Exhibit 99.1
Investor Contact:
Sharon Merrill Associates
(617) 542-5300
trr@investorrelations.com | 
| Company Contact:
Carl Paschetag, CFO
(978) 970-5600
cpaschetag@trcsolutions.com |
TRC announceS Fourth Quarter and fiscal
Year-End 2007 financial results
Company Increases Net Service Revenue;
Completes Implementation of New Enterprise-Wide Operating Platform
Lowell, MA, November 30, 2007 - TRC (NYSE: TRR), a recognized leader in engineering, consulting and construction management, today announced financial results for the fourth quarter and fiscal year ended June 30, 2007.
Fourth-Quarter Results
For the three months ended June 30, 2007, gross revenue increased 15.9% to approximately $115.0 million compared with approximately $99.2 million for the three months ended June 30, 2006. Net service revenue for the fourth quarter of fiscal 2007 increased 3.7% to approximately $63.9 million compared with approximately $61.6 million for the fourth quarter of fiscal 2006. Gross revenue includes subcontracted costs that can fluctuate period to period. The Company believes that net service revenue more closely reflects the value of services provided by TRC to customers.
The net loss for the three months ended June 30, 2007 was approximately $4.3 million compared with a net loss of approximately $12.2 million for the comparable period in fiscal 2006. The net loss applicable to common shareholders was approximately $4.3 million, or $0.23 per share, compared with a net loss of approximately $12.4 million, or $0.74 per share, for the three months ended June 30, 2006.
Fiscal Year 2007 Results
For the fiscal year ended June 30, 2007, gross revenue increased 11.5% to approximately $441.6 million compared with approximately $396.1 million for fiscal 2006. Net service revenue for fiscal 2007 increased 7.5% to approximately $255.9 million compared with approximately $238.0 million for fiscal 2006.
The net loss for fiscal 2007 was approximately $3.6 million compared with a net loss of approximately $23.8 million for fiscal 2006. The net loss applicable to common shareholders for fiscal 2007 was approximately $5.9 million, or $0.33 per share, compared
TRC
650 Suffolk Street • Lowell, Massachusetts 01854
Telephone 978-970-5600 • Fax 978-453-1995
with a loss of approximately $24.6 million, or $1.62 per share, in fiscal 2006. The net loss applicable to common shareholders for the fiscal year ended June 30, 2007 includes a loss of approximately $2.0 million, or $0.11 per share, related to the redemption of $15 million of convertible redeemable preferred stock in December 2006. The $2.0 million charge includes the effect of the restatement discussed below.
Restatement of FY 2007 Second Quarter
In the second quarter of fiscal 2007, the Company reported a benefit from the conversion of its preferred stock of approximately $3.9 million. The Company has now determined that it should have reported a charge relating to this matter for the same quarter of approximately $2.0 million. The quarterly information included in Form 10-K for the fiscal year ended June 30, 2007 will reflect this restatement. The previously issued Forms 10-Q for the quarters ended December 31, 2006 and March 31, 2007 should not be relied upon.
Amendment of Credit Facility
As of the end of fiscal 2007, the Company was not in compliance with the covenants under its principal credit agreement related to minimum earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and the delivery and filing of financial statements. The Company’s lenders have waived the violation of these covenants and amended the EBITDA covenant on a going-forward basis.
Comments on the Results
“While we are disappointed with the results, we are pleased with the overall progress of our turnaround,” said Chris Vincze, TRC’s Chairman and Chief Executive Officer. “During the fourth quarter and throughout fiscal 2007, we continued to make improvements to the business, and we continued to experience increasing demand for our services, particularly infrastructure and energy. The TRC brand has remained strong in the marketplace, and the need for our services continues to grow, as our recent revenue growth indicates.”
“Our performance for the fourth quarter of fiscal 2007 was below expectations, as a result of integration, rebranding and related issues; project cost overruns which may be recoverable in future periods; and the direct and indirect costs of the system conversion,” said Vincze. “Over the past two years, we consolidated 17 legacy accounting systems into one universal new platform, which we adopted in the fourth quarter of fiscal 2007. Start-up issues associated with the implementation caused a delay in finalizing our results
for fiscal 2007. The new operating platform should enable increased project profitability through improved project management, cost reductions of general and administrative expenses and improved management reporting.”
“We substantially advanced our turnaround strategy during the past year, which required significant investments,” said Vincze. “As a result, we anticipate that we should see another year of significant improvements during fiscal 2008. Our backlog is expanding on the strength of our target markets, which are diverse and well-funded. We continue to attract a workforce of highly qualified individuals who will support our growth and execution in the years ahead. In addition, during the fourth quarter of fiscal 2007, we launched a three-year strategic plan which is intended to drive revenue growth and improve our bottom line performance.”
Outlook
“Our strategy is centered around revenue growth and expertise in TRC’s primary markets: energy, infrastructure, environmental and real estate,” said Vincze. “During fiscal 2008 we will be concentrating on advancing our strategic initiatives and refining the way we manage the Company. TRC is well positioned to benefit from industry trends across our target markets, including increased infrastructure funding, the shortage of engineers, shifts in U.S. energy and resource policy, and the renewed focus on environmental issues, such as climate change. We also will continue to focus on cost control initiatives in fiscal 2008 and beyond. The new software platform will enable additional expense reductions in the quarters ahead. More importantly, the new platform will provide our colleagues with tools to better manage our ongoing and future projects.”
“We have made tremendous improvements and strategic investments during the past year. As we capitalize on favorable industry trends and continue to aggressively address our cost structure, we anticipate that TRC will deliver improved results throughout fiscal 2008, with the goal of ultimately making TRC a top-quintile performer in our industry,” concluded Vincze.
Conference Call Information
The Company will broadcast its fiscal 2007 financial results conference call this morning at 9:00 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 also may be accessed by dialing (866) 409-1557 or (913) 312-0697 prior to the start of the call. For
interested individuals unable to join the live conference call, a webcast replay will be available on the Company’s website.
About TRC
TRC creates and implements sophisticated and innovative solutions to the challenges facing America’s real estate, environmental, energy, and infrastructure markets. The Company also is a leading provider of technical, financial, risk management, and construction services to commercial 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 our services; product acceptance; industry-wide competitive factors; the ability to continue to attract and retain highly skilled and qualified personnel; recent changes in our senior management; the results of outstanding litigation; risks arising from either failure to identify, or from identified material weaknesses in our internal controls over financial reporting or our inability to effectively remedy such weaknesses; our inability to comply with the terms of our credit facility and our lenders’ future unwillingness to waive our noncompliance; and general political or economic conditions. Furthermore, market trends are subject to changes, which could adversely affect future results. See additional discussion in our Annual Report on Form 10-K for the fiscal year ended June 30, 2006, and other factors detailed from time to time in our 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 June 30, | | Years Ended June 30, | |
| | 2007 | | 2006 | | 2007 | | 2006 | |
| | | | | | | | | |
Gross revenue | | $ | 114,987 | | $ | 99,247 | | $ | 441,643 | | $ | 396,091 | |
Less subcontractor costs and other direct reimbursable charges | | 51,084 | | 37,688 | | 185,735 | | 158,111 | |
Net service revenue | | 63,903 | | 61,559 | | 255,908 | | 237,980 | |
| | | | | | | | | |
Interest income from contractual arrangements | | 1,102 | | 1,150 | | 4,747 | | 4,054 | |
Insurance recoverables and other income | | (773 | ) | 146 | | 4,170 | | 1,053 | |
| | | | | | | | | |
Operating costs and expenses: | | | | | | | | | |
Cost of services | | 60,634 | | 61,867 | | 231,025 | | 228,556 | |
General and administrative expenses | | 6,711 | | 7,009 | | 23,969 | | 24,350 | |
Provision for doubtful accounts | | (1,111 | ) | 2,235 | | 1,318 | | 7,971 | |
| | | | | | | | | |
Intangible asset write-off | | — | | 2,170 | | — | | 2,170 | |
Depreciation and amortization | | 2,394 | | 1,928 | | 8,311 | | 6,925 | |
| | 68,628 | | 75,209 | | 264,623 | | 269,972 | |
Operating income (loss) | | (4,396 | ) | (12,354 | ) | 202 | | (26,885 | ) |
Registration penalties | | 600 | | — | | 600 | | — | |
Interest expense | | 1,074 | | 929 | | 4,359 | | 4,545 | |
Loss from continuing operations before taxes, minority interest, equity earnings (losses) | | (6,070 | ) | (13,283 | ) | (4,757 | ) | (31,430 | ) |
Federal and state income tax benefit | | (2,010 | ) | (4,411 | ) | (1,337 | ) | (10,488 | ) |
Minority interest | | (17 | ) | — | | (24 | ) | — | |
| | | | | | | | | |
Loss from continuing operations before equity earnings (losses) | | (4,043 | ) | (8,872 | ) | (3,396 | ) | (20,942 | ) |
Equity in earnings (losses) from unconsolidated affiliates, net of taxes | | (214 | ) | 19 | | (161 | ) | 9 | |
Loss from continuing operations | | (4,257 | ) | (8,853 | ) | (3,557 | ) | (20,933 | ) |
Discontinued operations, net of taxes | | — | | (3,337 | ) | (77 | ) | (2,914 | ) |
| | | | | | | | | |
Net loss | | (4,257 | ) | (12,190 | ) | (3,634 | ) | (23,847 | ) |
Dividends, accretion and conversion charges on preferred stock | | — | | (162 | ) | (2,233 | ) | (751 | ) |
Net loss applicable to common shareholders | | $ | (4,257 | ) | $ | (12,352 | ) | $ | (5,867 | ) | $ | (24,598 | ) |
| | | | | | | | | |
Basic and diluted earnings (loss) per common share: | | | | | | | | | |
Loss from continuing operations | | $ | (0.23 | ) | $ | (0.52 | ) | $ | (0.33 | ) | $ | (1.43 | ) |
Discontinued operations, net of taxes | | — | | (0.22 | ) | — | | (0.19 | ) |
| | | | | | | | | |
| | $ | (0.23 | ) | $ | (0.74 | ) | $ | (0.33 | ) | $ | (1.62 | ) |
| | | | | | | | | |
Basic and diluted weighted average common shares outstanding | | 18,235 | | 16,705 | | 17,563 | | 15,168 | |
TRC COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
| | June 30, | | June 30, | |
| | 2007 | | 2006 | |
ASSETS | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 430 | | $ | 3,093 | |
Accounts receivable, less allowances for doubtful accounts | | 132,879 | | 120,829 | |
Insurance recoverable - environmental remediation | | 6,381 | | 3,546 | |
Deferred income tax assets | | 13,894 | | 15,261 | |
Income taxes refundable | | 587 | | 5,429 | |
Restricted investment | | 20,830 | | 33,230 | |
Prepaid expenses and other current assets | | 11,911 | | 8,049 | |
Total current assets | | 186,912 | | 189,437 | |
Property and equipment | | 57,569 | | 54,063 | |
Less accumulated depreciation and amortization | | 36,126 | | 35,105 | |
| | 21,443 | | 18,958 | |
Goodwill | | 130,935 | | 126,325 | |
Investments in and advances to unconsolidated affiliates and construction joint ventures | | 5,245 | | 4,315 | |
Long-term restricted investment | | 72,651 | | 78,856 | |
Long-term prepaid insurance | | 54,395 | | 56,612 | |
Assets held for sale | | — | | 458 | |
Other assets | | 14,401 | | 10,442 | |
Total assets | | $ | 485,982 | | $ | 485,403 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
Current liabilities: | | | | | |
Current portion of long-term debt | | $ | 31,618 | | $ | 37,608 | |
Accounts payable | | 54,976 | | 41,450 | |
Accrued compensation and benefits | | 22,134 | | 20,930 | |
Deferred revenue | | 31,494 | | 39,726 | |
Environmental remediation liability | | 4,629 | | 2,504 | |
Other accrued liabilities | | 24,007 | | 22,214 | |
Total current liabilities | | 168,858 | | 164,432 | |
Non-current liabilities: | | | | | |
Long-term debt, net of current portion | | 11,052 | | 2,845 | |
Deferred income tax liabilities | | 1,519 | | 4,689 | |
Long-term deferred revenue | | 134,901 | | 143,979 | |
Long-term environmental remediation liability | | 7,861 | | 9,302 | |
Minority interest in subsidiary | | 62 | | — | |
Total liabilities | | 324,253 | | 325,247 | |
| | | | | |
Convertible redeemable preferred stock | | — | | 15,000 | |
| | | | | |
Commitments and contingencies | | | | | |
Total shareholders’ equity | | 161,729 | | 145,156 | |
Total liabilities and shareholders’ equity | | $ | 485,982 | | $ | 485,403 | |
