Investor Presentation First Quarter Fiscal 2014 TRR
Jan 27, 2015
Investor Presentation
First Quarter Fiscal 2014
T R R
Safe Harbor Statement
2
Certain statements in this presentation 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, 2013, 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.
This presentation contains references to non-GAAP metrics such as EBITDA, gross margin and free cash flow. A
reconciliation of GAAP to non-GAAP metrics can be found on slide 19.
A pioneer in groundbreaking scientific and engineering developments since 1969, TRC is a national engineering, consulting and construction management firm that provides integrated services to three primary markets:
Energy | Environmental | Infrastructure
Expert problem solvers
100 + U.S. offices London office
2,900+ employees
NYSE: TRR
3
Company Profile
www.trcsolutions.com
Investment Highlights
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Well positioned in markets with solid medium- to long-term growth opportunities
Executing a focused profitable growth strategy
Large addressable market opportunity
Diversified revenue stream with attractive customer base
Strong balance sheet and cash position
Stable but growing backlog
TRC’s Diversified Business Model
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$110M 14% YOY Growth
$163M 3% YOY Growth
$44M 2% YOY Growth
Net Service Revenue by Segment
Fiscal Year 2013 Total NSR: $320.4 Million
6% YOY Growth
Infrastructure 14%
Environmental 51%
Energy 35%
Estimated Client Distribution by Industry(1)
Power / Utility
Oil & Gas
Transportation
Other
50%
10%
10%
30%
(1) Estimates as of June 2013.
Envi
ronm
enta
l Seg
men
t
6
Environmental Services
Permitting and resource management
Remediation and hazardous waste management
Air quality and air measurements
Building sciences, industrial hygiene, and compliance
Solid waste
51% of Total NSR
Segment Drivers
Increasing permitting and power plant decommissioning activities
Greenhouse gas rules – CO2
Continued development of upstream, midstream and downstream oil & gas markets
Re-emergence of industrials and related capital spend
$159.0 $163.2
FY 2012 FY 2013
Net Service Revenue (in millions)
$32.0 $30.8
FY 2012 FY 2013
Segment Profit (in millions)
+3%
-4%
Ener
gy S
egm
ent
7
35% of Total NSR
Energy Services
Electrical transmission, distribution & substation engineering
Energy efficiency
Communications engineering
Segment Drivers
Greenhouse gas rule – CO2
Expanding utility capital spend programs on aging transmission and distribution infrastructure
Dynamic revolution in domestic fuel supplies driving shifts in use of utility assets (e.g. Coal ↓, Natural Gas ↑, Renewables ↑, Efficiency ↑)
$96.0 $109.8
FY 2012 FY 2013
Net Service Revenue (in millions)
$23.5 $23.3
FY 2012 FY 2013
Segment Profit (in millions)
+14%
-1%
Infr
astr
uctu
re S
egm
ent Infrastructure Services
Transportation design services
Civil engineering services
Security consulting & engineering services
Geotechnical engineering & materials inspection
Construction engineering, inspection & management
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14% of Total NSR
Segment Drivers
Need to upgrade and repair aging infrastructure, especially bridges and roadways
Additional state funds for capital projects
Expansion of transportation services
$43.5 $44.2
FY 2012 FY 2013
Net Service Revenue (in millions)
$7.7 $8.7
FY 2012 FY 2013
Segment Profit (in millions)
+2%
+12%
Multi-disciplinary teams implement complex projects
Nationwide network is a crucial asset that
can be integral to project success
TRC helps clients: realize a higher return on investment manage risks align project solutions with
operational priorities integrate multiple areas of
expertise to arrive at a better solution
Why Clients Choose TRC
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Concept
Delivery & Operations
Permitting, Engineering, & Construction
High-Profile Private Sector Clients
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Working With All Levels of Government
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State and Local Federal
12
Growth Strategy
0%
2%
4%
6%
8%
10%
12%
Q2 2013 Q3 2013 Q4 2013 Q1 2014
Total
Organic
Total & Organic NSR Growth Recent Acquisitions
• Ocampo Esta Corp. (Covina operations)
• GE’s Air Emissions Testing business
• Heschong Mahone Group, Inc.
• Utility Support Systems, Inc. (USS)
• Invest in high-margin organic growth opportunities focused on: • Utility/Power • Oil & Gas • Infrastructure
• Pursue strategic acquisitions to enhance service offerings and geographic footprint of all three segments
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$245.9
$301.8 $320.4
FY 2011 FY 2012 FY 2013
Net Service Revenue(in millions)
6%
$75.2 $81.3
Q1 2013 Q1 2014
Net Service Revenue
(in millions)
8%
Q1 2014 v. Q1 2013
Significant Long Term Growth Potential
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Net service revenue
Cost of services
Gross margin
General and administrative expenses
Arena Towers litigation reversal
Operating income
EBITDA
EBITDA as a % of NSR
Federal and state income tax benefit
Net income applicable to TRC Companies, Inc.
Diluted earnings per common share
FY 2012
$301.8
$246.5
18.3%
$31.0
$(11.1)
$30.0
$24.4
8.1%
$3.9
$33.6
$1.16
FY 2013
$320.4
$268.5
16.2%
$30.7
-
$18.6
$25.5
7.9%
$18.0
$36.3
$1.23
(In millions, except per share data)
81.7% 83.8%
FY 2012 FY 2013
Cost of Services as % of NSR
10.3% 9.6%
FY 2012 FY 2013
G&A Expenses as % of NSR
Full Year Income Statement Highlights
$301.8
$320.4
$301.8
$320.4
$14,435
$24,403 $25,464
5.9%
8.1% 7.9%
FY 2011 FY 2012 FY 2013
Consolidated EBITDA
EBITDA Reflects Leverage in Business Model
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(in thousands)
Consolidated EBITDA EBITDA Margin
$52 $44 $54
$40 $60 $58
$138 $131 $135
2011 2012 2013
Segment NSR Backlog
NSR Backlog & New Project Wins
16
(in millions)
Energy • Public Service New Hampshire
EPC Project • NYSERDA Multifamily
Environmental • Sabal Trail Natural Gas Pipeline • Alabama Department of
Environmental Management
Infrastructure • Confidential Client – Waste
Water Treatment Plant • PennDOT District 4-0
$235 $247
New Project Wins
$230
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Balance Sheet Highlights
Cash and cash equivalents
Days sales outstanding (DSO)
Cash Flow Highlights
Cash flow from operations
Capital expenditures
Free cash flow
FY 2012
$16.6
78 days
$19.4
$7.1
$12.3
FY 2013
$18.1
83 days
$14.4
$3.9
$10.5
(In millions)
Balance Sheet and Cash Flow Highlights
Investment Highlights
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Well positioned in markets with solid medium- to long-term growth opportunities
Executing a focused profitable growth strategy
Large addressable market opportunity
Diversified revenue stream with attractive customer base
Strong balance sheet and cash position
Stable but growing backlog
Reconciliation of Non-GAAP Measures
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In millions
FY 2011 FY 2012 FY 2013
Net income applicable to TRC Companies, Inc.'s common shareholders (16.6)$ 33.6$ 36.3$
Interest expense 0.8 0.7 0.3
Federal and state income tax provision 1.1 (3.9) (18.0)
Depreciation and amortization 4.7 5.5 6.9
Net loss applicable to noncontrolling interest (0.1) (0.1) -
Equity in earninngs from unconsolidated affiliates, net of taxes - (0.3) -
Accretion charges on preferred stock 7.3 - -
Consolidated EBITDA (2.8)$ 35.5$ 25.5$
In millions
FY 2011 FY 2012 FY 2013
Net service revenue 245.9$ 301.8$ 320.4$
Cost of services 202.3 246.5 268.5
Gross Margin 43.6$ 55.3$ 51.9$
Gross Margin % 17.7% 18.3% 16.2%
In millions
FY 2011 FY 2012 FY 2013
Net cash provided by operating activities 12.5$ 19.4$ 14.4$
Additions to property and equipment (3.1) (7.1) (3.9)
Free Cash Flow 9.4$ 12.3$ 10.5$
Earnings Before Interest, Taxes, Depreciation, Amortization
Gross Margin and Gross Margin %
Free Cash Flow