MA
-- (Marketwire)
-- 05/09/12
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 three and nine month periods ended March 30, 2012.
Financial Highlights
Three Months Ended Nine Months Ended
--------------------- ----------------------
(In millions, except per share
data) March 30, March 25, March 30, March 25,
2012 2011 2012 2011
---------- ---------- ---------- ----------
Net service revenue(1) $ 75.1 $ 57.7 $ 222.5 $ 175.7
Arena Towers litigation
expense (reversal) (2) $ - $ - $ (11.1) $ -
Operating income $ 3.5 $ 1.1 $ 23.9 $ 7.4
Federal and state income tax
benefit (provision) $ 0.6 $ 0.0 $ 4.1 $ (0.7)
Accretion charges on preferred
stock $ - $ - $ - $ (7.3)
Net income (loss) applicable
to TRC Companies, Inc.'s
common shareholders $ 3.9 $ 1.0 $ 27.8 $ (1.1)
Diluted earnings (loss) per
common share $ 0.13 $ 0.03 $ 0.97 $ (0.05)
Diluted weighted-average
common shares outstanding 28.9 27.9 28.6 23.0
(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. A judgment was entered in
the case on October 10, 2011, and on January 3, 2012 the Company paid
$8.7 million in full satisfaction of the judgment and interest. In the
fourth quarter of fiscal 2011 the Company had recorded a litigation
accrual of $17.3 million related to the verdict.
Comments on Fiscal Third-Quarter Results
"In the third quarter, we delivered another solid performance, growing net service revenue (NSR) by 30% and more than tripling our operating income," said Chairman and Chief Executive Officer Chris Vincze. "The revenue increase is primarily the result of executing our organic growth strategy in the Energy segment, combined with contributions from our recent acquisitions in the Environmental segment. In addition, our ongoing margin improvement initiatives are proving to be successful -- resulting in enhanced operating margins in the quarter."
"TRC's Energy segment continues to be our largest contributor to growth. For the quarter, NSR for this segment was up 40%, and segment profit increased 57%. Demand in this segment has strengthened as utilities have enhanced capital investments to upgrade their electrical transmission and distribution systems. We also continue to see healthy levels of activity in the energy efficiency related markets."
"The acquisitions we have made in our Environmental segment are contributing meaningfully to our overall results. NSR for this segment grew 30%, with a large majority of that growth coming from acquisitions. Higher project volume and improvements to our cost structure resulted in an impressive 81% increase in segment profit."
"Infrastructure segment NSR for the quarter was up 8% despite the headwinds presented by the lack of a federal transportation bill and tight state and municipal funds. Part of our successful strategy for this segment has been to focus on TRC niche markets, such as construction engineering inspection, where TRC provides cost-effective services in high volume for many state transportation departments. In addition to the NSR growth, improved project execution across the segment and a lower expense structure translated into a 57% increase in segment profit for the third quarter."
Business Outlook
"The long-term outlook for all three of TRC's operating segments remains promising. In the near-term, we will benefit from the increasing demand for our Energy services, while the Environmental and Infrastructure markets are expected to regain momentum in the mid- to longer-term. The nation's focus on developing more efficient and cleaner power generation sources, as well as renewable energy initiatives, will create material opportunities for our Energy segment. In our Environmental segment, TRC has the capabilities to support all phases of the development of the natural gas markets. Two years ago, we launched our shale initiative to better capitalize on our multifaceted expertise in that market. We will continue to focus on profitable growth for our Infrastructure segment through organic growth initiatives, cross-selling opportunities and margin improvement."
"Overall, TRC has created a highly scalable business model that enables us to pursue strategic niche acquisitions while continuing to invest in internal growth. We have minimal long-term debt and a healthy balance sheet, which provides us with the financial flexibility to execute both elements of our growth strategy. We remain confident that our unique blend of specialized services, talented staff of professionals and reputation for excellence will continue to differentiate TRC in our markets. As the business and economic environments gradually improve, we are optimistic about achieving our goal of delivering consistent profitable growth."
Conference Call Information
The Company will broadcast its 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) 709-8155 or (201) 689-8881 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 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 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; 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; 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, 2011, 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 Nine Months Ended
---------------------- ----------------------
March 30, March 25, March 30, March 25,
2012 2011 2012 2011
---------- ---------- ---------- ----------
Gross revenue $ 101,118 $ 76,071 $ 310,231 $ 239,180
Less subcontractor costs
and other direct
reimbursable charges 25,983 18,323 87,745 63,519
---------- ---------- ---------- ----------
Net service revenue 75,135 57,748 222,486 175,661
---------- ---------- ---------- ----------
Interest income from
contractual arrangements 56 95 229 308
Insurance recoverables and
other income 554 392 1,292 3,302
Operating costs and
expenses:
Cost of services
(exclusive of costs shown
separately below) 62,910 48,912 184,245 147,201
General and administrative
expenses 8,087 6,713 22,482 19,563
Provision for doubtful
accounts - 449 365 1,622
Depreciation and
amortization 1,231 1,025 4,027 3,486
Arena Towers litigation
expense (reversal) - - (11,061) -
---------- ---------- ---------- ----------
Total operating costs and
expenses 72,228 57,099 200,058 171,872
---------- ---------- ---------- ----------
Operating income 3,517 1,136 23,949 7,399
Interest expense (228) (173) (584) (588)
---------- ---------- ---------- ----------
Income from operations
before taxes and equity in
earnings 3,289 963 23,365 6,811
Federal and state income tax
benefit (provision) 571 (16) 4,075 (702)
---------- ---------- ---------- ----------
Income from operations
before equity in earnings 3,860 947 27,440 6,109
Equity in earnings from
unconsolidated affiliates,
net of taxes - - 270 10
---------- ---------- ---------- ----------
Net income 3,860 947 27,710 6,119
Net loss applicable to
noncontrolling interest 21 5 70 39
---------- ---------- ---------- ----------
Net income applicable to TRC
Companies, Inc. 3,881 952 27,780 6,158
Accretion charges on
preferred stock - - - (7,261)
---------- ---------- ---------- ----------
Net income (loss) applicable
to TRC Companies, Inc.'s
common shareholders $ 3,881 $ 952 $ 27,780 $ (1,103)
========== ========== ========== ==========
Basic earnings (loss) per
common share $ 0.14 $ 0.04 $ 1.00 $ (0.05)
========== ========== ========== ==========
Diluted earnings (loss) per
common share $ 0.13 $ 0.03 $ 0.97 $ (0.05)
========== ========== ========== ==========
Weighted-average common
shares outstanding:
Basic 27,887 27,190 27,733 22,957
========== ========== ========== ==========
Diluted 28,943 27,921 28,619 22,957
========== ========== ========== ==========
TRC Companies, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
March 30, June 30,
2012 2011
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 13,270 $ 10,829
Accounts receivable, less allowance for doubtful
accounts 91,410 89,258
Insurance recoverable - environmental remediation 27,232 30,827
Restricted investments 6,755 12,413
Prepaid expenses and other current assets 13,891 10,087
---------- ----------
Total current assets 152,558 153,414
---------- ----------
Property and equipment 52,304 48,475
Less accumulated depreciation and amortization (38,685) (36,825)
---------- ----------
Property and equipment, net 13,619 11,650
---------- ----------
Goodwill 24,888 20,886
Investments in and advances to unconsolidated
affiliates and construction joint ventures 114 111
Long-term restricted investments 34,838 38,753
Long-term prepaid insurance 35,056 37,410
Other assets 14,677 13,836
---------- ----------
Total assets $ 275,750 $ 276,060
========== ==========
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 6,383 $ 3,139
Accounts payable 25,110 26,510
Accrued compensation and benefits 35,488 28,252
Deferred revenue 16,650 22,709
Environmental remediation liabilities 475 505
Other accrued liabilities 37,478 59,718
---------- ----------
Total current liabilities 121,584 140,833
---------- ----------
Non-current liabilities:
Long-term debt, net of current portion 4,162 6,037
Income taxes payable 109 4,912
Deferred revenue 83,513 88,865
Environmental remediation liabilities 5,450 5,741
---------- ----------
Total liabilities 214,818 246,388
---------- ----------
Commitments and contingencies
Equity:
Common stock, $.10 par value; 40,000,000 shares
authorized, 27,910,904 and 27,907,422 shares
issued and outstanding, respectively, at March
30, 2012, and 27,303,774 and 27,300,292 shares
issued and outstanding, respectively, at June
30, 2011 2,791 2,730
Additional paid-in capital 177,907 173,984
Accumulated deficit (119,475) (147,255)
Accumulated other comprehensive (loss) income (5) 429
Treasury stock, at cost (33) (33)
---------- ----------
Total shareholders' equity applicable to TRC
Companies, Inc. 61,185 29,855
Noncontrolling interest (253) (183)
---------- ----------
Total equity 60,932 29,672
---------- ----------
Total liabilities and equity $ 275,750 $ 276,060
========== ==========
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Investor Contact:
Dennis Walsh
Sharon Merrill
(617) 542-5300
trr@investorrelations.com
Company Contact:
Thomas W. Bennet, Jr.
CFO
(978) 970-5600
tbennet@trcsolutions.com
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