Trc q4 2016 earnings slides final

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Q4 Fiscal 2016 Investor Review

Aug. 31, 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 Fourth Quarter and Fiscal Year 2016 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 fiscal

year 2016 Form 10-K and fourth quarter 2016 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 17-22.

Q4 Fiscal 2016 Overview

3

NSR1 increased 16% YOY to $132.3MEnergy +4%, Environmental -9%, Infrastructure +24%, Pipeline Services NSR of $20.8M

NSR backlog increased 16% YOY to $367.2MEnergy -9%, Environmental +8%, Infrastructure +1%, Pipeline Services backlog of $48M

(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 $1.1M, less interest income increase of $0.5M.

Operating cash flow of $17.7MTop quintile DSO performance fuels operating cash flow in excess of earnings

Net income decreased 13% YOY to $5.9MAmortization expense increased $1.9M and net interest expense2 increased $0.6M

EBITDA increased 15% YOY to $14.8MHighest quarterly earnings in company history

Envi

ronm

enta

l Seg

men

t

$13.8 $14.2

$44.1 $41.7

Q4 2015 Q4 2016 FY 2015 FY 2016

Segment Profit (in millions)

-5%

+3%

$58.4 $53.1

$209.8 $206.1

Q4 2015 Q4 2016 FY 2015 FY 2016

Net Service Revenue (in millions)

-9%

-2%

4

NSR -9% YOY; primarily due to oil & gas industry downturn

Segment profit +3% YOY

NSR backlog +8% YOY

Continued decline in oil & gas market, delayed midstream capital projects and reduced spending across the entire spectrum

Increased segment profit due to previous employee headcount reductions to align productivity with revenue base ($4.0M of annualized payroll reductions in Q3 2016)

Construction, real estate and power markets gaining momentum

Q4 Fiscal 2016 Results

Ener

gy S

egm

ent

5

NSR +4% YOY

Segment profit -7% YOY, driven by administrative delays on a significant California program management contract

NSR backlog -9% YOY

Increased demand for services from long-term and newer clients from continued investment in electric transmission and distribution across the country

Demand for energy efficiency, testing / commissioning, and distribution engineering services driving growth

$39.1 $40.5

$145.7 $150.6

Q4 2015 Q4 2016 FY 2015 FY 2016


+3%

$9.5 $8.8

$32.1 $33.7

Q4 2015 Q4 2016 FY 2015 FY 2016


+5%

-7%+4%


Infr

astr

uctu

re S

egm

ent

6


NSR +24% YOY

Segment profit +32% YOY

NSR backlog +1% YOY

Transportation market strengthening via FAST Act, as well as increased state and local funding initiatives

Private investment and state legislation expanding PPP programs

Expansions of services in CA, FL, OH and SC

$13.6 $16.9

$49.1

$57.2

Q4 2015 Q4 2016 FY 2015 FY 2016


+17%

$3.0 $3.9

$9.2

$12.0

Q4 2015 Q4 2016 FY 2015 FY 2016


+32%

+31%

+24%

Pipe

line

Serv

ices

Seg

men

t

7

NSR $20.8 million

Segment loss of $(3.2) million, including intangible asset amortization of $2.1 million and acquisition integration expenses of $2.3 million, primarily lease abandonment charges

NSR backlog $48 million

Realigned cost structure to address continued uncertainty in oil & gas markets

• (~$18M annualized payroll reductions since 12/1/15)

Integration activities are substantially complete; focus is on client synergies and sales

$21.5 $20.8

Q3 2016 Q4 2016



$(3.1) $(3.2)

Segment (Loss) (in millions)

Q4 2016Q3 2016

$90 $96 $91

$96 $91 $87

$131 $139 $141

$50 $48

Q4 2015 Q3 2016 Q4 2016

Segment NSR Backlog

$367

NSR Backlog & New Project Wins

8

(in millions)

$317

$376

Energy• PSE&G - $10M substation electrical commissioning and

testing• Consolidated Edison - $2.5M for quality assurance /

quality control services for energy efficiency

Environmental• Xcel Energy Services, Inc. – $10M indefinite delivery /

indefinite quantity contract for environmental services• Eversource Energy - $3M turnkey environmental services

Infrastructure

• LA Metro Transport. Authority – $6.4M for design and environmental studies in widening two freeways

• Alabama DOT – $0.5M for testing and inspection of bridge and highway structures

Pipeline Services

• Confidential Client - $4.5M pipeline project• PSNC Energy (a SCANA company) - $3M compressor

station project

Recent Project Awards

Fiscal 2016 Highlights

9

NSR of $465.1 million, up 14%

Adjusted EBITDA of $44.6 million, up 11%

Operating cash flow of $48.1 million, up 50%

Acquisition-related debt reduced by $30 million or 29%

Acquired and fully integrated Willbros Professional Services

Quickly reduced costs as the downturn in oil and gas prices created market turmoil and uncertainty

Benefitted from the diversity of our four-segment portfolio: Infrastructure segment realized 17% NSR growth and 31% segment profit growth

16% backlog growth for the year sets the stage for fiscal 2017

Key Strategies and Initiatives

10

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

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

FY 2017 Outlook

11

Long-term markets favorable for all segments

Mid term, Environmental and Oil and Gas segments are positioned for growth when midstream markets recover and capital expenditure uncertainty tapers

Near term, Oil and Gas segment will see growth opportunities due to proposed integrity “Mega Rule”

Environmental segment near-term outlook solid with demand growth in municipal, real estate and power markets

Power segment growth on demand from utility clients investing in energy efficiency, renewable power and robust distribution systems

Infrastructure segment backlog building on increased transportation spending and our national expansion strategy

$12.9 $14.8

Q4 2015 Q4 2016

EBITDA (in millions)

Quarterly Financial Results Overview

12

$114.6 $132.3

Q4 2015 Q4 2016


+16%

$12.9 $15.2

Q4 2015 Q4 2016

Adjusted EBITDA* (in millions)

+18%

*Excludes $2.8 million of acquisition and integration expenses and the $2.5 million goodwill impairment credit.

+15%

$6.8 $5.9

Q4 2015 Q4 2016

Net Income (in millions)

-13%

Q4 2015

$114.6

$0.3

$90.0

21.4%

$12.0

10.5%

--

--

$10.7

$10.7

$12.9

11.2%

$12.9

11.2%

$6.8

$6.8

$0.22

$0.22

Q4 2016

$132.3

$14.2

$121.6

8.1%

$9.7

7.3%

$2.8

$(2.5)

$10.3

$10.6

$14.8

11.2%

$15.2

11.5%

$5.9

$6.1

$0.19

$0.20

13

(In millions, except per share data)

Quarterly Income Statement Highlights

78.5%

91.9%

Q4 2015 Q4 2016

Cost of Services as % of NSR

10.5%

7.3%

Q4 2015 Q4 2016

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

Goodwill impairment

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

1Excludes $2.8 million of acquisition and integration expenses and the $2.5 million goodwill impairment credit. 2Excludes acquisition related expense and goodwill impairment credit in note 1, net of an income tax benefit of 0.1 million

Q4 2015 Q4 2016

Net Service Revenue (0.2)$ (2.1)$

Insurance Recoverables 0.3 14.0

Cost of Services 0.2 11.4

Operating (Loss) Income (0.1)$ 0.5$

Exit Strategy Change in Estimate

$40.0

$16.1

FY 2015 FY 2016

EBITDA (in millions)

FY 2016 Financial Results Overview

14

$408.0 $465.1

FY 2015 FY 2016


+14%

$40.0 $44.6

FY 2015 FY 2016

Adjusted EBITDA* (in millions)

+11%-60%

$19.4

$-

FY 2015 FY 2016

Net Income (in millions)

-100%

1Excludes $6.6 million of acquisition and integration expenses and $22 million related to the impairment of goodwill. 2Excludes goodwill impairment and acquisition related expense in note 1, net of an income tax benefit of $10.9 million.

FY 2015

$408.0

$6.6

$337.3

17.3%

$37.3

9.1%

--

--

$30.7

$30.7

$40.0

9.8%

$40.0

9.8%

$19.4

$19.4

$0.63

$0.63

YTD 2015

$192.5

$5.5

$163.8

14.9%

$16.4

$12.9

$17.8

9.2%

$7.5

$0.2515

(In millions, except per share data)

FY 2016 Income Statement Highlights

82.7%86.5%

FY 2015 FY 2016

Cost of Services as % of NSR

9.1%7.4%

FY 2015 FY 2016

G&A Expenses as % of NSR

1Excludes $6.6 million of acquisition and integration expenses and $22 million related to the impairment of goodwill. 2Excludes goodwill impairment and acquisition integration related expense in note 1, net of an income tax benefit of $10.9 million.

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 expense

Goodwill impairment

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

FY 2016

$465.1

$16.2

$402.3

13.5%

$34.4

7.4%

$6.6

$22.0

$1.3

$29.9

$16.1

3.5%

$44.6

9.6%

$0.0

$17.7

$0.00

$0.56

FY 2015 FY 2016

Net Service Revenue (2.6)$ (3.5)$

Insurance Recoverables 3.9 15.7

Cost of Services 2.5 13.3

Operating Loss (1.2)$ (1.1)$

Exit Strategy Change in Estimate

16

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

Q4 2015

--

--

$19.5

$(1.6)

$17.9

Q4 2016

$(2.8)

$72.2

$17.7

$(1.8)

$15.9

(In millions)

Balance Sheet and Cash Flow Highlights

FY 2015

$37.3

83 days

$32.1

$(6.6)

$25.5

FY 2016

$18.8

79 days

$(29.8)

$72.2

$48.1

$(8.3)

$39.8

17

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

In millions

Q4 - 2015 Q4 - 2016

Net income applicable to TRC Companies, Inc.'s common shareholders $6.8 $5.9

Interest expense 0.0 1.1

Interest income - (0.5)

Provision for income taxes 3.9 3.7

Depreciation and amortization 2.2 4.6

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

Equity in earnings from unconsolidated affiliates, net of taxes - -

Accretion charges on preferred stock - -

Consolidated EBITDA $12.9 $14.8

Less: Acquisition and integration expenses - $2.8

Less: Goodwill impairment - ($2.5)

Consolidated Adjusted EBITDA $12.9 $15.2

In millions

Q4 - 2015 Q4 - 2016

Net service revenue $114.6 $132.3

Cost of services 90.0 121.6

Gross Margin $24.6 $10.7

Gross Margin % 21.4% 8.1%

Gross Margin and Gross Margin %

Reconciliation of Non-GAAP Measures

18

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

In millions

YTD - 2015 YTD - 2016


Interest expense 0.1 2.7

Interest income - (0.8)

Provision for income taxes 11.2 (0.7)

Depreciation and amortization 9.3 14.7

Net income (loss) applicable to noncontrolling interest (0.0) 0.1

Equity in earnings from unconsolidated affiliates, net of taxes - -

Accretion charges on preferred stock - -

Consolidated EBITDA $40.0 $16.1

Less: Acquisition and integration expenses - $6.6

Less: Goodwill impairment - $22.0

Consolidated Adjusted EBITDA $40.0 $44.6

In millions

YTD - 2015 YTD - 2016

Net service revenue $408.0 $465.1

Cost of services 337.3 402.3

Gross Margin $70.7 $62.8

Gross Margin % 17.3% 13.5%



19

In millions

Q4 - 2015 Q4 - 2016

Net cash provided by operating activities $19.5 $17.7

Additions to property and equipment (1.6) (1.8)

Free Cash Flow $17.9 $15.9

Free Cash Flow

In millions

YTD - 2015 YTD - 2016

Net cash provided by operating activities $32.1 $48.1

Additions to property and equipment (6.6) (8.3)

Free Cash Flow $25.5 $39.8

Free Cash Flow


20

In millions

Q4 - 2015 Q4 - 2016


Acquisition and integration Expenses - $2.8

Tax Effect of Acquisition and integration Expenses - ($1.1)

Goodwill impairment - ($2.5)

Tax Effect of Goodwill impairment - $1.0

Adjusted Net Income Applicable to TRC Companies, Inc's Common Shareholders $6.8 $6.1

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


In millions

YTD - 2015 YTD - 2016




Goodwill impairment - $22.0

Tax Effect of Goodwill impairment - ($8.5)

Adjusted Net Income Applicable to TRC Companies, Inc's Common Shareholders $19.4 $17.7

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

21

In millions

Q4 2015 Q4 2016

Operating income $10.7 $10.3



Adjusted operating income $10.7 $10.6

In millions

Q4 2015 Q4 2016





Tax Effect of Goodwill impairment - $1.0

Adjusted net income applicable to TRC Companies, Inc's common shareholders $6.8 $6.1

Diluted shares outstanding (as disclosed) 31.2 31.4

Add back for dilutive shares - -

Adjusted diluted shares outstanding 31.2 31.4

Adjusted diluted earnings per common share $0.22 $0.20

Adjusted Diluted Earnings per Common Share

Adjusted Operating Income


22

In millions

YTD 2015 YTD 2016

Operating income $30.7 $1.3



Adjusted operating income $30.7 $29.9

In millions

YTD 2015 YTD 2016





Tax Effect of Goodwill impairment - ($8.5)

Adjusted net income applicable to TRC Companies, Inc's common shareholders $19.4 $17.7

Diluted shares outstanding (as disclosed) 30.7 31.4

Add back for dilutive shares - 0.0

Adjusted diluted shares outstanding 30.7 31.4

Adjusted diluted earnings per common share $0.63 $0.56

Adjusted Diluted Earnings per Common Share



23

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 and the amount of the goodwill impairment.


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 Flow

The 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

24


The 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 and the amount of the goodwill impairment.

Adjusted Net Income

The 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 and the amount of the goodwill impairment.

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

Date post:	20-Jan-2017
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Trc q4 2016 earnings slides final

Investor Relations