LOWELL, MA--(Marketwire - May 4, 2011) - 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 and nine month periods ended March 25, 2011.
Financial Highlights
Three Months Ended Nine Months Ended
--------------------- --------------------
(In millions, except per share March 25, March 26, March 25, March 26,
data) 2011 2010 2011 2010
---------- --------- --------- ---------
Net service revenue* $ 57.7 $ 54.6 $ 175.7 $ 165.8
Operating income (loss) $ 1.1 $ (0.4) $ 7.4 $ (1.6)
Federal and state income tax
(provision) benefit $ - $ 0.4 $ (0.7) $ 4.8
Accretion charges on preferred
stock $ - $ (1.8) $ (7.3) $ (3.8)
Net income (loss) applicable to
TRC Companies, Inc.'s common
shareholders $ 1.0 $ (2.0) $ (1.1) $ 0.3
Diluted earnings (loss) per
common share $ 0.03 $ (0.10) $ (0.05) $ 0.02
Diluted weighted-average common
shares outstanding 27,921 19,588 22,957 19,906
*The Company believes net service revenue, rather than gross revenue, best
reflects the value of services provided to its customers and is the most
meaningful indicator of TRC's revenue performance.
Comments on the Third Quarter
"The 6% year-over-year growth in net service revenue (NSR) in the quarter was achieved despite the continued sluggish market conditions and absence of clear macro growth drivers in the domestic economy," said Chairman and Chief Executive Officer Chris Vincze. "Many clients continue to carefully manage their capital spending below 2007 levels, as they press for certainty with regard to federal energy, infrastructure, and environmental policy. Our 5% NSR backlog growth year over year in the quarter reflects a positive trend in project awards, particularly in our Energy and Environmental segments. Equally as important as our NSR growth in the quarter was the achievement of $1 million of net income in what is typically our seasonally weakest quarter. Combined with revenue growth and the absence of the preferred stock accretion expense, our focus on margin improvement and cost efficiency over the past several years has positioned us well for results that positively impact the bottom line."
"Our Energy segment achieved 25% NSR growth year over year in the quarter and 17% for the nine month year to date period as a number of clients have begun to resume investments in electric transmission, distribution and energy efficiency projects that were deferred over the past few years. Our profit in the Energy segment grew 74% year over year in the quarter as we benefitted from higher staff utilization and more efficient resource allocation. Our re-entry into the engineer, procure and construct (EPC) markets over the past year has clearly supported our improvements."
"Within our Environmental segment, NSR grew by 2% year over year during the quarter and 9% for the nine month year to date period. Segment profit declined slightly in the quarter due to project completion timing as well as seasonal effects in the Northeast but is up 22% for the 9 month year to date period."
"Within our Infrastructure segment, NSR declined 8% year over year in the quarter and 13% for the nine month year to date period driven by the uncertainties with federal policy and funding, as well as state and municipal budget deficits. Again, seasonal impact also hampered production. Segment profit however was up 80% year over year in the quarter and 4% for the nine month year to date period as the result of margin improvement activities."
Business Outlook
"Although the near-term outlook for both the economy and many of our key markets remains uncertain, we are encouraged by the long-term opportunities available to TRC, especially in how we have repositioned ourselves in the Energy and Environmental markets. We also remain focused on our performance excellence initiatives, which include continued investment in margin improvement and enterprise scale initiatives that help drive profitable growth. A fundamental component of our profitable growth strategy is to pursue acquisitions that will expand TRC's platform in key U.S. markets. For example, our recent acquisition of Alexander Utility Engineering (AUE) increases our power and telecommunications engineering presence in Texas, an important market for our Energy sector."
"We have built a cost-efficient scalable business model. We concluded the third quarter with $17.7 million of cash, cash equivalents and marketable securities, and a growing business. With a healthy balance sheet and the attendant financial capacity and flexibility, we are continuing to pursue our strategic plan."
Conference Call Information
The Company will broadcast its third-quarter fiscal 2011 financial results conference call today, May 4, 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, visit TRC's website at http://www.trcsolutions.com.
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, including potential payments related to TRC's ongoing IRS audit, if not resolved successfully; 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 additional discussion in TRC's Annual Report on Form 10-K for the fiscal year ended June 30, 2010, 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 25, March 26, March 25, March 26,
2011 2010 2011 2010
--------- --------- --------- ---------
Gross revenue $ 76,071 $ 82,101 $ 239,180 $ 246,722
Less subcontractor costs and
other direct reimbursable
charges 18,323 27,524 63,519 80,945
--------- --------- --------- ---------
Net service revenue 57,748 54,577 175,661 165,777
--------- --------- --------- ---------
Interest income from
contractual arrangements 95 108 308 475
Insurance recoverables and
other income 392 2,999 3,302 8,925
Operating costs and expenses:
Cost of services 48,912 50,103 147,201 150,863
General and administrative
expenses 6,713 6,127 19,563 19,176
Provision for doubtful accounts 449 600 1,622 1,710
Depreciation and amortization 1,025 1,251 3,486 5,047
--------- --------- --------- ---------
Total operating costs and
expenses 57,099 58,081 171,872 176,796
--------- --------- --------- ---------
Operating income (loss) 1,136 (397) 7,399 (1,619)
Interest expense (173) (242) (588) (768)
Gain on extinguishment of debt - - - 1,716
--------- --------- --------- ---------
Income (loss) from operations
before taxes and equity in
(losses) earnings 963 (639) 6,811 (671)
Federal and state income tax
(provision) benefit (16) 393 (702) 4,818
--------- --------- --------- ---------
Income (loss) from operations
before equity in (losses)
earnings 947 (246) 6,109 4,147
Equity in (losses) earnings
from unconsolidated affiliates,
net of taxes - (23) 10 (66)
--------- --------- --------- ---------
Net income (loss) 947 (269) 6,119 4,081
Net loss applicable to
noncontrolling interest 5 28 39 92
--------- --------- --------- ---------
Net income (loss) applicable to
TRC Companies, Inc. 952 (241) 6,158 4,173
Accretion charges on preferred
stock - (1,779) (7,261) (3,831)
--------- --------- --------- ---------
Net income (loss) applicable to
TRC Companies, Inc.'s common
shareholders $ 952 $ (2,020) $ (1,103) $ 342
========= ========= ========= =========
Basic earnings (loss) per
common share $ 0.04 $ (0.10) $ (0.05) $ 0.02
========= ========= ========= =========
Diluted earnings (loss) per
common share $ 0.03 $ (0.10) $ (0.05) $ 0.02
========= ========= ========= =========
Weighted-average common shares
outstanding:
Basic 27,190 19,588 22,957 19,523
========= ========= ========= =========
Diluted 27,921 19,588 22,957 19,906
========= ========= ========= =========
TRC COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
March 25, June 30,
2011 2010
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 12,210 $ 14,709
Marketable securities 5,481 -
Accounts receivable, less allowance for
doubtful accounts 79,182 87,104
Insurance recoverable - environmental
remediation 35,955 35,664
Restricted investments 12,505 14,744
Prepaid expenses and other current assets 12,141 9,123
Income taxes refundable 65 388
------------ ------------
Total current assets 157,539 161,732
------------ ------------
Property and equipment 45,978 47,287
Less accumulated depreciation and
amortization (35,818) (35,535)
------------ ------------
Property and equipment, net 10,160 11,752
------------ ------------
Goodwill 16,713 14,870
Investments in and advances to unconsolidated
affiliates and construction joint ventures 111 117
Long-term restricted investments 41,604 46,426
Long-term prepaid insurance 42,029 44,529
Other assets 8,758 8,369
------------ ------------
Total assets $ 276,914 $ 287,795
============ ============
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 3,144 $ 3,629
Accounts payable 24,051 35,871
Accrued compensation and benefits 25,573 22,393
Deferred revenue 21,627 26,486
Environmental remediation liabilities 527 623
Other accrued liabilities 42,405 43,781
------------ ------------
Total current liabilities 117,327 132,783
------------ ------------
Non-current liabilities:
Long-term debt, net of current portion 6,096 5,815
Long-term income taxes payable 4,711 4,149
Long-term deferred revenue 98,350 102,452
Long-term environmental remediation
liabilities 5,866 6,404
------------ ------------
Total liabilities 232,350 251,603
------------ ------------
Preferred stock, $.10 par value; 500,000 shares
authorized, 7,209 shares issued and
outstanding as convertible, liquidation
preference value of $22,277 as of
June 30, 2010 - 8,239
------------ ------------
Commitments and contingencies
Equity:
Common stock, $.10 par value; 40,000,000
shares authorized, 27,272,075 and
27,268,593 shares issued and outstanding,
respectively, at March 25, 2011, and
19,637,535 and 19,634,053 shares issued
and outstanding, respectively, at
June 30, 2010 2,727 1,964
Additional paid-in capital 173,380 163,897
Accumulated deficit (131,725) (137,883)
Accumulated other comprehensive income 379 133
Treasury stock, at cost (33) (33)
------------ ------------
Total shareholders' equity applicable to
TRC Companies, Inc. 44,728 28,078
Noncontrolling interest (164) (125)
------------ ------------
Total equity 44,564 27,953
------------ ------------
Total liabilities and equity $ 276,914 $ 287,795
============ ============
Contact Information: Investor Contact: Sharon Merrill Associates (617) 542-5300 trr@investorrelations.com Company Contact: Thomas W. Bennet, Jr. CFO (978) 970-5600 tbennet@trcsolutions.com