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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


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

Source:TRC Companies, Inc