EX-99.1 2 a10-17170_2ex99d1.htm EX-99.1

Exhibit 99.1

 

Investor Contact:

Company Contact:

Sharon Merrill Associates

Thomas W. Bennet, Jr., CFO

(617) 542-5300

(978) 970-5600

trr@investorrelations.com

tbennet@trcsolutions.com

 

TRC Announces Fourth-Quarter and Fiscal Year 2010 Financial Results

 

Lowell, MA, September 13, 2010 - 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 months and year ended June 30, 2010.

 

Summary Results

 

 

 

Three Months Ended

 

Years Ended

 

 

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

(In millions, except per share data)

 

2010

 

2009

 

2010

 

2009

 

Net service revenue*

 

$

64.3

 

$

63.6

 

$

230.1

 

$

254.8

 

Goodwill and intangible asset write-offs**

 

$

20.2

 

$

—

 

$

20.2

 

$

21.4

 

Depreciation and amortization***

 

$

3.0

 

$

2.0

 

$

8.0

 

$

7.3

 

Operating (loss) income

 

$

(19.8

)

$

0.4

 

$

(21.5

)

$

(16.7

)

Federal and state income tax provision (benefit)

 

$

0.6

 

$

4.5

 

$

(4.2

)

$

3.9

 

Accretion charges on preferred stock

 

$

2.6

 

$

0.2

 

$

6.4

 

$

0.2

 

Net loss applicable to TRC Companies, Inc.’s common shareholders

 

$

(23.2

)

$

(5.3

)

$

(22.9

)

$

(24.1

)

Diluted loss per common share

 

$

(1.18

)

$

(0.27

)

$

(1.17

)

$

(1.25

)

Diluted weighted-average common shares outstanding

 

19,619

 

19,354

 

19,548

 

19,272

 

 

*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.

 

**During the fourth quarter of fiscal year 2010, TRC recorded a non-cash goodwill impairment charge of $20.2 million.

 

***Fourth quarter of fiscal year 2010 includes a $1.6 million charge related to accelerated amortization of intangible assets.

 

Comments on the Results

“We believe our fourth-quarter results indicate that the demand environment across our key markets is beginning to improve,” said Chairman and Chief Executive Officer Chris Vincze.  “Net service revenues of $64.3 million were up 1.1% compared to the same quarter of the prior year — the first year-over-year increase in two years. Our gross revenue backlog of $361.0 million increased by $7.8 million, or 2.2%, from the third quarter level making it the first time in eight quarters that our backlog has increased from the immediately prior quarter.  The $19.8 million operating loss in the quarter was primarily the result of a $20.2 million goodwill impairment charge.  An additional $1.6 million expense for accelerated amortization of other intangible assets was also recorded in the quarter as part of depreciation and amortization expenses.  Excluding the non-cash goodwill impairment

 

TRC

650 Suffolk Street  ·  Lowell, Massachusetts 01854

Telephone 978-970-5600   ·  Fax 978-453-1995

 


 

charge of $20.2 million, we would have generated positive operating income for the fiscal fourth quarter.”

 

“During the fourth quarter, demand for our services, as measured by backlog growth in each of our operating segments, showed improvement compared to the third quarter.  Within our Energy operating segment, our energy efficiency services continue to represent a significant growth opportunity for TRC.  The current regulatory atmosphere and issues associated with sustainability and climate change present continuing opportunities in our Environmental operating segment.  Overall, our Infrastructure operating segment remains relatively flat, although major upgrades and substantial investments over the long term are necessary for the nation’s aging infrastructure.”

 

“While the demand environment is beginning to recover, we continued to further streamline our cost structure and reduced our general and administrative (G&A) costs in the fourth quarter by $0.1 million, or 1.9%, compared to the same quarter last year.”

 

“Although our full fiscal year 2010 net service revenue decreased by almost 10% year-over-year, we reduced both our G&A expenses and cost of services at a more accelerated rate.  We lowered G&A expenses by $5.8 million, or 17.6%, and our cost of services by $24.0 million, or 10.6%, from the prior year.  We concluded fiscal year 2010 with some revenue momentum, and we enter fiscal year 2011 with a significant improvement in our cost structure.”

 

Business Outlook

“Our objectives for fiscal year 2011 are clear: generating profitable organic growth and cash flow from operations, while continuing to deliver performance excellence.  We believe that sustainable profitable growth is possible for TRC in the current economic environment.  TRC’s capabilities align well with our country’s goals to improve its transportation and energy infrastructures, add renewable energy to domestic supply, and become more efficient producers of conventional energy.”

 

“The fundamentals of the markets TRC serves remain promising, both mid- and long-term.  Energy remains a primary driver of the domestic economy and we expect to see long-term growth in this operating segment as we continue to expand our offerings in energy efficiency, power delivery engineering and demand management programs.  Client interest in renewing large scale capital investments and in Engineer Procure and Construct (EPC)

 


 

contracts is returning; however, the exact timing and award of these EPC projects remains unpredictable.  We expect demand for our Environmental services to be driven by climate change, clean power, greenhouse gas and other air issues.  Coupled with the support of federal funding, the prospects for growth in our Environmental operating segment are improving.  We believe that the long-term market for our Infrastructure services remains stable, due to population shifts in certain geographic regions, continued aging and obsolescence of existing infrastructure, capacity shortfalls, and Federal stimulus funding for state and municipal projects.  All of these factors combined with the early signs of market improvements have led us to guarded optimism about our near-term growth prospects,” concluded Vincze.

 

Conference Call Information

The Company will broadcast its fourth-quarter and fiscal year-end 2010 financial results conference call today 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

 

Years Ended

 

 

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

 

 

2010

 

2009

 

2010

 

2009

 

Gross revenue

 

$

83,853

 

$

105,750

 

$

330,575

 

$

432,517

 

Less subcontractor costs and other direct reimbursable charges

 

19,531

 

42,144

 

100,476

 

177,713

 

Net service revenue

 

64,322

 

63,606

 

230,099

 

254,804

 

 

 

 

 

 

 

 

 

 

 

Interest income from contractual arrangements

 

121

 

216

 

596

 

1,859

 

Insurance recoverables and other (loss) income

 

(81

)

5,498

 

8,844

 

19,539

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of services

 

52,358

 

57,448

 

203,221

 

227,217

 

General and administrative expenses

 

7,952

 

8,102

 

27,128

 

32,936

 

Provision for doubtful accounts

 

634

 

1,336

 

2,344

 

3,952

 

Goodwill and intangible asset write-offs

 

20,249

 

—

 

20,249

 

21,438

 

Depreciation and amortization

 

3,002

 

2,030

 

8,049

 

7,322

 

Total operating costs and expenses

 

84,195

 

68,916

 

260,991

 

292,865

 

Operating (loss) income

 

(19,833

)

404

 

(21,452

)

(16,663

)

Interest expense

 

(235

)

(519

)

(1,003

)

(2,925

)

Gain on extinguishment of debt

 

—

 

—

 

1,716

 

—

 

Loss from operations before taxes and equity in earnings (losses)

 

(20,068

)

(115

)

(20,739

)

(19,588

)

Federal and state income tax provision (benefit)

 

608

 

4,515

 

(4,210

)

3,871

 

Loss from operations before equity in earnings (losses)

 

(20,676

)

(4,630

)

(16,529

)

(23,459

)

Equity in earnings (losses) from unconsolidated affiliates, net of taxes

 

21

 

(449

)

(45

)

(449

)

Net loss

 

(20,655

)

(5,079

)

(16,574

)

(23,908

)

Net loss attributable to noncontrolling interest

 

(33

)

—

 

(125

)

—

 

Net loss applicable to TRC Companies, Inc.

 

(20,622

)

(5,079

)

(16,449

)

(23,908

)

Accretion charges on preferred stock

 

2,600

 

215

 

6,431

 

215

 

Net loss applicable to TRC Companies, Inc.’s common shareholders

 

$

(23,222

)

$

(5,294

)

$

(22,880

)

$

(24,123

)

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per common share

 

$

(1.18

)

$

(0.27

)

$

(1.17

)

$

(1.25

)

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average common shares outstanding

 

19,619

 

19,354

 

19,548

 

19,272

 

 


 

TRC COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(Unaudited)

 

 

 

June 30,

 

June 30,

 

 

 

2010

 

2009

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

14,709

 

$

8,469

 

Accounts receivable, less allowance for doubtful accounts

 

87,104

 

99,903

 

Insurance recoverable - environmental remediation

 

35,664

 

27,379

 

Restricted investments

 

14,744

 

28,214

 

Prepaid expenses and other current assets

 

9,123

 

11,032

 

Income taxes refundable

 

388

 

224

 

Total current assets

 

161,732

 

175,221

 

Property and equipment:

 

 

 

 

 

Land and building

 

480

 

480

 

Equipment, furniture and fixtures

 

41,946

 

46,727

 

Leasehold improvements

 

4,861

 

4,909

 

 

 

47,287

 

52,116

 

Less accumulated depreciation and amortization

 

(35,535

)

(37,075

)

Property and equipment, net

 

11,752

 

15,041

 

Goodwill

 

14,870

 

35,119

 

Investments in and advances to unconsolidated affiliates and construction joint ventures

 

117

 

119

 

Long-term restricted investments

 

46,426

 

53,295

 

Long-term prepaid insurance

 

44,529

 

47,766

 

Other assets

 

8,369

 

10,335

 

Total assets

 

$

287,795

 

$

336,896

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current portion of long-term debt

 

$

3,629

 

$

4,632

 

Accounts payable

 

35,871

 

44,106

 

Accrued compensation and benefits

 

22,393

 

30,029

 

Deferred revenue

 

26,486

 

38,684

 

Environmental remediation liabilities

 

623

 

566

 

Other accrued liabilities

 

43,781

 

41,959

 

Total current liabilities

 

132,783

 

159,976

 

Non-current liabilities:

 

 

 

 

 

Long-term debt, net of current portion

 

5,815

 

7,869

 

Long-term income taxes payable

 

4,149

 

6,079

 

Long-term deferred revenue

 

102,452

 

105,008

 

Long-term environmental remediation liabilities

 

6,404

 

7,533

 

Total liabilities

 

251,603

 

286,465

 

Preferred stock, $.10 par value; 500,000 shares authorized, 7,209 shares issued and outstanding as convertible, liquidation preference value of $22,277 and $28,837 as of June 30, 2010 and 2009, respectively

 

8,239

 

1,808

 

Commitments and contingencies

 

 

 

 

 

Equity:

 

 

 

 

 

Common stock, $.10 par value; 40,000,000 shares authorized, 19,637,535 and 19,634,053 shares issued and outstanding, respectively, at June 30, 2010, and 19,357,573 and 19,354,091 shares issued and outstanding, respectively, at June 30, 2009

 

1,964

 

1,936

 

Additional paid-in capital

 

163,897

 

168,459

 

Accumulated deficit

 

(137,883

)

(121,434

)

Accumulated other comprehensive income (loss)

 

133

 

(305

)

Treasury stock, at cost

 

(33

)

(33

)

Total shareholders’ equity attributable to TRC Companies, Inc.

 

28,078

 

48,623

 

Noncontrolling interest

 

(125

)

—

 

Total equity

 

27,953

 

48,623

 

Total liabilities and equity

 

$

287,795

 

$

336,896