Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 30, 2018 | Jan. 25, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | TETRA TECH INC | |
Entity Central Index Key | 831,641 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-29 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 55,212,700 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 30, 2018 | Sep. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 66,502 | $ 146,185 |
Accounts receivable – net | 685,669 | 694,221 |
Contract assets | 126,545 | 142,882 |
Prepaid expenses and other current assets | 62,641 | 56,003 |
Income taxes receivable | 10,185 | 11,089 |
Total current assets | 951,542 | 1,050,380 |
Property and equipment – net | 41,795 | 43,278 |
Investments in unconsolidated joint ventures | 2,904 | 3,370 |
Goodwill | 782,564 | 798,820 |
Intangible assets – net | 11,984 | 16,123 |
Deferred tax assets | 8,448 | 8,607 |
Other long-term assets | 35,652 | 38,843 |
Total assets | 1,834,889 | 1,959,421 |
Current liabilities: | ||
Accounts payable | 119,363 | 160,222 |
Accrued compensation | 111,196 | 180,153 |
Contract liabilities | 155,585 | 143,270 |
Income taxes payable | 17,349 | 8,272 |
Current portion of long-term debt | 12,573 | 12,599 |
Current contingent earn-out liabilities | 14,227 | 13,633 |
Other current liabilities | 101,673 | 99,944 |
Total current liabilities | 531,966 | 618,093 |
Deferred tax liabilities | 27,331 | 30,166 |
Long-term debt | 247,581 | 264,712 |
Long-term contingent earn-out liabilities | 14,804 | 21,657 |
Other long-term liabilities | 58,904 | 57,693 |
Commitments and contingencies (Note 16) | ||
Equity: | ||
Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding at December 30, 2018 and September 30, 2018 | 0 | 0 |
Common stock - authorized, 150,000 shares of $0.01 par value; issued and outstanding, 55,326 and 55,349 shares at December 30, 2018 and September 30, 2018, respectively | 553 | 553 |
Additional paid-in capital | 130,753 | 148,803 |
Accumulated other comprehensive loss | (154,693) | (127,350) |
Retained earnings | 977,543 | 944,965 |
Tetra Tech stockholders’ equity | 954,156 | 966,971 |
Noncontrolling interests | 147 | 129 |
Total stockholders' equity | 954,303 | 967,100 |
Total liabilities and stockholders' equity | $ 1,834,889 | $ 1,959,421 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 30, 2018 | Sep. 30, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, authorized shares (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, par value (in dollars per share) | $ 10 | $ 10 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, authorized shares (in shares) | 150,000,000 | 150,000,000 |
Common stock, par value (in dollars per share) | $ 10 | $ 10 |
Common stock, shares issued (in shares) | 55,326,000 | 55,349,000 |
Common stock, shares outstanding (in shares) | 55,326,000 | 55,349,000 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | |
Revenue | $ 717,431 | $ 759,749 |
Gross profit | 98,684 | 94,145 |
Selling, general and administrative expenses | (42,973) | (45,556) |
Income from operations | 55,711 | 48,589 |
Interest expense | (2,897) | (3,160) |
Income before income tax (expense) benefit | 52,814 | 45,429 |
Income tax (expense) benefit | (10,782) | 623 |
Net income | 42,032 | 46,052 |
Net income attributable to noncontrolling interests | (35) | (18) |
Net income attributable to Tetra Tech | $ 41,997 | $ 46,034 |
Earnings per share attributable to Tetra Tech: | ||
Basic (in dollars per share) | $ 0.76 | $ 0.82 |
Diluted (in dollars per share) | $ 0.75 | $ 0.81 |
Weighted-average common shares outstanding: | ||
Basic (in shares) | 55,390 | 55,855 |
Diluted (in shares) | 56,366 | 56,875 |
Cash dividends paid per share (in dollars per share) | $ 0.12 | $ 0.1 |
Subcontractor | ||
Cost of revenue | $ (164,067) | $ (214,902) |
Other | ||
Cost of revenue | $ (454,680) | $ (450,702) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 42,032 | $ 46,052 |
Other comprehensive income, net of tax | ||
Foreign currency translation adjustments | (23,334) | (3,467) |
(Loss) gain on cash flow hedge valuations | (4,009) | 66 |
Other comprehensive loss attributable to Tetra Tech | (27,343) | (3,401) |
Other comprehensive income (loss) attributable to noncontrolling interests | 237 | (2) |
Comprehensive income | 14,926 | 42,649 |
Comprehensive income attributable to Tetra Tech | 14,654 | 42,633 |
Comprehensive income attributable to noncontrolling interests | $ 272 | $ 16 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 42,032 | $ 46,052 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 8,274 | 9,983 |
Equity in income of unconsolidated joint ventures, net of distributions | 421 | 282 |
Amortization of stock-based awards | 4,530 | 3,970 |
Deferred income taxes | (1,424) | (10,100) |
Provision for doubtful accounts | 3,073 | 2,524 |
Gain on sale of property and equipment | (104) | (411) |
Changes in operating assets and liabilities, net of effects of business acquisitions: | ||
Accounts receivable and contract assets | 14,528 | (36,011) |
Prepaid expenses and other assets | (3,936) | (16,321) |
Accounts payable | (40,859) | (35,169) |
Accrued compensation | (68,957) | (42,575) |
Contract liabilities | 6,090 | 12,330 |
Other liabilities | 9,015 | (162) |
Income taxes receivable/payable | 12,015 | 7,926 |
Net cash used in operating activities | (15,302) | (57,682) |
Cash flows from investing activities: | ||
Payments for business acquisitions, net of cash acquired | 0 | (18,294) |
Capital expenditures | (3,853) | (2,143) |
Proceeds from sale of property and equipment | 115 | 710 |
Net cash used in investing activities | (3,738) | (19,727) |
Cash flows from financing activities: | ||
Proceeds from borrowings | 45,727 | 120,026 |
Repayments on long-term debt | (62,668) | (25,026) |
Repurchases of common stock | (25,000) | (25,000) |
Taxes paid on vested restricted stock | (6,740) | (8,812) |
Stock options exercised | (2,314) | (5,584) |
Dividends paid | (6,654) | (5,589) |
Payment of contingent earn-out liabilities | (6,000) | 0 |
Net cash (used in) provided by financing activities | (59,021) | 61,183 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1,626) | (725) |
Net decrease in cash, cash equivalents and restricted cash | (79,687) | (16,951) |
Cash, cash equivalents and restricted cash at beginning of period | 148,884 | 192,690 |
Cash, cash equivalents and restricted cash at end of period | 69,197 | 175,739 |
Cash paid during the period for: | ||
Interest | 2,229 | 2,913 |
Income taxes, net of refunds received of $0.6 million and $0.1 million | 2,231 | 1,794 |
Reconciliation of cash, cash equivalents and restricted cash: | ||
Total cash, cash equivalents and restricted cash | $ 148,884 | $ 192,690 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | |
Statement of Cash Flows [Abstract] | ||
Income tax refunds | $ 0.6 | $ 0.1 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Dec. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim consolidated financial statements and related notes of Tetra Tech, Inc. (“we,” “us” , “our” or "Tetra Tech") have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and, therefore, should be read in conjunction with the audited consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2018 . These financial statements reflect all normal recurring adjustments that are considered necessary for a fair statement of our financial position, results of operations and cash flows for the interim periods presented. The results of operations and cash flows for any interim period are not necessarily indicative of results for the full year or for future years. Certain reclassifications were made to the prior year to conform to current year presentation. In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09 ("ASC 606"), "Revenue from Contracts with Customers", which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance and the related ASUs were effective for interim and annual reporting periods beginning after December 15, 2017 (first quarter of fiscal 2019 for us). On October 1, 2018, we adopted ASC 606 using the modified retrospective method in which the new guidance was applied retrospectively to contracts that were not substantially completed as of the date of adoption. Results for the reporting period beginning after October 1, 2018 have been presented under ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the previous guidance. See Note 3 , " Revenue Recognition " for further discussion of the adoption and the impact on our consolidated financial statements. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Dec. 30, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Standards In January 2016, the FASB issued guidance that generally requires companies to measure investments in other entities, except those accounted for under the equity method, at fair value and recognize any changes in fair value in net income. The guidance was effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). The adoption of this guidance had no impact on our consolidated financial statements. In March 2016, the FASB issued updated guidance which requires excess tax benefits and deficiencies on share-based payments to be recorded as income tax expense or benefit in the income statement rather than being recorded in additional paid-in capital. It also requires the presentation of employee taxes as financing activities on consolidated statements of cash flows, which was previously classified as operating activities. This guidance is effective for annual and interim periods beginning after December 15, 2016 (first quarter of fiscal 2018 for us), with early adoption permitted. In the first quarter of fiscal 2017, we adopted this guidance. In the first quarter of fiscal 2019, we revised the presentation of "Net cash used in operating activities" and "Net cash (used in) provided by financing activities" in the consolidated statement of cash flows for the period ended December 31, 2017 to correct the presentation of “Taxes paid on vested restricted stock” and appropriately reflect such amounts as financing activities. The correction resulted in a decrease of “Net cash used in operating activities” of $8.8 million and a decrease of “Net cash (used in) provided by financing activities” of $8.8 million . We assessed the materiality of these errors on our consolidated financial statements for prior periods and concluded that the amounts were not material to any prior interim or annual periods. We elected to revise the presentation for comparability purposes. In August 2016, the FASB issued guidance to address eight specific cash flow issues to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance was effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). The adoption of this guidance had no material impact on our consolidated financial statements. In October 2016, the FASB issued updated guidance which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The guidance was effective for fiscal reporting periods and interim reporting periods within those fiscal reporting periods, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). The adoption of this guidance had no material impact on our consolidated financial statements. In November 2016, the FASB issued updated guidance which provides amendments to address the classification and presentation of changes in restricted cash in the statement of cash flows. The guidance was effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). The adoption of this guidance had no material impact on our consolidated financial statements. In addition, captions in our consolidated statements of cash flows have been updated to include restricted cash, which is reported in our "Prepaid expenses and other current assets" on the consolidated balance sheets. In January 2017, the FASB issued updated guidance to simplify the test for goodwill impairment. The guidance eliminates step two from the goodwill impairment test. Under the updated guidance, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. This guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 (first quarter of fiscal 2021 for us), on a prospective basis. Earlier adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this guidance in the first quarter of our fiscal 2018, and the adoption of this guidance had no impact on our consolidated financial statements. In May 2017, the FASB issued updated guidance to clarify when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the updated guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of a change in terms or conditions. The guidance was effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us), on a prospective basis. The adoption of this guidance had no impact on our consolidated financial statements. Recently Issued Accounting Standards Not Yet Adopted In February 2016, the FASB issued guidance that requires the rights and obligations associated with leasing arrangements be reflected on the balance sheet in order to increase transparency and comparability among organizations. Under the guidance, lessees will be required to recognize a right-of-use asset and a liability to make lease payments and disclose key information about leasing arrangements. The guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018 (first quarter of fiscal 2020 for us). Early adoption is permitted. While we are currently evaluating the impact that this guidance will have on our consolidated financial statements, we currently expect that the adoption of the new guidance will result in a significant increase in the assets and liabilities on our consolidated balance sheets and will likely have an immaterial impact on our consolidated statements of income and cash flows. In June 2016, the FASB issued updated guidance which requires entities to estimate all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The updated guidance also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019 (first quarter of fiscal 2021 for us). Early adoption is permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In August 2017, the FASB issued accounting guidance on hedging activities. The amendment better aligns an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018 (first quarter of fiscal 2020 for us). Early adoption is permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In February 2018, the FASB issued guidance on reclassification of certain tax effects from accumulated comprehensive income, which allows for a reclassification of stranded tax effects from the Tax Cuts and Jobs Act ("TCJA") from accumulated other comprehensive income to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018 (first quarter of fiscal 2020 for us). We are currently evaluating the impact that this guidance will have on our consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Dec. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition On October 1, 2018, we adopted ASC 606, which supersedes most current revenue recognition guidance, including industry-specific guidance. We adopted the standard on a modified retrospective basis which results in no restatement of the comparative periods presented and a cumulative effect adjustment to retained earnings as of the date of adoption. As part of our adoption, the new standard was applied only to those contracts that were not substantially completed as of the date of adoption. To determine the proper revenue recognition method for contracts under ASC 606, we evaluate whether multiple contracts should be combined and accounted for as a single contract and whether the combined or single contract should be accounted for as having more than one performance obligation. The decision to combine a group of contracts or separate a combined or single contract into multiple performance obligations may impact the amount of revenue recorded in a given period. Contracts are considered to have a single performance obligation if the promises are not separately identifiable from other promises in the contracts. At contract inception, we assess the goods or services promised in a contract and identify, as a separate performance obligation, each distinct promise to transfer goods or services to the customer. The identified performance obligations represent the “unit of account” for purposes of determining revenue recognition. In order to properly identify separate performance obligations, we apply judgment in determining whether each good or service provided is: (a) capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and (b) distinct within the context of the contract, whereby the transfer of the good or service to the customer is separately identifiable from other promises in the contract. Contracts are often modified to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of our contract modifications are for goods or services that are not distinct from existing contracts due to the significant integration provided or significant interdependencies in the context of the contract and are accounted for as if they were part of the original contract. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. We account for contract modifications as a separate contract when the modification results in the promise to deliver additional goods or services that are distinct and the increase in price of the contract is for the same amount as the stand-alone selling price of the additional goods or services included in the modification. The transaction price represents the amount of consideration to which we expect to be entitled in exchange for transferring promised goods or services to our customers. The consideration promised within a contract may include fixed amounts, variable amounts, or both. The nature of our contracts gives rise to several types of variable consideration, including claims, award fee incentives, fiscal funding clauses, and liquidated damages. We recognize revenue for variable consideration when it is probable that a significant reversal in the amount of cumulative revenue recognized for the contract will not occur. We estimate the amount of revenue to be recognized on variable consideration using either the expected value or the most likely amount method, whichever is expected to better predict the amount of consideration to be received. Project mobilization costs are generally charged to project costs as incurred when they are an integrated part of the performance obligation being transferred to the client. Claims are amounts in excess of agreed contract prices that we seek to collect from our clients or other third parties for delays, errors in specifications and designs, contract terminations, change orders in dispute or unapproved as to both scope and price, or other causes of unanticipated additional costs. Revenue on claims is recognized only to the extent that contract costs related to the claims have been incurred and when it is probable that any significant revenue recognized related to the claim will not be reversed. Factors considered in determining whether revenue associated with claims (including change orders in dispute and unapproved change orders in regard to both scope and price) should be recognized include the following: (a) the contract or other evidence provides a legal basis for the claim, (b) additional costs were caused by circumstances that were unforeseen at the contract date and not the result of deficiencies in our performance, (c) claim-related costs are identifiable and considered reasonable in view of the work performed, and (d) evidence supporting the claim is objective and verifiable. This can lead to a situation in which costs are recognized in one period and revenue is recognized in a subsequent period when a client agreement is obtained or a claims resolution occurs. In some cases, contract retentions are withheld by clients until certain conditions are met or the project is completed, which may be several months or years. In these cases, we have not identified a significant financing component under ASC 606 as the timing difference in payment compared to delivery of obligations under the contract is not for purposes of financing. For contracts with multiple performance obligations, we allocate the transaction price to each performance obligation using a best estimate of the standalone selling price of each distinct good or service in the contract. The standalone selling price is typically determined using the estimated cost of the contract plus a margin approach. For contracts containing variable consideration, we allocate the variability to a specific performance obligation within the contract if such variability relates specifically to our efforts to satisfy the performance obligation or transfer the distinct good or service, and the allocation depicts the amount of consideration to which we expect to be entitled. We recognize revenue over time as the related performance obligation is satisfied by transferring control of a promised good or service to our customers. Progress toward complete satisfaction of the performance obligation is primarily measured using a cost-to-cost input percentage-of-completion method. The cost input is based primarily on contract cost incurred to date compared to total estimated contract cost. This measure includes forecasts based on the best information available and reflects our judgment to faithfully depict the value of the services transferred to the customer. For certain on-call engineering or consulting and similar contracts, we recognize revenue in the amount which we have the right to invoice the customer if that amount corresponds directly with the value of our performance completed to date. Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term. For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. When the current estimate of total costs for a performance obligation indicate a loss, a provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident. Contract Types Our services are performed under three principal types of contracts: fixed-price, time-and-materials and cost-plus. Customer payments on contracts are typically due within 60 days of billing, depending on the contract. Fixed-Price . Under fixed-price contracts, clients pay us an agreed fixed-amount negotiated in advance for a specified scope of work. Time-and-Materials . Under time-and-materials contracts, we negotiate hourly billing rates and charge our clients based on the actual time that we spend on a project. In addition, clients reimburse us for our actual out-of-pocket costs for materials and other direct incidental expenditures that we incur in connection with our performance under the contract. The majority of our time-and-material contracts are subject to maximum contract values, and also may include annual billing rate adjustment provisions. Cost-Plus . Under cost-plus contracts, we are reimbursed for allowed or otherwise defined costs incurred plus a negotiated fee. The contracts may also include incentives for various performance criteria, including quality, timeliness, ingenuity, safety and cost-effectiveness. In addition, our costs are generally subject to review by our clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. Adoption Upon adoption on October 1, 2018, under the modified retrospective method, we recorded a cumulative effect adjustment to decrease retained earnings by $2.8 million on October 1, 2018, as well as the following cumulative effect adjustments: • An decrease to contract assets of $5.0 million • An decrease to contract liabilities of $1.1 million • An increase to deferred tax assets of $1.1 million The decrease in retained earnings primarily resulted from a change in the manner in which we determine the unit of account for projects (i.e. performance obligations). Under previous guidance, we typically accounted for a contract as a single unit of revenue recognition. Upon adoption of ASC 606, we assess the nature of the promises in the contract and recognize revenue based on performance obligations within the respective contract or combined contract. The following table presents how the adoption of ASC 606 affected certain line items in our consolidated statement of income for the three months ended December 30, 2018: Recognition Under Previous Guidance Impact of the Adoption of ASC 606 Recognition Under ASC 606 (in thousands) Revenue $ 715,228 $ 2,203 $ 717,431 Income from operations 53,508 2,203 55,711 Income tax expense 10,257 525 10,782 Net income attributable to Tetra Tech 40,319 1,678 41,997 The following table presents how the adoption of ASC 606 affected certain line items in our consolidated balance sheet as of December 30, 2018: Recognition Under Previous Guidance Impact of the Adoption of ASC 606 Recognition Under ASC 606 (in thousands) Assets Contract assets (1) $ 131,885 $ (5,340 ) $ 126,545 Deferred tax assets 7,328 1,120 8,448 Liabilities and equity Contract liabilities (2) $ 158,519 $ (2,934 ) $ 155,585 Income taxes payable 16,824 525 17,349 Equity (3) Retained earnings $ 978,632 $ (1,089 ) $ 977,543 (1) Previously included in "Account receivable - net". (2) Previously presented as "Billings in excess of costs on uncompleted contracts". (3) Includes $2.8 million of cumulative catch-up adjustment to retained earnings on October 1, 2018 upon adoption of ASC 606. The following table presents how the adoption of ASC 606 affected certain line items in our consolidated statement of cash flows for the three months ended December 30, 2018: Recognition Under Previous Guidance Impact of the Adoption of ASC 606 Recognition Under ASC 606 (in thousands) Cash flows from operating activities: Net income $ 40,354 $ 1,678 $ 42,032 Accounts receivable and contract assets 7,574 6,954 14,528 Contract liabilities 15,248 (9,158 ) 6,090 Income taxes receivable/payable 11,489 526 12,015 Net cash used in operating activities (15,302 ) — (15,302 ) Contract Assets and Contract Liabilities We invoice customers based on the contractual terms of each contract. However, the timing of revenue recognition may differ from the timing of invoice issuance. As part of the adoption of ASC 606, contract assets have been bifurcated from billed and unbilled receivables. Contract assets represent revenue recognized in excess of the amounts for which we have the contractual right to bill our customers. Such amounts are recoverable from customers based upon various measures of performance, including achievement of certain milestones or completion of a contract. In addition, many of our time and materials arrangements, are billed in arrears pursuant to contract terms that are standard within the industry, resulting in contract assets and/or unbilled receivables being recorded, as revenue is recognized in advance of billings. Contract liabilities consist of billings in excess of revenue recognized. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation and increase as billings in advance of revenue recognition occur. Contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. There were no substantial non-current contract assets or liabilities for the periods presented. Net contract liabilities/assets consisted of the following: Balance at December 30, 2018 September 30, 2018 (in thousands) Contract assets $ 126,545 $ 142,882 Contract liabilities 155,585 143,270 Net contract liabilities 29,040 388 We recognized $56.2 million of revenue during the first quarter of fiscal 2019 that was included in contract liabilities as of September 30, 2018. The amount of revenue recognized from changes in transaction price associated with performance obligations satisfied in prior periods during the first quarter of fiscal 2019 was not material. The change in transaction price primarily relates to reimbursement of costs incurred in prior periods. We recognize revenue from contracts using the percentage-of-completion method, primarily utilizing the cost-to-cost approach, to estimate the progress towards completion in order to determine the amount of revenue and profit to recognize. Changes in those estimates could result in the recognition of cumulative catch-up adjustments to the contract’s inception-to-date revenue, costs and profit in the period in which such changes are made. As a result, we recognized net unfavorable operating income adjustments of $0.4 million for the first quarter of fiscal 2019 compared to net unfavorable operating income adjustments of $0.7 million during the first quarter of fiscal 2018 in the Commercial/International Services Group ("CIG") segment. Changes in revenue and cost estimates could also result in a projected loss, determined at the contract level, which would be recorded immediately in earnings. As of December 30, 2018 and September 30, 2018 , our consolidated balance sheets included liabilities for anticipated losses of $13.3 million and $13.6 million , respectively. The estimated cost to complete the related contracts as of December 30, 2018 was $18.4 million . Disaggregation of Revenue We disaggregate revenue by client sector and contract type, as we believe it best depicts how the nature, timing, and uncertainty of revenue and cash flows are affected by economic factors. The following tables provide information about disaggregated revenue and a reconciliation of the disaggregated revenue: Three Months Ended December 30, December 31, (in thousands) Client Sector U.S. state and local government $ 123,280 $ 151,754 U.S. federal government (1) 224,757 236,249 U.S. commercial 172,788 206,786 International (2) 196,606 164,960 Total $ 717,431 $ 759,749 (1) Includes revenue generated under U.S. federal government contracts performed outside the United States. (2) Includes revenue generated from foreign operations, primarily in Canada and Australia, and revenue generated from non-U.S. clients. Other than the U.S. federal government, no single client accounted for more than 10% of our revenue for the three months ended December 30, 2018 and December 31, 2017 . Three Months Ended December 30, 2018 December 31, 2017 Contract Type Fixed-price $ 240,933 $ 235,420 Time-and-materials 336,537 376,773 Cost-plus 139,961 147,556 Total revenue $ 717,431 $ 759,749 Remaining Unsatisfied Performance Obligations (“RUPOs”) Our RUPOs represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. We had $2.77 billion of RUPOs as of December 30, 2018. RUPOs increase with awards from new contracts or additions on existing contracts and decrease as work is performed and revenue is recognized on existing contracts. RUPOs may also decrease when projects are cancelled or modified in scope. We include a contract within our RUPOs when the contract is awarded and an agreement on contract terms has been reached. We expect to satisfy our RUPOs as of December 30, 2018 over the following periods: Amount (in thousands) Within 12 months $ 1,670,929 Beyond 1,101,342 Total RUPOs $ 2,772,271 Although RUPOs reflect business that is considered to be firm, cancellations, deferrals or scope adjustments may occur. RUPOs are adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals, as appropriate. Our operations and maintenance contracts can generally be terminated by the clients without a substantive financial penalty. Therefore, the remaining performance obligations on such contracts are limited to the notice period required for the termination (usually 30, 60, or 90 days). |
Accounts Receivable - Net
Accounts Receivable - Net | 3 Months Ended |
Dec. 30, 2018 | |
Receivables [Abstract] | |
Accounts Receivable - Net | Accounts Receivable - Net Net accounts receivable consisted of the following: December 30, September 30, (in thousands) Billed $ 463,159 $ 464,062 Unbilled 265,974 267,739 Total accounts receivable – gross 729,133 731,801 Allowance for doubtful accounts (43,464 ) (37,580 ) Total accounts receivable – net $ 685,669 $ 694,221 Billed accounts receivable represent amounts billed to clients that have not been collected. Unbilled accounts receivable, which represent an unconditional right to payment subject only to the passage of time, include unbilled amounts typically resulting from revenue recognized but not yet billed pursuant to contract terms or billed after the period end date. Most of our unbilled receivables at December 30, 2018 are expected to be billed and collected within 12 months. The allowance for doubtful accounts represents amounts that are expected to become uncollectible or unrealizable in the future. We determine an estimated allowance for uncollectible accounts based on management's consideration of trends in the actual and forecasted credit quality of our clients, including delinquency and payment history; type of client, such as a government agency or a commercial sector client; and general economic and particular industry conditions that may affect a client's ability to pay. Once contract performance is underway, we may experience changes in conditions, client requirements, specifications, designs, materials and expectations regarding the period of performance. Such changes result in change orders and may be initiated by us or by our clients. In many cases, agreement with the client as to the terms of change orders is reached prior to work commencing; however, sometimes circumstances require that work progress without a definitive client agreement. Revenue and any corresponding receivable in these cases is recognized based on the policy described in Note 3 , " Revenue Recognition " above. The total accounts receivable at both December 30, 2018 and September 30, 2018 included approximately $74 million related to claims, including requests for equitable adjustment, on contracts that provide for price redetermination. We regularly evaluate all unsettled claim amounts and record appropriate adjustments to operating earnings when it is probable that the claim will result in a different contract value than the amount previously estimated. We recorded no material gains or losses related to claims during the first quarters of fiscal 2019 and 2018 . Billed accounts receivable related to U.S. federal government contracts were $ 80.3 million and $ 81.5 million at December 30, 2018 and September 30, 2018 , respectively. U.S. federal government contracts unbilled receivables were $ 99.6 million and $ 102.7 million at December 30, 2018 and September 30, 2018 , respectively. Other than the U.S. federal government, no single client accounted for more than 10% of our accounts receivable at December 30, 2018 and September 30, 2018 . |
Acquisitions and Divestitures
Acquisitions and Divestitures | 3 Months Ended |
Dec. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures At the beginning of first quarter of fiscal 2018, we acquired Glumac, headquartered in Portland, Oregon. Glumac is a leader in sustainable infrastructure design with more than 300 employees and is part of our Government Services Group ("GSG") segment. The fair value of the purchase price for Glumac was $38.4 million. This amount was comprised of $20.0 million of initial cash payments made to the sellers and $18.4 million for the estimated fair value of contingent earn-out obligations, with a maximum of $20.0 million payable, based upon the achievement of specified operating income targets in each of the three years following the acquisition. In the second quarter of fiscal 2018, we completed the acquisition of Norman Disney & Young (“NDY”), a leader in sustainable infrastructure engineering design. NDY is an Australian-based global engineering design firm with more than 700 professionals operating in offices throughout Australia, the Asia-Pacific region, the United Kingdom, and Canada and is part of our CIG segment. The fair value of the purchase price for NDY was $56.1 million . This amount was comprised of $46.9 million of initial cash payments made to the sellers, $1.6 million held in escrow, and $7.6 million for the estimated fair value of contingent earn-out obligations, with a maximum amount of $20.2 million , based upon the achievement of specified operating income targets in each of the three years following the acquisition. In the third quarter of fiscal 2018, we divested our non-core utility field services operations in the CIG segment for net proceeds after transaction costs of $30.2 million . This operation generated approximately $70 million in annual revenue primarily from our U.S. commercial clients. These non-core divestitures resulted in a pre-tax loss of $1.7 million , which was included in "Selling, general and administrative expenses" ("SG&A") in the third quarter of fiscal 2018. Goodwill additions resulting from the above business combinations are primarily attributable to the existing workforce of the acquired companies and the synergies expected to arise after the acquisitions. The goodwill addition related to our fiscal 2018 acquisitions primarily represent the value of a workforce with distinct expertise in the sustainable infrastructure design market. In addition, these acquired capabilities, when combined with our existing global consulting and engineering business, result in opportunities that allow us to provide services under contracts that could not have been pursued individually by either us or the acquired companies. The results of these acquisitions were included in our consolidated financial statements from their respective closing dates. These acquisitions were not considered material to our consolidated financial statements. As a result, no pro forma information has been provided. Backlog, client relations and trade name intangible assets include the fair value of existing contracts and the underlying customer relationships with lives ranging from 1 to 10 years, and trade names with lives ranging from 3 to 5 years. For detailed information regarding our intangible assets, see Note 6 , “ Goodwill and Intangible Assets ”. Most of our acquisition agreements include contingent earn-out agreements, which are generally based on the achievement of future operating income thresholds. The contingent earn-out arrangements are based on our valuations of the acquired companies, and reduce the risk of overpaying for acquisitions if the projected financial results are not achieved. The fair values of any earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, we estimate the fair value of contingent earn-out payments as part of the initial purchase price and record the estimated fair value of contingent consideration as a liability in “Current contingent earn-out liabilities” and “Long-term contingent earn-out liabilities” on the consolidated balance sheets. We consider several factors when determining that contingent earn-out liabilities are part of the purchase price, including the following: (1) the valuation of our acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (2) the former owners of acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of our other key employees. The contingent earn-out payments are not affected by employment termination. We measure our contingent earn-out liabilities at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy. We use a probability-weighted discounted income approach as a valuation technique to convert future estimated cash flows to a single present value amount. The significant unobservable inputs used in the fair value measurements are operating income projections over the earn-out period (generally two or three years), and the probability outcome percentages we assign to each scenario. Significant increases or decreases to either of these inputs in isolation would result in a significantly higher or lower liability, with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and amount paid will be recorded in earnings. The amount paid that is less than or equal to the contingent earn-out liability on the acquisition date is reflected as cash used in financing activities in our consolidated statements of cash flows. Any amount paid in excess of the contingent earn-out liability on the acquisition date is reflected as cash used in operating activities in our consolidated statement of cash flows. We review and re-assess the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could differ materially from the initial estimates. Changes in the estimated fair value of our contingent earn-out liabilities related to the time component of the present value calculation are reported in interest expense. Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income. We had no adjustments to our contingent earn-out liabilities in the first quarters of fiscal 2019 and 2018 . At December 30, 2018 , there was a total potential maximum of $52.2 million of outstanding contingent consideration related to acquisitions. Of this amount, $ 29.0 million was estimated as the fair value and accrued on our consolidated balance sheet. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Dec. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The following table summarizes the changes in the carrying value of goodwill: GSG CIG Total (in thousands) Balance at September 30, 2018 $ 389,741 $ 409,079 $ 798,820 Translation and other (3,563 ) (12,693 ) (16,256 ) Balance at December 30 2018 $ 386,178 $ 396,386 $ 782,564 Our goodwill was impacted by foreign currency translation related to our foreign subsidiaries with functional currencies that are different than our reporting currency. The gross amounts of goodwill for GSG were $403.9 million and $407.4 million at December 30, 2018 and September 30, 2018 , respectively, excluding $17.7 million of accumulated impairment. The gross amounts of goodwill for CIG were $494.3 million and $507.0 million at December 30, 2018 and September 30, 2018 , respectively, excluding $97.9 million of accumulated impairment. We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter. Our most recent annual review at July 2, 2018 (i.e. the first day of our fourth quarter in fiscal 2018 ) indicated that we had no impairment of goodwill, and all of our reporting units had estimated fair values that exceeded their carrying values, including goodwill, by more than 30% . We regularly evaluate whether events and circumstances have occurred that may indicate a potential change in the recoverability of goodwill. We perform interim goodwill impairment reviews between our annual reviews if certain events and circumstances have occurred, such as a deterioration in general economic conditions; an increase in the competitive environment; a change in management, key personnel, strategy, or customers; negative or declining cash flows; or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods. We estimate the fair value of all reporting units with a goodwill balance based on a comparison and weighting of the income approach (weighted 70% ), specifically the discounted cash flow method, and the market approach (weighted 30% ), which estimates the fair value of our reporting units based upon comparable market prices and recent transactions and also validates the reasonableness of the multiples from the income approach. The resulting fair value is most sensitive to the assumptions we use in our discounted cash flow analysis. The assumptions that have the most significant impact on the fair value calculation are the reporting unit’s revenue growth rate and operating profit margin, and the discount rate used to convert future estimated cash flows to a single present value amount. The gross amount and accumulated amortization of our acquired identifiable intangible assets with finite useful lives included in “Intangible assets - net” on our consolidated balance sheets, were as follows: December 30, 2018 September 30, 2018 Weighted- Average Remaining Life (in Years) Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization ($ in thousands) Non-compete agreements — $ — $ — $ 83 $ (83 ) Client relations 2.6 54,057 (47,534 ) 54,639 (46,449 ) Backlog 0.4 22,991 (21,544 ) 23,371 (20,007 ) Trade names 3.0 7,972 (3,958 ) 8,144 (3,575 ) Total $ 85,020 $ (73,036 ) $ 86,237 $ (70,114 ) Amortization expense for the three months ended December 30, 2018 was $ 4.0 million, compared to $ 4.6 million for the prior-year period. Estimated amortization expense for the remainder of fiscal 2019 and succeeding years is as follows: Amount (in thousands) 2019 $ 4,954 2020 3,331 2021 2,249 2022 1,021 2023 429 Total $ 11,984 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Dec. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and equipment consisted of the following: December 30, September 30, (in thousands) Equipment, furniture and fixtures $ 132,162 $ 131,521 Leasehold improvements 31,327 31,430 Land and buildings 411 413 Total property and equipment 163,900 163,364 Accumulated depreciation (122,105 ) (120,086 ) Property and equipment, net $ 41,795 $ 43,278 The depreciation expense related to property and equipment was $ 4.3 million for the three months ended December 30, 2018 , compared to $ 5.2 million for the prior-year period. |
Stock Repurchase and Dividends
Stock Repurchase and Dividends | 3 Months Ended |
Dec. 30, 2018 | |
Stock Repurchase And Dividends [Abstract] | |
Stock Repurchase and Dividends | Stock Repurchase and Dividends On November 5, 2018, the Board of Directors authorized a new stock repurchase program under which we could repurchase up to $200 million of our common stock in addition to the $25 million remaining under the previous stock repurchase program. In the first quarter of fiscal 2019 , we expended the remaining $25 million under the previous program by repurchasing 430,559 shares through open market purchases at an average price of $58.06 . In fiscal 2018 , we repurchased through open market purchases under the previous program total of 1,491,569 shares at an average price of $50.28 for a total cost of $75.0 million . The following table summarizes dividend declared and paid in the first quarters of fiscal 2019 and 2018: Declare Date Dividend Paid Per Share Record Date Payment Date Dividend Paid (in thousands, except per share data) November 5, 2018 $ 0.12 November 30, 2018 December 14, 2018 $ 6,654 November 6, 2017 $ 0.10 November 30, 2017 December 15, 2017 $ 5,589 Subsequent Event. On January 28, 2019, the Board of Directors declared a quarterly cash dividend of $0.12 per share payable on February 28, 2019 to stockholders of record as of the close of business on February 13, 2019. |
Stockholders' Equity and Stock
Stockholders' Equity and Stock Compensation Plans | 3 Months Ended |
Dec. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity and Stock Compensation Plans | Stockholders’ Equity and Stock Compensation Plans We recognize the fair value of our stock-based awards as compensation expense on a straight-line basis over the requisite service period in which the award vests. Stock-based compensation expense for the first quarters of fiscal 2019 and 2018 was $ 4.5 million and $ 4.0 million , respectively. The majority of these amounts were included in SG&A in our consolidated statements of income. In the first quarter of fiscal 2019 , we awarded 89,816 performance shares units (“PSUs”) to our non-employee directors and executive officers at a fair value of $66.45 per share on the award date. All of the PSUs are performance-based and vest, if at all, after the conclusion of the three -year performance period. The number of PSUs that ultimately vest is based 50% on the growth in our diluted earnings per share and 50% on our total shareholder return relative to a peer group of companies and a stock market index over the vesting period. Additionally, we awarded 176,491 restricted stock units (“RSUs”) to our non-employee directors, executive officers and employees at the fair value of $66.11 per share on the award date. All of the executive officer and employee RSUs have time-based vesting over a four -year period, and the non-employee director RSUs vest after one year. |
Earnings per Share ("EPS")
Earnings per Share ("EPS") | 3 Months Ended |
Dec. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings per Share (EPS) | Earnings per Share (“EPS”) Basic EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding, less unvested restricted stock for the period. Diluted EPS is computed by dividing net income by the weighted-average number of common shares outstanding and dilutive potential common shares for the period. Potential common shares include the weighted-average dilutive effects of outstanding stock options and unvested restricted stock using the treasury stock method. The following table sets forth the number of weighted-average shares used to compute basic and diluted EPS: Three Months Ended December 30, December 31, (in thousands, except per share data) Net income attributable to Tetra Tech $ 41,997 $ 46,034 Weighted-average common shares outstanding – basic 55,390 55,855 Effect of dilutive stock options and unvested restricted stock 976 1,020 Weighted-average common stock outstanding – diluted 56,366 56,875 Earnings per share attributable to Tetra Tech: Basic $ 0.76 $ 0.82 Diluted $ 0.75 $ 0.81 For the first quarters of fiscal 2019 and 2018 , 0.1 million and 0.3 million options and restricted stock units, respectively, were excluded from the calculation of dilutive potential common shares because the assumed proceeds per share exceeded the average market price per share during the periods. Therefore, their inclusion would have been anti-dilutive. |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective tax rates for the first quarters of fiscal 2019 and 2018 were 20.4% and (1.4%) , respectively. The tax rates for fiscal 2019 and 2018 reflect the impact of the comprehensive tax legislation enacted by the U.S. government on December 22, 2017, which is commonly referred to as the Tax Cuts and Jobs Act ("TCJA"). The TCJA significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018, while also repealing the deduction for domestic production activities, limiting the deductibility of certain executive compensation, and implementing a modified territorial tax system with the introduction of the Global Intangible Low-Taxed Income (“GILTI”) tax rules. The TCJA also imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries. Based on our analysis of tax earnings and profits and tax deficits at the prescribed measurement dates, we have a cumulative net tax deficit and do not have any tax liability related to this tax. As we have a September 30 fiscal year-end, our U.S. federal corporate income tax rate was blended in fiscal 2018, resulting in a statutory federal rate of approximately 24.5% (3 months at 35% and 9 months at 21%), and will be 21% for fiscal 2019 and subsequent fiscal years. U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the tax law was enacted. As a result of the TCJA, we reduced our deferred tax liabilities and recorded a one-time deferred tax benefit of approximately $10.1 million in the first quarter of fiscal 2018 to reflect our estimate of temporary differences in the United States that would be recovered or settled in fiscal 2018 based on the 24.5% blended corporate tax rate or based on the 21% tax rate in fiscal 2019 and beyond versus the previous enacted 35% corporate tax rate. We finalized this analysis in the first quarter of fiscal 2019, and recorded an additional deferred tax benefit of $2.6 million this quarter. Excluding these net deferred tax benefits, our effective tax rate in the first quarter of fiscal 2019 was 25.3% compared to 20.9% in last year's first quarter. We have completed our measurement of the tax effects of the TCJA with respect to the one-time revaluation of our deferred tax liabilities and the one-time transition tax on foreign earnings pursuant to Staff Accounting Bulletin No. 118. The amounts recorded for these two items incorporate assumptions made based on our current interpretation of the TCJA and should not materially change. With respect to the GILTI provisions of the TCJA, we have analyzed our structure and expected global results of operations and do not expect to have any adjustment related to potential GILTI tax in our consolidated financial statements. Because of the complexity of the new GILTI tax rules, we will continue to evaluate the impact of this provision and the application of Accounting Standards Codification 740, Income Taxes. As of December 30, 2018, our deferred tax liabilities included a valuation allowance of $14.4 million related to foreign net operating loss carry-forwards in Australia, that we previously determined were not likely to be realized. The factors used to assess the likelihood of realization were the past performance of the related entities, our forecast of future taxable income, and available tax planning strategies that could be implemented to realize the deferred tax assets. The ability or failure to achieve the forecasted taxable income in the applicable Australian entities could affect the ultimate realization of deferred tax assets. Based on these future operating results, it is possible that the current valuation allowance could be recognized as a deferred tax benefit in the next 12 months. As of December 30, 2018 and September 30, 2018 , the liability for income taxes associated with uncertain tax positions was $11.6 million and $9.4 million , respectively. These uncertain tax positions substantially relate to ongoing examinations, which are reasonably likely to be resolved within the next 12 months. |
Reportable Segments
Reportable Segments | 3 Months Ended |
Dec. 30, 2018 | |
Segment Reporting [Abstract] | |
Reportable Segments | Reportable Segments We manage our operations under two reportable segments. Our GSG reportable segment primarily includes activities with U.S. government clients (federal, state and local) and all activities with development agencies worldwide. Our CIG reportable segment primarily includes activities with U.S. commercial clients and all international activities other than work for development agencies. Additionally, we will continue to report the results of the wind-down of our non-core construction activities in the Remediation and Construction Management ("RCM") segment. The remaining backlog for RCM as of December 30, 2018 was immaterial as the related projects are substantially complete. GSG provides consulting and engineering services primarily to U.S. government clients (federal, state and local) and development agencies worldwide. GSG supports U.S. government civilian and defense agencies with services in water, environment, infrastructure, information technology, and disaster management services. GSG also provides engineering design services for municipal and commercial clients, especially in water infrastructure, solid waste, and high-end sustainable infrastructure designs. GSG also leads our support for development agencies worldwide, especially in the United States, United Kingdom, and Australia. CIG provides consulting and engineering services primarily to U.S. commercial clients and international clients, both commercial and government. CIG supports commercial clients across the Fortune 500, oil and gas, energy utilities, manufacturing, aerospace, and mining markets. CIG also provides infrastructure and related environmental and geotechnical services, testing, engineering and project management services to commercial and local government clients across Canada, in Asia Pacific (primarily Australia and New Zealand), as well as Brazil and Chile. CIG also provides field construction management activities in the United States and Western Canada. Management evaluates the performance of these reportable segments based upon their respective segment operating income before the effect of amortization expense related to acquisitions, and other unallocated corporate expenses. We account for inter-segment revenues and transfers as if they were to third parties; that is, by applying a negotiated fee onto the costs of the services performed. All significant intercompany balances and transactions are eliminated in consolidation. Reportable Segments The following tables set forth summarize financial information regarding our reportable segments: Three Months Ended December 30, December 31, (in thousands) Revenue GSG $ 411,971 $ 442,772 CIG 317,793 331,513 RCM 1,453 6,807 Elimination of inter-segment revenue (13,786 ) (21,343 ) Total revenue $ 717,431 $ 759,749 Income from operations GSG $ 37,413 $ 39,125 CIG 27,099 21,294 RCM 4 (1,158 ) Corporate (1) (8,805 ) (10,672 ) Total income from operations $ 55,711 $ 48,589 (1) Includes amortization of intangibles, other costs and other income not allocable to our reportable segments. December 30, September 30, (in thousands) Total Assets GSG $ 495,343 $ 468,010 CIG 441,829 478,197 RCM 24,185 25,683 Corporate (1) 873,532 987,531 Total assets $ 1,834,889 $ 1,959,421 (1) Corporate assets consist of intercompany eliminations and assets not allocated to our reportable segments including goodwill, intangible assets, deferred income taxes and certain other assets . |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Dec. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The fair value of long-term debt was determined using the present value of future cash flows based on the borrowing rates currently available for debt with similar terms and maturities (Level 2 measurement, as described in “Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2018 ). The carrying value of our long-term debt approximated fair value at December 30, 2018 and September 30, 2018 . At December 30, 2018 , we had borrowings of $ 260.0 million outstanding under our Amended Credit Agreement, which were used to fund our business acquisitions, working capital needs, stock repurchases, dividends, capital expenditures and contingent earn-outs. |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Dec. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments We use certain interest rate derivative contracts to hedge interest rate exposures on our variable rate debt. We enter into foreign currency derivative contracts with financial institutions to reduce the risk that cash flows and earnings will be adversely affected by foreign currency exchange rate fluctuations. Our hedging program is not designated for trading or speculative purposes. We recognize derivative instruments as either assets or liabilities on the accompanying consolidated balance sheets at fair value. We record changes in the fair value (i.e., gains or losses) of the derivatives that have been designated as cash flow hedges in our consolidated balance sheets as accumulated other comprehensive income (loss), and in our consolidated statements of income for those derivatives designated as fair value hedges. In the fourth quarter of fiscal 2018, we entered into five interest rate swap agreements that we designated as cash flow hedges to fix the interest rate on the $250.0 million term loan facility under our Second Amended and Restated Credit Agreement. The interest rate swaps total $250.0 million and have a fixed interest rate of 2.79% and expire in July 2023. At December 30, 2018 and September 30, 2018, the effective portion of our interest rate swap agreements designated as cash flow hedges before tax effect was $ 2.8 million and $(1.3) million , respectively, all of which we expect to be reclassified from accumulated other comprehensive income (loss) to interest expense through July 2023 when the agreements expire. The fair values of our outstanding derivatives designated as hedging instruments were as follows: Fair Value of Derivative Instruments as of Balance Sheet Location December 30, 2018 September 30, 2018 (in thousands) Interest rate swap agreements Other current (liabilities) assets $ (2,849 ) $ 1,244 The impact of the effective portions of derivative instruments in cash flow hedging relationships and fair value relationships on income and other comprehensive income was $(4.0) million and $0.8 million for the first three months of fiscal 2019 and the fiscal year ended September 30, 2018 , respectively. Additionally, there were no ineffective portions of derivative instruments. Accordingly, no amounts were excluded from effectiveness testing for our interest rate swap agreements. |
Reclassifications Out of Accumu
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Dec. 30, 2018 | |
Equity [Abstract] | |
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | Reclassifications Out of Accumulated Other Comprehensive Income (Loss) The accumulated balances and reporting period activities for the three months ended December 30, 2018 and December 31, 2017 related to reclassifications out of accumulated other comprehensive income (loss) are summarized as follows: Three Months Ended Foreign Currency Translation Adjustments Gain (Loss) on Derivative Instruments Accumulated Other Comprehensive Loss (in thousands) Balances at October 1, 2017 $ (98,946 ) $ 446 $ (98,500 ) Other comprehensive (loss) income before reclassifications (3,467 ) 84 (3,383 ) Amounts reclassified from accumulated other comprehensive income Interest rate contracts, net of tax (1) — (18 ) (18 ) Net current-period other comprehensive (loss) income (3,467 ) 66 (3,401 ) Balances at December 31, 2017 $ (102,413 ) $ 512 $ (101,901 ) Balances at September 30, 2018 $ (128,602 ) $ 1,252 $ (127,350 ) Other comprehensive loss before reclassifications (23,334 ) (3,783 ) (27,117 ) Amounts reclassified from accumulated other comprehensive income Interest rate contracts, net of tax (1) — (226 ) (226 ) Net current-period other comprehensive loss (23,334 ) (4,009 ) (27,343 ) Balances at December 30, 2018 $ (151,936 ) $ (2,757 ) $ (154,693 ) (1) This accumulated other comprehensive component is reclassified to “Interest expense” in our consolidated statements of income. See Note 14, “Derivative Financial Instruments”, for more information. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We are subject to certain claims and lawsuits typically filed against the consulting and engineering profession, alleging primarily professional errors or omissions. We carry professional liability insurance, subject to certain deductibles and policy limits, against such claims. However, in some actions, parties are seeking damages that exceed our insurance coverage or for which we are not insured. While management does not believe that the resolution of these claims will have a material adverse effect, individually or in aggregate, on our financial position, results of operations or cash flows, management acknowledges the uncertainty surrounding the ultimate resolution of these matters. On January 14, 2019, following the October 15, 2018 filing of a notice of election to intervene, the Civil Division of the United States Attorney's Office ("USAO") filed complaints in intervention in three qui tam actions filed against our subsidiary, Tetra Tech EC, Inc. ("TtEC"), in the U.S. District Court for the Northern District of California. The complaints allege False Claims Act violations and breach of contract related to TtEC's contracts to perform environmental remediation services at the former Hunters Point Naval Shipyard in San Francisco, California. TtEC disputes the claims and will respond accordingly and defend this matter vigorously. We are currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Dec. 30, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Standards In January 2016, the FASB issued guidance that generally requires companies to measure investments in other entities, except those accounted for under the equity method, at fair value and recognize any changes in fair value in net income. The guidance was effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). The adoption of this guidance had no impact on our consolidated financial statements. In March 2016, the FASB issued updated guidance which requires excess tax benefits and deficiencies on share-based payments to be recorded as income tax expense or benefit in the income statement rather than being recorded in additional paid-in capital. It also requires the presentation of employee taxes as financing activities on consolidated statements of cash flows, which was previously classified as operating activities. This guidance is effective for annual and interim periods beginning after December 15, 2016 (first quarter of fiscal 2018 for us), with early adoption permitted. In the first quarter of fiscal 2017, we adopted this guidance. In the first quarter of fiscal 2019, we revised the presentation of "Net cash used in operating activities" and "Net cash (used in) provided by financing activities" in the consolidated statement of cash flows for the period ended December 31, 2017 to correct the presentation of “Taxes paid on vested restricted stock” and appropriately reflect such amounts as financing activities. The correction resulted in a decrease of “Net cash used in operating activities” of $8.8 million and a decrease of “Net cash (used in) provided by financing activities” of $8.8 million . We assessed the materiality of these errors on our consolidated financial statements for prior periods and concluded that the amounts were not material to any prior interim or annual periods. We elected to revise the presentation for comparability purposes. In August 2016, the FASB issued guidance to address eight specific cash flow issues to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance was effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). The adoption of this guidance had no material impact on our consolidated financial statements. In October 2016, the FASB issued updated guidance which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The guidance was effective for fiscal reporting periods and interim reporting periods within those fiscal reporting periods, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). The adoption of this guidance had no material impact on our consolidated financial statements. In November 2016, the FASB issued updated guidance which provides amendments to address the classification and presentation of changes in restricted cash in the statement of cash flows. The guidance was effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). The adoption of this guidance had no material impact on our consolidated financial statements. In addition, captions in our consolidated statements of cash flows have been updated to include restricted cash, which is reported in our "Prepaid expenses and other current assets" on the consolidated balance sheets. In January 2017, the FASB issued updated guidance to simplify the test for goodwill impairment. The guidance eliminates step two from the goodwill impairment test. Under the updated guidance, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. This guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 (first quarter of fiscal 2021 for us), on a prospective basis. Earlier adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this guidance in the first quarter of our fiscal 2018, and the adoption of this guidance had no impact on our consolidated financial statements. In May 2017, the FASB issued updated guidance to clarify when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the updated guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of a change in terms or conditions. The guidance was effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us), on a prospective basis. The adoption of this guidance had no impact on our consolidated financial statements. Recently Issued Accounting Standards Not Yet Adopted In February 2016, the FASB issued guidance that requires the rights and obligations associated with leasing arrangements be reflected on the balance sheet in order to increase transparency and comparability among organizations. Under the guidance, lessees will be required to recognize a right-of-use asset and a liability to make lease payments and disclose key information about leasing arrangements. The guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018 (first quarter of fiscal 2020 for us). Early adoption is permitted. While we are currently evaluating the impact that this guidance will have on our consolidated financial statements, we currently expect that the adoption of the new guidance will result in a significant increase in the assets and liabilities on our consolidated balance sheets and will likely have an immaterial impact on our consolidated statements of income and cash flows. In June 2016, the FASB issued updated guidance which requires entities to estimate all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The updated guidance also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019 (first quarter of fiscal 2021 for us). Early adoption is permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In August 2017, the FASB issued accounting guidance on hedging activities. The amendment better aligns an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018 (first quarter of fiscal 2020 for us). Early adoption is permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In February 2018, the FASB issued guidance on reclassification of certain tax effects from accumulated comprehensive income, which allows for a reclassification of stranded tax effects from the Tax Cuts and Jobs Act ("TCJA") from accumulated other comprehensive income to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018 (first quarter of fiscal 2020 for us). We are currently evaluating the impact that this guidance will have on our consolidated financial statements. |
Revenue Recognition | Revenue Recognition On October 1, 2018, we adopted ASC 606, which supersedes most current revenue recognition guidance, including industry-specific guidance. We adopted the standard on a modified retrospective basis which results in no restatement of the comparative periods presented and a cumulative effect adjustment to retained earnings as of the date of adoption. As part of our adoption, the new standard was applied only to those contracts that were not substantially completed as of the date of adoption. To determine the proper revenue recognition method for contracts under ASC 606, we evaluate whether multiple contracts should be combined and accounted for as a single contract and whether the combined or single contract should be accounted for as having more than one performance obligation. The decision to combine a group of contracts or separate a combined or single contract into multiple performance obligations may impact the amount of revenue recorded in a given period. Contracts are considered to have a single performance obligation if the promises are not separately identifiable from other promises in the contracts. At contract inception, we assess the goods or services promised in a contract and identify, as a separate performance obligation, each distinct promise to transfer goods or services to the customer. The identified performance obligations represent the “unit of account” for purposes of determining revenue recognition. In order to properly identify separate performance obligations, we apply judgment in determining whether each good or service provided is: (a) capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and (b) distinct within the context of the contract, whereby the transfer of the good or service to the customer is separately identifiable from other promises in the contract. Contracts are often modified to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of our contract modifications are for goods or services that are not distinct from existing contracts due to the significant integration provided or significant interdependencies in the context of the contract and are accounted for as if they were part of the original contract. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. We account for contract modifications as a separate contract when the modification results in the promise to deliver additional goods or services that are distinct and the increase in price of the contract is for the same amount as the stand-alone selling price of the additional goods or services included in the modification. The transaction price represents the amount of consideration to which we expect to be entitled in exchange for transferring promised goods or services to our customers. The consideration promised within a contract may include fixed amounts, variable amounts, or both. The nature of our contracts gives rise to several types of variable consideration, including claims, award fee incentives, fiscal funding clauses, and liquidated damages. We recognize revenue for variable consideration when it is probable that a significant reversal in the amount of cumulative revenue recognized for the contract will not occur. We estimate the amount of revenue to be recognized on variable consideration using either the expected value or the most likely amount method, whichever is expected to better predict the amount of consideration to be received. Project mobilization costs are generally charged to project costs as incurred when they are an integrated part of the performance obligation being transferred to the client. Claims are amounts in excess of agreed contract prices that we seek to collect from our clients or other third parties for delays, errors in specifications and designs, contract terminations, change orders in dispute or unapproved as to both scope and price, or other causes of unanticipated additional costs. Revenue on claims is recognized only to the extent that contract costs related to the claims have been incurred and when it is probable that any significant revenue recognized related to the claim will not be reversed. Factors considered in determining whether revenue associated with claims (including change orders in dispute and unapproved change orders in regard to both scope and price) should be recognized include the following: (a) the contract or other evidence provides a legal basis for the claim, (b) additional costs were caused by circumstances that were unforeseen at the contract date and not the result of deficiencies in our performance, (c) claim-related costs are identifiable and considered reasonable in view of the work performed, and (d) evidence supporting the claim is objective and verifiable. This can lead to a situation in which costs are recognized in one period and revenue is recognized in a subsequent period when a client agreement is obtained or a claims resolution occurs. In some cases, contract retentions are withheld by clients until certain conditions are met or the project is completed, which may be several months or years. In these cases, we have not identified a significant financing component under ASC 606 as the timing difference in payment compared to delivery of obligations under the contract is not for purposes of financing. For contracts with multiple performance obligations, we allocate the transaction price to each performance obligation using a best estimate of the standalone selling price of each distinct good or service in the contract. The standalone selling price is typically determined using the estimated cost of the contract plus a margin approach. For contracts containing variable consideration, we allocate the variability to a specific performance obligation within the contract if such variability relates specifically to our efforts to satisfy the performance obligation or transfer the distinct good or service, and the allocation depicts the amount of consideration to which we expect to be entitled. We recognize revenue over time as the related performance obligation is satisfied by transferring control of a promised good or service to our customers. Progress toward complete satisfaction of the performance obligation is primarily measured using a cost-to-cost input percentage-of-completion method. The cost input is based primarily on contract cost incurred to date compared to total estimated contract cost. This measure includes forecasts based on the best information available and reflects our judgment to faithfully depict the value of the services transferred to the customer. For certain on-call engineering or consulting and similar contracts, we recognize revenue in the amount which we have the right to invoice the customer if that amount corresponds directly with the value of our performance completed to date. Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term. For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. When the current estimate of total costs for a performance obligation indicate a loss, a provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident. Contract Types Our services are performed under three principal types of contracts: fixed-price, time-and-materials and cost-plus. Customer payments on contracts are typically due within 60 days of billing, depending on the contract. Fixed-Price . Under fixed-price contracts, clients pay us an agreed fixed-amount negotiated in advance for a specified scope of work. Time-and-Materials . Under time-and-materials contracts, we negotiate hourly billing rates and charge our clients based on the actual time that we spend on a project. In addition, clients reimburse us for our actual out-of-pocket costs for materials and other direct incidental expenditures that we incur in connection with our performance under the contract. The majority of our time-and-material contracts are subject to maximum contract values, and also may include annual billing rate adjustment provisions. Cost-Plus . Under cost-plus contracts, we are reimbursed for allowed or otherwise defined costs incurred plus a negotiated fee. The contracts may also include incentives for various performance criteria, including quality, timeliness, ingenuity, safety and cost-effectiveness. In addition, our costs are generally subject to review by our clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. Adoption Upon adoption on October 1, 2018, under the modified retrospective method, we recorded a cumulative effect adjustment to decrease retained earnings by $2.8 million on October 1, 2018, as well as the following cumulative effect adjustments: • An decrease to contract assets of $5.0 million • An decrease to contract liabilities of $1.1 million • An increase to deferred tax assets of $1.1 million The decrease in retained earnings primarily resulted from a change in the manner in which we determine the unit of account for projects (i.e. performance obligations). Under previous guidance, we typically accounted for a contract as a single unit of revenue recognition. Upon adoption of ASC 606, we assess the nature of the promises in the contract and recognize revenue based on performance obligations within the respective contract or combined contract. Contract Assets and Contract Liabilities We invoice customers based on the contractual terms of each contract. However, the timing of revenue recognition may differ from the timing of invoice issuance. As part of the adoption of ASC 606, contract assets have been bifurcated from billed and unbilled receivables. Contract assets represent revenue recognized in excess of the amounts for which we have the contractual right to bill our customers. Such amounts are recoverable from customers based upon various measures of performance, including achievement of certain milestones or completion of a contract. In addition, many of our time and materials arrangements, are billed in arrears pursuant to contract terms that are standard within the industry, resulting in contract assets and/or unbilled receivables being recorded, as revenue is recognized in advance of billings. Contract liabilities consist of billings in excess of revenue recognized. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation and increase as billings in advance of revenue recognition occur. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Dec. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Summary of the Effects of Adoption of ASC 606 | The following table presents how the adoption of ASC 606 affected certain line items in our consolidated statement of cash flows for the three months ended December 30, 2018: Recognition Under Previous Guidance Impact of the Adoption of ASC 606 Recognition Under ASC 606 (in thousands) Cash flows from operating activities: Net income $ 40,354 $ 1,678 $ 42,032 Accounts receivable and contract assets 7,574 6,954 14,528 Contract liabilities 15,248 (9,158 ) 6,090 Income taxes receivable/payable 11,489 526 12,015 Net cash used in operating activities (15,302 ) — (15,302 ) The following table presents how the adoption of ASC 606 affected certain line items in our consolidated balance sheet as of December 30, 2018: Recognition Under Previous Guidance Impact of the Adoption of ASC 606 Recognition Under ASC 606 (in thousands) Assets Contract assets (1) $ 131,885 $ (5,340 ) $ 126,545 Deferred tax assets 7,328 1,120 8,448 Liabilities and equity Contract liabilities (2) $ 158,519 $ (2,934 ) $ 155,585 Income taxes payable 16,824 525 17,349 Equity (3) Retained earnings $ 978,632 $ (1,089 ) $ 977,543 (1) Previously included in "Account receivable - net". (2) Previously presented as "Billings in excess of costs on uncompleted contracts". (3) Includes $2.8 million of cumulative catch-up adjustment to retained earnings on October 1, 2018 upon adoption of ASC 606. The following table presents how the adoption of ASC 606 affected certain line items in our consolidated statement of income for the three months ended December 30, 2018: Recognition Under Previous Guidance Impact of the Adoption of ASC 606 Recognition Under ASC 606 (in thousands) Revenue $ 715,228 $ 2,203 $ 717,431 Income from operations 53,508 2,203 55,711 Income tax expense 10,257 525 10,782 Net income attributable to Tetra Tech 40,319 1,678 41,997 |
Summary of Net Contract Liabilities/Assets | Net contract liabilities/assets consisted of the following: Balance at December 30, 2018 September 30, 2018 (in thousands) Contract assets $ 126,545 $ 142,882 Contract liabilities 155,585 143,270 Net contract liabilities 29,040 388 |
Reconciliation of Disaggregation of Revenue to Reportable Segments | Three Months Ended December 30, December 31, (in thousands) Client Sector U.S. state and local government $ 123,280 $ 151,754 U.S. federal government (1) 224,757 236,249 U.S. commercial 172,788 206,786 International (2) 196,606 164,960 Total $ 717,431 $ 759,749 (1) Includes revenue generated under U.S. federal government contracts performed outside the United States. (2) Includes revenue generated from foreign operations, primarily in Canada and Australia, and revenue generated from non-U.S. clients. Other than the U.S. federal government, no single client accounted for more than 10% of our revenue for the three months ended December 30, 2018 and December 31, 2017 . Three Months Ended December 30, 2018 December 31, 2017 Contract Type Fixed-price $ 240,933 $ 235,420 Time-and-materials 336,537 376,773 Cost-plus 139,961 147,556 Total revenue $ 717,431 $ 759,749 |
Remaining Performance Obligation, Expected Timing | We expect to satisfy our RUPOs as of December 30, 2018 over the following periods: Amount (in thousands) Within 12 months $ 1,670,929 Beyond 1,101,342 Total RUPOs $ 2,772,271 |
Accounts Receivable - Net (Tabl
Accounts Receivable - Net (Tables) | 3 Months Ended |
Dec. 30, 2018 | |
Receivables [Abstract] | |
Schedule of net accounts receivable and billings in excess of costs on uncompleted contracts | Net accounts receivable consisted of the following: December 30, September 30, (in thousands) Billed $ 463,159 $ 464,062 Unbilled 265,974 267,739 Total accounts receivable – gross 729,133 731,801 Allowance for doubtful accounts (43,464 ) (37,580 ) Total accounts receivable – net $ 685,669 $ 694,221 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Dec. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of changes in the carrying value of goodwill | The following table summarizes the changes in the carrying value of goodwill: GSG CIG Total (in thousands) Balance at September 30, 2018 $ 389,741 $ 409,079 $ 798,820 Translation and other (3,563 ) (12,693 ) (16,256 ) Balance at December 30 2018 $ 386,178 $ 396,386 $ 782,564 |
Summary of gross amount and accumulated amortization of acquired identifiable intangible assets with finite useful lives | The gross amount and accumulated amortization of our acquired identifiable intangible assets with finite useful lives included in “Intangible assets - net” on our consolidated balance sheets, were as follows: December 30, 2018 September 30, 2018 Weighted- Average Remaining Life (in Years) Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization ($ in thousands) Non-compete agreements — $ — $ — $ 83 $ (83 ) Client relations 2.6 54,057 (47,534 ) 54,639 (46,449 ) Backlog 0.4 22,991 (21,544 ) 23,371 (20,007 ) Trade names 3.0 7,972 (3,958 ) 8,144 (3,575 ) Total $ 85,020 $ (73,036 ) $ 86,237 $ (70,114 ) |
Schedule of estimated amortization expense for remainder of fiscal and succeeding years | Estimated amortization expense for the remainder of fiscal 2019 and succeeding years is as follows: Amount (in thousands) 2019 $ 4,954 2020 3,331 2021 2,249 2022 1,021 2023 429 Total $ 11,984 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Dec. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consisted of the following: December 30, September 30, (in thousands) Equipment, furniture and fixtures $ 132,162 $ 131,521 Leasehold improvements 31,327 31,430 Land and buildings 411 413 Total property and equipment 163,900 163,364 Accumulated depreciation (122,105 ) (120,086 ) Property and equipment, net $ 41,795 $ 43,278 |
Stock Repurchase and Dividends
Stock Repurchase and Dividends (Tables) | 3 Months Ended |
Dec. 30, 2018 | |
Stock Repurchase And Dividends [Abstract] | |
Dividends Declared and Paid | The following table summarizes dividend declared and paid in the first quarters of fiscal 2019 and 2018: Declare Date Dividend Paid Per Share Record Date Payment Date Dividend Paid (in thousands, except per share data) November 5, 2018 $ 0.12 November 30, 2018 December 14, 2018 $ 6,654 November 6, 2017 $ 0.10 November 30, 2017 December 15, 2017 $ 5,589 |
Earnings per Share ("EPS") (Tab
Earnings per Share ("EPS") (Tables) | 3 Months Ended |
Dec. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of number of weighted-average shares used to compute basic and diluted EPS | The following table sets forth the number of weighted-average shares used to compute basic and diluted EPS: Three Months Ended December 30, December 31, (in thousands, except per share data) Net income attributable to Tetra Tech $ 41,997 $ 46,034 Weighted-average common shares outstanding – basic 55,390 55,855 Effect of dilutive stock options and unvested restricted stock 976 1,020 Weighted-average common stock outstanding – diluted 56,366 56,875 Earnings per share attributable to Tetra Tech: Basic $ 0.76 $ 0.82 Diluted $ 0.75 $ 0.81 |
Reportable Segments (Tables)
Reportable Segments (Tables) | 3 Months Ended |
Dec. 30, 2018 | |
Segment Reporting [Abstract] | |
Summarized financial information of reportable segments | The following tables set forth summarize financial information regarding our reportable segments: Three Months Ended December 30, December 31, (in thousands) Revenue GSG $ 411,971 $ 442,772 CIG 317,793 331,513 RCM 1,453 6,807 Elimination of inter-segment revenue (13,786 ) (21,343 ) Total revenue $ 717,431 $ 759,749 Income from operations GSG $ 37,413 $ 39,125 CIG 27,099 21,294 RCM 4 (1,158 ) Corporate (1) (8,805 ) (10,672 ) Total income from operations $ 55,711 $ 48,589 (1) Includes amortization of intangibles, other costs and other income not allocable to our reportable segments. December 30, September 30, (in thousands) Total Assets GSG $ 495,343 $ 468,010 CIG 441,829 478,197 RCM 24,185 25,683 Corporate (1) 873,532 987,531 Total assets $ 1,834,889 $ 1,959,421 (1) Corporate assets consist of intercompany eliminations and assets not allocated to our reportable segments including goodwill, intangible assets, deferred income taxes and certain other assets . |
Derivative Financial Instrume_2
Derivative Financial Instruments Derivative Financial Instruments (Tables) | 3 Months Ended |
Dec. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value of derivatives designated as hedging instruments | The fair values of our outstanding derivatives designated as hedging instruments were as follows: Fair Value of Derivative Instruments as of Balance Sheet Location December 30, 2018 September 30, 2018 (in thousands) Interest rate swap agreements Other current (liabilities) assets $ (2,849 ) $ 1,244 |
Reclassifications Out of Accu_2
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Dec. 30, 2018 | |
Equity [Abstract] | |
Summary of reclassifications out of accumulated other comprehensive loss | The accumulated balances and reporting period activities for the three months ended December 30, 2018 and December 31, 2017 related to reclassifications out of accumulated other comprehensive income (loss) are summarized as follows: Three Months Ended Foreign Currency Translation Adjustments Gain (Loss) on Derivative Instruments Accumulated Other Comprehensive Loss (in thousands) Balances at October 1, 2017 $ (98,946 ) $ 446 $ (98,500 ) Other comprehensive (loss) income before reclassifications (3,467 ) 84 (3,383 ) Amounts reclassified from accumulated other comprehensive income Interest rate contracts, net of tax (1) — (18 ) (18 ) Net current-period other comprehensive (loss) income (3,467 ) 66 (3,401 ) Balances at December 31, 2017 $ (102,413 ) $ 512 $ (101,901 ) Balances at September 30, 2018 $ (128,602 ) $ 1,252 $ (127,350 ) Other comprehensive loss before reclassifications (23,334 ) (3,783 ) (27,117 ) Amounts reclassified from accumulated other comprehensive income Interest rate contracts, net of tax (1) — (226 ) (226 ) Net current-period other comprehensive loss (23,334 ) (4,009 ) (27,343 ) Balances at December 30, 2018 $ (151,936 ) $ (2,757 ) $ (154,693 ) (1) This accumulated other comprehensive component is reclassified to “Interest expense” in our consolidated statements of income. See Note 14, “Derivative Financial Instruments”, for more information. |
Recent Accounting Pronounceme_3
Recent Accounting Pronouncements Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net cash used in operating activities | $ (15,302) | $ (57,682) |
Net cash (used in) provided by financing activities | $ (59,021) | 61,183 |
Restatement Adjustment | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net cash used in operating activities | 8,800 | |
Net cash (used in) provided by financing activities | $ (8,800) |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Dec. 30, 2018 | Dec. 31, 2017 | Oct. 01, 2018 | Sep. 30, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Decrease to retained earnings upon adoption of new accounting guidance | $ (977,543) | $ (944,965) | ||
Increase to contract assets due to adoption of new accounting guidance | (126,545) | (142,882) | ||
Contracts liabilities | (155,585) | (143,270) | ||
Increase to deferred tax assets due to adoption of new accounting guidance | 8,448 | 8,607 | ||
Contract liability revenue recognized during the period | 56,200 | |||
Liabilities for anticipated losses | 13,300 | 13,600 | ||
Estimated cost to complete the related contracts | $ 18,400 | |||
Impact of the Adoption of ASC 606 | Accounting Standards Update 2014-09 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Decrease to retained earnings upon adoption of new accounting guidance | $ 2,800 | |||
Increase to contract assets due to adoption of new accounting guidance | 5,000 | |||
Contracts liabilities | 1,100 | |||
Increase to deferred tax assets due to adoption of new accounting guidance | $ 1,100 | |||
CIG | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net unfavorable operating income adjustments | $ 400 | $ 700 |
Revenue Recognition - Income St
Revenue Recognition - Income Statement Impact of Adoption of ASC 606 (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Revenue | $ 717,431 | $ 759,749 |
Income from operations | 55,711 | 48,589 |
Income tax (expense) benefit | 10,782 | (623) |
Net income attributable to Tetra Tech | 41,997 | $ 46,034 |
Recognition Under Previous Guidance | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Revenue | 715,228 | |
Income from operations | 53,508 | |
Income tax (expense) benefit | (10,257) | |
Net income attributable to Tetra Tech | 40,319 | |
Impact of the Adoption of ASC 606 | Accounting Standards Update 2014-09 | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Revenue | 2,203 | |
Income from operations | 2,203 | |
Income tax (expense) benefit | (525) | |
Net income attributable to Tetra Tech | $ 1,678 |
Revenue Recognition - Balance S
Revenue Recognition - Balance Sheet Impact of Adoption of ASC 606 (Details) - USD ($) $ in Thousands | Dec. 30, 2018 | Sep. 30, 2018 |
ASSETS | ||
Contract assets | $ 126,545 | $ 142,882 |
Deferred tax assets | 8,448 | 8,607 |
LIABILITIES AND EQUITY | ||
Contract liabilities | 155,585 | 143,270 |
Income taxes payable | 17,349 | 8,272 |
Equity: | ||
Retained earnings | 977,543 | $ 944,965 |
Recognition Under Previous Guidance | ||
ASSETS | ||
Contract assets | 131,885 | |
Deferred tax assets | 7,328 | |
LIABILITIES AND EQUITY | ||
Contract liabilities | 158,519 | |
Income taxes payable | 16,824 | |
Equity: | ||
Retained earnings | 978,632 | |
Impact of the Adoption of ASC 606 | Accounting Standards Update 2014-09 | ||
ASSETS | ||
Contract assets | (5,340) | |
Deferred tax assets | 1,120 | |
LIABILITIES AND EQUITY | ||
Contract liabilities | (2,934) | |
Income taxes payable | 525 | |
Equity: | ||
Retained earnings | $ (1,089) |
Revenue Recognition - Cash Flow
Revenue Recognition - Cash Flow Statement Impact of Adoption of ASC 606 (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net income | $ 42,032 | $ 46,052 |
Accounts receivable and contract assets | 14,528 | (36,011) |
Contract liabilities | 6,090 | 12,330 |
Income taxes receivable/payable | 12,015 | 7,926 |
Net cash used in operating activities | (15,302) | $ (57,682) |
Recognition Under Previous Guidance | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net income | 40,354 | |
Accounts receivable and contract assets | 7,574 | |
Contract liabilities | 15,248 | |
Income taxes receivable/payable | 11,489 | |
Net cash used in operating activities | (15,302) | |
Impact of the Adoption of ASC 606 | Accounting Standards Update 2014-09 | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net income | 1,678 | |
Accounts receivable and contract assets | 6,954 | |
Contract liabilities | (9,158) | |
Income taxes receivable/payable | 526 | |
Net cash used in operating activities | $ 0 |
Revenue Recognition - Summary o
Revenue Recognition - Summary of Contract Liabilities/Assets (Details) - USD ($) $ in Thousands | Dec. 30, 2018 | Sep. 30, 2018 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 126,545 | $ 142,882 |
Contract liabilities | 155,585 | 143,270 |
Net contract liabilities | $ 29,040 | $ 388 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 717,431 | $ 759,749 |
U.S. state and local government | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 123,280 | 151,754 |
U.S. federal government | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 224,757 | 236,249 |
U.S. commercial | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 172,788 | 206,786 |
International | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 196,606 | $ 164,960 |
GSG | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 717,431 | |
GSG | Fixed-price | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 240,933 | |
GSG | Time-and-materials | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 336,537 | |
GSG | Cost-plus | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 139,961 | |
CIG | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 759,749 | |
CIG | Fixed-price | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 235,420 | |
CIG | Time-and-materials | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 376,773 | |
CIG | Cost-plus | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 147,556 |
Revenue Recognition - Remaining
Revenue Recognition - Remaining Unsatisfied Performance Obligations (Details) $ in Thousands | Dec. 30, 2018USD ($) |
Revenue from Contract with Customer [Abstract] | |
Reaming unsatisfied performance obligation | $ 2,772,271 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-12-31 | |
Revenue from Contract with Customer [Abstract] | |
Reaming unsatisfied performance obligation | $ 1,670,929 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining unsatisfied performance obligation, expected timing of satisfaction | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-12-31 | |
Revenue from Contract with Customer [Abstract] | |
Reaming unsatisfied performance obligation | $ 1,101,342 |
Accounts Receivable - Net - Net
Accounts Receivable - Net - Net Accounts Receivable and Billings in Excess of Costs on Uncompleted Contracts (Details) - USD ($) $ in Thousands | Dec. 30, 2018 | Sep. 30, 2018 |
Receivables [Abstract] | ||
Billed | $ 463,159 | $ 464,062 |
Unbilled | 265,974 | 267,739 |
Total accounts receivable – gross | 729,133 | 731,801 |
Allowance for doubtful accounts | (43,464) | (37,580) |
Total accounts receivable – net | $ 685,669 | $ 694,221 |
Accounts Receivable - Net - Nar
Accounts Receivable - Net - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | |
Accounts Receivable - Net and Revenue Recognition | |||
Period for billing and collecting unbilled receivables | 12 months | ||
Unbilled accounts receivable related to claims and requests for equitable adjustment on contracts | $ 74,000 | $ 74,000 | |
Gains (losses) from claim settlement | 0 | $ 0 | |
Billed accounts receivable related to U.S. federal government contracts | 80,300 | 81,500 | |
US federal government unbilled contracts receivable | 265,974 | 267,739 | |
U.S. federal government | |||
Accounts Receivable - Net and Revenue Recognition | |||
US federal government unbilled contracts receivable | $ 99,600 | $ 102,700 |
Acquisitions and Divestitures -
Acquisitions and Divestitures - Narrative (Details) | 3 Months Ended | 12 Months Ended | ||||
Dec. 30, 2018USD ($) | Jul. 01, 2018USD ($) | Apr. 01, 2018USD ($)employee | Dec. 31, 2017USD ($)employee | Jan. 01, 2017 | Sep. 30, 2018USD ($) | |
Mergers and Acquisitions | ||||||
Contingent earn-out liability | $ 29,000,000 | |||||
Aggregate maximum of contingent consideration | 52,200,000 | |||||
Contingent earn-out liability adjustment | $ 0 | $ 0 | ||||
Minimum | ||||||
Mergers and Acquisitions | ||||||
Earn-out period | 2 years | |||||
Minimum | Existing customer contracts | ||||||
Mergers and Acquisitions | ||||||
Useful life of intangible assets | 1 year | |||||
Minimum | Trade names | ||||||
Mergers and Acquisitions | ||||||
Useful life of intangible assets | 3 years | |||||
Maximum | ||||||
Mergers and Acquisitions | ||||||
Earn-out period | 3 years | |||||
Maximum | Existing customer contracts | ||||||
Mergers and Acquisitions | ||||||
Useful life of intangible assets | 10 years | |||||
Maximum | Trade names | ||||||
Mergers and Acquisitions | ||||||
Useful life of intangible assets | 5 years | |||||
Glumac | ||||||
Mergers and Acquisitions | ||||||
Number of employees acquired in acquisition | employee | 300 | |||||
Fair value of acquisition purchase price | $ 38,400,000 | |||||
Cash paid to the former owners | 20,000,000 | |||||
Contingent earn-out liability | 18,400,000 | |||||
Aggregate maximum of contingent consideration | $ 20,000,000 | |||||
Contingent consideration achievement period | 3 years | |||||
Norman Disney & Young | ||||||
Mergers and Acquisitions | ||||||
Number of employees acquired in acquisition | employee | 700 | |||||
Fair value of acquisition purchase price | $ 56,100,000 | |||||
Cash paid to the former owners | 46,900,000 | |||||
Contingent earn-out liability | 7,600,000 | |||||
Amount held in escrow | 1,600,000 | |||||
Aggregate maximum of contingent consideration | $ 20,200,000 | |||||
Earn-out period | 3 years | |||||
Non-core field services business | Disposed of by sale | ||||||
Mergers and Acquisitions | ||||||
Proceeds from sale of divested business | $ 30,200,000 | |||||
Revenue from wired and fiber optic communication and infrastructure projects | $ 70,000,000 | |||||
Loss on disposition of business | $ 1,700,000 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands | 3 Months Ended |
Dec. 30, 2018USD ($) | |
Goodwill | |
Balance at beginning of the period | $ 798,820 |
Translation and other | (16,256) |
Balance at end of the period | 782,564 |
GSG | |
Goodwill | |
Balance at beginning of the period | 389,741 |
Translation and other | (3,563) |
Balance at end of the period | 386,178 |
CIG | |
Goodwill | |
Balance at beginning of the period | 409,079 |
Translation and other | (12,693) |
Balance at end of the period | $ 396,386 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Narrative (Details) - USD ($) | Jul. 02, 2018 | Dec. 30, 2018 | Sep. 30, 2018 |
Goodwill [Line Items] | |||
Impairment of goodwill | $ 0 | ||
Estimated fair values that exceeded their carrying values, percent (more than) | 30.00% | ||
Income approach, discounted cash flow method | |||
Goodwill [Line Items] | |||
Weighted rate used in fair value of goodwill (as a percent) | 70.00% | ||
Market approach | |||
Goodwill [Line Items] | |||
Weighted rate used in fair value of goodwill (as a percent) | 30.00% | ||
GSG | |||
Goodwill [Line Items] | |||
Gross amounts of goodwill | $ 403,900,000 | $ 407,400,000 | |
Accumulated impairment | 17,700,000 | ||
CIG | |||
Goodwill [Line Items] | |||
Gross amounts of goodwill | 494,300,000 | 507,000,000 | |
Accumulated impairment | $ 97,900,000 | $ 97,900,000 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Finite Lived Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | |
Finite-lived intangible assets | |||
Gross Amount | $ 85,020 | $ 86,237 | |
Accumulated Amortization | (73,036) | (70,114) | |
Amortization expense | 4,000 | $ 4,600 | |
Estimated amortization expense | |||
2,019 | 4,954 | ||
2,020 | 3,331 | ||
2,021 | 2,249 | ||
2,022 | 1,021 | ||
2,023 | 429 | ||
Total | $ 11,984 | ||
Non-compete agreements | |||
Finite-lived intangible assets | |||
Weighted- Average Remaining Life (in Years) | 0 years | ||
Gross Amount | $ 0 | 83 | |
Accumulated Amortization | $ 0 | (83) | |
Client relations | |||
Finite-lived intangible assets | |||
Weighted- Average Remaining Life (in Years) | 2 years 7 months 6 days | ||
Gross Amount | $ 54,057 | 54,639 | |
Accumulated Amortization | $ (47,534) | (46,449) | |
Trade names | |||
Finite-lived intangible assets | |||
Weighted- Average Remaining Life (in Years) | 4 months 24 days | ||
Gross Amount | $ 22,991 | 23,371 | |
Accumulated Amortization | $ (21,544) | (20,007) | |
Trade names | |||
Finite-lived intangible assets | |||
Weighted- Average Remaining Life (in Years) | 3 years | ||
Gross Amount | $ 7,972 | 8,144 | |
Accumulated Amortization | $ (3,958) | $ (3,575) |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | |
Property and Equipment | |||
Property and equipment, gross | $ 163,900 | $ 163,364 | |
Accumulated depreciation | (122,105) | (120,086) | |
Property and equipment, net | 41,795 | 43,278 | |
Depreciation expense related to property and equipment | 4,300 | $ 5,200 | |
Equipment, furniture and fixtures | |||
Property and Equipment | |||
Property and equipment, gross | 132,162 | 131,521 | |
Leasehold improvements | |||
Property and Equipment | |||
Property and equipment, gross | 31,327 | 31,430 | |
Land and buildings | |||
Property and Equipment | |||
Property and equipment, gross | $ 411 | $ 413 |
Stock Repurchase and Dividend_2
Stock Repurchase and Dividends - Narrative (Details) - USD ($) | Jan. 28, 2019 | Dec. 30, 2018 | Sep. 30, 2018 | Nov. 05, 2018 |
Subsequent Event [Line Items] | ||||
Maximum repurchase amount under stock repurchase program | $ 200,000,000 | |||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 25,000,000 | |||
Shares repurchased through open market purchases (in shares) | 430,559 | 1,491,569 | ||
Average price of shares repurchased (in dollars per share) | $ 58.06 | $ 50.28 | ||
Cost of shares repurchased | $ 25,000,000 | $ 75,000,000 | ||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Quarterly cash dividend declared (in dollars per share) | $ 0.12 |
Stock Repurchase and Dividend_3
Stock Repurchase and Dividends - Schedule of Dividends Declared and Paid (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 14, 2018 | Dec. 15, 2017 | Dec. 30, 2018 | Dec. 31, 2017 |
Stock Repurchase And Dividends [Abstract] | ||||
Dividend Paid Per Share (in dollars per share) | $ 0.12 | $ 0.1 | $ 0.12 | $ 0.1 |
Dividend Paid | $ 6,654 | $ 5,589 |
Stockholders' Equity and Stoc_2
Stockholders' Equity and Stock Compensation Plans (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | |
Stockholders' Equity and Stock Compensation Plans | ||
Stock-based compensation expense | $ 4.5 | $ 4 |
Performance-based restricted stock | ||
Stockholders' Equity and Stock Compensation Plans | ||
Percentage of shares that ultimately vest depending on growth in diluted earnings per share | 50.00% | |
Percentage of shares that ultimately vest depending on the shareholder return relative to peer group of companies over vesting period | 50.00% | |
Performance-based restricted stock | Non-employee directors and executive officers | ||
Stockholders' Equity and Stock Compensation Plans | ||
Granted (in shares) | 89,816 | |
Granted, fair value (in dollars per share) | $ 66.45 | |
Vesting period | 3 years | |
Restricted stock units | Non-employee directors, executive officers and employees | ||
Stockholders' Equity and Stock Compensation Plans | ||
Granted (in shares) | 176,491 | |
Granted, fair value (in dollars per share) | $ 66.11 | |
Restricted stock units | Executive officers and employees | ||
Stockholders' Equity and Stock Compensation Plans | ||
Vesting period | 4 years | |
Restricted stock units | Non-employee director | ||
Stockholders' Equity and Stock Compensation Plans | ||
Vesting period | 1 year |
Earnings per Share ("EPS") - Ca
Earnings per Share ("EPS") - Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Net income attributable to Tetra Tech | $ 41,997 | $ 46,034 |
Weighted-average common shares outstanding – basic (in shares) | 55,390 | 55,855 |
Effect of dilutive stock options and unvested restricted stock (in shares) | 976 | 1,020 |
Weighted-average common stock outstanding – diluted (in shares) | 56,366 | 56,875 |
Earnings per share attributable to Tetra Tech: | ||
Basic (in dollars per share) | $ 0.76 | $ 0.82 |
Diluted (in dollars per share) | $ 0.75 | $ 0.81 |
Earnings per Share ("EPS") - An
Earnings per Share ("EPS") - Antidilutive Securities (Details) - shares shares in Millions | 3 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from the calculation of dilutive potential common shares (in shares) | 0.1 | 0.3 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate (as a percent) | 20.40% | (1.40%) | |
Statutory federal tax rate | 24.50% | ||
Deferred tax benefit from tax reform remeasurement | $ 2.6 | $ 10.1 | |
Effective income tax rate excluding revaluation of deferred taxes (as a percent) | 25.30% | 20.90% | |
Deferred tax liability valuation allowance | $ 14.4 | ||
Liability for uncertain tax positions | $ 11.6 | $ 9.4 | |
Period during which unrecognized tax benefits would affect the effective tax rate | 12 months |
Reportable Segments - Financial
Reportable Segments - Financial Information (Details) $ in Thousands | 3 Months Ended | ||
Dec. 30, 2018USD ($)segment | Dec. 31, 2017USD ($) | Sep. 30, 2018USD ($) | |
Financial information regarding reportable segments | |||
Number of renamed reportable segments | segment | 2 | ||
Revenue | $ 717,431 | $ 759,749 | |
Income from operations | 55,711 | 48,589 | |
Total Assets | 1,834,889 | $ 1,959,421 | |
GSG | |||
Financial information regarding reportable segments | |||
Revenue | 717,431 | ||
CIG | |||
Financial information regarding reportable segments | |||
Revenue | 759,749 | ||
Operating segment | GSG | |||
Financial information regarding reportable segments | |||
Revenue | 411,971 | 442,772 | |
Income from operations | 37,413 | 39,125 | |
Total Assets | 495,343 | 468,010 | |
Operating segment | CIG | |||
Financial information regarding reportable segments | |||
Revenue | 317,793 | 331,513 | |
Income from operations | 27,099 | 21,294 | |
Total Assets | 441,829 | 478,197 | |
Operating segment | RCM | |||
Financial information regarding reportable segments | |||
Revenue | 1,453 | 6,807 | |
Income from operations | 4 | (1,158) | |
Total Assets | 24,185 | 25,683 | |
Elimination of inter-segment revenue | |||
Financial information regarding reportable segments | |||
Revenue | (13,786) | (21,343) | |
Corporate | |||
Financial information regarding reportable segments | |||
Income from operations | (8,805) | $ (10,672) | |
Total Assets | $ 873,532 | $ 987,531 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Millions | Dec. 30, 2018USD ($) |
Fair Value Disclosures [Abstract] | |
Borrowing under credit agreement | $ 260 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Narrative (Details) | 3 Months Ended | 12 Months Ended | |
Dec. 30, 2018USD ($) | Sep. 30, 2018USD ($)agreement | Sep. 30, 2018USD ($) | |
Interest rate swap agreements | Designated as cash flow hedges | Derivatives designated as hedging instruments | |||
Derivative Financial Instruments | |||
Number of derivative agreements | agreement | 5 | ||
Notional amount | $ 250,000,000 | ||
Fixed rate | 2.79% | ||
Effective portion of interest rate swap agreements | $ 2,800,000 | $ (1,300,000) | |
Foreign currency forward contracts and interest rate swap agreements | Derivatives designated as hedging instruments | |||
Derivative Financial Instruments | |||
Effective portion of interest rate swap agreements | (4,000,000) | $ 800,000 | |
Ineffective portion of derivative instruments | 0 | 0 | |
Amounts excluded from effectiveness testing | 0 | $ 0 | |
Amended Credit Agreement | Term Loan Facility | |||
Derivative Financial Instruments | |||
Maximum borrowing capacity | $ 250,000,000 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Fair Value (Details) - Designated as cash flow hedges - Interest rate swap agreements - Derivatives designated as hedging instruments - USD ($) $ in Thousands | Dec. 30, 2018 | Sep. 30, 2018 |
Other Current Liabilities | ||
Derivative Financial Instruments | ||
Derivative liability | $ (2,849) | |
Other current assets | ||
Derivative Financial Instruments | ||
Derivative asset | $ 1,244 |
Reclassifications Out of Accu_3
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | |
Reclassifications out of accumulated other comprehensive loss | ||
Balance at the beginning of the period | $ 966,971 | |
Other comprehensive (loss) income before reclassifications | (27,117) | $ (3,383) |
Interest rate contracts, net of tax | (226) | (18) |
Other comprehensive loss attributable to Tetra Tech | (27,343) | (3,401) |
Balance at the end of the period | 954,156 | |
Foreign Currency Translation Adjustments | ||
Reclassifications out of accumulated other comprehensive loss | ||
Balance at the beginning of the period | (128,602) | (98,946) |
Other comprehensive (loss) income before reclassifications | (23,334) | (3,467) |
Interest rate contracts, net of tax | 0 | 0 |
Other comprehensive loss attributable to Tetra Tech | (23,334) | (3,467) |
Balance at the end of the period | (151,936) | (102,413) |
Gain (Loss) on Derivative Instruments | ||
Reclassifications out of accumulated other comprehensive loss | ||
Balance at the beginning of the period | 1,252 | 446 |
Other comprehensive (loss) income before reclassifications | (3,783) | 84 |
Interest rate contracts, net of tax | (226) | (18) |
Other comprehensive loss attributable to Tetra Tech | (4,009) | 66 |
Balance at the end of the period | (2,757) | 512 |
Accumulated Other Comprehensive Loss | ||
Reclassifications out of accumulated other comprehensive loss | ||
Balance at the beginning of the period | (127,350) | (98,500) |
Balance at the end of the period | $ (154,693) | $ (101,901) |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Oct. 15, 2018action |
Commitments and Contingencies Disclosure [Abstract] | |
Loss Contingency, Actions Taken by Plaintiff | 3 |
Uncategorized Items - ttek-2018
Label | Element | Value |
Restricted Cash | us-gaap_RestrictedCash | $ 2,714,000 |
Restricted Cash | us-gaap_RestrictedCash | $ 2,695,000 |