Exhibit 99.1
January 26, 2005
Tetra Tech Reports First Quarter 2005 Results
Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the first quarter ended January 2, 2005. Revenue for the first quarter was $348.3 million, up 3.3% over revenue of $337.1 million for the same quarter last year. Revenue, net of subcontractor costs, for the first quarter was $243.1 million, increasing 0.6% from $241.7 million for the same quarter last year. Income from operations for the first quarter was $15.8 million, or 33.9% less than income from operations of $23.9 million for the same period last year. Net income for the first quarter was $7.9 million, or 38.9% less than net income of $12.9 million for the same period last year. Diluted earnings per share was 14 cents compared to diluted earnings per share of 23 cents for the same period last year, a 39.1% decrease.
Unaudited - - in thousands, except EPS
|
| First Quarter Ended |
| ||||
|
| January 2, |
| December 28, 2003 |
| ||
Revenue |
| $ | 348,342 |
| $ | 337,102 |
|
Revenue, Net of Subcontractor Costs |
| 243,097 |
| 241,705 |
| ||
Income from Operations |
| 15,828 |
| 23,941 |
| ||
Net Income |
| 7,903 |
| 12,942 |
| ||
|
|
|
|
|
| ||
Earnings Per Share (EPS): |
|
|
|
|
| ||
Basic |
| $ | 0.14 |
| $ | 0.23 |
|
Diluted |
| $ | 0.14 |
| $ | 0.23 |
|
Weighted Average Common Shares Outstanding: |
|
|
|
|
| ||
Basic |
| 56,469 |
| 55,504 |
| ||
Diluted |
| 56,977 |
| 57,395 |
| ||
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 second quarter of fiscal 2005 to be in the range of 15 cents to 17 cents. Revenue, net of subcontractor costs, for the second quarter is expected to range from approximately $235 million to $245 million. For the fiscal year, Tetra Tech’s guidance remains unchanged. Tetra Tech expects diluted earnings per share for the year
to range from approximately $0.76 to $0.83, and revenue, net of subcontractor costs, for the year, to range from approximately $1.0 billion to $1.1 billion.
Webcast
Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the first quarter results through a link posted on the Company’s web site at www.tetratech.com on January 27, 2005 at 8:00 a.m. (PST).
About Tetra Tech (www.tetratech.com)
Tetra Tech is a leading provider of consulting, engineering and technical services. With over 8,000 associates located in the United States and internationally, the Company supports commercial and government clients in the areas of resource management, infrastructure and communications. Tetra Tech’s services include research and development, applied science and technology, engineering design, program management, 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: fluctuations in quarterly operating results; the impact of downturns in the financial markets and reductions in government budgets; volatility of common stock value; concentration of revenues from government agencies and funding disruptions by these agencies; failure to properly manage projects; acquisition strategy risks; management of growth strategy; use of the percentage-of-completion method of accounting; adverse resolution of an IRS examination; loss of key personnel or the inability to attract and retain qualified personnel; implementation of the enterprise resource planning system; international operations risks; credit risks associated with commercial clients; 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 and adjustments; client base consolidation; failure of partners to perform on joint projects; inability to find qualified subcontractors; changes in existing environmental laws, regulations or programs; competition; restrictive covenants in debt agreements; risks of professional and other liabilities; adverse resolution of litigation; conflict of interest issues; changes in accounting for equity-related compensation; expenses associated with corporate governance; and disruption of operations due to computer viruses or terrorism. 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. Readers should not place undue reliance on forward-looking statements since such information speaks only as of the date of this release.
2
TETRA TECH, INC.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
|
| January 2, |
| October 3, |
| ||
|
| (Unaudited) |
|
|
| ||
|
|
|
|
|
| ||
ASSETS |
|
|
|
|
| ||
CURRENT ASSETS: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 20,568 |
| $ | 48,032 |
|
Accounts receivable - net |
| 391,280 |
| 374,630 |
| ||
Prepaid expenses and other current assets |
| 27,107 |
| 23,857 |
| ||
Income taxes receivable |
| 3,846 |
| 6,148 |
| ||
Total current assets |
| 442,801 |
| 452,667 |
| ||
|
|
|
|
|
| ||
PROPERTY AND EQUIPMENT: |
|
|
|
|
| ||
Equipment, furniture and fixtures |
| 89,373 |
| 87,159 |
| ||
Leasehold improvements |
| 9,713 |
| 9,694 |
| ||
Total |
| 99,086 |
| 96,853 |
| ||
Accumulated depreciation and amortization |
| (58,552 | ) | (55,572 | ) | ||
PROPERTY AND EQUIPMENT - NET |
| 40,534 |
| 41,281 |
| ||
|
|
|
|
|
| ||
INCOME TAXES RECEIVABLE |
| 33,800 |
| 33,800 |
| ||
|
|
|
|
|
| ||
GOODWILL |
| 260,822 |
| 254,553 |
| ||
|
|
|
|
|
| ||
INTANGIBLE AND OTHER ASSETS - NET |
| 24,146 |
| 26,206 |
| ||
|
|
|
|
|
| ||
TOTAL ASSETS |
| $ | 802,103 |
| $ | 808,507 |
|
|
|
|
|
|
| ||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||
CURRENT LIABILITIES: |
|
|
|
|
| ||
Accounts payable |
| $ | 89,886 |
| $ | 111,038 |
|
Accrued compensation |
| 44,483 |
| 55,493 |
| ||
Billings in excess of costs on uncompleted contracts |
| 25,283 |
| 28,941 |
| ||
Deferred income taxes |
| 4,869 |
| 4,421 |
| ||
Current portion of long-term obligations |
| 18,735 |
| 59,024 |
| ||
Other current liabilities |
| 44,186 |
| 48,921 |
| ||
Total current liabilities |
| 227,442 |
| 307,838 |
| ||
|
|
|
|
|
| ||
DEFERRED INCOME TAXES |
| 11,090 |
| 11,027 |
| ||
|
|
|
|
|
| ||
LONG-TERM OBLIGATIONS |
| 156,624 |
| 92,142 |
| ||
|
|
|
|
|
| ||
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
| ||
|
|
|
|
|
| ||
STOCKHOLDERS’ EQUITY: |
|
|
|
|
| ||
Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding as of January 2, 2005, and October 3, 2004 |
| — |
| — |
| ||
Exchangeable stock of a subsidiary |
| 1,426 |
| 1,426 |
| ||
Common stock - authorized, 85,000 shares of $0.01 par value; issued and outstanding 56,428 and 56,305 shares as of January 2, 2005 and October 3, 2004 respectively |
| 564 |
| 563 |
| ||
Additional paid-in capital |
| 244,543 |
| 243,490 |
| ||
Accumulated other comprehensive income |
| 865 |
| 375 |
| ||
Retained earnings |
| 159,549 |
| 151,646 |
| ||
TOTAL STOCKHOLDERS’ EQUITY |
| 406,947 |
| 397,500 |
| ||
|
|
|
|
|
| ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 802,103 |
| $ | 808,507 |
|
TETRA TECH, INC.
Condensed Consolidated Statements of Income
(Unaudited - in thousands, except per share data)
|
| Three Months Ended |
| ||||||
|
| January 2, |
| December 28, |
| % |
| ||
|
|
|
|
|
|
|
| ||
Revenue |
| $ | 348,342 |
| $ | 337,102 |
| 3.3 |
|
Subcontractor costs |
| 105,245 |
| 95,397 |
| 10.3 |
| ||
Revenue, net of subcontractor costs |
| 243,097 |
| 241,705 |
| 0.6 |
| ||
Other contract costs |
| 202,053 |
| 193,846 |
| 4.2 |
| ||
Gross profit |
| 41,044 |
| 47,859 |
| -14.2 |
| ||
Selling, general and administrative expenses |
| 25,216 |
| 23,918 |
| 5.4 |
| ||
Income from operations |
| 15,828 |
| 23,941 |
| -33.9 |
| ||
Interest expense - net |
| 2,478 |
| 2,372 |
| 4.5 |
| ||
Income before income tax expense |
| 13,350 |
| 21,569 |
| -38.1 |
| ||
Income tax expense |
| 5,447 |
| 8,627 |
| -36.9 |
| ||
Net income |
| $ | 7,903 |
| $ | 12,942 |
| -38.9 |
|
Earnings per share: |
|
|
|
|
|
|
| ||
Basic |
| $ | 0.14 |
| $ | 0.23 |
| -39.1 |
|
Diluted |
| $ | 0.14 |
| $ | 0.23 |
| -39.1 |
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
| ||
Basic |
| 56,469 |
| 55,504 |
| 1.7 |
| ||
Diluted |
| 56,977 |
| 57,395 |
| -0.7 |
| ||
|
|
|
|
|
|
|
| ||
Percentage of revenue, net of subcontractor costs: |
|
|
|
|
|
|
| ||
Revenue, net of subcontractor costs |
| 100.0 | % | 100.0 | % |
|
| ||
Other contract costs |
| 83.1 | % | 80.2 | % |
|
| ||
Gross profit |
| 16.9 | % | 19.8 | % |
|
| ||
Selling, general and administrative expenses |
| 10.4 | % | 9.9 | % |
|
| ||
Income from operations |
| 6.5 | % | 9.9 | % |
|
| ||
Interest expense - net |
| 1.0 | % | 1.0 | % |
|
| ||
Income before income tax expense |
| 5.5 | % | 8.9 | % |
|
| ||
Income tax expense |
| 2.2 | % | 3.6 | % |
|
| ||
Net income |
| 3.3 | % | 5.3 | % |
|
| ||
TETRA TECH, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited - in thousands)
|
| Three Months Ended |
| ||||
|
| January 2, |
| December 28, |
| ||
|
|
|
|
|
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net income |
| $ | 7,903 |
| $ | 12,942 |
|
|
|
|
|
|
| ||
Adjustments to reconcile net income to net cash used by operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
| 4,233 |
| 4,454 |
| ||
Deferred income taxes |
| 251 |
| 398 |
| ||
Provision for losses on receivables |
| 2,528 |
| 819 |
| ||
(Gain) loss on disposal of property and equipment |
| (60 | ) | 52 |
| ||
|
|
|
|
|
| ||
Changes in operating assets and liabilities, net of effects of acquisitions: |
|
|
|
|
| ||
Accounts receivable |
| (19,177 | ) | (27,443 | ) | ||
Prepaid expenses and other assets |
| (1,689 | ) | (2,348 | ) | ||
Accounts payable |
| (21,152 | ) | (2,757 | ) | ||
Accrued compensation |
| (11,010 | ) | (7,893 | ) | ||
Billings in excess of costs on uncompleted contracts |
| (3,658 | ) | 3,926 |
| ||
Other current liabilities |
| (3,592 | ) | 513 |
| ||
Income taxes receivable/payable |
| (2,396 | ) | (5,985 | ) | ||
Net cash used in operating activities |
| (47,819 | ) | (23,322 | ) | ||
|
|
|
|
|
| ||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
| ||
Capital expenditures |
| (3,274 | ) | (4,319 | ) | ||
Payments for business acquisitions, net of cash acquired |
| (2,228 | ) | — |
| ||
Proceeds on sale of property and equipment |
| 444 |
| 424 |
| ||
Net cash used in investing activities |
| (5,058 | ) | (3,895 | ) | ||
|
|
|
|
|
| ||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
| ||
Payments on long-term obligations |
| (807 | ) | (17,698 | ) | ||
Proceeds from borrowings under long-term obligations |
| 25,000 |
| 32,323 |
| ||
Net proceeds from issuance of common stock |
| 971 |
| 3,201 |
| ||
Net cash provided by financing activities |
| 25,164 |
| 17,826 |
| ||
|
|
|
|
|
| ||
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
| 249 |
| 95 |
| ||
|
|
|
|
|
| ||
NET DECREASE IN CASH AND CASH EQUIVALENTS |
| (27,464 | ) | (9,296 | ) | ||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
| 48,032 |
| 33,164 |
| ||
|
|
|
|
|
| ||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
| $ | 20,568 |
| $ | 23,868 |
|
|
|
|
|
|
| ||
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
| ||
Cash paid during the period for: |
|
|
|
|
| ||
Interest |
| $ | 4,543 |
| $ | 4,359 |
|
Income taxes, net of refunds received |
| $ | 7,506 |
| $ | 14,109 |
|