- Revenue $890 million, up 11% Y/Y
- Net revenue $720 million, up 13% Y/Y
- Operating income $84 million, up 20% Y/Y
- EPS $1.09, up 15% Y/Y
Tetra Tech, Inc. (NASDAQ: TTEK), a leading provider of high-end
consulting and engineering services, today announced results for
the third quarter ended July 3, 2022.
Third Quarter Results
Tetra Tech achieved record high third quarter results in
revenue, net revenue, operating income, and EPS. Revenue in the
third quarter totaled $890 million and revenue, net of
subcontractor costs (net revenue)1 was $720 million, up 11% and 13%
year-over-year, respectively. Operating income was $84 million, up
20% year-over-year, which reflects a 70 basis point increase in
operating margin. Earnings per share (“EPS”) was $1.09, up 15%.
Cash generated from operations was $98 million, up 42%
year-over-year, and DSO improved to 58.8 days. Backlog increased to
$3.51 billion, up 8% year-over-year, and on a constant currency
basis increased 12% year-over-year to $3.65 billion.
Quarterly Dividend and Share Repurchase Program
Tetra Tech’s Board of Directors approved a $0.23 per share
dividend, a 15% increase over the prior year, payable on August 26,
2022, to stockholders of record as of August 12, 2022. In the third
quarter, Tetra Tech repurchased $50 million of common stock.
Additionally, the Company had $398 million remaining under the
approved share repurchase program. The Company has returned $184
million to shareholders in the first nine months of the fiscal year
through a combination of share repurchases and dividends while
maintaining a net debt leverage ratio of 0.1x.2
Chairman and CEO Comments
Tetra Tech Chairman and CEO, Dan Batrack, commented, “Tetra Tech
generated record high third quarter results with double digit
revenue and earnings growth. The strong performance was driven by
continued demand for our differentiated Leading with Science®
approach and our suite of Tetra Tech Delta technologies for water,
environment and sustainable infrastructure projects. The addition
of TIGA further expands our digital water practice with
industry-leading software engineers and digital transformation
consultants experienced in solving complex challenges related to
water and data. Given the strength of our end markets and backlog,
we are increasing our guidance outlook 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.
Nine-Month Results
Revenue for the nine-month period was $2.60 billion and net
revenue was $2.10 billion, up 12% and 14%, respectively, over the
same period in fiscal 2021. Operating income of $246 million was up
25%, and EPS of $3.32 increased 21% over last fiscal year (adjusted
EPS of $3.25, up 19%). Cash flow from operations was $276 million,
up 22% 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 2022 to
range from $1.13 to $1.18 and net revenue to range from $676
million to $726 million. On a constant currency basis and adjusting
for the one extra week in the fourth quarter of fiscal 2021, the
mid-point of our net revenue guidance reflects double-digit growth
over last year’s fourth quarter. For fiscal 2022, Tetra Tech is
increasing adjusted EPS to now range from $4.38 to $4.43 and
increasing the guidance for net revenue to range from $2.78 billion
to $2.83 billion.3
Webcast
Investors will have the opportunity to access a live
audio-visual webcast and supplemental financial information
concerning the third quarter of fiscal 2022 results through a link
posted on the Company’s website at tetratech.com on August 4, 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
Nine Months Ended
July 3, 2022
June 27, 2021
July 3, 2022
June 27, 2021
Revenue
$
890,231
$
801,633
$
2,601,485
$
2,321,500
Subcontractor Costs
(169,745
)
(163,590
)
(502,024
)
(478,461
)
Net Revenue
$
720,486
$
638,043
$
2,099,461
$
1,843,039
EPS
$
1.09
$
0.95
$
3.32
$
2.74
COVID-19 Credits
(0.01
)
-
(0.07
)
-
Adjusted EPS
$
1.08
$
0.95
$
3.25
$
2.74
July 3, 2022
June 27, 2021
Current portion of long-term
debt
$
27,081
$
16,252
Long-term debt
234,375
234,020
Less: Cash and cash
equivalents
(217,384
)
(234,266
)
Net debt
$
44,072
$
16,006
Trailing 12-month EBITDA
$
345,414
$
287,551
Net debt leverage ratio
0.1x
0.1x
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/20220802006200/en/
Jim Wu, Investor Relations Charlie MacPherson, Media &
Public Relations (626) 470-2844
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