31568 (TRR) research, news, and more from GeoInvesting

Company description

Mon, 23 Feb 2015 05:00:00 GMT

TRC Companies, Inc provides engineering, consulting, and construction management services in the United States. Its Energy segment offers program design, program management, quality control, engineering, financial tracking, and reporting services to energy companies, utilities, commercial entities, and state and federal government entities. This segment undertakes upgrade, design, and new construction of electric transmission and distribution systems and substations, energy efficiency program design and management, and renewable energy development projects. The company’s Environmental segment is involved in environmental management of buildings and facilities; air quality measurements and modeling of potential air pollution impacts; water quality and water resource management; assessment and remediation of contaminated sites and buildings; hazardous waste management; construction monitoring, inspection, and management; environmental, health, and safety management and sustainability advisory services; compliance auditing and strategic due diligence; environmental licensing and permitting of various projects; and natural and cultural resource assessment, protection, and management. This segment serves industrial, transportation, energy, and natural resource companies, as well as federal, state, and municipal agencies. Its Infrastructure segment’s primary services comprise roadway, bridge, and related surface transportation design; structural design and inspection of bridges; program management; construction engineering inspection and construction management for roads and bridges; civil engineering services for municipalities and public works departments; geotechnical engineering; and security assessments, design, and construction management services to state and municipal governments, and commercial developers. The company was founded in 1969 and is headquartered in Windsor, Connecticut.

Comments & Business Outlook

Wed, 04 Nov 2015 15:58:17 GMT

$TRR ($11.19)reported Q1 2016 results:

Sales of $100.2 million vs $92.6 million in the prior year
EPS of $0.14 vs $0.11

Quotes from management:

"Fiscal 2016 is off to a good start, as we continue to execute our strategic growth initiatives," Vincze added. "In our Energy segment, demand for our utility clients remains strong. Our Infrastructure segment backlog is robust, and the prospects for a long-term federal transportation bill are favorable. Environmental issues related to transportation of natural gas and retirement of coal plants should support revenue growth in our Environmental segment. We are looking forward to completing our acquisition of the Willbros Professional Services business, which will become a fourth segment, Pipeline Services. We believe adding this unit's technical capabilities, employees and client base to TRC, with our national reputation and strong financial position, will create a company with an unparalleled capability to address all phases of the pipeline project life cycle."

Research

Wed, 09 Sep 2015 14:26:35 GMT

May re-establish long position in $TRR ($8.81)

On September 3, 2015 we closed out the remainder of our TRR long position, established on 2/24/2015 at $7.75. We originally sold some of our position when shares quickly ran to its recent high of $11.49. We stated we were not comfortable holding our long into this quarter's earnings. This morning TRR reported results ahead of our expectations and we will listen to the conference call to determine if this trend can continue and if we will re-establish a long position. We are now more comfortable reestablishing a long position and will alert members if we decide to do so.

Research

Fri, 04 Sep 2015 15:00:07 GMT

Closed our long position in TRR

Yesterday, via premium tweet, we stated we closed our long position in $TRR (8.75). In our May 19, 2015 email we stated:

“Will look to methodically sell small portions of TRR as shares approach our price target of $12.50.”

Shares were trading at $10.00 at that time and reached a high of $11.49 on June 11, 2015. While we sold a portion of our position on that run, we maintained a portion of long position until yesterday. With Q4 2015 earnings slated to be reported on Wednesday, September 9, 2015 we are not comfortable holding our long position as we feel the company is facing a difficult quarterly comparison vs last year’s Q4 results. We are maintaining TRR as a GeoBargain on the radar and will reassess our opinion after the company reports its Q4 results.

Research

Mon, 18 May 2015 04:00:00 GMT

GeoBargain on the radar TRR update

$TRR ($9.95) has been on a run lately up 33% since we disclosed our long position to Geo premium member on 2/24/15. We believe there are several factors driving TRR’s recent price action. First, fiscal Q3 (March 31, 2015) operating results were released on 5/6/15 reporting sales increased by 14% and net income 240% over the comparable period in fiscal 2014. Another catalyst for TRR’s recent rise could also be attributed to the performance of competitor, peer and former GeoBargain, NVEE. We recently removed NVEE from our GeoBargain list when its share price surpassed the $21.00 price target we set for the stock of when we published, “NV5 Holdings’ (NVEE) Management: Been There, Done That, and Doing it Again”, on February 18, 2015. The stock rose 117% during its tenure as a GeoBargain

When comparing the current valuations of TRR with NVEE it is noteworthy that TRR’s EV/Adjusted EBITDA multiple is 5.88 compared to NVEE’s of 10.66. If we consider EV/EBITDA (unadjusted), the multiples are 7.86 for TRR and 12.16 for NVEE. NVEE has had a faster growth rate and recent acquisitions as a tailwind but TRR is also getting its operations in gear with strong operating performance and guidance, and a recent acquisition. If we give NVEE the edge for multiples and apply a conservative 25% discount to TRR’s multiples vs. NVEE’s, we see a reasonable valuation for TRR of around $12.50. We believe a healthy valuation gap is prudent since we are a little more confident that NVEE Quarterly EPS growth rate will be less lumpy and issues specific financial guidance.

Comments & Business Outlook

Wed, 06 May 2015 04:00:00 GMT

Third Quarter 2015 Results

Q3 2015 revenues of $101.0 million vs $88.1 million in the prior year period
Q3 2015 EPS of $0.17 vs $0.05 in the prior year period

Comments on the Results

"TRC delivered a strong performance in all three of our segments during the third quarter," said Chris Vincze, Chairman and Chief Executive Officer. "Overall NSR increased 15%, and operating income nearly tripled, driven by strong fundamentals in all of our markets. Additionally, this year's third quarter was impacted less by the weather and medical cost issues that affected results in the same period last year.

"In our Environmental segment, NSR increased 22%, and profit increased 28%, on steady demand throughout the segment. Energy segment NSR was up 5%, while segment profit increased 10%, due to new project demand and efficient resource management. In the Infrastructure segment, NSR increased 19%, and segment profit rose 99%, resulting from project execution and receipt of pending change orders," Vincze said.

Business Outlook

"We continue to execute a profitable growth strategy across our three segments," Vincze added. "The Infrastructure segment, where backlog grew 56% in the quarter, is gaining momentum as several states have deployed significant capital projects. In the Energy segment, we are seeing increased demand from renewables as states such as California push for increasing energy efficiency and reduced carbon emissions. In addition, high levels of capital continue to be spent upgrading transmission and distribution assets. Meanwhile, in our Environmental segment, focused project execution and recent acquisitions are contributing to our growth and profitability. We have a strong balance sheet to support our growth through ongoing organic investments and strategic acquisitions, and we are optimistic about the remainder of fiscal 2015."

Research

Wed, 25 Feb 2015 05:00:00 GMT

$TRR ($8.09) - Yesterday, via premium tweet we stated TRR was breaking out and that we began to establish a long position. We are coding TRR as a GeoBargain on the radar and will look to set up a call with management. Please reference our 2/23/2015 research note for more color on this story.

Research

Mon, 23 Feb 2015 05:00:00 GMT

TRC Companies Inc. - TRR - On the Cusp of Accelerated Growth In Sales and Earnings?

GeoInvesting believes that if TRC Companies Inc. (TRR) can begin to grow its top line on a consistent basis and bring its gross margins of 16% more to near 36%, a figure more in line with comparable companies NV5 Holdings, Inc. (NVEE) and Willdan Group, Inc. (WLDN), we could see significant improvement in profitability and a notable increase in TRR’s share price.

Sometimes the best opportunities are present in under-performing companies that are about to turn the corner. We actually came across TRR, an engineering and construction management company, during our due diligence on GeoBargain NVEE. We mentioned that TRR was an under-performer compared to its most relevant comparable competitors in this industry. But, we still believe the story is worth tracking.

Management's Outlook and Accretive Acquisition Sparks GeoInvesting's Interest

In our 11/4/2014 email we stated we would begin to track TRR due to management commentary, combined with the completion of an accretive acquisition. The reasons for tracking this company are listed below...

As we mentioned in our GeoBargain NVEE article, industry dynamics in the engineering consultant industry are strong.
- There is an immediate need to upgrade the decaying U.S. infrastructure in public and private sectors.
- There is a related need to fill the increase in human resource demand.
Numerous acquisition opportunities are present in this fragmented industry. TRR has begun to take advantage of this situation as referenced by the recent acquisitions of Covino Environmental Associates and NOVA Safety and Enviromental within the last 7 months.
Acquisition strategy has helped fuel the growth and share prices of the two most relevant publicly traded comparables, NVEE and WLDN.

The following commentary from management indicates the company is about to enter into a period of near term growth.

“TRC continues to see solid growth opportunities in each of our segments. Our diversified business model is delivering increased profitability and growth. We have a strong balance sheet to support our growth initiatives, including ongoing organic investments and strategic acquisitions. We are encouraged about our outlook for the second half of fiscal 2015 and our long-term growth," concluded Vincze.”

Caveats:

We have not interviewed management to learn more about the growth initiatives and if its plans could lead to expanding gross margins to that of its industry comparables. We will provide an update as soon as possible.

Reasons For Tracking

Mon, 23 Feb 2015 05:00:00 GMT

TRC Companies Inc. - TRR - On the Cusp of Accelerated Growth In Sales and Earnings?

Management's Outlook and Accretive Acquisition Sparks GeoInvesting's Interest

As we mentioned in our GeoBargain NVEE article, industry dynamics in the engineering consultant industry are strong.
- There is an immediate need to upgrade the decaying U.S. infrastructure in public and private sectors.
- There is a related need to fill the increase in human resource demand.
Numerous acquisition opportunities are present in this fragmented industry. TRR has begun to take advantage of this situation as referenced by the recent acquisitions of Covino Environmental Associates and NOVA Safety and Enviromental within the last 7 months.
Acquisition strategy has helped fuel the growth and share prices of the two most relevant publicly traded comparables, NVEE and WLDN.

The following commentary from management indicates the company is about to enter into a period of near term growth.

“TRC continues to see solid growth opportunities in each of our segments. Our diversified business model is delivering increased profitability and growth. We have a strong balance sheet to support our growth initiatives, including ongoing organic investments and strategic acquisitions. We are encouraged about our outlook for the second half of fiscal 2015 and our long-term growth," concluded Vincze.”

Caveats:

We have not interviewed management to learn more about the growth initiatives and if its plans could lead to expanding gross margins to that of its industry comparables. We will provide an update as soon as possible.