LOWELL, MA--(Marketwired - May 8, 2013) - , May 8, 2013 - TRC Companies, Inc. (
Financial Highlights
| Three Months Ended | Nine Months Ended | ||||||||||||||
| (In millions, except per share data) | March 29, | March 30, | March 29, | March 30, | |||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||
| Net service revenue(1) | $ | 83.0 | $ | 75.1 | $ | 233.5 | $ | 222.5 | |||||||
| Arena Towers litigation reversal (2) | $ | - | $ | - | $ | - | $ | (11.1 | ) | ||||||
| Operating income | $ | 3.4 | $ | 3.5 | $ | 12.4 | $ | 23.9 | |||||||
| Federal and state income tax (provision) benefit (3) | $ | (0.2 | ) | $ | 0.6 | $ | (0.7 | ) | $ | 4.1 | |||||
| Net income applicable to TRC Companies, Inc. | $ | 3.1 | $ | 3.9 | $ | 11.5 | $ | 27.8 | |||||||
| Diluted earnings per common share | $ | 0.10 | $ | 0.13 | $ | 0.39 | $ | 0.97 | |||||||
| Diluted weighted-average common shares outstanding | 29.7 | 28.9 | 29.5 | 28.6 | |||||||||||
| (1) | The Company believes net service revenue best reflects the value of services provided and is the most meaningful indicator of 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 $11.2 million reduction of the litigation accrual in the first quarter of fiscal 2012. |
| (3) | The Company received approval of a federal tax settlement resulting in an income tax benefit in the first quarter of fiscal 2012. |
Comments on the Results
"TRC had a strong third quarter with solid top line contributions from all three segments," said Chairman and Chief Executive Officer, Chris Vincze. "Overall Net Service Revenue (NSR) was up 11% compared with the same quarter last year."
"NSR growth was fairly balanced with two-thirds coming from organic sources, while acquisitions provided the other third. Strong demand for electric distribution services and further expansion into the mid-Atlantic region led to a 16% increase in Energy segment NSR, while in the Environmental segment, NSR increased 7% due to increased utilization on large remediation projects. Profit in these segments was lower than the same quarter of the prior year, primarily due to increased costs on several fixed price projects, acquisition integration costs, and growth-related staffing costs. Infrastructure segment NSR was up 14% and profit was sharply higher compared with the same period of the prior year, largely due to improving market conditions and initiatives focused on higher margin work."
"We continued to benefit from our efficient cost structure. G&A expenses were flat in the quarter compared with the prior year, while the ratio of G&A costs to NSR decreased to 9.7% from 10.8% in the prior year period. The income tax expense in the quarter reflects continued federal alternative minimum tax and state income tax costs, compared with a tax benefit of $0.02 per diluted share in the prior year period."
Recent Developments
TRC also announced today that it has acquired the Covina, California operations of Ocampo-Esta Corporation, a power delivery engineering company, thus increasing its presence in the very active southern California utility market. "Ocampo-Esta has an outstanding reputation, and we welcome their talented staff of professionals to TRC. This acquisition, combined with the two acquisitions we closed last quarter -- the GE Air Emissions Testing business and the Sacramento-based energy efficiency consulting firm Heschong-Mahone Group -- furthers our growth strategy and expands our geographic presence and service offerings, particularly to the utility industry."
Business Outlook
"We are optimistic about the long-term prospects for our markets and believe we are uniquely positioned to serve them. Our NSR backlog grew 1.2% to $245 million compared with the third quarter of the prior year and was up sequentially by $20 million or 8.9% over the second quarter of this fiscal year. The demand for electric utility and energy efficiency services will continue. America's transportation infrastructure is in critical need of upgrade and repair and we are beginning to see signs of recovery in the environmental marketplace. Our strong financial position, including our new revolving credit facility, will serve our long-term strategy, allowing us to focus on our clients' needs and seek out growth opportunities," concluded Vincze.
Conference Call Information
The Company will broadcast its financial results conference call today, May 8, 2013 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. 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. | |||||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||||
| (in thousands, except per share data) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| March 29, | March 30, | March 29, | March 30, | ||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||||
| Gross revenue | $ | 109,806 | $ | 101,118 | $ | 322,562 | $ | 310,231 | |||||||||
| Less subcontractor costs and other direct reimbursable charges | 26,762 | 25,983 | 89,048 | 87,745 | |||||||||||||
| Net service revenue | 83,044 | 75,135 | 233,514 | 222,486 | |||||||||||||
| Interest income from contractual arrangements | 58 | 56 | 186 | 229 | |||||||||||||
| Insurance recoverables and other income | 1,068 | 554 | 3,725 | 1,292 | |||||||||||||
| Operating costs and expenses: | |||||||||||||||||
| Cost of services (exclusive of costs shown separately below) | 70,446 | 62,910 | 198,696 | 184,245 | |||||||||||||
| General and administrative expenses | 8,096 | 8,087 | 20,965 | 22,482 | |||||||||||||
| Provision for doubtful accounts | 408 | - | 408 | 365 | |||||||||||||
| Depreciation and amortization | 1,828 | 1,231 | 4,959 | 4,027 | |||||||||||||
| Arena Towers litigation reversal | - | - | - | (11,061 | ) | ||||||||||||
| Total operating costs and expenses | 80,778 | 72,228 | 225,028 | 200,058 | |||||||||||||
| Operating income | 3,392 | 3,517 | 12,397 | 23,949 | |||||||||||||
| Interest expense | (78 | ) | (228 | ) | (270 | ) | (584 | ) | |||||||||
| Income from operations before taxes and equity in earnings | 3,314 | 3,289 | 12,127 | 23,365 | |||||||||||||
| Federal and state income tax (provision) benefit | (231 | ) | 571 | (680 | ) | 4,075 | |||||||||||
| Income from operations before equity in earnings | 3,083 | 3,860 | 11,447 | 27,440 | |||||||||||||
| Equity in earnings from unconsolidated affiliates, net of taxes | - | - | - | 270 | |||||||||||||
| Net income | 3,083 | 3,860 | 11,447 | 27,710 | |||||||||||||
| Net loss applicable to noncontrolling interest | 18 | 21 | 49 | 70 | |||||||||||||
| Net income applicable to TRC Companies, Inc. | $ | 3,101 | $ | 3,881 | $ | 11,496 | $ | 27,780 | |||||||||
| Basic earnings per common share | $ | 0.11 | $ | 0.14 | $ | 0.40 | $ | 1.00 | |||||||||
| Diluted earnings per common share | $ | 0.10 | $ | 0.13 | $ | 0.39 | $ | 0.97 | |||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||
| Basic | 28,998 | 27,887 | 28,778 | 27,733 | |||||||||||||
| Diluted | 29,654 | 28,943 | 29,547 | 28,619 | |||||||||||||
| TRC Companies, Inc. | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (in thousands, except share data) | ||||||||||
| (Unaudited) | ||||||||||
| March 29, | June 30, | |||||||||
| 2013 | 2012 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 9,997 | $ | 16,561 | ||||||
| Accounts receivable, less allowance for doubtful accounts | 107,951 | 95,215 | ||||||||
| Insurance recoverable - environmental remediation | 25,899 | 25,744 | ||||||||
| Restricted investments | 6,208 | 4,413 | ||||||||
| Prepaid expenses and other current assets | 13,714 | 12,077 | ||||||||
| Total current assets | 163,769 | 154,010 | ||||||||
| Property and equipment | 55,781 | 53,352 | ||||||||
| Less accumulated depreciation and amortization | (41,989 | ) | (39,621 | ) | ||||||
| Property and equipment, net | 13,792 | 13,731 | ||||||||
| Goodwill | 28,360 | 24,888 | ||||||||
| Investments in and advances to unconsolidated affiliates and construction joint ventures | 109 | 109 | ||||||||
| Long-term restricted investments | 28,654 | 35,265 | ||||||||
| Long-term prepaid insurance | 32,033 | 34,272 | ||||||||
| Other assets | 14,509 | 12,853 | ||||||||
| Total assets | $ | 281,226 | $ | 275,128 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Current portion of long-term debt | $ | 5,521 | $ | 1,315 | ||||||
| Current portion of capital lease obligations | 560 | 267 | ||||||||
| Accounts payable | 29,469 | 30,712 | ||||||||
| Accrued compensation and benefits | 34,963 | 36,292 | ||||||||
| Deferred revenue | 19,573 | 18,236 | ||||||||
| Environmental remediation liabilities | 290 | 422 | ||||||||
| Other accrued liabilities | 31,158 | 30,315 | ||||||||
| Total current liabilities | 121,534 | 117,559 | ||||||||
| Non-current liabilities: | ||||||||||
| Long-term debt, net of current portion | 767 | 3,860 | ||||||||
| Capital lease obligations, net of current portion | 956 | 462 | ||||||||
| Income taxes payable and deferred income tax liabilities | 777 | 622 | ||||||||
| Deferred revenue | 70,548 | 79,104 | ||||||||
| Environmental remediation liabilities | 5,421 | 5,473 | ||||||||
| Total liabilities | 200,003 | 207,080 | ||||||||
| Commitments and contingencies | ||||||||||
| Equity: | ||||||||||
| Common stock, $.10 par value; 40,000,000 shares authorized, 29,025,522 and 29,022,040 shares issued and outstanding, respectively, at March 29, 2013, and 28,130,702 and 28,127,220 shares issued and outstanding, respectively, at June 30, 2012 | 2,903 | 2,813 | ||||||||
| Additional paid-in capital | 180,812 | 179,402 | ||||||||
| Accumulated deficit | (102,184 | ) | (113,680 | ) | ||||||
| Accumulated other comprehensive income (loss) | 44 | (184 | ) | |||||||
| Treasury stock, at cost | (33 | ) | (33 | ) | ||||||
| Total shareholders' equity applicable to TRC Companies, Inc. | 81,542 | 68,318 | ||||||||
| Noncontrolling interest | (319 | ) | (270 | ) | ||||||
| Total equity | 81,223 | 68,048 | ||||||||
| Total liabilities and equity | $ | 281,226 | $ | 275,128 | ||||||
Contact Information:
Investor Contact:
Dennis Walsh
Sharon Merrill
(617) 542-5300
trr@investorrelations.com
Company Contact:
Thomas W. Bennet, Jr.
CFO
(978) 970-5600
tbennet@trcsolutions.com