TTEK - Earnings call transcript Q2 2019

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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 then for open and the will a will up brief provide of results overview questions. call attention to Harbor the statement presentation. on I would to today's like Page direct your Safe X of statements Today's growth future forward-looking expectations. about discussion contains financial and and differ significantly filed due from those including today's in in described statements risks with reports may projected to forward-looking Tetra various results uncertainties SEC. periodic risks the Actual Tech's the as takes its update Except law, by required Tetra no obligation statements. Tech to forward-looking

of In over I to some to ahead, GAAP Tetra non-GAAP [Operator call addition, Instructions] the would presenting Mr. go turn Batrack. posted appropriate the be financial references, management since financial reconciliations now measures section in like Tech's Dan With will website. that, Please as are Batrack. Investors the

Dan Batrack

operations. the of much, earnings exceeded earnings company's a the plan broad-based ended Welcome all-time performance with we very cash in result quarter morning. history the quarterly Dana, history, good ever Tetra These you, all and results coming company. operations into our from significantly best share, results had the we its revenue, net call. the backlog was a highest thank was achieved and our the actually high conference in what on aggressive Great, expectations quarterly of believed very the and quarterly per with our of we to Tech quarter across

slide, outlook financial and competitive excellent an is will results our Chief quarterly approach quarter, resulting and overview financial performance. provide Steve second an clients will our in capital revenue, net adjusted I per second shareholders. to provide achieving diverse here, for phone of without and of quarter our such better our science, tax, this Burdick refer business record advantage additional the with our operating performance later as allocation. our webcast revenue, discuss I'll oriented strong in had on details We from Burdick, the on share solution along Financial earnings will which with which Officer, our shown the nonrecurring while income leading call. highs for the consulting and Our our following Steve in both operational the presentation, items and you're a numbers now reflects if benefit portfolio to performance

was $XXX For our million. revenue second quarter, our

from million, quarter. up up an XX% share quarter, Our up is net XX% earnings which This $X.XX $X of revenue resulted GAAP per I'd in adjusted favorable by and our is for company by high And the ago. ended third associated benefit years now which tax XX% three all-time of million for customers. with the first overview consecutive driven year, we an which basis, per diluted finally, the to for earnings $XXX in backlog up last a an at was time, share last from $X,XXX our from quarter of income another prior sequentially of the the the organically year. achieved from acquisition On million, for year. our $XX per a year-on-year, provide generated operating from up operations share XX% end diluted like Coffey our performance

Commercial building in States our work led markets, and end and Our of work Environmental design State second services. growth all Local was International, quarter record and performance across United especially by our

energy and renewable building the as XX% flat clients to US growth net was for growth renewable oil of energy gas was quarter for primarily for net XX% of up revenues our up This US XX% infrastructure well Our net winter the revenue was pipeline year-over-year was environmental XX% our work commercial and our Canadian Work and in our was for quarter design by and was our Commercial driven sustainable projects and was high-performance for International business our year-over-year. as and consulting. to clients Federal revenue of increases compared clients. and International our due year. design X% services last

have However, the X% our Federal government year-on-year impacts work, took quarter the that the shutdown adjusted our month during for revenues we associated been of would up second with if partial place January.

recovery segments. Local to in business and of The XX% an present State disaster due increase to response States our and United delivered XX% water in group business now like broad-based infrastructure GSG year-over-year our quarter, another by our work. by up and basis driven Our business revenues XXX planning the services This our I'd work we were principally have. by margin strong municipal in delivering by X% revenues quarter, work, and both strength while response a points disaster second that from quarter the performance was infrastructure continued up year-over-year disaster practice increasing year. water growing of augmented performance recovery planning XX.X%, the last

growth group's this this of half driven the revenue was the we XX%. oil driven commercial by that business the during clients by very low the carried margins, gas net projects in our of winter, very practice. second competitive About the the Canadian For while building grew growth nature of market, CIG due was pipeline and high-performance which, to design had by quarter, half the other

our increase. at we for just up an all-time record over our us, quarter second consecutive high as and year-over-year XX% is of Our $X.X third backlog, completed quarter, billion, an

services, can international also orders execute our year. a broadly As and be and indefinite clients commercial, our quarter, Architectural NASA government expect We indefinite quarter awarded our had $XXX which to we see commercial local million to were slide, that Notably over services, delivery, distributed task in for quite were civilian task second support you orders States our for worldwide. this across we contract the quantity awarded this were and perform in clients. with programs coming federal environmental new Engineering active sectors development defense to and United on orders

of the quarter. presentation to over Officer, present the Steve turn our Burdick, the Financial in to Chief like I'd financials our Steve? Now details to

Steve Burdick

Dan. you, Thank

So quarterly history were best results highlighted, per flows second operating Tetra Dan the Tech. revenue, just as income, the the quarter earnings among in for and net cash share XXXX of

million. revenue divestiture up services on I into that, with XXXX in an XX% activities. when fiscal million work; did our at in to which services. one, net increase second infrastructure second the for $XXX favorably on digits the international income share This XXXX. our lower status On discussed, be year-over-year and compares was response line to revenue operations. operation, to the $XXX we the sustainable to a per And quarter And resulted fiscal due as our and XX% from, the our of revenue a at year, efforts; some revenue current buildings the disaster the $X top second of compared increase XXXX. claims of Net RCM increased of divestiture when increased net operating wind our this increased would US million to organically our revenue fiscal pro And adjusted when revenue field account, environmental taking to after primarily XXXX revenue results. consulting earnings increase million $XX $XX third second about review double our X% water compared a quarterly So our income recovery and to revenue Likewise, by million pace down share, to quarter from of in of XX%. driven XXXX from year the operating quarter net of quarter income of revenue second, basis, municipal saw in of million subcontracting to quarter of from results the few focused excluding forma This EPS prior higher noncash gross an per net prior previously GAAP a activity compared of XXXX remaining reflect, growth. was have Fiscal $XXX in increase We fiscal the as in operating $XXX revenue the the charges generated and resolved. GAAP fiscal the GAAP various is reflects revenue we field basis, $X.XX. the third, like

the Our income and that makes between EPS adjusted explanation. delta per nonrecurring net most adjusted benefit, year significant over The $X.XX a primarily of income. year, EPS up in GAAP net due is this the requires bit which up item tax increase was XX% more our to share last our a

of net the as XXXX, losses, historical those following of had the per fiscal losses. share of In Tetra an At multiple second accumulated presentation, $XX those million benefit. page also GAAP And for and because acquired operating rationale on of the you about years Coffey losses, time, Coffey International. Tech of Coffey known NOL. tax had tax next our from quarter slide results So for the this reconciles and the earnings adjusted summarizes

acquisition For time not recorded the as GAAP at tax asset accounting NOL. processes, we this this and thus, NOL recognize accounting an could the we a reserve for of

X relative the purposes operation we purchase benefit acquisition, times was and this taxpayer. to a valuation under only acquisition, benefit the turn to a potential for price this and, if profitable paid represented Coffey consistent into a EBITDA. just equivalent consideration could thus, the taking into tax Also reduction was about NOL of For purchase XX% the future price the NOL Coffey that but was multiple

line we apply in with operations operational the could Tech's strategy and our them, that synergies to integrate so of their overhead was Coffey implement So in margins. acquisition Tetra improvements bring

this us strategy executing as years about now And fiscal NOLs of $XX result, $X three the per utilized of second to million is consistent rules require million and the NOL acquisition. we've since XXXX, accounting of the we recognize remaining have profitability, about time had tax successful million GAAP share. a We the in back, since this and of benefit to equivalent been quarter have in $X.XX the looking $XX of

be cash will $XX this we forward, million to benefit have NOL. from a realized approximately of Going

ago. $XXX.X favorably the accounts the improved of XX%. For totaled flows million compares year of this the The by of from the on benefits cash million, $XX cash which many a And amount $XXX.X cash debt, operations down increase ever of The million at result was our a of pay decrease an million. the a and flow second flow as totaled This cash management evident in million year is among This receivable a single $XXX.X focus highest decrease continued about quarter. prior was is $XX.X from our capital. was of quarter, our this working net generated improvement collection for generated to cash of a debt.

equivalent our the days closer decreased or longer-term improvement brings about sales DSO of less. significantly Lastly, us the our collections second from days days to is an year or days $XXX this of XX quarter. to and of This last as XX.X XX.X in outstanding target million of

managing the our balance allocation sheet cash of Now, turning in for for and capital company, returning to balance a shareholders. long-term it calls the our investing growth to strategy,

May. at To of eGlobalTech we operating a just will debt-to-EBITDA end continue million and factors, So is out We the Board in for areas that the of lines. flows be in strategic benefit second ratio of continued our end cash Moreover, about especially bottom X.X which second the strong our to our to the cash end, XXst the while flow us paid dividend, net able week, Dan that. quarter, annualized our with at our currently of this the the dividends to will $X.X quarter this have and And at XX%. approved do these acquisition of and speak in second we ratio the of Even in later. $XXX we've relatively completed consecutive which to shareholders, of allows in growing top month been lower invest debt just paid times, million operating Directors debt-to-equity the quarter.

that Board a Additionally, I'm per announce of quarterly to dividend approved in increase the share. has proud XX% rate to also the $X.XX Directors

the remaining addition share dividend So will go-forward $XX shareholders, these a stock on purchase utilize $XXX the program. completed million to continue in in we second under quarter. million the in to also basis, And we to payments repurchases approved

for all over Dan. pleased your want time back of at these to now second you today. results I the I'll thank quarter, very the call outstanding and you hand end to So the share with to I'm

Dan Batrack

you Steve. thank Great, very much,

X enter of year XXXX, we third engineering expect our the our region. our fiscal industrial and client a As we strategy XXXX, high-performance work work. quarter is building international driven Canada, sectors. This we see in XX% the design In driving our Kingdom across all of for our year fiscal by growth services, services United be growth Asia-Pacific will regional infrastructure and consulting in growth

We ongoing that State right disaster if of incremental US growth could to revenues Our disaster planning actually expected and funding rate services XX% Local by response a working grow we're receive response currently for and rate, at recovery is exceed sites at work. materially water and a now. municipal supported we additional combination this on

with water Our US renewable is cleanup combination and grow consulting. a a expected treatment, growth to at Commercial programs, environmental solid of X% rate work energy waste in high-end

inclusive We shutdown US in Federal XXXX, to impact year. earlier of took that expect our place government at the X% of work the this grow

disasters of disasters increased over as decade. each of Now we or the has eight significantly previously, frequency struck affecting each States discussed natural States United this the United years, year. was billion-dollar more and eight have In last the scale the past by

rebuild Now supports Tech catastrophic recovery. these communities after three of our Tetra as phases throughout events, clients

and the assessment The do work. work monitoring first or phase we early the is response that first

third and program of is the phase, these built And second long-term these different which The for building will the design the finally we're infrastructure be by quickly, solutions that at quite which planning actually recovery actually locations. followed management. it's the phase, is

company Our event. or any our a long-term other will and impacts the create resilient mission respond future and and floods for is the clients as of storms help infrastructure withstand fires to and the and events more manage that

XXXX. we of emergency of competitive line systems staff a hurricanes see activity board. additional team three second comprehensive proprietary network late with in the our the when trained Now the from network take on place. Tetra very response market event contracts, we with recovery increasingly in that United this States and struck surges each a recovery sustainable does active market through have are the advantage of highly have Tech phase response future as software does very and a revenues, of service this We that in

environmental services. analytics Another and data analytics was growth information and market Tetra associated for in problems. solve on water to technology of actually us research in operations founded the Tech is use

step brings and domain analytics leverage cloud strategic of end to a linkage expertise team type addition Department clients. of platform or here announce on our Tech really between technology. with artificial with eGlobalTech growth strategy They applications planning forward growth joins to skills ability the the are for to incubator team. at have test focuses company data our in our in core Department eGlobalTech that exemplify Our services analytics, the significant much both clients. subject Health presence an pleased the provides Human to and also Federal of advances of migration. domain collectively in of matter intelligence, the a very clients agile we and we high They IT the IT us data key knowledge our in to actually an with, US lab have in software and add practice. practitioners new brings and and such eGlobalTech looking IT Security. We're ideal for relationships with development Tetra us to our as that team, with strategy Homeland IT the federal pilot eGlobalTech our and Services don't advancing

solutions shown of slide, application learning, analytics. in new field technologies, artificial we data provide is particularly the clients operations. essential insights how Tech, very do into Sustainability a are core work solving that for value problems. in required custom run in and Our deep on and hub-and-spoke intelligence knowledge the predicated such to Successful this machine these rapidly on for is effective changing is as unique strategy, both Tetra of domain our we as our

April we on Directors, with at to it myself and sustainability Tetra few and our Our annual to year on our a completely throughout the our Day, begins commitment just you over this operations. week like extends Board Tech Earth report released highlights. I'd year, and sustainability Each team XX, with a provide global just ago, of was management

projects from the skills actually technical water and them which communities people Tech's countries millions in capacities. this largest drinking teaches comes impact projects that Tetra and benefits the in Our helps world. the lives we of enter on, engineering their work the adapting supplies, of from developing hurricanes recover actually around helps women into workforce safe provides

and that Tetra and enterprise-wide We've And adopted our We sustainability importantly, consumable run have we greenhouse program productivity how emissions sustainability reinforces eliminating other our systems are our committed to paper Tech's partners to extend core our values most electronic products. over internal by by reduced XX% also and staff, that gas vendors. and our enhance our operations. our

we work of like where are fiscal and to environment a for our updated for for contributions guidance guidance to of all providing year all communities reflects We their and present workforce work. committed an now global the our are which employees XXXX. diversity in clients the third quarter valued the and I'd our

Our guidance as follows. is

for net are shares associated revenue diluted amortization all billion, of earnings operations. Tech fiscal for include had does range guidance contributions adjusted revenue, million, in year guidance revenue $X.XX. from an share of $X.XX. XXXX, to with diluted In to it the XXXX revenue in guidance. at is share all second our summary, this quarter associated XX outstanding earnings for The for $XXX with per $X.XX this here of presentations, billion fiscal effective associated of estimate $X.X year, of with future this third of of is acquisitions. guidance an assumptions per a that and, million included diluted intangible $XX year guidance are cash we net rate range $XXX to Tetra the million does adjusted quarter The million average $X.XX exclude $X.X net guidance excellent to a For earnings per an a updated and as share of with We XX% past from record that's tax approximately do that

across And of our our orders broad by with the an year. business. reached base high fiscal pleased very half backlog I'm driven a Our first all-time of

providing confidence and year with And in we us we us for up This advantage and focuses the prepare and visibility markets I'd excellent fiscal given high complete that, now competitive opportunities has on and XXXX. increased strategy very the call in. an is XXXX year high-end a are questions. for serving Our Dana? consulting to open services for as that us fiscal like

Operator

question. question-and-answer of with will session line Capital Please Instructions] The begin KeyBanc first from [Operator Markets. Our with the your Tahira proceed Afzal now. comes question

Tahira Afzal

Thank you very good a again. and Dan, congratulations quarter on

Dan Batrack

Thank you, Tahira.

Tahira Afzal

give back you seems of your high of traditionally even you've peers to so your a look IT solutions? business, value been you lot - But breakup look Dan, you are you and kind now in and a other of of you your like breakup business more moving now more Can of is concentrated really of is of high-end water step as your data it solutions at - in more always much E&C complex some solutions. you versus this specialized a in give sort us bets, at peers. if that analytics how can much how with us that right of more really

Dan Batrack

Well, to data and it's clients. with We in the our have analytics providing a the more good more that solutions work question. we're embedded actual

bit and services, specific out where call on IT contract outlined us become platform different have difficult billion to that if which in we $XXX do we somewhere IT our it in a we Tech embedded not do what the have would a does technologies within eGlobalTech, is, what contracts Tetra a million, you our pure of about look does items. have, that as at capacity. order developing clients. we scientific slide, take We for call do So give presentation it IT We lines exactly refer in and have, $X just more solutions or would engineering practice to I with technical, to probably

actually of providing offset say would solutions. us services using making is $XX annual moving within So our more services. and to constrictions remaining IT that more we differentiator. billion had. smarter XX% in us is making say that we've of of to I more revenues. have more dedicated $X staffing allow the We're using capabilities It's new are would efficient, our contract the of a to I technology we services about IT us billion also the as it's just But $XX capacity is that in billion, that and about it

that our million embedded And a of number say so how fully is around I would representative into $XXX business. service it's the at not year

Tahira Afzal

some rate, as flex at I And and then started follow-up high a a of classify classification IT you've but what's second traditional upside industrial. bit flex company, part have rate Dan, incorporate it they're there Dan, Got more? you could room know more thoughts been solutions how and is to an to your around running your utilization change hence, that, with. been of this always you really question, as these in? even more begin yourselves? because you've their becoming you a you are guys for - solutions to peers margin IT pretty more utilization got do Any

Dan Batrack

Tetra believe focused I don't and company, that know as and a IT completely are Tech. IT classified engineering classify managements as what to I water, are consulting E&C, we us engineering I a firm a resource not an have differentiator. Well, but we and we environment, engineering as some on like - are utilize construction. and consulting

use incubator machine these scientists to and further artificial capacity we and technical applications, engineers. ourselves actually learning, labs including including we differentiate in IT, cloud-based the So use intelligence, of

with are to efficiently to more to of projects. our Tetra domain more projects. respect to and staff respect IT, that is expertise embedded utilization? - to provide an say, technical Yes. about to staff. not bring about technologically, increase their would be do with are respect I it help engineering us help It's in can actually complete utilizes projects will us scientific a our might With capacities. It's IT, and the adding actually engineering consulting will margin used adding IT But additional not I we and it use that so technically, support the firm both And other that Tech right firm think

GSG the really I quarter we XX% group, good the can flex, other words, call better you're and do think it in of for so CIG, more we utilization And respect in have with, it is workforce, being in the definitely part and leverage with second but going can do half our second its of to we I to workflow. see And better. do

into CIG our that's of to margins by go digits. driven half, XX% for XX.X%, and the watch XX%, lot double You'll we'll the utilization. expect I second –well a be up

we in marketplace. in yes, more differentiation a the IT So have utilization use as the flex we yes, and

Tahira Afzal

a lot Dan. Thanks

Dan Batrack

you, Great, thank Tahira.

Operator

next comes of from Our proceed with W. question the Robert line Wittmann question. your with Andrew Please Baird.

Andrew Wittmann

of Thanks great. maybe question. growth because, guess driver taking Hey, a for talk a disaster a I event, I now. else. which think, Dan. away, my to whatever nice as of of your on a guess is my has franchise to you disaster And I the a up onetime and it to right kind investors lights want really business here, different or been while But interesting got get be I has that, something question restoration proven about clean than lot for or think you guys for it's your this. to

Local kind a outlook in baked your your in outlook XX% has business mentioned and State the in of year. commentary, for You

higher another materially be you if work could it said disaster if - work. for You got more

I my Local already upside that is you to under that question guess task So have to - forecast? orders to the happen? and disasters you're disaster have do for another that and you already State need Or you specifically contracts your waiting incremental get happened

Dan Batrack

actually increase significantly both would We third really revenue question, need anything, in no the fourth disaster, order a It's to quarters. event, Andy. earthquake, any other good additional fire, and in words, other in Yes. our flood, not

additional that took number this events working today. past on task have orders are are fact, year, and of So that that mobilize sites anticipate place on have. And we actively in currently we we staff could a on and very well working work on we we are these already do

break can So past fact, would XX% what have we in to rates third a know increase were just easily and we we quantify XX%, presentation It be we on growth this know we into I've or growth can materials, that we rate State the incremental Local, It have. fact, work. indicated are could success? mobilized in in at task I pending fourth some type I could on even quarter. XX% and and, orders have We have additional it's of not about get that, in XX% quarter. get similar if XX%, the could be

at is little we best those a the but do bit include felt unless putting field, a were have of But Local in to estimate. felt it so is predictive of actually like that to business for a our or better or of bit a you our State of the course, we I is growth on Local I the we consider next So surprised what XX% would and was if State take when don't and hesitant representative especially are of quite underlying indicative the - something achieving future, in forecast guidance reach XX% But already underlying certainly be that business XX% couple better actually strong. it see of quarters. or

Andrew Wittmann

work I helpful a your guess has with you resurgence very follow-up think it in revenue basis the in to called that saw, you at do one, on on that my I your, pipeline Canada. question Great, least winter

meant was mentioned Obviously had good really very and I see market you then think and it's profitability a coming as oil bust, which It's it competitive with that you is the back. But I not isn't it are to guess good coming that you there. this if still good. the your how where only this Tech future. areas here construction I taking strategically wanted of on doing think, kind of I portfolio, thoughts of and doesn't fits the or garner Tetra with of work kind the is, it type Tetra inside really Tech's to fit one you're one real -

Dan Batrack

in the contracted part, was the is we're doing oil pipeline there for basis. area a of actually Well, A lot full last Andy. activities This it's Canada where the great construction work I observation, in turnkey - really turnkey are most is midstream work. on to analogous think the is a the we including sands saw up

So we have do produce relatively. the turnkey and to that in did is still expensive of in oil It It's region world, invest capability. very aggressive.

It pipeline winter gas million pricing. enormous put the it's second so the in very covered about and quarter, at $XX and on normally do was It us. place. oil work It We it margins, when And just was did minimis above of quarter actually pressures and Canada costs a takes and in and incremental for other equipment overhead de allocations staffing breakeven. essentially good items.

going determine, is has make we end a We going was evaluate was do be on a going the gas at sense. become in I make actually look call basis actually will but is better it is to out it an market a market we So I ago business, actually Canadian commoditized it to another to field had still And that entity. construction But fit not favorable with outlier, is actually pick profitable, It to come longer with that would say did portfolio decided to term. want commoditized. It ongoing determination become do It the but it low-margin over have a back. oil respect it don't summer, our to the or an entire that services. up. and we activities. to bit did year of

actually we'll continue to a at, So on definitive we update it is but look something that that today. don't have

Andrew Wittmann

for your you fair, time. very thank All

Dan Batrack

Great, thank you, Andy.

Operator

of question Noelle with [Operator comes line your Instructions] Stifel. proceed Please from Dilts Our question. next the with

Noelle Dilts

Hi, morning. thanks. Good

thoughts on there's So third just as some head for we if any curious of if you I dilutive impact the the could is eGlobalTech impacting guidance sort quarter? us and into give was year, your how

Dan Batrack

was beginning from that the of reason to technically the guidance our X% us last will eGlobalTech. the third revenues X% quarter, from day. impact, be inclusive of they and be at right the increased will we the Well, They joined contributed to

other XXX them that's insignificant. year on Federal We dilutive, what for Now not and are for and in included, should GAAP we interest dilutive at said that, relatively basis. would on course, just XXXX. past, have even us, as course, would being we're to board that first those disciplined. it's amortization in expense they us, someone does they're for it is with the mean breakeven. EPS a include But accretive, year. on call intangible would the of better respect then in dilutive in not be typically, we, for dilutive, in charges because amortization And with it's they of our and the But exceptional for I We the noncash Federal, as say, be so transaction There's reason to on intangible the not other almost from outlook acquisitions. our our that remained XXX% X% than shareholders, neutral X% I other joined basis an it acquisitions staff not a will are items, join there only such They quite that little about we've are have items. that year, costs which, eGlobalTech as increase dilutive workforce. months. But six But think it XXXX that - of all have an the say to of and on and the our going accounted not the

Noelle Dilts

of, work. of us more Thank that XXXX? of But much you, sense should how - in question, disaster fiscal maybe the doing that around I X to nature? at very in in helpful. could on And is into way some seeing understand response any were that here give recurring that you response discussions you that's you're 'XX, type disaster count there Phase planning you're And a not, shorter of your my look we if and that is becoming second term

Dan Batrack

at growth Local. we on included why look we We at of that's instead XX% that. that Now do do the State our and number other we and some look

you two one still it's the a changed. to the probably still what of that business back would I actually third as it and one of would would I upfront thirds periods that two activities, activities the which coming would in That about, revenues month ago, has So But disaster work have to would response in which program typically have, we've now and year. about come associated we've disaster to is include be to actually planning outlook. is went grown Phase recovery been actually of management. it say X, referred upfront activity. tried of our and if response years execution XXX% the I that say from

one So - typically runs years. and runs something. work from to it's a that begins And year gone from about from to nothing out three has -

to then as would lot move we inner of Katrina, work at that, a have even we never another taking never a such disaster, all, storm, impact; we that that we design And conclusion without activities. even the the actually $X another So detailed structure. have we the run have have in event of out still an did channel, never another And work we of navigation harbor storm at years. then billion-plus place would three surge

each - that the work, some year. my it. a it years, as of remarks, partitioning it's storms becoming there's in prepared there although a eight indicated unlikely in eight be is bit response that minimum upfront more next of I'd per zero relevant of will statistically So There last is is year which it's a

it not the descriptive say may in seeing environment. but marketplace as actually we to we necessarily are So including something of not we be it's not are recurring completely fully the in or expect, what

Noelle Dilts

you very much. thank Okay,

Dan Batrack

Thank you, Noelle.

Operator

Please with Our with the from proceed Maxim comes next of question Sullivan line Group. question. Tate your

Tate Sullivan

very and you of detail my shows see progress or all Hi, It Steve, promissory couple of that timing quick closing the taking Coffey. lot the a on of benefit issuance for a the a note the is thank a eGlobal too. there. questions, of based you from much I question for promised tax Is that? on financial release, on what note. thank you

Steven Burdick

on Yeah, a so the the which the closed Sunday. quarter, we day acquisition of was last

a later. was note days the was And that out so paid planning two tax that for we had and that and reasons, outstanding reason

Tate Sullivan

Okay.

for So the right? actually quarter. Is current then will be a it outflow, cash that

Steven Burdick

the In third yes. quarter,

Tate Sullivan

the related the cash inflow at note of that but just Okay slightly and a there some wasn't promissory million. And $X.X of the accounting was earn-out of Was then end quarter? and you. to expense, there thank

Steven Burdick

things. - So had is, there's earn-out yes, some well, adjustments. I we think two One

our from eGlobalTech. few the at, sheet the million, at a Some that that for $X.X just cash of earlier quarter acquisitions that of looking the end that's net the amount cash balance but years came ago, verse you're the onto then

Tate Sullivan

Okay.

and of the detail most for on And oil clarification within then oil are then the some thank the on comment. you of And gas? gas you the going doing and as include oil and work Or do, Okay. was gas forward, margins, Is that. can permitting and work a good that and understand that well construction I still capability? still you turnkey design some

Dan Batrack

design involved in gas are coming US environmental here professional with Yeah, the evaluation, and the services, market. and In really U.S., permitting, are site oil in work which geotech It's the the moved slowdown our is the States. the in to is the predominantly XXX% we work. detailed United revenues -

work the would that the in see growing digits, at more so, X% single normal smaller our we professional margins actually Canada, margin, portion about is X%, have what of is permitting but a growth construction, in but actually been lower sort And well. upper actually which so it and design in we're professional services. and at that doing services business In of Canada a of are rate consistent has also work with we is

the carry much QX and the becomes portion all construction our and permitting, QX the representative of and winter margins much gas way, more rest pipeline more or revenues our actual are in those quarter. see our QX, oil largest in contribution So and services; is our it minimis, of small by in company. you'll relative a its design professional is services of And right and de represented

Tate Sullivan

that Okay, for you great. detail. up Thank follow

Dan Batrack

Operator Riddick proceed question. Please with Great, your Sidoti. question thank comes you, from the Our next with Tate. Marc line of

Marc Riddick

Hi, good morning.

Dan Batrack

Good morning Marc.

Marc Riddick

use be have what contract if a update you might then and acquisition? I that. attributable could on And follow-up the wondering portion was on of capacity I to the recent on us that

Dan Batrack

our what the total is have of has Our we $XX backlog about billion, in contracted, that actually been ceiling company to capacity capacity go that that the funded contracts. us and have is contract a amount that we for contract us authorized to billion awarded, and collective refer the do $X.X work. The where the is contracts that we at list in

going design. because of So or I really it's Because out guess use of field in of that I would be the already it's would side de-obligation these this on definition the uncommon, that we're working the this our even turning we was I but revenue. projects, see could rare say - any into backlog, in to

contract capacity amount of Now backlog Tech, de quite that with was contract it's - backlog some to actually others GSA millions do that respect the we But actual have relatively their and would the small Tetra that but how measured now capacity. was calculate on have, is large and capacity very the depending contracts respect several would apportionment standing across taken contract to we be so, or to contributed, of in they dollars that the with eGlobalTech, hundred minimis. was with of

Marc Riddick

quick shutdown, you know back on was if a - expectations, the year to just moment I And I did the there shutdown, could was Okay. you due reduction a wondering then - that follow-up a go federal following on for during full to the that to embedded be have the there to X%? some what-have-you that during or had would is X% were revenue that shutdown, number been If the lost or upside now in out represent that you there. there lost regained orders

Dan Batrack

February we've and government have would were seen not at but because not contracts they seen federal that not the we've on we that had, work not much of didn't the as working in Marc, January. of month in additional to during be for in shortfall a the upside, number funding of the that the month up January. That twice agencies then they make

is, it just saw for shift to the everything we what we ramping right. make up what didn't rather up incur, fact, than to In they saw

streams So it gap. coming order the work in close to and similar the actually funding we ramp-up to is the and see the we what through that prior revenues but shutdown, the to is saw didn't

up to that of as right. right. roughly saw don't not this it's So going got it it's make away, for include days just the everything the we a think as catch-up moved pushed to XX shutdown. I did just We or a but

we're But now be reason, some case it to it get ramped up. the for So back would was to upside. incremental

So year the growth make to rate for that up dollars not our into for shutdown. we any factor additional did

Marc Riddick

Thank Okay, helpful. very that's you much. very

Dan Batrack

Marc. you, thank Great,

Operator

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

Dan Batrack

to of on have well insightful you, forward you you next to are very Bye. well you Tetra going or quarter. great all look our thank Things and really rest quarter. to of all very Great, as tell of questions, for to the your look better performance reported I'm going all Tech. Have much, glad this the we're here employees. all with again, I behalf speaking your of a to do I'll next day. you interest And And Dana. in thank

Operator

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

Tetra Tech (TTEK) 5 May 192019 Q2 Earnings call transcript