TTEK - Earnings call transcript Q1 2020

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

statements I'd expectations. presentation. Today's today's like statement Harbor in financial direct to and contains your about forward-looking Safe growth attention to the future discussion

projected those risks in forward-looking Actual Tech's results law, from may takes obligation and SEC. the significantly to Tetra due including periodic the no risks by to described today's various as with differ statements Tetra required update Except Tech statements. reports its uncertainties filed in forward-looking

management as be financial of reconciliations will GAAP financial Tetra non-GAAP some references posted appropriate since in Investors measures are presenting Tech's In the section the addition website.

request are will all listen-only after this mode. inform you for conference At that the the the like to question-and-answers presentation. I in a time, up the of participants company, would At open we

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

Dan Batrack

our share, call. first backlog year XXXX Michelle Thank to had fiscal Great. morning and broad-based earnings with double-digit XXXX business. year across We fiscal revenue, quarter excellent conference per and and first net much good an and earnings our start quarter our welcome you and very to strength in growth a

international quarter. our and work exceeded the fact, In for federal own even my U.S. expectations

our with our services and in XXXX. see and clients' infrastructure backlog with are environment, and to visibility providing very and analytics solutions with a approach year year-on-year to well-aligned sustainable our our new We up for high billion, across us water, end advanced Leading sequentially demand needs. Our record Science excellent strong markets grew $X.XX fiscal

providing environmental Kingdom new In throughout the WYG offer the us and water recent region. services is addition acquisition of our United in to with our opportunities

will details an performance outlook our with results our our additional provide quarter and overview of our Officer presentation capital our begin business financial Burdick, on Steve Financial while I'll today's first allocation. and Chief

records earnings We first multiple adjusted and had a first per backlog. setting our metrics strong quarter across share, net including revenue, for quarter, performance very new

$XXX XX% from the for Our us. was first a net quarter million, new revenue year, up prior high

We the of for also generated quarter, year, increasing high. an XX% last a was And XX% year-over-year adjusted an billion, our first growth earnings company. quarter per best the $X.XX share to the backlog for $X.XX high for from future up all-time indicator up

overview our quarter, federal performance customer. I'd business, and our to was provide our especially driven the by international an of In performance first clients. U.S. strong you like our for growth across by

driven Our Australia in energy-related year-over-year, business our United international and revenue in Kingdom environment year. growth expanded net Canada XX% by water, work of was and the including from acquisition geographies multiple last up and WYG

civilian U.S. was by represented for Defense, agencies, work up the clients Department. quarter. and and of The in federal the Work our our our net was for federal Department the in State XX% revenue U.S. driven U.S. work increase consulting our for XX% of year-over-year

was design, by driven performance Our XX% strong high business renewable comprised performance Commercial sustainable up U.S. commercial revenue in growth restoration, the net our X% building quarter. was of services. energy and in overall and environmental

at grew municipal revenues for and state water and XX% quarter. year-over-year local this infrastructure Our planning services

the of by in we offset growth response was having XXXX disaster in XXXX. less first this than work had However, quarter

already quarters on comparison. which offset X% a four local guidance. revenues reduced two, more our our overall is this response work year-on-year effect and even a of As be This disaster and into in result, reduced by will state incorporated three pronounced

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

services. high-end result environmental a grew CIG water strong and for both was services. broad-based The government X% GSG up in of and segment the first as GSG quarter broad-based Our growth our segments with demand in

of strong disaster at very a year-over-year. XX% GSG grew excluding response the rate

points were is Our year. in basis which margins last for our line GSG from with the expectations at XX up XX.X% quarter

and margin is grew Group and year-over-year Commercial by CIG quarter. Our segment delivered the a in International XX% which our XX.X%

Our markets. CIG the our performance as segment up margin result acquisition of points Pacific Canadian, in basis South delivered a well exclusive Asia commercial XX% the direct This operations of from is clients our strong about last year. and as WYG American with XXX a U.S.

plan of XX% by their on As quarter of margin well. WYG integration very a year. transition of already end They've achieve this and the this I've contribution initial current is going on the a margin single-digits through mentioned earlier improved rate the to to they're the low run fourth

in XX% up all-time resulting was and the and backlog new our across clients environmental backlog, In in and quarter, year-on-year also our both we task up first internationally. company. high States broad base won and the sequentially for of very For United services the orders water programs for a an

Protection our services. for contract analytical expand An and human to the Environmental had continue example award water-related ecological, for United studies capacity health recent analytics. new Agency advanced the States is We with high-end we and

services. task with new also the Army us international to fiscal Middle backlog orders environmental throughout work with with visibility a and were the excellent year with contract broad-based U.S. district provides were East of Engineers This engineering and for awarded XXXX. provide the We Army design awarded Corps multiple U.S.

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

Steve Burdick

Okay. Thank Dan. you,

history results our first earnings and revenue, in So the as backlog share the highlighted just for per of Tech. quarter operating the Tetra first best Dan were of income quarter XXXX

increased XXXX. the compared when of fiscal quarter basis, revenue of first XXXX XXXX $XXX XX% the revenue of to the the fiscal the increased Likewise, of $XXX quarter first net net million million first XX% $XXX fiscal in million million of quarter quarter the $XXX when of compared to XXXX. revenue revenue GAAP a in first On fiscal

and our especially, business technology efforts, Canada environmental especially civilian our and UK; those of growth U.S. the commercial clients. international work; from with and primarily sustainable water renewable infrastructure consulting resulted in also and increases in high-end and our agency revenue government our these continued U.S. engineering Overall, energy services the now our

basis, and a On our percentage our a higher revenue operating increased than income share increases. at earnings top-line GAAP per

of was share income first for $XX compared compared and $XX million per to operating million the $X.XX XXXX quarter year. was earnings to Our last $X.XX year last our

growth, we was higher-margin by basis, adjusted increase increase services. EPS an fronting, also by quarterly our consulting but year-over-year this and On generated not in our XX% driven revenue only engineering and

do difference which the quarter in construction our to cash resulted our I to $X.XX position expect want year. did the that a fourth EPS adjusted of do of this the divest portion reconciling we of over fiscal of to which XXXX due a to gain sell our Canadian decision is our pipeline have in assets fiscal point sales business, remainder EPS asset further out of XXXX about which will of results. rest GAAP We the and we benefit between believe our

the Now flows quarter totaled in quarter. the operations first for -- for related cash of first to million. used Those $XX

operating quarter exceed generating we to is anticipate first XXXX, our which flows seasonality. expected in operations, cash And net fiscal to normal The due positive income. negative are from cash typically

to continued and million due from our Our is cash flows times annualized debt strong about $XXX net operations. settled our net X.X at debt-to-EBITDA

best-in-class not could our four the XXXX. DSO. XX of day's first quarter. the of lastly, from days fourth an low improvement our year DSO of Furthermore, and further last And anticipate since days business quarter. outstanding This XX days from improve sales as decreased our to been is last continue has we this and improve And the we our quarter refine we as outlook, to

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

M&A We've able while operating do growing bottom to invest further just capabilities, to service an cash have us which and opportunities, contribute expanded a presence can top lines that. strong strong and continued customers the been high-end new and opportunities. areas, in allows Our of geographic annualized pipeline technical we and client to flow strategic strategic

at and amount out XXrd we increased million we which quarter our at a paid the consecutive dividend happy Directors next month first in the be our dividend, that of quarter. update will amount $X.X February paid share. approved program, $X.XX have Regarding started Board our our rate year an revisit to the since time. that of will per And I'm provide report we of each in we and dividend program, the

capacity our Furthermore, approved million previously approved an Directors stock under additional which program, remaining. of in This $XXX Board million supplement to a of approved buyback the million stock $XXX the $XXX gives us has programs. buybacks

Dan. first I'm financial you I back outstanding over to And very results and your want today. quarter, share pleased time will call to for thank these to hand the for the I

Dan Batrack

XXXX the now Thank very to I'd Steve. Great. our for year. like to you turn outlook much, fiscal

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

growth operations. work, international planning driven by Australia U.K. and based in water be Our engineering and particularly environmental consulting our and and will new Canada,

supported which federal for civilian, grow XX% by increase backlog, almost and be lines. is Department current rate will X% our work U.S. in our at our expect development Defense, international our work a to of We service across to and XX% revenue federal convert business the to This of year.

design. expected restoration, rate with work and renewable at environmental to to high-performance expected X% building Our energy, U.S. grow commercial sustainable is X% revenue a increased for

U.S. XX%. growth us We work a expect to growth and to with continue of for state local XX% programs rate our a water municipal for market be to

demand services we their and Texas, cities will continue Many that large strong that of municipal increases California, have the in growth. our drive to serve major for markets in and and funding Florida include

we two is their rapidly the opportunities our of to to the The the for federal since government growth built second like sustainable high-performance been client it's $XX in in buildings. you would us can primary client priority significant of is XXXX. federal our billion the contract U.S. programs. current a that and largest is believe We've to support I areas One and have company. federal we U.S. portfolio and founding for the address government highlight capacity government access very

new federal contract environmental high-end the agencies, development supports capacity delivery for of we've of facilitate and international agency to Department our added current the the Defense, and and capacity contract analytics Department State. water services. most IT Our advanced of recently, And U.S.

in agencies spending the by all fiscal $X.X spending more for and ago, federal includes budget XXXX month us of trillion Tech. Defense, bills international a Tetra final in U.S. Department approved were government. core increases at markets than The development here Just civilian

result prior Now, us place, that today, seen this federal year. optimistic we're and in budget years for very increased shutdowns and delays will this the we've and sequestrations government without that in already the in revenues

and increase us area for to demand few water than global been practice that $XXX that a buildings sustainable our minimize revenues the for design power this for worldwide. million in and high buildings for seeing and of practice we buildings last Another is and more We've use, waste. operate today We're high-growth now they is operation that buildings investing have sustainable with generate capture annual buildings. that the and recycle high-performance years a in buildings growing high-performance into continue

infrastructure advancing of the capabilities to pretty to We're impact work we're and acquisitive while in Science with growth. Asia our Leading through goal, the in as the Our building different double simple and and state-of-the-art again Kingdom. for approach. Pacific to of market is $XXX a design Working this million with application environment. Canada, are city an excellent Sustainable high-end our to innovation design in and States, the facilities for in, global regional this to that now clients combination their markets and expanding and both reducing better live United is United clients, of organic with an

for I'd to our all year QX present fiscal now for of like guidance XXXX. and

is follows. guidance Our as

diluted net an providing For to million $XXX we're $X.XX of $XXX of with adjusted million earnings per range, QX, to $X.XX. share revenue, guidance associated

by $X.XX $X.XX adjusted billion For a to at which produced the we per quarter. the revenue to first guidance on of of of includes associated same that the or revenues billion our performance this based year, share $X.X lower earnings an updated $X.XX, raise net remains entire the end $X.X with

occur along of are you It included. webcast, does following you're a per amortization. XX.X an diluted year, assumptions If share on remainder this up from can That's past, include the year. see tax as million contributions noncash shares acquisitions during rate assume the the the outstanding. not that future does charge, in the we intangible that any guidance $X.XX effective have may for that the average XX%, have of And

per for XXXX quarter In revenue, share. net records and summary, to excellent first and first revenue, we income had quarter earnings start fiscal an year setting

advanced reached we're with another remainder Leading high we as visibility are throughout reaffirming long-term backlog our And year environment us in of solutions, the increased services these infrastructure. fiscal focus seeing opportunities begin Science Our growth demand all-time that excellent for with sustainable aligned year. the our water, strategy our for in that XXXX, with to services analytics approach high-end in on strategy and provides

that to the With for open Michelle, now, I'd up call like questions.

Operator

Instructions] the of Markets. Sean KeyBanc proceed Thank line The with question. question with you. Capital comes [Operator Please from first your Eastman

Sean Eastman

Hi my taking team. for Thanks questions.

First one CIG strength for margins we relative business of is I'd were expectations, say to quarter if in surprises. commercial at the the the look probably underlying kind and positive me the our

more business sustainable could color the and a are we how through get as 'XX? Just the commercial we little they hoping for on drivers underlying move

Dan Batrack

bright particularly margins actually that spots say would bright one the spots quarter. of I Sean. question, CIG's Great the in was

when the XX% about of to margins, CIG GSG. margin that performance point one their addition for percentage as adjust within actually begin brings I was about CIG think we of WYG increase you them the which

saw So strong and that line increase XX%. was up is very you growth We commercial growth at really saw U.S. top the really both driven which two in in international. promising. areas, It

been U.S. Canada new looking you strong the more us. a insight you quarter out quarter. commercial called the in backlog sector orders across you'd biggest board actually very book-to-bill for little of task about incremental U.S. webcast, give to in that The on or with actually our the received orders of we bit if to along followed respect With the out has the the a we was see forward, commercial growth X.X. just stood bit on one a

strongest our than work the was the book-to-bill state margins and we as confidence higher our the us commercial and in as of fiscal think Now expansion local year to I commercial through move such we good more grew typically gives a so CIG U.S. government backlog And areas, in U.S. all continue work flow which indicator additional see but U.S. we're sectors some has in to other that or that's going through. XXXX. margins

Sean Eastman

That's quick we margin relative is WYG process a important that's as could to maybe move update of we know expectations. how excellent. factor get the through swing tracking I integration And on well. kind the just year as an

Dan Batrack

to say, a progress, a breakeven we're Yes. on There's two parts with from making about margin would was talk I expansion the WYG. we're One tracking rate. what I would run essentially expectations what respect exactly to would XX% about business our be.

back-end We our right a year. a don't increase the really expectations see it as roughly either the but which front-end I loaded, with were about is in what on margin here in quarter couple percent, first or very say right -- are X% We across of financially. linear would line

up we'll be would to with end a ability that QX being X%, do the that little bit as to probably expect and increase and in at move to I a the faster. think as QX, I progress of through XX%. far QX probably We then we'll see X% it QX increase a have in actually

other portion And operationally, culturally really would our both and it's integration expectations. markets the with the to other of operations exceeding respect in synergies say But our end company. I area that in actually is

clients. have our on-the-ground for in-country us And what that we've and staff the other United I have work. represent ongoing actually translated that's and have work clients managers program into we actually Canada operations given by commercial our have to resources support technical the multi-national in for Kingdom now mean and the that we that that in already U.S. seen technical permitting it is, And and capability local

water be that actually many of Northern number have Ireland as utilities to with a WYG the submitted and been different in with the expect major Kingdom competitive stand-alone. of proposals we that we've very United to significant And submitted never a would

good out cultural the Americans synergies Canadians should and of my actually have top number end Australians far we revenue that at that of WYG a we So by as exceeded the gone has and the through real year. parcels of expectations embracement be move the even indicator

Sean Eastman

talk strategically then break one you mix and roughly could advanced three you in go the IT think level next you're higher years. analytics the the was today if for IT And just out growing could guys of last I business. you and analytics where advanced curious, about me say Excellent. is and that what

Dan Batrack

Well it's federal and the currently. IT and I'll -- the tell a analytics actually small is fastest-growing you we company's is analytics. that area company. of believe it's -- our data -- area advanced we've it's And I well a IT quarter of for spoke of in us the the revenue in data government bit The previous under XX% all this

say IT focused professional may find or want to on would services would that highly analytics technical are client-focused. we're providing. other that services and The general I that, data from differentiate I domain it IT you

and the the spoke analytics department, that the more in for more So be state advanced data remarks: the done. more progress example I that's effectively we're and evaluations being monitoring of using place. state It put for for to U.S. them that would prepared expenditures are example; we're an the our for being made department that work doing allows ecological for that's evaluate in EPA the regarding analytics evaluation being the

on these Tetra domain highly the advanced analytics. intertwined the is of market Tech cross sustainable the are integration as expertise, the so the water, between leader design And which environment, a engineers

it's IT and capable less different have, and of type platform competition the really you expertise how automated that even way a competing, you much wave a different actually advanced for that could very making be to artificial this where do actually it it's a have approach the we're analytics not what great many end end transform because will us. intelligence be progress. people and business market It's it new for it domain front It's creates of and market. in through how how that's And can and

I think hope fitting. dollar quickly it's respect So helps the to with what growing see that I is it how -- and how amount we

Sean Eastman

helpful. it. appreciate you. Thank Very Really

Dan Batrack

very Sean. you much, Thank Great.

Operator

Thank you.

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

Noelle Dilts

quarter. and thanks Hi, good congratulations on a

Dan Batrack

Thank you, Noelle.

Noelle Dilts

there So on sort you of in allocation market. it the just know I could comment always if versus just acquisition what in bit was are as could And you're now of M&A strategy. I stands pretty et a touch first, repurchase it's balanced, but capital seeing pipeline terms if hoping any your right cetera? on you preferences slight been the

Dan Batrack

Yes, very like continues robust join be their good tell corporation. questions. They're discipline very in to the because from filter our them staff we We and sourced to with our shortage this lead thing to technical I'll own on that they you come company The do pipeline use acquisitions that merge we're very here, for of Tetra actually specific like Tech. to looking The have full. partner there's that priorities. encouraged that have technical actually one the word board generally We to for, identification us our with the would added for that we've and that so areas opportunities. of respect no we XX,XXX we're would

for position. monetization than high-performance us design practice the of an practice join certain growth we opportunities we advanced and there by I a One geographies government spoke and a to looking actually is in area many building fast-growing the come actually we firm area area move that looking opportunities, fastest-growing we're round High-performance corporation, with for help IT. a a that is and folks us a to buildings, have in we many higher is lead area that that That's that and U.S. just analytics sell. us to which think again just at fact for that to have a the out federal is have market-leading different

the And would then there's we actually opportunities in in that to additional water like the add consulting U.K. capability water U.K.

the municipal there. So folks on in more we Australia. have work And ground

best is no areas we and different that have that number leaders, With technical balance the Tech to sheet partners would fit bring Tetra to priority of bigger our to the allocation, shortage for respect possible use plenty Tech new thought to better openings position, competitive one to in want not the there's pipeline. company we new increase leaders. and our bring to there's well in Tetra to make make So but capital in with actually

sheet. had areas spoke that And one the that in And the is I we're for so number to. priority focused our just balance

million However, of and we our that come supportive and think of there's We with consistent committed are disciplined us program approach to relatively many not that did you've we're buyback past Directors giving addition still into approve a yet for the is Board the so also a to our think the a committed the that just stock. company. upside and the buyback. our in program That best we're future. $XXX to more should to more repurchase valuation seen of to for but We to market, signal or seen years. as being the visibility we're The be changing respect disciplined flexibility

million. We're did see we've about a $XX this you this last quarter, quarter, is of which timing. So million been $XX matter last

I side, GAAP so, those on disciplined those is take And accretive on there approach to that in looking and on and of buyback, I shared be deemphasize aggressively in is to as to add a something would buyback to But right on partners can where acquisitions acquisitions say the put I'd to, a lever a indicated for move if we priority fronts action we're one. that would be all the we're that company. basis want we year the for to a But actually use a that larger would order And we we far regular will as very manner. looking. acquisitions, expect to as on just financial it disciplined on both

Noelle Dilts

helpful. Thanks. That's very

be Tetra is well just election is that the know That continue the But years you will Thanks. spending sustain what just through versus could disruption that extent – where Second, the of short-term no that I cause helpful. and the it just administration. year, Tech levels matter to would you pretty elections? given generally to speak kind an doing feel programs tend election should what you

Dan Batrack

say interesting Tetra government. right. we've and existence the federal Noelle. for seen getting Yeah Democrats not from We've would to back change in years. and that, roughly been from Republicans particular XX close Yeah. Republicans our you're a in seen Democrats, that's move to I revenue Tech has

seen say, election will side in is someone generally the pickup constraints the we've be budget. fiscal years and of a wants I However, reason to neither provide aisle to to the

I say, in included on presentation increases we've budget slides, seen defense. will the in So and we

if seen for So, EPA Their you're has seen USA budgets EPA Agency a up. a saw is increases that which fact slightly. actually International the hawkish, component. state and We some you've Development seen in up in also budget is department, increases. decade We've is then the largest of so the even

this really the So negative environment cycle. to moving nobody really this and up create board into is is budgets an election across wanting a

fiscal matter, see through robust funding year end be we'll we election, for the we year year. we of So – this and spending actually will actually spending, before think for XXXX, certainly, full another for these September, After what see very transpired. see strong well, our throughout fiscal but and concludes fiscal That's our election, clients. the at XXXX, it the which

Noelle Dilts

the then the are have last you disasters question, you could contribution multiyear question of One, given from quick One seeing natural that more larger guess avoidance you opportunity WYG in two. – around programs? backlog quarter? even or of sort book-keeping – quick us a And I give been occurring mitigation Thanks. Great. lot are these

Dan Batrack

Yes. give I both can you those. of

opportunities community XXXX more well this in federal with is, is is and billion mitigation, significant And what So This development the we to $XX out Tech. Tetra government they come funding and was took grants. it for disaster actually and excess includes prior. measured up mitigation respect for saw that call the for of grants this of what place natural for disasters communities block in right to alley

and mitigation earthquakes protection, would infrastructure for flood Mitigation protected improvements. floods, other fire, of moving events floodwalls, to more up in efforts structural from areas water be in and the the it for offsets case instances of low-lying means seismic where be that would additional case

consulting All the into front-end moving and even of this engineering. is prioritization

to a actually we percentage so there to of being dollars put was and and mitigation. preparedness And commitment a have all movement upfront disaster seen

mitigate So it let's hits. do it something to before

all be are these huge exactly we things So advocates to and market. fit are that where would our

Operator

you. Thank

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

Andrew Wittmann

Great. Thanks.

my answered, have most think but of you thought questions your are and or three it the picture local have excluding storm of would here clarifying response asked calling disaster work bigger our and if kind the I could of last notable our and models business, headwinds out been I the we quarters noting correctly worth quarters those specifically since as kind be so that, correctly that expectations headwinds the unfold. year get you those quantify just baseline set of and state

Dan Batrack

just the contributed million million – our and WYG essentially And about and the answer quarter growth. They backlog that's good the contributed revenue nothing complete Absolutely, to of question. $XX in to $XX to a they to $XX Yeah. orders. Noelle's, in million contributed

take about push. revenue, orders So, when minus you the a it was the

of the and for quarter WYG increase operation. in did the that's to and not backlog in itself contribute the WYG So, UK

the see work. is headwinds, that which of response a about With present response make the saw I numbers numbers first quarter year-over-year work, -- we that to adjusted was number without around in of here. we precise used to the $XX of the sure some that happened and the In respect reduction get the quarter just the the we million

does about number QX bigger. is get $XX The million.

quarter coming about million. we million; QX the $XX up, So QX see $XX $XX million; about and

But by overall growth those and numbers to, those way and XX% that are municipal the are in the state headwinds adjust for QX, no are XX% the that's those numbers this those our we'll the -- because those state referring assuming local future QX for with to respect and to there see activities numbers, to events. So, that that's I was in and QX, that you -- the what when are actually and out as local.

we these mobilize that that or to So, accordingly. of if respond events there we are offset any anything type numbers would actually

Andrew Wittmann

here up I your Okay. midpoint helpful. guidance to of the if I flow guess only $X.XXX. thought didn't you the beat obligatory kind guys the the and give Super. that process some Dan, annual wondering $X.XX why you yet full of was went is, question that perspectives then And beat your you could by That's midpoint midpoint. us just through it $X.XX behind

Dan Batrack

Yeah. That's question. question. good That's good really a a

had very quarter. we Now first a good

this the one by year. We're prudently right at phone got that looked that. we both of for quarter call one we'll or in. hit on I'd in. another performance it it, call or as conference did month we one You're midyear, actually beat we silverly. fiscal And look in and days $X.XX. XX and to into And quarter call We're once update our QX update We've

felt that. make with it all revenue $X.XX. wouldn't so of or most was did But end that $X.XX move of just It year our up covered early that our the the of a in earnings. doubt the on our But we end bottom top it we no either move beat

given year. in intent. respect just I nothing was prudent say So That cautionary. being to being into with It be the or fiscal was should read early appropriate there would so that not the

Andrew Wittmann

have Thank you. That’s today. all I

Dan Batrack

very Andy. you much, Thank Great.

Operator

Thank you.

Please comes of proceed Scattergood. next Ryan Our and Boenning with from your question. the question Connors with line

Ryan Connors

the looks all growth $X.X actually certainly The stick billion Thank minimal implies higher actually the year-over-year mid really you. there right of Good low morning. end Wanted on end at just guidance and but to healthy, at revenue. guidance. theme the and that just revenue in last looking with

that low you curious backlog you've just that I'm strong. about the dynamics high everything the place in variables given to end the and what So, of to pretty leads guidance talked low that looking you get different that end keep are

Dan Batrack

Yeah. That's a good question.

last of how last billion, $X.X that and guidance for me understand But, numbers the contributions actually year net this year for in revenue our range year. end that we adjust revenue would exist guidance low don't $X.X the let currently looking were the then there what share we billion. I at of is that on we're with see a so, two you low at that And high-end $X.X year Last as imputed the at and midpoint. and were we billion, both do course

activities the detail where the in stream. construction quarter. So, of midstream $XXX our gave response are: not the two just the one, revenue work I million net of we revenue that breakdown was were turnkey disaster is million, $XX practice items that of and by And number contributed our doing Canadian

By knew very we this were of very contribution be trying last would the to the open year-on-year we and way, because year transparent that through in place. on be this comparison

pipeline $XXX I take billion if would $XXX and last which from you is if million, from you Canadian disaster our say million year's take billion. number So, last year, $X.XXX million $X.X $XX really midstream work, out is from

compare the at $X.XXX you $X.X for just at midpoint. billion our If is the to And a XX% increase midpoint year way. that of billion, that's a guidance this better

an our mentioned, us billion I it end And low moves $X.X use can end you'd that well the the the X% at upper would at Obviously, double-digits. into represent increase. and high

you the actually at operations our So midpoint what really ongoing X% XX-ish, our represents. or XX% what if of our range an look at moves guidance to producing are with sort from

Ryan Connors

it. Got

Okay. Apples to good. apples

is called a other mentioned Now thing other side. the the update in Can out what just past you side emerging market's – didn't of about about buildings, water give contaminants the seeing, that like us talked how kind and you've talk you? on PFAS. federal developing was few – here for specifically you you the opportunities there, the an one question sustainable that my But you you're

Dan Batrack

Yes.

are acronym, or used, in airports at where with which that place. uses been where spoken of firefighting and firefighting have We facilities, it's that past defense components fire about are less activities are or they've stations and employing firefighting, the those the other chemical or practicing primarily the taken retardants have PFAS, at PFOS quarters for familiar – chemical

Air it – that's drivers doing. Army, primarily Force. It for of actually is doing right branches portion, we're that on Most Defense for one is the we're groundwater the Navy Department work now and the of is three the and the really all big work of environmental the

surrounding And time, and we're work for of it in through the this, course what identification is modeling for Fate over leaders convert chemicals. Tech it one and presence transport. fits which geology. water very of where is impact it And municipal for the of first Tetra will how is what may And actually the the of it to it then moves transport fast going the fate these as is and well waste.

the the percentage We've of with it's Australia the quickly Department environmental their not growing But to to U.S., Defense MOD beginning of work respect we're say only just Defence do this and of had in work success Ministry DOD. in would in I for U.K. with the doing for doing we're we're and this also

in. that the So agencies defense three are working those we're

program treatability fast. We It's for is demonstration the discussing are for early. to we to one very done you have of clients. with topics frequent contracting not self-performed pilot we've do – what although, our it but it once very It's that respect growing with most this it's identified actually been and treat seen one with

out the very because the no there have States. or for of United that is is the course, state which And level surrounding early interested. are Protection level the levels action either And this in Environmental communities enforceable PFOS come are very federal Agency yet here at the

in this And where the we're the in the or would innings? very old of say early second are so – proverbial the but first the this. bottom the Maybe I we top of is nine

Ryan Connors

it. Got it. Got

have of there Okay. at And said out radiation heard the looking had about alarmists is last some flow, while. get continues as that topic there week saying in vindicated. some another – like forth. one the I I new Hunters lawsuit the guess last of a in to there's then seems this the Tetra as in a of I haven't point, issue was and it in But not Dan. an just the did of Tech know much so news we terms study one

process of get of a or can how with where Anything could of you there that closure know on us kind timetable can not terms to legal much kind – you milestones in I but where we get that? are there's process share we'll But on say the certain about plays out?

Dan Batrack

to we've Well, let play although and look a because do job, out. for nature process on of of and this tried we legal I quiet would remain matter say better try can legal the the – remain we to the to yes what topic,

seen the our by and divisions stand vehemently performed. – deny stand You've of we these allegations that one certainly work salacious that

these these they're a bit suits on more prejudice. But we've But prejudice Others gone so of of have their dismissed own. and visible. had have and number so dismissed make civil suits number a with we withdrawn them perhaps with been a those could

our if number attempt make favor we'll say the to moved want that visible to and you so has community. to in investment And the

-- which we But with process it and takes I would say its favorable that and actual it with all own the life. the is was the was performed. And recognition is exceeded accordance of is time met I even legal work components status rest completely work with just that that hate to of call feel contracted a we contractual what in will or take the we done were for

Ryan Connors

look Well, it’s good this that. morning. time your for to thanks hear. a for We And lot

Dan Batrack

Ryan. Absolutely,

Operator

you. Thank

with with Our comes question your next proceed from Riddick Please Marc of question. Sidoti. line the

Marc Riddick

morning. Good Hi.

Dan Batrack

Marc. morning, Good

Marc Riddick

worked on you some my bit quite thinking some year update covered that be already thoughts questions was we for that it's model bit haven't and wondering something have of fiscal your we we be little the a office looking around about a original or maybe for things give of might the lot gone we've this bit whether maybe the CapEx a whether but already need be over years to So IT should things I as an area A areas space some to morning. to it or one be come. that in if could of answered, Thanks. may investment you were at this or needs

Dan Batrack

more for Steve will put work some the about I'll be with of we self-performance the follow But actually any context talk plant trucks drop as more which would it type the that equipment, to goes where portfolio continue in of type of or approach. I'll front-end overarching Marc. trending let activities numbers of to that field property to PP&E we're shape less into specific and of actually Yes less then strategy the our and up sort to. depreciation. requirement activity that

and become we side, that professional that necessary. have actually lighter on CapEx we the less do and lighter on less The as computers the is and from capital-intensive. items such analytic other So and tools focused service CapEx

-- We cloud. to goal as corporation our office gone XXX% IT requirements have is the CapEx because to with the And moving fact, to a our actually cloud. our largely move in back respect to requirements, dropped we have essentially we're

But past of numbers trended us the the continues a and then over can turnaround eliminates with gives speed. purchases even for have few couple faster numbers. IT you give hardware it years of numbers. where to reliability to our depreciation this year So decrease and It what our high is respect Steve that focus we

Steve Burdick

Sure.

CapEx for were of So Tetra CapEx into of years business getting prior is Tech come to X.X% years that I about if couple out think over the revenue. number requirement year of RCM last a needs of of you our this the was revenue. following And above and X% up to well

for and future. headed down in it's that brought the we where appropriate quite So, we're

Dan Batrack

at income If on D depreciation. like here requires. as purchasing I'm I'd -- EBIT concerned of is part focused that business something we Yeah, one very and thing Marc we're Tech what operating as our Tetra far and that's or need we're

and earnings actually And interest so, to with become encouraged before I very am almost our watch identical taxes EBITD or very similar our EBIT to depreciation.

points two indication same is earnings powers to converge of the good right those difference less a probably it's really should the operating of business. essentially those So basis be two, or XX now the even between and which

Operator

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

Tate Sullivan

high-performance the on of A Thank know the you've Hi. million I building business. on to the for and detail $XXX the couple that follow-up target revenue on and that thanks you. double mentioned

of is number? current -- rate that that? million as that please. revenue at $XXX annual I subcontractor run there in is similar look that you can Or If a rate revenue net can the a Just share is --

Dan Batrack

is subcontract, less it high-performance that it On we're building self-performance. but focused has of most the that design, actually MEP. Because on the work is primarily

work the so electrical that's water fire mechanical on. we're suppression hydraulics and work, and focused So water delivery the the it's for and

of even We study and whereas essentially maybe subcontract and we laboratories collect have do data. vessels we to investigative marine in-house, that may other work all third-party almost research that or

That's with case, most the to high-performance buildings. our the not for part respect

net that the revenue number is probably say would XX%. I of So,

has component revenues the we that company it So, than a higher across have. much self-performance other

Tate Sullivan

that international me it's Can you been been this double to long competitive that? did Maybe has had your gives is Or you've Can on scale how please? something confidence I it comment mean, in you. landscape that, remind quarters? you And now? it target? the change that Thank that you two

Dan Batrack

been the couple It's of quarters. last Yes.

an saw this think in out with more material that see XXXX. first And as we in. invest I came identified it the were it going was actually a to that and area we you time was contributor,

a a respect The big with have reason fits we investors side. its with environmental a the sustainable it it identified it it the our environment driver, doubt, company definitely E of recognized has Many on of to as in of end the clients. ESG, -- key focus represents without the many that is of

organically. U.K. bring us much building visibility on who government and probably with had addition side, at new to did the with in to that's has more WYG the it given a And the a opportunities a we're in we'll marketplace better that double-digit of the progress what And seeing respect make grow given rate hadn't at with us high-performance respect confidence we before.

having good presence Melbourne our In the a the both foothold. West in And and location really have so, East for Australia with we primary is the buildings think well. I in the practice it's U.S. And Coast. growing

the now years if you the ago, to, were allowing new us that in limited couple service just clients footprint to And U.S. the course a then, primarily U.K. of with went of back we a it's global

represents the opportunities. to for of take our goal where we marketplace we'd like with us. And bigger think a have that's is which to stated come the where much footprint actually facilities business and clients us feel doubling allowed We our this it. is So, out

Tate Sullivan

on WYG low-single you say mention bought quick single-digits about, mentioned or thought margin? public before you Did Thank I and I the was it. But digits. know did current -- is you And you. it real the you follow-up something

Dan Batrack

been essentially breakeven, digits, about would X%. a they in in that quarter joined us. Low-single was very know the so I the the first it we quarter was in that a which which quarter fourth probably were quarter have first

were contribution So, in moved the for we they But X% a have about revenues. it QX up.

Tate Sullivan

for it Florida. me, you Okay. mentioned water that -- growth and was anecdotal can in Texas program last feedback? Was announcement you customer muni And or utility just CapEx you California, -- or

Dan Batrack

No. driving That's revenues the internally areas those are actually the growth. numbers primarily the that And that we're line seeing are Tetra with Tech's top growth.

is the I'd is call that water, county So Tech seeing XX%, numbers that both growth revenue Tetra about and municipal our and work. our in state city

work. our growth. we're And So that municipal collectively I XX% seeing again saw the year-over-year

seen XX% XX% we you'd California, We And contribution stated. where -- biggest seeing seen is have even That's the we're we've Texas Florida. where XX%. that seen the in faster and past growth. that are This in the we've toward We've through the if asked, actually growth. to the XXXX, of much

levels funds see all and three XXXX. initiatives keep funding been their in put visibility bonds have to those large that and that moving of that in forward throughout we give And to place good

Tate Sullivan

very Okay. Thank much. you me. all for That's

Dan Batrack

Tate. you, Thank

Operator

question-and-answer to Dan the to Mr. conference the like of end the concludes turn over to This session. back you. I'd Thank Batrack conclude.

Dan Batrack

quarter to forward performance, first your Great, you for performance on this just another and And Michelle. very finished. on record thank of you very Tech. Tetra insightful thank call, much, that look for we of building in all interest a quarter questions being your particularly strong We

look have great to the all of week. rest speaking of I you And hope a I next quarter. really you, forward with again

Thank good a day. you. Bye. have And

Operator

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

Tetra Tech (TTEK) 30 Jan 202020 Q1 Earnings call transcript