TTEK - Earnings call transcript Q3 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 today Chief us management Batrack, Dan With Chairman Executive Officer; Steve Officer. Chief Burdick, are and They we'll for up and the open a will the brief provide of results, overview questions. call to direct statement safe in today's I'd like the to presentation. your attention harbor Today's financial expectations. discussion contains forward-looking statements about future growth and described statements in from due differ Tech's results significantly those including projected the today's uncertainties, may filed risks various to reports forward-looking Tetra risks periodic SEC. with and Actual in the obligation as update law, Except by Tetra required forward-looking Tech takes no to statements. its

will website. In open like references, I Instructions] that, of request the be the will Dan Batrack. posted At ahead, presenting up as financial presentation. GAAP questions Please financial call to Tech's conference reconciliations would the are after and over measures Company, section addition, [Operator go the Batrack. we answers since With to appropriate Investors in the the turn some management for Mr. the non-GAAP Tetra of

Dan Batrack

technologies. results, quarter, our much, our business you to projected efficiency report and fiscal result our our that high-end to a pleased quarter of good the Overall, call. XXXX and ability recently leverage third in released third Thank guidance welcome and Year earnings solid to with morning, delivered conference working Michelle, in performance. very line I'm our remote and increased as virtual

this and in our science for a backlog with is quarter, spending our Our and demand for strong and both in year-on-year our continued up staff's And margins unabated resulting services, sequentially. increasing down, generation. utilization indirect is resulting cash higher leading

this year customers. our the I'll are begin in an and outlook, and bit of for share date that overview with speak to details to results I'll and performance guidance we later earnings a our increasing call. XXXX, per of our Given fiscal

multiple address revenue the end proceeds an results will slightly capital and result Steve While overview succeeding operations associated allocation. of the Financial net financial per an then for from Officer, in was a of our share sales our a We outperformance revenue and of turnkey expectations million, strong wind-down we $XXX the segment. We Canadian measures. our as of CIG oil market equipment was upper when million, our earnings at quarter $XXX provide $X.XX, the our assessment. customer of quarter operations. our Total and had $X.XX provided, include we guidance Chief performance across Burdick, our quarter and outlook I will generated with the from and gas third for

the best backlog, $X.X I'll orders across indicator And more give net few revenues that now few across I'd our U.S. up Our was -- to with XX% quarter, in of a customer billion. all end moments. was growth, quarter. clients increase in for increasing clients, up our driven year-over-year. like by This for our about performance customers, a in X.X% we expectations. details our of Work sequentially, just and our our our broad-based solid Federal of X% third line to of In customer. performance had overview the provide represented an the by future

provide Department XX% basis for saw restrictions on growth of the During we work a services impacted saw projects, the agencies. in that for Federal do year-on-year travel the offsetting these and a our on-site we Unfortunately, our with we in U.S. an client overall our that in flat growth the quarter, the civilian of growth work. international groups revenues Government, development for to resulting for some Federal X% Defense ability other

increased local contribution, saw cancellations no project We project delays bid our Response revenues opportunities year's last and grew or the year-on-year. Excluding State Disaster and X% quarter. in

expected, than quarter. anticipate lower return growth and we the to in our revenue fourth revenues was State double-digit that slightly will growth local Although

our U.S. commercial revenues a revenues. steady We X% down which was performance saw U.S. XX% for half year-on-year. of business represent and comprised our about Our of commercial regulatory-driven programs,

did in work we gas, see oil and manufacturing programs. discretionary some industrial buildings commercial a However, reduction and

representing Our year-on-year international of our net business, on revenues, XX% X% grew basis. a

Our while services services stable, were were discretionary the some international down. Government of commercial

United segment. travel like now performance project field delays operations Kingdom regional our Our constraints. and did to see by present I'd due some to restrictions access

is public and business which is Australia. clients. X first primarily international Government based sector Canada, our the segment, primarily our Commercial segments Our U.S. which on And commercial the International the the second Services include, and segment practice which operations, in includes the Group, focused Kingdom Group, United

The expected, GSG of services consulting quarter, up delivered group The was in Programs. margin Water management disciplined of in in its delivery, strong margin for and CIG Government X%, group. XX.X% is driven The a public slowdown strong with was and delivered by ahead XX.X%, our margin segment that GSG the segment a increasing also the of Environmental from As which slightly sector which Analytics especially of significant performance particularly year. revenue, margin light a and their last for quarter's was result project Advanced base this expectations. double-digit

and mentioned X with quarter, the $X.X all billion. book-to-bill increase backlog our work the as in into our backlog a of sequential business up we go and the our stability broad-based, outlook authorized X.X% This positive improving of sectors. a in for was X% contract fourth sequentially quarter. bit was client increase earlier, For increasing, forward best the year-on-year major and is The I our as to indicator

contracts Government of the the Environmental capacity Protection of across Department Government essential to initiatives. stimulus of Corps Department State. Engineers, the our expand the future more the programs $XX Army in we for to enter Defense, the billion Agency, contract Federal USAID and with provide addition, with respond quickly than agencies, In continue Federal capacity U.S. These U.S. with us awards framework to and

Environmental Coastal of the United to the the the we emergencies in awarded the Protection Under just environment the Environmental we disasters. States. example, will and in and assist protecting Agency's and human Technical Team single-award Agency for in Response response health For and were natural Superfund Region mid-Atlantic quarter, Protection contract, Assessment man-made this contract third

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

Steve Burdick

in XXXX Fiscal came range quarter about revenue In $XXX expected. third million. to to end revenue of the was revenue $XXX Dan. Okay, and with like for our quarter, million. amounted financial financial I'd in now the third as revenue the results guidance and condition of to the well $XXX thank and our was review as the as line million you, third million Overall, XXXX quarter. $XXX as net quarter of fiscal third net our of

as Our decision revenue our by in last of of large turnkey to dispose the and business. disaster year net revenue growth rate projects as pipeline was well response XXXX Canadian impacted our completion

line year. Excluding these the in X prior impacts, been net have with revenue would our

margin cost revenues our by operating in earnings improved relation our to structure year-over-year, line were share down and While in remain with revenue. controlling the our disciplined and to our per be our managed business We revenue.

$X.XX partially margin adjusted improvement CIG our end the As in our of a top in XX.X%. to range a of driven And result, $X.XX which guidance segment, per margin our the the in better than was QX operating realized came the of $X.XX. of by earnings increase share

Page I'd adjustments. For GAAP the X, like and to those reconciliation summarize of you presentation slide following on on the

about due our our resulted million gains in we to 'XX or dispositions. $X realized Canadian on management equipment we sell the of business, continue pipeline First, to decision third a QX gain to And in in which equipment noncore per share. the construction divest $X.XX the quarter,

this represents Secondly, we earn-out of loss non-operating our the a liability. amount earn-out small true-up and a reported relative total liability, estimated to

totaled operations sheet we over ensure flow, Even of third first for just XXXX. flows a year-to-date as million $X.XX generated at the global cash in income we the Cash XX balance on and Tetra XX ways, recent share trailing and operations $XXX the excess flows look many higher to positive the compared quarter. strengthening cash the cash from remains from economic periods, in fiscally of back about months, uncertainty generated our previous months the as cash X months. we flow at adequate million. disciplined a generating amounts than proactively cash to operations liquidity. the as outlook to in XX% is generated focused for per Tech is fiscal On XX% of This quarter long basis, net term, which rate when these over improvement from $XXX a our important And more trailing

in flows improvement Our This as working our days DSO, and XX capital from improvement focus or third from resulted a last quarter. quarter. outstanding, sales year decreasing days days of XX and the is also of has an to sequential last on cash

our And is than came of the net amounts last is X.Xx debt a at which net from leverage to X.Xx, Our sequentially decrease year. XX% quarter. million, second in $XXX less the in which debt-to-EBITDA

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

trailing the cash returns through we this during significant cash benefit position share shareholders third last and quarter, to dividends the have And providing we XX $XXX Over operations. generated buybacks. million from months, to from in continued by our

buyback utilized combined implementing a of is of remaining approved strong out allocation a Directors program, XXth and $XX dividend of our during stock I our have share, important dividend, program. we paid $X.XX sheet XX% $X.X over on which a dividends as month year. the will which our our $XXX want balance quarter stock million that the consecutive liquidity. successfully million to basis, ensuring we under a ample Furthermore, the announce be of quarter, increase we have just both is past buyback we our On our paid per in at in as million Regarding approved previously Board and rate And programs. in last third capital September strategy

of of our on have We in sheet million over liquidity available terms QX $XXX balance in our and funds end credit under the form agreements. available an the both hand cash at of of

I'll As later our will I'm over pleased a shareholders that while Dan investing and provide result, acquisitions quarter. Tetra a both discuss in the to strategic Tech to to the position returns these support, financial Dan. that back third for we areas, through organically such call to significant and growth a want to will financial I presentation. in the hand continue is share you bit for in thank your all results

Dan Batrack

Great. in much, like Steve. Thank strategy now I'd advanced to our differentiated discuss analytics. you very growth

high-end and environmental As has a you water Tech in reputation know, Tetra for consulting. services

of One analytics our for ability clients. the experts the success advanced leverage reasons delivery our of to of the is for solutions our in

and air of capture data. and address autonomous the interpretation facilitate the of sea that in technologies applications high-end technologies volume range advanced at recent applying and of and clients. analytics environmental commercial the data for intelligence increase artificial on programs with for these land, the our the of both clients wide Some to speed a employ our of We're

analyze address with technologies analytics, and expanding For real-time our technology in twins applied adaptive and we're and operations digital us facilities, information intelligence clients Federal apply needs. interpretive these to clients, Government's leveraging management. are optimize to to water State marketplace to the we're information in solutions control artificial collaboration cloud that display and operate is water leveraging by enable rapidly today. interpret our the and our market, create to local to dashboards In clients dynamic It treatment differentiating dynamically management our experts using our to

joined capabilities have us, the the new XXXX, portion Federal advanced Over market. years, Since past analytics expanded X have practice. we relationships of the in fiber our client technology industry-leading each and bringing significantly firms X

had Over result services Federal advanced and rate. the $X of acquisitions analytics we'll and the These to growth capacity advanced Government. U.S. Federal IT rate over analytics a quadrupled our year. organic integrated revenues years, and Today, practice contract fully are that revenues is a $XXX a run this for million our X a billion of in past see with has XX%

all the than like the have present now the prioritized with to for fourth XXXX. practice continued fiscal to million to year by I'd and for in $XXX year We double a guidance quarter our the run year XXXX. of a rate more revenues growth this goal on

clients; our markets: end the commercial client State sequentially U.S. quarter. As see our and third operations, we Federal U.S. and from quarter, growing enter our each fourth U.S. X international of four, clients; our local the we three, Government; all one, two, our

$X.XX. earnings development impact the follows: that $X.XX to impacted awarded. is of revenues. projects for pandemic restrictions areas our fourth guidance international per resulting is global our with the has in year of as Most quarter million of business, these However, travel delays, to delays we've share XXXX, revenue notably, have been continued associated Incorporating to of our diluted our for fiscal for an guidance $XXX revenues million $XXX net select

and our $X.XX with guidance net an continued of global their year, providing disruption approach with solutions year we're billion fiscal the time long-term earnings this adapt $X.XX. to with help In $X.XX, associated entire per clients science revenue In updated $X.XX change, for is demand pandemic, associated diluted for leading XXXX ongoing range the objectives. throughout share to the solutions. a of For seeing billion of and we support our analytics to our and to are advanced summary, them

Our broad-based clients work quarter. begin is visibility for in as additional that and and with we authorized increase the our provides approved backlog us is fourth by

water, solving climate is in world's like balance up and financial access of to approach to management the for And As strong and environment I a we're capital forward the of And to Steve open to Michelle, has and change. questions. covered, complex allocation. effects capital most result disciplined Tetra call challenges our sheet the Tech's looking now

Operator

question-and-answer you. [Operator will the Capital Please of Eastman session The proceed your first comes The question. Instructions] Thank now. with Markets. begin from line with Sean question KeyBanc

Sean Eastman

Thanks backlog. team. start for I'd on my just taking question. like the Hi, to

you all wonder, visibility you did this notable characterize I would sequential Do sectors fiscal you expect that And types think continue? how pretty it's think this drove that client that I into at dynamic time? can Tech's Tetra just that 'XX point in and increase. quarter?

Dan Batrack

X It was increased that positive areas. was for that the Sean. all a was would us question, expected of great Well, have one the areas quarter. across we in It not surprise

challenged did was State buildup we we we think In unsure, interesting in reiterate sectors Government, coming at U.S. to be increases in most But visibility, would we State up. our have X have that U.S. up. into for increases I Government what see in to majority increases was I'm work. and, to did our and our with in our was in provided backlog our quite also that which We going want all highly much case Federal which which the was local, expect of were did commercial would growth and both and we the fact, backlog respect and and be is to and clear the that international our case. predictable, do we the was of carry local even the guidance that would client with quarter an to it would the commercial not international, With respect and quarter, early Federal orders. because we with June, and we the time and the expected with

slide number. different all-time will of individual to the close in quarter greater say would received we an particularly we in I clients, orders we've saw review orders, We visibility they the different in received, in of you If but of less. the bundled number we to typically record our more would was slightly programs, shorter you notice the is were a but buildup a number received global to in respect have came what in from close backlog periods. high provided which with because all that that from that smaller operation. presentation, is across I our our international and is, that commercial size the globe they say categories

programs very clients a future. bit so different many we It's, are commit I'm some I So to forward. and This of into encouraged, X in months, But are our think good typically of would that areas for of we to clients moving months. respect X is where collectively end be so X this how many X us. they conservative are with out X being are funded or different time or in months, months logical we funded that uncertainty, for quite much our and feeling the

quick that's saw of So we coming it into the we a overview what anticipated how from what and changed quarter.

Sean Eastman

next the around concerns front mind one days. the local helpful. are these investment is, And me budgets really State community just Very of for for and

us factors we for as the the seeing about Tetra business is level and basically, swing the sort Tech of year watch to you're at and have just So there? X. are look next can We over what really today? State local of What Tetra what think trajectory you the reality set Tech, on for or important

Dan Batrack

that forward, I a what But and clients and hearing respect is items budgets and here at actually not local saw we're pandemic. our the to we what pressure, say we're the as proposals moving really local looking in to would are reductions solicitations Tetra departure this to We've respect probably and we've they've cadence work. hearing is response at seen are forward, there other revenues submittals up. seeing State or our that projects actually quarter, for That under in at looking and what to question. staffing and of the of the has we're from between actually, seeing it's the number level. pull good the with revenues that what and work pullbacks uninterrupted request yet. the or Tech to requested. State Well, the with local global largest different state gone inquiries With and back seen we're we're number What our relatively past prior the that clients

do to they other cities the seen continued haven't delivered increase clients collected seen types so and a is that States into Counties, being may this that to project our prepared appears these not or and I come being stimulus seen quickly technical of respond and managers the that quite they with projects being, would that had or be that appears awards can actually to quite others. our funding it can submittals, move so in translate note quickly. the increase, responses observation and been discussion global projects be awarded What the being an may staff. have We've the I of first XXXX, XXXX what the designed stimulus us shovel-ready is, and the are the to I number projects, we do, that Federal pace our into we to projects that before. back an there These steady One When they're a that crisis. in increase have or unusual did to we've had just many Now we our weren't that awards. go. at have came that in forward, notice seen proposal financial the ready been is

have becoming and this to I So clients prepared over to move and us portend And perhaps different State, financial think more quickly. we'd prepared contracts XXX the be able move no are with and our do crisis that standing previous from a for taken quickly. well would lesson doubt local quite county clients, and with

you we're bidding go in if indicators. the typically will sustainable relatively them, Things global financial back, summarize, and stable opportunities infrastructure, our seeing moving financial are under just we look the or doubt forward again, note, water seeing, what So there's we're to work do unabated, lagging And the no just the and State move environment forward. from this crisis. and But revenues I this clients, isn't crisis that local for that up. provide

is So typically, but we type an frame, year impact saw X impacts a be is in something orders even years now local and expect This, XXXX/'XX financial for course, it's provided farther when we indicator. almost something progressing. lagging took out. the be would support before work State work the of or may impact if in the and to it still production, from the to a clients, in steeper financial the much time this And nothing or of hit, a the it

different will local they're while is not to that time agencies, we're Congress stimulus programs We that call course, on today, support resigned that at help entities. inevitability. think Of Governmental this negotiating for we're speaking this

programs, the go possible it's type it revenues stimulus these could right actually even so further. up And of with see

Sean Eastman

guys. I'm more, going to sneak in one

the what work. just perspective clearly, Are in would putting coming up color guys update cash how in of this thinking financial Any on the But you Tech's And Just expect Coffeys be pipeline? in, kind Tetra position of a acquisition pipeline? is flow, more sort there will great. and that spot on bright we're term here. from given be to how, the a we deployment any should immediate capital backdrop just WYGs about

Dan Batrack

The on both has Federal pipeline of focused call that sectors. actually advanced number that sector water quite conservative data everyone the been the we been is are on building really previous There a strategies our identified, full. drivers. It in analytics Well, areas and by successful the robust. we've as we've is other and as are Not calls in out fulfilling this presented, fiscally ourselves.

opportunities. So certainly, that created has additional

concern say change There many certainly the I So regimen this tax a may have regarding after that's are would calendar year. that one.

And others transactions. to so explore have looked

put is goal not not work. to our to our balance So sheet completely

the us. opportunities. for are We plenty looking best-in-class There's to join of

as yes, these I I Australia, join that past Segue, us contribution other those joined in our Company. so brightest earlier, few we've point and years, to the great And continue. including X one that to that just had there this the And of my to excellent firms an back success having are best such past the just in over would sequence the U.K. us opportunities would comments technology-leading was February expect

Sean Eastman

Got it. thanks. And time. Appreciate the

Operator

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

Noelle Dilts

in Congrats well Hi, morning. tough environment. guys. Good on a operating

talked this see I in convergence have CIG know we questions. you've of Dan, time, coming couple together or about of could I idea GSG margins. the past, a kind margin and So of over that

the how goals margin how Just about about at longer-term of should of each thinking kind you're kind the we that divisions? of think and curious for this point

Dan Batrack

CIG I'm or Well, Group goal it My close prediction this that gap. the I'm take Because my -- was of the originally asked end do that will I'm think not to acknowledge year. by on have place that. been Commercial willing timing. I you actually that glad not I International off fiscal I'm respect going off to with destination. would our on

the consistent believe longer-term operating pandemic But respect X quarters. under it's goals, back So I from do I do think to quarter, has that But it's XX%. management our is maybe say level That's pushed if environments, Group XX% satisfied, normal it's I'm they days that maybe they've pushed I on around X XX%. think back. this a and I recognize think operated recognize and that I Services pretty think quarter. roughly But with and basis. operation. now. the excellent XX.X% do Government We pandemic had it run would between good I XX just that actually above I that last or this I operation

they're So XX%. I'd Again, is say, narrow, average, that to on pretty GSG if is XX% XX%, well. range running

is So but at a XX%. in CIG economic as Business on the shows go Services it Commercial environment, low They or as business may think range conditions. the a volatility. more environment, make Inherently, sorry, to I XX%, Government XX% can strong do changes our the in volatile. -- think that challenging is I the quickly low And something be up more XX%. Business maybe based or

Government So for Services that's group to far CIG why our the to range XX%. to is numbers wider. as Group achieve And XX% for as similar a timing

be that able achieve the quarters, think I within that. should next to X we

Noelle Dilts

impacted That's there by helpful. about I the talked or might this, how kind missed fees, starting funded some long-term very that get ability like to to local start some we to while and local is clarity areas be quarter, by any Are see thinking kind side? or there released, going areas be if more get when may that. back Again, of and are kind giving I we State if work any State about of Government. that? and Great. to And user going that be things you bit sort of you but a update last coronavirus if of just a you're to where could an concerned And pockets measures understand municipal get little on there you weakness then of lot State the pressure assess on sorry of some of on budgets

Dan Batrack

working essentially back Well, our project with clients highly our came that that not do the seen sensitive are again, with July leaves that headline next Restoration will say to budgets that respect for XXXX our this may that. fact, counterparts programs these and having appear But out time. the not at them actually Environmental Water have just risk projects know attuned in our and of X challenges to at We pull staff, least on Stewardship. our I me clients the at to Those focused have and Treatment, reductions significant we're forecasting Wastewater year. to States' their be reductions. do counterparts. Flood fiscal the The been for Control, while part maybe And Supply, reduced on are and from on some

so forward. going programs And those are

be changes local if to to be updates are have there's valuations and it's challenges our a How moving change, late parts going year clear are there our at programs midyear asked big that, the and those the directly. from response to And will that do you we've reconcile respect We programs. quite budget. level. when potentially for generally, clients But the forward is, with their now, happen. reduced from at that's other actually of their seen Tax of or actually not had If not There's number properties modeling assumptions. that counterparts there'll our receipts later. we've actually State

Operator

the of from question England Sam Next comes Berenberg. line with

Sam England

couple a me. from Just

see on you more of business the cross-selling growth in in the bit of you've give you acquired. The businesses areas? touched them some and legacy where they around Could first opportunities your growth color that the one, accelerating us create, technology-focused you a any

Dan Batrack

Well, great us. I for think a opportunity that's

paid actually programs that to through a been we've these legacy own of business best-in-class our modernization, presentation carry so it services Federal But curve have Analytics Services zero-learning other or translate for and developed offering this And and take clients. long-term and dashboard data clients are development with of their all IT other and to or we Advanced the that and for developed Data those what so work. lend where can to book we've been that

on Now brought application didn't much cross-sold commercial our of technologies and that be learned it been and believe commercial huge at and clients. savings State international a speak lessons analytics, today international Governments cutting-edge can lessons by our and I had And data do the where to local the National on the advanced we the the and do really and but learned done work for clients.

do So an made investments that clients. the take differentiate area learned translate to been and helps our and commercial that's Tech, that, that actually government Tetra by think and those that in international we we lessons have that can

is think So much big margin one of And exist. we higher it opportunities that it a should work. the areas be cross-selling

revenue. So will only it not drive

closing higher GSG exceeding and So top that CIG margins. margins And actually contribute to actually our line generate synergies, it should gap. hopefully,

Sam England

talked on then do about do completely you scope Or And until I the off travel the of travel given do the come of contracts Great. international opportunities restrictions, how you has of them? remotely? likelihood you and the them any just have do travel side. impacted see change longer-term any way restrictions Okay. to to you restrictions suppose those

Dan Batrack

in-country Well, we're some we're actually in those the taking remotely that U.S. of scopes be performing of can these that work of the international we are the in here data and the resequencing But that are we methodologies of some developing here. performed in Developing do of be and development the work of the countries. actually recipients some for can the locations done platforms and components work have maybe benefit of the these that done taking guidance documents can developing the items much of

to range see let with our seen it bit. to yes, has remotely. So we've that say, if international a reduction The fair But can in restrictions and me we can few in this I been revenues it I a little travel of do just amount of because add XX%. XX% would a work numbers the of development quantify

So range, XX%. of let upper me end use the that

that would that XX% world, the is engineering, sustainable infrastructure flip leading that recognize practices developing have, of providing environment for and proceeding. we for you countries one then the that which and still of you water in the If consulting, over is support work

be I do down can't of travel full, matter you I not some gap contractually reprogrammed. move the The XX% And is They've forward. if not XX% while get we'll work It's recognize They've have that glass close full. still being done and canceled. XX% to been These it not is just So a lifted, projects preferable. restrictions half is countries. when delayed. been believe to not are these can't of been this

Operator

the with Baird. next Wittmann Andrew from comes question Our line of

Andrew Wittmann

to Dan, your talked remarks, into very rates Okay. bit the of about I top dig more margins as well. how good. wanted little the if were a you your utilization And

lack COVID used every would people I less day, mentioned that these also takes travel it from efficiency makes obviously, you like and entertain but And imagine, wake the presumably, out taking your I to guys and think your it, expenses situation trying things, here can't of up entertainment hands. vacation, of maximize to. the margins. travel, they you Obviously, are benefited

a margin better could us I So to performance understand this help lack could lack of vacation the the affect 'XX? was was understand the was are Or benefit you quarter. into the vacation or the of of lack want you fourth by expenses carry vacation? this just to on hoping to quantifying contributor Because into going you year-over-year comment, And then as how just a it utilization? travel business? of could your these look presumably, And I

Dan Batrack

was that. or couple to doubt Not there we or people no increase? Because contribute reduced particularly. there's that delayed, there's components let taking me start utilization did put on were But hold margin higher of vacation. with, projects vacations that Well, had to

So vacation. took in lieu people of furloughs,

conferences, travel, time for different in that meeting for We and didn't associated in collaboratively utilization seminars, That's lack itself a these material be contributor vacation including of we indirect increase to out vacation and in conventions, at going see see with place, that, different of our events. things did a utilization. all significant not for the for take to converting reduction an So case. for

We reduce spent their that we to and spent at also Company So locations. noteworthy. we off-set IT at continue over was had increased all utilization. of monitors translates tickets airplane to could hotels remote and staff not think We spending for the and savings increase the wasn't things programmed increase that types to more minimis. setting on and productivity up the services. our working efficiency this that more of essentially that that's money all going a that do de for But actually see It different money than say and was I and the meals though our we level. that that these did It higher things. for of would

once VPNs a have future technologies the to chairs we others. you new basis, that hope have and We that. new new on do and we Now replicate and provide would monitors to to and don't connections hopefully won't

So contributor a forward. these we savings go more of on travel and entertainment should become as

the did remote have with quarter was more effective So respect made we contribute, by travel to that investments. not vacation offset but did our to working in entertainment investments contribute staff IT and

Andrew Wittmann

comparisons given put step key are of 'XX But that Super for from there and to comparisons the we taken budgeting along 'XX? your see for here getting said I in hoping were as the thinking of guidance, into some forms you that 'XX what or significantly. in and presumably building kind haven't margin same some that as helpful guess, I back a or pretty that Obviously, as revenue of your in you're realized just, affected was it guidance. that ask be your estimates I either some then the answer. guidance? -- you're year own think the just But 'XX, 'XX I our through end not could are the about going budget, but just 'XX. aware you run one, here factors know factors should terms we swing of about for out I'm fiscal own the puts you of 'XX either from that notable vein. you takes your you to And of us

Dan Batrack

timing it let's respect I will additional to I but normalization, the of swing of be to the to word some safety. with some use refer restrictions travel, Well, respect to hate the relaxation as of with think, the factors, and -- health

as existing in So now. field to the some United actually in that we certainly States. we've or will work. locations more restricted of Kingdom move and here and And efficient right We'll relaxes, where the in more it are move Australia United here been to back the States,

we've restrictions will now, So for our make going on with one ever going what us. to go be that of I a that can river the for it's does before And Are managers that Because is become done less? out planning -- actually actually to in which a have from one type we're constraining a us, little exercises maybe at our XXXX. are to function project a lake a think to hear for I are, respect complicated more is or given looking a difference or more and of I engineers I what sediment project? there restrictions remediation right

So hate imponderable, very we're closely. to that's but that an say I -- watching it's it's one

X a the just That a confidence quite not item. big on providing one we're and swing trillion, seeing by should U.K. next programs Government of the $X and with the or of commercial in this benefit that's the passed sectors. saw that stimulus stepping funding just be know geography I a will for the in is provide also And our States. Australia. would We and Europe here for just program significant we think other for additional State, will which even give respect that's in role discussions under the and marketplace. similar Federal in way, item, that United stimulus weeks, So or week local to here

positive the aligned work, back dollars that highly that having And are and often be most So overall these the these for benefits part, will all various with actually for people help economies. the because lasting think I pretty. programs can economy, side to infrastructure on a putting focused

those now. big to be that are collaboration before carefully. to we offices. is to time, there's its less are We're one hybrid that we model, model very hybrid we're that actually today, to And the seem then just the platform model. at of few looking It what more XX% we've will that at we going realized we're a a a will things not And in XX% actually in So across clearly some less Tech Tetra items office may today be collaborating benefits of that we which small construct But the we platform more move going space, looking very, have pandemic our global space. And when working hybrid that actually are working a now. maybe looks return. like And office with did have virtual-global the offices. than same the significantly at are right will

at the benefits less will the back, the and in have collaboration the office, Company. over So means it of may of the perpetuating offices development XX% again, if XX% that you that come and the culture flip us which give here mentoring, we and

reduction we fully in as our line office can roughly of we And a we in. that the So all X a it year. office hit our space, think of both. It But bottom think contribution first have take XX% years to bake will we won't or least for from office years today. reduction. on of space. million we're to $XX XX% what could X or from our million on $XX now have increase That's just a earnings based that the represent, reduced bottom contribution in in producing at that line And

fourth that for forward to So through and working with we these based you really and pieces factors. of looking move the sharing of our and looking XXXX with valuation the as we're on those at guidance other moving quarter, are some I'm our

Operator

the comes question line Gerry Sweeney from Capital. next ROTH Our with of

Gerry Sweeney

want being about margin utilization analytics Wanted as strategy, we ticket either look. questions come margins. at bit a could a look just CIG highlighted GSG have or I a that $XXX to type million know today on million. different business, it higher-priced talk you a several historical and already, the margin enhancer And When business? different some little or take Tetra to Obviously, be a or this does than I up enhancer forward, $XXX of higher-margin a by of the item? go that carry to Tech but you growth tact

Dan Batrack

answer the yes Well, is and yes. yes,

the margin. driven a is carry we're here of utilization. thing in all is So by advanced analytics, net revenue. yes, the higher higher aware most that Yes, it revenue does one that of case is it of The

subcontracted. drilling. And investigative That's for quite instances, surveying in no So and about that And and subcontracted many we field we revenues XX%, of have carry includes work. get we generally subcontract, margin field the low XX% our the laboratories is on XX% and often, activities. subcontracted

internally. performed advanced the actually On analytics, it's

our so staff professional perform And it's at. that

of margin all So we revenue. the on carry

a our domain dollar. margin very so higher highly demand, and demand, a relatively because really given revenue, the And very to itself especially actually linked experts. The is it be there small the for high that greater demand, analytics high end with be you'll high see enhanced and actually at are supply is we'll it's specialized supply,

margin in us the So, we and it of in margins think the revenue we the to But that taking up, result could increase And margin points. move itself. and or as carries from more be what XXX it the would million. has up $XXX out is utilization GSG $XXX million modeled a of fully exactly haven't XXX basis

at once So get with the Federal XX XX could analytics we advanced larger to higher move even to the our a bit level. scale or a

Gerry Sweeney

done opportunity said, of then just work has you delayed. once, been questions. quick to create follow-up development, travel come just that Does to wanted And Talking backlog a restrictions relaxation be of I into as about international obviously, this place? needs

Dan Batrack

one Yes, of a know of at to it There couple there that of is does. that rush different will is be a there school are be big complete. thought backlog. ways work of a, looking then a I But

be is since revenues up. often the right. pushed the more And flow a so it's What that a to higher order has completed, at work throughput level that will see in can finite to generally still get we

keep the larger original in to projects given don't become a quarter it, So the schedule.

to So a be of done delay to originally by if was scheduled XXXX. of It XXXX, was that will X-month the work the to. and actually moves it the mid-year done done completed be be end

the move to the original if get back up to pile schedule. and So simply things think not I right,

Gerry Sweeney

at does end come of the the eventually that revenue But day, it. through? Got

Dan Batrack

it does. Yes. does. Yes, Yes, it

Gerry Sweeney

for taken position a Obviously, little positioned in follow-up. There smaller, versus quick may or bit one that? be just questionable very good. But just like financial financial about your your of leverage step acquisitions is Tetra comment additional competition anything being position a a better that. Tech's then that drive does And opportunities of further, terms was revenue and

Dan Batrack

different I does it Well, a in light. think

with as a the So we use sheet table. it do our not differentiator balance on like respect to to putting

letter a bond because So is or to LC can, we or not credit, something that we a our goal of put else. want an up

of have generation leverage because say, commercial fiscally risk. are we stable, we to goal their it will sectors not a fact, go more balance firms don't clients life beyond. do, around because very they we our and federal and do say crisis. side many for to consultants and large looking cash our of have financial because and some and because and put stable saw of local clients sheet larger at and to companies That's largest reason that some our to strong this the want goal. Our a of they great that in fiscally want what very be of are isn't the during we that. low We our they in all we the it, prudent, engineers is don't I State, their and But even the for saw larger, what the across program want And is want global

weren't is and itself natural So not does different large a just priority they're of and a by most we the those scale They in went because answer of they because lot to tendency I way, large, it safe. the that that stable. think give in sectors And know are very away. firms

X, of carry X that leverage, multiples So those those high leverage higher. that have or

you but large, be may this for not world. be may You long

position changes. of access plenty So I stable both, and to to of predictability leverage, capital, these across workforce low an any we're deliverance economic excellent of the in think have

Gerard Sweeney

congrats And a nice on quarter. Great.

Dan Batrack

you, Thank Gerry. Great.

Operator

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

Dan Batrack

And and I infrastructure at Tetra science, employees very and look Thank and promoting for Tetra solutions in but with much all I our all performed the and our to third sustainability environment not And much, Tech, and services and a And services. Great. On safe. to year of we our provide by insight, day a you have of we'll next quarter thank you giving leading call, the the forward questions with very of water, be support your guidance -- in you of and share really the forecast rest we fiscal XXXX, the where XXXX. year myself your clients much, great fiscal you behalf only we and are summer. very supporting for how committed your And you. rest great XX,XXX Thank for Tech. Michelle. you of mostly thank the

Operator

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

Tetra Tech (TTEK) 1 Aug 202020 Q3 Earnings call transcript