SOURCE: TRC Companies, Inc.

TRC Companies, Inc.

September 09, 2015 07:00 ET

TRC Announces Fourth-Quarter Fiscal 2015 Financial Results

Net Service Revenue Up 21% and Net Income Up 34% From Prior Year Fourth Quarter

LOWELL, MA--(Marketwired - Sep 9, 2015) - 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 fourth quarter and year ended June 30, 2015.

Financial Highlights

    Three Months Ended       Year Ended    
(In millions, except per share data)   June 30,
2015
  June 30,
2014
  %
Change
  June 30,
2015
  June 30,
2014
  %
Change
Net service revenue(1)   $ 114.6   $ 94.5   21%   $ 408.0   $ 355.0   15%
Operating income   $ 10.7   $ 9.0   19%   $ 30.7   $ 20.9   47%
Net income applicable to TRC Companies, Inc.   $ 6.8   $ 5.0   34%   $ 19.4   $ 12.1   61%
Diluted earnings per common share   $ 0.22   $ 0.17   29%   $ 0.63   $ 0.40   58%
Diluted weighted-average common shares outstanding     31.2     30.3         30.7     30.1    
                                 
  (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 completed a solid year with strong performance in each of our segments during the fourth quarter," said Chris Vincze, Chairman and Chief Executive Officer. "Overall NSR, operating income and net income were all up significantly as we continued to experience healthy demand across our markets.

"In the fourth quarter of fiscal 2015, NSR increased 21% compared with the same period of fiscal 2014, while operating income was up 19%. For the full fiscal year, NSR was up 15% and operating income rose 47%. Net income was up 34% for the fourth quarter and 61% for the year.

"In our Environmental segment, NSR increased 28% and profit increased 47% in the fourth quarter, driven largely by pipeline permitting activity for our oil and gas clients. For the full fiscal year, NSR and profit in this segment were up 23% and 25%, respectively.

"Energy segment NSR was up 12%, and profit increased 35% in the fourth quarter of 2015 as a result of demand for transmission and distribution services. For the full fiscal year, Energy segment NSR rose 8% and profit increased 20%.

"In the Infrastructure segment, NSR increased 11% and segment profit climbed 16% during the fourth quarter. In addition, backlog grew 92%, driven by increased funding for infrastructure projects at state and local levels," Vincze said. "Infrastructure segment NSR increased 8% and profit grew 7% for the full fiscal year."

Business Outlook
"The steady expansion of our business provides us with increased confidence that our strategy is working," Vincze added. "We are consistently growing NSR and margins across the company. The increase in the Infrastructure segment backlog demonstrates improvement in that market during the next several quarters. In the Energy segment, the demand for renewables, transmission asset upgrades and the retirement of coal-fired generation stations will continue to drive growth. In our Environmental segment, pipeline companies continue to transport low-cost natural gas and related liquids to key markets, although we are monitoring the pace of new development."

Conference Call Information
TRC will broadcast its financial results conference call today, September 9, 2015 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, environmental 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, 2015, and other factors included from time to time in the Company's other subsequent 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     Year Ended  
    June 30,     June 30,     June 30,     June 30,  
    2015     2014     2015     2014  
Gross revenue   $ 149,087     $ 125,675     $ 546,117     $ 475,677  
  Less subcontractor costs and other direct reimbursable charges     34,520       31,183       138,099       120,721  
Net service revenue     114,567       94,492       408,018       354,956  
                                 
Interest income from contractual arrangements     30       26       97       52  
Insurance recoverables and other income     295       261       6,533       17,874  
                                 
Operating costs and expenses:                                
  Cost of services (exclusive of costs shown separately below)     90,016       77,194       337,291       312,108  
  General and administrative expenses     11,622       6,411       36,982       31,053  
  Provision for doubtful accounts     349       -       349       -  
  Depreciation and amortization     2,202       2,213       9,316       8,800  
Total operating costs and expenses     104,189       85,818       383,938       351,961  
Operating income     10,703       8,961       30,710       20,921  
Interest expense     (9 )     (17 )     (134 )     (169 )
Income from operations before taxes     10,694       8,944       30,576       20,752  
Income tax provision     (3,936 )     (3,912 )     (11,180 )     (8,742 )
Net income     6,758       5,032       19,396       12,010  
Net loss applicable to noncontrolling interest     5       5       19       41  
Net income applicable to TRC Companies, Inc.   $ 6,763     $ 5,037     $ 19,415     $ 12,051  
                                 
                                 
Basic earnings per common share   $ 0.22     $ 0.17     $ 0.64     $ 0.41  
Diluted earnings per common share   $ 0.22     $ 0.17     $ 0.63     $ 0.40  
                                 
Weighted-average common shares outstanding:                                
  Basic     30,457       29,725       30,291       29,594  
  Diluted     31,232       30,290       30,724       30,140  
                                 
                                 
TRC Companies, Inc.  
Condensed Consolidated Balance Sheets  
(in thousands, except per share data)  
(Unaudited)  
   
    June 30,     June 30,  
    2015     2014  
ASSETS  
Current assets:                
  Cash and cash equivalents   $ 37,296     $ 27,597  
  Restricted cash     122       5,756  
  Accounts receivable, less allowance for doubtful accounts     138,346       116,937  
  Insurance recoverable - environmental remediation     40,927       42,062  
  Restricted investments     6,701       2,934  
  Deferred income tax assets     16,057       12,293  
  Income taxes refundable     412       1,021  
  Prepaid expenses and other current assets     10,499       12,441  
    Total current assets     250,360       221,041  
Property and equipment:                
  Land and building     480       480  
  Equipment, furniture and fixtures     58,734       54,340  
  Leasehold improvements     5,380       5,420  
      64,594       60,240  
  Less accumulated depreciation and amortization     (50,885 )     (47,190 )
    Property and equipment, net     13,709       13,050  
Goodwill     37,024       31,679  
Long-term deferred income tax assets     2,867       4,267  
Long-term restricted investments     18,385       23,537  
Long-term prepaid insurance     25,929       28,521  
Other assets     14,607       13,490  
    Total assets   $ 362,881     $ 335,585  
                 
LIABILITIES AND EQUITY  
Current liabilities:                
  Current portion of long-term debt   $ 50     $ 463  
  Current portion of capital lease obligations     166       562  
  Accounts payable     31,999       32,663  
  Accrued compensation and benefits     47,233       36,586  
  Deferred revenue     10,612       14,503  
  Environmental remediation liabilities     8,695       138  
  Income taxes payable     3,271       193  
  Other accrued liabilities     42,170       47,117  
    Total current liabilities     144,196       132,225  
Non-current liabilities:                
  Long-term debt, net of current portion     55       105  
  Capital lease obligations, net of current portion     -       167  
  Income taxes payable and deferred income tax liabilities     1,647       1,539  
  Deferred revenue     68,579       70,398  
  Environmental remediation liabilities     489       6,268  
    Total liabilities     214,966       210,702  
Commitments and contingencies                
Equity:                
    Common stock, $.10 par value; 40,000,000 shares authorized, 30,485,510 and 30,482,028 shares issued and outstanding, respectively, at June 30, 2015, and 29,752,934 and 29,749,452 shares issued and outstanding, respectively, at June 30, 2014     3,049       2,975  
  Additional paid-in capital     191,321       187,748  
  Accumulated deficit     (45,939 )     (65,354 )
  Accumulated other comprehensive loss     (88 )     (77 )
  Treasury stock, at cost     (33 )     (33 )
    Total shareholders' equity applicable to TRC Companies, Inc.     148,310       125,259  
  Noncontrolling interest     (395 )     (376 )
    Total equity     147,915       124,883  
    Total liabilities and equity   $ 362,881     $ 335,585  
                 
                 

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