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  Change Change   2017   2016  Change Change
                 
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 AssociateSharon Merrill Associates(617) 542-5300trr@investorrelations.com Company Contact: Thomas W. Bennet, Jr., CFO (978) 970-5600 tbennet@trcsolutions.com