Exhibit 99.1
November 19, 2003
Tetra Tech Reports Fourth Quarter and Fiscal Year 2003 Results
Fourth Quarter Diluted Earnings Per Share 28 Cents, up 115%
Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the fourth quarter and fiscal year ended September 28, 2003. Gross revenue for the fourth quarter was $340.0 million, up 36.6% over gross revenue of $248.9 million for the same quarter last year. Net revenue for the quarter was $255.1 million, increasing 32.7% from $192.3 million for the same quarter last year. Operating income for the fourth quarter was $29.1 million, or 89.0% more than the $15.4 million for the same period last year. Net income increased 119.6% to $15.7 million compared to $7.2 million for the same period last year. Diluted earnings per share were 28 cents compared to 13 cents for the same period last year, a 115% increase.
Gross revenue for fiscal 2003 was $1.132 billion, up 17.2% from $966.2 million for fiscal 2002. Net revenue for fiscal year 2003 was $860.8 million, an increase of 16.2% over net revenue of $740.7 million for fiscal 2002. Operating income for fiscal 2003 was $93.2 million, or 54.2% more than the $60.4 million for fiscal 2002. Income before the cumulative effect of accounting change was $50.1 million, up 57.0% from $31.9 million for the same period last year. Net loss for fiscal 2003, as a result of the cumulative effect of accounting change of $114.7 million that is further described below, was $64.6 million, compared to net income of $31.9 million in fiscal 2002. Diluted earnings per share before the cumulative effect of accounting change for fiscal 2003 were 90 cents, an increase of 55% compared to the 58 cents last year.
|
| Fourth Quarter Ended |
| Fiscal Year Ended |
| ||||||||
|
| Sept. 28, 2003 |
| Sept. 29, 2002 |
| Sept. 28, 2003 |
| Sept. 29, 2002 |
| ||||
Gross Revenue |
| $ | 339,950 |
| $ | 248,896 |
| $ | 1,132,050 |
| $ | 966,223 |
|
Net Revenue |
| 255,128 |
| 192,317 |
| 860,772 |
| 740,715 |
| ||||
Income from Operations |
| 29,141 |
| 15,416 |
| 93,152 |
| 60,421 |
| ||||
Income Before Cumulative Effect of Accounting Change |
| 15,734 |
| 7,165 |
| 50,109 |
| 31,910 |
| ||||
Net Income/(Loss) |
| 15,734 |
| 7,165 |
| (64,560 | ) | 31,910 |
| ||||
EPS Before Cumulative Effect of Accounting Change: |
|
|
|
|
|
|
|
|
| ||||
Basic |
| 0.29 |
| 0.13 |
| 0.94 |
| 0.60 |
| ||||
Diluted |
| 0.28 |
| 0.13 |
| 0.90 |
| 0.58 |
| ||||
Basic Shares Outstanding |
| 53,914 |
| 53,271 |
| 53,531 |
| 52,760 |
| ||||
Diluted Shares Outstanding |
| 56,616 |
| 54,964 |
| 55,782 |
| 55,086 |
| ||||
Cumulative Effect of Accounting Change
On September 30, 2002, Tetra Tech adopted Financial Accounting Standards Board Statement No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). As a result of performing the required steps of SFAS 142, Tetra Tech wrote off 100% of the goodwill related to the historical Communications segment during the second quarter of fiscal 2003. This write-off is presented as a cumulative effect of accounting change outside of income from operations.
Business Outlook
The following statements are based on current expectations. These statements are forward-looking and the actual results could differ materially. These statements do not include the potential impact of corporate transactions that may be completed after the date of this release. The Business Outlook section should be read in conjunction with the information on forward-looking statements at the end of this release.
Tetra Tech expects diluted earnings per share for the first quarter of fiscal 2004 to be approximately 22 cents to 24 cents. Net revenue for the first quarter is expected to range from approximately $220 million to $235 million. For the fiscal year, Tetra Tech expects diluted earnings per share to range from approximately $1.09 to $1.14, and net revenue to range from approximately $950 million to $1.06 billion.
Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the fourth quarter results through a link posted on the Company’s web site at www.tetratech.com on November 20, 2003 at 8:00 a.m. (PT)
About Tetra Tech (www.tetratech.com)
Tetra Tech is a leading provider of consulting, engineering and technical services. With more than 8,000 associates located in the United States and internationally, the Company supports commercial and government clients in the areas of resource management and infrastructure. Tetra Tech’s services include research and development, applied science and technology, engineering design, construction management, and operations and maintenance.
CONTACT: Li-San Hwang, CEO or Mike Bieber, Investor Relations (626) 351-4664
This news release contains forward-looking-statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include information concerning future events and the future financial performance of Tetra Tech that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. Readers are urged to read the documents filed by Tetra Tech with the SEC, specifically the most recent reports on Form 10-K, 10-Q and 8-K, each as it may be amended from time to time, which identify risk factors that could cause actual results to differ materially from the forward-looking statements. Among the important factors or risks that could cause actual results or events to differ materially from those in the forward-looking statements in this release are: acquisition strategy risks; fluctuations in quarterly operating results and stock price; the impact of downturns in the financial markets on clients; management of growth strategy; credit
2
risks associated with commercial clients; the consolidation of client base; loss of key personnel or the inability to attract and retain qualified personnel; changes in existing laws and regulations; concentration of revenues from agencies of the Federal government and reductions in spending by these agencies; audit of contracts with governmental agencies; losses under fixed-price contracts or termination of contracts at the client’s discretion; backlog cancellation or adjustment; inability to find qualified subcontractors; competition; risks of professional and other liabilities; conflict of interest issues; and foreign currency fluctuations. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in Tetra Tech’s most recent reports on Form 10-Q and Form 10-K, each as it may be amended from time to time. Tetra Tech’s results of operations for the fiscal quarter and year ended September 28, 2003 are not necessarily indicative of Tetra Tech’s operating results for any future periods. Any projections in this release are based on limited information currently available to Tetra Tech, which is subject to change. Although any such projections and the factors influencing them will likely change, Tetra Tech will not necessarily update the information, since Tetra Tech will only provide guidance at certain points during the year. Such information speaks only as of the date of this release.
3
TETRA TECH, INC.
STATEMENT OF OPERATING INFORMATION
(in thousands, except per share data)
|
| QUARTER ENDED |
| TWELVE MONTHS ENDED |
| ||||||||||||
|
| SEPT 28,2003 |
| SEPT 29,2002 |
| % |
| SEPT 28,2003 |
| SEPT 29,2002 |
| % |
| ||||
|
| (UNAUDITED) |
| (UNAUDITED) |
|
|
| (UNAUDITED) |
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross Revenue |
| $ | 339,950 |
| $ | 248,896 |
| 36.6 |
| $ | 1,132,050 |
| $ | 966,223 |
| 17.2 |
|
Subcontractor Costs |
| 84,822 |
| 56,579 |
| 49.9 |
| 271,278 |
| 225,508 |
| 20.3 |
| ||||
Net Revenue |
| 255,128 |
| 192,317 |
| 32.7 |
| 860,772 |
| 740,715 |
| 16.2 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of Net Revenue |
| 203,788 |
| 150,718 |
| 35.2 |
| 680,158 |
| 582,153 |
| 16.8 |
| ||||
Gross Profit |
| 51,340 |
| 41,599 |
| 23.4 |
| 180,614 |
| 158,562 |
| 13.9 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Selling, General and Administrative Expenses |
| 21,636 |
| 23,354 |
| -7.4 |
| 86,176 |
| 87,330 |
| -1.3 |
| ||||
Amortization of Intangibles |
| 563 |
| 2,829 |
| -80.1 |
| 1,286 |
| 10,811 |
| -88.1 |
| ||||
Income from Operations |
| 29,141 |
| 15,416 |
| 89.0 |
| 93,152 |
| 60,421 |
| 54.2 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest Expense |
| 3,138 |
| 2,236 |
| 40.3 |
| 10,162 |
| 9,340 |
| 8.8 |
| ||||
Interest Income |
| 583 |
| 2,701 |
| -78.4 |
| 888 |
| 3,888 |
| -77.2 |
| ||||
Income Before Income Tax Expense |
| 26,586 |
| 15,881 |
| 67.4 |
| 83,878 |
| 54,969 |
| 52.6 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income Tax Expense |
| 10,852 |
| 8,716 |
| 24.5 |
| 33,769 |
| 23,059 |
| 46.4 |
| ||||
Income Before Cum Effect of Acctg Change |
| 15,734 |
| 7,165 |
| 119.6 |
| 50,109 |
| 31,910 |
| 57.0 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cumulative Effect of Accounting Change |
| 0 |
| 0 |
| 0.0 |
| 114,669 |
| 0 |
| 0.0 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Income (Loss) |
| $ | 15,734 |
| $ | 7,165 |
| 119.6 |
| $ | (64,560 | ) | $ | 31,910 |
| -302.3 |
|
Earnings Per Share - Diluted * |
| $ | 0.28 |
| $ | 0.13 |
| 115.4 |
| $ | 0.90 | * | $ | 0.58 |
| 55.2 |
|
Avg Shares Outstanding - Diluted |
| $ | 56,616 |
| $ | 54,964 |
| 3.0 |
| $ | 55,782 |
| $ | 55,086 |
| 1.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Percentage of Net Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Revenue |
| 100.0 | % | 100.0 | % |
|
| 100.0 | % | 100.0 | % |
|
| ||||
Cost of Net Revenue |
| 79.9 |
| 78.4 |
|
|
| 79.0 |
| 78.6 |
|
|
| ||||
Gross Profit |
| 20.1 |
| 21.6 |
|
|
| 21.0 |
| 21.4 |
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
SG&A |
| 8.5 |
| 12.1 |
|
|
| 10.0 |
| 11.8 |
|
|
| ||||
Amortization of Intangibles |
| 0.2 |
| 1.5 |
|
|
| 0.1 |
| 1.5 |
|
|
| ||||
Income from Operations |
| 11.4 |
| 8.0 |
|
|
| 10.9 |
| 8.1 |
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Interest Expense |
| 1.0 |
| (0.2 | ) |
|
| 1.1 |
| 0.7 |
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income Before Income Tax Expense |
| 10.4 |
| 8.2 |
|
|
| 9.8 |
| 7.4 |
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income Tax Expense |
| 4.3 |
| 4.5 |
|
|
| 3.9 |
| 3.1 |
|
|
| ||||
Net Income * |
| 6.1 | % | 3.7 | % |
|
| 5.9 | % | 4.3 | % |
|
| ||||
* Before the cumulative effect of accounting change related to goodwill
4
TETRA TECH, INC.
BALANCE SHEET INFORMATION
(in thousands, except share data)
|
| SEPTEMBER 28, |
| SEPTEMBER 29, |
| ||
|
| (Unaudited) |
|
|
| ||
ASSETS |
|
|
|
|
| ||
CURRENT ASSETS: |
|
|
|
|
| ||
Cash and Cash Equivalents |
| $ | 33,164 |
| $ | 46,345 |
|
Accounts Receivable - Net |
| 167,717 |
| 137,354 |
| ||
Unbilled Receivables - Net |
| 164,818 |
| 117,354 |
| ||
Contract Retentions |
| 4,286 |
| 5,090 |
| ||
Prepaid Expenses and Other Current Assets |
| 26,037 |
| 18,588 |
| ||
Income Taxes Receivable |
| 20,825 |
| 20,683 |
| ||
Total Current Assets |
| 416,847 |
| 345,414 |
| ||
|
|
|
|
|
| ||
PROPERTY AND EQUIPMENT: |
|
|
|
|
| ||
Leasehold Improvements |
| 10,123 |
| 8,217 |
| ||
Equipment, Furniture and Fixtures |
| 84,133 |
| 76,756 |
| ||
Total |
| 94,256 |
| 84,973 |
| ||
Accumulated Depreciation and Amortization |
| (53,469 | ) | (44,847 | ) | ||
PROPERTY AND EQUIPMENT - NET |
| 40,787 |
| 40,126 |
| ||
|
|
|
|
|
| ||
GOODWILL - NET |
| 210,792 |
| 278,267 |
| ||
|
|
|
|
|
| ||
INTANGIBLE AND OTHER ASSETS - NET |
| 25,054 |
| 8,173 |
| ||
|
|
|
|
|
| ||
TOTAL ASSETS |
| $ | 693,480 |
| $ | 671,980 |
|
|
|
|
|
|
| ||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||
CURRENT LIABILITIES: |
|
|
|
|
| ||
Accounts Payable |
| $ | 93,265 |
| $ | 60,038 |
|
Accrued Compensation |
| 46,743 |
| 34,228 |
| ||
Billings in Excess of Costs on Uncompleted Contracts |
| 16,307 |
| 11,837 |
| ||
Other Current Liabilities |
| 26,562 |
| 19,377 |
| ||
Deferred Income Taxes |
| 28,992 |
| 18,638 |
| ||
Current Portion of Long-Term Obligations |
| 11,597 |
| 1,559 |
| ||
Total Current Liabilities |
| 223,466 |
| 145,677 |
| ||
|
|
|
|
|
| ||
LONG - TERM OBLIGATIONS |
| 107,463 |
| 110,000 |
| ||
|
|
|
|
|
| ||
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
| ||
|
|
|
|
|
| ||
STOCKHOLDERS EQUITY: |
|
|
|
|
| ||
Preferred Stock - Authorized, 2,000,000 Shares of $.01 Par Value; None Issued and Outstanding |
| — |
| — |
| ||
Exchangeable Stock of a Subsidiary |
| 13,239 |
| 13,239 |
| ||
Common stock - authorized, 85,000,000 shares of $.01 par value; issued and outstanding 54,089,704 and 53,273,227 shares at September 28, 2003 and September 29, 2002, respectively |
| 541 |
| 533 |
| ||
Additional Paid-In Capital |
| 216,908 |
| 207,505 |
| ||
Accumulated Other Comprehensive Loss |
| (387 | ) | (1,784 | ) | ||
Retained Earnings |
| 132,250 |
| 196,810 |
| ||
Total Stockholders’ Equity |
| 362,551 |
| 416,303 |
| ||
|
|
|
|
|
| ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 693,480 |
| $ | 671,980 |
|
5
TETRA TECH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
|
| Twelve Months Ended |
| ||||
|
| September 28, |
| September 29, |
| ||
|
| (Unaudited) |
|
|
| ||
|
|
|
|
|
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net (loss) income |
| $ | (64,560 | ) | $ | 31,910 |
|
|
|
|
|
|
| ||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
| ||
Cumulative effect of accounting change |
| 114,669 |
| — |
| ||
Depreciation and amortization |
| 16,727 |
| 23,354 |
| ||
Deferred income taxes |
| 9,435 |
| 19,997 |
| ||
Provision for losses on receivables |
| 8,061 |
| 3,479 |
| ||
Loss on disposal of property and equipment |
| 98 |
| — |
| ||
|
|
|
|
|
| ||
Changes in operating assets and liabilities, net of effects of acquisitions: |
|
|
|
|
| ||
Accounts receivable |
| 3,695 |
| 22,020 |
| ||
Unbilled receivables |
| (30,710 | ) | 5,770 |
| ||
Contract retentions |
| 2,827 |
| 146 |
| ||
Prepaid expenses and other assets |
| (4,633 | ) | (3,721 | ) | ||
Accounts payable |
| 2,013 |
| 4,919 |
| ||
Accrued compensation |
| 6,438 |
| (795 | ) | ||
Billings in excess of costs on uncompleted contracts |
| (472 | ) | 1,483 |
| ||
Other current liabilities |
| 2,980 |
| 2,935 |
| ||
Income taxes receivable/payable |
| 319 |
| (16,286 | ) | ||
Net Cash Provided By Operating Activities |
| 66,887 |
| 95,211 |
| ||
|
|
|
|
|
| ||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
| ||
Capital expenditures |
| (8,419 | ) | (7,165 | ) | ||
Payments for business acquisitions, net of cash acquired |
| (87,233 | ) | (45,079 | ) | ||
Proceeds on sale of property and equipment |
| 1,456 |
| — |
| ||
Net Cash Used In Investing Activities |
| (94,196 | ) | (52,244 | ) | ||
|
|
|
|
|
| ||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
| ||
Payments on long-term obligations |
| (91,056 | ) | (74,927 | ) | ||
Proceeds from borrowings under long-term obligations |
| 97,000 |
| 56,000 |
| ||
Net proceeds from issuance of common stock |
| 7,892 |
| 6,067 |
| ||
Net Cash Provided By (Used In) Financing Activities |
| 13,836 |
| (12,860 | ) | ||
|
|
|
|
|
| ||
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
| 292 |
| (2 | ) | ||
|
|
|
|
|
| ||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
| (13,181 | ) | 30,105 |
| ||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
| 46,345 |
| 16,240 |
| ||
|
|
|
|
|
| ||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
| $ | 33,164 |
| $ | 46,345 |
|
|
|
|
|
|
| ||
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
| ||
Cash paid during the period for: |
|
|
|
|
| ||
Interest |
| $ | 10,009 |
| $ | 9,370 |
|
Income taxes, net of refunds received |
| $ | 23,165 |
| $ | 17,667 |
|
6