LOWELL, MA--(Marketwired - Aug 31, 2016) - TRC Companies, Inc. (
"Fiscal 2016 was a transformative and challenging year for TRC. In November we acquired the Willbros Professional Services (WPS) business and fully integrated it under very difficult market conditions. This transaction launched TRC as a leader of end-to-end project solutions in the midstream oil and gas markets. At the same time, we generated $48 million in positive cash flow for the year, paying down debt by $30 million and ending with $19 million of cash on the balance sheet," said Chris Vincze, Chairman and Chief Executive Officer.
"From an earnings perspective, TRC's fourth quarter trended in a positive direction, despite slowly improving conditions in the oil and gas markets. We had expenses related to the WPS acquisition of $2.8 million in the fourth quarter and $6.6 million for the full fiscal year. We also took a net $22.0 million, non-cash goodwill impairment charge for the full fiscal year," Vincze continued. "In the fourth quarter of fiscal 2016, NSR increased 16% compared with the same period of fiscal 2015. Operating income for the fourth quarter of fiscal 2016 was down 4% compared to the prior period, but when adjusted for acquisition-related expenses was down 1%. For the full fiscal year, NSR was up 14% and operating income declined 96%. However, adjusted for acquisition-related expenses and the goodwill charge, operating income was down only 3%."
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| (In millions, except per share data) | June 30, 2016 | June 30, 2015 | % Change | June 30, 2016 | June 30, 2015 | % Change | ||||||||||||||
| GAAP Results | ||||||||||||||||||||
| Net service revenue (1) | $ | 132.3 | $ | 114.6 | 16 | % | $ | 465.1 | $ | 408.0 | 14 | % | ||||||||
| Acquisition and integration expense | $ | 2.8 | $ | - | N/A | $ | 6.6 | $ | - | N/A | ||||||||||
| Depreciation | $ | 1.8 | $ | 1.3 | 37 | % | $ | 6.9 | $ | 5.8 | 19 | % | ||||||||
| Amortization | $ | 2.8 | $ | 0.9 | 217 | % | $ | 7.8 | $ | 3.5 | 124 | % | ||||||||
| Goodwill impairment | $ | (2.5 | ) | $ | - | N/A | $ | 22.0 | $ | - | N/A | |||||||||
| Operating income | $ | 10.3 | $ | 10.7 | -4 | % | $ | 1.3 | $ | 30.7 | -96 | % | ||||||||
| Net income applicable to TRC Companies, Inc. | $ | 5.9 | $ | 6.8 | -13 | % | $ | 0.0 | $ | 19.4 | -100 | % | ||||||||
| Diluted earnings per common share | $ | 0.19 | $ | 0.22 | -14 | % | $ | 0.00 | $ | 0.63 | -100 | % | ||||||||
| Non-GAAP Results | ||||||||||||||||||||
| EBITDA | $ | 14.8 | $ | 12.9 | 15 | % | $ | 16.1 | $ | 40.0 | -60 | % | ||||||||
| Tax effect of acqusition and integration expenses | $ | (1.1 | ) | $ | - | N/A | $ | (2.4 | ) | $ | - | N/A | ||||||||
| Tax effect of goodwill impairment | $ | 1.0 | $ | - | N/A | $ | (8.5 | ) | $ | - | N/A | |||||||||
| Adjusted operating income (2) | $ | 10.6 | $ | 10.7 | -1 | % | $ | 29.9 | $ | 30.7 | -3 | % | ||||||||
| Adjusted EBITDA (2) | $ | 15.2 | $ | 12.9 | 18 | % | $ | 44.6 | $ | 40.0 | 11 | % | ||||||||
| Adjusted net income (2) (3) | $ | 6.1 | $ | 6.8 | -10 | % | $ | 17.7 | $ | 19.4 | -9 | % | ||||||||
| Adjusted diluted earnings per common share (2) (3) | $ | 0.20 | $ | 0.22 | -9 | % | $ | 0.56 | $ | 0.63 | -11 | % | ||||||||
| (1) | TRC believes net service revenue (NSR) best reflects the value of services provided and is the most meaningful indicator of revenue performance. | |
| (2) | Excludes acquisition and integration expenses of $2.8 million and $6.6 million and goodwill impairment charges of $(2.5) million and $22.0 million for the three and twelve months ended June 30, 2016, respectively. | |
| (3) | Excludes goodwill impairment and acquisition related expense in note 2, net of an income tax benefit of $0.1 million and $10.9 million for the three and twelve months ended June 30, 2016, respectively. | |
Comments on Segment Results "Our Energy segment experienced a 4% increase in NSR and 7% decline in segment profit compared to the fourth quarter of fiscal 2015," Vincze added. "The increase in NSR was primarily the result of increased demand for electric transmission and distribution services, and the decline in segment profit was related to delays in the award of project tasks under a significant program management project in California. In our Infrastructure segment, transportation-related spending by our clients led to a 24% increase in segment NSR and a 32% increase in segment profit. The continued slowdown from certain oil and gas clients led to a 9% decline in NSR in our Environmental segment, while profit increased 3%, primarily due to project efficiencies and cost savings from staff reductions.
"The downturn in oil and gas markets continued to weigh on our Pipeline Services segment. NSR for the quarter was $20.8 million, and the segment experienced a loss of $3.2 million, including $2.1 million of amortization expenses and $2.3 million of acquisition integration expenses, primarily lease abandonment charges," Vincze said. "We have made significant staff reductions and other cost improvements in this segment, normalizing our platform to the current revenue streams. These cost reductions led to fourth quarter segment profit of $1.2 million, before amortization and acquisition integration expenses."
Business Outlook "The long-term prospects are favorable for all of our segments," Vincze said. "In our Energy segment, demand from our utility clients, along with increased energy efficiency, testing and commissioning, and transmission project activity, will support growth. Increased state and federal government transportation spending continues to spur backlog growth in our Infrastructure segment. Our Environmental segment will continue to be affected by the slowdown from our oil and gas clients, but demand for services related to environmental remediation, construction, transaction support, the retirement of coal plants, and renewable energy should contribute to growth. Long-term fundamentals support future growth in our Pipeline Services segment, especially with regard to our integrity services, despite current headwinds. With the improvements we have made to our cost structure and balance sheet, we are ready to capitalize on expansion opportunities in all of our strategic markets."
Conference Call Information / Reconciliation of Non-GAAP Metrics TRC will webcast its financial results conference call today, Aug. 31, 2016 at 9 a.m. ET. To listen to the live webcast and access the accompanying presentation slides, visit the " Investor Center " section of TRC's website at www.TRCsolutions.com . Those slides also contain a reconciliation of non-GAAP metrics utilized in this press release to GAAP metrics. The call also may be accessed by dialing (877) 407-5790 or (201) 689-8328. A webcast replay will be available on the Company's website for approximately one year.
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 energy, environmental, infrastructure and pipeline 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 | Year Ended | ||||||||||||||||
| June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | ||||||||||||||
| Gross revenue | $ | 169,532 | $ | 149,087 | $ | 620,864 | $ | 546,117 | |||||||||
| Less subcontractor costs and other direct reimbursable charges | 37,201 | 34,520 | 155,735 | 138,099 | |||||||||||||
| Net service revenue | 132,331 | 114,567 | 465,129 | 408,018 | |||||||||||||
| Interest income from contractual arrangements | 53 | 30 | 122 | 97 | |||||||||||||
| Insurance recoverables and other income | 14,129 | 295 | 16,048 | 6,533 | |||||||||||||
| Operating costs and expenses: | |||||||||||||||||
| Cost of services (exclusive of costs shown separately below) | 121,627 | 90,016 | 402,317 | 337,291 | |||||||||||||
| General and administrative expenses | 9,685 | 11,971 | 34,375 | 37,331 | |||||||||||||
| Acquisition and integration expenses | 2,847 | - | 6,571 | - | |||||||||||||
| Depreciation | 1,820 | 1,333 | 6,890 | 5,814 | |||||||||||||
| Amortization | 2,757 | 869 | 7,835 | 3,502 | |||||||||||||
| Goodwill impairment | (2,484 | ) | - | 21,981 | - | ||||||||||||
| Total operating costs and expenses | 136,252 | 104,189 | 479,969 | 383,938 | |||||||||||||
| Operating income | 10,261 | 10,703 | 1,330 | 30,710 | |||||||||||||
| Interest income | 514 | - | 840 | - | |||||||||||||
| Interest expense | (1,145 | ) | (9 | ) | (2,707 | ) | (134 | ) | |||||||||
| Income from operations before taxes | 9,630 | 10,694 | (537 | ) | 30,576 | ||||||||||||
| Income tax provision | (3,688 | ) | (3,936 | ) | 670 | (11,180 | ) | ||||||||||
| Net income | 5,942 | 6,758 | 133 | 19,396 | |||||||||||||
| Net loss applicable to noncontrolling interest | (33 | ) | 5 | (92 | ) | 19 | |||||||||||
| Net income applicable to TRC Companies, Inc. | $ | 5,909 | $ | 6,763 | $ | 41 | $ | 19,415 | |||||||||
| Basic earnings per common share | $ | 0.19 | $ | 0.22 | $ | 0.00 | $ | 0.64 | |||||||||
| Diluted earnings per common share | $ | 0.19 | $ | 0.22 | $ | 0.00 | $ | 0.63 | |||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||
| Basic | 31,074 | 30,457 | 30,936 | 30,291 | |||||||||||||
| Diluted | 31,424 | 31,232 | 31,359 | 30,724 | |||||||||||||
| TRC Companies, Inc. | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (in thousands, except per share data) | ||||||||||
| (Unaudited) | ||||||||||
| June 30, 2016 | June 30, 2015 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 18,804 | $ | 37,296 | ||||||
| Restricted cash | 71 | 122 | ||||||||
| Accounts receivable, less allowance for doubtful accounts | 149,280 | 138,346 | ||||||||
| Insurance recoverable - environmental remediation | 49,934 | 40,927 | ||||||||
| Restricted investments | 5,959 | 6,701 | ||||||||
| Income taxes refundable | 75 | 412 | ||||||||
| Prepaid expenses and other current assets | 24,122 | 10,499 | ||||||||
| Total current assets | 248,245 | 234,303 | ||||||||
| Property and equipment | 74,053 | 64,594 | ||||||||
| Less accumulated depreciation and amortization | (51,593 | ) | (50,885 | ) | ||||||
| Property and equipment, net | 22,460 | 13,709 | ||||||||
| Goodwill | 75,337 | 37,024 | ||||||||
| Intangible assets, net | 45,969 | 9,304 | ||||||||
| Deferred income tax assets | 26,239 | 18,924 | ||||||||
| Long-term restricted investments | 18,420 | 18,385 | ||||||||
| Long-term prepaid insurance | 23,425 | 25,929 | ||||||||
| Other assets | 18,383 | 5,303 | ||||||||
| Total assets | $ | 478,478 | $ | 362,881 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Current portion of long-term debt | $ | 18,339 | $ | 50 | ||||||
| Current portion of capital lease obligations | - | 166 | ||||||||
| Accounts payable | 29,311 | 31,999 | ||||||||
| Accrued compensation and benefits | 48,485 | 47,233 | ||||||||
| Deferred revenue | 15,363 | 10,612 | ||||||||
| Environmental remediation liabilities | 8,654 | 8,695 | ||||||||
| Income taxes payable | 265 | 3,271 | ||||||||
| Other accrued liabilities | 58,026 | 42,170 | ||||||||
| Total current liabilities | 178,443 | 144,196 | ||||||||
| Non-current liabilities: | ||||||||||
| Long-term debt, net of current portion | 79,243 | 55 | ||||||||
| Long-term income taxes payable | 2,204 | 1,647 | ||||||||
| Deferred revenue | 65,340 | 68,579 | ||||||||
| Environmental remediation liabilities | 433 | 489 | ||||||||
| Total liabilities | 325,663 | 214,966 | ||||||||
| Commitments and contingencies | ||||||||||
| Equity: | ||||||||||
| Common stock, $.10 par value; 40,000,000 shares authorized, 31,087,084 and 31,083,602 shares issued and outstanding, respectively, at June 30, 2016, and 30,485,510 and 30,482,028 shares issued and outstanding, respectively, at June 30, 2015 | 3,109 | 3,049 | ||||||||
| Additional paid-in capital | 195,156 | 191,321 | ||||||||
| Accumulated deficit | (45,898 | ) | (45,939 | ) | ||||||
| Accumulated other comprehensive loss | (71 | ) | (88 | ) | ||||||
| Treasury stock, at cost | (33 | ) | (33 | ) | ||||||
| Total shareholders' equity applicable to TRC Companies, Inc. | 152,263 | 148,310 | ||||||||
| Noncontrolling interest | 552 | (395 | ) | |||||||
| Total equity | 152,815 | 147,915 | ||||||||
| Total liabilities and equity | $ | 478,478 | $ | 362,881 | ||||||
Investor Contact: Andrew Blazier Senior Associate Sharon Merrill (617) 542-5300 trr@investorrelations.com Company Contact: Thomas W. Bennet, Jr. CFO (978) 970-5600 tbennet@trcsolutions.com
