Three Months Ended
September 24, September 25,
(In millions, except per share data) 2010 2009
Net service revenue* $ 57.6 $ 57.0
Operating income $ 3.4 $ 0.2
Federal and state income tax provision $ (0.5) $ (0.1)
Accretion charges on preferred stock $ (3.8) $ (0.8)
Net loss applicable to TRC Companies, Inc.'s
common shareholders $ (1.1) $ (0.9)
Diluted loss per common share $ (0.06) $ (0.05)
Diluted weighted-average common shares
outstanding 19,684 19,404
*The Company believes net service revenue, rather than gross revenue, best
reflects the value of services provided to its customers and is the most
meaningful indicator of TRC's revenue performance.
Comments on the First Quarter
"TRC's first-quarter fiscal 2011 results demonstrate that our profitable
growth initiatives are proving effective within the dual constraints of a
highly competitive market environment and an uncertain economy," said
Chairman and Chief Executive Officer Chris Vincze. "Net Service Revenue
(NSR), which grew approximately $0.6 million, or 1.1%, increased
year-over-year for the second consecutive quarter. The increase was
primarily driven by demand for our environmental services and the
recovering performance of our energy segment. Our infrastructure segment
contributed to the bottom line with improved profit results on lower NSR."
"On the expense side, the results reflect our more efficient cost
structure. A decrease in Cost of Services was the key driver of our
current quarter operating profit of $3.4 million. For the second
consecutive quarter, gross revenue backlog continued to grow, up 5.3% to
$380 million from the immediately prior quarter."
"Within our environmental segment, we experienced stronger demand in areas
that are benefitting from an increase in regulatory compliance and
enforcement, such as our air quality, air measurement, and environmental
remediation services. NSR in our energy segment grew slightly in the
quarter, primarily through increased demand for our energy efficiency
services and increased activity on electrical transmission, distribution
and substation projects. While economic uncertainty and lack of a
consistent federal energy policy continues to impact overall expenditures,
our energy clients are beginning to resume investments in certain energy
projects that were previously stalled as a result of budgetary caution.
Work within our infrastructure segment was primarily focused in areas with
access to funding, such as federal stimulus money or pre-recession capital
programs related to bridge and highway programs. Most state and local
budgets continue to be pressured by severe funding limitations."
Business Outlook
"Our focus for fiscal 2011 is to achieve both profitable revenue growth
through our key operational and sales strategies as well as operating
income growth through performance excellence. Traditionally, the first and
fourth quarters are the strongest part of the year for us. We are off to a
good start in fiscal 2011, and our approach to the remainder of the year is
to extend our current momentum in the context of the seasonal effects that
usually impact our next two fiscal quarters."
"While capital spending by our clients is expected to remain below
historical norms, we are continuing to target the most promising areas
within our environmental and energy segments. We are encouraged by the
prospects for our energy segment, particularly for our energy efficiency
and engineer-procure-construct (EPC) services. We expect increased
regulatory activity and corporate risk mitigation initiatives to drive
demand within our environmental segment. Although TRC has made significant
improvements in the infrastructure business portfolio, we do not anticipate
meaningful near-term growth in this segment. Over time, we anticipate
alternative funding mechanisms; potential for additional economic stimulus;
and the increasing need to upgrade, replace or repair the nation's aging
infrastructure will renew growth in that segment," concluded Vincze.
Conference Call Information
The Company will broadcast its first-quarter fiscal 2011 financial results
conference call on November 4 at 9 a.m. ET. Those who wish to listen to the
conference call should visit the "Investor Center" section of TRC's website
at www.TRCsolutions.com. The call also may be accessed by dialing (877)
709-8155 or (201) 689-8881 prior to the start of the call. For interested
individuals unable to join the live conference call, a webcast replay will
be available on the Company's website for one year.
About TRC
A pioneer in groundbreaking scientific and engineering developments since
the 1960s, TRC is a national engineering, consulting and construction
management firm that provides integrated services to the energy,
environmental, and infrastructure markets. TRC serves a broad range of
clients in government and industry, 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, visit TRC's website at http://www.trcsolutions.com.
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, the availability and adequacy of insurance; the uncertainty of
our operational and growth strategies; circumstances which could create
large cash outflows, such as contract losses, litigation, uncollectible
receivables and income tax assessments, including potential payments
related to TRC's ongoing IRS audit, if not resolved successfully;
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; and general political or
economic conditions. Furthermore, market trends are subject to changes,
which could adversely affect future results. See additional discussion in
TRC's Annual Report on Form 10-K for the fiscal year ended June 30, 2010,
Quarterly Reports on Form 10-Q, and other factors detailed 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
----------------------------
September 24, September 25,
2010 2009
------------- -------------
Gross revenue $ 78,818 $ 82,357
Less subcontractor costs and other direct
reimbursable charges 21,228 25,397
------------- -------------
Net service revenue 57,590 56,960
------------- -------------
Interest income from contractual arrangements 88 180
Insurance recoverables and other income 597 3,283
Operating costs and expenses:
Cost of services 46,574 50,880
General and administrative expenses 6,538 6,678
Provision for doubtful accounts 578 686
Depreciation and amortization 1,228 1,950
------------- -------------
Total operating costs and expenses 54,918 60,194
------------- -------------
Operating income 3,357 229
Interest expense (197) (264)
------------- -------------
Income (loss) from operations before taxes
and equity in losses 3,160 (35)
Federal and state income tax provision (464) (56)
------------- -------------
Income (loss) from operations before equity
in losses 2,696 (91)
Equity in losses from unconsolidated
affiliates, net of taxes (13) (15)
------------- -------------
Net income (loss) 2,683 (106)
Net loss applicable to noncontrolling
interest 21 27
------------- -------------
Net income (loss) applicable to TRC
Companies, Inc. 2,704 (79)
Accretion charges on preferred stock (3,799) (834)
------------- -------------
Net loss applicable to TRC Companies, Inc.'s
common shareholders $ (1,095) $ (913)
============= =============
Basic and diluted loss per common share $ (0.06) $ (0.05)
============= =============
Basic and diluted weighted average common
shares outstanding 19,684 19,404
============= =============
TRC COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
September 24, June 30,
2010 2010
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 903 $ 14,709
Accounts receivable, less allowance for
doubtful accounts 94,792 87,104
Insurance recoverable - environmental
remediation 35,881 35,664
Restricted investments 12,675 14,744
Prepaid expenses and other current assets 13,858 9,123
Income taxes refundable 179 388
------------- -------------
Total current assets 158,288 161,732
------------- -------------
Property and equipment 47,101 47,287
Less accumulated depreciation and
amortization (35,708) (35,535)
------------- -------------
Property and equipment, net 11,393 11,752
------------- -------------
Goodwill 14,870 14,870
Investments in and advances to unconsolidated
affiliates and construction joint ventures 112 117
Long-term restricted investments 46,424 46,426
Long-term prepaid insurance 43,696 44,529
Other assets 8,305 8,369
------------- -------------
Total assets $ 283,088 $ 287,795
============= =============
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 5,344 $ 3,629
Accounts payable 27,446 35,871
Accrued compensation and benefits 24,253 22,393
Deferred revenue 22,481 26,486
Environmental remediation liabilities 512 623
Other accrued liabilities 43,254 43,781
------------- -------------
Total current liabilities 123,290 132,783
------------- -------------
Non-current liabilities:
Long-term debt, net of current portion 5,757 5,815
Long-term income taxes payable 4,449 4,149
Long-term deferred revenue 103,858 102,452
Long-term environmental remediation
liabilities 6,219 6,404
------------- -------------
Total liabilities 243,573 251,603
------------- -------------
Preferred stock, $.10 par value; 500,000
shares authorized, 7,209 shares issued and
outstanding as convertible, liquidation
preference value of $20,114 and $22,277 as
of September 24, 2010 and June 30, 2010,
respectively 12,038 8,239
------------- -------------
Commitments and contingencies
Equity:
Common stock, $.10 par value; 40,000,000
shares authorized, 19,802,043 and
19,798,561 shares issued and outstanding,
respectively, at September 24, 2010, and
19,637,535 and 19,634,053 shares issued
and outstanding, respectively, at
June 30, 2010 1,980 1,964
Additional paid-in capital 160,643 163,897
Accumulated deficit (135,179) (137,883)
Accumulated other comprehensive income 212 133
Treasury stock, at cost (33) (33)
------------- -------------
Total shareholders' equity applicable to
TRC Companies, Inc. 27,623 28,078
Noncontrolling interest (146) (125)
------------- -------------
Total equity 27,477 27,953
------------- -------------
Total liabilities and equity $ 283,088 $ 287,795
============= =============
Contact Information: Investor Contact: Sharon Merrill Associates (617) 542-5300 trr@investorrelations.com Company Contact: Thomas W. Bennet, Jr. CFO (978) 970-5600 tbennet@trcsolutions.com