Exhibit 99.1
TRC Reports Fiscal 2005 Second Quarter and First Half Results
Windsor, CT — February 3, 2005 — TRC (NYSE:TRR) today announced operating results for the second quarter and first half of fiscal 2005.
Second Quarter Results
Gross revenue for the second quarter ended December 31, 2004 was $95.8 million compared to $97.3 million for the second quarter of fiscal 2004. Net service revenue for the second quarter of fiscal 2005 was $58.6 million compared to $60.3 million for the same period of the prior year.
Net income for the second quarter of fiscal 2005 was $2.5 million, or $0.16 per diluted share. This compares to net income for the second quarter of fiscal 2004 of $3.7 million, or $0.24 per diluted share. Cash flows from operations were $7.7 million during this year’s second quarter compared to $5.3 million for the same period last year.
TRC’s revenue and earnings performance for the second quarter was affected by the temporary postponement of several large government-related emissions tests and unexpected softness in the transportation market. In addition, approximately $0.8 million in non-operating income related to cost savings generated on an environmental remediation project that had been expected in the second quarter is now anticipated in the third quarter.
“Based on our backlog of approximately $260 million at December 31, 2004 and our expectation for further modest expansion of the U.S. economy, we expect growth in net service revenue and net income for fiscal 2005 as a whole,” said Chairman and Chief Executive Officer Dick Ellison.
“We continue to believe that TRC is on a sustainable long-term growth path,” Ellison said. “The many operational enhancements we implemented during the past year have increased our efficiency and our control of the business. We also made progress during the second quarter in the implementation of our strategic plan. Notable accomplishments included the award of one of the largest environmental remediation projects in TRC’s history by BNSF Railway Company and a large Exit Strategy contract by Tecumseh Products Company, as well as the development of three strategic acquisitions that will expand our core practices in key niche markets and high-growth geographic areas.”
First Half Results
Gross revenue for the first six months of fiscal 2005 was $185.4 million compared to $187.6 million for the first six months of fiscal 2004. Net service revenue for the first six months of fiscal 2005 increased to $119.0 million from $116.9 million for the same period of the prior year.
Net income for the first six months of fiscal 2005 was $5.4 million, or $0.34 per diluted share, after a charge for the cumulative effect of an accounting change of $0.6 million (net of income taxes), or $0.04 per share. Prior to this charge, net income was $6.0 million, or $0.38 per diluted share. This compares to net income for the first six months of fiscal 2004 of $6.7 million, or $0.44 per diluted share.
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TRC
5 Waterside Crossing • Windsor, Connecticut 06095
Telephone 860-298-9692 • Fax 860-298-6291
Conference Call
TRC will host a conference call at 11:00 a.m. EST today. A simultaneous WebCast may be accessed from the Investor Center link at www.TRCsolutions.com. A replay will be available after 1:00 p.m. ET at this same Internet address, or at (800) 633-8284, reservation #21230686.
About TRC
Named one of FORTUNE Magazine’s 100 Fastest Growing Companies in 2003, Forbes Top 200 Best Small Companies and Business Week’s Top 100 Hot Growth Companies, TRC is a customer-focused company that creates and implements sophisticated and innovative solutions to the challenges facing America’s environmental, infrastructure, power, and transportation markets. The Company is also a leading provider of technical, financial, risk management, and construction services to both industry and government customers across the country. For more information, visit TRC’s website at 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 our future expectations, contain projections of our future results of operations or of our financial condition, or state other “forward-looking” information. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our 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, the challenges inherent in integrating newly acquired businesses, regulatory uncertainty, the availability of funding for government projects, the level of demand for the Company’s services, product acceptance, industry-wide competitive factors, the ability to continue to attract and retain highly skilled and qualified personnel, and political, economic, or other conditions. Furthermore, market trends are subject to changes, which could adversely affect future results. See additional discussion in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2004, and other factors detailed from time to time in the Company’s other filings with the Securities and Exchange Commission.
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TRC COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | Three Months Ended
December 31, | | Six Months Ended
December 31, | |
(in thousands, except per share data) | | 2004 | | 2003 | | 2004 | | 2003 | |
| | | | | | | | | |
Gross revenue | | $ | 95,760 | | $ | 97,282 | | $ | 185,417 | | $ | 187,601 | |
Less subcontractor costs and direct charges | | 37,128 | | 36,990 | | 66,444 | | 70,743 | |
Net service revenue | | 58,632 | | 60,292 | | 118,973 | | 116,858 | |
| | | | | | | | | |
Operating costs and expenses: | | | | | | | | | |
Cost of services | | 49,725 | | 50,078 | | 99,927 | | 97,536 | |
General and administrative expenses | | 2,686 | | 2,164 | | 4,951 | | 4,447 | |
Depreciation and amortization | | 1,519 | | 1,434 | | 2,972 | | 2,860 | |
| | 53,930 | | 53,676 | | 107,850 | | 104,843 | |
| | | | | | | | | |
Income from operations | | 4,702 | | 6,616 | | 11,123 | | 12,015 | |
Interest expense | | 470 | | 365 | | 893 | | 739 | |
| | | | | | | | | |
Income before taxes | | 4,232 | | 6,251 | | 10,230 | | 11,276 | |
Federal and state income tax provision | | 1,735 | | 2,563 | | 4,194 | | 4,573 | |
| | | | | | | | | |
Income before accounting change | | 2,497 | | 3,688 | | 6,036 | | 6,703 | |
Cumulative effect of accounting change, net of income taxes of $409 | | — | | — | | (589 | ) | — | |
| | | | | | | | | |
Net income | | 2,497 | | 3,688 | | 5,447 | | 6,703 | |
| | | | | | | | | |
Dividends and accretion charges on preferred stock | | 178 | | 204 | | 401 | | 371 | |
| | | | | | | | | |
Net income available to common shareholders | | $ | 2,319 | | $ | 3,484 | | $ | 5,046 | | $ | 6,332 | |
| | | | | | | | | |
Basic earnings per common share: | | | | | | | | | |
Before accounting change | | $ | 0.17 | | $ | 0.26 | | $ | 0.40 | | $ | 0.47 | |
Cumulative effect of accounting change | | 0.00 | | 0.00 | | (0.04 | ) | 0.00 | |
| | $ | 0.17 | | $ | 0.26 | | $ | 0.36 | | $ | 0.47 | |
| | | | | | | | | |
Diluted earnings per common share: | | | | | | | | | |
Before accounting change | | $ | 0.16 | | $ | 0.24 | | $ | 0.38 | | $ | 0.44 | |
Cumulative effect of accounting change | | 0.00 | | 0.00 | | (0.04 | ) | 0.00 | |
| | $ | 0.16 | | $ | 0.24 | | $ | 0.34 | | $ | 0.44 | |
| | | | | | | | | |
Average shares outstanding: | | | | | | | | | |
Basic | | 13,991 | | 13,583 | | 13,949 | | 13,541 | |
Diluted | | 14,814 | | 14,522 | | 14,765 | | 15,395 | |
TRC COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share data) | | Dec. 31,
2004 | | Jun. 30,
2004 | |
ASSETS | | | | | |
Current assets: | | | | | |
Cash | | $ | 1,768 | | $ | 3,468 | |
Accounts receivable, less allowances for doubtful accounts | | 126,145 | | 116,704 | |
Insurance recoverable - environmental remediation | | 4,489 | | 1,647 | |
Income taxes refundable | | 115 | | 656 | |
Deferred income tax benefits | | 1,177 | | 312 | |
Prepaid expenses and other current assets | | 2,975 | | 2,130 | |
| | 136,669 | | 124,917 | |
Property and equipment, at cost | | 46,607 | | 44,612 | |
Less accumulated depreciation and amortization | | 29,886 | | 27,569 | |
| | 16,721 | | 17,043 | |
Goodwill | | 116,859 | | 111,829 | |
Investments in and advances to unconsolidated affiliates and construction joint ventures | | 6,936 | | 7,030 | |
Long-term insurance receivable | | 8,317 | | 2,879 | |
Long-term insurance recoverable - environmental remediation | | 33,623 | | 13,358 | |
Other assets | | 10,585 | | 5,961 | |
| | $ | 329,710 | | $ | 283,017 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
Current liabilities: | | | | | |
Current portion of long-term debt | | $ | 1,000 | | $ | 1,229 | |
Accounts payable | | 21,810 | | 16,024 | |
Accrued compensation and benefits | | 11,874 | | 13,811 | |
Billings in advance of revenue earned | | 11,493 | | 6,338 | |
Environmental remediation liability | | 4,489 | | 1,647 | |
Other accrued liabilities | | 11,643 | | 8,014 | |
| | 62,309 | | 47,063 | |
Non-current liabilities: | | | | | |
Long-term debt, net of current portion | | 43,442 | | 41,398 | |
Deferred income taxes | | 9,020 | | 8,578 | |
Long-term environmental remediation liability | | 33,623 | | 13,358 | |
| | 86,085 | | 63,334 | |
Mandatorily redeemable preferred stock | | 14,882 | | 14,823 | |
Shareholders’ equity: | | | | | |
Capital stock: | | | | | |
Preferred, $.10 par value; 500,000 shares authorized, 15,000 issued as mandatorily redeemable, liquidation preference of $15,000 | | — | | — | |
Common, $.10 par value; 30,000,000 shares authorized, 15,060,557 and 14,117,578 shares issued and outstanding, respectively, at December 31, 2004 and 14,837,657 and 13,894,678 shares issued and outstanding, respectively, at June 30, 2004 | | 1,506 | | 1,484 | |
Additional paid-in capital | | 102,138 | | 98,570 | |
Retained earnings | | 65,687 | | 60,640 | |
| | 169,331 | | 160,694 | |
Less treasury stock, at cost | | 2,897 | | 2,897 | |
| | 166,434 | | 157,797 | |
| | $ | 329,710 | | $ | 283,017 | |
