- Fourth quarter revenue $753 million and net revenue $590
million
- Fourth quarter EPS $0.82; Adjusted EPS $0.91
- Record fiscal 2020 EPS $3.16, up 11% Y/Y
- Record fiscal year cash flow of $262 million, up 26%
Y/Y
- Record backlog of $3.24 billion, up 5% Y/Y and up 6%
Q/Q
Tetra Tech, Inc. (NASDAQ: TTEK), a leading provider of high-end
consulting and engineering services, today announced results for
the fourth quarter and fiscal year ended September 27, 2020.
Fourth Quarter Results
Revenue in the fourth quarter totaled $753 million and revenue,
net of subcontractor costs (net revenue)1, was $590 million.
Earnings per share (“EPS”) was $0.82 on a GAAP basis and adjusted
EPS1 was $0.91. Cash generated from operations was $68 million.
Backlog at the end of the quarter was a record $3.24 billion, up 5%
year-over-year and up 6% sequentially.
Quarterly Dividend and Share Repurchase Program
On November 9, 2020, Tetra Tech’s Board of Directors declared a
$0.17 per share dividend, a 13% increase over the prior year,
payable on December 11, 2020 to stockholders of record as of
November 30, 2020. In the fourth quarter, Tetra Tech repurchased
$15 million of common stock. Additionally, as of September 27,
2020, the Company had $208 million remaining under the approved
share repurchase programs.
Fiscal Year Results
Revenue for fiscal 2020 totaled $3.0 billion and net revenue was
$2.3 billion. EPS was $3.16 and adjusted EPS was $3.26. Cash
generated from operations of $262 million was a record, up 26%
compared to the previous year. The strong cash flow enabled the
Company to return $152 million to shareholders in fiscal 2020
through a combination of share repurchases and dividends, while
continuing to invest in strategic acquisitions and de-levering to a
net debt leverage ratio of 0.5x 2.
_______________ 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. 2 The net debt
leverage ratio is defined as total debt less cash and cash
equivalents divided by 12-month adjusted EBITDA. Refer to
Regulation G Information and Reconciliation of GAAP and non-GAAP
Items.
Chairman and CEO Comments
Tetra Tech’s Chairman and CEO, Dan Batrack, commented, “Tetra
Tech had a solid fourth quarter to finish fiscal year 2020,
generating a 12.6% EBITDA margin, up 80 basis points from last
quarter and up 130 basis points from last year’s fourth quarter. We
continue to see demand for our differentiated high-end consulting
services augmented by technology and advanced data analytics, which
drove a sequential increase in net revenue across all four of our
client sectors. In 2020, we further advanced our growth strategy by
adding industry leading technology firms that enhance our technical
capabilities to offer innovative solutions in addressing our
clients’ critical water, environmental and sustainable
infrastructure programs. Increased orders from all of our
end-markets drove our backlog up 6% from the prior quarter and
provides a solid foundation for 2021.”
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 first quarter of fiscal 2021 to
range from $0.78 to $0.83 and net revenue to range from $570
million to $600 million. For fiscal 2021, Tetra Tech expects EPS to
range from $3.30 to $3.50, and net revenue to range from $2.35
billion to $2.55 billion. 3
Webcast
Investors will have the opportunity to access a live
audio-visual webcast and supplemental financial information
concerning the fourth quarter and fiscal 2020 results through a
link posted on the Company’s website at tetratech.com on November
12, 2020 at 8:00 a.m. (PT).
_______________
3 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
Fiscal Year Ended
Sep. 27,
2020
Sep. 29,
2019
Sep. 27,
2020
Sep. 29,
2019
Revenue
$
753,364
*
$
841,502
$
2,994,891
$
3,107,348
Subcontractor costs
(163,550
)
(213,809
)
(646,319
)
(717,711
)
Net revenue
$
589,814
*
$
627,693
$
2,348,572
$
2,389,637
* Change in Q4-20 revenue and net revenue
reflects reduced disaster response and disposition of Canadian
turn-key pipeline operation.
EPS
$
0.82
$
0.21
$
3.16
$
2.84
Purchase accounting*
0.11
0.16
0.11
0.18
Non-core dispositions
(0.02
)
0.14
(0.12
)
0.14
COVID-19
–
–
0.11
–
RCM / claims
–
0.18
–
0.26
Acquisition / integration
–
0.19
–
0.19
Non-recurring tax items
–
–
–
(0.44
)
Adjusted EPS
$
0.91
$
0.88
$
3.26
$
3.17
* In the fourth quarter of fiscal 2020,
Tetra Tech recognized non-cash purchase accounting items that
included goodwill impairment related to its Asia Pacific operations
partially offset by earn-out liability adjustments.
Sep. 27, 2020
Current portion of long-term debt
$
49,264
Long-term debt
242,395
Less: Cash and cash equivalents
(157,515
)
Net debt
$
134,144
Trailing 12-month adjusted EBITDA
$
267,809
Net debt leverage ratio
0.5x
About Tetra Tech
Tetra Tech is a leading provider of high-end consulting and
engineering services for projects worldwide. With 20,000 associates
working together, Tetra Tech provides clear solutions to complex
problems in water, environment, infrastructure, resource
management, 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 29, 2019, and Tetra Tech’s Quarterly Reports on
Form 10-Q for fiscal year 2020, 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/20201111005847/en/
Jim Wu, Investor Relations Charlie MacPherson, Media &
Public Relations (626) 470-2844
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