Exhibit 99.1
November 12, 2008
Tetra Tech Reports Record Fourth Quarter Results
Exceeding Revenue and Earnings Guidance
· Record net revenue of $348.8 million, up 26.6%
· Record diluted EPS of $0.30, up 25.0%
· Record backlog of $1.65 billion, up 30.8%
Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the fourth quarter and fiscal year ended September 28, 2008. The Company exceeded both its revenue and earnings guidance for the quarter and fiscal year.
Fourth Quarter Results
Revenue in the quarter was $649.2 million, up 49.3% from $434.8 million, and revenue, net of subcontractor costs, was $348.8 million, up 26.6% from $275.5 million for the same quarter last year. Income from operations for the quarter was $30.8 million, up 25.9% from $24.5 million for the same quarter last year. Net income for the quarter was $18.2 million, up 29.2% from $14.1 million for the same quarter last year. Diluted earnings per share (EPS) for the quarter was $0.30, up 25.0% from $0.24 for the same quarter last year. Backlog at the end of the quarter was a record $1.65 billion, up 30.8% from $1.26 billion at the end of the same quarter last year. Cash generated from operations in the fourth quarter was $25.3 million, down 27.6% from $34.9 million for the same quarter last year.
Compared to the fourth quarter of fiscal 2007, Tetra Tech’s federal government business grew 23.2%, driven by increased workload with the U.S. Agency for International Development; state and local business declined 11.7%, due largely to reduced activity on school design projects and the conclusion of a large wired communications project; and commercial business grew 54.3%, driven largely by wind energy and core water and environmental projects.
Fiscal Year Results
Revenue for fiscal 2008 was $2.145 billion, up 38.1% from $1.554 billion, and revenue, net of subcontractor costs, was $1.246 billion, an increase of 23.0% from $1.013 billion for the same period last year. Income from operations for fiscal 2008 was $106.4 million, up 23.3% from $86.3 million for the same period last year. Net income for fiscal 2008 was $60.9 million, up 31.4% from $46.4 million for the same period last year. Diluted EPS for fiscal 2008 was $1.02, up 29.1% from $0.79 for the same period last year. Cash generated from operations improved in fiscal 2008 to $68.4 million, up 46.5% from $46.7 million for the same period last year.
Tetra Tech’s Chairman and CEO Dan Batrack stated, “Tetra Tech had an outstanding fiscal 2008 and we are pleased to report record fourth quarter and fiscal 2008 results. Our excellent performance was driven by our focus on water, environmental, and alternative energy solutions. We thank all of our associates throughout the Company, without whose dedication to service and excellence we could not have accomplished these record results. We also thank our clients for entrusting us with a growing share of their most complex project needs. While we are clearly aware of the current global economic challenges, we are confident in our growth outlook for fiscal 2009. We remain committed to achieving our long-term goal of 15% top and bottom line growth, with approximately half resulting from organic operations and half from acquisitions.”
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| Three Months Ended |
| Fiscal Year Ended |
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In thousands (except EPS data) |
| Sept. 28, |
| Sept. 30, |
| Sept. 28, |
| Sept. 30, |
| ||||
Revenue |
| $ | 649,204 |
| $ | 434,765 |
| $ | 2,145,254 |
| $ | 1,553,888 |
|
Revenue, net of subcontractor costs |
| 348,764 |
| 275,459 |
| 1,245,545 |
| 1,012,915 |
| ||||
Income from operations |
| 30,810 |
| 24,470 |
| 106,400 |
| 86,297 |
| ||||
Interest expense, net |
| (388 | ) | (389 | ) | (2,987 | ) | (2,290 | ) | ||||
Loss on retirement of debt |
| — |
| — |
| — |
| (4,226 | ) | ||||
Income tax expense |
| (12,224 | ) | (9,947 | ) | (42,507 | ) | (33,437 | ) | ||||
Income from continuing operations |
| 18,198 |
| 14,133 |
| 60,906 |
| 46,344 |
| ||||
Income (loss) from discontinued operation, net of tax |
| — |
| (43 | ) | — |
| 9 |
| ||||
Net income |
| $ | 18,198 |
| $ | 14,090 |
| $ | 60,906 |
| $ | 46,353 |
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Earnings per share: |
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Basic |
| $ | 0.31 |
| $ | 0.24 |
| $ | 1.04 |
| $ | 0.80 |
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Diluted |
| $ | 0.30 |
| $ | 0.24 |
| $ | 1.02 |
| $ | 0.79 |
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Weighted-average common shares outstanding: |
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Basic |
| 59,508 |
| 58,227 |
| 58,813 |
| 57,948 |
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Diluted |
| 60,563 |
| 58,911 |
| 59,632 |
| 58,553 |
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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 transactions that may be completed or developments that become evident 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 EPS for the first quarter of fiscal 2009 to be in the range of $0.25 to $0.27. Revenue, net of subcontractor costs, for the first quarter is expected to range from $310 million to $330 million. For fiscal 2009, Tetra Tech expects diluted EPS to be $1.10 to $1.18. Revenue, net of subcontractor costs, for fiscal 2009 is expected to range from $1.275 billion to $1.375 billion.
Webcast
Investors will have the opportunity to access a live audio-visual webcast and supplemental
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financial information concerning the fourth quarter results through a link posted on the Company’s web site at www.tetratech.com on November 13, 2008 at 8:00 a.m. (PST).
About Tetra Tech (www.tetratech.com)
Tetra Tech is a leading provider of consulting, engineering, program management, construction and technical services addressing the resource management and infrastructure markets. The Company supports government and commercial clients by providing innovative solutions focused on water, the environment and alternative energy. With more than 8,500 associates located in the United States and internationally, Tetra Tech’s capabilities span the full project life cycle.
CONTACTS:
Jorge Casado, Investor Relations
Talia Starkey, Media & Public Relations
(626) 351-4664
Forward-Looking Statements
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: worldwide political and economic uncertainties; fluctuations in annual revenue, expenses and operating results; the cyclicality in demand for state and local government services; concentration of revenues from government agencies and funding disruptions by these agencies; a shift in U.S. defense spending; a delay in the completion of the U.S. government budget process; impact of downturns in the financial markets and reductions in government budgets; violations of government contractor regulations; dependence on winning or renewing federal, state and local government contracts; the government’s right to modify, delay, curtail or terminate contracts at its convenience; the failure to properly manage projects; the loss of key personnel or the inability to attract and retain qualified personnel; the use of estimates and assumptions in the preparation of financial statements; the use of the percentage-of-completion method of accounting; the inability to accurately estimate contract risks, revenue and costs; the failure to win or renew contracts with private and public sector clients; acquisition strategy risks; goodwill impairment; growth strategy management; adverse resolution of an IRS examination; backlog cancellation and adjustments; risks associated with international operations; the failure of partners to perform on joint projects; the inability to find qualified subcontractors; the failure of subcontractors to satisfy their obligations; changes in existing environmental laws, regulations or programs; credit risks associated with commercial clients; changes in capital markets and the access to capital; credit agreement covenants; industry competition; the volatility of common stock value; liability risks and the ability to obtain or maintain adequate insurance; the ability to obtain adequate bonding; safety programs; conflict of interest issues; force majeure events; protection of intellectual property rights; and the implementation of the enterprise resource planning system. Any projections in this release are
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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.
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TETRA TECH, INC.
Consolidated Balance Sheets
(in thousands, except par value)
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| September 28, |
| September 30, |
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Assets |
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Current Assets: |
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Cash and cash equivalents |
| $ | 50,902 |
| $ | 76,741 |
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Accounts receivable - net |
| 625,786 |
| 437,315 |
| ||
Prepaid expenses and other current assets |
| 36,774 |
| 28,496 |
| ||
Income taxes receivable |
| 4,275 |
| — |
| ||
Deferred income taxes |
| 2,316 |
| — |
| ||
Current assets of discontinued operations |
| — |
| 304 |
| ||
Total current assets |
| 720,053 |
| 542,856 |
| ||
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Property and equipment: |
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Land and buildings |
| 7,588 |
| 6,630 |
| ||
Equipment, furniture and fixtures |
| 112,780 |
| 100,391 |
| ||
Leasehold improvements |
| 10,804 |
| 10,738 |
| ||
Total |
| 131,172 |
| 117,759 |
| ||
Accumulated depreciation and amortization |
| (69,784 | ) | (63,382 | ) | ||
Property and equipment - net |
| 61,388 |
| 54,377 |
| ||
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Deferred income taxes |
| 6,498 |
| 12,342 |
| ||
Income taxes receivable |
| 14,953 |
| 33,800 |
| ||
Goodwill |
| 221,545 |
| 180,952 |
| ||
Intangible assets - net |
| 14,609 |
| 5,166 |
| ||
Other assets |
| 15,081 |
| 15,576 |
| ||
Non-current assets of discontinued operations |
| 2,418 |
| 2,418 |
| ||
Total Assets |
| $ | 1,056,545 |
| $ | 847,487 |
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Liabilities and Stockholders’ Equity |
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Current Liabilities: |
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Accounts payable |
| $ | 223,304 |
| $ | 154,560 |
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Accrued compensation |
| 101,699 |
| 78,029 |
| ||
Billings in excess of costs on uncompleted contracts |
| 100,336 |
| 55,172 |
| ||
Deferred income taxes |
| — |
| 13,035 |
| ||
Income taxes payable |
| — |
| 1,576 |
| ||
Current portion of long-term obligations |
| 3,926 |
| 3,304 |
| ||
Other current liabilities |
| 58,634 |
| 42,805 |
| ||
Total current liabilities |
| 487,899 |
| 348,481 |
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Long-term obligations |
| 53,292 |
| 81,080 |
| ||
Other long-term liabilities |
| 3,840 |
| 2,223 |
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Commitments and contingencies |
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Stockholders’ Equity: |
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Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding as of September 28, 2008 and September 30, 2007 |
| — |
| — |
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Common stock - authorized, 85,000 shares of $0.01 par value; issued and outstanding 59,875 and 58,387 shares as of September 28, 2008 and September 30, 2007, respectively |
| 599 |
| 584 |
| ||
Additional paid-in capital |
| 314,860 |
| 280,022 |
| ||
Accumulated other comprehensive income (loss) |
| 15 |
| (37 | ) | ||
Retained earnings |
| 196,040 |
| 135,134 |
| ||
Total stockholders’ equity |
| 511,514 |
| 415,703 |
| ||
Total Liabilities and Stockholders’ Equity |
| $ | 1,056,545 |
| $ | 847,487 |
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Tetra Tech, Inc.
Consolidated Statements of Income
(in thousands, except per share data)
|
| Three Months Ended |
| Fiscal Year Ended |
| ||||||||
|
| September 28, |
| September 30, |
| September 28, |
| September 30, |
| ||||
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| 2008 |
| 2007 |
| 2008 |
| 2007 |
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| (unaudited) |
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Revenue |
| $ | 649,204 |
| $ | 434,765 |
| $ | 2,145,254 |
| $ | 1,553,888 |
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Subcontractor costs |
| (300,440 | ) | (159,306 | ) | (899,709 | ) | (540,973 | ) | ||||
Revenue, net of subcontractor costs |
| 348,764 |
| 275,459 |
| 1,245,545 |
| 1,012,915 |
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Other contract costs |
| (274,484 | ) | (218,393 | ) | (991,358 | ) | (812,270 | ) | ||||
Gross profit |
| 74,280 |
| 57,066 |
| 254,187 |
| 200,645 |
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Selling, general and administrative expenses |
| (43,470 | ) | (32,596 | ) | (147,787 | ) | (114,348 | ) | ||||
Income from operations |
| 30,810 |
| 24,470 |
| 106,400 |
| 86,297 |
| ||||
Interest expense - net |
| (388 | ) | (390 | ) | (2,987 | ) | (2,290 | ) | ||||
Loss on retirement of debt |
| — |
| — |
| — |
| (4,226 | ) | ||||
Income before income tax expense |
| 30,422 |
| 24,080 |
| 103,413 |
| 79,781 |
| ||||
Income tax expense |
| (12,224 | ) | (9,947 | ) | (42,507 | ) | (33,437 | ) | ||||
Income from continuing operations |
| 18,198 |
| 14,133 |
| 60,906 |
| 46,344 |
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Income (loss) from discontinued operation, net of tax |
| — |
| (43 | ) | — |
| 9 |
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Net income |
| $ | 18,198 |
| $ | 14,090 |
| $ | 60,906 |
| $ | 46,353 |
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Earnings per share: |
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Basic |
| $ | 0.31 |
| $ | 0.24 |
| $ | 1.04 |
| $ | 0.80 |
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Diluted |
| $ | 0.30 |
| $ | 0.24 |
| $ | 1.02 |
| $ | 0.79 |
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Weighted-average common shares outstanding: |
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Basic |
| 59,508 |
| 58,227 |
| 58,813 |
| 57,948 |
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Diluted |
| 60,563 |
| 58,911 |
| 59,632 |
| 58,553 |
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TETRA TECH, INC
Consolidated Statements of Cash Flows
(in thousands)
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| Fiscal Year Ended |
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| September 28, |
| September 30, |
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| 2008 |
| 2007 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
| $ | 60,906 |
| $ | 46,353 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
| 18,639 |
| 13,723 |
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Stock-based compensation |
| 8,296 |
| 5,763 |
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Excess tax benefits from stock-based compensation |
| (1,663 | ) | (491 | ) | ||
Deferred income taxes |
| 10,662 |
| (1,785 | ) | ||
Write-off of unamortized debt financing costs |
| — |
| 1,069 |
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Provision for losses on contracts and related receivables |
| 6,571 |
| 3,581 |
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Gain on sale of discontinued operations |
| — |
| (414 | ) | ||
Gain on disposal of property and equipment |
| (1,220 | ) | (732 | ) | ||
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Changes in operating assets and liabilities, net of effects of acquisitions: |
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Accounts receivable |
| (156,139 | ) | (85,611 | ) | ||
Prepaid expenses and other assets |
| (9,377 | ) | (6,110 | ) | ||
Accounts payable |
| 58,401 |
| 44,813 |
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Accrued compensation |
| 19,440 |
| 10,416 |
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Billings in excess of costs on uncompleted contracts |
| 42,110 |
| 6,226 |
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Other liabilities |
| 19,219 |
| 1,969 |
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Income taxes receivable/payable |
| (7,465 | ) | 7,906 |
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Net cash provided by operating activities |
| 68,380 |
| 46,676 |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Capital expenditures |
| (17,768 | ) | (13,141 | ) | ||
Payments for business acquisitions, net of cash acquired |
| (77,771 | ) | (31,343 | ) | ||
Proceeds from sale of discontinued operations |
| 3,614 |
| 3,901 |
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Proceeds from sale of property and equipment |
| 2,089 |
| 896 |
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Net cash used in investing activities |
| (89,836 | ) | (39,687 | ) | ||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Payments on long-term obligations |
| (41,713 | ) | (130,677 | ) | ||
Proceeds from borrowings under long-term obligations |
| 15,000 |
| 128,000 |
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Payment of deferred financing fees |
| — |
| (1,032 | ) | ||
Excess tax benefits from stock-based compensation |
| 1,663 |
| 491 |
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Net proceeds from issuance of common stock |
| 20,667 |
| 7,617 |
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Net cash (used in) provided by financing activities |
| (4,383 | ) | 4,399 |
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NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
| (25,839 | ) | 11,388 |
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
| 76,741 |
| 65,353 |
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CASH AND CASH EQUIVALENTS AT END OF PERIOD |
| $ | 50,902 |
| $ | 76,741 |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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Cash paid during the period for: |
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Interest |
| $ | 3,977 |
| $ | 6,564 |
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Income taxes, net of refunds received |
| $ | 34,228 |
| $ | 27,852 |
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