TRC Announces Strong Third-Quarter Fiscal 2015 Financial Results

Net Service Revenue Up 15% and Operating Income Up 185% From Prior Year Third Quarter


LOWELL, MA--(Marketwired - May 6, 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 third quarter ended March 27, 2015.

Financial Highlights

           
           
    Fiscal Third Quarter Ended      
    March 27,   March 28,   %  
(In millions, except per share data)   2015   2014   Change  
Net service revenue(1)   $ 101.0   $ 88.1   15 %
Operating income   $ 7.1   $ 2.5   185 %
Net income applicable to TRC Companies, Inc.   $ 5.2   $ 1.4   261 %
Diluted earnings per common share   $ 0.17   $ 0.05   240 %
Diluted weighted-average common shares outstanding     30.7     30.2      
                   

(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
"TRC delivered a strong performance in all three of our segments during the third quarter," said Chris Vincze, Chairman and Chief Executive Officer. "Overall NSR increased 15%, and operating income nearly tripled, driven by strong fundamentals in all of our markets. Additionally, this year's third quarter was impacted less by the weather and medical cost issues that affected results in the same period last year.

"In our Environmental segment, NSR increased 22%, and profit increased 28%, on steady demand throughout the segment. Energy segment NSR was up 5%, while segment profit increased 10%, due to new project demand and efficient resource management. In the Infrastructure segment, NSR increased 19%, and segment profit rose 99%, resulting from project execution and receipt of pending change orders," Vincze said.

Business Outlook
"We continue to execute a profitable growth strategy across our three segments," Vincze added. "The Infrastructure segment, where backlog grew 56% in the quarter, is gaining momentum as several states have deployed significant capital projects. In the Energy segment, we are seeing increased demand from renewables as states such as California push for increasing energy efficiency and reduced carbon emissions. In addition, high levels of capital continue to be spent upgrading transmission and distribution assets. Meanwhile, in our Environmental segment, focused project execution and recent acquisitions are contributing to our growth and profitability. We have a strong balance sheet to support our growth through ongoing organic investments and strategic acquisitions, and we are optimistic about the remainder of fiscal 2015."

Conference Call Information
TRC will broadcast its financial results conference call today, May 6, 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     Nine Months Ended  
    March 27,     March 28,     March 27,     March 28,  
    2015     2014     2015     2014  
                         
Gross revenue   $ 130,777     $ 120,836     $ 397,030     $ 350,002  
  Less subcontractor costs and other direct reimbursable charges     29,783       32,755       103,579       89,538  
Net service revenue     100,994       88,081       293,451       260,464  
                                 
Interest income from contractual arrangements     23       73       67       26  
Insurance recoverables and other income     753       5,008       6,238       17,613  
                                 
Operating costs and expenses:                                
    Cost of services (exclusive of costs shown separately below)     83,486       80,127       247,275       234,914  
    General and administrative expenses     8,927       8,363       25,360       24,642  
    Depreciation and amortization     2,208       2,161       7,114       6,587  
Total operating costs and expenses     94,621       90,651       279,749       266,143  
Operating income     7,149       2,511       20,007       11,960  
Interest expense     (73 )     (22 )     (125 )     (152 )
Income from operations before taxes     7,076       2,489       19,882       11,808  
Provision for income taxes     (1,916 )     (1,060 )     (7,244 )     (4,830 )
Net income     5,160       1,429       12,638       6,978  
Net loss applicable to noncontrolling interest     5       2       14       36  
Net income applicable to TRC Companies, Inc.   $ 5,165     $ 1,431     $ 12,652     $ 7,014  
                                 
Basic earnings per common share   $ 0.17     $ 0.05     $ 0.42     $ 0.24  
Diluted earnings per common share   $ 0.17     $ 0.05     $ 0.41     $ 0.23  
                                 
Weighted-average common shares outstanding:                                
  Basic     30,382       29,691       30,233       29,549  
  Diluted     30,737       30,166       30,551       30,088  
                                 
 
 
TRC Companies, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
 
    March 27,     June 30,  
    2015     2014  
ASSETS  
Current assets:                
  Cash and cash equivalents   $ 21,343     $ 27,597  
  Restricted cash     277       5,756  
  Accounts receivable, less allowance for doubtful accounts     131,666       116,937  
  Insurance recoverable - environmental remediation     42,647       42,062  
  Restricted investments     6,892       2,934  
  Deferred income tax assets     12,281       12,293  
  Income taxes refundable     2,266       1,021  
  Prepaid expenses and other current assets     12,354       12,441  
    Total current assets     229,726       221,041  
                 
Property and equipment     63,501       60,240  
  Less accumulated depreciation and amortization     (50,283 )     (47,190 )
    Property and equipment, net     13,218       13,050  
Goodwill     36,354       31,679  
Long-term deferred income tax assets     3,046       4,267  
Long-term restricted investments     19,729       23,537  
Long-term prepaid insurance     26,505       28,521  
Other assets     15,076       13,490  
    Total assets   $ 343,654     $ 335,585  
                 
LIABILITIES AND EQUITY  
Current liabilities:                
  Current portion of long-term debt   $ 1,035     $ 463  
  Current portion of capital lease obligations     261       562  
  Accounts payable     27,188       32,663  
  Accrued compensation and benefits     43,150       36,586  
  Deferred revenue     14,580       14,503  
  Environmental remediation liabilities     8,147       138  
  Other accrued liabilities     40,623       47,310  
    Total current liabilities     134,984       132,225  
Non-current liabilities:                
  Long-term debt, net of current portion     60       105  
  Capital lease obligations, net of current portion     -       167  
  Income taxes payable and deferred income tax liabilities     1,481       1,539  
  Deferred revenue     66,538       70,398  
  Environmental remediation liabilities     527       6,268  
    Total liabilities     203,590       210,702  
Commitments and contingencies                
Equity:                
    Common stock, $.10 par value; 40,000,000 shares authorized, 30,436,459 and 30,432,977 shares issued and outstanding, respectively, at March 27, 2015, and 29,752,934 and 29,749,452 shares issued and outstanding, respectively, at June 30, 2014     3,044       2,975  
  Additional paid-in capital     190,214       187,748  
  Accumulated deficit     (52,702 )     (65,354 )
  Accumulated other comprehensive loss     (69 )     (77 )
  Treasury stock, at cost     (33 )     (33 )
    Total shareholders' equity applicable to TRC Companies, Inc.     140,454       125,259  
  Noncontrolling interest     (390 )     (376 )
    Total equity     140,064       124,883  
    Total liabilities and equity   $ 343,654     $ 335,585  
                 

Contact Information:

Investor Contact:
Andrew Blazier
Senior Associate
Sharon Merrill
(617) 542-5300
trr@investorrelations.com

Company Contact:
Thomas W. Bennet, Jr.
CFO
(978) 970-5600
tbennet@trcsolutions.com

Company ProfileTRC Companies, Inc.