Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and thank you for joining the Tetra Tech Earnings Call.

As a reminder, Tetra Tech is also simulcasting this presentation with slides in the Investors section of its website at tetratech.com. This call is being recorded at the request of Tetra Tech, and this broadcast is the copyrighted property of Tetra Tech. Any rebroadcast of this information, in whole or part, without the prior written permission of Tetra Tech is prohibited.

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

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

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

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

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

Dan Batrack

Thank And revenue, setting and fiscal much, XXXX had per start year, and our excellent earnings for quarter's records first morning, Darryl. income call. an conference to good very XXXX first our quarter year fiscal to our and welcome operating new net Great. you earnings We share.

our EBITDA Amyx, practice. from to cleared growth the the acquisition XX% us, up announced for achieved In high-end And the bringing US first high XX% of future $X.XX federal quarter the XXX security year. our exceeded billion, first the time quarter, we Backlog, just for an margin indicator of IT in our staff closed, best history. last of as all-time

consulting and Group X,XXX days XX acquisition business. completed our more energy international opportunities, of staff the growth back that RPS And new and in especially we water recent, ago, adds provides just

capital performance outlook, details Steve growth together today's Officer, our opportunities provide that presentation insight also RPS. strategic financial provide see overview and President our our additional will an Jill results of while Hudkins, we Chief allocation. Burdick, begin will the quarter and our additional with of our first business Financial with into I'll

a had revenue, new We earnings operating backlog. strong very quarter, for per records net share income, setting and adjusted first

from a the all-time Our net quarter, high X% for was new million prior in the history. year, $XXX any in up the quarter revenue company's

had also is year. margin, We prior increase basis the record XX% a adjusted which EBITDA from XX points

a we margin, XX% this generated up operating As million result increased of for the income an $XX company, of year-over-year.

Earnings record were quarter. from per the for a $X.XX operations share

on equivalent First in ceded basis an time we've ever XX% the in And over on $X tax fact, per we basis. $X.XX, were of last year well quarter. GAAP from up share earnings a

of overview quarter, first provide our I'd key four now strong our end of performance to our by across like customer. performance all growth sectors. an client by In driven was our the

services. was net a driven XX% and buildings, and Commercial sector our renewable fastest-growing about a was the strong comprised high-performance net growth area the overall US energy company year-over-year in environmental of fast-growing The Our commercial in with business. in very restoration revenue revenue performance by up quarter

in Department the clients International driven net driven it Agency Development. very key such our Environmental broad-based government a The Federal and by and clients, the work US especially of US was US US agencies all as up our across year-over-year Agency, XX% of for but the was our Protection was for government Federal the by Work civilian revenue XX% increases represented Federal State for US our in increase quarter.

United States. growth supply our markets growth of planning solutions. state water, demand services the municipal, Our builds a the double-digit This years management and our seven infrastructure rate local on this and local revenues grew for year-over-year XX% and XX% for at strong water quarter in with and state continued here best-in-class consecutive in watershed

Canada, up Our constant water, in the basis, and countries year-on-year by work, net driven of Kingdom. a revenue primarily and International sustainable the XX% infrastructure in was environmental Australia currency growth United on

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

Our of services. the quarter in broad-based both as first our GSG a high-end result for and grew demand segments, our CIG

Government with and segment, the segment programs. start which growth the year-over-year X% I'll GSG and or up in Services the Group with water was environmental

GSG Our from basis XX.X% record delivered year. segment XXX a margin, last points up

was things. three a This different record margin result really of

shift business to our continued First, services. mix higher-margin in

really project project higher close-outs the in performance. and And favorable Second, third, utilization quarter.

and October utilization of November Hurricane which recovery December. disaster strong for work during through especially US and the the We impacted quarter services Ian, responding had coming and really into our extending to for Florida month Federal just

in extraordinary and quarter close-outs segment. Without an representative the we seen disaster a work, would project margin the the margin and margin about GSG for XX% more for probably of particular contributions episodic it's from segment ongoing really that have these

with quarter consecutive XX.X% our the and The CIG is year expectations. a This points expansions grew up delivered CIG basis fifth segment in year-on-year with margin X% for margin the from last by year-on-year segment. the line XX in a quarter,

expansion global buildings, The programs in strong renewable by operations. margin environmental in and driven energy first was utilization services high-performance quarter the across our

our first in the the resulting new here up programs and $X.XX government quarter, task States XX% we year-on-year, United of orders at of the internationally. value quarter and in for clients company. billion high ending commercial with the was In and won Backlog an both end all-time the many

We federal $XX quarter. in in just master billion billion to contract almost orders generate capacity government, agreements, US in service the and leveraged the new $X existing our value our with

also such with their excellent visibility, support contract in Energy awarded programs million a States provides backlog and additional were with new remainder us the XXXX. the fiscal $XX new United This USA broad-based Navy of for needs. restoration Services to the $XX as by environmental million through Moldova, year in We contract Transformation capacity

pleased RPS Tetra XX, moving welcome actually Group, just very RPS to opportunities, rapidly on I'm to with the closed at we're we systems ours. Now, And days the aligning January shared of collaboration, acquisition Tech. XX on and ago forward everyone the and their Group

targeting Tech some that aligned our staff growth brings we've for geographic future to consulting Group with highly time. services are X,XXX and key regions RPS approach for been in projects over high-end to that The Tetra

doubles our Kingdom these also Ireland X,XXX across United RPS services broadening in a Europe, our countries us time, client and that Norway, of Netherlands giving by our employees relationships extends staff in of regions. the the adding for of the RPS and in operations first significant presence in both the Republic region. and Australia

an billion. approximately Tech combine a annualized an XXX,XXX organization servicing year actually we Group, XX,XXX now projects working Tetra with collectively clients When XXX collectively we offices deliver have from we with RPS employees, XX,XXX and the and $X.X revenue of worldwide,

this the environment and needs science by and growth leading addressing and Tech services. our clients RPS, team infrastructure driving Tetra increasing sustainable is Together, for water,

Financial our to more At this like to point, go through the Officer, in presentation to Burdick, of Steve Steve? turn I'd quarter. our financial details over Chief the performance

Steve Burdick

you, Thank Dan.

fiscal to the marked Dan revenue us. quarter the our for million for strong operations record performance of Overall, and of XXXX. now review amounting we like results mentioned, revenue by and had quarterly record revenue quarterly a is million, which from first is $XXX $XXX financial I'd So as and earnings the to net

constant markets, basis. up US including and and FX when federal was revenue change X% last international, a XX% growth experienced currency net up commercial, from local government, for We strong year Now on revenue a the our adjusting over clients. fiscal was the year, end state revenue last the from and all

first profitability strong. also Our very the for quarter was

you GSG Our growth from operating from up of $XXX improvement increase were by where adjusted which year. income and million, in coming XX% out year, heard year our segment, both improvement and XXX to CIG XX points EBITDA as XX of EBITDA points the was in last GSG's the our in margins Dan and increase, about operating points margin, came in segments basis came over driven over which an basis up up increased at basis was This last margin over of three-quarters this about XX%. the was last one-quarter was

Now, in year. increase an $X.XX. GAAP was EPS XX% our last came at from of This

entered the our in of at RPS presentation, in a summary September. we provided time in dollars hedge price back noted to for US the as the reconciliation this appendix purpose agreement As in locking signed in the we the into

an million the EPS. $XX GAAP quarter for we the had gain Now hedge first of contributed to of $X.XX FX that XXXX, fiscal

We and our in million will hedge late closed entered British or save year trading was gain US a our XX the XX% $X to amounted acquisition pound the the price just when going load FX into this reduced effectively XX-year the ago, to dollar. purchase and over expense cumulative the almost forward. hedge by And per January the at million time this effect interest days ultimately at of on $XXX about cumulative

about $X.X about operating related to for and the fees net fee for to million acquisition addition of our million financing gain, hedge In bridge recorded the $X.X recorded in incurred legal of costs interest debt RPS in we income.

losses, at to adjusted EPS record high increase XX% quarterly excluding of of EPS was compared Now an This came year. gains and these last our the in an acquisition $X.XX. all-time

And were quarter had I also another if the impact -- rate versus similar been want by tax even year in at an that would XX% our lower was and tax the tax XX% have EPS our out rate that the a XX%. to on point we ago. differential rate EPS our higher

generated our from quarter from million. is to Historically, relative the Cash totaled lowest first first $XX for seasonally flows generated the cash quarter operations. operations period

resulted has our standard on DSO focus in Our flows days. maintaining of cash the XX industry capital working leading and

projects This our DSO of this to managers continues higher-quality portfolio that years the to our satisfied geographies. clients broad lead markets and trend across and from in reflect is lower improvement really end a highly project all sustainable work our and prior relative outstanding

total net times about was $XX cash of debt net of million to with a EBITDA amounts million. the at to a leverage debt position $XXX and X.X Our

program, year-over-year of first our quarter, I consecutive of to that Directors seventh quarterly regarding out dividends dividend announce dividend be this we increases dividend a consecutive Board paid in in $XX this is paid. year dividends XXth our million want our in quarter. Now our $X.XX and double-digit the the to approved and paid And

margins, provided with which flows will the acquisition, to cash to the to opportunity the presented take here greater for comfortably leverage we RPS financial improved operating next. I and Tetra on banking positive speak fund lower As and has through today, relationships continued Tech our high-quality results leverage EBITDA

of done XX%. in from acquisitions XXXX levels the be more over Tetra two and as with generating accomplished Tech to well company what our of for Coffey expect to will RPS, for significant first, next is EBITDA integration So margins to; plan for three the Tech. which the a we those present out looking actual opportunity over financial similar like Tetra had we both margins This And years, XXXX. in WYG the manner a increase previous the be for lower historical RPS when line following our I'd in presentation, public in

and ERP By services focusing platform business our in the synergies, those we corporate and increased margins from double-digit systems Tetra on high-end to into differentiated cost our while revenues, breakeven businesses the Tech the current had greater integrating levels. for

secondly, to our line balance we with of debt-to-EBITDA delever would cash with operations, be And leverage margins times and long-term have expect to flows, end to in Tetra of cash improved along through the level And net RPS goal times. we flows Tech's from two this times positive to by strong debt expect our year. one about net more of X.X profit a sheet a to

So as quarterly XXXX. very you start share for I'm with pleased the fiscal of these our to you can tell, results

discuss call Tech for over together. support will to many the and a hand want few RPS of just your of bringing opportunities thank I to Tetra and you to the Jill I business now

Jill Hudkins

provide position with Thank opportunities. you, for as energy renewable Tech demonstrated by water, water an water by in global number is has treatment Tetra strategic fit excellent years. both for clients Tech, news Tetra worldwide and is one sustainable working water supplies to record expanding solutions. our Steve. leadership water innovative and RPS ranking XX engineering Tech consecutive a our Tetra our

basis, advancing per addition digital programs to addressable Our practice of is with water RPS UK data hydraulics major decision-making clients. subscription market. a remote the The predictive and Pro providing Tech's RPS utilities consulting of expands cloud-based visualization billion clients same us by asset year provides rapidly Tetra software brings long-term and and a management. net UK all agency analytics access providing by RPS water contracts growing analytics. water a water with for market that These monitoring platform £XX utilize Group's quality, automation, system and Water relationships water on

energy energy the Tetra global energy £XX Tetra Tech's Tetra advances having renewable Tech's US. opportunities. also billion a permitting hydropower, has XXXX projects high-end holds long-term RPS of addition siting year renewable record news giving The than Tech utilities, consulting to Tech Europe, by United for wind power. in and Tetra wind for rankings significantly provided per with power engineering offshore market strategy in Kingdom Tetra top more increasing and with access solar Tech relationships in and energy the

and For the two permitting the the of the marine and a the projects, front-end the Block development Tech areas Europe, services Coastal projects, market, planning only Wind analytics. the offshore in services provided Wind for having an all providing specialized [indiscernible] for decade UK wind the wind Island also over Virginia US one, of on offshore three for resume geophysical project. of Tetra RPS the and project wind impressive operational and in two investigation brings and worked and

wind North current Sea, the the Sea. clients generation put XXX positioned offices is in a Tetra well Together, the of Kingdom, expected in Norway the in wind North increase the the development Ireland, offshore with fivefold we to on to are support in in United representing Tech RPS and Netherlands, gigawatts ideally map suited our

like now, to back I'd turn the And Dan. to presentation

Dan Batrack

Great. two the Thank and And to second in morning. you, I'd that this I'd quarter year parts very guidance like now all fiscal much, like to of XXXX. for for present Jill. do our

year be group to now. or days for the January First, amount I'll the contributions us guidance presenting XX second, like And provide Tetra they've quarter for for for financial the post-acquisition I'd post with and XX. collective Tech's been the for second without the XXXX of RPS. the I'll all remind outlook Group's both RPS just And of fiscal here

like I'd for our RPS. begin Tetra excluding guidance to follows as Tech with

for of earnings $X.XX quarter, $XXX quarter associated is to second $X.XX. guidance For XXXX, net revenue per the to the range $XXX of with of our million a an share million,

of For an our per of a billion with the year $X.XX. range entire $X.XX to of we of revenue, $X net are associated revenue level billion year fiscal guidance to share increasing guidance net to $X.XX earnings XXXX,

million has the It effective the Tetra the assumes XX% rate this per for $XX within of guidance of RPS intangible we'll expense guidance amortizations, for Tech $X.XX take for year. tax an This of we the will year remainder excluding following have or assumptions. for an share,

any diluted outstanding other would shares this that the We after million have approximately acquisition. XX contributions exclude RPS take and guidance does place

will of with we revenue to With minus the the contributions respect the $XXX that estimated contributions, contribute share of the per approximately quarter, to have financial million $X.XX earnings for for associated RPS net second in they an Tech, second Tetra quarter.

expect XXXX, fiscal with an For total, will basis, transaction the be entire year they and of earnings contribute we of the eight months in and our neutral share to excluding approximately adjusted million per that they be revenue will on that $XXX us costs. integration net

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

us into remainder excellent of XXXX that long-term backlog Our frankly all-time further aligned another that of the for reached visibility even future. our provide and comprised strategy with are high growth services the

begin focus and for seeing with reaffirming environmental Science advanced we're Leading opportunities demand the year, water, high-end the our solutions we on services infrastructure. strategy analytics sustainable programs increased and and our approach to in As

And Darryl, questions. the like would with to that, I for call open up

Operator

Instructions] your Please Noelle The question-and-answer now. from Stifel. the proceed with [Operator Our with question. session will of come Dilts first line begin questions

Noelle Dilts

everyone. Thanks Hi.

expand XXXX. around your just a could you expectations that hoping was margins RPS for I fiscal So bit on

when talking RPS of double-digit to think in acquisition, margin had near I the term. EBITDA had a the been kind getting about before --

Thanks. how over laid that basically just, how expand rollout out this upon and thinking the you've profile margin next you're you the X.X cost the of could about So years? savings year, sort

Dan Batrack

the expanding RPS included his actually for Absolutely, that Steve, in depict graphically was remarks, put a expectations the Thanks slide together prepared Noelle. that Group. question. our margin for

the in which been Group that just trailing months, XXXX, has Now over RPS call slightly completed X%, was XX around X%. let's

the an increase year, We expect that average Tech as will to number for approximately that expect under will we double and X%. that that Tetra

exiting XXXX, we'll year to closer be at run fact, fiscal XX%. a In rate

beginning year, they'll rate it end for approximately at the and be with a of But XX% contribute expanding it to X% X% at average, approximately would for the about year. the at that run XXXX, for the now,

at to We that average annual it will right enter middle, into level, be level XXXX, an move Tech XX% double-digit with XXx up about at about number XXXX. for XX level and in that in a would XX expect to plus. expect at that the would approximately there months, which the XX% a in XX be at then and about we be that And finally, Tetra following

way sounds away. I calendar, away. less XXXX we're But Now, federal like than US long on that that's government in one months a respect, say would eight since, the

to So, forecast for make contributions quite it's actually Tetra savings, adjustments to a I close. from respect comment With RPS on to did with our respect Tech. the

expect cost basis, platforms that aligning approximately helping assist and synergies will embedded our systems, their will get see or will to had million it the reduced moving from have do $XX We a contribution implemented, is indicated. fully we on to we contribute once to just a in That -- margins cost to I that EBITDA. common

us sorry, about it $XX order about in -- $XX year. to million million, us will We cost achieve savings expect that per will the I'm cost in XX it

year get we'll half cost expect that about fiscal We XXXX. synergies of year, this in

be So of current savings year $XX this about for we million. million $XX the cost in $XX The year. will expect, get here we'd fiscal a about million, that

that this half fiscal fiscal So million, will That that XXXX. about million we'll $X to of about $XX spend $XX leave year for year. million the total achieve of our we'll incur

year that I a know through then fast. million, We ongoing expect and XXXX, ran to beyond the be pretty numbers, I on an up to basis. those XX for annual about future $XX yield and

to be questions those Steve, details into that on happy get provide I'd the So, there's underlying support. some of or have some

Noelle Dilts

Sure.

upon about guess, Tetra that been sort of I really synergies the topic. couple the think, next you of know I potential those discussed, years? have so, Tech-RPS think acquisition. the the we're over out you're combined expand I as commit sales reason opportunities, thinking while of key again – RPS just some for I growth of I Could on the you a and how as entity look

Dan Batrack

talked they've about be that. had about and accretion. I in RPS we've the a I'm financial certainly to satisfaction financial expect folks know know joined really that excited the achievable. our -- great a take on to accretion we've mid- to Tetra the for I teens still actually them once I year us that's integrated basis. and Tech easily upper on believe I

that. fact we actually than most look better even to revenue the is is the In But perhaps do what synergies. exciting

spoke would brings other new for Tech meaningful RPS And RPS use I largest innovative go for the gives renewable have to US these offshore And it. capability and Tetra think new that that of wind have offshore of biggest. often North any -- in that world. Jill programs the the very one that growth have around terms wind Tetra Tetra know most ability out areas and markets a combined Tech not and very of But the areas. unmatched with the bit energy through to geography and to new in access the won't is I Sea participation permitting would the is some us I Tech not course

that's this is think I is one plus one do more. example So, slightly an not

or is four one I one think it's five. plus

XX for been or Tech's maximum This local very respect been it's in the into AMP and been Kingdom the and asset doing the priority impacts water governments water enormous quality loading is the things and that's water doing participate as US years EPA programs. what we value the agriculture UK. and has programs loads for chemical just priority doing of We've utilities new we've to with like been item to for the United loading. to other for livestock XX we quality daily US streams Tetra management for here can the UK a in the the new Tech water advent think the anxious The programs and markets. to past total state bring Tetra

we think area master utilities major more it's I service RPS So, move. has water holding in the what plus UK have big the just I position is a a one every of where another that slightly or the one think it's framework with agreement not than is plus two contracts

we're five never that while ranking much the going before. six for pretty number or up move utilities as value providing as rank fast by better with seen currently of the water RPS is advent number I UK the Tech think far revenues water And that utilities, have to Tetra

They bringing by not they technology and measured can that in done by on to of back backs the it And of dollars if in don't the have the actually hundreds the investments of government United can investments was the the of millions do to on US that that. capability the Tech They made invest UK here States. get the building that Tetra billions.

Noelle Dilts

much. Great. Thanks very

Operator

you. Thank

come line Andy Our next your of from the proceed with Wittmann Baird. questions with question. Please

Andy Wittmann

I for was good sense how everyone. Dan taking a the quarter questions here. Thanks my just guidance relates and the it of maybe to to just get hoping Great.

I So, question the I this guess way. asked

than the the little you be kind items higher GSG a mentioned earned artificially expected certainly bit I viewed them -- don't shouldn't continuing benefit. margins as but and that had some were You artificially of segment a

the said was. In like is XX% underlying what kind more you performance fact of

guidance you not like the the not margin difference like of of it your the $X.XX guidance guidance performance. do it's So most all is the and due probably if looks as the of much. majority that but about quarter margin beat beat raise GSG you -- It that difference to just of raise means segment but basically which

good is terribly your is outlook implication supported, the is, right still the the and that not of about it's balance and right of that the that maybe question Is way guess to is way the guidance about think it? but I So, changed. the thinking first year

Dan Batrack

Yeah.

I Ian, made of reason October respond contributions an great say Florida. the the mobilized December right we extraordinary first that the Hurricane think all it. way We primarily across The is had months during would comment had to I course, through additional -- staff that and think quarter. a the of X,XXX to we I that about to

do We minimize mobilized accelerate operations and to the Florida to that, there surrounding certainly from an change the because busy. go impacts, of the and consider were one-time impact really storms, to response, the the event, climate extraordinary to of I across with But really the not rest I'm We of staff hesitant become it's area. our down to in say residents that.

if model up. But that guidance going the way XX% you out, it would have up our

Now, the we for more. in did flow annual through every beat quarter our guidance and the bit of

expect bit So into a be EPS. we very forecast little we do things will a But with for year high actually stronger. the came

in for our And we basis increase points embedded across actually in company. the had XX our XXXX margin another forecast

increase we I that intact the a it through say, and that flowing we beat. leave actually that, does yes, it all than coming the you actually had more when to even so maintain the year? while did yes it primarily say of and the we would guidance QX bit, had beat I And increase say, absorbing in into would although,

do coming we in. optimism have So

the and beat bit this is presented a doing, we you little that's more two through And after in can all, we just insight only with communicate? struggled with XX they're while us course, the company perfect we with, of which trying days. have really components. -- to And base What going order with days we XX to highlighted really contribute, -- was What RPS why more. flow how in to

think together on yes, your And remains through it top begin and XX% growing collective it integrate the a the that calculation see take with company. as one these plus line to then, collective going look much Tetra we'll with as RPS, these add So the doesn't well intact and we we merging individuals. see our year actually parts And do to to I number. you're to over into to go -- Tech, is

think characterization the really And and to what yes, synergies revenue. our your improving going to both I'll cost But is of is contribute on our even accurate be I the with maintaining the outlook to valuable bottom-line Andy. through excited present year beat and

Andy Wittmann

obviously then, going forward be question EPS that don't you guidance with an can And you know to amortization here, the yet talk going I to days Okay. just going XX about to but only intangible guess, is you're about follow-on there's how talk hit -- which RPS obviously.

at But -- gave it us of pieces. for I with going two this of And very you realistic looking is forward you that this to intangible like do going some a kind think an XXXX of think so adjustment way amortization? have

done which And the you as get then talking more it kind and just you of to maybe closing thinking future XXXX that really like to back something go you how that you've historically or in principles, are is about founded internally? GAAP

Dan Batrack

on That that's question. great a guidance question. -- a that we're that followed a for great think have I those That's Tech's Tetra know GAAP. you would

in think moves actually down. our that actual only not industry does adjustments industry the but and company just any our I we're fact, performance In

see per from our share you $X.XX. that of earnings adjusted we And share down can $X to a over

any the each contribution quarters seen You would took of have EPS and our adjusted type We last of extraordinary down. year.

than Tech. Tetra know other that So who I does don't

be do understand and amortization. to we we we what and and and GAAP the one-time we continue will adjusted the the integration know intangible on actually incorporated RPS look once that the actually And I to revert basis. those those transaction, cost an -- which expect costs present with we've

we've are. where We'll as us historically to to be expect those returning But been. XXXX, be quite what as I we to into move transparent

well contributions digits. reporting been, that increases cleanest, the taken are into quarter which on where are direct we've even there results, if our even most those we've which this fact out is of are a to our In GAAP extraordinary And the reflect double basis.

be So only number there Tech's with into we off adjusting amortization, even understanding reporting are future. to contributions in of one-time I'm Tetra the would of that RPS us. yet. one-time clear accurate not case those joining change It so know yes by many appropriate looking a items associated are their provide the to don't But intangible and they for because

next quarter. GAAP this We'll probably reporting So we'll XXXX for adjustments then company. to return that and into appropriate through place the we'll put timing at have

Andy Wittmann

for make sense. prospectus. all That a lot Okay. you Thank and of your time

Dan Batrack

Andy. you much, Thank Great. very

Operator

Thank you.

of Our your proceed come with question. Please next from Alex questions Dwyer the KeyBanc. line with

Alex Dwyer

projects pipeline? conservative prove forward of Hi funding guys. Can a you last more since in maybe update anything later is ultimately terms here talk of trying into the about moving minimal the year? the customers just sounds get year? the guidance what's a contribution or through with to for IIJA? currently sense this baked expectation coming changed I'm like It could still Has this the

Dan Batrack

Well, when one this year. quite the I primarily we the frequently. believe special It's get contribution, legislation of comments. a both and we Act different will the then good CHIPS the law question. the varying a since combination even Act We It's it do have past Reduction into and IIJAs passed late get say would Inflation some ever probably in

been state our level get have the expect minimis them flowed quite to We've clients of We haven't overall. local, funds to our to which funding. had to grants material yet. growth and The the begin seen necessarily contributed any provided de be we've they in rates at it that us some area we or to one but

planning, to really projects design. upfront these start. but going outline I very QX and mostly in QX be expect initial conceptual the to on late It's QX the even

into contribution not in are But I a XXXX, so a to level that it's half for second assignments. like up it and conceptual but and a they begin you design. exciting the build bell small start detailed start curve. at start small what's us these fiscal permitting tasks with And the move when They projects year they projects in about program And expect of financial the start to many XXXX. is

so And build and contribute many years. really over they'll

So to going half are they'll owners the start during second this engineer for or these then, in years contribute year more. constructors. programs and of three oversight will that for implementation build course, five of and the by multiple to years And

So included first de it's in no our quarter contribution and way contribution XXXX. in the minimis a Really quarter. in second any not during is had material

out their build to appropriate it you'll to in the to I've will half. delayed which it second backlog. and be our right. begin to seen You'll seeing trigger what's would we're funds pushed cause see And go procure to it now anything the to not then that ability the begin or in clients, see And

I say note will did other did excluding that also revenue in the come for in only and the anything in backlog. make later contribute was expect not quarter, IIJA I to do it to I'd the year But growth the and sources quarter. really contribute That first – the funding not not the backlog want to our

we it of detail So converts report -- revenue. into the contract then in backlog is goes to it to capacity sequence, which course, then goes

So to we're side. from contribute a revenue the out few seeing quarters still that

Alex Dwyer

was GSG end Got with above raised what margins I it. catching And well potentially margins. high the with three timing just of quarter the there prepared if quarter. line last could items wondering, you be? And case second time CIG still both in called back was even is or the those remarks. on latest up the range this of segments the this of in you the question out you interesting the margin ranges the margin message for out If the the was guys target GSG when coming

Dan Batrack

executives, they I a That's leads you year range CIG I overall our XX.X%. an margin additional a we like say widens It's speak with Every as great gap be expect to will and that saw EBITDA that performance for between gap XX.X% an and this GSG to time between last the close going GSG the the question. say, and by they're great question. quarter.

to were say have would and to I the can said I me in close and and thought then to they what saying, better. margin in GSG expect being keep puts that first we me by to is a do XX% GSG beginning quarter. close that they XX.X% gap

GSG. a say few I'll XX this because surpass bit of both what I guess, and I expect I expand. items. over XXXX other margins to CIG think So, a at outlier a GSG in time I and do of And think included CIG XXXX. GSG And point is and increase catch still basis will We the the disaster was do an

it only it's has be going in outperformed. because if they is CIG I miss underperformed you is, this thing because the it year. tell The GSG quarters one has it's can But not to of

the to quarter. as it's shareholders our because GSG, and any who performance of last analysts this top investors doesn't good catch for going our for surpass or over So track be this, if our you and of estimates we're means CIG saw that

Operator

Thank you.

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

Tate Sullivan

that Hello. services fast-growing that the and a wind business. growth projects energy the being morning. on haven't of RPS? majority Is I renewable good and you Thank used offshore before the before you already in term work US adding Again renewable you mentioned is great heard energy that commercial

Dan Batrack

area. been wind has onshore has be strong. I fastest-growing will to still the say continued That

strong. been actually has Solar

Of would today. as in course, pre-RPS that want largest US. what we're hydro now right But well is component -- Canada say to between the I say don't of really I of doing and the single as both

would and As been the XX in what doing of almost we're it and US. days have Canada exclusively ago earlier,

commented add that areas Europe, our of substantially work a and with big helped RPS we growth -- now part a for I renewable greater was XX% which think the year-over-year, commercial grow was aspect and energies new and joining But will wind offshore have the in be that. energy us that been drive But and big UK, Australia on. opportunities actually the renewable permitting

all study And Jill one United permitting upfront thing, productive the the all of we're the operationally the are completed months, many don't that offshore was only and want and producing Tetra and here York that from what New supporting in over leases fact of understate I most energy said, most two actually projects came Tech bite, past of support the done was States, of in were big auctions the work those. wind which lease offshore by the to that

because in small larger X the did told and we things only X, facilities leases and And guys up, of RPS, Hornsea having what can X right, I US supporting, pick when great like by that are are did new programs and it. we're generation that actually wind are that largest others the beginning feel the here we we're the hope offshore that we that's than and offshore having we it most operational you two and puny, which is world's the

into Tetra RPS', really future. into it this and looks So take going on programs I us you favorable very Tech when year for think and

Tate Sullivan

RPS And offshore bringing this be it cross-sell RPS done or work is UK? similar so and the you there to offshore wind opportunity and wind what that some the in have is capabilities, in you – should the can

Dan Batrack

wind than the one the different doing. we've is interesting been thing what can We is to been doing has – that RPS support offshore work that's

in both they're But the seen or permitting Now, RPS technologies new under utilized here brings topic or or the of United States. under buoy's the studies. just general offshore not we've that

an very example autonomous small They have have LiDAR offshore are systems. they buoys. be vessels have have them. almost systems supplies They're Radar power automated buoys. So these and large panels. they like solar would They self And through regenerating on

actually of them. modeling They of or different in discharge a offshore from the measure that or of the attributes are necessary all some wind the environmental of servicing for case impact oils aspect vessels

real-time haven't there's state, in with all there real-time have you monitoring the buoys. these an you oil trajectories here of transport on-site And oil spill, can it we used the rest do United vessel those a and if So out States. spill, for

that very the offshore critters the in birds we high have Fisheries, that which Benthic US to high work impacts all others in very US. On avian here we the avian resolution water. of species, the we hand, flyways, monitor biology studies, have have to the here with divers other types the green in systems underground radar the are

sub-bottom bring We of surveys, of to bathymetric them. mammals, hydro small high-resolution have evaluation a we marine survey, and real-time fleet offshore can surveys profiling

to yet seen in other they'll or used Europe bring US to technologies locations. us So and haven't them bring been we'll we've never the in technologies that

is complementary it think very and really I synergistic. So

why that's – to model with bring financial just accretion no that again, can the will on the exciting high-teens side, that's doubt to come really the mid is But out I revenue fantastic. love to we So us. what industry

Tate Sullivan

on maybe some that And RPS, mean I – accounting from is then then imply margins revenue one the net transitioning higher the to they RPS' – get construction and management does to And it GAAP or –? depends divestitures to bring do lower-margin up on to perhaps subcontracting work it thing that costs some do revenue. was – I

Dan Batrack

– gross than There well, smaller Tech. actually is the Tetra net to Yeah.

of actually to they So less difference net. a gross from have

to be total XX-month revenue. full there basis, about So are revenue, or basis, expect an or around net basis million gross revenue annualized $XXX on and $XXX on on annualized a a we million on XX-month

more and have is on here at than government So we of Tech. participation that federal and requirements net Tetra more than Tetra they gross execution less do using actually between we for about difference work XX% disadvantaged that Tech, work. do small

naturally have we to the contractual subcontracting meet so And obligations requirements.

or have high-end, in which we not with they and As the a direction differentiated see less more have yes. far going offered marketplace some just is as, technically competition, work decidively services marketplace. that in model in are margin is much reflected to one the both WYG, competitive divestiture. which not as higher do Coffey But the that are We're landscape is different and it margin, lower and change move we implemented necessarily had to

to but going not margin. will the be reflected. is better be absolute be to where be be that to with bigger, our RPS. in And can efforts is So That focus reflected

Tate Sullivan

you, Dan. Thank

Dan Batrack

Thanks, Tate.

Operator

you. Thank

from line questions Dudas of next Please proceed come Vertical Our with question. Michael with the Research. your

Michael Dudas

Dan morning, Good and you. Thank Jill.

Dan Batrack

Michael. Hi,

Jill Hudkins

Michael. Hi,

Michael Dudas

Okay.

margins moving RPS better margins about do especially just to thoughts people you or -- team? the in to joining amongst any -- -- the days could new expertise these -- before, a to there their Are around know and but on relative better the things yeah, have I Tech adds continuing need more to relative and contract value So RPS, base significant the on XX there that RPS. proposition that you government the those question retention only are through their and managing such, can And your expectations? senior the bit Tetra on expectations touched been little share or the extract maybe it's margin clients? employees of

Dan Batrack

Tetra it Tech. respect Well, here One in so We new. retention programs there. margins second increasing project two do or the retention, the is to have execution. retention, questions is With

every Tetra shareholders. to same stock, that of we to employee company with alignment access provide will Tech retention. Tetra we that actually have positions We as owner actually staff do component the Tech equity our of and a an have be outside is as want We

the that over multi-years across We management piece top putting retention Tetra multi-years existing areas they're does as in for for have of the a Tech the and Tech part of to that own certainly of selected that are select organization sure awards and a employee vests here. that place. stock vest we they over and rock make the So of every Tetra

through right than that. currently I currently, is retirement And is clients will a here And when to Tetra that career higher. our of RPS. provides career extraordinary you've institutional order more low. I'm the the joined than Tech for bit our scientists. all is achieve I of the not But is their going Tetra rate in they'll the I prior higher and they is they want slightly anywhere. home or us, of Tech say better will quite rate been with forever high-end of of next X% actually have is stickiness spot before looking continue at the and where knowledge their to sort to to help overall Tech Tech's make Tetra is XX% what below that is quite be engineers people company years consistency. Tetra than the those here not in five a This career. put This it landing technical type we a next were turnover Tech, around turnover step RPS's expect shouldn't Tetra they acquisition levels say and way turnover at that circa

through our you grew look in XXXX, that. if at business. And The not next we recession impacting fact is

that. up If look through we you the were at pandemic

this so those tougher the And home is things for the get better employees.

been been their to respect with restricted Now I they think and with they a run they hampered have respect ERP have office. lack single can of in better? back a to system that do

I real-time knowledge understanding project staff immediately accessing substantially across complete of at of immediate to to be think have that to where their decisions-making is with respect systems they management higher of and Tech. access the ability are organization for Tetra made technical percent entire the

one know We're is of We've XX decades move RPS period, to what to two be that just XX-year was into on to another XX-month going and we're on where that -- systems. our five for them. been and or ahead we're I -- going they'll move journey journey to don't

and then And all ourselves, so the will for will of their propositions and help better that clients XXX,XXX delivery provide I think our performance clients which by for collective into result value new projects. better solutions and and

it's So with just not their respect margins higher to efficiency done can the on to to going even that had they Tetra we prior tools and cost, they are what do jobs to be going how better giving drive than existing them Tech. joining the

Michael Dudas

Excellent, Dan. Thank you.

Dan Batrack

Thank you, Michael.

Operator

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

Dan Batrack

our this clients. outcome Thank we thank very and end for respect you and more Thank synergies you call. for as to with earnings being to specific contributions that on the and revenue of have very one have with we much both on clarity more with really projects revenue very the of you look for every the us, Darryl, patience your much

be their us with great going to UK too even week but the I first this operations actually the days call, pleasure more than entire many chance there. I and gives I know went times that, again, Monday probably when in the to left over exceptional. the a had we I closed spend and had many across been XX excited Netherlands, have the Norway, UK, during of us with last

opportunity going had project going the it's in not the Australian do our together initiating already on have across to our first and wouldn't wins. same staff great that will have that day, wins operations contribution. great be just a me visit, the new I'm a had. front I think otherwise are say in going with line we markets. the collaboration I for to it's And we've going And to ceremonial actually it's the Asian

with as tell that we're forward I'm making, the So hope presentation, sharing looking you and that soon and today's to will I can really you as be from progress more details great of Thank the forward only And talking you to you And hope quarter quarter's I next rest away. have a next I week. on this call. look you. XX to days

Operator

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

Tetra Tech (TTEK) 2 Feb 232023 Q1 Earnings call transcript