Exhibit 99.1
January 21, 2004
Tetra Tech Reports First Quarter 2004 Results
Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced first quarter results for fiscal year 2004. Gross revenue for the quarter ended December 28, 2003 was $337.1 million, up 44.6% from gross revenue of $233.1 million for the same quarter last year. Revenue, net of subcontractor costs(1), for the quarter was $241.7 million, up 33.6% from $181.0 million a year ago. Income from operations for the quarter was $23.9 million, 39.8% more than the $17.1 million for last year’s first quarter. Net income for the quarter was $12.9 million, up 41.6% from $9.1 million a year ago. Diluted earnings per share were 23 cents compared to 17 cents for the previous year, a 35.3% increase.
For the first quarter of fiscal 2004, guidance for diluted earnings per share was 22 to 24 cents, and for revenue, net of subcontractor costs, was $220 million to $235 million.
Summary of Financial Results:
($ in thousands, except per share data)
|
| First Quarter Ended |
| ||||
|
| Dec. 28, 2003 |
| Dec. 29, 2002 |
| ||
Gross Revenue |
| $ | 337,102 |
| $ | 233,080 |
|
Revenue, Net of Subcontractor Costs(1) |
| 241,705 |
| 180,982 |
| ||
Income from Operations | 23,941 | 17,123 | |||||
Net Income |
| 12,942 |
| 9,139 |
| ||
EPS - Basic |
| 0.24 |
| 0.17 |
| ||
EPS - Diluted |
| 0.23 |
| 0.17 |
| ||
|
|
|
|
|
| ||
Basic Shares Outstanding |
| 54,269 |
| 53,286 |
| ||
Diluted Shares Outstanding |
| 57,395 |
| 55,005 |
| ||
(1) The former net revenue financial statement caption has been changed to revenue, net of subcontractor costs. This change has not affected the amount or the methodology used to calculate this amount.
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 material 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’s fiscal year 2004 guidance remains unchanged. Tetra Tech expects diluted earnings per share for the second quarter of 2004 to be approximately 25 cents. Revenue, net of subcontractor costs, for that quarter is expected to range from approximately $240 million to $250 million.
About Tetra Tech (www.tetratech.com)
Tetra Tech is a leading provider of consulting, engineering and technical services. With nearly 9,000 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.
Investors will have the opportunity to access a live audio-visual webcast concerning the first quarter results through a link posted on the Company’s web site at www.tetratech.com on January 22, 2004 at 8:00 a.m. (PST)
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 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 ended December 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.
TETRA TECH, INC.
Statement of Operating Information
($ in thousands, except per share data)
|
| QUARTER ENDED |
| ||||||
|
| DECEMBER 28, 2003 |
| DECEMBER 29, 2002 |
| % |
| ||
|
| (UNAUDITED) |
| (UNAUDITED) |
|
|
| ||
|
|
|
|
|
|
|
| ||
Gross Revenue |
| $ | 337,102 |
| $ | 233,080 |
| 44.6 |
|
Subcontractor Costs |
| 95,397 |
| 52,098 |
| 83.1 |
| ||
|
|
|
|
|
|
|
| ||
Revenue, Net of Subcontractor Costs(1) |
| 241,705 |
| 180,982 |
| 33.6 |
| ||
|
|
|
|
|
|
|
| ||
Other Contract Costs(1) |
| 193,846 |
| 143,374 |
| 35.2 |
| ||
|
|
|
|
|
|
|
| ||
Gross Profit |
| 47,859 |
| 37,608 |
| 27.3 |
| ||
|
|
|
|
|
|
|
| ||
Selling, General and Administrative Expenses |
| 23,918 |
| 20,485 |
| 16.8 |
| ||
|
|
|
|
|
|
|
| ||
Income from Operations |
| 23,941 |
| 17,123 |
| 39.8 |
| ||
|
|
|
|
|
|
|
| ||
Interest Expense |
| 2,401 |
| 2,193 |
| 9.5 |
| ||
Interest Income |
| 29 |
| 301 |
| (90.4 | ) | ||
|
|
|
|
|
|
|
| ||
Net Interest |
| 2,372 |
| 1,892 |
| 25.4 |
| ||
|
|
|
|
|
|
|
| ||
Income Before Income Tax Expense |
| 21,569 |
| 15,231 |
| 41.6 |
| ||
|
|
|
|
|
|
|
| ||
Income Tax Expense |
| 8,627 |
| 6,092 |
| 41.6 |
| ||
|
|
|
|
|
|
|
| ||
Net Income |
| $ | 12,942 |
| $ | 9,139 |
| 41.6 |
|
|
|
|
|
|
|
|
| ||
Earnings Per Share - Diluted |
| $ | 0.23 |
| $ | 0.17 |
| 35.3 |
|
|
|
|
|
|
|
|
| ||
Average Shares Outstanding - Diluted |
| 57,395 |
| 55,005 |
| 4.3 |
| ||
|
|
|
|
|
|
|
| ||
Percentage of Revenue, Net of Subcontractor Costs |
|
|
|
|
|
|
| ||
Revenue, Net of Subcontractor Costs |
| 100.0 | % | 100.0 | % |
|
| ||
|
|
|
|
|
|
|
| ||
Other Contract Costs |
| 80.2 | % | 79.2 | % |
|
| ||
|
|
|
|
|
|
|
| ||
Gross Profit |
| 19.8 | % | 20.8 | % |
|
| ||
|
|
|
|
|
|
|
| ||
Selling, General and Administrative Expenses |
| 9.9 | % | 11.3 | % |
|
| ||
|
|
|
|
|
|
|
| ||
Income from Operations |
| 9.9 | % | 9.5 | % |
|
| ||
|
|
|
|
|
|
|
| ||
Net Interest |
| 1.0 | % | 1.0 | % |
|
| ||
|
|
|
|
|
|
|
| ||
Income Before Income Tax Expense |
| 8.9 | % | 8.4 | % |
|
| ||
|
|
|
|
|
|
|
| ||
Income Tax Expense |
| 3.6 | % | 3.4 | % |
|
| ||
|
|
|
|
|
|
|
| ||
Income Before Cumulative Effect of Accounting Change |
| 5.4 | % | 5.0 | % |
|
| ||
|
|
|
|
|
|
|
| ||
Cumulative Effect of Accounting Change |
| 0.0 | % | 0.0 | % |
|
| ||
|
|
|
|
|
|
|
| ||
Net Income |
| 5.4 | % | 5.0 | % |
|
| ||
(1) The former Net Revenue and Cost of Net Revenue financial statement captions have been changed to Revenue, Net of Subcontractor Costs and Other Contract Costs, respectively. This change has not affected the respective amounts or the methodology used to calculate these amounts.
TETRA TECH, INC.
PRELIMINARY BALANCE SHEET INFORMATION
($ in thousands, except share data)
|
| DECEMBER 28, |
| SEPTEMBER 28, |
| ||
|
| (UNAUDITED) |
|
|
| ||
ASSETS |
|
|
|
|
| ||
CURRENT ASSETS: |
|
|
|
|
| ||
Cash and Cash Equivalents |
| $ | 23,868 |
| $ | 33,164 |
|
Accounts Receivable - Net |
| 189,184 |
| 167,717 |
| ||
Unbilled Receivables - Net |
| 169,424 |
| 164,818 |
| ||
Contract Retentions |
| 4,838 |
| 4,286 |
| ||
Prepaid Expenses and Other Current Assets |
| 27,458 |
| 26,037 |
| ||
Income Taxes Receivable |
| 28,189 |
| 20,825 |
| ||
Total Current Assets |
| 442,961 |
| 416,847 |
| ||
|
|
|
|
|
| ||
PROPERTY AND EQUIPMENT: |
|
|
|
|
| ||
Equipment, Furniture and Fixtures |
| 86,061 |
| 84,133 |
| ||
Leasehold Improvements |
| 10,619 |
| 10,123 |
| ||
Total |
| 96,680 |
| 94,256 |
| ||
Accumulated Depreciation and Amortization |
| (55,779 | ) | (53,469 | ) | ||
PROPERTY AND EQUIPMENT - NET |
| 40,901 |
| 40,787 |
| ||
|
|
|
|
|
| ||
GOODWILL - NET |
| 210,792 |
| 210,792 |
| ||
|
|
|
|
|
| ||
INTANGIBLE AND OTHER ASSETS - NET |
| 25,342 |
| 25,054 |
| ||
|
|
|
|
|
| ||
TOTAL ASSETS |
| $ | 719,996 |
| $ | 693,480 |
|
|
|
|
|
|
| ||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||
CURRENT LIABILITIES: |
|
|
|
|
| ||
Accounts Payable |
| $ | 90,508 |
| $ | 93,265 |
|
Accrued Compensation |
| 38,850 |
| 46,743 |
| ||
Billings in Excess of Costs on Uncompleted Contracts |
| 20,233 |
| 16,307 |
| ||
Other Current Liabilities |
| 26,919 |
| 26,562 |
| ||
Deferred Income Taxes |
| 29,390 |
| 28,992 |
| ||
Current Portion of Long-Term Obligations |
| 25,079 |
| 11,597 |
| ||
Total Current Liabilities |
| 230,979 |
| 223,466 |
| ||
|
|
|
|
|
| ||
LONG-TERM OBLIGATIONS |
| 108,606 |
| 107,463 |
| ||
|
|
|
|
|
| ||
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 54,452,120 and 54,089,704 Shares at December 28, 2003 and September 28, 2003, Respectively |
| 545 |
| 541 |
| ||
Additional Paid-In Capital |
| 221,484 |
| 216,908 |
| ||
Accumulated Other Comprehensive Loss |
| (49 | ) | (387 | ) | ||
Retained Earnings |
| 145,192 |
| 132,250 |
| ||
Total Stockholders’ Equity |
| 380,411 |
| 362,551 |
| ||
|
|
|
|
|
| ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 719,996 |
| $ | 693,480 |
|
TETRA TECH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
|
| Three Months Ended |
| ||||
|
| DECEMBER 28, |
| DECEMBER 29, |
| ||
|
| (Unaudited) |
| (Unaudited) |
| ||
|
|
|
|
|
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net income |
| $ | 12,942 |
| $ | 9,139 |
|
|
|
|
|
|
| ||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
| 4,454 |
| 3,315 |
| ||
Deferred income taxes |
| 398 |
| — |
| ||
Provision for losses on receivables |
| 819 |
| 770 |
| ||
Loss on disposal of property and equipment |
| 52 |
| — |
| ||
|
|
|
|
|
| ||
Changes in operating assets and liabilities, net of effects of acquisitions: |
|
|
|
|
| ||
Accounts receivable |
| (22,271 | ) | (8,374 | ) | ||
Unbilled receivables |
| (4,620 | ) | 9,690 |
| ||
Contract retentions |
| (552 | ) | 131 |
| ||
Prepaid expenses and other assets |
| (2,348 | ) | (4,444 | ) | ||
Accounts payable |
| (2,757 | ) | (12,121 | ) | ||
Accrued compensation |
| (7,893 | ) | (5,014 | ) | ||
Billings in excess of costs on uncompleted contracts |
| 3,926 |
| 2,989 |
| ||
Other current liabilities |
| 513 |
| 2,537 |
| ||
Income taxes receivable/payable |
| (5,985 | ) | (653 | ) | ||
Net Cash Used In Operating Activities |
| (23,322 | ) | (2,035 | ) | ||
|
|
|
|
|
| ||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
| ||
Capital expenditures |
| (4,319 | ) | (1,705 | ) | ||
Proceeds on sale of property and equipment |
| 424 |
| — |
| ||
Net Cash Used In Investing Activities |
| (3,895 | ) | (1,705 | ) | ||
|
|
|
|
|
| ||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
| ||
Payments on long-term obligations |
| (17,698 | ) | (182 | ) | ||
Proceeds from borrowings under long-term obligations |
| 32,324 |
| — |
| ||
Proceeds from issuance of common stock |
| 3,201 |
| 176 |
| ||
Net Cash Provided By (Used In) Financing Activities |
| 17,826 |
| (6 | ) | ||
|
|
|
|
|
| ||
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
| 95 |
| 71 |
| ||
|
|
|
|
|
| ||
NET DECREASE IN CASH AND CASH EQUIVALENTS |
| (9,296 | ) | (3,675 | ) | ||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
| 33,164 |
| 46,345 |
| ||
|
|
|
|
|
| ||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
| $ | 23,868 |
| $ | 42,670 |
|
|
|
|
|
|
| ||
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
| ||
Cash paid during the period for: |
|
|
|
|
| ||
Interest |
| $ | 4,359 |
| $ | 4,128 |
|
Income taxes, net of refunds received |
| $ | 14,109 |
| $ | 6,746 |
|