- EPS from operations up 45%; Diluted
EPS of $0.31
- Backlog up 11% in WEI / RME
- Organic growth 3% in WEI /
RME
- Quarterly dividend increased
14%
Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the
second quarter ended March 29, 2015.
Second Quarter Results
Revenue in the quarter was $564.8 million and revenue, net of
subcontractor costs1, was $432.8 million. Revenue and revenue, net
of subcontractor costs, in the quarter were both up 3% compared to
the prior year, excluding the wind-down of the Remediation and
Construction Management (“RCM”) segment and the impact from foreign
currency translation. Operating income was $30.4 million and
diluted earnings per share (EPS) were $0.31. Operating income
adjusted for non-operational items2 in the quarter compared to last
year’s second quarter was up 26%, and EPS from operations2 were up
45% compared to the second quarter of fiscal 2014. Cash generated
from operations was $19.3 million, up 33% compared to last year’s
second quarter.
Quarterly Dividend and Share Repurchase
Program
On April 27, 2015, Tetra Tech’s Board of Directors declared a
14% increase in the quarterly dividend, raising it to $0.08 per
share payable on May 29, 2015 to shareholders of record as of May
14, 2015. Additionally, in the second quarter, the Company spent an
additional $48.6 million of the approved $200 million share
repurchase program. For the first half of fiscal 2015, Tetra Tech
has returned $77.4 million to its shareholders through share
repurchases and dividends.
Tetra Tech’s Chairman and CEO, Dan Batrack commented, “Tetra
Tech had a solid second quarter, which reflects the strength in our
water, environment and energy business. We continue to see a strong
volume of orders and contract wins, which resulted in an 11%
increase in backlog in our on-going operations on a constant
currency basis. We are focused on advancing our strategic growth
plan, as demonstrated by our announced acquisition of Cornerstone
Environmental Group, in addition to returning capital to our
shareholders through share repurchases and dividends.”
Six-Month Results
Revenue for the six-month period was $1.1 billion and revenue,
net of subcontractor costs, was $869.8 million. Operating income
for the six-month period was $67.0 million and EPS were $0.71. Cash
generated from operations was $24.8 million.
Income Statement
In thousands (except EPS data)
Three Months Ended
Six Months Ended March 29,
2015
March 30,
2014
March 29,
2015
March 30,
2014
Revenue $ 564,763 $ 586,285 $ 1,145,819 $ 1,232,133 Subcontractor
costs (132,009 ) (130,300 ) (275,985 )
(293,158 ) Revenue, net of subcontractor costs
432,754
455,985
869,834
938,975
Operating income 30,398 46,186 67,010 89,904 Interest expense
(1,804 ) (2,496 ) (3,594 ) (4,919 ) Income tax expense
(9,584 ) (11,781 ) (18,760 ) (25,749 ) Net
income including noncontrolling interests
19,010
31,909
44,656
59,236
Net loss (income) attributable to noncontrolling interests
7
(200
)
(64
)
(213
)
Net income attributable to Tetra Tech
$
19,017
$
31,709
$
44,592
$
59,023
Earnings per share attributable to Tetra Tech: Basic
$ 0.31 $ 0.49 $ 0.72 $ 0.91 Diluted $
0.31 $ 0.48 $ 0.71 $ 0.90
Weighted-average common shares
outstanding:
Basic 61,153 64,835 61,816 64,670 Diluted 61,723 65,710 62,431
65,517
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.
Tetra Tech expects EPS for the third quarter of fiscal 2015 to
be in the range of $0.40 to $0.44. Revenue, net of subcontractor
costs, for the third quarter is expected to range from $420 million
to $470 million. For fiscal 2015, EPS guidance is now expected to
range from $1.60 to $1.70, and cash EPS3 guidance is expected to
range from $2.30 to $2.55. Revenue, net of subcontractor costs, for
fiscal 2015 guidance is expected to range from $1.70 billion to
$1.85 billion.
Webcast
Investors will have the opportunity to access a live
audio-visual webcast and supplemental financial information
concerning the second quarter results through a link posted on the
Company’s website at www.tetratech.com on April 30, 2015 at 8:00
a.m. (PT).
About Tetra Tech (www.tetratech.com)
Tetra Tech is a leading provider of consulting, engineering,
program management, and construction management services. The
Company supports commercial and government clients focused on
water, environment, infrastructure, resource management, and
energy. With 13,000 staff worldwide, Tetra Tech provides clear
solutions to complex problems.
Tetra Tech, Inc. Regulation G
Information Reconciliation of Operating
Income In thousands Three Months Ended March 29,
2015
March 30,
2014
Operating Income (GAAP): $ 30,398 $ 46,186 Foreign currency
translation 905 -- Legal settlement 3,160 -- Contingent
consideration (3,113 ) (21,343 ) Operating Income
(Operations) $ 31,350 $ 24,843
Reconciliation of Diluted EPS Three Months Ended
March 29,
2015
March 30,
2014
EPS attributable to Tetra Tech (GAAP): $ 0.31 $ 0.48 Per
diluted share, net of tax: Foreign currency translation 0.01 --
Legal settlement 0.03 -- Contingent consideration (0.03 )
(0.26 ) EPS (Operations) $ 0.32 $ 0.22
Forward-Looking Statements
This news release contains forward-looking statements that are
subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
include information concerning future events and the future
financial performance of Tetra Tech that involve risks and
uncertainties. Readers are cautioned that these forward-looking
statements are only predictions and may differ materially from
actual future events or results. Readers are urged to read the
documents filed by Tetra Tech with the SEC, specifically the most
recent reports on Form 10-K, 10-Q, and 8-K, each as it may be
amended from time to time, which identify risk factors that could
cause actual results to differ materially from the forward-looking
statements. Among the important factors or risks that could cause
actual results or events to differ materially from those in the
forward-looking statements in this release are: worldwide political
and economic uncertainties; fluctuations in annual revenue,
expenses, and operating results; the cyclicality in demand for our
overall services; the cyclicality in demand for mining services;
the cyclicality in demand for oil and gas services; concentration
of revenues from U.S. government agencies and potential funding
disruptions by these agencies; violations of U.S. government
contractor regulations; 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;
credit risks associated with certain commercial clients; risks
associated with international operations; 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 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; acquisition strategy and integration risks; goodwill or
other intangible asset impairment; growth strategy management;
backlog cancellation and adjustments; 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; changes in resource management,
environmental, or infrastructure industry laws, regulations, or
programs; changes in 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; the interruption of systems and information
technology; the ability to impede a business combination based on
Delaware law and charter documents; and stock price volatility. Any
projections in this release are based on limited information
currently available to Tetra Tech, which is subject to change.
Although any such projections and the factors influencing them will
likely change, Tetra Tech will not necessarily update the
information, since Tetra Tech will only provide guidance at certain
points during the year. Readers should not place undue reliance on
forward-looking statements since such information speaks only as of
the date of this release.
1 Tetra Tech’s revenue includes a significant amount of
subcontractor costs and, therefore, the Company believes revenue,
net of subcontractor costs, which is a non-GAAP financial measure,
provides a valuable perspective on its business results.
2 See reconciliation tables for details on non-operational
items.
3 Cash EPS is a non-GAAP financial measure that provides a
valuable perspective on the Company’s financial results. Cash EPS
is defined as cash flow from operations divided by diluted shares
outstanding. Refer to the cash flow statement for reconciliation
from net income to cash flow from operations.
Tetra Tech, Inc.Jim Wu, Investor RelationsCharlie MacPherson,
Media & Public Relations(626) 470-2844
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