TTEK - Earnings call transcript Q4 2018

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Operator

Good morning and thank you for joining the Tetra Tech Earnings Call. By now, you should have received a copy of the press release.

If you have not, please contact the company's corporate office at 626-351-4664.

As a reminder, Tetra Tech is also simulcasting this presentation with slides in the Investors section of its website at www.tetratech.com. This call is being recorded at the request of Tetra Tech, and this broadcast is the copyrighted property of Tetra Tech. information of or Tetra this prior without of permission written Tech rebroadcast in part whole the Any is prohibited. from and Financial today Chief us management Batrack, Dan With Chairman Executive Officer; Steve Officer. Chief Burdick, are and They will call open and the then a will up brief provide questions. of results overview for the direct attention the today's Safe would presentation. statement on I your like Harbor to of to page X statements contains forward-looking about discussion and expectations. future Today's financial growth and statements differ filed may projected from including due in to described significantly risks with reports forward-looking results Actual in Tetra various those uncertainties, SEC. periodic risks the today's Tech's the as takes its update Except law, by required Tetra no obligation statements. Tech to forward-looking

request of In are mode. would some turn you GAAP Batrack. presentation. Tetra non-GAAP the At participants ahead, questions-and-answers up addition, this listen-only the like presenting for At that a posted appropriate all Mr. be Please would in like financial the I references, the management open will since financial to Batrack. company, reconciliations Dan to conference measures section call over that, now in the we inform after go of Tech's time, will website. With I as are the Investors to the

Dan L. Batrack

to backlog And orders for had earnings very operating record the first and our you $X.X and highs our ever fourth all-time year for with very Great. Thank time earnings over the share company. driving fourth ongoing quarter income fiscal good strong billion conference morning and much, a Hillary. quarter per We welcome XXXX to call. for hitting new

beyond. revenue, our these income visibility Strong billion strong government, earnings generating net fiscal orders the over services revenue. and and year, excellent momentum we that gives the commercial, levels across us $X.X operating record in per and markets work. For international that first this fourth broad-based achieved and for local and also for records for XXXX state drove to It's the Tetra for time demand new backlog our quarter including our XXXX full were the share, in Tech and revenue,

focused for solutions that we highly share Officer, We business achieving and markets infrastructure on quarterly that highly environment an We details company. will Financial services overview the XXXX, I'll and the provide confident on are we a new for now are that and capital future provide the financial results and and in Burdick, serve. for provide valued Chief outlook essential water, income in differentiated strong very operations. performance and of us our a for provide ongoing leading annual our and quarter science per operating Steve additional record earnings for for our allocation while the had also highs

$XXX quarter, For our ongoing up X% from year. operations million, prior our the revenue from fourth was

I'd and by our now the which million, revenue provide prior the earnings $X.XXX customers. share overview operating $XX generated up to finally, company. of X% of year And highest net million, X% resulting income of from our from X% the prior billion, up for in sequentially year-over-year was up XX% history which a is like last diluted per backlog of X% quarter, up from year. $X.XX year, was the end Our $XXX performance an the the in growing to an

our led our U.S. was Our record our and commercial for fourth end state across quarter strong U.S. markets especially performance and but by a work. growth local

planning floods. work municipal fires water the an were and continuing year-over-year. for quarter areas infrastructure and in strong net and XX% with a metropolitan Texas direct growth services result the organic of this state of local for Florida, of and our past growth revenues in California, was Our This revenue emergency recovery and

work was year-over-year. the our revenues work U.S. in the was X% quarter our U.S. the Department. and work by net This up our Our of driven and Federal consulting State for Defense was XX% clients Department increase U.S. for Federal of in

by was consulting in water year-over-year transportation net driven XX% was X% our environmental Australia, up by international and permitting, net Asia-Pacific revenue up revenue work and and Commercial And year-over-year New infrastructure design U.S. local the region. Our driven Zealand finally, services our activities.

However, it by in that segment. weakness we I'd markets. was saw partially now by present our our like to offset Canadian performance

had In quarter, highest an quarter GSG XX% Group, and excellent our GSG completed slow in Our Government quarter, XX.X% strong recovery margins generation up or business by the the in U.S. was and our third Commercial and group basis state the United quarter the that up with The in was markets. if year-over-year Canadian year. growth from net exclude for Group's last of divestiture International quarter the from States. in Services company. the both revenue the with and impact same great the grew our They rates points the negatively in the the group, business of fourth a Federal another fastest the in we quarter fourth local X% had you CIG's margin, Western XXX the impacted just Business the non-core margin here XXXX. fourth clients quarter revenue

up prior last at up of last year year full the XX% revenue, in financial Asia-Pacific impacts, record margins highs supported glad to results resulting fiscal XXXX, in operations. net million, our the including for Well, per revenue earnings the from fiscal year. year States high ongoing $X.XXX our $X.XXX just CIG's from income revenue earnings up operations was recurring which entire X% United these metric diluted income all-time billion, XX% strong and for year. an Net every in Tetra Commercial XXXX, operating for year operating was achieved Excluding share. $XXX share to XX% full the present from and I'm of year in prior revenue, compared almost up is was by business performance our Tech's and very X% per billion was all-time the $X.XX,

contract exceptionally quarter. into from backlog We our which X.X% and sequential a new of quarter. extremely fourth a outlook wins is book-to-bill the important orders the in course, Of going achieved prior X% had in in XXXX increase and we resulted strong an

We broad total Our U.S. was, our to orders a included very and billion, County we including clients. counties environmental the base had management company, Commercial clients States quarter with as Federal across major commercial sectors. end and earlier, local an presentation and We the clients our great strong And of for Steve? Financial our over us turn clients Engineers, at to I'd some the Army across the visibility Los Officer, as the such go all-time backlog of forward. and state $X.XXX our present from Aviation orders just year. International mentioned as the details very the the manufacturing for Chief areas with Federal U.S. Angeles in of services giving growth I high Corps fantastic point, Burdick, energy, like Navy, high-end United Steve all such Administration, for the this financials now, quarter resource the Development. had of permitting Agency for to the would client and the as and the our at

Steven M. Burdick

Okay. Thank Dan. you,

a to want to our now, quarter. full this this Dan the slide of that results, which point if So find results presentation, I following appendix can financial on you earnings to do addressed presented GAAP previously. turning in financial our you're overview And results along reconciliation for the of our ongoing out

just came to revenue from the net on income increased XXXX fiscal and million, highlighted, fourth fiscal million strong. As $XXX $XXX in which fourth have and quarter $XXX quarter of of differentiated higher fourth and were continued revenue our margins. of the focus Dan of operating quarter The the revenue $XXX These compared high-end increases when services, million do of XXXX. revenue, EPS revenue million XXXX quite revenue for net

X% net addition, of higher XX% to quarter relative X%. an up over in quarter of divestiture take and third into operations, perspective, account EPS operating compared increase you saw In our revenue services field with last year and X% we From last an of were income after revenue fourth ongoing increases the year. the up

related $X.XX of an charge claim operating per to Our and presentation. is GAAP settlement the was and includes in receivables which owed for project, completed fourth This this had on non-cash a charge earnings due old a which of a highlighted in XXXX. cash reconciled been in contract us. a non-cash to construction final resulted resolution a receipt a income for net multi-year appendix claim, price This to that results quarter late fixed share a revenue, provided

of is but cash I provided a typically case from which want to fourth compared for the quarter XXXX put to Now our XX% only strong in $XXX.X XXXX. was the and operations this increased when single by million million. perspective, The fiscal Tech XX% to quarter, quarter the to generator, flow has cash And generated is operations operating in point the a $XXX.X prior-year fiscal year, ever comparing total the out, most this this up cash in fourth fourth quarter. not cash Tetra compared totaled flow

totaled Our times. of $XXX and debt resulted leverage million year ratio X.X in at a net end

lastly, do outstanding working days with managed over significant we for we days work And or long-term, our have DSO, quarter. was sales cash days this XX XXXX. our continue which will in the operations. elevated towards XX.X fourth Lastly, to of DSO even the target fiscal from a But capital we generate less, to

operating days would current our flow. about result XX-day cash to For million DSO example, in days reduction $XX from in this XX XX of

like to off cover I Lastly, allocation. capital our

acquire strategy dividends. that. fiscal will to So managing consecutive sustainable continue strategic just CapEx our our flows with approved to at utilized top which allocation the dividends investing about capital to invest in to during And of through allowed strategy. sheet our board our order a in to both in internal rate out of to million million our into $XX significant $XX operating investments to cash XXXX capital our growth purposes. returning infrastructure And substantial XXXX. us for $XX for a our balanced week, shareholders. to the in paid business, business, dividend, shareholders deployed returns firms and strong and the Even shareholders we in delivering had allocation capital $X.XX a $XXX to part return NDY we do to year, directors And balance out of of design December million such growth key Also cash our share. calls in of paid of million In remains be Glumac per our these cash about balance in and as XXth buybacks we this business. We just add XXXX,

our we As million buyback annual the be over time to of program I addition thank a paid initiated operating call approaching or program years fiscal very our you cash flow previous in stock year. all for to want initiated new your Including these back both completion also to the the back has I XX% fiscal to today. buybacks, financial results stock just I'm board of in for out outstanding to say pleased of – to about I'll turn XXXX. And to shareholders buyback and ago, approved the Dan. turn deliver in I'll directors the two And million $XXX the such, the $XXX stock dividends want XXXX.

Dan L. Batrack

Great. Thank very you much, Steve.

growth international we all As expect revenue sectors. of our fiscal Tech's we strong to expect Tetra rate. we enter at grow fiscal In major a customer year XX% year XXXX, XXXX, four across

Our engineering will services primarily and and in regional work, infrastructure Australia Canada. growth driven international by be design

the services. at and Federal federal third a backlog, a We will grow be is Defense, almost strong by This expect work civilian, increase revenue year. of to Department our in for our supported work and for our international which our our a related to of overall convert our X% development rate U.S. business

local our market comparisons That contributed be quite to and difficult with events. significantly our U.S. last up extraordinary even year's growth X% overall the work us, continue revenues. expect for We year-on-year, state to a with this hurricane being actually to

energy grow underlying Our Commercial industry-leading expected Federal on expected renewable these in is end infrastructure increases up water finally, types X% clean-up give continuing U.S. some water XX% are specialized work to of of industrial environmental approximately to a at performance And municipal the its its markets is being our first treatment, Development. work rate the to with I'd being the actually to programs a the in like areas, services. major second agencies, as and brief year-over-year, three the projects a the for this XXXX. highlight be market. growth that for revenues long-term start major this to U.S. and Federal our in State of overall We being is U.S. like U.S. go and component Tetra Tech's. the Defense, third think The U.S. Department of driving with client we And I government Department of client of government. into Agency civilian International or

and services of for increased an our Defense. here significantly of Defense, Department budget from key the of XXXX assessment, opportunities United Defense design the that in And overseas last management States and of support both them. fiscal Department facilities the up for to include the and the For year, with year approved we see Department infrastructure is

the for of supporting for support, and Agency the the billion do budgets the federal for department projects other closely U.S. Agency to government. side development, highest we we we government. proud Tech market. U.S. role latter have have increased significant we're and market, with that the data half to state the International and we're we see to news $XX federal the of Environmental international of more the programs. world. by years in the ever has quite row that the and key Administration, Federal XX rankings support leadership Energy, of with analytics, backlog we in of visibility civilian Department the and all Department received record Aviation On at opportunities the of developing backlog Protection Federal leverage priorities excellent fiscal with our for one that. the for that the believe year the to we local in engineering XXXX the we administration's support work funding worldwide number federal strong we the orders departments monitoring, And approved infrastructure XXXX, entering providing expert this consulting, tied their the Tetra finally, water With in with water The is We a programs held a that with and in have priority highest of Tech contracts here in than State Tetra government. And and Development within

consecutive services growth water-related droughts water populations, California, Tetra strong and in water-related in states in to Tech dominate extremes Our the state water for services the double-digit nine local our municipal have of floods. management metropolitan primarily local that's and areas, the leveraged resulted and and associated regions state achieving our business These and and include regions large and of very markets the presence These Florida. Texas largest for exposure infrastructure expanding work because and emergency work. our of response of their the both which quarters with

as statewide. does provide full lifecycle plans Tech Tetra large-scale state water, clients things and the water developing into treating that reuse resources including drinking consulting new for engineering supplies water watershed by local even Now, saltwater wastewater and such beneficial and the development of converting management protect doing for

approach clients, and Science For we're infrastructure. management Leading our for environmental energy, to Commercial renewable develop with using sustainable high-end solutions our

associated Having market expansion market, energy, we're expected wind offshore permitting ideally consultant support in issues XX for XX renewable positioned complex as are this with wind worked an offshore offshore expert For to the the we in the of States. the United the the leading wind here projects industry. East Coast the on in on emerging

next of number expected to of of the had are United the capacity along the double offshore and wind years, X Over States. another two proposed the projects shorelines gigawatts

services for We and provide XX holding our to in by number We Engineering high-end the one years. continue design position lead as for consecutive management News-Record consulting market-leading reported clients. environmental

high-end both took infrastructure & of past also in year, the sustainable of place States Norman engineering we've group here with Young tripled United the in and the of size the our revenues Glumac which acquisitions in Australia, XXXX. Over design Disney

had these clients facilities our to are the net-zero their now the and for quarter high-quality our XXXX. support recycle in year for that occupants. environments energy, worldwide fiscal provide and here and water Australia present of And guidance for designing based ability operations buildings. generate the all in I'd like now U.S. Our first to

as guidance follows. is Our

an to $XXX $X.X associated year per For range $X.XX. the share an for net is for the million And XXXX, to of is $X.XX per earnings first our with $X.XX of for to billion $X.XX. $X.X with share all quarter, million range associated to $XXX a of revenue net guidance guidance our diluted revenue billion, diluted of fiscal earnings a

the It's if approximately webcast, non-cash include intangible for in charge see you XX% you're estimates. these year. can million Now, for the following the $X assumptions. included the anticipate rate a or $X.XX on of along tax charges, These amortization. the entire We effective

year this future any We for that guidance have does contributions earnings had In records entirety about past shares fiscal XX the of years, the in quarter include we an and diluted new million net revenue, outstanding. from in And acquisitions income for revenue, excellent take will year. summary, place XXXX just during fourth as not setting average company.

not business an the high all-time of book highest of history in highest reached the backlog Our of number, company. the the we've had quality that only with but the

on differentiated focus high that unique we margin high Our believe service entire quite providing business the in a industry. us is consulting and value, engineering is very with

recognize the technical technology now are strategic our value ever And I'd position and the open to We new like closing, invest Science the best growing up with in in and financial Hillary, execute has adoption plan and that, future. business. performance to of innovation of Leading call the the And our with us and questions. our placed for to and in

Operator

begin will now. session question-and-answer The

first The with from comes question Afzal KeyBanc. Tahira

Tahira Afzal

Hi, another Dan. on good you Congratulations team quarter. to and your

Dan L. Batrack

Tahira. Thank you much, very

Tahira Afzal

be those seem storm in for guidance you it your Can we if and Dan, gas. So, year? well and same help conservative you worked see back some and that that the into around next set could what at do come you've sensibly emerge are the and the areas those conservatively revenues oil that's numbers know I out opportunities pretty did timeframe of

Dan L. Batrack

we XXXX. into areas cautious very of and we've going the been you as backwards gas, on the have you (XX:XX) oil between markets. with the could cautious, gas. conservative storm have Oil work identified say I'm timing listed these and I Well, to magnitude the been think going of to that curve the them you two and and respect

the have here in We more States. a seen United it consistent bit

So we nice to gas have seen at midstream steady primarily U.S. the rate. predictable and focused are our oil continue we increase a which on work

of become And how Canadian words, And actually other in bottom. and But our areas chasing become that on the you not seen we've points built plan. aggressive, actually have where predictability slow. have a it's low the so work, will quite We've forecast be Price oil gas number focused and into more we more we're it to competitive. seen go?

And XXXX. so in uncertain remain we have to quite to elected left more which as disciplined, it has contribution the much

So included the gas we've primarily much that's oil for and – not Canadian recovery.

recover, that no five million it if in doubt, earnings. you or back at it the went four oil probably our with Now, own primarily structurally if in end years our half in and significant amount if guidance, and $XXX it that of back a cautious. looked and certainly high if was different remain even that associated did performance revenue you and push came to time, years, the to a the And gas. but approximately contributed item, Canadian one we fact, that above just would do contribution, level But

fires we and U.S. to responding today are the in essentially, Hurricane time and to ago on a the use to I the – throughout Harvey conservative Storms, we way year. the at been the of it. fires Southeast was XXXX a West. at remarkable We've A this and in just right. so like really to year and Irma, call, in forecast. in included year our out this were You're it prudent word, were issues ago that we've the And responding we telephone

to So those estimate. difficult are quite

this been do happen modest modest contribution. anything If we we that increasing, to with have very very a So we've the severity the similar recognize year, put and been frequency and again but contribution.

coming our But we the modest activity if and in. with storm would of end also events ability. amount the in any with but push – us really So unusual that has range some of there was – quite have high itself that it included to

I consider appropriate. ourselves So would

government backlog, what of even and seen And contracts indications pushing think our years. they budgets we've spent actually And mention the some at in and last I shown orders, manner being a know last now and but Federal the if pickup compared on task the say U.S. might didn't those. to the seen have in in conservative of the you've you continue to we could push have out the area actually end. two the pickup first up a I us the the certainly that seen also upper But it,

been those for areas XXXX. we've So three on modest somewhat

Tahira Afzal

that about speaking, it. XX% Got comfortably while doing way it? the midpoint guidance. Would plus of Seems the conservative, the was right I you've Then your of you like to were math. versus kind been think be

Dan L. Batrack

beating had You could markets. And that estimating. prepared my shared calculation. we're going remarks, increases, We it focused be meeting are But in end think of we're as our as very to on I do always, what way. during every people that one of or certainly these

being overly are I markets. that wouldn't So of certainly some end activities it the our quarter given quite strong, call first increases be some during forecasting all in in believe could cautious, because year. But the favorable I do we

Operator

Boenning from with The is Scattergood. next question Ryan & Connors

Ryan Michael Connors

into backlog bit, Dan. the question. taking for a Great. I to little Thanks just dive wanted my

profile – of should more as could kind address directly if in I different we the of couple you and the expect danced ways. the in type You the But wonder that of you delivered. around composition of gets margin terms this backlog mix just a

Dan L. Batrack

that have. The generally the reflected backlog we has revenues

of bit So per follow year. take emphasis more partitioning our federal government. a on revenues a look the with at it Backlog would the

since while it's some a a backlog bit than that. bit on burn smaller. the instances, is federal it So bit a be and book commercial, commercial, almost XX%, government would in is shorter a more about And

a the and makeup if you you commercial, use backlog. a if about the partitioning so of reflection then the be increase you reduction that XX% – the on on XX%, put government of about XX% same would you or if the took on So the XX%, took

As the overall... far as

Ryan Michael Connors

it. Got

Okay.

Dan L. Batrack

of we Yeah. But of no middle Government the a by had overall embedded, about And be on about causes kind or year But for Group, Group. year it really the margins Government it the middle be lower say, digits XXXX. of by or hate and capped predict as XX%. we the And good a Commercial I in revenue a actually into the would what think us Services to is what it what's was which should year as International, that's in would to this year and XX% Services achieve the And – last us that in backlog, I doubt far in good income in the the or XXXX, fourth a our I Maybe move is and to forecast what would numbers actually the we backlog. that's expect embedded forecast standards. margin would between CIG, be XX% be road call or would good guide road. our many the in while will and backlog, embedded double from quarter.

Ryan Michael Connors

Got you it. That's the Great discipline growing design. fast. exactly question has do with other My detail. what sustainable I looking is talk for. about Obviously, to that just was

everywhere? commercial of also, tripling in more us that terms just Or size different any your really in that that activity You is becomes way happening really is is starts – And to thing? But you can when then the that my customers, a understanding across that type move of talked needle? for about that of of year-over-year.

Dan L. Batrack

commercial now. mostly right It's

I really and we're been this mostly rate, commercial. it's And some local, up run it because state on but a still level. picking to we've think, have We quickly, grown

to a on So we're if quarter, rate, a probably you closer million $XXX our run year. getting used about last

significant. of sort number. get It's to that's the beginning So

the that's billion So on total total by on on about that's a But a not way, – that's revenue, and on so, what, net X%. a basis. revenue $X

very the rate with under the being actually of higher client. it's moderate federal do that to It that move and are to we to We just would that capacity. contract have, And the we we margins our respect bit the plus structures think have margins. clients, point plenty risk are contributing. into federal because are capability some is beginning federal of a established cost actually T&M that low So getting

we that or some of might top So on line would And moderation actually have could increased trade-off significantly. there be course, growth be margin.

that's not the level line growth the we're would to commercial. a of going grow the the So on top federal that a take expense we're look at at. that trade-off the having But we at

would it top. on So be incremental

So Might I'd get at like million about XX% I XXXX, know entire headed the to it which direction. it hit see million, to that to $XXX we're XX% year business, this but company's to a in put we're would from next forecast that $XXX of would – increase don't be if going XX%. certainly

Ryan Michael Connors

from Got me. last one it. And then one

accelerating Just the in U.S. – risk I more of talking wage about, guess a factor of talk about economy. but what obviously, a growth lot

doors every a people night. the walk assets business. out It's Your

costs. how you're managing about against terms in talk So that of

Dan L. Batrack

– other consolidation not great and we're working consolidation. the in we're this actually the be professionals of of that the It's – into what to lot in don't the short-term net market a the an categories interesting disruption pressures a really is migration call have competitors in It a that know sensitive But wage a through I the may all it. seen to by U.S. effect I'll unemployment marketplace. in We've it and of appreciable seen here With X%, company down question. in. around we the peers

the we've a then consolidating which cost are technical initiating interesting I'll is not use best makes being think let huge of rid staff we've words. And which that. go increase we're our consolidators, seen ones that And that's amount is hasn't – as would cost synergies, own of recipient look as I available. supply, for ones and code of We're I it two in of we're folks getting And and those the brightest a create that lot so location obviously a in actually they'd supply base. leaving more to it but caused as their they and think, going – been stable. another helped, direct the be on demand huge more and far

sensitive to management but Tech's while senior big a you're note, engineer level we been much one executive is and referring at So just the are And compensation and participation. it's salaries not are of Tetra what issue. it around performance equity to,

generally when And would actually at bonus in compensation while far the as equity. compensation be Tetra to the salary is puts annually so Coming overall them as and in take performance in which you add when marketplace. best participation spot at Tech, market, you we

Ryan Michael Connors

Got it.

Thanks Thanks. again stuff. good That's for your time. Okay.

Dan L. Batrack

Ryan. you, Great. Thank

Operator

question comes next Wittmann Your from Andy Baird. with

Andrew John Wittmann

– questions. wanted bit to usually I'm was CIG compromise when this Super. a here. little cash and balance in taking dig going guys in Great. and on some Thanks to it you there's settle cash. quarter guys claim a the in I get Usually, sheet recognized segment, my like for you the the

I that the that that days quantify think, cash have that prepared claim your quarter was settlement in that's remarks. part XX outstanding? might Did received fourth you and mentioned at of on that Was the is the of that Steve, you end received? still or

Steven M. Burdick

part did the of your to outstanding days in quarter. quarter, – and issue We at quarter. the the the did first fourth we was the end receive question, it so of XX the answer in was cash It the resolve

Andrew John Wittmann

like it to the Okay. the did Was And that? was relate charge? – XX.X us it of give can it you – size how

Steven M. Burdick

We actually received – yeah.

difference and what was the received. actually charge we booked had we the So between what

it'll $XX be somewhere million. $XX So we between did and million – receive

Andrew John Wittmann

this, it $XX up to million relates the a just wind down. – XX of that guys and time to guess was tied days last Great. segment think I lot that of Okay. opportunity, the I commented on in you the other of And as kind RCM then

negotiations close some of guys year RCM and is you just do an Steve, fiscal getting that think You where the we that kind there? in on XXXX on tied-up the the cash real update are Maybe, there. of get

Steven M. Burdick

So – we I have have our RCM think taken for down to we zero. the backlog segment,

to outstanding We projects years contracts took finally. just the it six But for have handful, down have were you later. years we the see or a last would to do resolve four wound And four sooner as resolved, we resolve. do like there. there still versus claim have that claims that years five with We out maybe where was that last this those are over

focused – resolve in they fall But we year. in And go next so We'd those. the on things the beyond in probably are probability, to like that. and all resolving will these are they'll them

Andrew John Wittmann

well levels that, targets despite of now. Well, kind Okay. under still leverage your your

you – conspicuous didn't to that you kind for didn't a of that company stock us quarter you was bit $XX first going to board You sense here. of little more. I'm little buyback. million of the is gives increased in look in and Dan, the this it that I a the normal mean, do the where coverage do to wants kind obviously, bit size a the come

return to a isn't forward? the that more in And this You didn't been didn't maybe in you're programmatic with so returning had even deleveraging, tell what does company how of quarter in why it the the the XX% thinking participate and of basis? why this we that than kind over us the rather on about the and quarter. kind I cash past of template about think XX% What year, go-forward mean, you more XX% going the when like flow do specifically,

Dan L. Batrack

matter the I think, it deployment first million. Well, all, of a previous was the $XXX to just the the of respect respect to with of renewing $XXX million, with of bit timing last

So, by on size we be the were timeframe the would board. simply approved the focused and both that

should unusual. So, be nothing it

no will on at entire entered is basis in will capital States, million back the very to growing want say into we positions keep expanding not essentially moving We've our and just reason a United as returning. geographies here outset other higher, bring number our announcement one. Canada, the not service buyback the I do and flexibility industry. that linear the we company means in far moving been we fifth Essentially, one sets essentially maintaining material have our I is for to there. would as that quickly have and and third make to that invest the best the Australia million And just there's the what in an completed areas positions, $XX two the $XXX We those a in technical into substantially like on to But buying we've we wouldn't and have quarter and brightest of had to just acquisitions expect that that M&A. but change number would And be year. been

markets of deploy can in. the announced compete do to our just at million us earnings keep We we do want plenty still on release flexibility. the call we this that M&A of can we so $XXX a And to this and that at forefront And keep sizable was – in yesterday. amount substantial

guess, even types But position X.X. our to our comfortable because quite X, comfort and I a as know leverages we more is bigger into X, markets. move X is between leverage we between be haven't those even temporal target with just I seen, be down ever. into would So competitive we'd there which great and of X

So are reason buyback the at for year would capital don't return that more reason to for least the not flexibility it XX% see us. at to join lever for to as come available, at the to for look deploy capital right price other that to the X.X. us right use give point the some expect shareholders. acquisitions If is the But that coming firms us into disciplined to

Andrew John Wittmann

Okay. that you're how and commentary thinking all on it. Appreciate of the about

I there much. it very leave thank think and you I'll

Dan L. Batrack

you, Thank Yeah. Andy.

Operator

with is from Noelle question The next Dilts Stifel.

Noelle Christine Dilts

morning. thanks. Hi, Good

Dan L. Batrack

morning. Good

Noelle Christine Dilts

Just at a more (XX:XX) you of do kind leverage expanding potential this coffee, around upon of your deal, to à then, would some And given last on position or operations? the of roll-up bigger be you you la verticals? looking smaller of sort in as of point, that of that interest Could as some market the well M&A. are point to interest expand geographies most your of

Dan L. Batrack

Yes.

that services we don't large services verticals expansion have not, expanding expand and at. we're so the other is existing new there's have a is just support markets that in areas that's areas asking you us geographic two, performing work clients the perform or that two as where expansion; offer on. we mentioned, So were focus are for work to to material presence that to that geographic into we and One

So where U.S. let a me States like offices start United with to the over more in presence. niche, the we niche-y, significant which is We're the here XXX rollup, so have would services in the expand that we

through, high-end the that We've will there's make expand emergency coastlines services like U.S., from month all additional and of engineering disaster program that and being have our We counties of to selection and in the and are with need takes us the would very, resilient. on final really areas expand evaluation management and recovery design more and the that providing the which detailed consulting a the X,XXX leader after cities the response done front-end market the really even providing more and year that clients and of to over one people activities very and we on place. competitive. event But well follow and efforts make we to way the sort of the one consulting would

the clients, to and the long-term United So we program like a would resources in for work in but here engineering management and capabilities additional lot on to in the bring here that capability States U.S. resiliency we would in-house, additional capability like of consulting design add and have vertical side we

the rollup, So you our I that. verticals could as expanding refer would that – in a to say,

U.S. of a a that's side on area growing. key on We consulting midstream upfront here in and that lot for the So areas the gas oil the do and work in us. are

Areas in and, comes that focusing water the thing great waste the supply, water only identification, be that's would on demand be, permitting. country, upfront. phenomenal the environmental largest the that water were a the and not top water in then areas, but of water the one just States in use, missing we're the in oil-producing But XX if is is and measures, the Texas not world, it if it Western top It's is in ultimately, One X. the Permian. retreatment oil-producing from it. would the United By not on all

we're So that's big not only area is that a additional in rollups capability today to the looking we but opportunity, future. another that add think

the Brisbane, those more first two that far some Eastern expansion, others. on which as So at. In Melbourne, geographic for Australia, to of are like the side as Sydney, verticals looking actively is we're in U.S., municipal here the we'd this the cities in add of actually

So say expansion. that's would I out the rounding geographic

we move think position people Australia. thousand And in in few a we water actually the can that in number have one environment and We to continent.

new we minimal far I list, the European and are have say actually – we very on would There platform. a and As as high our UK markets. the need it's is a territory, presence, very do

through have be for for whether that we a so platform it looking as in geographic to But and energy. Canada And in something our use probably the to flow that U.S. rollup here would that at do the small and we're we we'd in through then use leading environment our expertise be a and no, And scale and actually and Australia a renewable like that we and platform. technology looking tuck-in, could that capabilities footprint. We'd larger water not. could appropriately

Noelle Christine Dilts

that seeing And And specifically? U.S. the expand services? some trends you're category, you're sort with some that some environmental gas upon on you make That's helpful. the the maybe within of ash could very question, then seeing of coal a verticals Great. of just up that and in Commercial, bit what in of U.S. second just particularly those oil and side those

Dan L. Batrack

Oil years four as years, pulled pretty gas, back I back in Commercial, has was you the U.S. five Commercial part much U.S. With a of us. and for actually it's the – believe, bigger our went broad it for, actually business. everyone. if or It's

So industrial. our Commercial is U.S.

aerospace, sectors, So we for we work the automotive, work the for manufacturing commercial for we work work for utilities. the we

so are commercial a And energy offshore the others for we actually for wind, of developers. on lot renewable both and and solar do, work

quite design actually portion. mentioned up pretty of I'd on sector. actually building that on an So commercial is work actually most question, the significant as earlier moved And has it's quickly. a And sustainable

still recovers part we it speaking U.S. are focused while on small that pretty business. oil is builds, back a So and up as the in and the gas it and ride relatively actually of

a biological through separate the storm – do such way water, all owners not with ash, the environmental construction tunneling, – but from it's then and the has permitting, because actually I of crossing been species, doing actually heavily, new we'll say, priorities of the compliance We issues the suffered But under construction a of actually that focusing, coal this will oil the from wetlands, it do great water construction bit not oversight administration right we And oversight do current administration. constructor, oversight. When almost plants. it's and endangered is so area. design. do feasibility Now, it's gas almost wanted the for for administration's geotechnical, enforcement it quality, little diversity and – it's for to on some actually a the exclusively. for environmental of majority in environmental construction, what routing, it work, doing is the oversight it's as previous midstream pipeline way we're we're the But an de-emphasis clearance, the area that has the study environmental

changed very So or bullish years, the in requirements. been But went minimis. us if years four three has past And have been investment couple back quite you'd based it materially years. economic de that you has on hear on it,

as the But driver, market significantly. for It support. quite individual a are actually that as has of are one not and a decreased is regulatory us. safety corporations that we drivers that making. is far So key priorities health and There

Noelle Christine Dilts

Thanks. That's helpful.

Dan L. Batrack

Thank you, Noelle.

Operator

question from Sullivan, Tate is Maxim Group. next The

Tate Sullivan

you. Thank

there I presentation, Or update a for? that please? progress, looking update is quarter, last the the we most government emerging on on slide announcement recent there not should from was on Can think contaminant opportunity? opportunity. the Is be it an specific you that

Dan L. Batrack

area. come It's that billion actually moving new to the health, of is a of just seen U.S. we impacted specific updates. Protection the the government. slides Department for We components on more actually can are We something human – it the states It levels part a federal not protective have forward. of been we byproducts federal Department $XX continuing hasn't surrounding cleanup away. on. are for a announcement that of ongoing the Environmental Emerging that and to that we've – local is see both – forward. And and enlisted which of used the Yeah. And This through growing are and provide working military government. don't priority priority protect we're identified and one the working retardants while PFAS, area in really will perform referred the identified has and quarter a And acronyms Agency groundwater. fire agencies identified PFOS drinking through the gone of special contaminants bases are U.S. the it of last been and to individual around the health impacted. just as of EPA But have are that chemicals, exposure out growing as the just and of It is lot Defense, primarily pursue Defense any the would be we actually waned. move that water that that hasn't the respect programs new force their to with communities the of

Tate Sullivan

on -I was works mentioned where of timeline you that delays the you for you an quarter orders. how the government Can give detail. give also in releasing you usually? that Thank it prior can example task And Okay. think

Dan L. Batrack

last quarter, I relatively Tech. backlog had flat for talked about Well, Tetra been

fourth the the all-time. and that at we U.S. was appropriations orders have budgets actually were happen third task having comment flat. gone was an had busy. Now, my releasing was government And from really that Backlog an all-time revenue did and to releasing Federal in relatively we very the quarter, and in approved see record not projects Things its passed did quarter.

with now in it did to we It see meaningful high been not it – was what had tsunami the government to – we orders. like a all-time what not wave was tidal a or drove But Now, of actually anything is and as new that. itself it release federal wasn't the or backlog forecasting.

the the a and over federal government. that more can come in that budget authorized so by And and to there's out XX the is approved just I been think approval for that seen XX years. and components earliest budgets had we've of the the lot expend release appropriation This

forward. in the government going best we've the it's federal So, visibility had

in actually, of XXXX levels us backlog translate would also help their revenues continues authorization manner, higher to yes, that So, much quarter to of better release. fourth end guidance. us our into the then help that would that here drive top to their through from most if drive only but not even was our And regular a and more

Tate Sullivan

Okay. the for rest Thank a you very detail. much day. of Have that great

Dan L. Batrack

very Tate. Thank much, you

Operator

now Batrack This over will session. conclude turn Dan back Q&A I the conference conclude. will to the to

Dan L. Batrack

very excited it start looking and to and here you Well, and a forward you thank month into fiscal We're fast and a for we're an week hope to you started in your a our already on I'll next forward company and Bye. again at year the questions I'll with we're interest quarter year all week great how and and you look of much, speaking next first the Tech. to we've you thank XXXX. all really XXXX. fiscal really off Tetra you quarter. you we Hillary, tell update your insightful in I to talk give to of rest on the a have quarter

Operator

and all Ladies and nice a disconnect gentlemen, may have All this concludes our conference today. for parties Thank you day. for now. participating

Tetra Tech (TTEK) 8 Nov 182018 Q4 Earnings call transcript