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Form 8-K TRC COMPANIES INC /DE/ For: May 04

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May 4, 2016 8:07 AM EDT


    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) May 4, 2016
 
TRC COMPANIES, INC.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
1-9947
06-0853807
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)

21 Griffin Road North, Windsor, Connecticut
06095
(Address of Principal Executive Offices)
 (Zip Code)
 
(860) 298-9692
(Registrant's telephone number, including area code)
 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Item 2.02. Results of Operations and Financial Condition.
On May 4, 2016, TRC Companies, Inc. issued a news release announcing its financial results for the fiscal third-quarter ended March 25, 2016. A copy of the news release is attached hereto as Exhibit 99.1 to this report which is incorporated herein by reference.
The information in this Item 2.02 (including Exhibit 99.1) shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.


Item 9.01. Financial Statements and Exhibits.
Exhibit 99.1
News release titled "TRC Announces Third-Quarter Fiscal 2016 Financial Results."



SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: May 4, 2016            TRC Companies, Inc.

By:    /s/ Thomas W. Bennet, Jr.    
Thomas W. Bennet, Jr.
Senior Vice President and
Chief Financial Officer






EXHIBIT INDEX

Exhibit No.        Description

99.1
News release titled "TRC Announces Third-Quarter Fiscal 2016 Financial Results."


Exhibit 99.1

Investor Contact:
 
Company Contact:
Andrew Blazier, Senior Associate
Thomas W. Bennet, Jr., CFO
Sharon Merrill
(978) 970-5600
(617) 542-5300
 


TRC Announces Third-Quarter Fiscal 2016 Financial Results

Third-Quarter FY 2016 Highlights
•
NSR1 up 20% to $121.3 million
•
Adjusted operating income2 of $2.8 million
•
Adjusted EBITDA2 of $7.9 million
•
Adjusted net income2 of $1.7 million
•
Adjusted EPS2 of $0.05
•
Operating cash flow of $17.0 million

Lowell, MA, May 4, 2016 - TRC Companies, Inc. (NYSE: TRR), a recognized leader in engineering, environmental consulting and construction-management services to the energy, environmental, infrastructure and pipeline markets, today announced financial results for the fiscal third quarter ended March 25, 2016.
“During the third quarter, we advanced our strategy to position TRC as the leading provider of full-service solutions to our primary markets,” said Chris Vincze, Chairman and Chief Executive Officer. “In just 120 days, we have fully integrated the Pipeline Services segment acquisition into TRC’s systems. Pipeline Services results drove the 20% increase in NSR from the third quarter a year ago.”


TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995

Exhibit 99.1

 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
March 25,
 
March 27,
 
%
 
March 25,
 
March 27,
 
%
(In millions, except per share data)
2016
 
2015
 
Change
 
2016
 
2015
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Results
 
 
 
 
 
 
 
 
 
 
 
Net service revenue (1)
$
121.3

 
$
101.0

 
20
 %
 
$
332.8

 
$
293.5

 
13
 %
Acquisition and integration expense
$
1.6

 
$
—

 
N/A

 
$
3.7

 
$
—

 
N/A

Goodwill impairment
$
24.5

 
$
—

 
N/A

 
$
24.5

 
$
—

 
N/A

Depreciation
$
1.9

 
$
1.3

 
49
 %
 
$
5.1

 
$
4.5

 
13
 %
Amortization
$
3.2

 
$
0.9

 
249
 %
 
$
5.1

 
$
2.6

 
93
 %
Operating income
$
(23.3
)
 
$
7.1

 
-426
 %
 
$
(8.9
)
 
$
20.0

 
-145
 %
Net (loss) income applicable to TRC Companies, Inc.
$
(14.3
)
 
$
5.2

 
-377
 %
 
$
(5.9
)
 
$
12.7

 
-146
 %
Diluted (loss) earnings per common share
$
(0.46
)
 
$
0.17

 
-371
 %
 
$
(0.19
)
 
$
0.41

 
-146
 %
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Results
 
 
 
 
 
 
 
 
 
 
 
Adjusted operating income (2)
$
2.8

 
$
7.1

 
-61
 %
 
$
19.3

 
$
20.0

 
-4
 %
Adjusted EBITDA (2)
$
7.9

 
$
9.4

 
-16
 %
 
$
29.4

 
$
27.1

 
8
 %
Adjusted net income (2)(3)
$
1.7

 
$
5.2

 
-66
 %
 
$
11.4

 
$
12.7

 
-10
 %
Adjusted diluted earnings per common share (2)(3)
$
0.05

 
$
0.17

 
-71
 %
 
$
0.36

 
$
0.41

 
-12
 %
 
 
 
 
 
 
 
 
 
 
 
 

(1)
The Company 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 $1.6 million and $3.7 million and goodwill impairment charges of $24.5 million for the three and nine months ended March 25, 2016, respectively.

(3)
Excludes goodwill impairment and acquisition related expense in note 2, net of an income tax benefit of $10.1 million and $10.9 million for the three and nine months ended March 25, 2016, respectively.



Comments on Segment Results

“Our Energy segment experienced a 3% decline in NSR and 9% decline in segment profit year over year, driven by delays related to a significant new project award and timing associated with the receipt of change orders,” Vincze continued. “In our Infrastructure segment, renewed transportation-related spending by our municipal and state clients drove a 10% increase in segment NSR on solid 20% margins. The 4% decline in segment profit was due to a significant change order awarded in the year-ago quarter. In our Environmental segment, the continued slowdown from certain oil and gas clients led to a 2% decline in NSR and a profit decline of 20% year-over-year.

“Our newest and fourth segment, Pipeline Services, has been affected by the downturn that has spread throughout the oil and gas sector,” Vincze said. “Pipeline services delivered NSR of $21.6 million and a segment loss of $3.1 million. We have undertaken a series of cost reduction initiatives with total annualized savings of approximately $15 million, in order to align segment expenses with current revenues in this business. We also incurred $1.6 million of acquisition integration expenses in Q3. In addition, given the steep

TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995


decline in near-term demand in the oil and gas sector, we incurred a non-cash goodwill impairment charge in the quarter associated with the Pipeline Services segment acquisition.”


Business Outlook

"We continue to believe in the long-term prospects for each of our segments. The underlying market fundamentals in our Energy segment remain strong, spurred by demand from our utility clients and activity on the energy efficiency and renewables fronts. Infrastructure segment backlog is healthy, driven by increased transportation spending at both the state and federal levels and a new federal transportation bill. Although we are experiencing a slowdown from our oil and gas clients in our Environmental segment, demand for services related to environmental remediation, construction, transaction support, the retirement of coal plants and the need to transport natural gas should contribute to segment revenue going forward. Despite the market constraints currently affecting our Pipeline Services segment, the long-term outlook is positive on the strength of domestic demand for energy, the need for comprehensive pipeline integrity management, an expected increase in U.S. fossil fuel exports and the transition from coal-fired power plants to natural gas.”



Conference Call Information / Reconciliation of Non-GAAP Metrics

TRC will webcast its financial results conference call today, May 4, 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

TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995


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 filings with the Securities and Exchange Commission.







TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995


TRC Companies, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)

 
Three Months Ended
 
Six Months Ended
 
March 25,
2016
 
March 27,
2015
 
March 25,
2016
 
March 27,
2015
Gross revenue
$
158,130

 
$
130,777

 
$
451,332

 
$
397,030

Less subcontractor costs and other direct reimbursable charges
36,877

 
29,783

 
118,534

 
103,579

Net service revenue
121,253

 
100,994

 
332,798

 
293,451

Interest income from contractual arrangements
27

 
23

 
69

 
67

Insurance recoverables and other income
146

 
753

 
1,919

 
6,238

Operating costs and expenses:
 
 
 
 
 
 
 
Cost of services (exclusive of costs shown separately below)
104,030

 
83,486

 
280,690

 
247,275

General and administrative expenses
9,523

 
8,927

 
24,690

 
25,360

Acquisition and integration expenses
1,606

 
—

 
3,724

 
—

Goodwill impairment
24,465

 
—

 
24,465

 
—

Depreciation
1,942

 
1,303

 
5,070

 
4,481

Amortization
3,162

 
905

 
5,078

 
2,633

Total operating costs and expenses
144,728

 
94,621

 
343,717

 
279,749

Operating (loss) income
(23,302
)
 
7,149

 
(8,931
)
 
20,007

Interest income
189

 
—

 
326

 
—

Interest expense
(1,073
)
 
(73
)
 
(1,562
)
 
(125
)
(Loss) income from operations before taxes
(24,186
)
 
7,076

 
(10,167
)
 
19,882

Income tax benefit (provision)
9,954

 
(1,916
)
 
4,358

 
(7,244
)
Net (loss) income
(14,232
)
 
5,160

 
(5,809
)
 
12,638

Net (income) loss applicable to noncontrolling interest
(65
)
 
5

 
(59
)
 
14

Net (loss) income applicable to TRC Companies, Inc.
$
(14,297
)
 
$
5,165

 
$
(5,868
)
 
$
12,652

 
 
 
 
 
 
 
 
Basic (loss) earnings per common share
$
(0.46
)
 
$
0.17

 
$
(0.19
)
 
$
0.42

Diluted (loss) earnings per common share
$
(0.46
)
 
$
0.17

 
$
(0.19
)
 
$
0.41

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
Basic
31,045

 
30,382

 
30,886

 
30,233

Diluted
31,045

 
30,737

 
30,886

 
30,551



TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995


TRC Companies, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
 
March 25,
2016
 
June 30,
2015
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
9,120

 
$
37,296

Restricted cash
—

 
122

Accounts receivable, less allowance for doubtful accounts
145,789

 
138,346

Insurance recoverable - environmental remediation
38,745

 
40,927

Restricted investments
6,156

 
6,701

Deferred income tax assets
16,280

 
16,057

Income taxes refundable
203

 
412

Prepaid expenses and other current assets
27,559

 
10,499

Total current assets
243,852

 
250,360

 
 
 
 
Property and equipment
73,114

 
64,594

Less accumulated depreciation and amortization
(50,356
)
 
(50,885
)
Property and equipment, net
22,758

 
13,709

Goodwill
75,337

 
37,024

Intangible assets, net
48,726

 
9,304

Long-term deferred income tax assets
10,284

 
2,867

Long-term restricted investments
16,870

 
18,385

Long-term prepaid insurance
24,258

 
25,929

Other assets
20,174

 
5,303

Total assets
$
462,259

 
$
362,881

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Current portion of long-term debt
$
20,031

 
$
50

Current portion of capital lease obligations
—

 
166

Accounts payable
32,370

 
31,999

Accrued compensation and benefits
47,552

 
47,233

Deferred revenue
16,010

 
10,612

Environmental remediation liabilities
8,669

 
8,695

Income taxes payable
212

 
3,271

Other accrued liabilities
45,605

 
42,170

Total current liabilities
170,449

 
144,196

Non-current liabilities:
 
 
 
Long-term debt, net of current portion
83,756

 
55

Income taxes payable and deferred income tax liabilities
2,067

 
1,647

Deferred revenue
60,492

 
68,579

Environmental remediation liabilities
461

 
489

Total liabilities
317,225

 
214,966

Commitments and contingencies
 
 
 
Equity:
 
 
 
Common stock, $.10 par value; 40,000,000 shares authorized, 31,057,243 and 31,053,761 shares issued and outstanding, respectively, at March 25, 2016, and 30,485,510 and 30,482,028 shares issued and outstanding, respectively, at June 30, 2015
3,106

 
3,049

Additional paid-in capital
193,288

 
191,321

Accumulated deficit
(51,807
)
 
(45,939
)
Accumulated other comprehensive loss
(79
)
 
(88
)
Treasury stock, at cost
(33
)
 
(33
)
Total stockholders' equity applicable to TRC Companies, Inc.
144,475

 
148,310

Noncontrolling interest
559

 
(395
)
Total equity
145,034

 
147,915

Total liabilities and equity
$
462,259

 
$
362,881


TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995


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