EX-99.1 2 exhibit991trcq1f2017earnin.htm EXHIBIT 99.1 TRC Q1F2017 EARNINGS RELEASE Exhibit
Exhibit 99.1

Investor Contact:
 
Andrew Blazier, Senior Associate
 
Sharon Merrill
 
(617) 542-5300
 
trr@investorrelations.com
 
trclogoa07.jpg
 
Company Contact:
 
Thomas W. Bennet, Jr., CFO
 
(978) 970-5600
 
tbennet@trcsolutions.com
 
 

TRC Announces First-Quarter Fiscal 2017 Financial Results
NSR Up 24% from Q1 Fiscal 2016; Oil & Gas Segment Results Continue to Improve

Lowell, MA, Nov. 3, 2016 - TRC Companies, Inc. (NYSE: TRR), a recognized leader in engineering, environmental consulting and construction-management services to the power, environmental, infrastructure and oil and gas markets, today announced financial results for the fiscal first quarter ended September 30, 2016.
 
Three Months Ended
 
 
 
 
September 30,
 
September 25,
 
$
%
(In millions, except per share data)
2016
 
2015
 
Change
Change
 
 
 
 
 
 
 
GAAP Results
 
 
 
 
 
 
Net service revenue (1)
$
124.3

 
$
100.2

 
$
24.1

24
 %
Acquisition and integration expense
$
—

 
$
0.9

 
$
(0.9
)
N/A

Depreciation
$
1.8

 
$
1.4

 
$
0.4

26
 %
Amortization
$
2.7

 
$
0.8

 
$
1.9

223
 %
Operating income
$
6.0

 
$
7.7

 
$
(1.7
)
-22
 %
Net income applicable to TRC Companies, Inc.
$
3.6

 
$
4.5

 
$
(0.9
)
-19
 %
Diluted earnings per common share
$
0.12

 
$
0.14

 
$
(0.02
)
-14
 %
 
 
 
 
 
 
 
Non-GAAP Results
 
 
 
 
 
 
EBITDA
$
10.5

 
$
9.9

 
$
0.5

5
 %
Tax effect of acquisition and integration expenses
$
—

 
$
0.4

 
$
(0.4
)
N/A

Adjusted operating income (2)
$
6.0

 
$
8.6

 
$
(2.6
)
-30
 %
Adjusted EBITDA (2)
$
10.5

 
$
10.8

 
$
(0.3
)
-3
 %
Adjusted net income (2)(3)
$
3.6

 
$
5.0

 
$
(1.4
)
-28
 %
Adjusted diluted earnings per common share (2)(3)
$
0.12

 
$
0.16

 
$
(0.04
)
-25
 %
(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)
Excludes acquisition and integration expenses of $0.9 million for the three months ended September 25, 2015.
(3)
Excludes acquisition related expense in note 2, net of an income tax benefit of $0.4 million for the three and nine months ended September 25, 2015.

“In the first quarter of fiscal 2017, NSR was $124 million, up 24% from $100 million in the same period of fiscal 2016. The increase was primarily driven by our Oil & Gas segment, which we acquired during the second quarter of fiscal 2016, as well as by large projects in our Power and Infrastructure segments,” said Chris Vincze, Chairman and Chief Executive Officer. “Operating income was $6 million, $1.7 million lower than the $7.7 million reported in the prior-year period, while net income was $3.6 million, down $0.9 million, primarily due to a $1.9 million increase in amortization expense. EBITDA increased to $10.5 million, up $0.5 million, or 5% from the prior-year period. Our Days Sales Outstanding, or DSO, of 84 days was an improvement of six days from the 90-day result in the year-ago quarter.”


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


Comments on Segment Results
“In our Power segment, NSR increased 8% and segment profit rose 9%, compared with the first quarter of fiscal 2016,” Vincze said. “The increases were primarily driven by several large capital projects, including a significant program management project in California. Environmental segment NSR and segment profit declined 5% and 9%, respectively, primarily as a result of a decrease in demand from our oil and gas clients, continuing the trend of recent quarters. In our Infrastructure segment, ongoing transportation-related spending by our clients drove a 23% increase in NSR and a 49% increase in segment profit year-over-year.

“Our Oil & Gas segment generated much improved results, despite continued uncertainty in this market. NSR of $21.3 million increased from $20.8 million in the fourth quarter of fiscal 2016. Segment profit was $1.4 million, up from a segment loss in the fourth quarter,” Vincze said. “The improvement in bottom-line performance is primarily related to higher productivity and the significant cost improvements we made in previous quarters to align our platform to current revenue streams.”
 

Business Outlook
“We are encouraged by the long-term prospects in each of our segments,” Vincze said. “In our Power segment, demand from our utility clients, our current expansion in California and the ongoing shift toward program management work are driving revenue growth. We are working on significant state and public-private partnership projects that should fuel Infrastructure results in the near term. The capital spend slowdown in oil and gas continues to weigh on our Environmental segment. However, this should be partially offset by demand for services related to construction, transaction support, the retirement of coal plants and renewable energy. Our Oil & Gas segment appears to be stabilizing, and we expect to see a number of capital projects going forward. In particular, we see an increased level of activity and interest in our pipeline integrity-related services.”


Conference Call Information / Reconciliation of Non-GAAP Metrics
TRC will webcast its financial results conference call today, Nov. 3, 2016 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. Those slides also contain a reconciliation of non-GAAP metrics utilized in this press release to GAAP metrics. 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.



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

Exhibit 99.1


About TRC
A pioneer in groundbreaking scientific and engineering developments since the 1960s, TRC is a national engineering, environmental consulting and construction management firm that provides integrated services to the power, environmental, infrastructure and oil and gas markets. TRC serves a broad range of commercial, industrial and government clients, 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, 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; capital availability and project investment by TRC’s clients; 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, 2016, and other factors included 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
 
September 30,
2016
 
September 25,
2015
Gross revenue
$
180,851

 
$
135,459

Less subcontractor costs and other direct reimbursable charges
56,546

 
35,296

Net service revenue
124,305

 
100,163

Interest income from contractual arrangements
34

 
15

Insurance recoverables and other income
637

 
742

Operating costs and expenses:
 
 
 
Cost of services (exclusive of costs shown separately below)
103,676

 
82,984

General and administrative expenses
10,839

 
7,121

Acquisition and integration expenses
—

 
878

Depreciation
1,788

 
1,424

Amortization
2,716

 
840

Total operating costs and expenses
119,019

 
93,247

Operating income
5,957

 
7,673

Interest income
278

 
—

Interest expense
(845
)
 
(28
)
Income from operations before taxes
5,390

 
7,645

Income tax provision
(1,731
)
 
(3,157
)
Net income
3,659

 
4,488

Net (income) loss applicable to noncontrolling interest
(20
)
 
4

Net income applicable to TRC Companies, Inc.
$
3,639

 
$
4,492

 
 
 
 
Basic earnings per common share
$
0.12

 
$
0.15

Diluted earnings per common share
$
0.12

 
$
0.14

 
 
 
 
Weighted-average common shares outstanding:
 
 
 
Basic
31,149

 
30,635

Diluted
31,601

 
31,318



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)
 
September 30,
2016
 
June 30,
2016
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
12,681

 
$
18,804

Restricted cash
60

 
71

Accounts receivable, less allowance for doubtful accounts
168,466

 
149,280

Insurance recoverable - environmental remediation
50,086

 
49,934

Restricted investments
5,473

 
5,959

Income taxes refundable
—

 
75

Prepaid expenses and other current assets
21,917

 
24,122

Total current assets
258,683

 
248,245

 
 
 
 
Property and equipment
75,193

 
74,053

Less accumulated depreciation and amortization
(52,922
)
 
(51,593
)
Property and equipment, net
22,271

 
22,460

Goodwill
75,337

 
75,337

Intangible assets, net
43,253

 
45,969

Deferred income tax assets
25,851

 
26,239

Long-term restricted investments
18,150

 
18,420

Long-term prepaid insurance
22,896

 
23,425

Other assets
16,575

 
18,383

Total assets
$
483,016

 
$
478,478

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Current portion of long-term debt
$
15,497

 
$
18,339

Accounts payable
39,210

 
29,311

Accrued compensation and benefits
47,733

 
48,485

Deferred revenue
13,880

 
15,363

Environmental remediation liabilities
8,646

 
8,654

Income taxes payable
902

 
265

Other accrued liabilities
57,541

 
58,026

Total current liabilities
183,409

 
178,443

Non-current liabilities:
 
 
 
Long-term debt, net of current portion
77,253

 
79,243

Long-term income taxes payable
903

 
2,204

Deferred revenue
63,933

 
65,340

Environmental remediation liabilities
408

 
433

Total liabilities
325,906

 
325,663

Commitments and contingencies
 
 
 
Equity:
 
 
 
Common stock, $.10 par value; 40,000,000 shares authorized, 31,258,090 and 31,254,608 shares issued and outstanding, respectively, at September 30, 2016, and 31,087,084 and 31,083,602 shares issued and outstanding, respectively, at June 30, 2016
3,126

 
3,109

Additional paid-in capital
195,802

 
195,156

Accumulated deficit
(42,259
)
 
(45,898
)
Accumulated other comprehensive loss
(98
)
 
(71
)
Treasury stock, at cost
(33
)
 
(33
)
Total stockholders' equity applicable to TRC Companies, Inc.
156,538

 
152,263

Noncontrolling interest
572

 
552

Total equity
157,110

 
152,815

Total liabilities and equity
$
483,016

 
$
478,478


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