TTEK - Earnings call transcript Q4 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 call open and the will a will up brief provide questions. of results, overview for the direct attention the Safe would Statement in I your like Harbor to to today’s presentation. forward-looking about expectations. financial future and Today’s growth statements discussion contains projected the in risks results described today’s statements Actual from may periodic various including significantly due the Tech’s and Tetra those uncertainties, with SEC. risks differ in to filed forward-looking reports takes Except obligation as required by law, update Tetra statements. Tech forward-looking no its to

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

Danny Batrack

much, fourth you XXXX Laura, morning, Thank to good our very Great. conference call. welcome quarter and year fiscal and and earnings

the the you just Before with in an observed here priority even started his the Development, election for and Joe FEMA, top believe in I what know the like update is ago. entities Federal change energy of change Environmental Agency would agencies, priority and Corps This associated to will process and addressing Government. We Army some with initiatives. support. economy. things, hasn’t administration begin of with infrastructure has complicated have history more States water, Biden for divided first, business also in yet. for directly among is let Clearly, to-date. International my key climate Congress, such as the that the Well, climate a and would we to in work very leading be share U.S. do from United in-line a the frontline United is emphasized of increased environment the early, the place presentation change the also investing to government’s in who revitalizing XX-year expertise on Engineers aspects But Agency, with Protection we a took The me potential implications than our begin we Even nine-days funding has the stimulus today, administration. spending. infrastructure it identified we government-sponsored Biden I transition States our the is bipartisan potential for climate United States benefit from likely has infrastructure

time. However, at the package new is uncertain infrastructure timing this stimulus the of

additional for will programs allocation. of fiscal administration’s our address led Financial on overview our fourth our quarter, customer and year calls. our provide and detailed the our guidance new customers, financials our more We will Chief give As review performance. strong who outlook performance our I earnings we you EPS capital a with an will quarterly a backlog XXXX. had and record then I see updates followed of we Steve will develop, Burdick, by now Officer, and begin by

of X% revenue quarter. up Our million $XXX prior the from was

high to on also our revenue $XXX at which increased of Our forecast. quarterly X% a end sequential the net was basis million, by

per which for year-over-year $X.X in customer. over history. up highest all strong performance in EBITDA provide performance of to share our best also across in our expectations earnings an In X% highest growing up of of XX% company. represents the This backlog, Company’s from our was $XX In end of X%. year-over-year, share ahead Our to $X.XX, and would divisions. billion, per QX and revenue were forward million And quarter. the of our sequentially, customers the was prior our it operating earnings on revenues, the saw up our continued is adjusted fourth by in was now overview local the which of sequentially of generated strength indicator, X% the XX% quarter, history also like I our which up We all organically the increased our state and quarterly sequentially.

growth the in business. our in the for sequentially. Federal up work, was was this clients and Xth local quarter of year is disaster of response contributions Work our our of net Excluding and extraordinary U.S. the consecutive X% revenue state XX% our double-digit

the work agencies for Federal X% Defense. of U.S. Our U.S. civilian year-over-year for grew Department and XX%

growth this associated U.S.A. with for the travel due work by restrictions offset virus. However, to was COVID-XX delays in

revenue Our prior net commercial X% XX% our the of U.S. up from business was and quarter.

commercial our local revenue property commercial net international and reductions to some X% energy sector. our from saw our consulting see stable. services providing, work finally, environmental in the regulatory-driven We Our energy the in in and services And was programs buildings prior non-regulatory growth continue government did renewable We services, especially new be Canada. quarter. up for continued for in

segment. impacted discretionary now delays in I and was region. commercial Asia our for by to our work would present cancellations project performance like Pacific However, clients by

and margin the driven on in the for the I segment, design XXXX. our quarter-over-quarter years. we data for analytics of XX or the broad expansion a high-end performance to quarter, by key a year-over-year and and on into margin margin fiscal quarter, several GSG of showed Services been clients our in delivering would both that a very focused have our up Group points The a services segment was performance provide past basis significant basis prior GSG’s our XXX delivered basis per base now from XX.X% water local fourth year-over-year, segments In and basis. Commercial by CIG CIG year year-over-year clients. is margin XX.X% plan margin, up and result to like business was of to both the Government Strong of quarter quarter, This the expansion metric QX insight points more oversaw both COVID-XX. spite our mix the continued Group team more during up change our or were the project and quarter. points margin environmental segment, Federal favorable The impacts an basis International demonstrating and in CIG’s for closer margins of delivery XXX disciplined as margin. a results of the of management were their a the our that fourth a

and per adjusted of XXXX, share generated on basis and revenue of all-time full a the the year. Notably, Tech’s fiscal EPS, $X.XX a highs year per full-year record for achieved For operations was Tetra share from $X of we $X.XX GAAP cash billion. earnings for backlog. record earnings a record we

this especially generated and of disruption record during and I’m also from unusual by circumstances pleased performance our global for the area, We with million, cash $XXX the pandemic. operations the of quite caused team in year, the

consulting programs high expanded both billion. services was to a Environmental the a with in the by Finally, rounding $XXX a contract over just Last We this over energy States Federal fourth over is indicator fourth to billion. renewable Government, broad $XXX quarter, waste the orders, services. X% million United won and on of strong for new resulting expectations. clients, quarter, we market. Army typically In leading environmental of all-time and record our water, high from fully was and million $X.X restoration the our Agency In delivered continuing of out just quarter across services, $XX of sequentially just leadership Corps and base basis of internationally. $X.X backlog United quarter in States capacity and and for also our new on million differentiated differentiated X% and hazardous our in up U.S. broad-based the power the Protection in management up for a Engineers year-on-year Backlog in our our contracts year, key for orders and up energy the quarter environmental year strongest we the won orders this task renewable fiscal

Now turn to financials details I our to like quarter present Burdick, and presentation of the would Steve. the year. for the to over Steve

Steven Burdick

Okay. Thank Dan. you,

about XXXX revenue now financial well quarter for quarter higher of $XXX $XXX would of of fiscal in I XXXX position the million fiscal in-line end range as million, financial which So to $XXX was as net $XXX came XXXX. with amounted end was of our GAAP revenue as as to our net like the fourth of and the guidance the revenue results Overall, to our fiscal million fourth review expected. The million.

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

our in-line have these would Excluding year. revenues impacts, prior the with two been

we from performance continue in both compared operating margin to the and prior business mix shape our and as has share per portfolio. year. margins our increased project our resulted earnings to This improvement Our

of top Our our end margin, better year share EPS basis $X.XX last improvement to points for which improvement came of a in which continued the in the of over guidance, of our driven our adjusted an by both matters. range show in $X.XX. year. $X.XX In included of over our in EPS XXX results this operating QX, This of our adjusted increase the GAAP was per earnings details than was and two of GAAP The quarter the GAAP basis. quarter between Excluded of earnings presentation. a year, adjusted reconciliation the our from EPS and were $X.XX last this current are improvements $X.XX fourth were appendix adjusted on

gains, these positive sells are gain the for equipment $X is complete, we total million. just additional now First, cash of fiscal shy realized and XXXX

liabilities purchase for non-cash true charge recorded earn out up accounting good in One and healthy of of And are Asia and Pacific be relative to level sheet quarter. a positive fourth to in two income. a ensure proactively, division. cash our we continues Tetra for flows to Tech of will balance Secondly, our adjustments the excess on liquidity. strengthening we focused fiscally disciplined generating net-net the

operations million, share to our generated over cash the flow XX% Total higher fourth the in cash million including an is such, cash basis, quarter. for operations $X.XX about our totaled of flow for per on $XX the generated cash annual XXXX. from $XXX As flows about amounts year And fiscal the year. from

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

last a net amounts which decrease $XXX Our debt from to is million, year. XX%

in came debt-to-EBITDA net X.X times. our about at still While

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

have the to both year, providing returns our during fiscal we for generated last cash this dividends cash shareholders through $XXX operations. share from buybacks. in continued and by the million fourth position significant we from quarter, And Over benefit

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

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

share call I’m to support, February Dan. Federal, quarter. our As results the back in you strategic for while and position these growth a in Tech continue and financial shareholders that to through will fourth we with in to I is we strategic you Segue for I which result, significant now a want provide and we acquisitions, all hand over September. in areas, as which such BlueWater closed investing thank organically very Technologies, both the to closed your to will returns such pleased Tetra key

Danny Batrack

Steve. you, Thank Great.

for our As XXXX, very At combining to delivering innovation on focused differentiated scientists be engineers enter our end Delta experience, worldwide. We the and continue technical clients Tech full differentiated we to for we delivering projects our solutions Tech, by Tech our The Tetra year high our Tetra and fiscal world-class lead a spectrum clients. Federal Tetra we call the over local, services with Delta. developed technologies, we have and that in clients. of encompasses year the science XX,XXX our commercial

technical solutions slide the all a few of illustrated our on we are If you today. are to that following the clients are webcast, on the just bringing

that CSOP examples system water the of award-winning Some are management. control optimizes our real-time

collection by Rail our over artificial that solution Our rail intelligence, XX%. time reduces AI data

enable that that be Tech’s fully energy makes out Box and shelf rugged of solutions just is our focused on concept, client rapidly I reality not practical meaningful, out fiscal field actually highlight for and AI technical to features infrastructure, through on the sectors a in our Tech terrain Vision clients. four Solution infrastructure virtual Tetra our By displayed year Our building will we innovation services XXXX. the implementable It across what and analysis media. the now Tetra delta real XD inaccessible recognize it deployed in and are in expertise the AI the and water, fundamental field. for a our digital differentiated is and to trains environment, foundation of electronic

for of work us development. international Federal and across distributed the is civilian Defense agencies, Department U.S. Our

consultants, States uses mitigating with we third the cities front quality We on and fundamental most more with program, X% be business municipalities water profile United impacts practices. Government programs across programs. to we these programs. a different work water and of Agencies one development, in requirements to first emerging some billion to and analyzing of management, data establish have just PFAS. local their and the water U.S. help critical their such their national Federal use with Department the across Departments country. super assessments, that the and are work provide highest the rate For supply contaminants, about using data tracing priority Defense agencies, the base we brackish in which year. We their of fiscal grow share We supply the water, water coast-to-coast about international provide all advance our States over evolutions Tetra for for some our XXXX, Agency Federal aXXX analytics regulatory we contract applying that the with currently optimize as Protection analytics year solutions number capacity And Environmental support and and $XX of our high-end to support feed treatment facilities. site We ranked water adjusted on highest Agency than work United almost United programs expect high address to the States. sustainable reuse designing with solutions XXX as Federal works Fisheries U.S. such sustainable the and of by state and design. end desalination our in clients services kind advanced water water We we for of digital at by In Tech and capacity

With rate, U.S. municipal approximately our for XX% to planning work this at and continue market expect and services growing market. in local a and work industry-leading be State disaster a longer-term We us. our continuing to performance our growth recovery water

science rankings Fortune consulting developers Our and We differentiated include U.S. in and clients environmental power clients, one top focused reputation environmental XXX number and in is to our wind waste commercial on and that renewable support national solid in companies. our the providing commercial energy and leverage services. management work primarily energy waste

such distributed regulatory-driven Our across work of programs renewable buildings is overall energy and environmental as development. healthy evenly contaminated lands discretionary restoration and for programs,

increases Our expected in and energy. commercial quarter outside for by the clients at we to primarily government of United U.S. the renewable about work do about business business, International evenly a revenues Commercial grow about between a XX% split year, of work expected driven is clients and our for to work X% for is rate States. about our be overall be

such program intelligent end control real-time high in and includes water Canada. work our international as Toronto, systems, services Our

to Tech’s investigations United management. the consulting catalysts additional year. sensor corridors of Kingdom for Tetra expect coastal fiscal in latter seismic Geo geotechnical rate Arctic could we year transportation such international programs as Tech programs in expected for X%. such as also portion Tetra the XXXX, implemented revenue stimulus international include zone systems, provide a Infrastructure of Canada be or the about and end at Our Centers, In and grow high growth to deployed Geography

environmental by consulting and and driven Canada. growth work, engineering primarily planning, water in international will Our be

impacted Kingdom in is However, the like to our to the entire fiscal and slow fiscal part be would year continued by and now of XXXX. year quarter United of negatively recovery XXXX early of in for guidance Australia. year present the lockdowns the expected I economic and the for first year

approximately associated $X.XX. million guidance earnings $XXX as quarter, with revenue $XXX net first million of range is a of anticipate $X.XX Our follows: to an for share diluted per of a to the we

some be XXXX, of collective webcast, associated to if of fiscal range along For basis That of based of earnings a guidance approximately concluded on to into the which per for revenue with the million year is share we the in following $X.XX $X.XX represents are incorporated quarter. this and XXXX entire diluted see $X.XX to assumptions we on of you have in $X.XX We can an for anticipate, And you that anticipate year first the amortization, guidance. the net the share. our $X will per acquisitions previously billion billion $X.XX. do

a expect tax effective rate. We XX%

generation We shareholders. In quarter our and records in new XXXX, for expect our guidance place I outstanding practices that future does company. summary, may will acquisitions fiscal shares note, earnings, the the any EPS contributions annual we and exclude setting as guidance, for during an million of approximately with past cash had year the this year. excellent And take XX.X for fourth

high-end enter demand approach of before. water, in science ever with services leading As energy our environment is XXXX, and than more our fiscal we year renewable and

and our would fiscal now visibility open excellent for as us And Laura. with billion to momentum backlog into all-time call high the like year. questions. both move I Our up new of $X.X over that, provides with we

Operator

now. from Instructions] first answer begin [Operator of Markets. Eastman Sean session question will question Our the The and KeyBanc line with comes Capital

Sean Eastman

think to Nice, to this the with accelerated year, XXXX fiscal the looking that administration? you lower guidance, election sort upper I you. swing Thank term, wanted into finish we thanks customary end? about factors or questions. start strong line under just XXXX this what my taking trajectory get dynamics as real just an needle-moving the And could fiscal to growth top longer outcome, the the for around drives of

Danny Batrack

represent factors, have during Sean. items question, remarks do that the I our The would high to and guidance. the high to certainly shared of out my to We end. swing some Good go us the growth drive I the ability to model of prepared think the the rates midpoint And that could end. had

the early Federal fully Some prepared the new of That on basis, year. events. the contribution implemented. have them of That one would quarters time. though, that they as be my climate change, remarks, the Certainly, renewable include such short-term are out be structural on that from on focus fires short-term Probably that very the would and And administration place. be revenues storm a those longer-term gets this both this increased would storms the But in include a if items the is Biden in administration priorities Coast. West would positive, on have environment, impact would a the transactional focus would more new a taken energy. clean

would prioritize are put they that, of that Tech. increases in areas government we confidence the in that existing are areas that And place. Tetra be core these dollars high they even would by absolutely we would in also actually the I funding have focus without could spent or would fundamental of that a budget to funding, be for expertise expect the company. fact, of And think All

Sean Eastman

Got you.

in that as was that two, how expansion next Advanced you that to is And side, outlined side. the helpful. against like momentum is margin over time business leg that of And revenue on driver guys That last million or really fourth Analytics I’m the XXXX say frame? Advanced Okay. Analytics quarter. look of quarter it target of curious fiscal another Advanced that $XXX it you over tracking Analytics seems just on year for sort key we the are that the kind growth is fair as And

Danny Batrack

think expand going Yes. growth I The the Federal Advanced is Analytics continued Government, in our margin. to

overall to do is on We our at basis rate what about been the organic from year of think for for XX% our a We growth higher or to and the margin. XXXX. up a probably it Services Group It think that over fiscal track GSG are to it We targets $XXX year Federal will XX slightly will for increase grow that XX% the had XX%. XX% million. Government, add for of Government business continues points

XX.X%. the probably to So XX.X%

making impact even an it right So now. is

Sean Eastman

any sneak Okay. well here. going are clearly, Got it. framework new the business? But be this positioned flip pockets Dan, guys watchful maybe otherwise has And you whether administration on side the one on of risk, last of within DoD guys downside? that it that, there mean, what would Or I’m of of in. one I the are maybe within are the you outlined

Danny Batrack

the administration would be Well, issue not biggest priorities. I the of think its

platforms I think in participation engagement to have weapons or defense, with we no items. or these other logistics or respect

on environmental side. Our work the is restoration

So continuing us. administration would spent a means each is is actually reduced a a departments, a coming biggest actually would sector, prior ago, fine divided where of the for of even President’s we a issue Probably from to the seen actually assessment. closure in up costs progress decade that had back lack a up congress priority us, those freeze environmental the give the very administration have budgets. largely base funds the which investigation with spending or for for be But favorable increased respect even end of the are the with with the resolution, which typically, executive and of the year realignment budget should because defense within

Sean Eastman

over. pass helpful. so much. really will I Thanks Excellent it

Danny Batrack

you Thank Sean. Good.

Operator

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

your with questions. proceed may You

Noelle Dilts

morning good nice quarter. on and a guys Hi congrats

XXXX that you factors you you CIG on are So will look could of of thanks what impact how and key fiscal how was margins. I sense the trending? to those thinking clarity hoping the are are GSG as give also the margins some a out for about us

Danny Batrack

a is XXX from that previous think we CIG, over we for Well, points the think Yes. as range basis increased it year.

what XX% range So we we anticipate be would to year. would the for think XX%

So it GSG. in is closing on

Some and addressed swing into turnkey think double-digit that mix, we to business can probably of the this coming year. them for number itself account of a to have of taken a respect into with performance, headwind care bit increase closing happen we might factors this the lockdowns to I including think the with factors, some would could year, half our needed would to the Canadian unknown of and which what of that pipeline obtain been side represent the And factors that in material that for that I work, commercial helpful. U.K. has acquisition respect obviously, think of at need on pandemic, And WYG. or area That international in say moving probably actually that swing most this. United the of moment. down our is of is improvement the be we a Kingdom We just be the which view next we

far. So we structures lockdowns lockdown think so are developed or approaches and the both address pretty last we the had months. with we are that But this effectively watching And we economic that eight associated are these have associated six that months, items with those impacts slowdown have to business closely.

Noelle Dilts

complement opportunity M&A to looking U.K. acquisition then a U.K., And the you there, chatted bit water update I us of the about topic could know you WYG. at you are an about Great. a give the on Okay. on thinking how

and Just of thinking curious opportunity? how the been kind about what has you that there are progress

Danny Batrack

firms. we Well, had have with number a of meetings

So there. there opportunities are out

So alternatives. full have it sufficiently we I would pipeline full least the is at say classic that or is

some be be and strong they not in technical utilities just that of characteristics would strong. as right preferably, existing for a add sense think firm. I We would the are expertise looking And the new water the And reputation, as capability the sector with contracts of exist. they might

AMP of the strong that Some that of is of the were priorities be for analysis. but portion part that is certainly it not some economist, Cycle might doing Seven’s on economics necessarily

that XXXX. that we in year to make So on is would progress something look fiscal

Noelle Dilts

you. Thank Great.

Danny Batrack

Thank you Noelle.

Operator

Our next the England comes from with of line Sam question Berenberg.

your may You with questions. proceed

Samuel England

taking the thanks guys Hi for questions.

how any you of talk The first has you just one had, the might not integration have contract to did have won acquisitions you about enhanced those proposition the is those otherwise wins going and deals? I before could that acquisitions, you led whether recent

Danny Batrack

a a the Well, here about only ago guess over announced BlueWater and a month probably a little ago. acquisition I obviously, we just XX-days we worked XX-days over already number that departments have we agencies seen importantly we Federal of the and more Federal, of maybe within winds Government little a for have half and had new wit contract new before. haven’t is it

that in is acquisition to rest our can this clients past. that Tech bring services expertise Tetra not BlueWater new which we extremely access had have in to of case gives the already their valuable for clients haven’t opportunity us us of these that the to initiated. it So we only But it offerings for in we also offer to opens the up the

them White that the fully ERP over year So I UK, integrated a have Young just or go to that back I’m proud If run our is quite well. systems. ago into we Green WYG announce in

took to we over our year. it of systems. about ERP But migrated have us So a thousand those people couple

utilities We wins have have slow had they for would that a before, across the water getting had by work including worked we working not the of not had of significant client before some number UK. source the UK in multiple in that sets

of areas there. and additional the Defense We Ministry number of wins had with have other

margins. to to are platforms. well. has which free them meaningful office And worked putting where allowed has increased in the be want us And back close we to their anywhere folks, more is yet. contributions do our not So on to up by the quite to out UK the that of It staff a while operation we number

place. even taking probably of We are halfway pandemic in the there, light

and to these integrating have more has worked moving we well cross-selling very for and revenue synergies So on systems efficient there.

Samuel England

trend then and What in XXXX? And of volume have contract the do will larger that trend seeing Great. continue think you you Okay. the next it a sort you into QX. that is smaller towards one, wins been behind of mentioned

Danny Batrack

Well, it will. I think

So characterize are seeing. let we what me

it it. quarter, It the or the It of received single we program large fact, or mobilization order. number or very, up. and or was were that a programs projects anything a else. were of a project I that our In second in just think wasn’t orders, was starting of that number It so wasn’t and it those in project company highest country wasn’t fourth of Department very aid Defense task many drove for really new orders a task single

coming you big in presentation slide. of backlog can it So single actually think and with large see our I instead blocks in orders,

booked, down we If categories. orders bundled into were look number of you they a typically the that

So there of as is forward. smaller a things clients making think It bets reflects they that go reflects. I couple our it

So also. other to instead They dollars It perhaps for every does single providing those is that And $X three are bit move months. It spread to projects six weeks to allows out be $XX levels. million could get to more the flexibility. give them us a providing nimble. also them them million of to allows forward same it more

with little economic other expect while them. going items we this favorable continue that a is it a clearer to trend. the until and little it a for for of bit some as uncertainty get see associated So And I pandemic

Samuel England

answers your will it for Thanks Great. leave guys. I there.

Danny Batrack

Great. Thank Sam. you

Operator

comes from Our & Riddick Company. of Marc with Sidoti question next the line

may proceed with You your questions.

Marc Riddick

morning. good Hi

Danny Batrack

Marc. morning Good

Marc Riddick

mandates more, around spend suppose, the the this rejoining as Accord. far potential global I far of a as about if election, as with and Climate talking you could And Federal as well but guess, little more I time as opportunity as focus, Paris is I and at wondered that I the the least opportunities wondering there you. opportunity that some that focus top or election, much sort or was well. local Thank funding had was mind we state areas as was on as presents of with Federal I of wondering was company if for have

Danny Batrack

It good the rejoining Climate a U.S. is And I that Paris the do question. believe Accord.

Government that government doctrines some the they that that do the see, department policies be which will actually executive a that administration, and is change place, with we been going as one what be focuses understand or individual the impacts While will actually a of identify indicates we U.S. Biden commitment will and seen an have put is and case. each has whole in the and be from there and we of early publications What it that of will act approach, I of agency. climate champions every the are is Federal with an individual address that to actually each individual branch indication

it so services lot this, has access the the is a the that through And State out through broaden a globally and bilateral U.S. And types in development of is through think, impact priority to the we international both these. going for And the through of have. of all Department, U.S. that course, here the I of accords

the of research Tetra will and and practical globally have expertise So technologies can’t do have Tech whole think all And very government through individual implementation closely XX-years. aligned last at the and believe this of delta a I that exist. of the marketer the would on of I the developed that a just to for of ripple focus we leading focus type priorities investments be we edge this what over end more does Tetra Tech the of front

So I for company. think that alignment well very the portends

Marc Riddick

is a That great. note. then maybe different guess a on follow-up quick And I

that the you you the and before the of talent budgeting I that what opportunities as time is timing that see of could year you. to was that what we sort acquisition opportunities wondering if wondering a you embedded if see and talking far the might for see throughout little the you? to advantage the there thoughts do Thank maybe a component about spend year for guidance. as with So was take

Danny Batrack

a do the number experts that Tech in of of a bench contra think have item great I strength, areas. one great world-class Tetra does Well,

to that to say quite supporting from staff Federal is clients being with our fungible able respect would some And at treatment technologies to end cutting-edge front move commercial Government.

but our also be to been address what these vetted to increase, not be as precisely able staff to asking, alternatives to respond and yet. opportunities fully able to introduce they haven’t scenarios perhaps to think quite I that will we quickly So additional are be or mobilize them only

developed, we my implementable, which is it only actually believe the being mobilized. on not comments can think both be is I So being but front are, it I in

do a acquisition, hires some have best academic do are clients globally, entire strategic brightest where enterprise respect of We that to think to entities our best the leading the solutions talent and we a we the with but have number I problems the through us institutions So almost bringing ability and and from other certainly time. take it on across apply join acquisitions. and they need real brightest of to that

themselves during So these no opportunities as should lag XXXX. be present there

Marc Riddick

Thank Very color. for very much encouraging. the you

Danny Batrack

Thank you Marc.

Operator

of with question Scattergood. line and Connors from next Our Ryan comes the Bening

may You with your questions. proceed

Ryan Connors

run on Great. a and for the stock. congratulations tremendous Thanks questions taking for

Danny Batrack

Thank Ryan. much, very you

Ryan Connors

my in big So picture nature. is question more

budget under you a And this of spending stimulus priority. to he topic, politics lot stock some in, are be how that spending like seem Biden for administration. you pricing seems maybe Federal the COVID this massive the appear but Just economically be have will inheriting such that deficit, for the to potential worried be that a infrastructure, about environmental does talked first Federal that additional especially given

to before even definitely any get to they around of got even So this. bigger they get

expect So you control, to the when get Tech government how ramp at is reduce a to deficit trying off underperform big coming is it Tetra the the the and to recession, back there, is deficit. actually under government generally because realistic tends a history, look to the trying

So what view your is there?

Danny Batrack

that seen have I Yes, note.

natural First of is. respect progression agree of to all, what with, some I stimulus there with are the things

they out, traditional than climate services are different that change, work, demand there that renewable stimulus these think the just because we initial A&E more provide. with more the when actually comes energy, more will more that be We services. So projects, for environment, aligned is

I at through Obama look the the you beginning. So better. a then financial I administration does services, course, crisis least And set at we the that major fare it a is then, last global sequestration, and is the to through is historically, There get budget seen which its we from was begins place. that their What to the spending words have as Federal recover and in to less for eventually, budgets decrease during we spending big others, which go yet think just of happened very for spending. the emphasize, have that the what these under deficits happened infrastructure happened. think very the spend macro deficits. But also do at aside they do large to sort view from spending it if not way, wanted And the under large of by would for Obama lot

to of still a to hill is be us, which to front done. that work is in that needs respect climb with So big

property next at want it take point, spent. tailwind. its to So do is, some spending, typically is that recovery enormous if observed But is a then general for clients in you need local what by that even that economy is to What logical to receipts, and and an happens stimulus. this output are the other that pay items state with should commercial followed we amount be have the step you tax the now have you and of and values the

saw during respect it and yes, So actual and commercial account or local not had and that sequestration, at actually stimulus down factors with spending that or at was that, work that, had state with were year-over-year have to come that offsetting with we we we there Federal see positions XX% back looked but previous government. increases other respect a was we haven’t actually submarkets spending, the during in the where recessions for to We did and local. the associated with gone a Government. we seen Tech’s And in there performance and reduction the Tetra bit,

do I that the at could think the were. of actual what it with attributed impacts lack surface, knowledge of be while the So

in If years. drivers look was it a actually particular little see you other you deeper, could that had impacts those that

Ryan Connors

Okay.

highest like that about big what if driver new you It Senate on saying, politics back key et the Federal spend, cetera. are is issue. peel green environmental we on presidential the infrastructure, obviously, the what is sounds profile. politics, like fact based onion is Now the the the spending, the if sounds the the But deal, it really

and different very difficult how how the if your even Senate, the just of a months really years. that the few Republicans versus or to side could of of now if then this So critical really is through this I it lot couple Senate, is outlook deviously hold from get take mean, is some a Democrats is if view? and in control expand for your a this could

Danny Batrack

Senate will one agree on a feel the and type nothing. other goes just stalemate. provide on goes that the areas thing Nobody are that the work way - for way, complete about pick anything. we that we of we is focused that optimistic will and the very Well, do House let’s they one

government end we we continuing So going going fund resolution, and just up a is end what anything, unless the you to and not are agree is they with disagree, to and there increase. be shut no with, which are up down, will to to

branch, still So priorities the climate big be that could to that believe whatsoever, us. priorities be the that we to priority sets through without spending their for that the or why government very an of under his actually with to deal, that respect implement change, we deficit as just And should And have an are the items favorable scenario, that even the the is new increased increase a beneficiary it large outlined. we very continuing to executive the resolution. provided spent the is dollars where President the points within been

We don’t in we deficits stimulus So fare need increased to very increased need Federal don’t spending. through well this order period. next

Ryan Connors

Got it.

one last one then for And me. Okay.

a of but kind danced margin. coming buckets you the business, down of bit, you look projects specifically types you around your just at if not kind of pike, the this the same of type Just everything of little could carries see

potential relative So the what the areas the areas to you the of margin contraction? in business, things that of see profiles are of that you terms see, mix of growing the

Danny Batrack

an think fiscal We Federal XXXX. coming the in Federal into growth. saw in add day We That we well, data the bit Blue analytics is a think growing Growing, Government, the in additional area is area higher gives us did to neighborhood XXXX. water contributions We organic here to of margin. of areas our that year. is in that number first essentially this same is the grow, we going expand will It XX% think, organically margin. that XX% our in help advanced XX%

us environmental the wind. to monitoring well we and fisheries, evaluation offshore monitoring higher that more is that flyways. margins. area over to Tetra marine an construction, impairment commercial is It permitting work is marine think CIG, has are Tech net growing. this in we in has a and environment, doing and to in mammals, shellfish, So the sector growing energy Renewable for work, impact done during sedimentation move

have leases We on others offshore more combined. done than all work

have we not a so most share. And are majority the don’t given that we the just of

We are priority. And it a has there. actually quite dominant

as also on makes part and larger focus will They the others. deal that of are sense. it see additional We economic turbines. But new green

in for far to and since this it us. impact and have area offshore, another we that, is for You respect is we an growth and are with local also for us, use excellent think land that carries higher-margin less position

for government side a that the that commercial are of will areas are commercial and margin down pike. and the So and expansion, margins we those help international That growing, on both the on sectors actually that government see coming and couple both carry us.

Ryan Connors

great. Well much that Thanks for so it. is time your Got Dan.

Danny Batrack

Great. Thank you much very Ryan.

Operator

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

Danny Batrack

I years awful and all lot for most varied quarter. doubt the We of at the one recoveries. team insights, And largest I fiscal year with want the and here of in negative, And here or staff XX-years, questions work just commend in been oil for to the complicated, for year, most the year of glad finish really by prices that XXXX such with quick a the Tech, I XX-plus you all was Tetra the an day. at Tech. history, complicated fiscal been your every of very have XXXX were many strong leadership to pandemic, those. I complicated was interest haven’t you but much, followed Thank no fourth Tech with thank its Tetra the single Laura, most and but Tetra unemployment the drops, ways, to In it most with with going

all-time growth buybacks, of see to have finish held navigated year high per well. that completing earnings We all-time I our team, are I finance unbelievably glad I to Board was because glad share, that all-time was up completing high we second better. backlog, thanks half, able saw Directors, to this with Our phenomenal with not through revenues the the dividend could And cash believe generation. stock us leverage there and to can quarterly in healthy But multiple that I call said, think few the you And that that of we the that or look with acquisitions XXXX. safe the bright very with looking and are irrespective I next decreasing markets have talking the say and then. of firms forward company. forward executions, be on all of Thank completing a to until no end you. we

Operator

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

Tetra Tech (TTEK) 12 Nov 202020 Q4 Earnings call transcript