Trc q1 2017 earnings slides final2

www.trcsolutions.com

Q1 Fiscal 2017 Investor Review

Nov. 3, 2016Chris Vincze Tom BennetChairman & CEO Chief Financial Officer

T R R

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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, 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; capital

availability and project investment by our clients; 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, 2016, 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.

These slides are intended as a visual aid to TRC’s commentary on the First Quarter Fiscal Year 2017 Financial Results Conference Call.

As such they should be considered in the full context of that commentary, the transcript of that conference call and TRC’s first quarter

Form 10-Q and financial results press release. Also, this presentation contains references to non-GAAP metrics such as EBITDA, gross

margin, free cash flow and various adjusted metrics. A reconciliation of GAAP to non-GAAP metrics can be found on slides 13-18.

Q1 Fiscal 2017 Overview

3

NSR1 increased 24% YOY to $124.3MPower +8%, Environmental -5%, Infrastructure +23%, Oil & Gas NSR of $21.3M

NSR backlog increased 10% YOY to $352MPower -2%, Environmental +2%, Infrastructure -3%, Oil & Gas backlog of $35M

(1) TRC believes net service revenue (gross revenue less subcontractor costs and other direct reimbursable charges) best reflects the value of services provided to its customers and is the most meaningful indicator of its revenue performance.

(2) Interest expense increase of $0.8M, less interest income increase of $0.3M.

Net income decreased 19% YOY to $3.6MAmortization expense increased $1.9M and net interest expense2 increased $0.5M

EBITDA increased 5% YOY to $10.5MAdjusted EBITDA declined 3% YOY

Operating cash flow of $(3.2)MCash used to support sequential revenue growth; six-day YOY DSO improvement

Envi

ronm

enta

l Seg

men

t

4

$51.6 $48.9

Q1 2016 Q1 2017

Net Service Revenue (in millions)

$10.0 $9.1

Q1 2016 Q1 2017

Segment Profit (in millions)

-5% -9%

NSR -5% YOY; primarily due to decrease in services to oil & gas clients

Segment profit -9% YOY

NSR backlog +2% YOY

Low oil & gas prices and challenging market conditions led to constrained capital spending

In addition to Power and Real Estate, state and municipal markets providing growth opportunities

Q1 Fiscal 2017 Results

Pow

er S

egm

ent

5

$34.3 $37.1

Q1 2016 Q1 2017


$7.3 $8.0

Q1 2016 Q1 2017


+9%+8%

NSR +8% YOY; driven by several large capital projects

Segment profit +9% YOY

NSR backlog -2% YOY

Growth in volume of significant EPC and program management opportunities

Continued demand for energy efficiency, testing and commissioning and distribution engineering services driving growth


Infr

astr

uctu

re S

egm

ent

6

$13.6

$16.6

Q1 2016 Q1 2017


$2.9

$4.3

Q1 2016 Q1 2017


+23%

+49%

NSR +23% YOY; driven by increased PPP, state and local government activity

Segment profit +49% YOY

NSR backlog -3% YOY

Project execution and increased scale drove growth in profit

Geographic expansion is providing new revenue opportunities


Oil

& G

as S

egm

ent

7

NSR $21.3 million; continued uncertainty in oil and gas markets

Segment profit $1.4 million

NSR backlog $35 million

Integration activities are complete; focused on revenue synergies and sales

Segment profit driven by cost reduction initiatives

Integrity and technology-driven solutions seeing increased activity

$21.5 $20.8 $21.3

Q3 2016 Q4 2016 Q1 2017



$(3.1) $(3.2)

$1.4


Q1 2017Q3 2016 Q4 2016

$91 $91 $88

$98 $87 $96

$130 $141 $133

$48 $35

Q1 2016 Q4 2016 Q1 2017

Segment NSR Backlog

$352

NSR Backlog & New Project Wins

8

(in millions)

$319

$367

Power• Confidential Utility Client – $1.8M for transmission line

relocation• San Diego Association of Governments – $1.8M energy

engineering services to the cities in San Diego County

Environmental• LADWP – $14.6M for coal-plant decommissioning• US EPA – $11.5M 5-year contract to study effects of gas

and aerosol air pollutants on human health

Infrastructure

• Wellsburg Bridge Public-Private Partnership – $4.6M for sub-consulting

• Tennessee DOT – $2.5M for construction engineering and inspection services for various projects

Oil & Gas

• Confidential Client – $4.7M pipeline project in WV• Cascade Natural Gas – $2.0M TVC feature assessment

study

Recent Project Awards

Key Strategies and Market Outlook

9

Continue to invest in organic growth opportunities

Increase focus on strategic markets:

Power / Utility – Continued investment to modernize gas & electric systems; significant renewable generation investment and focus on energy efficiency

Transportation – FAST transportation bill supports capital expansion; growing trend toward PPP projects; new infrastructure funding post election

Oil & Gas – Changing midstream and LDC market dynamics resulting in focus on repair / maintenance, upgrade, and monitoring of existing assets using technology-driven solutions

Continue building program management and construction management capabilities

Pursue acquisitions that provide geographic expansion and enhanced technical capabilities or new adjacent services

Continue focus on improving operating margin and increasing operating cash flow

$9.9 $10.5

Q1 2016 Q1 2017

EBITDA (in millions)

Quarterly Financial Results Overview

10

$100.2

$124.3

Q1 2016 Q1 2017


+24%

$10.8 $10.5

Q1 2016 Q1 2017

Adjusted EBITDA* (in millions)

-3%

*Excludes acquisition and integration expenses of $0.9 million for the three months ended September 25, 2015.

+5%

$4.5

$3.6

Q1 2016 Q1 2017

Net Income (in millions)

-19%

Q1 2016

$100.2

$0.7

$83.0

17.2%

$7.1

7.1%

$0.9

$7.7

$8.6

$9.9

9.9%

$10.8

10.8%

$4.5

$5.0

$0.14

$0.16

Q1 2017

$124.3

$0.6

$103.7

16.6%

$10.8

8.7%

--

$6.0

$6.0

$10.5

8.4%

$10.5

8.4%

$3.6

$3.6

$0.12

$0.12

11

(In millions, except per share data)

Quarterly Income Statement Highlights

82.8% 83.4%

Q1 2016 Q1 2017

Cost of Services as % of NSR

7.1%

8.7%

Q1 2016 Q1 2017

G&A Expenses as % of NSR

Net service revenue

Insurance recoverables and other income

Cost of services (COS)

Gross margin %

General and administrative expenses

G&A as % of NSR

Acquisition and integration expenses

Operating income

Adjusted operating income1

EBITDA

EBITDA as a % of NSR

Adjusted EBITDA1

Adjusted EBITDA as a % of NSR

Net income

Adjusted net income1, 2

Diluted earnings per common share

Adjusted diluted earnings per common share1, 2

1 Excludes acquisition and integration expenses of $0.9 million for the three months ended September 25, 2015. 2 Excludes acquisition-related expense in note 1, net of an income tax benefit of $0.4 million.

12

(In millions)

Balance Sheet and Cash Flow Highlights

Balance Sheet Highlights

Cash and cash equivalents

Days sales outstanding (DSO)

Acquisition-related debt repayment

Acquisition-related debt balance

Cash Flow Highlights

Cash flow from operations

Capital expenditures

Free cash flow

Q1 2016

$53.1

90

--

--

$14.3

$(2.0)

$12.3

Q1 2017

$12.7

84

$1.4

$69.7

$(3.2)

$(1.6)

$(4.8)

Operating Cash Flow Items

EBITDA

Sequential Gross

Revenue

Payroll Timing

Q1 2016

$9.9

$(13.6)

-

Q1 2017

$10.5

$11.3

$(12.2)

13

Earnings Before Interest, Taxes, Depreciation, Amortization and Goodwill & Intangible Asset Impairment

In millions

Q1 - 2016 Q1 - 2017

Net income applicable to TRC Companies, Inc.'s common shareholders $4.5 $3.6

Interest expense 0.0 0.9

Interest income - (0.2)

Provision for income taxes 3.1 1.7

Depreciation and amortization 2.3 4.5

Net income (loss) applicable to noncontrolling interest (0.0) 0.0

Consolidated EBITDA $9.9 $10.5

Less: acquisition and integration expenses $0.9 -

Consolidated Adjusted EBITDA $10.8 $10.5

In millions

Q1 - 2016 Q1 - 2017

Net service revenue $100.2 $124.3

Cost of services 83.0 103.7

Gross Margin $17.2 $20.6

Gross Margin % 17.2% 16.6%

Gross Margin and Gross Margin %

Reconciliation of Non-GAAP Measures

Amounts rounded for presentation purposes.

14

In millions

Q1 - 2016 Q1 - 2017

Net cash provided by operating activities $14.3 $(3.2)

Additions to property and equipment (2.0) (1.6)

Free Cash Flow $12.3 $(4.8)

Free Cash Flow



15

In millions

Q1 - 2016 Q1 - 2017


Acquisition and integration expenses $0.9 -

Tax effect of acquisition and integration expenses ($0.4) -

Adjusted Net Income Applicable to TRC Companies, Inc's Common Shareholders $5.0 $3.6

Adjusted Net Income Applicable to TRC Companies, Inc.'s Common Shareholders



16

In millions

Q1 2016 Q1 2017

Operating income $7.7 $6.0


Adjusted operating income $8.6 $6.0

In millions

Q1 2016 Q1 2017



Tax effect of acquisition and integration expenses ($0.4) -

Adjusted net income applicable to TRC Companies, Inc's common shareholders $5.0 $3.6

Diluted shares outstanding (as disclosed) 31.3 31.6

Adjusted diluted earnings per common share $0.16 $0.12

Adjusted Diluted Earnings per Common Share

Adjusted Operating Income



17

Earnings Before Interest, Taxes, Depreciation, Amortization (EBITDA)The Company presents EBITDA because it believes that it is a useful tool for the Company, its lenders and its investors to measure the Company’s ability to meet debt service, capital expenditure and working capital requirements. As used in the presentation, EBITDA is operating income plus depreciation and amortization.

Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization (Adjusted EBITDA)As used in the presentation, Adjusted EBITDA is defined as EBITDA plus acquisition and integration expenses.

Gross Margin and Gross Margin %The Company presents Gross Margin and Gross Margin % to allow investors to better evaluate short-term and long-term profitability trends. The definition of Gross Margin is equal to Net Service Revenue less Cost of Services. Gross Margin % is equal to Gross Margin Divided by Net Service Revenue.

Free Cash FlowThe Company presents Free Cash Flow, and ratios based on it, to conduct and evaluate its business because, although it is similar to cash flow from operations, the Company believes it is a useful measure of cash flows since purchases of fixed assets are a necessary component of ongoing operations. The definition of Free Cash Flow is equal to net cash provided by (used in) operating activities plus additions to property and equipment.

Definitions for Non-GAAP Measures

18

Adjusted Operating IncomeThe Company presents Adjusted Operating Income because it believes that it is a useful tool for the Company, its lenders and its investors to measure the Company’s underlying operating performance. As used in the presentation, Adjusted Operating Income is defined as operating income plus acquisition and integration expenses.

Adjusted Net IncomeThe Company presents Adjusted Net Income because it believes that it is a useful tool for the Company, its lenders and its investors to measure the Company’s financial performance. As used in the presentation, Adjusted Net Income is defined as net income applicable to TRC Companies, Inc. plus the tax effected acquisition and integration expenses. The Company utilizes its effective tax rate for the period in calculating the tax effect.

Adjusted Diluted Earnings Per Share (Adjusted Diluted EPS)The Company presents Adjusted Diluted EPS because it believes that it is a useful tool for the Company, its lenders and its investors to measure the Company’s financial performance. As used in the presentation, Adjusted Diluted EPS is defined as Adjusted Net Income divided by diluted weighted average shares outstanding.

Definitions for Non-GAAP Measures

Trc q1 2017 earnings slides final2

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