Tetra Tech — Jul 30, 2025 release
Fiscal 2025 third-quarter results · 8-K Item 2.02 · Exhibit 99.1 · 0001104659-25-072237
Showing in the filing
EPS
“$0.38 to $0.43”
Period
Q4 FY2025
Measure
GAAP-tied
Source
Prose
All guidance in this release · 5
Quarterly dividend
“$0.065 per share”
Net revenue for FY2025
“$4.454 billion to $4.554 billion”
Adjusted EPS for FY2025
“$1.49 to $1.54”
Net revenue for Q4 FY2025
“$1.0 billion to $1.1 billion”
EPS for Q4 FY2025
“$0.38 to $0.43”
Exhibit 99.1 · full document
EXHIBIT 99.1
Exhibit 99.1
NEWS RELEASE
July 30,
2025
Tetra Tech Reports Strong Third Quarter 2025
Results
·
Revenue $1.37 billion and Net Revenue $1.15 billion
·
Net Revenue of $1.06 billion, up 11% Y/Y excluding USAID and DOS
·
Operating Income $165 million, up 28% Y/Y
·
EPS $0.43, up 34% Y/Y
·
Operating Cash Flow $350 million, up 148% Y/Y
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 third quarter ended June 29, 2025.
Q3
FY25
YTD
FY25
$
million (except EPS data)
Reported
Excluding
USAID / DOS
Adjusted 1
Excluding
USAID / DOS
Revenue
$ 1,370
$ 1,264
$ 4,112
$ 3,560
Net
Revenue 1
$ 1,153
$ 1,062
$ 3,454
$ 2,990
Operating
Income
$ 165
$ 159
$ 432
$ 396
EPS
$ 0.43
$ 0.41
$ 1.11
$ 1.01
Backlog
$ 4,277
$ 4,149
$ 4,277
$ 4,149
Third Quarter Highlights (Excluding USAID and
DOS)
· Revenue increased 10% Y/Y to $1.26 billion
· Net Revenue increased 11% Y/Y to $1.06 billion
· Operating Income increased 37% Y/Y to $159 million
· EPS increased 46% Y/Y to $0.41
· Backlog $4.15 billion, up Y/Y and sequentially
· Days sales outstanding: 54 days
Year to Date Highlights (Excluding USAID and
DOS)
· Revenue increased 10% Y/Y to $3.56 billion
· Net Revenue increased 10% Y/Y to $2.99 billion
· Adjusted
Operating Income increased 24% Y/Y to $396 million
· Adjusted
EPS increased 31% Y/Y to $1.01
1 Non-GAAP
financial measures which the Company believes provide valuable perspectives on its business
results. The reported adjusted operating income and EPS exclude non-cash goodwill impairment
related to USAID in Q2-25 and legal contingency in Q1-25. Refer to tables at the end of the
release and Regulation G Information for reconciliations to the comparable GAAP metrics.
Recent Key Wins
· $990 million multiple-award contract for engineering design for NAVFAC
Pacific
· $249 million multiple-award contract for energy resilience for USACE
Huntsville District
· $248 million multiple-award contract for planning and engineering
services for USACE Europe District
· $190 million multiple-award contract for planning and engineering
services for USACE Honolulu District
· $94 million single-award contract for emergency preparedness and response
services for U.S. EPA
· $45 million multiple-award contract for environmental services for
U.S. Department of the Interior
· $22 million single-award contract for disaster recovery services for
the State of Georgia
· $10 million single-award contract for water digital automation systems
for Los Angeles County
Quarterly Dividend and Share Repurchase Program
On July 28, 2025, Tetra Tech’s Board
of Directors approved the Company’s 45 th consecutive quarterly dividend at an amount of $0.065 per share, a 12% increase
year-over-year, payable on August 29, 2025, to stockholders of record as of August 15, 2025. In the third quarter, Tetra Tech
repurchased $25 million of common stock. Additionally, as of June 29, 2025, the Company had $648 million remaining under the approved
share repurchase programs.
Chairman and CEO Comments
Dan Batrack, Chairman and CEO, commented,
“Tetra Tech delivered another strong quarter with increasing revenue, record operating income, and significant operating
margin expansion over the third quarter of last year. This performance is being driven by our high-end water, environmental and
sustainable infrastructure services, which includes our clients’ increased funding for preparing and responding to natural
disasters. Although the financial results for fiscal 2025 to date have exceeded our initial expectations, we are continuing
to navigate the near-term financial impacts from the changes in U.S. federal government priorities and the related secondary impacts
to our end markets.”
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.
For fiscal 2025, Tetra Tech expects net reven ue 2
to range from $4.454 billion to $4.554 billion and adjusted EPS 3 g uidance to range from $1.49 to $1.54. For the fourth
quarter of fiscal 2025, Tetra Tech expects net revenue to range from $1.0 billion to $1.1 billion and EPS to range from $0.38 to $0.43.
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 adjustments in our guidance for EPS exclude legal contingency of $0.35 in Q1-25 and goodwill impairment
of $0.31 in Q2-25.
2
Webcast
Investors will have the opportunity to access
a live audio-visual webcast and supplemental financial information concerning the third quarter of fiscal 2025 results through a link
posted on the Company’s website at tetratech.com on July 31, 2025, at 8:00 a.m. (PT).
Reconciliation
of GAAP and Non-GAAP Items
In thousands (except EPS data)
Three Months Ended
Nine Months Ended
June 29,
2025
June 30,
2024
June 29,
2025
June 30,
2024
Revenue
$
1,369,816
$
1,344,323
$
4,112,490
$
3,824,205
USAID / DOS
(106,084
)
(194,753
)
(552,572
)
(577,762
)
Revenue excl. USAID / DOS
$
1,263,732
$
1,149,570
$
3,559,918
$
3,246,443
Revenue
$
1,369,816
$
1,344,323
$
4,112,490
$
3,824,205
Subcontractor costs
(216,800
)
(234,742
)
(658,439
)
(646,828
)
Net revenue
$
1,153,016
$
1,109,581
$
3,454,051
$
3,177,377
USAID / DOS
(91,305
)
(154,503
)
(464,104
)
(470,294
)
Net revenue excl. USAID / DOS
$
1,061,711
$
955,078
$
2,989,947
$
2,707,083
Operating Income
$
164,986
$
128,630
$
227,114
$
357,395
Legal contingency
-
-
115,000
-
Goodwill impairment
-
-
92,416
-
Contingent consideration
(58
)
500
(2,355
)
477
Adjusted Operating Income
$
164,928
$
129,130
$
432,175
$
357,872
USAID / DOS
(5,492
)
(12,918
)
(36,638
)
(39,434
)
Adjusted OI excl. USAID / DOS
$
159,436
$
116,212
$
395,537
$
318,438
EPS
$
0.43
$
0.32
$
0.45
$
0.88
Legal contingency
-
-
0.35
-
Goodwill impairment
-
-
0.31
-
Adjusted EPS
$
0.43
$
0.32
$
1.11
$
0.88
USAID / DOS
(0.02
)
(0.04
)
(0.10
)
(0.11
)
Adj. EPS excl. USAID / DOS
$
0.41
$
0.28
$
1.01
$
0.77
3
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, and design sustainable and resilient infrastructure. 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.
4
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.
5
Tetra Tech, Inc
Balance Sheet - Unaudited
(unaudited - in thousands, except par value)
As of
June 29,
September 29,
2025
2024
Assets
Current assets:
Cash and cash equivalents
$ 242,833
$ 232,689
Accounts receivable, net
1,127,519
1,051,461
Contract assets
142,852
129,678
Prepaid expenses and other current assets
106,592
113,555
Total current assets
1,619,796
1,527,383
Property and equipment, net
70,302
73,065
Right-of-use assets, operating leases
186,145
177,950
Goodwill
2,084,872
2,046,569
Intangible assets, net
157,752
160,585
Deferred tax assets
109,477
105,529
Other non-current assets
125,103
101,595
Total assets
$ 4,353,447
$ 4,192,676
Liabilities and Equity
Current liabilities:
Accounts payable
$ 234,591
$ 197,440
Accrued compensation
313,335
332,096
Contract liabilities
389,856
351,738
Short-term lease liabilities, operating leases
64,109
63,419
Current contingent earn-out liabilities
35,362
26,934
Other current liabilities
338,868
247,900
Total current liabilities
1,376,121
1,219,527
Deferred tax liabilities
30,673
30,162
Long-term debt
862,483
812,634
Long-term lease liabilities, operating leases
145,045
140,095
Non-current contingent earn-out liabilities
34,369
21,812
Other non-current liabilities
162,660
138,033
Total liabilities
2,611,351
2,362,263
Equity:
Preferred stock - authorized, 2,000 shares of $0.01 par
value; no shares issued and outstanding at June 29, 2025 and September 29, 2024
-
-
Common stock - authorized, 750,000 shares of $0.01 par value; issued and outstanding, 262,752 and 267,717 shares at June 29, 2025
and September 29, 2024, respectively
2,628
2,677
Additional paid-in capital
-
35,900
Accumulated other comprehensive loss
(65,117 )
(78,875 )
Retained earnings
1,804,429
1,870,620
Tetra Tech stockholders' equity
1,741,940
1,830,322
Noncontrolling interests
156
91
Total stockholders' equity
1,742,096
1,830,413
Total liabilities and stockholders' equity
$ 4,353,447
$ 4,192,676
6
Tetra Tech, Inc
Consolidated Statements of Income
(unaudited - in thousands, except per share data)
Three Months Ended
Nine Months Ended
June 29,
June 30,
June 29,
June 30,
2025
2024
2025
2024
Revenue
$ 1,369,816
$ 1,344,323
$ 4,112,490
$ 3,824,205
Subcontractor costs
(216,800 )
(234,742 )
(658,439 )
(646,828 )
Other costs of revenue
(901,477 )
(886,409 )
(2,766,854 )
(2,556,212 )
Gross profit
251,539
223,172
687,197
621,165
Selling, general and administrative expenses
(86,611 )
(94,042 )
(255,022 )
(263,293 )
Legal contingency costs
-
-
(115,000 )
-
Contingent consideration - fair value adjustments
58
(500 )
2,355
(477 )
Impairment of goodwill
-
-
(92,416 )
-
Income from operations
164,986
128,630
227,114
357,395
Interest expense, net
(8,288 )
(9,912 )
(23,996 )
(29,374 )
Income before income tax expense
156,698
118,718
203,118
328,021
Income tax expense
(42,815 )
(32,894 )
(83,045 )
(90,758 )
Net income
113,883
85,824
120,073
237,263
Net income attributable to noncontrolling interests
(39 )
(14 )
(94 )
(35 )
Net income attributable to Tetra Tech
$ 113,844
$ 85,810
$ 119,979
$ 237,228
Earnings per share attributable to Tetra Tech:
Basic
$ 0.43
$ 0.32
$ 0.45
$ 0.89
Diluted
$ 0.43
$ 0.32
$ 0.45
$ 0.88
Weighted-average common shares outstanding:
Basic
263,026
267,575
265,589
267,255
Diluted
264,855
270,260
268,113
269,503
7
Tetra Tech, Inc.
Consolidated Statements of Cash Flows
(unaudited - in thousands)
Nine Months Ended
June 29,
June 30,
2025
2024
Cash flows from operating activities:
Net income
$ 120,073
$ 237,263
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
43,636
56,718
Amortization of stock-based awards
25,789
23,713
Deferred income taxes
(7,656 )
(9,736 )
Provision for losses on accounts receivables
3,406
-
Impairment of goodwill
92,416
-
Fair value adjustments to contingent consideration
(2,355 )
477
Gain on cash surrender value of life insurance policies
(1,599 )
-
Other non-cash items
3,781
3,769
Changes in operating assets and liabilities, net of effects of business acquisitions:
Accounts receivable and contract assets
(65,886 )
(54,286 )
Prepaid expenses and other assets
(21,720 )
(18,437 )
Accounts payable
27,539
18,991
Accrued compensation
(15,991 )
(7,982 )
Contract liabilities
44,486
33,011
Income taxes receivable/payable
32,818
(16,436 )
Cash settled contingent earn-out liability
(7,420 )
-
Other liabilities
85,521
(13,955 )
Net cash provided by operating activities
356,838
253,110
Cash flows from investing activities:
Payments for business acquisitions, net of cash acquired
(97,693 )
(93,650 )
Capital expenditures
(13,396 )
(11,324 )
Proceeds from sale of assets
882
666
Proceeds from company-owned life insurance policies
1,934
-
Net cash used in investing activities
(108,273 )
(104,308 )
Cash flows from financing activities:
Proceeds from borrowings
715,000
180,000
Repayments on long-term debt
(665,000 )
(200,000 )
Payment of debt issuance costs
(2,738 )
-
Repurchases of common stock
(199,984 )
-
Shares repurchased for tax withholdings on share-based awards
(13,942 )
(12,906 )
Payments of contingent earn-out liabilities
(14,805 )
(29,112 )
Stock options exercised
216
2,690
Dividends paid
(47,992 )
(43,303 )
Principal payments on finance leases
(5,742 )
(4,827 )
Net cash used in financing activities
(234,987 )
(107,458 )
Effect of exchange rate changes on cash and cash equivalents
(3,434 )
2,146
Net increase in cash and cash equivalents
10,144
43,490
Cash and cash equivalents at beginning of period
232,689
168,831
Cash and cash equivalents at end of period
$ 242,833
$ 212,321
Supplemental information:
Cash paid during the period for:
Interest
$ 23,837
$ 26,867
Income taxes, net of refunds received of $13.6 million and $4.0 million
$ 55,523
$ 115,933
Noncash financing activities:
Excise taxes accrued but not paid
$ 1,513
$ -
8
Tetra Tech, Inc.
Regulation G Information
June 29, 2025
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
2nd Qtr
6 Mos
3rd Qtr
9 Mos
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
1,322.1
2,742.7
1,369.8
4,112.5
Subcontractor Costs
(668.5 )
(771.5 )
(213.1 )
(199.0 )
(412.1 )
(234.7 )
(646.8 )
(230.0 )
(876.8 )
(223.3 )
(218.4 )
(441.7 )
(216.8 )
(658.5 )
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
1,103.7
2,301.0
1,153.0
3,454.0
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
661.4
1,413.2
673.0
2,086.2
Subcontractor Costs
(484.4 )
(523.4 )
(132.3 )
(130.6 )
(263.0 )
(152.3 )
(415.3 )
(158.1 )
(573.4 )
(150.6 )
(140.5 )
(291.1 )
(152.6 )
(443.6 )
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
520.9
1,122.1
520.4
1,642.6
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
678.9
1,367.1
715.8
2,082.8
Subcontractor Costs
(239.3 )
(309.0 )
(96.6 )
(85.1 )
(181.7 )
(102.2 )
(283.9 )
(90.9 )
(374.8 )
(92.1 )
(96.1 )
(188.2 )
(83.2 )
(271.4 )
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
582.8
1,178.9
632.6
1,811.4
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
2nd Qtr
6 Mos
3rd Qtr
9 Mos
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
5,388
6,135
113,844
119,979
Income Tax Expense
85,602
127,526
26,523
31,341
57,864
32,894
90,757
39,266
130,023
14,530
25,700
40,230
42,815
83,045
Interest
Expense
11,584
46,537
9,578
9,883
19,461
9,912
29,374
7,897
37,271
7,218
8,491
15,709
8,287
23,996
Depreciation
13,859
19,980
6,951
5,637
12,588
5,713
18,301
5,421
23,722
5,402
5,248
10,650
5,410
16,059
Amortization
13,174
41,226
12,533
12,094
24,627
13,790
38,417
11,538
49,955
10,660
8,629
19,289
8,287
27,577
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
38,557
53,456
92,013
178,643
270,656
Contingent Consideration
-
12,255
(37 )
14
(22 )
500
477
2,064
2,541
(366 )
(1,931 )
(2,297 )
(58 )
(2,355 )
Goodwill Impairment
-
-
-
-
-
-
-
-
-
-
92,416
92,416
-
92,416
Acquisition
& Integration Expenses
-
49,554
-
-
-
-
-
7,138
7,138
-
-
-
-
-
Legal Contingency Costs
-
-
-
-
-
-
-
-
-
115,000
-
115,000
-
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
153,191
143,941
297,132
178,585
475,717
9
the item shown at left
other guidance in this release
Text is the filed exhibit, verbatim.