Exhibit 99.1
 | NEWS RELEASE January 29, 2025 |
Tetra Tech Reports Strong First Quarter Results
· Record Revenue $1.42 billion, up 16% Y/Y
· Record Net Revenue $1.20 billion, up 18% Y/Y
· Operating Income $23 million; adjusted operating income $138 million, up 24% Y/Y
· Record Backlog $5.44 billion, up 15% Y/Y
· Raised high-end and reaffirmed midpoint of FY25 EPS guidance
Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK), a leading provider of high-end consulting and engineering services in water, environment and sustainable infrastructure, today announced results for the first quarter ended December 29, 2024.
First Quarter Highlights
| · | Revenue increased 16% Y/Y to $1.42 billion |
| · | Net Revenue1 increased 18% Y/Y to $1.20 billion |
| · | Operating Income $23 million; adjusted Operating Income increased 24% Y/Y to $138 million |
| · | EPS $0.00; adjusted EPS1 increased 25% Y/Y to $0.35 |
| · | Backlog increased 15% Y/Y to $5.44 billion |
| · | Industry-leading DSO of 55.9 days |
Recent Key Wins
| · | $498 million five-year multiple award contracts to deliver architect-engineering services and civil works support for USACE in Los Angeles and Japan Districts |
| · | $249 million five-year multiple award contract for planning and engineering services for USACE Mobile District |
| · | $100 million five-year multiple award contract for the Office of Land and Emergency Management for research and analysis of emerging advanced environmental technologies |
| · | $66 million five-year single award contract to provide disaster and emergency response services in the U.S. Midwest |
| · | $46 million multiple award architect-engineering contract for flood and emergency response for USACE |
1 Non-GAAP financial measures which the Company believes provide valuable perspectives on its business results. Refer to tables at the end of the release and Regulation G Information for reconciliations to the comparable GAAP metrics.
Chairman and CEO Comments
Dan Batrack, Chairman and CEO, commented, “Tetra Tech began fiscal 2025 with a strong first quarter, which included all-time record high quarterly revenue and backlog, and record high first quarter adjusted operating income and EPS. We continued to see significant demand for our differentiated services in water, environment, and sustainable infrastructure across our global operations. In the first quarter, we added over $1 billion of new contract capacity, which included contracts for essential water supply, flood control structures and inland navigation. With our record backlog and momentum, we are well positioned to respond to our U.S. and international clients’ priorities.”
Quarterly Dividend and Share Repurchase Program
On January 27, 2025, Tetra Tech’s Board of Directors approved the Company’s 43rd consecutive quarterly dividend at an amount of $0.058 per share, a 12% increase year-over-year, payable on February 26, 2025, to stockholders of record as of February 12, 2025. In the first quarter, Tetra Tech repurchased $25 million of common stock. Additionally, as of December 29, 2024, the Company had $323 million remaining under its $400 million share repurchase program.
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.
At the direction of the new U.S. Administration, Tetra Tech has paused some of its U.S. federal government work, particularly with USAID, while assisting our clients with their review of multiple programs across the various government agencies we support. Tetra Tech has updated its guidance for fiscal year 2025 based on its current outlook, which includes the potential impact of the ongoing U.S. federal government review process.
For fiscal 2025, Tetra Tech expects the full year guidance for net revenue2 to range from $4.365 billion to $4.765 billion and adjusted EPS3 to range from $1.37 to $1.52. For the second quarter in fiscal 2025, Tetra Tech expects net revenue to range from $1.0 billion to $1.1 billion and EPS to range from $0.30 to $0.33.
Webcast
Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the first quarter of fiscal 2025 results through a link posted on the Company’s website at tetratech.com on January 30, 2025, at 8:00 a.m. (PT).
2 Reconciliation of the net revenue guidance to the most directly comparable GAAP measure is not available without unreasonable efforts because the Company cannot predict the magnitude and timing of all the components, including subcontractor costs, required to provide such reconciliation with sufficient precision.
3 The only adjustment in our guidance for EPS is to exclude the legal settlement costs of $0.35 in the first quarter of fiscal 2025.
Reconciliation of GAAP and Non-GAAP Items
In thousands (except EPS data)
| Three Months Ended | ||||||||
| December 29, 2024 | December 31, 2023 | |||||||
| Revenue | $ | 1,420,561 | $ | 1,228,267 | ||||
| Subcontractor costs | (223,231 | ) | (213,098 | ) | ||||
| Net revenue | $ | 1,197,330 | $ | 1,015,169 | ||||
| Operating Income | $ | 22,526 | $ | 111,081 | ||||
| Legal contingency costs | 115,000 | - | ||||||
| Contingent consideration | - | (37 | ) | |||||
| Adjusted Operating Income | $ | 137,526 | $ | 111,044 | ||||
| EPS | $ | 0.00 | $ | 0.28 | ||||
| Legal contingency costs | 0.35 | - | ||||||
| Adjusted EPS | $ | 0.35 | $ | 0.28 | ||||
About Tetra Tech
Tetra Tech is the leader in water, environment and sustainable infrastructure, providing high-end consulting and engineering services for projects worldwide. With 30,000 employees working together, Tetra Tech provides clear solutions to complex problems by Leading with Science® to address the entire water cycle, protect and restore the environment, design sustainable and resilient infrastructure, and support the clean energy transition. For more information about Tetra Tech, please visit tetratech.com or follow us on LinkedIn and Facebook.
CONTACTS:
Jim Wu, Investor Relations
Charlie MacPherson, Media & Public Relations
(626) 470-2844
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as "anticipate," "expect," "could," "may," "intend," "plan" and "believe," among others, generally identify forward-looking statements. These forward-looking statements are based on current expectations and beliefs of Tetra Tech’s management and currently available operating, financial, economic and other information, and are subject to a number of risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. A variety of factors, many of which are beyond our control, could cause actual future results or events to differ materially from those projected in the forward-looking statements in this release, including but not limited to: continuing worldwide political and economic uncertainties; the U.S. Administration’s potential changes to fiscal policies; the cyclicality in demand for our overall services; the fluctuation in demand for oil and gas, and mining services; risks related to international operations; concentration of revenues from U.S. government agencies and potential funding disruptions by these agencies; dependence on winning or renewing U.S. government contracts; the delay or unavailability of public funding on U.S. government contracts; the U.S. government’s right to modify, delay, curtail or terminate contracts at its convenience; compliance with government procurement laws and regulations; the impact of global pandemics; credit risks associated with certain clients in certain geographic areas or industries; acquisition strategy and integration risks; goodwill or other intangible asset impairment; the failure to comply with worldwide anti-bribery laws; the failure to comply with domestic and international export laws; the failure to properly manage projects; the loss of key personnel or the inability to attract and retain qualified personnel; the ability of our employees to obtain government granted eligibility; the use of estimates and assumptions in the preparation of financial statements; the ability to maintain adequate workforce utilization; the use of the percentage-of-completion method of accounting; the inability to accurately estimate and control contract costs; the failure to adequately recover on our claims for additional contract costs; the failure to win or renew contracts with private and public sector clients; growth strategy management; backlog cancellation and adjustments; risks relating to cyber security breaches; the failure of partners to perform on joint projects; the failure of subcontractors to satisfy their obligations; requirements to pay liquidated damages based on contract performance; the adoption of new legal requirements; changes in resource management, environmental or infrastructure industry laws, regulations or programs; changes in bank and capital markets and the access to capital; credit agreement covenants; industry competition; liability related to legal proceedings, investigations, and disputes; 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 reports and opinions; liabilities relating to environmental laws and regulations; force majeure events; protection of intellectual property rights; stock price volatility; the ability to impede a business combination based on Delaware law and charter documents; and other risks and uncertainties as may be described in Tetra Tech’s periodic filings with the Securities and Exchange Commission, including those described in the “Risk Factors” section of Tetra Tech’s Annual Report on Form 10-K for the fiscal year ended September 29, 2024. Readers should not place undue reliance on forward-looking statements since such information speaks only as of the date of this release. Tetra Tech does not intend to update forward-looking statements and expressly disclaims any obligation to do so.
Non-GAAP Financial Measures
To supplement the financial results presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we present certain non-GAAP financial measures within the meaning of Regulation G under the Securities Exchange Act of 1934, as amended. We provide these non-GAAP financial measures because we believe they provide a valuable perspective on our financial results. However, non-GAAP measures have limitations as analytical tools and should not be considered in isolation and are not in accordance with, or a substitute for, GAAP measures. In addition, other companies may define non-GAAP measures differently which limits the ability of investors to compare non-GAAP measures of Tetra Tech to those used by our peer companies. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is set forth above in this release.
Tetra Tech, Inc
Consolidated Balance Sheets
(unaudited - in thousands, except par value)
| As of | ||||||||
| December 29, | September 29, | |||||||
| 2024 | 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | 248,104 | 232,689 | ||||||
| Accounts receivable, net | 1,117,666 | 1,051,461 | ||||||
| Contract assets | 122,310 | 129,678 | ||||||
| Prepaid expenses and other current assets | 143,768 | 113,555 | ||||||
| Total current assets | 1,631,848 | 1,527,383 | ||||||
| Property and equipment, net | 67,102 | 73,065 | ||||||
| Right-of-use assets, operating leases | 172,080 | 177,950 | ||||||
| Goodwill | 1,968,684 | 2,046,569 | ||||||
| Intangible assets, net | 142,097 | 160,585 | ||||||
| Deferred tax assets | 96,916 | 105,529 | ||||||
| Other non-current assets | 100,457 | 101,595 | ||||||
| Total assets | 4,179,184 | 4,192,676 | ||||||
| Liabilities and Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | 238,157 | 197,440 | ||||||
| Accrued compensation | 222,549 | 332,096 | ||||||
| Contract liabilities | 359,957 | 351,738 | ||||||
| Short-term lease liabilities, operating leases | 61,184 | 63,419 | ||||||
| Current contingent earn-out liabilities | 24,153 | 26,934 | ||||||
| Other current liabilities | 361,345 | 247,900 | ||||||
| Total current liabilities | 1,267,345 | 1,219,527 | ||||||
| Deferred tax liabilities | 24,902 | 30,162 | ||||||
| Long-term debt | 888,450 | 812,634 | ||||||
| Long-term lease liabilities, operating leases | 134,759 | 140,095 | ||||||
| Non-current contingent earn-out liabilities | 22,007 | 21,812 | ||||||
| Other non-current liabilities | 149,702 | 138,033 | ||||||
| Equity: | ||||||||
| Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding at December 29, 2024 and September 29, 2024 | - | - | ||||||
| Common stock - authorized, 750,000 shares of $0.01 par value; issued and outstanding, 268,028 and 267,717 shares at December 29, 2024 and September 29, 2024, respectively | 2,680 | 2,677 | ||||||
| Additional paid-in capital | 21,153 | 35,900 | ||||||
| Accumulated other comprehensive loss | (187,754 | ) | (78,875 | ) | ||||
| Retained earnings | 1,855,818 | 1,870,620 | ||||||
| Tetra Tech stockholders' equity | 1,691,897 | 1,830,322 | ||||||
| Noncontrolling interests | 122 | 91 | ||||||
| Total stockholders' equity | 1,692,019 | 1,830,413 | ||||||
| Total liabilities and stockholders' equity | 4,179,184 | 4,192,676 | ||||||
Tetra Tech, Inc.
Consolidated Statements of Income
(unaudited - in thousands, except per share data)
| Three Months Ended | ||||||||
| December 29, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Revenue | $ | 1,420,561 | $ | 1,228,267 | ||||
| Subcontractor costs | (223,231 | ) | (213,098 | ) | ||||
| Other costs of revenue | (975,853 | ) | (824,671 | ) | ||||
| Gross profit | 221,477 | 190,498 | ||||||
| Selling, general and administrative expenses | (83,951 | ) | (79,417 | ) | ||||
| Legal contingency costs | (115,000 | ) | - | |||||
| Income from operations | 22,526 | 111,081 | ||||||
| Interest expense, net | (7,218 | ) | (9,577 | ) | ||||
| Income before income tax expense | 15,308 | 101,504 | ||||||
| Income tax expense | (14,530 | ) | (26,524 | ) | ||||
| Net income | 778 | 74,980 | ||||||
| Net income attributable to noncontrolling interests | (31 | ) | (8 | ) | ||||
| Net income attributable to Tetra Tech | $ | 747 | $ | 74,972 | ||||
| Earnings per share attributable to Tetra Tech: | ||||||||
| Basic | $ | 0.00 | $ | 0.28 | ||||
| Diluted | $ | 0.00 | $ | 0.28 | ||||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 267,854 | 266,585 | ||||||
| Diluted | 271,886 | 268,690 | ||||||
Tetra Tech, Inc.
Consolidated Statements of Cash Flows
(unaudited - in thousands)
| Three Months Ended | ||||||||
| December 29, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 778 | $ | 74,980 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 16,063 | 19,484 | ||||||
| Amortization of stock-based awards | 8,142 | 7,641 | ||||||
| Deferred income taxes | 767 | (1,624 | ) | |||||
| Other non-cash items | 775 | 123 | ||||||
| Changes in operating assets and liabilities, net of effects of business acquisitions: | ||||||||
| Accounts receivable and contract assets | (91,725 | ) | (22,288 | ) | ||||
| Prepaid expenses and other assets | (26,186 | ) | (28,615 | ) | ||||
| Accounts payable | 44,194 | 33,790 | ||||||
| Accrued compensation | (101,641 | ) | (80,069 | ) | ||||
| Contract liabilities | 27,527 | 41,862 | ||||||
| Income taxes receivable/payable | (1,538 | ) | (15,941 | ) | ||||
| Cash settled contingent earn-out liability | (2,720 | ) | - | |||||
| Other liabilities | 138,627 | (20,097 | ) | |||||
| Net cash provided by operating activities | 13,063 | 9,246 | ||||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | (3,433 | ) | (3,434 | ) | ||||
| Net cash used in investing activities | (3,433 | ) | (3,434 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from borrowings | 90,000 | 125,000 | ||||||
| Repayments on long-term debt | (15,000 | ) | (60,000 | ) | ||||
| Repurchases of common stock | (25,000 | ) | - | |||||
| Shares repurchased for tax withholdings on share-based awards | (13,307 | ) | (12,670 | ) | ||||
| Payments of contingent earn-out liabilities | (145 | ) | (18,862 | ) | ||||
| Stock options exercised | 114 | 335 | ||||||
| Dividends paid | (15,549 | ) | (13,873 | ) | ||||
| Principal payments on finance leases | (1,719 | ) | (1,539 | ) | ||||
| Net cash provided by financing activities | 19,394 | 18,391 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (13,609 | ) | 5,655 | |||||
| Net increase in cash and cash equivalents | 15,415 | 29,858 | ||||||
| Cash and cash equivalents at beginning of period | 232,689 | 168,831 | ||||||
| Cash and cash equivalents at end of period | $ | 248,104 | $ | 198,689 | ||||
| Supplemental information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 4,295 | $ | 6,369 | ||||
| Income taxes, net of refunds received of $1.7 million and $0.9 million | $ | 14,489 | $ | 43,297 | ||||
Tetra Tech, Inc.
Regulation G Information
December 29, 2024
Reconciliation of Revenue to Revenue, Net of Subcontractor Costs ("Net Revenue")
(in millions)
| 2024 | 2025 | |||||||||||||||||||||||||||||||||||||||
| 2022 | 2023 | 1st Qtr | 2nd Qtr | 6 mos | 3rd Qtr | 9 Mos | 4th Qtr | Total | 1st Qtr | |||||||||||||||||||||||||||||||
| Consolidated | ||||||||||||||||||||||||||||||||||||||||
| Revenue | 3,504.0 | 4,522.6 | 1,228.3 | 1,251.6 | 2,479.9 | 1,344.3 | 3,824.2 | 1,374.5 | 5,198.7 | 1,420.6 | ||||||||||||||||||||||||||||||
| Subcontractor Costs | (668.5 | ) | (771.5 | ) | (213.1 | ) | (199.0 | ) | (412.1 | ) | (234.7 | ) | (646.8 | ) | (230.0 | ) | (876.8 | ) | (223.3 | ) | ||||||||||||||||||||
| Net Revenue | 2,835.5 | 3,751.1 | 1,015.2 | 1,052.6 | 2,067.8 | 1,109.6 | 3,177.4 | 1,144.5 | 4,321.9 | 1,197.3 | ||||||||||||||||||||||||||||||
| GSG Segment | ||||||||||||||||||||||||||||||||||||||||
| Revenue | 1,820.9 | 2,158.9 | 575.0 | 597.1 | 1,172.2 | 640.6 | 1,812.7 | 670.6 | 2,483.4 | 751.8 | ||||||||||||||||||||||||||||||
| Subcontractor Costs | (484.4 | ) | (523.4 | ) | (132.3 | ) | (130.6 | ) | (263.0 | ) | (152.3 | ) | (415.3 | ) | (158.1 | ) | (573.4 | ) | (150.6 | ) | ||||||||||||||||||||
| Net Revenue | 1,336.5 | 1,635.5 | 442.7 | 466.5 | 909.2 | 488.3 | 1,397.4 | 512.5 | 1,910.0 | 601.2 | ||||||||||||||||||||||||||||||
| CIG Segment | ||||||||||||||||||||||||||||||||||||||||
| Revenue | 1,738.4 | 2,424.6 | 669.1 | 671.2 | 1,340.3 | 723.6 | 2,063.9 | 722.9 | 2,786.7 | 688.2 | ||||||||||||||||||||||||||||||
| Subcontractor Costs | (239.3 | ) | (309.0 | ) | (96.6 | ) | (85.1 | ) | (181.7 | ) | (102.2 | ) | (283.9 | ) | (90.9 | ) | (374.8 | ) | (92.1 | ) | ||||||||||||||||||||
| Net Revenue | 1,499.1 | 2,115.6 | 572.5 | 586.1 | 1,158.6 | 621.4 | 1,780.0 | 632.0 | 2,411.9 | 596.1 | ||||||||||||||||||||||||||||||
Reconciliation of Net Income Attributable to Tetra Tech to Adjusted EBITDA
(in thousands)
| 2024 | 2025 | |||||||||||||||||||||||||||||||||||||||
| 2022 | 2023 | 1st Qtr | 2nd Qtr | 6 mos | 3rd Qtr | 9 Mos | 4th Qtr | Total | 1st Qtr | |||||||||||||||||||||||||||||||
| Net Income Attributable to Tetra Tech | 263,125 | 273,420 | 74,972 | 76,446 | 151,418 | 85,810 | 237,228 | 96,154 | 333,382 | 747 | ||||||||||||||||||||||||||||||
| Income Tax Expense | 85,602 | 127,526 | 26,523 | 31,341 | 57,864 | 32,894 | 90,757 | 39,266 | 130,023 | 14,530 | ||||||||||||||||||||||||||||||
| Interest Expense1 | 11,584 | 46,537 | 9,578 | 9,883 | 19,461 | 9,912 | 29,374 | 7,897 | 37,271 | 7,218 | ||||||||||||||||||||||||||||||
| Depreciation | 13,859 | 19,980 | 6,951 | 5,637 | 12,588 | 5,713 | 18,301 | 5,421 | 23,722 | 5,402 | ||||||||||||||||||||||||||||||
| Amortization | 13,174 | 41,226 | 12,533 | 12,094 | 24,627 | 13,790 | 38,417 | 11,538 | 49,955 | 10,661 | ||||||||||||||||||||||||||||||
| FX Hedge Gain | (19,904 | ) | (89,402 | ) | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| EBITDA | 367,440 | 419,287 | 130,557 | 135,401 | 265,958 | 148,119 | 414,077 | 160,276 | 574,353 | 38,558 | ||||||||||||||||||||||||||||||
| Contingent Consideration | - | 12,255 | (37 | ) | 14 | (22 | ) | 500 | 477 | 2,064 | 2,541 | - | ||||||||||||||||||||||||||||
| Acquisition & Integration Expenses2 | - | 49,554 | - | - | - | - | - | 7,138 | 7,138 | - | ||||||||||||||||||||||||||||||
| Legal Contingency Costs | - | - | - | - | - | - | - | - | - | 115,000 | ||||||||||||||||||||||||||||||
| COVID-19 Credits | (6,486 | ) | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Adjusted EBITDA | 360,954 | 481,096 | 130,520 | 135,415 | 265,936 | 148,619 | 414,554 | 169,478 | 584,032 | 153,558 | ||||||||||||||||||||||||||||||
1 Includes write-off of deferred debt origination fees of $3.8 million in fiscal 2023
2 Includes lease impairment charge of $16.4M in fiscal 2023