- Revenue of $802 million, up 13% Y/Y
- Record Net Revenue of $638 million, up 14% Y/Y
- EPS $0.95, up 14% Y/Y; up 22% Y/Y on an Adjusted
Basis
- Record Backlog of $3.25 billion, book-to-bill 1.12x
Tetra Tech, Inc. (NASDAQ: TTEK), a leading provider of high-end
consulting and engineering services, today announced results for
the third quarter ended June 27, 2021.
Third Quarter Results
Revenue in the third quarter totaled $802 million, up 13%
year-over-year. Tetra Tech achieved record quarterly revenue, net
of subcontractor costs (net revenue)1, of $638 million, up 14%
year-over-year. EPS was $0.95 up 14% and up 22% on an adjusted
basis year-over-year. Cash flow from operations was $69 million and
days sales outstanding (“DSO”) declined five days year-over-year to
65 days, the lowest level in over 10 years. Backlog grew to an
all-time high of $3.25 billion with increased orders for water and
environmental services.
Acquisition of Hoare Lea
After the completion of the third quarter, on July 27, 2021,
Tetra Tech announced that it has acquired Hoare Lea, a leader in
sustainable engineering design. Established in 1862, Hoare Lea is
an award-winning, high-end consultancy firm in the United Kingdom,
with more than 900 employees. The addition of Hoare Lea further
advances Tetra Tech’s industry-leading sustainable buildings
solutions for commercial and government clients.
Quarterly Dividend and Share Repurchase Program
On July 26, 2021, Tetra Tech’s Board of Directors declared a
$0.20 per share dividend, an 18% increase over the prior year,
payable on September 3, 2021 to stockholders of record as of August
20, 2021. In the third quarter, Tetra Tech repurchased $15 million
of common stock. Additionally, as of June 27, 2021, the Company had
$163 million remaining under the approved share repurchase
program.
Chairman and CEO Comments
Tetra Tech’s Chairman and CEO, Dan Batrack, commented, “Our
business generated record third quarter results driven by strong
double-digit revenue growth in both our U.S. state & local and
international businesses. The demand to address the challenges of
global climate change and sustainable infrastructure priorities are
well aligned with our market leading positions in water and
environment. Our Leading with Science® approach is in more demand
than ever and augmented by Tetra Tech Delta, our suite of
proprietary technologies and analytical tools. We continued to
invest in long-term strategic growth areas by adding Hoare Lea who
joins our global High Performance Buildings practice. Given our
results to date and outlook, we are increasing our guidance outlook
for fiscal 2021.”
________________________
1 Non-GAAP financial measures which the
Company believes provide valuable perspectives on its business
results. Refer to Reconciliation of GAAP and non-GAAP Items.
Nine-Month Results
For the nine-month period, Tetra Tech achieved record results,
including all-time highs for revenue, net revenue, operating
income, EPS and cash flow. Revenue for the nine-month period was
$2.32 billion and net revenue was $1.84 billion. Operating income
was $197 million, up 13% compared to the same period in fiscal
2020, and EPS increased 17% to $2.74. Cash flow from operations was
$227 million, up 16% year-over-year.
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 fourth quarter of fiscal 2021 to
range from $0.95 to $1.00 and net revenue to range from $650
million to $700 million. For fiscal 2021, Tetra Tech is increasing
its guidance outlook and now expects EPS to range from $3.69 to
$3.74, and net revenue to range from $2.50 billion to $2.55
billion2.
Webcast
Investors will have the opportunity to access a live
audio-visual webcast and supplemental financial information
concerning the third quarter of fiscal 2021 results through a link
posted on the Company’s website at tetratech.com on July 29, 2021
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 required to
provide such reconciliation with sufficient precision.
Reconciliation of GAAP and Non-GAAP
Items
In thousands (except EPS data)
Three Months Ended
Nine Months Ended
June 27, 2021
June 28, 2020
% Y/Y
June 27, 2021
June 28, 2020
% Y/Y
Revenue
$
801,633
$
709,771
13
%
$
2,321,500
$
2,241,527
4
%
Subcontractor costs
(163,590
)
(149,494
)
(478,461
)
(482,768
)
Net revenue
$
638,043
$
560,277
14
%
$
1,843,039
$
1,758,759
5
%
EPS
$
0.95
$
0.83
14
%
$
2.74
$
2.34
17
%
Earn-out adjustments
–
0.01
–
(0.01
)
Non-core dispositions
–
(0.06
)
–
(0.10
)
COVID-19
–
–
–
0.11
Adjusted EPS
$
0.95
$
0.78
22
%
$
2.74
$
2.34
17
%
About Tetra Tech
Tetra Tech is a leading provider of high-end consulting and
engineering services for projects worldwide. With 21,000 associates
working together, Tetra Tech provides clear solutions to complex
problems in water, environment, sustainable infrastructure,
renewable energy, and international development. We are Leading
with Science® to provide sustainable and resilient solutions for
our clients. For more information about Tetra Tech, please visit
tetratech.com, follow us on Twitter (@TetraTech), or like us on
Facebook.
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 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: the impact of the COVID-19 pandemic; 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; 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 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 27, 2020, and Tetra Tech’s Quarterly Reports on
Form 10-Q for fiscal year 2021, as well as in Tetra Tech’s other
filings with the SEC. 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 included in this release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210728005980/en/
Jim Wu, Investor Relations Charlie MacPherson, Media &
Public Relations (626) 470-2844
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