HighGravityData

Tetra Tech — Jan 29, 2025 release

Fiscal 2025 first-quarter results · 8-K Item 2.02 · Exhibit 99.1 · 0001104659-25-007277
Open on SEC.gov ↗
Showing in the filing
Adjusted EPS
“$1.37 to $1.52”
Period
FY2025
Measure
Company-defined measure
Source
Prose
All guidance in this release · 5
Quarterly dividend
“$0.058 per share”
Net revenue for FY2025
“$4.365 billion to $4.765 billion”
Adjusted EPS for FY2025
“$1.37 to $1.52”
Net revenue for Q2 FY2025
“$1.0 billion to $1.1 billion”
EPS for Q2 FY2025
“$0.30 to $0.33”
Exhibit 99.1 · full document
EXHIBIT 99.1   Exhibit 99.1     NEWS RELEASE January 29, 2025     Tetra Tech Reports Strong First Quarter Results   ·   Record Revenue $1.42 billion, up 16% Y/Y ·   Record Net Revenue $1.20 billion, up 18% Y/Y ·   Operating Income $23 million; adjusted operating income $138 million, up 24% Y/Y ·   Record Backlog $5.44 billion, up 15% Y/Y ·   Raised high-end and reaffirmed midpoint of FY25 EPS guidance   Pasadena, California . Tetra Tech, Inc. (NASDAQ: TTEK), a leading provider of high-end consulting and engineering services in water, environment and sustainable infrastructure, today announced results for the first quarter ended December 29, 2024.   First Quarter Highlights   · Revenue increased 16% Y/Y to $1.42 billion   · Net Revenue 1 increased 18% Y/Y to $1.20 billion   · Operating Income $23 million; adjusted Operating Income increased 24% Y/Y to $138 million   · EPS $0.00; adjusted EPS 1 increased 25% Y/Y to $0.35   · Backlog increased 15% Y/Y to $5.44 billion   · Industry-leading DSO of 55.9 days   Recent Key Wins   · $498 million five-year multiple award contracts to deliver architect-engineering services and civil works support for USACE in Los Angeles and Japan Districts   · $249 million five-year multiple award contract for planning and engineering services for USACE Mobile District   · $100 million five-year multiple award contract for the Office of Land and Emergency Management for research and analysis of emerging advanced environmental technologies   · $66 million five-year single award contract to provide disaster and emergency response services in the U.S. Midwest   · $46 million multiple award architect-engineering contract for flood and emergency response for USACE     1 Non-GAAP financial measures which the Company believes provide valuable perspectives on its business results. Refer to tables at the end of the release and Regulation G Information for reconciliations to the comparable GAAP metrics.         Chairman and CEO Comments   Dan Batrack, Chairman and CEO, commented, “Tetra Tech began fiscal 2025 with a strong first quarter, which included all-time record high quarterly revenue and backlog, and record high first quarter adjusted operating income and EPS. We continued to see significant demand for our differentiated services in water, environment, and sustainable infrastructure across our global operations. In the first quarter, we added over $1 billion of new contract capacity, which included contracts for essential water supply, flood control structures and inland navigation. With our record backlog and momentum, we are well positioned to respond to our U.S. and international clients’ priorities.”   Quarterly Dividend and Share Repurchase Program   On January 27, 2025, Tetra Tech’s Board of Directors approved the Company’s 43 rd consecutive quarterly dividend at an amount of $0.058 per share, a 12% increase year-over-year, payable on February 26, 2025, to stockholders of record as of February 12, 2025. In the first quarter, Tetra Tech repurchased $25 million of common stock. Additionally, as of December 29, 2024, the Company had $323 million remaining under its $400 million share repurchase program.   Business Outlook   The following statements are based on current expectations. These statements are forward-looking, and the actual results could differ materially. These statements do not include the potential impact of transactions that may be completed or developments that become evident after the date of this release. The Business Outlook section should be read in conjunction with the information on forward-looking statements at the end of this release.   At the direction of the new U.S. Administration, Tetra Tech has paused some of its U.S. federal government work, particularly with USAID, while assisting our clients with their review of multiple programs across the various government agencies we support. Tetra Tech has updated its guidance for fiscal year 2025 based on its current outlook, which includes the potential impact of the ongoing U.S. federal government review process.   For fiscal 2025, Tetra Tech expects the full year guidance for net revenue 2 to range from $4.365 billion to $4.765 billion and adjusted EPS 3 to range from $1.37 to $1.52. For the second quarter in fiscal 2025, Tetra Tech expects net revenue to range from $1.0 billion to $1.1 billion and EPS to range from $0.30 to $0.33.   Webcast   Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the first quarter of fiscal 2025 results through a link posted on the Company’s website at tetratech.com on January 30, 2025, at 8:00 a.m. (PT).     2 Reconciliation of the net revenue guidance to the most directly comparable GAAP measure is not available without unreasonable efforts because the Company cannot predict the magnitude and timing of all the components, including subcontractor costs, required to provide such reconciliation with sufficient precision.   3 The only adjustment in our guidance for EPS is to exclude the legal settlement costs of $0.35 in the first quarter of fiscal 2025.         Reconciliation of GAAP and Non-GAAP Items In thousands (except EPS data)       Three Months Ended       December 29, 2024     December 31, 2023   Revenue   $ 1,420,561     $ 1,228,267   Subcontractor costs     (223,231 )     (213,098 ) Net revenue   $ 1,197,330     $ 1,015,169                     Operating Income   $ 22,526     $ 111,081   Legal contingency costs     115,000       -   Contingent consideration     -       (37 ) Adjusted Operating Income   $ 137,526     $ 111,044                     EPS   $ 0.00     $ 0.28   Legal contingency costs     0.35       -   Adjusted EPS   $ 0.35     $ 0.28     About Tetra Tech   Tetra Tech is the leader in water, environment and sustainable infrastructure, providing high-end consulting and engineering services for projects worldwide. With 30,000 employees working together, Tetra Tech provides clear solutions to complex problems by  Leading with Science ®  to address the entire water cycle, protect and restore the environment, design sustainable and resilient infrastructure, and support the clean energy transition.  For more information about Tetra Tech, please visit tetratech.com or follow us on LinkedIn and Facebook .   CONTACTS: Jim Wu, Investor Relations Charlie MacPherson, Media & Public Relations (626) 470-2844         Forward-Looking Statements   This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as "anticipate," "expect," "could," "may," "intend," "plan" and "believe," among others, generally identify forward-looking statements. These forward-looking statements are based on current expectations and beliefs of Tetra Tech’s management and currently available operating, financial, economic and other information, and are subject to a number of risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. A variety of factors, many of which are beyond our control, could cause actual future results or events to differ materially from those projected in the forward-looking statements in this release, including but not limited to: continuing worldwide political and economic uncertainties; the U.S. Administration’s potential changes to fiscal policies; the cyclicality in demand for our overall services; the fluctuation in demand for oil and gas, and mining services; risks related to international operations; concentration of revenues from U.S. government agencies and potential funding disruptions by these agencies; dependence on winning or renewing U.S. government contracts; the delay or unavailability of public funding on U.S. government contracts; the U.S. government’s right to modify, delay, curtail or terminate contracts at its convenience; compliance with government procurement laws and regulations; the impact of global pandemics; credit risks associated with certain clients in certain geographic areas or industries; acquisition strategy and integration risks; goodwill or other intangible asset impairment; the failure to comply with worldwide anti-bribery laws; the failure to comply with domestic and international export laws; the failure to properly manage projects; the loss of key personnel or the inability to attract and retain qualified personnel; the ability of our employees to obtain government granted eligibility; the use of estimates and assumptions in the preparation of financial statements; the ability to maintain adequate workforce utilization; the use of the percentage-of-completion method of accounting; the inability to accurately estimate and control contract costs; the failure to adequately recover on our claims for additional contract costs; the failure to win or renew contracts with private and public sector clients; growth strategy management; backlog cancellation and adjustments; risks relating to cyber security breaches; the failure of partners to perform on joint projects; the failure of subcontractors to satisfy their obligations; requirements to pay liquidated damages based on contract performance; the adoption of new legal requirements; changes in resource management, environmental or infrastructure industry laws, regulations or programs; changes in bank and capital markets and the access to capital; credit agreement covenants; industry competition; liability related to legal proceedings, investigations, and disputes; the availability of third-party insurance coverage; the ability to obtain adequate bonding; employee, agent, or partner misconduct; employee risks related to international travel; safety programs; conflict of interest issues; liabilities relating to reports and opinions; liabilities relating to environmental laws and regulations; force majeure events; protection of intellectual property rights; stock price volatility; the ability to impede a business combination based on Delaware law and charter documents; and other risks and uncertainties as may be described in Tetra Tech’s periodic filings with the Securities and Exchange Commission, including those described in the “Risk Factors” section of Tetra Tech’s Annual Report on Form 10-K for the fiscal year ended September 29, 2024. Readers should not place undue reliance on forward-looking statements since such information speaks only as of the date of this release. Tetra Tech does not intend to update forward-looking statements and expressly disclaims any obligation to do so.   Non-GAAP Financial Measures   To supplement the financial results presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we present certain non-GAAP financial measures within the meaning of Regulation G under the Securities Exchange Act of 1934, as amended. We provide these non-GAAP financial measures because we believe they provide a valuable perspective on our financial results. However, non-GAAP measures have limitations as analytical tools and should not be considered in isolation and are not in accordance with, or a substitute for, GAAP measures. In addition, other companies may define non-GAAP measures differently which limits the ability of investors to compare non-GAAP measures of Tetra Tech to those used by our peer companies. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is set forth above in this release.         Tetra Tech, Inc Consolidated Balance Sheets (unaudited - in thousands, except par value)       As of       December 29,     September 29,       2024     2024   Assets             Current assets:                 Cash and cash equivalents     248,104       232,689   Accounts receivable, net     1,117,666       1,051,461   Contract assets     122,310       129,678   Prepaid expenses and other current assets     143,768       113,555   Total current assets     1,631,848       1,527,383                     Property and equipment, net     67,102       73,065   Right-of-use assets, operating leases     172,080       177,950   Goodwill     1,968,684       2,046,569   Intangible assets, net     142,097       160,585   Deferred tax assets     96,916       105,529   Other non-current assets     100,457       101,595   Total assets     4,179,184       4,192,676                     Liabilities and Equity                 Current liabilities:                 Accounts payable     238,157       197,440   Accrued compensation     222,549       332,096   Contract liabilities     359,957       351,738   Short-term lease liabilities, operating leases     61,184       63,419   Current contingent earn-out liabilities     24,153       26,934   Other current liabilities     361,345       247,900   Total current liabilities     1,267,345       1,219,527                     Deferred tax liabilities     24,902       30,162   Long-term debt     888,450       812,634   Long-term lease liabilities, operating leases     134,759       140,095   Non-current contingent earn-out liabilities     22,007       21,812   Other non-current liabilities     149,702       138,033                     Equity:                 Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding at December 29, 2024  and September 29, 2024     -       -   Common stock - authorized, 750,000 shares of $0.01 par value; issued and outstanding, 268,028 and 267,717 shares at December 29, 2024 and September 29, 2024, respectively     2,680       2,677   Additional paid-in capital     21,153       35,900   Accumulated other comprehensive loss     (187,754 )     (78,875 ) Retained earnings     1,855,818       1,870,620   Tetra Tech stockholders' equity     1,691,897       1,830,322   Noncontrolling interests     122       91   Total stockholders' equity     1,692,019       1,830,413   Total liabilities and stockholders' equity     4,179,184       4,192,676           Tetra Tech, Inc. Consolidated Statements of Income (unaudited - in thousands, except per share data)       Three Months Ended       December 29,     December 31,       2024     2023   Revenue   $ 1,420,561     $ 1,228,267   Subcontractor costs     (223,231 )     (213,098 ) Other costs of revenue     (975,853 )     (824,671 ) Gross profit     221,477       190,498   Selling, general and administrative expenses     (83,951 )     (79,417 ) Legal contingency costs     (115,000 )     -   Income from operations     22,526       111,081   Interest expense, net     (7,218 )     (9,577 ) Income before income tax expense     15,308       101,504   Income tax expense     (14,530 )     (26,524 ) Net income     778       74,980   Net income attributable to noncontrolling interests     (31 )     (8 ) Net income attributable to Tetra Tech   $ 747     $ 74,972                     Earnings per share attributable to Tetra Tech:                 Basic   $ 0.00     $ 0.28   Diluted   $ 0.00     $ 0.28                     Weighted-average common shares outstanding:                 Basic     267,854       266,585   Diluted     271,886       268,690           Tetra Tech, Inc. Consolidated Statements of Cash Flows  (unaudited - in thousands)       Three Months Ended       December 29,     December 31,       2024     2023   Cash flows from operating activities:                 Net income   $ 778     $ 74,980   Adjustments to reconcile net income to net cash provided by operating activities:                 Depreciation and amortization     16,063       19,484   Amortization of stock-based awards     8,142       7,641   Deferred income taxes     767       (1,624 ) Other non-cash items     775       123   Changes in operating assets and liabilities, net of effects of business acquisitions:                 Accounts receivable and contract assets     (91,725 )     (22,288 ) Prepaid expenses and other assets     (26,186 )     (28,615 ) Accounts payable     44,194       33,790   Accrued compensation     (101,641 )     (80,069 ) Contract liabilities     27,527       41,862   Income taxes receivable/payable     (1,538 )     (15,941 ) Cash settled contingent earn-out liability     (2,720 )     -   Other liabilities     138,627       (20,097 ) Net cash provided by operating activities     13,063       9,246                     Cash flows from investing activities:                 Capital expenditures     (3,433 )     (3,434 ) Net cash used in investing activities     (3,433 )     (3,434 )                   Cash flows from financing activities:                 Proceeds from borrowings     90,000       125,000   Repayments on long-term debt     (15,000 )     (60,000 ) Repurchases of common stock     (25,000 )     -   Shares repurchased for tax withholdings on share-based awards     (13,307 )     (12,670 ) Payments of contingent earn-out liabilities     (145 )     (18,862 ) Stock options exercised     114       335   Dividends paid     (15,549 )     (13,873 ) Principal payments on finance leases     (1,719 )     (1,539 ) Net cash provided by financing activities     19,394       18,391                     Effect of exchange rate changes on cash and cash equivalents     (13,609 )     5,655                     Net increase in cash and cash equivalents     15,415       29,858   Cash and cash equivalents at beginning of period     232,689       168,831   Cash and cash equivalents at end of period   $ 248,104     $ 198,689                     Supplemental information:                 Cash paid during the period for:                 Interest   $ 4,295     $ 6,369   Income taxes, net of refunds received of $1.7 million and $0.9 million   $ 14,489     $ 43,297           Tetra Tech, Inc. Regulation G Information December 29, 2024   Reconciliation of Revenue to Revenue, Net of Subcontractor Costs ("Net Revenue") (in millions)                   2024     2025       2022     2023     1st Qtr     2nd Qtr     6 mos     3rd Qtr     9 Mos     4th Qtr     Total     1st Qtr   Consolidated                                                                                 Revenue     3,504.0       4,522.6       1,228.3       1,251.6       2,479.9       1,344.3       3,824.2       1,374.5       5,198.7       1,420.6   Subcontractor Costs     (668.5 )     (771.5 )     (213.1 )     (199.0 )     (412.1 )     (234.7 )     (646.8 )     (230.0 )     (876.8 )     (223.3 ) Net Revenue     2,835.5       3,751.1       1,015.2       1,052.6       2,067.8       1,109.6       3,177.4       1,144.5       4,321.9       1,197.3                                                                                     GSG Segment                                                                                 Revenue     1,820.9       2,158.9       575.0       597.1       1,172.2       640.6       1,812.7       670.6       2,483.4       751.8   Subcontractor Costs     (484.4 )     (523.4 )     (132.3 )     (130.6 )     (263.0 )     (152.3 )     (415.3 )     (158.1 )     (573.4 )     (150.6 ) Net Revenue     1,336.5       1,635.5       442.7       466.5       909.2       488.3       1,397.4       512.5       1,910.0       601.2                                                                                     CIG Segment                                                                                 Revenue     1,738.4       2,424.6       669.1       671.2       1,340.3       723.6       2,063.9       722.9       2,786.7       688.2   Subcontractor Costs     (239.3 )     (309.0 )     (96.6 )     (85.1 )     (181.7 )     (102.2 )     (283.9 )     (90.9 )     (374.8 )     (92.1 ) Net Revenue     1,499.1       2,115.6       572.5       586.1       1,158.6       621.4       1,780.0       632.0       2,411.9       596.1     Reconciliation of Net Income Attributable to Tetra Tech to Adjusted EBITDA (in thousands)                   2024     2025       2022     2023     1st Qtr     2nd Qtr     6 mos     3rd Qtr     9 Mos     4th Qtr     Total     1st Qtr   Net Income Attributable to Tetra Tech     263,125       273,420       74,972       76,446       151,418       85,810       237,228       96,154       333,382       747   Income Tax Expense     85,602       127,526       26,523       31,341       57,864       32,894       90,757       39,266       130,023       14,530   Interest Expense 1     11,584       46,537       9,578       9,883       19,461       9,912       29,374       7,897       37,271       7,218   Depreciation     13,859       19,980       6,951       5,637       12,588       5,713       18,301       5,421       23,722       5,402   Amortization     13,174       41,226       12,533       12,094       24,627       13,790       38,417       11,538       49,955       10,661   FX Hedge Gain     (19,904 )     (89,402 )     -       -       -       -       -       -       -       -   EBITDA     367,440       419,287       130,557       135,401       265,958       148,119       414,077       160,276       574,353       38,558                                                                                     Contingent Consideration     -       12,255       (37 )     14       (22 )     500       477       2,064       2,541       -   Acquisition & Integration Expenses 2     -       49,554       -       -       -       -       -       7,138       7,138       -   Legal Contingency Costs     -       -       -       -       -       -       -       -       -       115,000   COVID-19 Credits     (6,486 )     -       -       -       -       -       -       -       -       -                                                                                     Adjusted EBITDA     360,954       481,096       130,520       135,415       265,936       148,619       414,554       169,478       584,032       153,558     1 Includes write-off of deferred debt origination fees of $3.8 million in fiscal 2023 2 Includes lease impairment charge of $16.4M in fiscal 2023
the item shown at left
other guidance in this release
Text is the filed exhibit, verbatim.