SOURCE: TRC Companies, Inc.

TRC Companies, Inc.

September 12, 2012 07:30 ET

TRC Announces Fourth-Quarter and Fiscal Year 2012 Financial Results

Fourth-Quarter Net Service Revenue Grows 13%; Company Achieves Full-Year NSR Growth of 23% to More Than $300 Million

LOWELL, MA--(Marketwire - Sep 12, 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 and year ended June 30, 2012.

Financial Highlights

             
             
    Three Months Ended     Year Ended  
    June 30,     June 30,     June 30,     June 30,  
(In millions, except per share data)   2012     2011     2012     2011  
                                 
Net service revenue(1)   $ 79.3     $ 70.3     $ 301.8     $ 245.9  
                                 
Arena Towers litigation expense (reversal) (2)   $ -     $ 17.3     $ (11.1 )   $ 17.3  
                                 
Operating income (loss)   $ 6.0     $ (15.0 )   $ 30.0     $ (7.6 )
                                 
Federal and state income tax (provision) benefit   $ (0.1 )   $ (0.4 )   $ 3.9     $ (1.1 )
                                 
Accretion charges on preferred stock   $ -     $ -     $ -     $ (7.3 )
                                 
Net income (loss) applicable to TRC Companies, Inc.'s common shareholders   $ 5.8     $ (15.5 )   $ 33.6     $ (16.6 )
                                 
Diluted earnings (loss) per common share   $ 0.20     $ (0.57 )   $ 1.16     $ (0.69 )
                                 
Diluted weighted-average common shares outstanding     29.4       27.3       28.8       24.1  
                                 
(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 $11.1 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 litigation expense of $17.3 million related to the verdict.
 
 

Comments on the Results
"Fiscal 2012 was a milestone year for TRC," said Chairman and Chief Executive Officer Chris Vincze. "We concluded the year with solid fourth-quarter results, generating NSR growth of 13% and $5.8 million of net income as we executed on our strategy to profitably grow the business and strengthen TRC as a leader in the energy and power industries."

"Our Energy segment has been a steady contributor to TRC's overall growth. In the fourth quarter, NSR for this segment increased 27% and profit was up 31% fueled by our utility clients' continued investment in their electric transmission and distribution systems. A renewed focus on capital programs for electric system reliability and energy efficiency, as well as our expanded geographic presence, are also contributing to our success in Energy."

"During the quarter, NSR for the Environmental segment was up 13%, and profit increased 55% as we benefited from the expanded geographic reach of acquired businesses. Organic growth in this segment was constrained by overall federal policy uncertainty, but opportunities are increasing related to regional shale-gas and other developments in the power/energy industry."

"Throughout fiscal 2012, government funding constraints at all levels have challenged our Infrastructure segment. In the fourth quarter, NSR decreased 8% while profit was 12% lower. Nevertheless, Infrastructure finished the year with 3% NSR growth and 33% profit growth." 

Business Outlook
"We believe the outlook for each of TRC's segments is promising. Capital planning in the energy and power markets should drive demand for TRC's energy and environmental services once federal policy is clarified and stabilized. Some improvement in the infrastructure market should occur over the next few years with the recent passage of the MAP-21 Federal Transportation Bill, and long-term prospects remain strong due to urban population growth and the need to fix our nation's aging infrastructure." 

"Our results in fiscal 2012 demonstrate that TRC is well positioned for further margin improvement and continued growth. We have the financial flexibility to execute our two-pronged profitable growth strategy. The first element of our strategy focuses on organic growth through national programs centered on key accounts and service bundling, such as our RE Power offering. The second element is targeting acquisitions that enhance our portfolio of services and continue geographic expansion, particularly in our Energy and Environmental segments. We are encouraged by our prospects as we enter fiscal 2013."

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 may also 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 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.  
Consolidated Statements of Operations  
(in thousands, except per share data)  
(Unaudited)  
   
    Three Months Ended     Year Ended  
    June 30,     June 30,     June 30,     June 30,  
    2012     2011     2012     2011  
Gross revenue   $ 109,728     $ 94,029     $ 419,959     $ 333,209  
  Less subcontractor costs and other direct reimbursable charges     30,434       23,779       118,179       87,298  
Net service revenue     79,294       70,250       301,780       245,911  
                                 
Interest income from contractual arrangements     66       103       295       411  
Insurance recoverables and other income     (678 )     (4,875 )     614       (1,573 )
                                 
Operating costs and expenses:                                
  Cost of services (exclusive of costs shown separately below)     62,261       55,064       246,506       202,265  
  General and administrative expenses     8,543       6,723       31,025       26,286  
  Provision for doubtful accounts     390       141       755       1,763  
  Depreciation and amortization     1,481       1,243       5,508       4,729  
  Arena Towers litigation expense (reversal)     -       17,278       (11,061 )     17,278  
Total operating costs and expenses     72,675       80,449       272,733       252,321  
Operating income (loss)     6,007       (14,971 )     29,956       (7,572 )
Interest expense     (84 )     (173 )     (668 )     (761 )
Income (loss) from operations before taxes and equity in earnings    
5,923
     
(15,144
)    
29,288
     
(8,333
)
Federal and state income tax (provision) benefit     (145 )     (425 )     3,930       (1,127 )
Income (loss) from operations before equity in earnings     5,778       (15,569 )     33,218       (9,460 )
Equity in earnings from unconsolidated affiliates, net of taxes     -       20       270       30  
Net income (loss)     5,778       (15,549 )     33,488       (9,430 )
Net loss applicable to noncontrolling interest     17       19       87       58  
Net income (loss) applicable to TRC Companies, Inc.     5,795       (15,530 )     33,575       (9,372 )
Accretion charges on preferred stock     -       -       -       (7,261 )
Net income (loss) applicable to TRC Companies, Inc.'s common shareholders   $ 5,795     $ (15,530 )   $ 33,575     $ (16,633 )
                                 
Basic earnings (loss) per common share   $ 0.21     $ (0.57 )   $ 1.21     $ (0.69 )
Diluted earnings (loss) per common share   $ 0.20     $ (0.57 )   $ 1.16     $ (0.69 )
                                 
Weighted-average common shares outstanding:                                
  Basic     27,921       27,284       27,781       24,107  
  Diluted     29,433       27,284       28,822       24,107  
                                   
   
TRC Companies, Inc.  
Consolidated Balance Sheets  
(in thousands, except share data)  
(Unaudited)  
    June 30,     June 30,  
    2012     2011  
ASSETS  
Current assets:                
  Cash and cash equivalents   $ 16,561     $ 10,829  
  Accounts receivable, less allowance for doubtful accounts     95,215       89,258  
  Insurance recoverable - environmental remediation     25,744       30,827  
  Restricted investments     4,413       12,413  
  Prepaid expenses and other current assets     11,119       9,878  
  Income taxes refundable     958       209  
    Total current assets     154,010       153,414  
Property and equipment:                
  Land and building     480       480  
  Equipment, furniture and fixtures     47,819       43,093  
  Leasehold improvements     5,053       4,902  
      53,352       48,475  
  Less accumulated depreciation and amortization     (39,621 )     (36,825 )
    Property and equipment, net     13,731       11,650  
Goodwill     24,888       20,886  
Investments in and advances to unconsolidated affiliates and construction joint ventures     109       111  
Long-term restricted investments     35,265       38,753  
Long-term prepaid insurance     34,272       37,410  
Other assets     12,853       13,836  
    Total assets   $ 275,128     $ 276,060  
                 
LIABILITIES AND EQUITY  
Current liabilities:                
  Current portion of long-term debt   $ 1,315     $ 3,139  
  Current portion of capital lease obligations     267       -  
  Accounts payable     30,712       26,510  
  Accrued compensation and benefits     36,292       28,252  
  Deferred revenue     18,236       22,709  
  Environmental remediation liabilities     422       505  
  Other accrued liabilities     30,315       59,718  
    Total current liabilities     117,559       140,833  
Non-current liabilities:                
  Long-term debt, net of current portion     3,860       6,037  
  Capital lease obligations, net of current portion     462       -  
  Income taxes payable and deferred income tax liabilities     622       4,912  
  Deferred revenue     79,104       88,865  
  Environmental remediation liabilities     5,473       5,741  
    Total liabilities     207,080       246,388  
Commitments and contingencies                
Equity:                
    Common stock, $.10 par value; 40,000,000 shares authorized, 28,130,702 and 28,127,220 shares issued and outstanding, respectively, at June 30, 2012, and 27,303,774 and 27,300,292 shares issued and outstanding, respectively, at June 30, 2011    

2,813
     

2,730
 
  Additional paid-in capital     179,402       173,984  
  Accumulated deficit     (113,680 )     (147,255 )
  Accumulated other comprehensive (loss) income     (184 )     429  
  Treasury stock, at cost     (33 )     (33 )
    Total shareholders' equity applicable to TRC Companies, Inc.     68,318       29,855  
  Noncontrolling interest     (270 )     (183 )
    Total equity     68,048       29,672  
    Total liabilities and equity   $ 275,128     $ 276,060  
                 
                 

Contact Information