TRC Announces First-Quarter Fiscal 2016 Financial Results

LOWELL, MA -- (Marketwired) -- 11/04/15 -- TRC Companies, Inc. (NYSE: TRR), a recognized leader in engineering, environmental consulting and construction management services to the energy, environmental and infrastructure markets, today announced financial results for the fiscal first quarter ended September 25, 2015.

Financial Highlights

                                              Three Months Ended
                                         ---------------------------
                                         September 25, September 26,    %
(In millions, except per share data)          2015          2014     Change
                                         ------------- ------------- ------
Net service revenue(1)                   $       100.2 $        92.6      8%
Operating income                         $         7.7 $         6.0     28%
Net income applicable to TRC Companies,
 Inc.                                    $         4.5 $         3.5     29%
Diluted earnings per common share        $        0.14 $        0.11     27%
Diluted weighted-average common shares
 outstanding                                      31.3          30.4

(1) The Company believes net service revenue (NSR) best reflects the value
of services provided and is the most meaningful indicator of revenue
performance.

Comments on the Results "We began the new fiscal year with solid performance in each of our segments," said Chris Vincze, Chairman and Chief Executive Officer. "We continued to execute on our growth strategy, driving topline growth across our business. NSR increased 8% and net income rose 29% from the same period the prior year.

"In our Environmental segment, NSR increased 11% and profit rose 1% in the quarter, largely as a result of services provided to our midstream oil and gas clients. NSR growth outpaced profit due to the timing of change orders, as well as costs associated with organic growth initiatives, as we invest to take advantage of developing market conditions. Strong demand for electrical transmission and distribution services led to a 5% increase in Energy segment NSR, while strong project execution and efficient labor cost management helped increase segment profit 31% year over year. Infrastructure segment NSR increased 9%, driven by demand from our state transportation and commercial clients. Project execution and labor cost management drove a 37% increase in segment profit during the quarter," Vincze said.

Business Outlook "Fiscal 2016 is off to a good start, as we continue to execute our strategic growth initiatives," Vincze added. "In our Energy segment, demand for our utility clients remains strong. Our Infrastructure segment backlog is robust, and the prospects for a long-term federal transportation bill are favorable. Environmental issues related to transportation of natural gas and retirement of coal plants should support revenue growth in our Environmental segment. We are looking forward to completing our acquisition of the Willbros Professional Services business, which will become a fourth segment, Pipeline Services. We believe adding this unit's technical capabilities, employees and client base to TRC, with our national reputation and strong financial position, will create a company with an unparalleled capability to address all phases of the pipeline project life cycle."

Conference Call Information TRC will webcast its financial results conference call today, November 4, 2015 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. 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 and infrastructure markets. TRC serves a broad range of commercial, industrial and governmental 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, the uncertainty of TRC's operational and growth strategies; 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; 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, 2015, and other factors included from time to time in the Company's other subsequent 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 25,  September 26,
                                                    2015           2014
                                               -------------  -------------

Gross revenue                                  $     135,459  $     123,025
  Less subcontractor costs and other direct
   reimbursable charges                               35,296         30,406
                                               -------------  -------------
Net service revenue                                  100,163         92,619
                                               -------------  -------------

Interest income from contractual arrangements             15             22
Insurance recoverables and other income                  742          4,844

Operating costs and expenses:
  Cost of services (exclusive of costs shown
   separately below)                                  82,984         81,190
  General and administrative expenses                  7,999          8,038
  Depreciation and amortization                        2,264          2,265
                                               -------------  -------------
Total operating costs and expenses                    93,247         91,493
                                               -------------  -------------
Operating income                                       7,673          5,992
Interest expense                                         (28)           (31)
                                               -------------  -------------
Income from operations before taxes                    7,645          5,961
Income tax provision                                  (3,157)        (2,480)
                                               -------------  -------------
Net income                                             4,488          3,481
Net loss applicable to noncontrolling interest             4              4
                                               -------------  -------------
Net income applicable to TRC Companies, Inc.   $       4,492  $       3,485
                                               =============  =============

Basic earnings per common share                $        0.15  $        0.12
                                               =============  =============
Diluted earnings per common share              $        0.14  $        0.11
                                               =============  =============

Weighted-average common shares outstanding:
  Basic                                               30,635         29,979
                                               =============  =============
  Diluted                                             31,318         30,378
                                               =============  =============



                            TRC Companies, Inc.
                   Condensed Consolidated Balance Sheets
                   (in thousands, except per share data)
                                (Unaudited)

                                               September 25,     June 30,
                                                    2015           2015
                                               -------------  -------------
                                   ASSETS
Current assets:
  Cash and cash equivalents                    $      53,149  $      37,296
  Restricted cash                                          -            122
  Accounts receivable, less allowance for
   doubtful accounts                                 135,141        138,346
  Insurance recoverable - environmental
   remediation                                        40,919         40,927
  Restricted investments                               6,382          6,701
  Deferred income tax assets                          16,281         16,057
  Income taxes refundable                                497            412
  Prepaid expenses and other current assets           14,330         10,499
                                               -------------  -------------
    Total current assets                             266,699        250,360
                                               -------------  -------------

Property and equipment                                65,731         64,594
  Less accumulated depreciation and
   amortization                                      (47,351)       (50,885)
                                               -------------  -------------
    Property and equipment, net                       18,380         13,709
                                               -------------  -------------
Goodwill                                              37,024         37,024
Long-term deferred income tax assets                   2,813          2,867
Long-term restricted investments                      18,374         18,385
Long-term prepaid insurance                           25,366         25,929
Other assets                                           9,255         14,607
                                               -------------  -------------
    Total assets                               $     377,911  $     362,881
                                               =============  =============

                           LIABILITIES AND EQUITY
Current liabilities:
  Current portion of long-term debt            $       4,641  $          50
  Current portion of capital lease obligations            92            166
  Accounts payable                                    31,280         31,999
  Accrued compensation and benefits                   55,412         47,233
  Deferred revenue                                    12,404         10,612
  Environmental remediation liabilities                8,680          8,695
  Income taxes payable                                 1,794          3,271
  Other accrued liabilities                           41,599         42,170
                                               -------------  -------------
    Total current liabilities                        155,902        144,196
                                               -------------  -------------
Non-current liabilities:
  Long-term debt, net of current portion                  51             55
  Capital lease obligations, net of current
   portion                                                 -              -
  Income taxes payable and deferred income tax
   liabilities                                         1,695          1,647
  Deferred revenue                                    67,121         68,579
  Environmental remediation liabilities                  482            489
                                               -------------  -------------
    Total liabilities                                225,251        214,966
                                               -------------  -------------
Commitments and contingencies
Equity:
    Common stock, $.10 par value; 40,000,000
     shares authorized, 30,834,382 and
     30,830,900 shares issued and outstanding,
     respectively, at September 25, 2015, and
     30,485,510 and 30,482,028 shares issued
     and outstanding, respectively, at June
     30, 2015                                          3,083          3,049
  Additional paid-in capital                         191,536        191,321
  Accumulated deficit                                (41,447)       (45,939)
  Accumulated other comprehensive loss                   (80)           (88)
  Treasury stock, at cost                                (33)           (33)
                                               -------------  -------------
    Total shareholders' equity applicable to
     TRC Companies, Inc.                             153,059        148,310
  Noncontrolling interest                               (399)          (395)
                                               -------------  -------------
    Total equity                                     152,660        147,915
                                               -------------  -------------
    Total liabilities and equity               $     377,911  $     362,881
                                               =============  =============

Investor Contact:
Andrew Blazier
Senior Associate
Sharon Merrill
(617) 542-5300
[email protected]

Company Contact:
Thomas W. Bennet, Jr.
CFO
(978) 970-5600
[email protected]

Source: TRC Companies, Inc.

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