Exhibit 99.1
November 9, 2011
Tetra Tech Reports Strong Fourth Quarter and Fiscal 2011 Results
· Q4 Net Revenue up 22%(1) to $476 million
· Q4 Diluted EPS up 20%(1) to $0.42
· FY11 Net Revenue up 25%(1) to $1.79 billion
· FY11 Diluted EPS up 18%(1) to $1.43
Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the fourth quarter and fiscal year ended October 2, 2011.
Fourth Quarter Results
Pro-forma(1): Tetra Tech’s fourth quarter of fiscal 2011 had 13 weeks while the fourth quarter of fiscal 2010 had 14 weeks. The pro-forma presentation excludes the benefit of the additional week in the fourth quarter of fiscal 2010. On this basis, revenue in the fourth quarter of fiscal 2011 was $675.7 million, up 16.0% compared to $582.5 million in the fourth quarter last year. Revenue, net of subcontractor costs(2), was $475.9 million, up 21.6% compared to $391.4 million in the fourth quarter last year. Earnings before interest, taxes, depreciation, and amortization (EBITDA(3)), were $56.4 million, up 28.8% compared to $43.8 million in the fourth quarter last year. Operating income was $43.4 million, up 25.5% compared to $34.6 million in the fourth quarter last year. Net income was $26.4 million, up 22.5% compared to $21.6 million in the fourth quarter last year. Diluted EPS were $0.42, up 20.0% compared to $0.35 in the fourth quarter last year.
GAAP: On a GAAP basis, which includes the results of the additional week in the fourth quarter of fiscal 2010, revenue in the fourth quarter of fiscal 2011 was $675.7 million, up 7.7% compared to $627.4 million last year. Revenue, net of subcontractor costs, was $475.9 million, up 13.1% compared to $420.7 million in the fourth quarter last year. EBITDA were $56.4 million, up 21.6% compared to $46.4 million in the fourth quarter last year. Operating income was $43.4 million, up 17.0% compared to $37.1 million in the fourth quarter last year. Net income was $26.4 million, up 14.1% compared to $23.1 million in the fourth quarter last year. Diluted EPS were $0.42, up 13.5% compared to $0.37 in the fourth quarter last year. Backlog was $1.95 billion, up 5.2% compared to $1.85 billion at the end of fiscal 2010. Cash from operations was $33.2 million, compared to $42.3 million in the fourth quarter last year.
(1) Tetra Tech reports results of operations based on 52 and 53-week periods ending near September 30 of each year. Fiscal years 2011 and 2010 contained 52 and 53 weeks, respectively. The Company believes the pro-forma information presented for the one-week difference provides important data for comparative purposes. A table reconciling the pro-forma data can be found at the end of this release.
(2) Tetra Tech’s revenue includes a significant amount of subcontractor costs and, therefore, the Company believes revenue, net of subcontractor costs, which is a non-GAAP financial measure, provides a valuable perspective on its business results.
(3) EBITDA is a non-GAAP financial measure. The Company believes EBITDA is a useful representation of operating performance because of significant amounts of acquisition-related non-cash amortization expense. A table reconciling net income attributable to Tetra Tech to EBITDA can be found at the end of this release.
Fiscal Year Results
Pro-forma(1): Tetra Tech’s fiscal 2011 had 52 weeks while fiscal 2010 had 53 weeks. The pro-forma presentation excludes the benefit of the additional week in fiscal 2010. Revenue for fiscal 2011 was $2,573.1 million, up 19.3% compared to $2,156.3 million in fiscal 2010. Revenue, net of subcontractor costs, was $1,792.3 million, up 25.3% compared to $1,431.0 million in fiscal 2010. EBITDA were $198.6 million, up 28.2% compared to $155.0 million in fiscal 2010. Operating income was $146.4 million, up 20.1% compared to $122.0 million in fiscal 2010. Net income was $90.0 million, up 19.7% compared to $75.2 million in fiscal 2010. Diluted EPS in fiscal 2011 were $1.43, up 18.2% compared to $1.21 in fiscal 2010.
GAAP: On a GAAP basis, which includes the results of the additional week in fiscal 2010, revenue for fiscal 2011 was $2,573.1 million, up 16.9% compared to $2,201.2 million in fiscal 2010. Revenue, net of subcontractor costs, was $1,792.3 million, up 22.7% compared to $1,460.2 million in fiscal 2010. EBITDA were $198.6 million, up 26.0% compared to $157.6 million in fiscal 2010. Operating income was $146.4 million, up 17.6% compared to $124.5 million in fiscal 2010. Net income was $90.0 million, up 17.2% compared to $76.8 million in fiscal 2010. Diluted EPS in fiscal 2011 were $1.43, up 15.3% compared to $1.24 in fiscal 2010. Cash from operations was $131.6 million, up 23.2% compared to $106.8 million in fiscal 2010.
Tetra Tech’s Chairman and CEO, Dan Batrack said, “Tetra Tech had a strong fiscal 2011 and finished with record results. For the fiscal year, we exceeded our 15% long-term growth goals for revenue and income. This growth was driven by strong demand for our water-related services provided to mining, energy and industrial clients. Over the past year, we have successfully expanded our geographic reach and diversified our customer mix. Today approximately 30% of our net revenue is represented by our international clients. For fiscal 2012, we expect our organic growth to increase as a result of international expansion. Our fiscal 2012 forecast reflects continued growth in the international and commercial markets and stability in our government markets.”
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 2012 to be in the range of $0.33 to $0.36. Revenue, net of subcontractor costs, for the first quarter is expected to range from $450 million to $500 million. For fiscal 2012, Tetra Tech expects diluted EPS to be $1.50 to $1.63. Revenue, net of subcontractor costs, for fiscal 2012 is expected to range from $1.9 billion to $2.1 billion.
Webcast
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 website at www.tetratech.com on November 10, 2011 at 8:00 a.m. (PST).
|
| Three Months Ended |
| Fiscal Year Ended |
| ||||||||
In thousands (except EPS data) |
| Oct. 2, |
| Oct. 3, |
| Oct. 2, |
| Oct. 3, |
| ||||
Revenue |
| $ | 675,662 |
| $ | 627,382 |
| $ | 2,573,144 |
| $ | 2,201,232 |
|
Subcontractor costs |
| (199,724 | ) | (206,707 | ) | (780,817 | ) | (741,002 | ) | ||||
Revenue, net of subcontractor costs |
| 475,938 |
| 420,675 |
| 1,792,327 |
| 1,460,230 |
| ||||
Operating income |
| 43,433 |
| 37,124 |
| 146,422 |
| 124,474 |
| ||||
Interest expense, net |
| (1,452 | ) | (443 | ) | (5,930 | ) | (1,387 | ) | ||||
Income tax expense |
| (14,582 | ) | (13,539 | ) | (47,510 | ) | (46,268 | ) | ||||
Net income including noncontrolling interests |
| 27,399 |
| 23,142 |
| 92,982 |
| 76,819 |
| ||||
Net income attributable to noncontrolling interests |
| (1,000 | ) | — |
| (2,943 | ) | — |
| ||||
Net income |
| $ | 26,399 |
| $ | 23,142 |
| $ | 90,039 |
| $ | 76,819 |
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Earnings per share: |
|
|
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|
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| ||||
Basic |
| $ | 0.42 |
| $ | 0.38 |
| $ | 1.45 |
| $ | 1.25 |
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Diluted |
| $ | 0.42 |
| $ | 0.37 |
| $ | 1.43 |
| $ | 1.24 |
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Weighted-average common shares outstanding: |
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|
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|
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|
| ||||
Basic |
| 62,310 |
| 61,580 |
| 62,053 |
| 61,430 |
| ||||
Diluted |
| 62,864 |
| 61,999 |
| 62,775 |
| 62,087 |
| ||||
About Tetra Tech (www.tetratech.com)
Tetra Tech is a leading provider of consulting, engineering, program management, construction management, and technical services. The Company supports government and commercial clients by providing innovative solutions to complex problems focused on water, natural resources, the environment, infrastructure, and energy. With more than 13,000 employees worldwide, Tetra Tech’s capabilities span the entire project life cycle.
Tetra Tech, Inc.
Regulation G Information
Reconciliation of Net Income to EBITDA
|
| Three Months Ended |
| Fiscal Year Ended |
| ||||||||
In thousands |
| Oct. 2, |
| Oct. 3, |
| Oct. 2, |
| Oct. 3, |
| ||||
Net income attributable to Tetra Tech |
| $ | 26,399 |
| $ | 23,142 |
| $ | 90,039 |
| $ | 76,819 |
|
Interest expense, net |
| 1,452 |
| 443 |
| 5,930 |
| 1,387 |
| ||||
Income tax expense |
| 14,582 |
| 13,539 |
| 47,510 |
| 46,268 |
| ||||
Depreciation |
| 6,737 |
| 5,443 |
| 27,138 |
| 20,402 |
| ||||
Amortization |
| 7,232 |
| 3,832 |
| 27,979 |
| 12,683 |
| ||||
EBITDA |
| $ | 56,402 |
| $ | 46,399 |
| $ | 198,596 |
| $ | 157,559 |
|
Comparison of fiscal 2010 to pro-forma 2010 with 52 weeks
|
| Fourth Quarter 2010 |
| Fiscal Year 2010 |
| ||||||||
In thousands (except EPS data) |
| As Reported |
| Pro-forma |
| As Reported |
| Pro-forma for |
| ||||
Revenue |
| $ | 627,382 |
| $ | 582,478 |
| $ | 2,201,232 |
| $ | 2,156,327 |
|
Revenue, net of subcontractor costs |
| 420,675 |
| 391,430 |
| 1,460,230 |
| 1,430,984 |
| ||||
EBITDA |
| 46,399 |
| 43,805 |
| 157,559 |
| 154,965 |
| ||||
Operating income |
| 37,124 |
| 34,605 |
| 124,474 |
| 121,955 |
| ||||
Net income |
| 23,142 |
| 21,552 |
| 76,819 |
| 75,230 |
| ||||
Diluted earnings per share |
| 0.37 |
| 0.35 |
| 1.24 |
| 1.21 |
| ||||
Pro-forma results were determined by subtracting one week of fourth quarter fiscal 2010 results from as reported figures.
CONTACTS:
Jim Wu, Investor Relations
Talia Starkey, Media & Public Relations
(626) 470-2844
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 and commercial services; credit risks associated with certain commercial clients; concentration of revenues from government agencies and funding disruptions by these agencies; delays in U.S. federal debt ceiling legislation; a disruption in U.S. government funding; shifts in U.S. defense spending; delays in the completion of the U.S. government budget process; violations of government contractor regulations; dependence on winning or renewing federal, state and local government contracts; the delay or unavailability of public funding; 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 ability to maintain adequate utilization of our workforce; 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 and integration risks; goodwill or other intangible asset impairment; growth strategy management; backlog cancellation and adjustments; risks associated with international operations; the failure of partners to perform on joint projects; the failure of subcontractors to satisfy their obligations; changes in resource management or infrastructure industry laws, regulations or programs; changes in capital markets and the access to capital; credit agreement covenants; industry competition; volatility of common stock value; liability related to legal proceedings; the availability of third-party insurance coverage; the ability to obtain adequate bonding; employee, agent or partner misconduct; employee risks related to international travel; safety programs; conflict of interest issues; liabilities relating to environmental laws and regulations; force majeure events; protection of intellectual property rights; and reliance on third-party software to run critical systems. 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.
TETRA TECH, INC.
Consolidated Balance Sheets
(in thousands, except par value)
|
| October 2, |
| October 3, |
| ||
Assets |
|
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|
| ||
Current Assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 90,494 |
| $ | 220,933 |
|
Accounts receivable - net |
| 657,179 |
| 566,642 |
| ||
Prepaid expenses and other current assets |
| 84,612 |
| 49,889 |
| ||
Income taxes receivable |
| 6,817 |
| 7,249 |
| ||
Total current assets |
| 839,102 |
| 844,713 |
| ||
|
|
|
|
|
| ||
Property and equipment - net |
| 77,536 |
| 79,383 |
| ||
Investments in and advances to unconsolidated joint ventures |
| 3,454 |
| 140 |
| ||
Goodwill |
| 569,414 |
| 394,422 |
| ||
Intangible assets - net |
| 81,053 |
| 45,995 |
| ||
Other assets |
| 23,429 |
| 17,036 |
| ||
Total Assets |
| $ | 1,593,988 |
| $ | 1,381,689 |
|
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| ||
Liabilities and Equity |
|
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| ||
Current Liabilities: |
|
|
|
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| ||
Accounts payable |
| $ | 164,819 |
| $ | 166,450 |
|
Accrued compensation |
| 110,937 |
| 93,243 |
| ||
Billings in excess of costs on uncompleted contracts |
| 84,754 |
| 79,401 |
| ||
Deferred income taxes |
| 22,870 |
| 21,851 |
| ||
Current portion of long-term debt |
| 2,556 |
| 5,002 |
| ||
Contingent earn-out liabilities |
| 64,119 |
| 10,513 |
| ||
Other current liabilities |
| 81,654 |
| 90,747 |
| ||
Total current liabilities |
| 531,709 |
| 467,207 |
| ||
|
|
|
|
|
| ||
Deferred income taxes |
| 25,394 |
| 12,506 |
| ||
Long-term debt |
| 144,868 |
| 122,510 |
| ||
Other long-term liabilities |
| 36,767 |
| 31,333 |
| ||
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Commitments and contingencies |
|
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Equity: |
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Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding as of October 2, 2011 and October 3, 2010 |
| — |
| — |
| ||
Common stock - authorized, 150,000 shares of $0.01 par value; issued and outstanding, 62,495 and 61,755 shares as of October 2, 2011 and October 3, 2010, respectively |
| 625 |
| 618 |
| ||
Additional paid-in capital |
| 399,420 |
| 368,865 |
| ||
Accumulated other comprehensive income |
| 4,754 |
| 18,763 |
| ||
Retained earnings |
| 449,926 |
| 359,887 |
| ||
Tetra Tech stockholders’ equity |
| 854,725 |
| 748,133 |
| ||
Noncontrolling interests |
| 525 |
| — |
| ||
Total equity |
| 855,250 |
| 748,133 |
| ||
Total Liabilities and Equity |
| $ | 1,593,988 |
| $ | 1,381,689 |
|
Tetra Tech, Inc.
Consolidated Statements of Income
(in thousands, except per share data)
|
| Three Months Ended |
| Fiscal Year Ended |
| ||||||||
|
| October 2, |
| October 3, |
| October 2, |
| October 3, |
| ||||
|
| 2011 |
| 2010 |
| 2011 |
| 2010 |
| ||||
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|
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| ||||
Revenue |
| $ | 675,662 |
| $ | 627,382 |
| $ | 2,573,144 |
| $ | 2,201,232 |
|
Subcontractor costs |
| (199,724 | ) | (206,707 | ) | (780,817 | ) | (741,002 | ) | ||||
Other costs of revenue |
| (378,669 | ) | (338,672 | ) | (1,462,172 | ) | (1,172,542 | ) | ||||
Selling, general and administrative expenses |
| (53,836 | ) | (44,879 | ) | (183,733 | ) | (163,214 | ) | ||||
Operating income |
| 43,433 |
| 37,124 |
| 146,422 |
| 124,474 |
| ||||
Interest expense - net |
| (1,452 | ) | (443 | ) | (5,930 | ) | (1,387 | ) | ||||
Income before income tax expense |
| 41,981 |
| 36,681 |
| 140,492 |
| 123,087 |
| ||||
Income tax expense |
| (14,582 | ) | (13,539 | ) | (47,510 | ) | (46,268 | ) | ||||
Net income including noncontrolling interests |
| 27,399 |
| 23,142 |
| 92,982 |
| 76,819 |
| ||||
Net income attributable to noncontrolling interests |
| (1,000 | ) | — |
| (2,943 | ) | — |
| ||||
Net income attributable to Tetra Tech |
| $ | 26,399 |
| $ | 23,142 |
| $ | 90,039 |
| $ | 76,819 |
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Earnings per share attributable to Tetra Tech: |
|
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Basic |
| $ | 0.42 |
| $ | 0.38 |
| $ | 1.45 |
| $ | 1.25 |
|
Diluted |
| $ | 0.42 |
| $ | 0.37 |
| $ | 1.43 |
| $ | 1.24 |
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Weighted-average common shares outstanding: |
|
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| ||||
Basic |
| 62,310 |
| 61,580 |
| 62,053 |
| 61,430 |
| ||||
Diluted |
| 62,864 |
| 61,999 |
| 62,775 |
| 62,087 |
| ||||
TETRA TECH, INC
Consolidated Statements of Cash Flows
(in thousands)
|
| Fiscal Year Ended |
| ||||
|
| October 2, |
| October 3, |
| ||
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| 2011 |
| 2010 |
| ||
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income including noncontrolling interests |
| $ | 92,982 |
| $ | 76,819 |
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Adjustments to reconcile net income including noncontrolling interests to net cash from operating activities: |
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Depreciation and amortization |
| 55,684 |
| 33,491 |
| ||
Loss on settlement of foreign currency forward contract |
| 293 |
| 28 |
| ||
Equity in earnings of unconsolidated joint ventures |
| (4,877 | ) | (1,184 | ) | ||
Distributions of earnings from unconsolidated joint ventures |
| 4,802 |
| 1,689 |
| ||
Stock-based compensation |
| 10,582 |
| 10,178 |
| ||
Excess tax benefits from stock-based compensation |
| (104 | ) | (754 | ) | ||
Deferred income taxes |
| 1,720 |
| 11,641 |
| ||
Provision for doubtful accounts |
| 3,733 |
| 7,179 |
| ||
Exchange (gain) and loss |
| 1,288 |
| (205 | ) | ||
Lease termination costs |
| 1,281 |
| — |
| ||
Gain on disposal of property and equipment |
| (231 | ) | (1,480 | ) | ||
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Changes in operating assets and liabilities, net of effects of acquisitions: |
|
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Accounts receivable |
| 2,046 |
| (23,161 | ) | ||
Prepaid expenses and other assets |
| (28,324 | ) | 5,770 |
| ||
Accounts payable |
| (34,013 | ) | (10,002 | ) | ||
Accrued compensation |
| 11,157 |
| 4,582 |
| ||
Billings in excess of costs on uncompleted contracts |
| (1,669 | ) | (19,957 | ) | ||
Other liabilities |
| 4,720 |
| 9,590 |
| ||
Income taxes receivable/payable |
| 10,553 |
| 2,618 |
| ||
Net cash provided by operating activities |
| 131,623 |
| 106,842 |
| ||
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Capital expenditures |
| (18,901 | ) | (21,584 | ) | ||
Payments for business acquisitions, net of cash acquired |
| (269,996 | ) | (78,905 | ) | ||
Payment in settlement of foreign currency forward contract |
| (4,216 | ) | (3,960 | ) | ||
Receipt in settlement of foreign currency forward contract |
| 3,923 |
| 3,932 |
| ||
Restricted cash |
| (5,000 | ) | — |
| ||
Investments in unconsolidated joint ventures |
| (530 | ) | — |
| ||
Proceeds from sale of property and equipment |
| 879 |
| 3,128 |
| ||
Net cash used in investing activities |
| (293,841 | ) | (97,389 | ) | ||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Payments on long-term debt |
| (43,047 | ) | (2,673 | ) | ||
Proceeds from borrowings |
| 66,892 |
| 120,000 |
| ||
Net change overdrafts |
| 726 |
| — |
| ||
Distributions paid to noncontrolling interests |
| (1,702 | ) | — |
| ||
Excess tax benefits from stock-based compensation |
| 104 |
| 754 |
| ||
Net proceeds from issuance of common stock |
| 8,378 |
| 3,353 |
| ||
Net cash provided by financing activities |
| 31,351 |
| 121,434 |
| ||
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EFFECT OF EXCHANGE RATE CHANGES ON CASH |
| 428 |
| 861 |
| ||
|
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
| (130,439 | ) | 131,748 |
| ||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
| 220,933 |
| 89,185 |
| ||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
| $ | 90,494 |
| $ | 220,933 |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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Cash paid during the period for: |
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Interest |
| $ | 4,226 |
| $ | 1,287 |
|
Income taxes, net of refunds received |
| $ | 33,715 |
| $ | 32,407 |
|