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 | ||||||