Earnings call transcript Q3 2023

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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 we'll and provide up open for will overview results, of then 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

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

Dan Batrack

news end much, RPS a up as environment future. fiscal Group, our for see XX% in growth well catalysts clients. you a XX,XXX excellent who We here. just Together, Earnings the X over Donna, on revenue, January year-over-year, morning, were entering thank the have major us rankings to We're which now over high this good and will of record advancing the all With our is working XXX,XXX of Difficulty] expectations quarter. our third we over performance very have very Well, worldwide Call. in that annual staff about water #X We welcome the billion while exceeded drive $X in or strategy year by integrating rapidly decade. different and Quarter year Third with year. leaders an recognized projects XX,XXX XXXX and Conference had our [Technical at growth joined

First, the of of our in and millions synergies with collective we're are the capabilities the benefits Group. client bidding just dollars beginning to high-end new base workforce. Today, realize programs on leveraging we're our revenue that hundreds of RPS of

United to and Second, in increase are the funding see just into pace States, programs put the we contract beginning major the IRA of by in as being water our from place stimulus the see IIJA we climate United United States, watershed third, the increasing spending the geographies in Australia. programs and management change-related And clients. energy, the Kingdom renewable government supply, for of especially commitments and vehicles

Tech, all America, rapidly tens thousands we're thousands of coastal that catalysts at Europe our and platform infrastructure, Our risk impacts Tetra be regions, of estuaries mitigation large-scale expansion have across providing of to assessing of for map margin Australia. miles technologies as our that enterprise. generative to utilizing such Tetra AI-enabled leveraging will by Fusion growth underpinned we're continue all rail tools Delta Tech and lakes, climate-related across and Using systems. here and the we evaluating we're and North We're buildings

Delta traditional the of significantly associated on support increases having headcount. technologies Deployment Tetra Tech increased to revenues our profit continue without add higher in margins to

per our strength our outlook, both share our earnings revenue the net for of and fiscal and for Given performance we're increasing XXXX. guidance year

key followed call today will emerging giving Officer, have. more Chief by our capital for growth Jill I'll outlook who's guidance insight into of that allocation. our of I'll Hudkins, as then increased our both guidance on but provide you Burdick, increased joining move our and provide the all XXXX. detailed to quarter on earnings the we next our who guidance President, fourth overview I'll outlook XXXX Steve forward review year for fiscal an will and give markets. financials into guidance and look I address year But and and specifics on me and provide further Financial we a with performance course, update our an then of begin Of XXXX, that our fiscal our customers,

The Tetra including In revenue high of first our the full being to billion. Group $XXX collective quarter increased operations, $X.XX quarter, with million exceeding already from had strong very our year-over-year the the corporation XX% Tech expectations. RPS performance, the

EBITDA $XXX increased rates reaching the revenues a to Tech our Our RPS the or not these and had record underlying performance across in EBITDA thought even And was increased last growth for the quarter, billion, singly the business. in progressing without XX% advances I earnings And of Tetra of metrics revenue, how attributable double-digit the and share. our in had and income, new high up great Each from very were highs income backlog corporation from were a metrics of third to legacy important quarter board that we've per operating financial this quarter. net highlight contribution the XX% $X.XX of the legacy million record Tech's year, show Tetra with all-time business revenue, last RPS. high up for operation was finally, the that year. it of to

legacy The I'd we're our revenue that our prior generate federal our an XX%, $X without provide faster performing the year-over-year. to business did group XX% by XX% customers, by almost respectively. up which overview fact, work record key each even end from that was of like and now share groups. customer billion, Administration Department. And In EBITDA NOA, USAID income being earnings XX% grew clients, was performance driven revenue up was net up was Tech's growth for Protection by doing of U.S. RPS' and the Aviation as and year, our million the Environmental is and contributions per grew underlying that water programs, Federal especially fastest or such without pace. the with State year. XX% than RPS of at revenue revenue civilian for in The broad-based U.S. Tetra environmental year-over-year. up from The increased Operating last $XXX in the agencies, the Agency, XX% that

were state digital contributions programs. and from United the disaster revenues last was our major XX% growth from Our driven extraordinary year, by all and related infrastructure work State response across local municipal up water regions excluding local metropolitan across States.

Tetra continue XX% driven renewable high-performance commercial U.S. renewable saw and energy, Group's up growth Ireland, to driven and supporting Norway in revenues water the which Our our green be in sustainable combined assessments were XX% RPS by United by buildings to to all net by year-on-year. revenue work programs just work. growth beginning was programs, This up infrastructure RPS growth, last driven from and primarily energy environmental Tech and was Australia. International, synergies contribute largest Kingdom, across the are year.

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

or was XX% environmental very from year. and increasing our our last also federal services digital for by year, by GSG XX% Government driven margin or Group GSG's and XX segment Commercial/International while segment both programs water state segment, grew clients. growth Group up CIG Services year-over-year. in grew in to from increases its broad-based, quarter, The and points local last the XX% First basis

infrastructure. renewable was revenue and revenue resides most driven legacy growth high-performance of the as Brazilian increased well actually RPS, as energy, programs with this the building Now business the addition activities from for CIG of where and

the in of quarter backlog. our areas the strongest performance one metrics Really corporation the was of and

which orders the Our year-on-year And another same by of ending can orders, perform billion. we renewable strong, federal $XXX backlog defines for with contract our programs. speak we Engineers. awarded way it's were successfully Army Hudkins Army contract competed and contracted, million Engineers backlog is million work order the $X.XX a contracting awarded environmental like high by on in will were to including bit very this capacity contract million a won the and contract million go projects third a funded at task We I was note, the over energy last period, Jill restoration while including under In base the and awards including task this would Corps also a multiple up IIJA-focused issued $XXX moments, We U.S. and Tech first authorized Corps its $XXX XX% the significant and in orders, all-time broad-based the today. few from in of year the increasing in work -- more quarter quarter about clients. by new commercial $XXX quarter, for Tetra additional quarter,

work capacity for addition United the that in were programs Kingdom-based awarded to a in water addition led Kingdom States, been just the major In RPS our all awarded contract United to United operations. in company. $XXX the They've great over we the by new were million here

some over presentation over our in now, our to the point Burdick, this go of of Officer, like I'd At Chief to the turn quarter. the financials Financial Steve details to

Steve? So

Steven Burdick

you, Thank Dan.

Dan, anticipated. from So had as matters. flows heard with than results also and to our Those we improvements cash quarter extend an coming related capital you allocation excellent in just better

reconciliation, strong, million. transaction RPS we million, generated costs year. in So as operations cash flows for operations $XXX up from including XX% $XXX outlays over And totaling was cash certain from last included was the

In in addition, debt we paid down of the quarter. $XXX million

our to an has industry-leading prior outstanding managers flows and and work This DSO low DSO slower higher-quality end relative project is satisfied highly XX our working that from all-time all in of and the for reflects Our broad geographies. maintaining Tetra a Tech portfolio continues our of across the and years, all focus capital standard in trend that sustainable our resulted of markets and the improvement on our cash clients days. record projects lead

in our per dividend approved quarterly dividends Board dividend consecutive that of our of is year double-digit dividends I quarterly Regarding for year-over-year and XXth for quarter. this share increases the of want paid. we million And program, announce $X.XX $XX consecutive in This our dividend quarter. out paid to ninth Directors our our

current RPS just of X projects talked financial the been RPS, well Tech. which was of is in and term Tech and Tetra our RPS I'd integrating to the status Tetra has significant the like people going the integration plan acquisition, closing Now of our as ago, together. update which to regards for months quite over for long Dan and about, you recent opportunity a on And over

by accomplished as XXXX. looking out for 'XX over Coffey from acquisitions, X XXXX when WYG X% by be in we and Xx had XX% in previous done XXXX. So EBITDA years, in over we to This our similar margin X will fiscal actual to expect our under public in to with manner RPS a what the almost fiscal company next increase

those And to Tech services the our systems by high-end joining while platform current increased Tetra synergies, onto corporate our system and revenues from the focusing about margins breakeven for on for business levels. double-digit the Tetra we'd and differentiated businesses ERP cost to greater prior integrating Tech

months, integration result as X the as first relative So further ERP the These financial the onetime we fourth RPS, actions synergies and significant will cost to space system synergies that office in the will costs to provide RPS increased quarter the through long-term now realized transition cost in operating well benefits our onto both additional expect we've business. consolidations. of ongoing to in realize and business additional

date, positive team revenue and increasing are So balance joint cash improved compared opportunities delever Tetra cash far with from these margins profit our original to through the along we integration operations, Tech's projections, efforts levels sheet. on to flows, to of strong seeing And we leadership our our based synergies. continue with improved to flows RPS and margin expect RPS

with leverage acquisition of exceeded target we leverage. were RPS more projections debt our levered end have above the net high our temporary Although close highly we reducing on our a the ratio range, initial at the of

a about We to expect ended the a would sheet we of further and about third of this leverage X.Xx net X.X to quarter delever by at end the the factor balance multiple, year.

the accretive, And while we consider company. interest of increasing to financing the would XXXX. these approximately continue $X.XX $X.XX EPS fiscal benefit on net existing we the cash capital to adding for estimates structure decreasing long-term be lower by 'XX margins, but EBITDA fiscal our And and expense on in are arrangements the based in expect alternative of approximately so debt, on

pleased that EPS areas. the now to will to addition and QX our is at to XXXX, by accretion of call many these as Thank our results the the just provide continue with we had we our of market few to we of will time which stated Jill? discuss share So double-digit what support. opportunities previously I'm result in for that have you. acquisition. expect business RPS I strategic And over your Jill a in core you and hand

Jill Hudkins

Thank you, Steve.

markets IIJA across were programs examples control passed few and infrastructure U.S. share agencies distributed is wins Tech's and federal and We for driving of will Corps established just funding funding been the development eagerly wind. and XXXX. to funding of ramp-up. U.S. out have indications I'm programs. Tetra energy. incentives Tetra record renewable being Tetra this money federal track well Kentucky Tech Tech the stimulus of in that a and that demonstrate the decade-long the earlier was IRA This water, And all core early from We awaiting sustainable rolled XXXX delivering to excited structures resulted Engineers be Tech's Army flow federal of project beginning water flow of environment, industry-leading successful once-in-a-generation in process navigation federal summer. program. funding America Lock chips offshore for awarded are the new Tetra recent to

PFAS just million significant IIJA $XXX to state support mentioned. Dan water selected Corps their The Tetra first Engineers management funding support funding drinking received that IIJA to Dayton supplies. that the federal high-end under Army impacts mitigate Water task through provide the contract of water provides The consulting the of Ohio. and also program, order of IIJA which awarded to projects PFAS Tech state

of California. early wind offshore award and both renewable Act providing program wind in floating in floating a Tech's incentives for energy, Coast Tech benefit support our major Reduction a wind Tetra offshore The development that of Tetra global expertise funding power and the Reduction project inflation tax Act. from ranking #X the of scored the will provided is permitting inflation will incentives in X-gigawatt

we the and is identification that see our contaminants emerging Another developing billion programs in of supplies. treatment of nearly water $XXX

innovative and for #X in XXXX. ranked record for decade. has been since water water Tech Tech Tetra a in XX water in provided company's solutions Tetra engineering the founding full has treatment #X news years by

just contaminants leader, our industry pharmaceuticals. U.S. few emerging our than has PFAS Tech examples facilities. the water more in a Tetra in clients. of microplastics at water and I'll key for is programs Tetra work for million $XXX addressing Tech a you As PFAS, investigation of forefront give performed military in

some the country's treatment exchange designed the also treatment ion facility including highest has plants, PFAS country. Tech of municipal water Tetra the water profile largest in

clean ocean USAID's program, cities, Our global is $XX project microplastic Ocean supporting management. million flagship Blue plastics and advancing

And Chesapeake the multiyear the U.S., our Bay Watershed. with for has actuary EPA provided microplastic risk the work the largest U.S. assessments in

presence the remove. to residuals in emerging water, are which challenging of Another issue pharmaceutical is very

multiple an For Oceanside, California, Tetra addressing facility emerging advanced Tech recently completed other water contaminants. treatment delivery and pharmaceuticals of

And Here clients to system at of we back with Tech, are working Dan. to Tetra presentation one and turn future every upgrades our water like I'd regulations. to anticipate the address now to needed

Dan Batrack

guidance guidance you our quarter or I'd guidance of like for fiscal with provide entire our guidance fact, to for our fiscal for of consolidated in year updated for XXXX, a Thank fourth much, begin fourth outlook very Jill. quarter. I'll for the and both increased for Great. XXXX. all our the year

contributions and RPS. legacy of is the operation consolidated Tetra the for guidance both Tech This for

slide legacy you're revenue down I'll from investor your the for for RPS, contributions operations use. you'll both and our are the broken but guidance see providing both for We've actually numbers earnings fourth If share following our the be year. along for the quarter full and the deck, and per consolidated net on

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

updated billion $X.XX we of increased our of guidance is with both net billion to to the per year the for follows: earnings $X.XX. share net projection and a For share guidance earnings range and as the $X.XX entire $X.XX associated -- of an per revenue and XXXX, revenue fiscal have for updated new

highlight If you are slide on along few of assumptions. can the see presentation, I'll the following a you these.

it This acquisitions the year transaction with the shares does of for of the guidance any also the rate future does associated exclude RPS year. outstanding. the and excludes does intangible diluted amortization acquisition. that and that's end integration in into Our annual the tax incorporated now RPS, million make does $XX the average fourth guidance. $X.XX fiscal It or associated and just only from would $XX that exclude XX%, include expenses amortization include single with just million It of between contributions effective already specifically intangible quarter we

seeing differentiated net infrastructure. operating EBITDA, of proud, we're water, financial sustainable high earnings I've summary, set our rapid and environment actually metrics, highlighted, exceeding for with is it's with revenue, integration leading all metric In science great has all-time quarter We demand RPS our strong backlog. the very think as third In share. looking really in we our new as quarter, expectations. feel income, and on, of commented per records revenue, key had did an approach of a And the already Steve with course, forward we high expectations. The we ending very

And contracting leveraging and rapidly quite and we're sure, new so we amazing. to was capacity more and have for opportunities services client our actually to services new to exceed that offer than work expanded And before. our combined base had for

just And increased ever brighter looks stimulus U.S. entire the to programs future with beginning climate and be base, before. commitments across client change our than our from released funding client

our performance our result and pleased have a shared strong as to I we're backlog, net with So guidance record increased you, earnings both as for just per high revenue our and share. of year-to-date

for with open that, to up operator, questions. I And you the Donna, would call ask

Operator

of Today's question Markets. coming going Instructions]. Capital is first be KeyBanc to Sean Eastman [Operator from

Sean Eastman

Team. Nice update here.

to range episodic hear would I material or place out. a quite be a guidance for So quarterly EPS. didn't I called extraordinary the start anything thought good beat versus

quarter. the just momentum driving on some thoughts high-level in perhaps what's So the here really

Dan Batrack

in a of whether work respect extraordinary an unusual in unexpected that not great not to single contributor, or ago had Ukraine, Sean. didn't for The second area quarter, from USA contribution specific beat hear with a the question, we quarter any case. was but the a That's you --

driven beat or USA the historically individual had or disaster any of Ukraine by So work in other specifically fire response because not significant this -- was location. quarters contributions in We've hurricanes. from a floods, one the

some an actually because actually driver project market calls in quarter the receive not saw was it and few was exciting smoke in it broad-based. going us. not performance across I ash that were and say a markedly a unexciting north, very our we questions here actually our of markets. Canada. in high did observed around end it We fires really because is I a in that we of was, It a it for the up No, was the U.S., that here, but some performance I've be certainly an to ways, up as characterize was from had would the in all board quarter opportunity.

growing. a see not and XX%, we've compared been really few back XX%. on at you local tell I'll our anything big to up areas it to I were Historically, And our up a we've -- up nice, to say It's there was quarters, at sort pick is was it of standout That see to growth. rates. its year-to-year in certainly glad I would between well above you Last And I to was to pleased state XX% local work much see at glad but guess, but that was not was state to else. I it I really little XX% better, mid-teen that seen was but bit are few others, a XX%. and done want and business. actually if say standout

really talk board. defense. course, work, major XX% segments. what growth government drives We X the We our about in growth. talk Of about it's across XX%

talked when We talk AID. agencies we about about civilian

but call was it was U.K., up as But that the Tech that out course, X%. Canada called slide it were the slightly digits, we across X Australia Civilian That's as I all want we so RPS we called And had the our in board up, up. we at more upper not why out they contribution, the in and Now of mix. business only out. really, in part up it was were internationally the did single areas. Tetra all was Works international, to underlying of

effect in international we double a that on taken internationally the U.K. like digits. international was the little and the numbers slower the you've if bit real commercial of in was But into headwinds development short their in up some Australia work that work. of well had some The infrastructure was into development and places

wish So the that up, was area could was there board. across say I was but particular performance I really it one

going single not Although we hit we can still cylinder. on do to better. I'm say every

Australia, of to I nice As as been our international assignments development out we've and some project Australia. orders had far some work really revenue mentioned, although with come U.K. stronger have could of respect of the out as forward-looking

would So stopped I there something think that to long. we're it's that don't indicate going that for be

a kind that's good board long-winded the here Sean. quarter, So way I of of in the things pretty across guess look

Sean Eastman

And That's exchange year sort at that's growth. I terms That's mid-teens net look the work pull of and in the year though the suggesting think great, last order just if do roughly is as it seems then pull for momentum seems Dan. And revenue this what new the It trending headwind accelerating. everybody we're organic growth. of underlying in you're this episodic wants -- out I year, hear. and sort calculations to foreign some out adjustment of organic

does should of I mean, So Dan? feel growth extrapolate can be what of from pace that, sustained? it this we kind like

Dan Batrack

the XX% indicator over million up. because sequentially. drove of on going order also that about and driven I'll good that on backlog growth, now. at about best coming say by really feel really on also I we're year-over-year share the area. of we're where growth no that say I wasn't $XXX any was revenue it's there or guess earnings that which is about I single true increase per to Well, was talked our big revenue I one be -- where the beat

guidance, organic fourth of Now will talk the in our you'll included if mid-teens. and what midpoint in the I our about guidance the see for you take quarter, growth we've we're

to this organic slightly mid-teens point, posted and our with that than earnings. on respect right our So growth sort to up what better on we revenue of you're

the that included guidance quarter. We have for fourth

into I'll I year think from would Hudkins are insight specific XXXX. numbers directionally, look into But few I but And only on a that call. would markets do going areas specifics in any say Jill strong, on to But don't want say, from from anything there's I I'm or the I a these economic good some provide things the going very and our I away away, XXXX. change know geographies of stay to next forward. looks provided in we from material that see we're contribute. that fiscal an like days it's XX clients outlook as we're moving

Sean Eastman

one to going I'm Okay. sneak more in.

Just the in mix, RPS relative quarters. the it's X sort to business, X quarters, of been

indicated You particular ahead outlook better-than-expected have it's the RPS. is walked quarters investors communicate the of Perhaps to plan would now in gate the what you in X kind driving results a tracking out row. of of up from here

Dan Batrack

very we closely within consulting not Tetra culture very that much are that at shop are in They're Norway The the that front-end alignment are in the Tech. I RPS reasonable detailed attribute culture. of a Australia, really the in presence serve But areas in it's the excellent an Ireland it They they Holland, and have providing with all, value, Netherlands. I designers would not say Tetra are high-level drawing. -- workforce. They're final Tech. primarily well, commodity to services really They experts is aligned they first providers. with U.K., what course, doing of also have

to just I with actually a early overall being doing cycle even Tetra the quarters. would Tetra the for months, process. from say amazed want had now project the talk thought a review. couple before advocate of comes and conceptual about very Tech. I'm and Tech alternative identifying was life high us I that in so RPS I And X having vertical a level, at them in

us, RPS infrastructure they Works, climate of life their some I is in the with in much on advisory Department work that work think the actually Australia. they for than advocacy Public work, political different Some you cycle and could renewable certainly earlier their regarding how change but of and would is bring in very parties advisory do complementary. energies does go work that particularly of didn't prioritize

where new whole a think clients specific up aspirational And and this at this of is it teens, opens part, want given the Tetra past the opportunities. put numbers I calendar high my it think It moment. project that Tech. I approaching up to They've set we're could But data in in had I and go, margins that don't the of on XX%. spoken that very their similar. Tech And with culturally, historically had RPS colleagues, alignment than think have I higher Tetra I

And to being or certain think think being I it's why and going quality, seen their that's best-in-class backlog a I've disruption that little on And up. up. and a has workforce those the with performance their leader on priority I the very folks the degree, that to seen well we've with respect very that client-facing going RPS some are -- I project have. technical us. no seen of about quantity, think facing. I've not aligned seen I've

which Tech a Tech I'm colleague me at more the welcome how stand in let and Tetra So, next company. here to level, higher to even do it than show the Tetra

Operator

coming The of from question Andy is Baird. Wittmann next W. Robert

Andrew Wittmann

Tetra talk Tech Great. This years. not at the Delta. Tetra about thing wanted is Tech I a to last new in few

understanding every I bet benefit in at this a bit little mentioned like myself probably detail. conference I But You feel from would call. others and more

Maybe an you kind bit contract the to with bit employ I a its giving Dan, rates. little what example . contracts? what it's its these kind talk just of you talk give as business? expect just how for don't of business us Tetra we sense maybe margin Or rest is little and about investors company relevant, it own even extent profile in that that were its existing able compares know from contract, future. larger a maybe and if to Tech is So growth analysts really the solutions or could can to of better it this a the about more about intertwined can to Delta the -- of

Dan Batrack

Andy, really Tetra Tetra you, Tech. the one about Tech I'm of the tell areas here Delta I'll excited at that is

the with have the the of those from me I For came house. over years, side that up worked technical

tools Tech off in always we've -- in a used. delta that differentiate models and We modeling tank, the as has been research us Tetra the Tech Tetra the use And these used delta, encompass to think which I to Tech as development it's we collection see a well, had internally the that has think its we've the leader Tetra of origins. marketplace. the started that really

paid give federal of We have the through then tools enough, and locals have research dollars fact, the the the work. best-in-class and for used years in science been of be we've they out grants, by over that a really hundreds work. you origins developed to of the that on Tetra world perform government, And deployed that the to at technology if their and you'll through deep government engineers of dig that technical state bunch underlying that federal we've can the Tech millions scientists become find

as did communicating So work all the Tech tools the of that the is publicly far our are as in Delta start embedded provide. Tetra we

or It actually determine erosion can heat sensing of remote green and loss, walls have sorts we do do dollars type to as people allows and reconstruction and seen do. now preventative sequential and XX X do allows and identified or It put XXX actually to walls, remote sea things technologies more all heat islands in days work tools technology such artificial would rates damage and XX have is diversion can on take can to sea to buildings such through cameras or take that us less to we So maintenance. place. what of operation erosion years as transfer, be that can bypasses people It assessments comprehensive for new our be for where XD clients. then costs be work normally

X% all so typically it's It has up So that moved between anywhere where used X%. points, projects XXX on of basis to is XXX been to our exciting. margins our

tools. XX% making XX% making So XX% if between we're now we the by just to using were before, somewhere

those of they or XXX Now if different located get Dallas, XXX tools, whether we internally. Tetra England. Australia, every not Perth, access to or have Leeds, about they're in client one Texas hires tools Tech, a And

kind and most that's particularly in like clients. tools. in way. basis competitive so make a company project I #X, competitor actually clients. for the love selected we profits for a I exciting of our Now on using love the how the yielding XX% us me, it technically, have but cheaper, it our doing that can can being we it win best geeky better, that to being come part I I'm a cheaper and than these and faster

part that So about, that's I'm levels like. I still or probably most the X can the and this -- I'm X myself. contemplate But what excited is still a part I beyond

of millions measured on This we market unfortunately, that size AI I'll experts generative here place where it Tetra is have that several company using But employing actually and we've are in this. putting the in go actually years dollars for to this. now. in been We're a It's dollars. now Tech this people on few in

We and are without provide when in sit can Tech you subscription. there. the them or clients I we you customization. the some clients and can sell us without that it call that get do be Tetra things think can a Delta do to to that lease there. our things where our combination can the our use But them don't clients can we of having need them us They input. There's tools or actually give come it, using

It's $XX revenues it's Tetra and think generated somewhere it's it. million, quickly. generated where I quite Tech somewhere growing is with probably it's without program revenue associated That -- labor and

gone -- from doubled it water, and promising environmental part referenced Tetra licenses that the platform such this, actually I we where thousands to it is being think seems me that for bases and to for without here collective infrastructure And the has at actually clients to use asset of And well for We is of Tech Tetra as can doubled. to here It person there. generative this over XX, AI railroads. and large a is last I a generative so what's again miles this most X XX. sustainable year track the Tech. sell number managing refer I the

encroachment, call we time or or damaged or or officially of vulnerable as this, waterway because a satellite, railway be we water or would give else time. near impairment potentially through actually exposed other systems use it Can real anything actually, a of flood LiDAR or real that vegetation of

DOTs. We currently. only issued to by is X,XXX to X with here of or state DOTs measured X adopted are and number current in clients our these thousands have somewhere X,XXX being this several of licenses currently we It's The United States. the of between licenses have

look the our users to goal have X having been for the or really years. I'll you AI a Current come X financial complete we portion. the probably million. included next by that million took If a of -- is here $XX over X to way, this back degenerative daylight hesitant in size internally, I've

Maybe revenue AI The programs XX%, small one the up we're best not incremental of come And and $XX the that on the sufficient many think exciting. our we're subscription I think subscriptions, generative that that of science is actually experts margins It's track gross all incremental the But technology we becoming on, in of the software and of it things detail recurring the a model. going customized the XX%. that at We're are margins most this with renewal there's that bring portion other company. becoming this is cost application at but are And that and it's U.S. be just scale have It's XX%. with rates technology for I this clear need But anywhere actually very that and happen. revenue, operating to to on but as are once not going SaaS in to reinvestment. people the is bring a disassociating AI, world. in a meaning going that no to the adding something going make bring hire million, the margin. we're disclose only to has north the seeing sufficient system. CAGR only that's those We at can it we gets margins to more have leverage domain

Andrew Wittmann

and little a comprehensive the talk marketplace? quarter more question, the I compare seeing That in was inside just that put before. discussion. Are the the about backlog a margins I there movement how demand bit that you appreciate nevertheless. to mundane in of but was you you've any may that, backlog Dan. overall the important, were they given the could during the hoping trends margins in here Maybe

Dan Batrack

would you I -- say interesting. out yes. begrudgingly We about Yes, we talk us hear margins. -- gross don't call it's

I'll talk people and where is margins cost. I've G&A pocket So trick margins Because overhead they thought then operating the count always call don't gross just embedded it. in actually a about

So to actually I margins. operating like to go

and on So XXX -- higher I and it had work XX delta AI out typically sort separate is to discussion doing. the just basis of generative the points we're the

power very it has higher. of So pricing is doing that we're work It fast because be is tending it actually that is done. is high to the of some track some -- very demand,

pricing So kind there the is of mix. rest some power. is of But it

more that are end. of in leverage, the lower have having being We to some are work the we that might moving high or lower actually and taking considered the company commoditized be we

includes we the RPS a of marketplace through higher And I combination advisory the And ability others. finding so with think and work some of we pricing that talked that mix. are about moving a and end some just to in

the we a there burn will our in So have. off backlog And in embedded higher backlog is margin year. it's typically

XX% another slightly go I beyond that. would in year's of next revenue the we think say XX% is have. backlog we

backlog. short-term it's So

increase talked we've just And that backlog about and booked. expansion so our be would that year-over-year a margin we've reflected that increase basis that in XX points

Operator

The Vertical Partners. from of Michael next coming question Research Dudas is

Michael Dudas

still getting Tetra at the about higher RPS over comment Tech. I'm with margins

or the challenging really sure. expiration the folks at You're least now Tetra teams Tech for

Dan Batrack

a And little need the folks. morning. in myself to I true. Tetra the in put I'm that's bucket earlier wondering No, the I of Tech get up

Michael Dudas

been of like appreciate revenue activity -- very say. above-average of Couple Maybe side? that. some of you tools out share fits across and the your there the that has better noticed Is it in And booking especially there it kind renewable for say, thoughts. I in and, much growth with well Canada. water mid-market Excellent. seems overall opportunity market,

Dan Batrack

has been very up Renewables strong there.

a We've well cities gone has say you'd I'd infrastructure As our more in and us. seen some area really that provincial to large spending the for of the Canada, if it's infrastructure say there.

focus. for don't with a I the we're to Of of coming and want there's of which infrastructure of out rail. activity means item, been There a negative to floods there on that rail side. some have associated a course, of but items, other this economic Canada, lot working lot been have some a glad majors been high be and make derailments on

tools and other very of RailAI about, a been we making busy that's It we us. So digital programs of of use that. have the including for number talked is some like

has issue. a So been water big

the you Canada, about when days, that last think XX about -- the East. fires you I Columbia in talked least you both talk at British and

do So protection that looking of we at areas are we're course, environmental for those of for habitat restoration, work for watershed.

is Canada So I to of very about doing Yes, Canada Is well. broad-based. doing back earlier go kind well. my comment

of to The from sending renewable us a energy Tetra's I'd very our strong, the has other our But you this other the years X specialized that years I is high-voltage will kV more me well that engineers where a $XXX to be but to capability Canada, across ago, tell it specialized area and I'll say XXX that's board. well XXX one prominently would X geographies matching at later the engineering. bring are I technology. we high-voltage to that Canada I've and that particularly chastise talked transmission have accolades XXX done market over people It's very can geographies up. engineers ago, and the out that relative engineers. the here about have, if to before. even this It's typically sources. hoping glad was electrical expertise really up. to more But are even you U.S. coming I'm know over give have high-voltage work

are sitting interconnect the it's Every where have local don't be single them more to people used of path location offshore out you and of in transmission an have to for to wind -- in off some actually one because the ocean. even true with the most the have beaten factories

push then that interconnect green the and do it the carbon onshore can complete used the both transmission, grid energy into So reducing to have you have the to being you and so footprint. really

that's for could is the for Ontario team, expertise above management performance our a really of put Canadian group, primarily And excellent board. us. under actually us, strong leaders, something work coming across of an So that us, that technical differentiates even be out Canada, fantastic and that great out the I outperformer that

Michael Dudas

fiscal far thoughts. certainly in about appreciate your and geographics. broad-based -- I those guess The XXXX. be, would second success talked strength follow-up my so question year I you amongst And question segments

do to As would pipeline booking opportunities in to rate the what better you continued I plus to kind And than would Andrew's those X you of growing margins see look you've the look are certainly say, looking and revenue to, in book in leading XXXX. question, certainly, book-to-bills as been somewhat range response as you're business? at talked pipeline, you you of that XXXX, similar in to into that about ahead new year-end similar

Dan Batrack

much that not wins. is to broadly, about from to is that too one we most the I'm and item early the a too would being passed the we've programs? caution I what not attention, conversion And talked the one the stimulus program Well receives infer glad the to to and of and it actually the see slide, her converting the bill Jill on thought timing coming magnitude say that key highlighted revenue U.S. of highlighted of I what's out opportunities Jill

put see So U.S. program million. she I saw programs place. using glad $XXX the spoke both win being contract vehicles. in she regarding a is I'm other Engineers that is of a of mentioned you that key really to They're City And Corps Dayton, and as

into -- revenues contract the is backlog now 'XX. in allow seeing than work X, our with we so I capacity are going what's think And XXXX. be what will contracts. new come it book-to-bill at I capacity into when go go actually increasing question, contract or that other think will ask we're going through I the as greater first coming think to or to But now contribute going to even task into to things what's That's you is ramp out high? orders. So the revenue could there going orders from ramp

and factor will actually For into their us, million. dump $XXX They'll do others say backlog. that some

of task you've let you've don't going it it count count and and only I'm after amount order We you've do get We it. just us a authorized work. funded think the that. to do it, I to given us x me and

it something So and for will exist. authorization funding. watch the the say We'll count want translate that us, given it others to you'll than a I account who little both doesn't they've slower us when

backlog the for to that our the on 'XX. into that change believe renewable also So margins to it work but energy translation carries commercial do higher I begin overall. It's will allow pick commercial yes, climate to as move not up And we government clients. we're doing and just

Operator

Batrack At comments. this . time, I over would Mr. like to floor closing to for back turn the

Dan Batrack

good here, moderating for turning individual only not I for very you hope but did I as the and we the hope Great back have to have high coming in exceed to it thank questions. everything points that else. Well, questions. quarters performance Donna, much,

really of do even XXXX. fiscal year. have weeks for a highlight And that finish we're us, -- outlier weeks to I XXXX for we're strong this on end in looking October fiscal away. really an away, guidance to is a that about on. time it's forward spend and to our X I even year our U.S. know we getting the So X, close to that I'm X something really know be year. federal would starts more so calendar our something is providing only looking to forward I'm

-- I've among us these Tech into hear the legacy be you Tetra Tech. details different RPS, and Tetra will talk about than up is it broken it RPS last not times the think I because

X We've so together. within but company will I legacy guess and are track the that to But strong, you, We it performance we the company. I one provided of the of are underlying call detail. RPS. We're think same, tell working been want our I I I'll contributions company, the the has and

opportunities collaboration, synergies, more revenue have more We together. more

and to to number, talk us that, very call, XX we great with doing one and for Bye. we And you day together quarter performance. I'm presenting next set one into thank you for the as I on I forward as a looking And one much think to and I'll are future of in of 'XX, this move company, roughly you you what days. all in rest investors joining quarter's week. hope have excellent

Operator

today's participation. and Ladies gentlemen, your thank This you for event. concludes

day. may rest You and of at lines time, this your enjoy the the disconnect off webcast and your walk

Tetra Tech (TTEK) 10 Aug 232023 Q3 Earnings call transcript