TRC COMPANIES INC /DE/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 5, 2014

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8-K - 8-K - TRC COMPANIES INC /DE/trcform8-kq2f14.htm
Exhibit 99.1

Investor Contact:
 
Company Contact:
Dennis Walsh, Vice President
Thomas W. Bennet, Jr., CFO
Sharon Merrill
(978) 970-5600
(617) 542-5300
tbennet@trcsolutions.com
trr@investorrelations.com
 


TRC Announces Second-Quarter Fiscal 2014 Financial Results

Strength Across All Segments Drives 21% Net Service Revenue Growth


Lowell, MA, February 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.


TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995


“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,

TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995


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
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995


TRC Companies, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)

 
Three Months Ended
 
Six Months Ended
 
December 27,
2013
 
December 28,
2012
 
December 27,
2013
 
December 28,
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
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995


TRC Companies, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
 
December 27,
2013
 
June 30,
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


TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995

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