TTEK - Earnings call transcript Q3 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 Web site at www.tetratech.com. recorded is request Tetra the being and Tetra Tech. is broadcast this copyrighted call at of the Tech This property of prior Any or Tech information this prohibited. written without is rebroadcast Tetra permission in of of part whole

call Batrack, results, With Executive and open and Financial They we'll Officer are brief a the Chief Chief will Burdick, then Chairman provide us for Steve overview management today Officer. from questions. Dan and of up the

in required results risks to statement in presentation. attention growth projected statements to periodic the significantly I contains the statements. reports statements its Today's from to would like various the direct as forward-looking Tech including harbor with forward-looking Tetra discussion law, no takes and to and your by forward-looking update safe Tetra financial may those obligation today's about future today's Tech's described risks expectations. in filed Actual due differ Except uncertainties, SEC.

measures be section In the of addition, Investors Instructions]. will Web financial management Tetra the appropriate since non-GAAP Tech's presenting site as are in GAAP [Operator references, reconciliations posted financial some

I would to ahead, the call Batrack. like Batrack. Please With that, go to Dan Mr. now turn over

Dan Batrack

operating consecutive from backlog. quarter last with Even and this quarter revenue, year. earnings good to its XX% performance, Great, very you much, the our Dana, income backlog with our financial results I'm report quarterly best history, call. and the revenue, Donna. welcome company's we to up revenue and net and quarterly with ended that all-time Tetra sequentially Thank achieved conference pleased morning, high Tech the record-breaking for up fourth in

per for for year of results, both all excellent we're annual XXXX. these raising revenue and guidance earnings share With fiscal our

I'm we're third to about our worldwide. While quarter more that and expansion clients actually had excited we offering the new services great even a geographic our financially,

more about the I'll Kingdom of our to the later advances expand the strategy the significantly objective at bit beginning remarks, presence prepared WYG, speak acquisition XXXX, which of and on the July the and in completed which quarter, Europe. X, a of our date the in Specifically, fourth we of in United

Science opportunities our intelligence and our creating than as by with machine-learning evidenced for is recent the Leading new solutions, awards by in us, of $XXX acquisition approach, of over, eGlobalTech, quarter. data by Our contracts provided in recent million analytics more just artificial augmented

items, here Chief today's Steve and with nonrecurring as of operating which presentation So better our on income, for additional I've our the outlook, more for business details provide without We earlier. had shown adjusted will and begin the reflects earnings revenue, overview excellent later performance allocation. financial the achieving Burdick, and our numbers, I'll third slight our quarter, per net I'll record indicated quarterly differences on refer discuss capital will detailed Financial a the while to an Steve as operational highs results Officer, share slide, Burdick, performance backlog, our CFO, in adjusted which call. revenue,

last X% revenue third quarter, was $XXX our our from up For million, year.

the operating an million, of share million, earnings revenue prior from XX% the of diluted income last which $X.XX an And income in from operating XX% for all-time year-over-year, generated quarter, net from up per finally, This year, up another was $XXX up up setting XX% high consecutive the prior which is resulted Our the billion, adjusted up $XX year. and company. $X.XXX XX% the fourth quarter for is year. the for backlog which at quarter, the ended sequentially

by of each overview like key our clients. performance to provide of an end our now I'd

by of Our local U.S. record our growth all quarter the and for markets. our end supported performance was state third led by work, across

local XX% our of XX% business. overall quarter and state this were up generated U.S. Our revenues and

to is grow double-digit services. growth long-term southeast our U.S. one, program and Our disaster the California, local which disaster pace; continues and support and response, management Rico the our especially coastal state two, best-in-class and the and of infrastructure U.S. at Puerto in recovery success includes: local areas mitigation a planning, market regions; the services, third in state driving for water area

Our revenue international and energy quarter, Work last quarter which International was federal compared of net and clients and of year-over-year is including driven overall the revenue our represented up clients XX% was XX% geotechnical analysis for to in work was Canada, U.S. year. our for up in growth renewable XX% the programs. our business. our net by X% permitting, industrial conventional environmental

Aviation federal the contract main USAID; Our continued capacity Agency strong Department client are performance the International in builds our which for of or broad in U.S. on three sectors, market this the of Development and Federal third which would Human the Security, Department Health Protection Services Environmental Administration and include agencies, Agency, sector others. Defense; would Homeland and Department and civil of be

very on revenue work which in commercial seeing here our energy our States. growth transformation United in market U.S. we've work utility XX% in pipeline clients. X% Our is U.S., Fortune We're and here midstream quarter, the XXX in actually in also was permitting growth and our environmental markets, strong seen the continued building high-performance strength our the of in commercial the seen net We've year-over-year. supporting designs utility for up

our by like present now I'd to our segments. performance

as growth primarily our organization. municipal continued water and strength well to infrastructure planning in another performance This that margin revenues recovery excellent work or is XX% the of year. GSG while delivering other expanding disaster another business disaster work, as Group, last across focused which basis by continue in quarter programs from the quarter. Our the a largest group, increased its by GSG, response the we of XX projects federal third up was XX.X%, driven points Government delivered be Services year-over-year on

International generated the third of Business Commercial Group's X% quarter. our and revenue XX% grew quarter, For and margin net for the by a

we and completed an as I've all-time is performance XX% the for backlog, increase. $X.XXX up particular to continued record of year-over-year note continues third across as in us, Canada. earlier, group's at expand, the programs quarter, to The CIG which America environmental high is is strengthen. The billion, strength North and all commercial, fourth energy Total with consecutive mentioned of

slide, our on had and clients following distributed for orders third simulcast, the see you As were our worldwide. that government broadly local on along and across our quarter federal commercial, can

Notably global in an the this our in digital were international contracts. in analytical support we to the expertise new International high-end to increase see a Tetra strategy analytical This contract Tech's of domain Agency for scope or analytical quarter, exactly development We capabilities. combine scope provide with for into U.S. large scale awarded Development, USAID. fits type

builds programs the throughout watersheds next and monitoring our largest the with experience D.C. the States. our area, of and for Washington, we major coupled United of some the program Anacostia analysis Washington, the restoration phase rivers river a In in were D.C., This awarded the program restoration River. with of upon

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

Steve Burdick

Thank you, Dan.

services revenue, divestiture reflects highlighted, our revenue, in fiscal just of operations. Tech. field and earnings Dan were discussed, per third as in revenue And third best the quarter revenue of So as fiscal quarterly point net the our XXXX income previously Tetra results share the XXXX and for XXXX history I utility operating that out net to the quarter want

third forma net divestiture, saw when where on last was line pro and quarter So year we revenue account, XX% XX%. actually was basis, prior this year, about in to we the this top double-digit year about take up a a the compared into revenue meaning increase up

XXXX. million a the when third X% million third $XXX revenue on million fiscal the the Now XXXX compared $XXX in net third the million $XXX basis, increased Likewise, fiscal revenue to quarter GAAP the fiscal of quarter when of fiscal to of third X% increased net XXXX the revenue quarter $XXX compared revenue quarter in XXXX. of of

a resulted continued in engineering growth continued increase generated million our infrastructure by revenue services. from engineering operating income efforts, response from planning was that $XX income consulting and consulting XX% water our to municipal driven those our This in by the for the and into recovery and the these million. quarter. front-end primarily especially Canada; year-over-year on operating international work; and third U.S.-focused focus increase activities and have $XX the overall, quarterly And increases in We disaster our

favorably $X.XX EPS which GAAP basis, GAAP EPS compares year prior our the a $X.XX. On was to of per share,

EPS over in XX% increase decrease year our effective our net in last income, expense the due lower primarily tax income, the benefited The increase which to third interest up a from net is and in a quarter our rate. operating

of Now quarter, effective or the we benefit a in tax did XX.X%. the an about tax few recognize in discrete rate which them of resulted third

of was million. current even to in our this per totaled earnings about the debt. $XXX.X the of would fiscal This tax a receivable capital. the and the of if increase have favorably for The been at or applied we XX%, benefits about year XX% our rate cash effective our flow improvement of on or of estimated quarter, -- third annualized year still our share $X.XX third basis third record For quarter flow operations significant year a is generated and the On exceeded top-end our cash prior a over through quarter, the which of in guidance. increase the accounts first cash excellent, working quarters XX%. $XX of quarter, by from $XX.X of XXXX result million management was year-to-date million management cash X flow a of excellent focus continued the our compares of an this Among collection many prior the third

year last the this net slightly to only of at as quarter $XXX.X about million time fiscal $XXX.X third Our increased this million year. debt from

buybacks funded During acquisitions, dividend and amount. the stock quarter, and WYG eGlobalTech the higher the we a

our slightly Our continued net a just to factor settled debt-to-EBITDA flows operations. X.X due cash strong from below

back grew outstanding to quarter. the is but as timing sales the cash which from days days expect an and of you better. operating temporarily And required our second do to revenues collections. and decreased that the improvement we heavier growth half to this much from DSO note due did towards quarter, of of XX.X third quarter, working last our of should our lastly, increased And use year, a flow the the our impact This significantly this do capital,

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

the $X.X August able And month strong approved will in and quarter, in at the per top areas us million $XXX Continued Dan end, flows we've dividends. while year-to-date, operating quarter will a We've share. And moreover, third we XXnd growing strategic lines. we dividends allows our cash in consecutive to the the our to been of and cash that of which to $XX.X Board in million speak out in Directors the in And paid $X.XX week, quarter. But of paid of which paid later. be WYG, dividend, the out year-to-date this rate this funded third invest of acquisitions to million just especially bottom through third operating just to and do eGlobalTech flow that. continue annualized

to In completed the in addition we the XXXX. million and third payments in million year-to-date $XX repurchases in $XX share the shareholders, dividend to quarter fiscal

continue, continuing Going $XXX forward, stock under the to program will buyback dividend utilizing we quarterly the and the look we program. million approved will remaining

third very you thank am to want results pleased financial for I your So share for quarter, and I these today. to outstanding the time

call I Dan. So over to the will hand back

Dan Batrack

much, Thank very Great. you Steve.

enter our update on like we As of the fiscal you XXXX, to our I'd year an quarter acquisition provide strategy. fourth with

Tetra plan, with as objectives. through Acquisitions closely acquisitive on we aligned quarterly growth for calls, strategic here our strategic advancing of is Tech organic presented combination growth a Our these and a previously growth. are

first past year results in are that developed that approach with the we've X very company. in a accretive decades, acquisitions the disciplined their Over

objectives strategic major three actually support. have we acquisitions that materially Now

is a in sustainable First, build is practice building a that year best-in-class to million high-performance building design. high-end $XXX

capabilities our third, that's vision the and knowledge And in domain to by that European analytics our a cutting-edge enabled the technology. expand Kingdom to United significant by geographic in leading share consultants data Second, coverage in completing by of our market. add adding digital acquisition

firms strategy past us who that objectives. after recent added our all of joined these across addition Now months, we've in X the new the WYG just is five The most advanced XX close. significantly quarter

mentioned July closed earlier, on X. the I've actually transaction was As

United staff, as X,XXX consulting some Defense, and have with international reputation newest of offices National in Ministry Grid. is a our They like local Aid Kingdom addition, base, in I'd you major the UK with insight is development leading such which a includes long-term and a Kingdom, and top-tier utilities WYG the firm. Sellafield XX client a company to and WYG. based provide United of as which Now the into

to advancing complementary Tetra in WYG already in on Tech, highly align integrate as expect or mix be well XX-month our and of provide WYG business fiscal only with we're XXXX our growth organic both financial their with best-in-class period. to operations. Tech's way double-digit a by future roughly systems for about financial our will expect culture and operations WYG Now, and enterprise performance end Tech, platform IT leveraging but not and strategies resources excellent and aligned brings the them Overall, Tetra Tetra into we the year to I throughout successful, be Tech's, reaching in Tetra they the acquisitive a region. growth margins will our that we an

weeks we're in bidding positioning on together will new Now already after combined proposals the new has contracts leverage just and the joined opportunities two marketplace. see our three for markets We four growth major that companies. us, WYG resources of and new

infrastructure amp that Kingdom First, cycle and the our for leading is we primarily course, and our planning services. in we position high-end water And and water water corporation the area where can of management market. next the for United believe technical is provide the program the market

have area the second area for in there's market, our facility environmental and in across coverage that engineering programs strong which housing restoration geographic military that infrastructure we third the restoration resources large-scale and both the positions and shortage. needs addressing a Kingdom WYG the remediation will where serve Kingdom, A in United we And from can globally. be key The contracts. expanding United has acute very is

year quarter guidance And the digital on I'd throughout present updated of advantage and team finally, broad fiscal our analytical, competitive for our a a Union. and for all the the like range guidance where has XXXX. Kingdom services European international now United development-related developmental, to our fourth significant and combined

is follows. as guidance Our

For quarter, million $X.XX of an revenue per adjusted be $XXX we range net our $X.XX. fourth in to of earnings associated $XXX to million the expect with the diluted share to

of fiscal ranging of diluted XXXX a for share Our upper adjusted $X.XXX associated with $X.XXX billion, of billion $X.XX. to net year revenue for per updated $X.XX all range is earnings guidance to an an from

associated year your reference. for with guidance are for this the Now provided on fiscal assumptions here slide XXXX the

earnings third excellent summary, records we all providing with we and XXXX WYG enter net and fiscal United that the for us income, July, include had In advantage share markets the in backlog. and our Union which high-end of XXXX. and of our per financial to into to and in the revenue, new surveying, excellent complete an key our quarter, Kingdom advanced strategy operating achieving European closing metrics, We expand revenue, increased visibility are year high competitive consulting confidence markets us a us for we're services fiscal as move opportunities to and year giving prepare

now I'd questions. to up open Dana, that, with like And the call for

Operator

question Capital first The Tahira from with instructions] Afzal [Operator comes Markets. KeyBanc

Sean Eastman

Tahira It's Sean on for today.

so? at kind years The first in in local, or last I to utilization is versus on performance do kind where over two explosive light of a state wonder GSG, range? you there one really and for could me segment if constraints of that characterize growth capacity normalized clearly point is the of you And what the particular. have in growth in start

Dan Batrack

local success We've within our and our international had activities development GSG. in markets great our federal activities state and and

and that exceptional this course, really it's we to So quarter, an outperformer been of growth. driving while all that local, have the X note was want past do areas GSG state

up we respect toward staff we're end utilized said stable XX.X%, between And efficiently, to past running as with very are to our and the upper Now XX%. we'll the in margins of that be XX% would that highly range. When a range. at utilization, have we're relatively XX% the is we range, at business

another percentage mid- basis to do on We group more would getting adding So in maximum optimal close several we or could within a growth leverage upper our additional add But what rate. we I without been utilization that call XXs, of the so a within have staff. to workforce. quarterly any has still the utilization an are

year where would And also have instance, the utilization in XX% did things ago, that where had fourth closeouts were a is that fees particular year extraordinary. largely fact, we're I margin as quarter point the that projects that and well to staff. we of a comparison, actually we In of some into award and last favorable special associated with

access the performance, or from we limiting can has staffing additional to see don't there. but ability do even better have as actually resources think what this upside and factor exceptional a at I we I time, So been

Sean Eastman

year. question what our backlog me. this to was but entering the second get early the fine-tune we're it's about backlog look XXXX forecast, as it know I for be XXXX, for And to helpful versus fiscal to talk sense we makeup of would entering in a as

in and implied Just size mix? that of burn revenue how in project backlog rapidly terms that to is

Dan Batrack

my it remarks, We respects, And some quarter I that, prepared high feel first in only record, backlog. do the Xx. at million while so in it's Well, best metrics, backlog. financial achieved not the exceeded best fourth in consecutive Xx, the but quarter all-time I on a the and quarter us was if in is in an about it revenue. the felt the that is here it great different our Tech the wasn't many is know Tetra about this included the noteworthy we was I was increase, the actually of one for And history that one reason $XXX that item is it's company a

know quarter very million, greater book-to-bill to add quarter. a over revenue the $XXX to $XXX but an $XXX this on reason in revenue rate total million, $XXX all-time all to was it was I we wasn't that a high then burn that high, replace is have our had net that was the and Now at of also in million, the us that noteworthy expenditure it million, revenue more X and is than

of fourth I'll being we in we're that negotiations by that have into are proposals evaluated many direct that of have are and visibility single tell quarter, the you, our clients, awards more level which to so And with. going

actually with we're not I'm leading trend best we our indicator I where as going the word to So as go into is. is how positive but going our that fourth confident, continue is to is quite respect end single to to feel feel, which to the use to backlog trying of next the this where quarter. I And into perform year,

very to composition, it's respect With broad. the

with and that and increase, had more great very sectors: that backlog increase did was will we all But international, in actually slightly orders burn the local, a the and federal, performance quarter. of into the you state tell had local, we new state obvious. of across we Obviously, coming commercial, XX% that While I would state be local, broad.

And far as goes, far to continues it as as execution, as actually slightly timing shorter. be

As XX% we year. move the consulting actual a the burn on aspect, said business front-end the And bit the say more XX% the in months, going more or and that XX XX%, is to the past, we're early typically we've next I company more at little in of the of rate only to would in burn that. beyond with at a it the slightly would

a So at A up, we X we're a lot visibility. ago? up Well, ago, to year so were XX. And compared X we're we we're of X, year how we have $XXX were at million. about

incurred So even the larger with year. revenue this

areas very is So, about but I long-winded, bit feel a of I the best because question the we that it covered aspects it the it's one different your in little company. of know hope

Operator

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

Tate Sullivan

can work? building $XXX more a And hear I design context that where you're your you before please? you talked target mentioned that million for did give to currently, you comment, and about if Dan,

Dan Batrack

million practice. can. sure building I We're Yes, level now. about right half that high-performance targeting We're $XXX

probably close rate we're So of to around, a at run million. $XXX currently

the four seeing XX%. business to we that So roughly, seeing been and organic for a can our be some number that businesses won't growth very, certain but XX% been have we've three double steep Obviously, we years. rates we very would of It in growth, be in three think geography, in years, organic. next between

Other X%. more to digits, X%, the in areas, so numbers we've been middle-single low seeing X%,

we doubt acquisitive. to will be be to need both to that objective, we'll organic, achieve no and So need

expertise be number some a excellent And us. our team we like additional help identified we have think join We actually would the it strengthen bring that that would in add areas. both would of and come certain high-growth geographic to technical partners to coverage to of

think three around acquisitive and that we're a $XXX of roughly in organic next through we'd years. combination million We So achieve actually the now. growth,

Tate Sullivan

the you the And I, then CIG in on commercial below, above group the building that can average high-performance below that given segment in or comment or average? margins

Dan Batrack

CIG the average margins of is certainly, group above actually and within above commodity current with out reporting the CIG They're significantly are It the aspects. compared, any that average disassociated above completely is areas itself. of one

associated clients. mining. commercial or of drivers it's with anything completely our So oil set really in words, and It the like from large on other has not side a gas different

goal levels to So And to are. building yes, is the seeing the we up other to the margins are the fact, where quite in we're complementary businesses high-performance that practice. get currently in the

Tate Sullivan

have it completely fair MYG apply the then MYG? not it? Coffey shall did And different, they, can you I two? the you is to compare that acquisition on Are the from three I even Did compare know Or international, to you acquisition Coffey integrating ago? different years geographies, to the experiences learn but

Dan Batrack

respect the the of I them, use both consulting a go had and plug-and-play, of in Commonwealth similar get they to law I strong think with the the Tech. which both and successful Tetra WYG, a integrated sustainability absolutely have they're and they're world the water and Obviously, certain drivers absolutely geographically, and programs, excellent environmental ends other for infrastructure of which hate very countries. priority which of development heart investments extent, actually rule They are, but but the comparables. Coffey both They international word almost are, a both to practice, immediately. arm, very they're at plug in with in to

the Coffey years one took get is now, and us right of to would platforms. actually we learned, years implementing I that we're two X.X say about it lessons XXX% And our it onto of to ERP

from year XX development days WYG international XXXX, we'll board going and that of today. expect into the fiscal component have We that's on

efficiently, respect learn with that's how So more did even moving and case. we the we're what to

day of have the That We'd being component by one same the be essentially learned leverage that on same that just a allows of revenue X communication, expect everything. only year the the on business. same to we to of and the international synergies expect their October on, XXXX, the to the rest behind months X, which because was development is fiscal lessons us platforms, financials, few

the intercompany by So work the is platform. augmented

area I'd say other And we've the a better probably U.K. Australia bit U.S. Tetra gotten closer at, Tech than the was. is that in to the

During that we've place started we one, this can on process, day accelerated go did on so and planning than identifying a proposals and end visit and clients we market that actually Coffey. even can that we took basis more

was successful. very Coffey So

timeframe. will I shorter that, match a just think perhaps WYG on

Operator

from next Our Sidoti. question comes with Riddick Marc

Marc Riddick

did. I of this. wanted you sort a touch bit But it's deeper on wanted the to a being delve the piggybacking fairly -- on working see ground and if little and on to following as guess, out and I having acquisition ground the of together feet I commentary bit as could as little maybe quickly you sort to into running hitting the quickly

really as Some lines. were particularly helpful. be would whether preparation any into not were sort that of far receptive, industry or That verticals might and as that what and -- what that of be might those particular along or the -- the opportunities anything there that that went

Dan Batrack

we've fact, identify can But new the to backlog. has examples contributing other orders then on has our Yes, the in give I in Defense means and of U.K. quarter our expect where that we with of central we next European think Frankfurt on with had items the a actually our largely Defense, couple has near-term we partnered and And our progress U.S. been you Ministry can which of Department presence Europe proper. in locations. in success -- that the for it's operations. office been Germany And around a been

moving a We've, presence, But initiated us partners. been we've very immediately. that with limited of using forward, subcontractors and U.K. have with course,

on. that work pulling using and were the we're be others going WYG subbing to back to So immediately we

are that, that defense the the similar the PFAS, have are for We Defense. emerging capabilities will arena big regarding new of the with U.S. programs, have PFOS which drivers that in drivers Ministry and contaminants like enormous

pull actually we So can those together.

So can and We U.S. to quite Engineers have one. the District well. new that are contracts of use we supported theater, in do Corps we through the Army U.S. going really in now work for on that, country think our European resources that that's day European

about that. good feel we So

weeks, I it's that reviewing say just the combined X development. will pleasure that international a had are we've basis proposals in great been And while for going on of collaborative

would it So to or DFID as our U.K., in somewhat in business, size. as you're seven the UK Aid, number far numbers WYG. probably we business precise if the were be I say was similar for

combined, a we're top competitor. So five

proposals, U.K. has should process of make and And and for least experience their the XX capability the Union that submitted tens us Bank us. they're European Tetra of the we WYG we've with being have others, I within competitor. at out think dollars submitted, the joining between millions the the with World what and combined very first with a many in or top of days Tech's of and in Australia in And USAID door

to I'll And the updates as happy and a very be coming calls in those you are translated those examples. to give contribution how wins into real-life to So our backlog. have

Marc Riddick

And great. here, gears, but of that's switching of Okay, sort moment. a home wanted it's sort back I here know I coming for early-stage

but passed a might wanted the and would sort have here, if see share had Tetra the what a to it's see and process through sense early I benefit of sort if any they there? on you sort It some though Tech sort to we as might what any of you was general that open then wanted some thoughts but might maybe I of might up, just of budgetary of thoughts or be as the opportunities House, for opportunities get of there forward. that seems sort to know put early-stage were

Dan Batrack

ceiling what really, forward. it. government, we're us he'll feel concurrence means that defense it is glad we this And addresses House through to today. within the hopefully for other look, the And and move funding refer The on sign gone departments actually both And it's President's we just of to the Senate's get indicated budget agencies. departments the see you the Well, really and it. We'll two-year both as all for sort the works for deal of sometimes, civil indicated, civil as a and really simple. which,

work To if predictability not is have be the actually or not, respect that we'll if forward consistency go have you ability and you not. or with what budget, add and or and you resolution If going respect with actually federal it a or know to there's to information spend they've government, don't or to to continuing allocated. sequestered going to been back go their clarity, actually it's

we think is predictable, this don't because to normalize it's, a could, a would call so to more what know I anymore. big what I use means hate word that back And this I step

Steven Burdick

word. strong a That's

Dan Batrack

Yes. much But the really revenue to us. Tech I the diversity actually for Department to government is think State federal civil that deal the a other has from more a within predictable Tetra and big to defense this stream the departments,

while. we for think, in predictability, be haven't that seen So with years, would visibility us, and I it X quite a

And I the bodes government, the quite contract billion do federal federal have over actually the well capacity So for this in know well in to that I've said number. I $XX billion gets past, on business. closer with think we and $XX calls our

contract I think for those are ability that that this And right others place fund capacity do now work, this that have us bodes actually it their well and in very area. programs, and so in to for

Operator

question comes Noelle Dilts from Our with next Stifel.

Noelle Dilts

where are on could question, first just How some I progression? margin that? you're the My quarter. to expand bit about about expansion? to how great longer-term thinking And a circle I back WYG. that drive you're thinking was opportunities on to there hoping you wanted Congratulations a

Dan Batrack

Well, public I a that WYG been has think obviously, company.

filings. been You've but a Their percent, to seen minimis their call not zero a at performance profitability. I'm X%. couple X, de say has going it let's at

at So say that level. let's we're starting

a prepared work remarks, beyond now, rate will said we'll at within is start, of I'd which at of internally, I've in XX, as couple on which we that essentially Tetra we'll at a be run will before the XX%. they'll that, be the margin running be Tech But quarters fourth XXXX, As least double-digit. a percent. they'll that type at And start quarter be indicated be, the XX%. goal XX-plus that in toward And they'll actually from I will expect XX%, expect by year business, my be

even, a businesses, fixed prevalently U.S. and U.S. the think work to do in schedules that of and for have natural the which some a clients that here of level some the or some they in than have we use price, in cost is than higher rate potential more to I rather they rate T&M for and them have schedules produce what reimbursable, had actually nature by use some the the they governor margins that commercial of actually which actually the that even we the

a And couple you'd quarter, we posted they was if I above when think within, that, at I Tetra GSG, would that even going I lower ask, be the of we've the because should after within at run historical it they at CIG fourth the should Tech to XX% months So or think XX rates do are in achieve margins quarters that be think though greater. at they from a or that that? XX, say the I'm now, level. rate have a

to So that I'm mid-teens the going say number. in

above want current is by CIG to going don't at CIG margins. CIG because be saying limit be I above or So to its they'll

Noelle Dilts

feeling over about about helpful thoughts sustainable And obviously on us talk And GSG XXXX, a but know bit early in comment get terms range? still just Could to has cadence forward? the how with it's moving of of kind I of And past are your of on strong you, that levels about you need where end those to think are that very to of and what any last been CIG. in going. like you higher margins see kind in Are to think been again, helping years. the to little improvement it's two targeted the margin think CIG?

Dan Batrack

of its type performance start is to of Yes. team both Well, with And current all, comment, execute GSG I'll we continue have backlog, and easy, it continue to first the type of had. at it predictable I and the at the staff do projects the the to performance. expect management which

we to So that's few to do GSG. With need work things CIG, have a respect we through.

think, the respect Canada at work I think, revenue implementation, some I we contributed don't is to that competitive on on I being in have essentially management calls of highly with have previous construction the commented margin. that no

I priority. think I've that. address a moving indicated we will to last quarter, we're that

take. year on margins. in that $XX about will make be helpful, million contribute be will it all, It a will XXXX a to expect first business at no We progress that, to some of

X% at help an I margin, we'll do XXXX. address as I into take, providing it suppressing that, you you starting the progress and so you them the look So give will that itself update probably making we're I up, let's there. that CIG, think We to for if the reducing and CIG or call WYG, it in to part of as de we're we'll a optic integrate CIG have, transparency though at that moving we move take number give an and some to they're of if recognize of margin what otherwise say just that a or X%, early of XXXX, just going ex will will is that into as WYG a in do minimis

double-digit, be here watch XXXX, low-teens, glad I year acquisition as CIG's where the just toward perform the CIG the hit in There'll the a mentioned, which XX%, I think go the, be I noise As in of not towards we summer. XXXX will costs, of should fourth the margins do CIG, maybe spring did I'm because number move into quarter. quarter they and see lot will in the think spring XX-ish. throughout transaction but a double-digit in into we'll year,

and So for them. of we're the the targeting that's type number timing

Operator

Our next question comes from Baird. Andrew Robert Wittmann with W.

Andrew Wittmann

I you of is, infrastructure I kind state a about heard about more just And local little and mean in do. just I specifically, as think could so to state that bit we the Dan, the we what really work business. good I you this wanted commentary, and more little bit talk about water your growth insight guess X you have a talked local that into in drill buckets

understand, third planning the talked you could help of bucket, of kind And next each quick Just and best year, response, we even on think happening needed so as it's of open probably kind think of I buckets that. understand us at the And response then which the disaster it eyes stuff. about projects. in and You and I longer-term hoping grown? forecasting kind be of type kind which on to least year-to-date about is basis, of talked have those a comparisons think as of maybe of quarter about you we really was what's how inside I

Dan Batrack

you and state work. got response do This let of XX% represent the the some actually a founding the does the about water infrastructure. the right? long-term baseline recovery been wastewater and the X quarter of work. So management, and up work with XX%. absolutely. that's work, of to start the of longest, some That with Andy, it's about me refer local for the flood with it to over contributions this do Yes, us the our one of we municipalities, it our consulting where for goes company, watershed that water all is little supply would we buckets, as sort Even control back treatment, all the

X that divide the attributable of water to if about to that buckets, was attributable much business So how I take services is we and infrastructure have. that it those XX% up, of XX%

continues to quite has and So several years perform really for it now. well

work, X% area management is mitigation longer-term -- work, of is the about That as services. program recovery, second an The to increase of the which the which referred the XX%. for plant consulting recovery, planning the I accounts that

water be are you and not execution was less of response this all bucket. it visibility on increase. doubt, those are Those you be episodic. were infrastructure, XXs than big XX% not the into X-year addition. if recovery actually the or And two. that for last with no about above shared those, the precise, XX% something And want long would the to we XXs, call that of have About XX% which between accounted the the if was because So programs. those between I

of and number based quarters, QX guidance quarter, Hurricanes the -- than a the about is that that we additional grow have event. for higher have Maria just we will the it you This that other third And is episodic new that's So Harvey. even that. and contribution year But few which as response Or that many this on or are first know replaceable? any in can Irma year, work, in disaster were I we our responding say not at, I how looking our ago, There's doubt no from? much have, what we included is any forecast to already.

not it's quarter. would I So a say single that all

the up lot If the would and are that right response load, water out of quite looking load is. pick we what to work a you now look the are doing for on others for the next to recovery quickly we're these year, that and growing infrastructure,

a at we're go what few the and to specific as looking on touched your contributed that believe I out. how it So in of as hope provided we numbers comments. I I quarter

Operator

over question-and-answer now the Batrack turn will conclude to will conclude. session. Dan back This I to the conference

Operator

to now I over question-and-answer conference will This Batrack Dan will the turn conclude back conclude. to session. the

Dan Batrack

thank that Thank months the insight all very Tech. year interest got much, for you on in sure to in presentation And great left your Dana. questions, listening ask quarter. two this those XXXX. for and We're and and focused We've this attending very is Great. fiscal you making another for Tetra

our those put to tell where you we're with looking but to our finish plans next going only tell performance eye to Although on really got not diligently call for now XXXX. for performance we're working this the forward quarter, on right together I'll and our year, sharing how you what you are XXXX, we really we've estimates next on quarterly our an for I'm and

talking Goodbye. look So all very next much, and to quarter. forward thank to I you you

Operator

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

Tetra Tech (TTEK) 4 Aug 192019 Q3 Earnings call transcript