Exhibit 99.1
April 21, 2004
Tetra Tech Reports Second Quarter 2004 Results
Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced second quarter results for fiscal year 2004. Revenue for the quarter ended March 28, 2004 was $331.4 million, up 35.0% from $245.5 million for the same quarter last year. Revenue, net of subcontractor costs, was $242.8 million for the quarter, up 25.9% from $192.9 million a year ago. Income from operations for the quarter was $24.0 million, 12.4% more than the $21.3 million for last year’s second quarter. Net income for the quarter was $13.0 million, up 14.0% from $11.4 million a year ago. Diluted earnings per share were 23 cents compared to 21 cents for the previous year, a 9.5% increase.
For the second quarter of fiscal 2004, revised guidance for diluted earnings per share was 23 cents, and guidance for revenue, net of subcontractor costs, was $240 million to $250 million.
Revenue for the six months ended March 28, 2004 was $668.5 million, up 39.7% from $478.5 million for the same period last year. Revenue, net of subcontractor costs, for the six months was $484.5 million, up 29.6% from $373.9 million a year ago. Income from operations for the six-month period was $47.9 million, 24.6% more than the $38.4 million for the six-month period last year. Net income for the six-month period was $26.0 million, compared to a net loss of $94.1 million last year, due to the cumulative effect of accounting change of $114.7 million in 2003. Diluted earnings per share before the cumulative effect of accounting change for the six-month period were 45 cents compared to 37 cents last year, a 21.6% increase.
Summary of Financial Results:
(in thousands, except per share data)
|
| Second Quarter Ended |
| Six Months Ended |
| ||||||||
|
| March 28, 2004 |
| March 30, 2003 |
| March 28, 2004 |
| March 30, 2003 |
| ||||
Revenue |
| $ | 331,395 |
| $ | 245,464 |
| $ | 668,497 |
| $ | 478,544 |
|
Revenue, Net of Subcontractor Costs |
| 242,818 |
| 192,870 |
| 484,523 |
| 373,852 |
| ||||
Income from Operations |
| 23,965 |
| 21,324 |
| 47,906 |
| 38,447 |
| ||||
Income Before Cumulative Effect of Accounting Change |
| 13,029 |
| 11,425 |
| 25,971 |
| 20,564 |
| ||||
Net Income/(Loss) |
| 13,029 |
| 11,425 |
| 25,971 |
| (94,105 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
EPS Before Cumulative Effect of Accounting Change: |
|
|
|
|
|
|
|
|
| ||||
Basic(1) |
| 0.23 |
| 0.21 |
| 0.47 |
| 0.38 |
| ||||
Diluted |
| 0.23 |
| 0.21 |
| 0.45 |
| 0.37 |
| ||||
Basic Shares Outstanding(1) |
| 55,885 |
| 54,608 |
| 55,695 |
| 54,565 |
| ||||
Diluted Shares Outstanding |
| 57,465 |
| 55,419 |
| 57,430 |
| 55,212 |
| ||||
(1) EPS-basic and basic shares outstanding have been revised for the periods ended March 30, 2003 to include 1,235,000 shares of common stock issuable upon the exchange of exchangeable shares of a subsidiary.
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 expects diluted earnings per share for the third quarter of 2004 to be approximately 26 to 28 cents. Revenue, net of subcontractor costs, is expected to range from approximately $255 million to $270 million for the third quarter. For the fiscal year, Tetra Tech expects diluted earnings per share to range from approximately $1.05 to $1.09. Revenue, net of subcontractor costs, is expected to range from approximately $1.00 billion to $1.04 billion for the fiscal year.
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 second quarter results through a link posted on the Company’s web site at www.tetratech.com on April 22, 2004 at 8:00 a.m. (PDT).
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: fluctuations in quarterly operating results; acquisition strategy risks; management of growth strategy; volatility of common stock value; concentration of revenues from government agencies and funding disruptions by these agencies; the impact of downturns in the financial markets and reductions in government budgets; credit risks associated with commercial clients; failure to properly manage projects; violations of government contractor regulations; competitive bidding for government contracts; the affect of a negative government audit; the inability to accurately estimate contract risks, revenue and costs; backlog cancellation or adjustment; client base consolidation; failure of partners to perform on joint projects; inability to find qualified subcontracts; loss of key personnel or the inability to attract and retain qualified personnel; changes in existing laws, regulations or programs; competition; risks of professional and other liabilities; adverse resolution of litigation; conflict of interest issues; adverse resolution of an IRS examination; changes in financial accounting standards; expenses associated with corporate governance; implementation of the ERP system; disruption of operations due to computer viruses or terrorism; 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 March 28, 2004 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
2
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.
Unaudited Statements of Operations
(in thousands, except per share data)
|
| QUARTER ENDED |
| SIX MONTHS ENDED |
| ||||||||||||
|
| MARCH 28, 2004 |
| MARCH 30, 2003 |
| % |
| MARCH 28, 2004 |
| MARCH 30, 2003 |
| % |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
| $ | 331,395 |
| $ | 245,464 |
| 35.0 |
| $ | 668,497 |
| $ | 478,544 |
| 39.7 |
|
Subcontractor costs |
| 88,577 |
| 52,594 |
| 68.4 |
| 183,974 |
| 104,692 |
| 75.7 |
| ||||
Revenue, net of subcontractor costs |
| 242,818 |
| 192,870 |
| 25.9 |
| 484,523 |
| 373,852 |
| 29.6 |
| ||||
Other contract costs |
| 194,701 |
| 151,075 |
| 28.9 |
| 388,547 |
| 294,449 |
| 32.0 |
| ||||
Gross profit |
| 48,117 |
| 41,795 |
| 15.1 |
| 95,976 |
| 79,403 |
| 20.9 |
| ||||
Selling, general and administrative expenses |
| 24,152 |
| 20,471 |
| 18.0 |
| 48,070 |
| 40,956 |
| 17.4 |
| ||||
Income from operations |
| 23,965 |
| 21,324 |
| 12.4 |
| 47,906 |
| 38,447 |
| 24.6 |
| ||||
Interest expense |
| 2,380 |
| 2,331 |
| 2.1 |
| 4,781 |
| 4,524 |
| 5.7 |
| ||||
Interest income |
| 131 |
| 50 |
| 162.0 |
| 160 |
| 351 |
| -54.4 |
| ||||
Net interest |
| 2,249 |
| 2,281 |
| -1.4 |
| 4,621 |
| 4,173 |
| 10.7 |
| ||||
Income before income tax expense |
| 21,716 |
| 19,043 |
| 14.0 |
| 43,285 |
| 34,274 |
| 26.3 |
| ||||
Income tax expense |
| 8,687 |
| 7,618 |
| 14.0 |
| 17,314 |
| 13,710 |
| 26.3 |
| ||||
Income before cumulative effect of accounting change |
| 13,029 |
| 11,425 |
| 14.0 |
| 25,971 |
| 20,564 |
| 26.3 |
| ||||
Cumulative effect of accounting change |
| 0 |
| 0 |
| 0.0 |
| 0 |
| 114,669 |
| -100.0 |
| ||||
Net income |
| $ | 13,029 |
| $ | 11,425 |
| 14.0 |
| $ | 25,971 |
| $ | (94,105 | ) | -127.6 |
|
Earnings per share before cumulative effect of accounting change - diluted |
| $ | 0.23 |
| $ | 0.21 |
| 9.5 |
| $ | 0.45 |
| $ | 0.37 |
| 21.6 |
|
Weighted average shares outstanding - diluted |
| 57,465 |
| 55,419 |
| 3.7 |
| $ | 57,430 |
| $ | 55,212 |
| 4.0 |
| ||
Percentage of revenue, net of subcontractor costs: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue, net of subcontractor costs |
| 100.0 | % | 100.0 | % |
|
| 100.0 | % | 100.0 | % |
|
| ||||
Other contract costs |
| 80.2 | % | 78.3 | % |
|
| 80.2 | % | 78.8 | % |
|
| ||||
Gross profit |
| 19.8 | % | 21.7 | % |
|
| 19.8 | % | 21.2 | % |
|
| ||||
Selling, general and administrative expenses |
| 9.9 | % | 10.6 | % |
|
| 9.9 | % | 11.0 | % |
|
| ||||
Income from operations |
| 9.9 | % | 11.1 | % |
|
| 9.9 | % | 10.2 | % |
|
| ||||
Net interest |
| 0.9 | % | 1.2 | % |
|
| 1.0 | % | 1.1 | % |
|
| ||||
Income before income tax expense |
| 9.0 | % | 9.9 | % |
|
| 8.9 | % | 9.1 | % |
|
| ||||
Income tax expense |
| 3.6 | % | 3.9 | % |
|
| 3.6 | % | 3.7 | % |
|
| ||||
Income before cumulative effect of accounting change |
| 5.4 | % | 6.0 | % |
|
| 5.3 | % | 5.4 | % |
|
| ||||
Cumulative effect of accounting change |
| 0.0 | % | 0.0 | % |
|
| 0.0 | % | 30.7 | % |
|
| ||||
Net income |
| 5.4 | % | 6.0 | % |
|
| 5.3 | % | -25.3 | % |
|
| ||||
TETRA TECH, INC.
Preliminary Balance Sheet
(in thousands, except par value)
|
| MARCH 28, |
| SEPTEMBER 28, |
| ||
|
| (UNAUDITED) |
|
|
| ||
ASSETS |
|
|
|
|
| ||
CURRENT ASSETS: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 34,656 |
| $ | 33,164 |
|
Accounts receivable - net |
| 175,814 |
| 167,717 |
| ||
Unbilled receivables - net |
| 183,597 |
| 164,818 |
| ||
Contract retentions |
| 4,757 |
| 4,286 |
| ||
Prepaid expenses and other current assets |
| 23,929 |
| 26,037 |
| ||
Income taxes receivable |
| 31,158 |
| 20,825 |
| ||
Total current assets |
| 453,911 |
| 416,847 |
| ||
|
|
|
|
|
| ||
PROPERTY AND EQUIPMENT: |
|
|
|
|
| ||
Equipment, furniture and fixtures |
| 85,531 |
| 84,133 |
| ||
Leasehold improvements |
| 10,757 |
| 10,123 |
| ||
Total |
| 96,288 |
| 94,256 |
| ||
Accumulated depreciation and amortization |
| (57,182 | ) | (53,469 | ) | ||
PROPERTY AND EQUIPMENT - NET |
| 39,106 |
| 40,787 |
| ||
|
|
|
|
|
| ||
GOODWILL |
| 253,045 |
| 210,792 |
| ||
|
|
|
|
|
| ||
INTANGIBLE AND OTHER ASSETS - NET |
| 26,617 |
| 25,054 |
| ||
|
|
|
|
|
| ||
TOTAL ASSETS |
| $ | 772,679 |
| $ | 693,480 |
|
|
|
|
|
|
|
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|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||
CURRENT LIABILITIES: |
|
|
|
|
| ||
Accounts payable |
| $ | 92,541 |
| $ | 93,265 |
|
Accrued compensation |
| 44,024 |
| 46,743 |
| ||
Billings in excess of costs on uncompleted contracts |
| 17,944 |
| 16,307 |
| ||
Other current liabilities |
| 28,162 |
| 26,562 |
| ||
Deferred income taxes |
| 29,105 |
| 28,992 |
| ||
Current portion of long-term obligations |
| 55,006 |
| 11,597 |
| ||
Total current liabilities |
| 266,782 |
| 223,466 |
| ||
|
|
|
|
|
| ||
LONG - TERM OBLIGATIONS |
| 108,278 |
| 107,463 |
| ||
|
|
|
|
|
| ||
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
| ||
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STOCKHOLDERS’ EQUITY: |
|
|
|
|
| ||
Preferred stock - authorized, 2,000 shares of $.01 par value; none issued and outstanding |
| — |
| — |
| ||
Exchangeable stock of a subsidiary |
| 13,238 |
| 13,239 |
| ||
Common stock - authorized, 85,000 shares of $.01 par value; issued and outstanding 54,868 and 54,090 shares at March 28, 2004 and September 28, 2003, respectively |
| 549 |
| 541 |
| ||
Additional paid-in capital |
| 225,757 |
| 216,908 |
| ||
Accumulated other comprehensive loss |
| (146 | ) | (387 | ) | ||
Retained earnings |
| 158,221 |
| 132,250 |
| ||
Total stockholders’ equity |
| 397,619 |
| 362,551 |
| ||
|
|
|
|
|
| ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 772,679 |
| $ | 693,480 |
|
TETRA TECH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
|
| Three Months Ended |
| ||||
|
| MARCH 28, |
| MARCH 30, |
| ||
|
| (Unaudited) |
| (Unaudited) |
| ||
|
|
|
|
|
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net income (loss) |
| $ | 13,029 |
| $ | 11,425 |
|
|
|
|
|
|
| ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
| ||
Cumulative effect of accounting change |
| — |
| — |
| ||
Depreciation and amortization |
| 4,369 |
| 3,468 |
| ||
Deferred income taxes |
| (285 | ) | — |
| ||
Provision for losses on receivables |
| 1,516 |
| 1,083 |
| ||
Loss on disposal of property and equipment |
| 652 |
| — |
| ||
|
|
|
|
|
| ||
Changes in operating assets and liabilities, net of effects of acquisitions: |
|
|
|
|
| ||
Accounts receivable |
| 13,063 |
| 13,316 |
| ||
Unbilled receivables |
| (12,330 | ) | (22,460 | ) | ||
Contract retentions |
| 81 |
| 198 |
| ||
Prepaid expenses and other assets |
| 3,130 |
| 1,711 |
| ||
Accounts payable |
| (7,500 | ) | (8,901 | ) | ||
Accrued compensation |
| 3,873 |
| 2,411 |
| ||
Billings in excess of costs on uncompleted contracts |
| (2,289 | ) | (2,461 | ) | ||
Other current liabilities |
| (2,021 | ) | 209 |
| ||
Income taxes receivable |
| (2,166 | ) | (7,397 | ) | ||
Net cash used in operating activities |
| 13,122 |
| (7,398 | ) | ||
|
|
|
|
|
| ||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
| ||
Capital expenditures |
| (2,893 | ) | (2,295 | ) | ||
Payments for business acquisitions, net of cash acquired |
| (31,371 | ) | (72,193 | ) | ||
Proceeds on sale of property and equipment |
| 477 |
| — |
| ||
Net cash used in investing activities |
| (33,787 | ) | (74,488 | ) | ||
|
|
|
|
|
| ||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
| ||
Payments on long-term obligations |
| (25,402 | ) | (5,393 | ) | ||
Proceeds from borrowings under long-term obligations |
| 55,001 |
| 65,000 |
| ||
Net proceeds from issuance of common stock |
| 1,862 |
| 499 |
| ||
Net cash provided by financing activities |
| 31,460 |
| 60,106 |
| ||
|
|
|
|
|
| ||
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
| (8 | ) | 521 |
| ||
|
|
|
|
|
| ||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
| 10,788 |
| (21,259 | ) | ||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
| 23,868 |
| 42,670 |
| ||
|
|
|
|
|
| ||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
| $ | 34,656 |
| $ | 21,411 |
|
|
|
|
|
|
| ||
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
| ||
Cash paid during the period for: |
|
|
|
|
| ||
Interest |
| 459 |
| 191 |
| ||
Income taxes, net of refunds received |
| 10,883 |
| 15,394 |
| ||