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TRC Announces Second-Quarter Fiscal 2013 Financial Results

TRC Announces Second-Quarter Fiscal 2013 Financial Results 
LOWELL, MA -- (Marketwire) -- 02/06/13 --  TRC Companies, Inc. (NYSE:
TRR), a recognized leader in engineering, consulting and construction
management services to the energy, environmental and infrastructure
markets, today announced financial results for the fiscal three and
six months ended December 28, 2012.  
Financial Highlights  


 
                                                                            
                       Three Months Ended            Six Months Ended       
                  ---------------------------- ---------------------------- 
(In millions,                                                               
 except per share  December 28,   December 30,  December 28,   December 30, 
 data)                 2012           2011          2012           2011     
                   ------------   ------------  ------------   ------------ 
                                                                            
Net service                                                                 
 revenue(1)       $        75.3  $        73.9 $       150.5  $       147.4 
                                                                            
Arena Towers                                                                
 litigation                                                                 
 expense                                                                    
 (reversal) (2)   $           -  $         0.2 $           -  $       (11.1)
                                                                            
Operating income  $         4.4  $         4.9 $         9.0  $        20.4 
                                                                            
Federal and state                                                           
 income tax                                                                 
 (provision)                                                                
 benefit (3)      $        (0.2) $         0.2 $        (0.4) $         3.5 
                                                                            
Net income                                                                  
 applicable to                                                              
 TRC Companies,                                                             
 Inc.             $         4.1  $         5.2 $         8.4  $        23.9 
                                                                            
Diluted earnings                                                            
 per common share $        0.14  $        0.18 $        0.28  $        0.84 
                                                                            
Diluted weighted-                                                           
 average common                                                             
 shares                                                                     
 outstanding               29.5           28.5          29.5           28.5 

 
(1) The Company believes net service revenue best reflects the value
of services provided to its customers and is the most meaningful
indicator of TRC's revenue performance.
 (2) On October 5, 2011 a
post-trial motion was granted to disregard a substantial portion of
the verdict in this matter resulting in an $11.2 million reduction of
the litigation accrual in the first quarter of fiscal 2012. In the
fourth quarter of fiscal 2011 the Company had recorded litigation
expense of $17.3 million related to the verdict.
 (3) The Company
received approval of a federal tax settlement resulting in a one-time
benefit in the first quarter of fiscal 2012.  
Comments on the Results
 "In the second quarter TRC delivered another
solid performance as we continued to grow the business despite
challenging market conditions," said Chairman and Chief Executive
Officer Chris Vincze. "Driven by higher demand for our Energy
services, Net Service Revenue (NSR) increased 2% in the second
quarter compared to the same quarter of the prior year. We also
continued building our growth platform and finalized two strategic
acquisitions which closed at the beginning of our fiscal third
quarter."  
"Energy segment NSR grew 9% in the second quarter compared to the
same period of the prior year primarily due to increased activity on
electric distribution projects for large utilities and the expansion
of our geographic presence in the mid-Atlantic region. Segment profit
for the quarter was down 14% compared to the second quarter of fiscal
2012 reflecting higher-than-expected contract costs on several
fixed-price projects. The market demand for distribution and
transmission services continues to be high, and we believe that
capital spending programs underlying those markets represent a growth
opportunity for TRC in the years ahead." 
"Our Environmental segment NSR grew 2% and profit was up 8% in the
second quarter compared to the same period of the prior year due to
increased utilization on certain large remediation projects. Natural
gas pipeline development and regional gas transportation, as well as
the potential for gas export, continue to represent major
opportunities for TRC. Our Infrastructure segment, which is most
affected by the lack of consistent government funding, saw NSR
decrease 8% and profit 25% in the second quarter compared to the same
period of the prior year, reflecting lower overall demand for our
services. However, segment NSR backlog for the quarter was 14% higher
than in the comparable period of the prior year."  
"We recently acquired GE's Air Emissions Testing business and the
Heschong Mahone Group, Inc. ("HMG"), a California based energy
efficiency consulting firm. The addition of the GE business to our
Environmental segment strengthens our leadership position in the
emissions testing market by adding technical resources and geographic
reach, primarily in the upper Midwest, West Coast, and the South.
Energy efficiency is a key growth market, and the HMG acquisition in
our Energy segment augments our client base and service offerings
while expanding our presence in the West Coast energy efficiency
market. These acquisitions represent important steps in our
profitable growth strategy and extend our momentum by focusing
resources on our most attractive markets." 
Business Outlook 
 "As we have said before, we believe TRC is in the
right markets at the right time. We are well-positioned to benefit as
the ongoing transformation of the U.S. energy industry continues and
capital spending patterns normalize in our target markets. We
continue to maintain a strong balance sheet and will leverage that to
pursue profitable growth both organically and through acquisitions."  
Conference Call Information
 The Company will broadcast its financial
results conference call today, February 6, 2013 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
may also be accessed by dialing (877) 709-8155 or (201) 689-8881. 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 and
updates from the Company, visit TRC's website at www.TRCsolutions.com
and follow TRC on Twitter 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, 2012, 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           Six Months Ended      
                     --------------------------  -------------------------- 
                     December 28,  December 30,  December 28,  December 30, 
                         2012          2011          2012          2011     
                     ------------  ------------  ------------  ------------ 
                                                                            
Gross revenue        $    104,470  $    105,378  $    212,756  $    209,113 
  Less subcontractor                                                        
   costs and other                                                          
   direct                                                                   
   reimbursable                                                             
   charges                 29,216        31,482        62,286        61,762 
                     ------------  ------------  ------------  ------------ 
Net service revenue        75,254        73,896       150,470       147,351 
                     ------------  ------------  ------------  ------------ 
                                                                            
Interest income from                                                        
 contractual                                                                
 arrangements                  83            95           128           173 
Insurance                                                                   
 recoverables and                                                           
 other income                 913           518         2,657           738 
                                                                            
Operating costs and                                                         
 expenses:                                                                  
  Cost of services                                                          
   (exclusive of                                                            
   costs shown                                                              
   separately below)       64,564        61,173       128,250       121,335 
  General and                                                               
   administrative                                                           
   expenses                 5,694         6,847        12,869        14,395 
  Provision for                                                             
   doubtful accounts            -             -             -           365 
  Depreciation and                                                          
   amortization             1,593         1,434         3,131         2,796 
  Arena Towers                                                              
   litigation                                                               
   expense                                                                  
   (reversal)                   -           163             -       (11,061)
                     ------------  ------------  ------------  ------------ 
Total operating                                                             
 costs and expenses        71,851        69,617       144,250       127,830 
                     ------------  ------------  ------------  ------------ 
Operating income            4,399         4,892         9,005        20,432 
Interest expense              (80)         (175)         (192)         (356)
                     ------------  ------------  ------------  ------------ 
Income from                                                                 
 operations before                                                          
 taxes                      4,319         4,717         8,813        20,076 
Federal and state                                                           
 income tax                                                                 
 (provision) benefit         (215)          206          (449)        3,504 
                     ------------  ------------  ------------  ------------ 
Income from                                
                                 
 operations before                                                          
 equity in earnings         4,104         4,923         8,364        23,580 
Equity in earnings                                                          
 from unconsolidated                                                        
 affiliates, net of                                                         
 taxes                          -           270             -           270 
                     ------------  ------------  ------------  ------------ 
Net income                  4,104         5,193         8,364        23,850 
Net loss applicable                                                         
 to noncontrolling                                                          
 interest                      19            18            31            49 
                     ------------  ------------  ------------  ------------ 
Net income                                           
                       
 applicable to TRC                                                          
 Companies, Inc.     $      4,123  $      5,211  $      8,395  $     23,899 
                     ============  ============  ============  ============ 
                                                                            
Basic earnings per                                                          
 common share        $       0.14  $       0.19  $       0.29  $       0.86 
                     ============  ============  ============  ============ 
Diluted earnings per                                                        
 common share        $       0.14  $       0.18  $       0.28  $       0.84 
                     ============  ============  ============  ============ 
                                                                            
Weighted-average                                                            
 common shares                                                              
 outstanding:                                                               
  Basic                    28,874        27,845        28,668        27,657 
                     ============  ============  ============  ============ 
  Diluted                  29,471        28,525        29,477        28,458 
                     ============  ============  ============  ============ 
                                                                            
                                                                            
                                                                            
                             TRC Companies, Inc.                            
                    Condensed Consolidated Balance Sheets                   
                      (in thousands, except share data)                     
                                 (Unaudited)                                
                                                                            
                                                December 28,     June 30,   
                                                    2012           2012     
                                               -------------  ------------- 
                                   ASSETS                                   
Current assets:                                                             
  Cash and cash equivalents                    $      10,830  $      16,561 
  Accounts receivable, less allowance for                                   
   doubtful accounts                                  99,840         95,215 
  Insurance recoverable - environmental                                     
   remediation                                        25,456         25,744 
  Restricted investments                               6,615          4,413 
  Prepaid expenses and other current assets           12,998         12,077 
                                               -------------  ------------- 
    Total current assets                             155,739        154,010 
                                               -------------  ------------- 
                                                                            
Property and equipment                                54,063         53,352 
  Less accumulated depreciation and                                         
   amortization                                      (40,950)       (39,621)
                                               -------------  ------------- 
    Property and equipment, net                       13,113         13,731 
                                               -------------  ------------- 
Goodwill                                              24,888         24,888 
Investments in and advances to unconsolidated                               
 affiliates and construction joint ventures              114            109 
Long-term restricted investments                      29,855         35,265 
Long-term prepaid insurance                           32,796         34,272 
Other assets                                          12,071         12,853 
                                               -------------  ------------- 
    Total assets                               $     268,576  $     275,128 
                                               =============  ============= 
                                                                            
                           LIABILITIES AND EQUITY                           
Current liabilities:                                                        
  Current portion of long-term debt            $       5,676  $       1,315 
  Current portion of capital lease obligations           371            267 
  Accounts payable                                    26,410         30,712 
  Accrued compensation and benefits                   29,422         36,292 
  Deferred revenue                                    18,377         18,236 
  Environmental remediation liabilities                  300            422 
  Other accrued liabilities                           28,335         30,315 
                                               -------------  ------------- 
    Total current liabilities                        108,891        117,559 
                                               -------------  ------------- 
Non-current liabilities:                                                    
  Long-term debt, net of current portion                 994          3,860 
  Capital lease obligations, net of current                                 
   portion                                               618            462 
  Income taxes payable and deferred income tax                              
   liabilities                                           626            622 
  Deferred revenue                                    75,395         79,104 
  Environmental remediation liabilities                5,439          5,473 
                                               -------------  ------------- 
    Total liabilities                                191,963        207,080 
                                               -------------  ------------- 
Commitments and contingencies                                               
Equity:                                                                     
    Common stock, $.10 par value; 40,000,000                                
     shares authorized, 28,898,252 and                                      
     28,894,770 shares issued and outstanding,                              
     respectively, at December 28, 2012, and                                
     28,130,702 and 28,127,220 shares issued                                
     and outstanding, respectively, at June                                 
     30, 2012                                          2,890          2,813 
  Additional paid-in capital                         179,420        179,402 
  Accumulated deficit                        
       (105,285)      (113,680)
  Accumulated other comprehensive loss                   (78)          (184)
  Treasury stock, at cost                                (33)           (33)
                                               -------------  ------------- 
    Total shareholders' equity applicable to                                
     TRC Companies, Inc.                              76,914         68,318 
  Noncontrolling interest                               (301)          (270)
                                               -------------  ------------- 
    Total equity                                      76,613         68,048 
                                               -------------  ------------- 
    Total liabilities and equity               $     268,576  $     275,128 
                                               =============  ============= 

  
Investor Contact:     
Dennis Walsh  
Sharon Merrill    
(617) 542-5300 
trr@investorrelations.com  
Company Contact: 
Thomas W. Bennet, Jr.
CFO
(978) 970-5600 
tbennet@trcsolutions.com
 
 
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