SOURCE: TRC Companies, Inc.

TRC Companies, Inc.

February 04, 2015 07:00 ET

TRC Announces Strong Second-Quarter Fiscal 2015 Financial Results

NSR and Net Income Up 10% and 29%, Respectively

LOWELL, MA--(Marketwired - Feb 4, 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 second quarter ended December 26, 2014.

   
Financial Highlights  
   
    Fiscal Second Quarter Ended      
    December 26,   December 27,   %  
(In millions, except per share data)   2014   2013   Change  
Net service revenue(1)   $ 99.8   $ 91.1   10 %
Operating income   $ 6.9   $ 5.2   32 %
Net income applicable to TRC Companies, Inc.   $ 4.0   $ 3.1   29 %
Diluted earnings per common share   $ 0.13   $ 0.10   30 %
Diluted weighted-average common shares outstanding     30.5     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
"Continued strength in our Environmental segment drove our solid performance in the second quarter of fiscal 2015," said Chris Vincze, Chairman and Chief Executive Officer. "Overall NSR increased 10%, and operating income grew 32%, while net income rose 29%, compared to the second quarter of Fiscal 2014. We are pleased with our progress and see continued strength in our core markets.

"In our Environmental segment, NSR increased 18% and profit increased 16%, primarily due to higher demand from our oil and gas customers for pipeline permitting services. Energy segment NSR was essentially flat, rising 1%, while segment profit increased 8%, driven by project execution and focused cost management. In the Infrastructure segment, NSR was nearly flat while segment profit declined 30%. The weaker performance was due to the timing of change orders on several large projects. Nevertheless, we continue to generate new Infrastructure project wins, and the fundamentals in this market are strong."

Business Outlook
"TRC continues to see solid growth opportunities in each of our segments. Our diversified business model is delivering increased profitability and growth. We have a strong balance sheet to support our growth initiatives, including ongoing organic investments and strategic acquisitions. We are encouraged about our outlook for the second half of fiscal 2015 and our long-term growth," concluded Vincze.

Conference Call Information
TRC will broadcast its financial results conference call today, February 4, 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, 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, 2014, 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     Six Months Ended  
    December 26,     December 27,     December 26,     December 27,  
    2014     2013     2014     2013  
                                 
Gross revenue   $ 143,228     $ 122,592     $ 266,253     $ 229,166  
  Less subcontractor costs and other direct reimbursable charges     43,390       31,461       73,796       56,783  
Net service revenue     99,838       91,131       192,457       172,383  
                                 
Interest income from contractual arrangements     22       (94 )     44       (47 )
Insurance recoverables and other income     641       305       5,485       12,605  
                                 
Operating costs and expenses:                                
  Cost of services (exclusive of costs shown separately below)     82,599       76,389       163,789       154,787  
  General and administrative expenses     8,395       7,508       16,433       16,279  
  Depreciation and amortization     2,641       2,250       4,906       4,426  
Total operating costs and expenses     93,635       86,147       185,128       175,492  
Operating income     6,866       5,195       12,858       9,449  
Interest expense     (21 )     (38 )     (52 )     (130 )
Income from operations before taxes     6,845       5,157       12,806       9,319  
Provision for income taxes     (2,848 )     (2,068 )     (5,328 )     (3,770 )
Net income     3,997       3,089       7,478       5,549  
Net loss applicable to noncontrolling interest     5       7       9       34  
Net income applicable to TRC Companies, Inc.   $ 4,002     $ 3,096     $ 7,487     $ 5,583  
                                 
Basic earnings per common share   $ 0.13     $ 0.10     $ 0.25     $ 0.19  
Diluted earnings per common share   $ 0.13     $ 0.10     $ 0.25     $ 0.19  
                                 
Weighted-average common shares outstanding:                                
  Basic     30,329       29,652       30,157       29,477  
  Diluted     30,531       30,069       30,458       30,049  
                                   
                                   
   
   
TRC Companies, Inc.  
Condensed Consolidated Balance Sheets  
(in thousands, except share data)  
(Unaudited)  
   
    December 26,     June 30,  
    2014     2014  
ASSETS  
Current assets:                
  Cash and cash equivalents   $ 13,278     $ 27,597  
  Restricted cash     24       5,756  
  Accounts receivable, less allowance for doubtful accounts     135,754       116,937  
  Insurance recoverable - environmental remediation     43,578       42,062  
  Restricted investments     2,553       2,934  
  Deferred income tax assets     12,249       12,293  
  Income taxes refundable     711       1,021  
  Prepaid expenses and other current assets     12,620       12,441  
    Total current assets     220,767       221,041  
                 
Property and equipment     62,739       60,240  
  Less accumulated depreciation and amortization     (49,247 )     (47,190 )
    Property and equipment, net     13,492       13,050  
Goodwill     36,642       31,679  
Long-term deferred income tax assets     3,142       4,267  
Long-term restricted investments     24,753       23,537  
Long-term prepaid insurance     27,166       28,521  
Other assets     15,888       13,490  
    Total assets   $ 341,850     $ 335,585  
                 
LIABILITIES AND EQUITY  
Current liabilities:                
  Current portion of long-term debt   $ 2,972     $ 463  
  Current portion of capital lease obligations     375       562  
  Accounts payable     36,103       32,663  
  Accrued compensation and benefits     33,969       36,586  
  Deferred revenue     16,592       14,503  
  Environmental remediation liabilities     184       138  
  Other accrued liabilities     41,342       47,310  
    Total current liabilities     131,537       132,225  
Non-current liabilities:                
  Long-term debt, net of current portion     64       105  
  Capital lease obligations, net of current portion     33       167  
  Income taxes payable and deferred income tax liabilities     1,423       1,539  
  Deferred revenue     66,967       70,398  
  Environmental remediation liabilities     8,511       6,268  
    Total liabilities     208,535       210,702  
Commitments and contingencies                
Equity:                
    Common stock, $.10 par value; 40,000,000 shares authorized, 30,353,170 and 30,349,688 shares issued and outstanding, respectively, at December 26, 2014, and 29,752,934 and 29,749,452 shares issued and outstanding, respectively, at June 30, 2014     3,035       2,975  
  Additional paid-in capital     188,642       187,748  
  Accumulated deficit     (57,867 )     (65,354 )
  Accumulated other comprehensive loss     (77 )     (77 )
  Treasury stock, at cost     (33 )     (33 )
    Total shareholders' equity applicable to TRC Companies, Inc.     133,700       125,259  
  Noncontrolling interest     (385 )     (376 )
    Total equity     133,315       124,883  
    Total liabilities and equity   $ 341,850     $ 335,585  
                     
                     

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