TRC Announces Third-Quarter Fiscal 2017 Financial Results


NSR Up 6% from Q3 Fiscal 2016; Net Income of $4.5 Million

LOWELL, Mass., May 04, 2017 (GLOBE NEWSWIRE) -- 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 third quarter ended March 31, 2017.

 Three Months Ended  Nine Months Ended  
 March March  March March  
  31, 25, $% 31, 25, $%
(In millions, except per share data) 2017 2016 ChangeChange 2017 2016 ChangeChange
         
GAAP Results        
Net service revenue(1)$   128.7 $  121.3 $  7.5 6%$   380.4 $  332.8 $  47.6 14%
Acquisition and integration expense$   -  $  1.6 $  (1.6)-100%$   -  $  3.7 $  (3.7)-100%
Goodwill impairment$   -  $  24.5 $  (24.5)-100%$   -  $  24.5 $  (24.5)-100%
Depreciation$   1.7 $  1.9 $  (0.2)-12%$   5.2 $  5.1 $  0.2 3%
Amortization$   2.8 $  3.2 $  (0.3)-11%$   8.1 $  5.1 $  3.1 60%
Operating income$   7.0 $  (23.3)$  30.4 N/A $   20.0 $  (8.9)$  28.9 N/A 
Net income applicable to TRC Companies, Inc.$   4.5 $  (14.3)$  18.8 N/A $   12.1 $  (5.9)$  18.0 N/A 
Diluted earnings per common share$   0.14 $  (0.46)$  0.60 N/A $   0.38 $  (0.19)$  0.57 N/A 
          
Non-GAAP Results         
EBITDA(2)$   11.5 $  (18.2)$  29.7 N/A $   33.4 $  1.2 $  32.2 2,644%
Adjusted EBITDA(3)$   11.5 $  7.9 $  3.6 46%$   33.4 $  29.4 $  4.0 14%
                     
(1) TRC believes net service revenue (NSR) best reflects the value of services provided and is the most meaningful indicator of revenue performance.
(2) TRC presents EBITDA because it believes that it is a useful tool for the Company, its lenders and its investors to measure the Company’s ability to meet debt service, capital expenditure and working capital requirements. As used in the presentation, EBITDA is operating income plus depreciation and amortization.
(3) Excludes acquisition and integration expenses of $1.6 million and $3.7 million for the three months and nine months ended March 25, 2016, respectively, and a goodwill impairment charge of $24.5 million for the three months and nine months ended March 25, 2016. For a complete reconciliation of the Company’s non-GAAP results, please see the associated reconciliation tables, which are posted on the Company’s website.
                     

“Our third quarter results were driven by robust demand in the majority of our markets. NSR was $128.7 million, up 6% from $121.3 million in the same quarter of fiscal 2016. The increase was driven primarily by large capital projects in our Power segment, including a significant program management project in California,” said Chris Vincze, Chairman and Chief Executive Officer. “Our Infrastructure segment also contributed to NSR growth, driven by transportation-related spending associated with several large public-private partnership projects. Our strong topline performance drove operating income of $7.0 million, net income of $4.5 million and EBITDA of $11.5 million."

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 Companies, Inc.   
Condensed Consolidated Statements of Operations   
(in thousands, except per share data)   
(Unaudited)   
           
   Three Months Ended Nine Months Ended 
   March 31, March 25, March 31, March 25, 
    2017   2016   2017   2016  
Gross revenue $   189,724   $  158,130  $   569,237   $  451,332  
 Less subcontractor costs and other direct reimbursable charges    60,999      36,877     188,851      118,534  
Net service revenue    128,725      121,253     380,386      332,798  
           
Interest income from contractual arrangements    20      27     116      69  
Insurance recoverables and other income    1,140      146     2,421      1,919  
           
Operating costs and expenses:         
 Cost of services (exclusive of costs shown separately below)    107,071      104,030     316,360      280,690  
 General and administrative expenses    11,290      9,523     33,171      24,690  
 Acquisition and integration expenses    -       1,606     -       3,724  
 Goodwill impairment    -       24,465     -       24,465  
 Depreciation    1,701      1,942     5,243      5,070  
 Amortization    2,813      3,162     8,146      5,078  
Total operating costs and expenses    122,875      144,728     362,920      343,717  
Operating income (loss)    7,010      (23,302)    20,003      (8,931) 
Interest income    391      189     955      326  
Interest expense    (1,201)    (1,073)    (2,887)    (1,562) 
Income from operations before taxes     6,200      (24,186)    18,071      (10,167) 
Income tax (provision) benefit    (1,663)    9,954     (5,867)    4,358  
Net income (loss)    4,537      (14,232)    12,204      (5,809) 
Net income applicable to noncontrolling interest    (39)    (65)    (69)    (59) 
Net income (loss) applicable to TRC Companies, Inc. $   4,498   $  (14,297) $   12,135   $  (5,868) 
           
           
Basic earnings per common share $   0.14   $  (0.46) $   0.39   $  (0.19) 
Diluted earnings per common share $   0.14   $  (0.46) $   0.38   $  (0.19) 
           
Weighted-average common shares outstanding:         
 Basic    31,605      31,045     31,401      30,886  
 Diluted    32,248      31,045     31,937      30,886  

 

TRC Companies, Inc. 
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
(Unaudited)
       
       
    March 31, June 30,
     2017   2016 
ASSETS
Current assets:    
 Cash and cash equivalents $6,211   $18,804 
 Restricted cash    16,760      71 
 Accounts receivable, less allowance for doubtful accounts  183,069    149,280 
 Insurance recoverable - environmental remediation     47,410      49,934 
 Restricted investments    5,863      5,959 
 Income taxes refundable    -      75 
 Prepaid expenses and other current assets    22,253      24,122 
  Total current assets  281,566    248,245 
       
Property and equipment    72,971      74,053 
 Less accumulated depreciation and amortization  (51,747)  (51,593)
  Property and equipment, net    21,224      22,460 
Goodwill     91,054      75,337 
Intangible assets, net    48,515      45,969 
Deferred income tax assets    24,685      26,239 
Long-term restricted investments     17,010      18,420 
Long-term prepaid insurance    21,838      23,425 
Other assets     14,731      18,383 
  Total assets $520,623   $478,478 
       
LIABILITIES AND EQUITY
Current liabilities:    
 Current portion of long-term debt  $10,783   $18,339 
 Accounts payable    45,429      29,311 
 Accrued compensation and benefits    46,788      48,485 
 Deferred revenue    14,659      15,363 
 Environmental remediation liabilities    8,640      8,654 
 Income taxes payable    649      265 
 Other accrued liabilities     83,915      58,026 
  Total current liabilities  210,863    178,443 
Non-current liabilities:    
 Long-term debt, net of current portion     80,056      79,243 
 Long-term income taxes payable    939      2,204 
 Deferred revenue    59,595      65,340 
 Environmental remediation liabilities    395      433 
  Total liabilities    351,848      325,663 
Commitments and contingencies    
Equity:    
  Common stock, $.10 par value; 40,000,000 shares authorized, 31,623,496 and 31,620,014 shares issued and outstanding, respectively, at March 31, 2017, and 31,087,084 and 31,083,602 shares issued and outstanding, respectively, at June 30, 2016    3,162      3,109 
 Additional paid-in capital  198,918    195,156 
 Accumulated deficit   (33,763)  (45,898)
 Accumulated other comprehensive loss    (130)    (71)
 Treasury stock, at cost    (33)    (33)
  Total shareholders' equity applicable to TRC Companies, Inc.  168,154    152,263 
 Noncontrolling interest    621      552 
  Total equity  168,775    152,815 
  Total liabilities and equity $520,623   $478,478 
       



            

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