- Revenue $853 million, up 13% Y/Y
- Net revenue $700 million, up 17% Y/Y
- EPS $0.98, up 18% Y/Y
- Backlog of $3.61 billion, up 15% Y/Y
Tetra Tech, Inc. (NASDAQ: TTEK), a leading provider of high-end
consulting and engineering services, today announced results for
the second quarter ended April 3, 2022.
Second Quarter Results
Tetra Tech achieved record second quarter results in revenue,
net revenue, and operating income. Revenue in the second quarter
totaled $853 million and revenue, net of subcontractor costs (net
revenue)1 was $700 million, up 13% and 17% year-over-year,
respectively. Operating income was $75 million, up 23%, and
earnings per share (“EPS”) was $0.98, up 18%. Cash generated from
operations was $95 million, and DSO improved to 59 days. Backlog
increased to $3.61 billion, up 15% year-over-year.
Quarterly Dividend and Share Repurchase Program
On May 2, 2022, Tetra Tech’s Board of Directors declared a $0.23
per share dividend, a 15% increase over the prior year, payable on
May 27, 2022, to stockholders of record as of May 13, 2022. In the
second quarter, Tetra Tech repurchased $50 million of common stock.
Additionally, the Company had $448 million remaining under the
approved share repurchase programs. The Company has returned $122
million to shareholders in the first six months of the fiscal year
through a combination of share repurchases and dividends while
maintaining a net debt ratio of 0.2x.2
Chairman and CEO Comments
Tetra Tech Chairman and CEO Dan Batrack commented, “We continued
our strong operating and financial performance, driven by double
digit growth in our U.S. State & Local, International and
Commercial end markets. During the second quarter, we further
expanded our client service offerings as Tetra Tech welcomed two
technical leading consulting and engineering firms, Piteau
Associates and Axiom Data Science. Given the strength of our end
markets and backlog, we are increasing our guidance for both net
revenue and EPS for fiscal 2022.”
_______________ 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.
Annual Sustainability Report and Inaugural Sustainability
Linked Credit Facility
We released our annual Sustainability Report on Earth Day 2022
and established our inaugural sustainability-linked credit facility
on February 22, 2022. Tetra Tech President and Chief Sustainability
Officer Leslie Shoemaker commented, “This year’s sustainability
report highlights the positive impact our projects are making on
the world with a goal of improving the lives of one billion people.
We have established this ground-breaking and first-of-its-kind
measurement and quantification of environmental and social benefits
directly associated with the projects the Company performs.”
Steve Burdick, Tetra Tech Chief Financial Officer, further
stated, “We are pleased that the bank lender group has recognized
Tetra Tech’s long-term commitment to advancing sustainability and
incorporated financial rewards in our credit facility for achieving
measurable benefits.”
Six-Month Results
Revenue for the six-month period was $1.71 billion and net
revenue was $1.38 billion, up 13% and 14%, respectively, over the
same period in fiscal 2021. Operating income of $162 million was up
27%, and EPS of $2.23 increased 25% over last fiscal year. Cash
flow from operations was $178 million, up 13% 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 third quarter of fiscal 2022 to
range from $1.00 to $1.05 and net revenue to range from $665
million to $715 million. For fiscal 2022, Tetra Tech is increasing
EPS to now range from $4.30 to $4.40, and increasing the guidance
for net revenue to range from $2.72 billion to $2.82 billion.3
Webcast
Investors will have the opportunity to access a live
audio-visual webcast and supplemental financial information
concerning the second quarter fiscal 2022 results through a link
posted on the Company’s website at tetratech.com on May 5, 2022, 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
Six Months Ended
April 3,
2022
March 28,
2021
April 3,
2022
March 28,
2021
Revenue
$
852,744
$
754,764
$
1,711,255
$
1,519,868
Subcontractor Costs
(153,103
)
(154,939
)
(332,280
)
(314,873
)
Net Revenue
$
699,641
$
599,825
$
1,378,975
$
1,204,995
EPS
$
0.98
$
0.83
$
2.23
$
1.79
COVID-19 Credits
-
-
(0.06
)
-
Adjusted EPS
$
0.98
$
0.83
$
2.17
$
1.79
Current portion of long-term debt
$
12,503
$
28,885
Long-term debt
237,500
238,339
Less: Cash and cash equivalents
(194,378
)
(225,330
)
Net debt
$
55,625
$
41,894
Trailing 12-month EBITDA
$
330,777
$
278,473
Net debt leverage ratio
0.2
x
0.2
x
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 October 3, 2021, and Tetra Tech’s Quarterly Reports on Form
10-Q for fiscal year 2022, 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/20220504006028/en/
Jim Wu, Investor Relations Charlie MacPherson, Media &
Public Relations (626) 470-2844
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