SOURCE: TRC Companies, Inc.

TRC Companies, Inc.

February 05, 2014 07:00 ET

TRC Announces Second-Quarter Fiscal 2014 Financial Results

Strength Across All Segments Drives 21% Net Service Revenue Growth

LOWELL, MA--(Marketwired - Feb 5, 2014) - 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 and six months ended December 27, 2013.

Financial Highlights

           
  Three Months Ended     Six Months Ended  
  December 27,     December 28,     December 27,     December 28,  
(In millions, except per share data) 2013     2012     2013     2012  
                               
Net service revenue(1) $ 91.1     $ 75.3     $ 172.4     $ 150.5  
                               
Insurance recoverables and other income $ 0.3     $ 0.9     $ 12.6     $ 2.7  
                               
Operating income $ 5.2     $ 4.4     $ 9.4     $ 9.0  
                               
Federal and state income tax provision(2) $ (2.1 )   $ (0.2 )   $ (3.8 )   $ (0.4 )
                               
Net income applicable to TRC Companies, Inc. $ 3.1     $ 4.1     $ 5.6     $ 8.4  
                               
Diluted earnings per common share(2) $ 0.10     $ 0.14     $ 0.19     $ 0.28  
                               
Diluted weighted-average common shares outstanding   30.1       29.5       30.0       29.5  
                               

(1) The Company believes net service revenue (NSR) best reflects the value of services provided and is the most meaningful indicator of revenue performance.
(2) The three and six month periods ended December 28, 2012 were impacted by a deferred tax asset valuation allowance, which significantly reduced the effective tax rate.

Comments on the Results
"TRC delivered strong results in the second quarter, as we generated double-digit growth in all three segments," said Chris Vincze, Chairman and Chief Executive Officer. "NSR increased 21% and operating income was up 18% compared with the same quarter last year.

"Our Environmental segment NSR grew 13% year-over-year primarily due to increased demand for remediation and pipeline permitting services, as well as acquisition growth. The increased volume of work in this segment, combined with strong project execution, yielded profit growth of 12%.

"In our Energy segment, NSR was up 35% and profit increased 29% year-over-year as a result of increased activity on transmission and distribution projects and acquisition growth. During the third quarter, we acquired EMCOR Energy Services, Inc. (EES), a subsidiary of EMCOR Group, Inc. As the newest addition to our Energy segment, EES further diversifies our service offering to the energy efficiency markets by expanding our core program management and consulting capabilities with additional engineering resource services for utility clients.

"Our Infrastructure segment NSR and profit grew 18% and 49% year-over-year, respectively, due to increased work on several large transportation design projects, primarily to upgrade and repair aging infrastructure.

Business Outlook
"TRC is well-positioned in attractive markets where we provide end-to-end solutions for some of today's most in-demand projects. These include electric transmission and distribution activities, pipeline permitting, energy efficiency initiatives, power plant decommissioning, and infrastructure repairs and upgrades. Our NSR backlog rose 4% to $234 million year over year, and we intend to continue building backlog. We remain focused on executing a profitable growth strategy that balances acquisitions and organic investments," concluded Vincze.

Conference Call Information
TRC will broadcast its financial results conference call today, February 5, 2014 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     Six Months Ended  
  December 27,     December 28,     December 27,     December 28,  
  2013     2012     2013     2012  
                               
Gross revenue $ 122,592     $ 104,470     $ 229,166     $ 212,756  
  Less subcontractor costs and other direct reimbursable charges   31,461       29,216       56,783       62,286  
Net service revenue   91,131       75,254       172,383       150,470  
                               
Interest income from contractual arrangements   (94 )     83       (47 )     128  
Insurance recoverables and other income   305       913       12,605       2,657  
                               
Operating costs and expenses:                              
  Cost of services (exclusive of costs shown separately below)   76,389       64,564       154,787       128,250  
  General and administrative expenses   7,508       5,694       16,279       12,869  
  Depreciation and amortization   2,250       1,593       4,426       3,131  
Total operating costs and expenses   86,147       71,851       175,492       144,250  
Operating income   5,195       4,399       9,449       9,005  
Interest expense   (38 )     (80 )     (130 )     (192 )
Income from operations before taxes   5,157       4,319       9,319       8,813  
Federal and state income tax provision   (2,068 )     (215 )     (3,770 )     (449 )
Net income   3,089       4,104       5,549       8,364  
Net loss applicable to noncontrolling interest   7       19       34       31  
Net income applicable to TRC Companies, Inc. $ 3,096     $ 4,123     $ 5,583     $ 8,395  
                               
Basic earnings per common share $ 0.10     $ 0.14     $ 0.19     $ 0.29  
Diluted earnings per common share $ 0.10     $ 0.14     $ 0.19     $ 0.28  
                               
Weighted-average common shares outstanding:                              
  Basic   29,652       28,874       29,477       28,668  
  Diluted   30,069       29,471       30,049       29,477  
   
   
   
TRC Companies, Inc.  
Condensed Consolidated Balance Sheets  
(in thousands, except share data)  
(Unaudited)  
   
   
  December 27,     June 30,  
  2013     2013  
ASSETS  
Current assets:              
  Cash and cash equivalents $ 8,546     $ 18,136  
  Accounts receivable, less allowance for doubtful accounts   116,732       109,320  
  Insurance recoverable - environmental remediation   37,644       26,305  
  Restricted investments   4,845       5,582  
  Deferred income tax assets   12,213       12,518  
  Income taxes refundable   4,027       1,444  
  Prepaid expenses and other current assets   17,644       12,045  
    Total current assets   201,651       185,350  
               
Property and equipment   59,431       57,005  
  Less accumulated depreciation and amortization   (45,897 )     (43,171 )
    Property and equipment, net   13,534       13,834  
Goodwill   31,432       28,797  
Investments in and advances to unconsolidated affiliates and construction joint ventures   109       113  
Long-term deferred income tax assets   5,558       6,601  
Long-term restricted investments   24,199       27,580  
Long-term prepaid insurance   29,961       31,497  
Other assets   14,360       13,992  
    Total assets $ 320,804     $ 307,764  
               
LIABILITIES AND EQUITY  
Current liabilities:              
  Current portion of long-term debt $ 4,717     $ 4,745  
  Current portion of capital lease obligations   588       568  
  Accounts payable   25,745       32,238  
  Accrued compensation and benefits   31,417       34,040  
  Deferred revenue   17,232       20,094  
  Environmental remediation liabilities   136       291  
  Other accrued liabilities   43,723       31,737  
    Total current liabilities   123,558       123,713  
Non-current liabilities:              
  Long-term debt, net of current portion   162       568  
  Capital lease obligations, net of current portion   470       789  
  Income taxes payable and deferred income tax liabilities   767       310  
  Deferred revenue   72,989       68,514  
  Environmental remediation liabilities   6,418       6,973  
    Total liabilities   204,364       200,867  
Commitments and contingencies              
Equity:              
    Common stock, $.10 par value; 40,000,000 shares authorized, 29,680,606 and 29,677,124 shares issued and outstanding, respectively, at December 27, 2013, and 29,053,301 and 29,049,819 shares issued and outstanding, respectively, at June 30, 2013   2,968       2,905  
  Additional paid-in capital   185,738       181,874  
  Accumulated deficit   (71,822 )     (77,405 )
  Accumulated other comprehensive loss   (42 )     (109 )
  Treasury stock, at cost   (33 )     (33 )
    Total shareholders' equity applicable to TRC Companies, Inc.   116,809       107,232  
  Noncontrolling interest   (369 )     (335 )
    Total equity   116,440       106,897  
    Total liabilities and equity $ 320,804     $ 307,764  
                   

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