- Record Quarterly Revenue $1.34 billion, up 11% Y/Y
- Record Q3 Operating Income $129 million, up 32% Y/Y
- Record Q3 EPS $1.59, up 42% Y/Y
- Record Backlog $5.23 billion, up 19% Y/Y
- Increasing FY 2024 Net Revenue and EPS guidance
Tetra Tech, Inc. (NASDAQ: TTEK), a leading provider of high-end
consulting and engineering services in water, environment and
sustainable infrastructure, today announced results for its third
quarter ended June 30, 2024.
Third Quarter Highlights
- Revenue increased 11% Y/Y to $1.34 billion
- Net Revenue1 increased 12% Y/Y to $1.11 billion
- Operating Income increased 32% Y/Y to $129 million
- EPS increased 42% Y/Y to $1.59
- Backlog increased 19% Y/Y to $5.23 billion
- Industry-leading DSO of 54 days
- Cash Flow from Operations of $141 million
- Net Debt / EBITDA reduced 34% Y/Y to 1.15x
Recent Key Wins
- $439 million for expanding energy resiliency through
innovative solutions for diversified generation, delivery and
storage of energy in Ukraine
- $73 million to increase energy resiliency and support
sustainable infrastructure throughout West Africa
- $65 million for disaster preparedness associated with
impacts from climate change and rising sea levels across vulnerable
areas in the Asia Pacific region
- $64 million for supporting sustainable land and
infrastructure systems including water resource management and
irrigation in developing countries
- $56 million to design advanced water treatment and PFAS
removal solution for a new facility in Virginia
- $54 million for sustainable infrastructure programs
addressing climate change adaptation in Southeast Asia
- $35 million for assessment and restoration for water and
environmental impacts associated with fire recovery in Hawaii
- $32 million for investigation and evaluation of
contaminated sediments within the Anacostia River in the Potomac
River Basin
- $27 million to assess and design water leachate
treatment solutions in municipal landfills in California
Executive Management Comment
Dan Batrack, Chairman and CEO, commented, “Tetra Tech continued
our strong performance through the third quarter with increasing
demand for our high-end water, environment, and sustainable
infrastructure services, resulting in record quarterly revenue and
an all-time high backlog. We continued to grow our services for
front-end advisory and consulting work, resulting in the expansion
of our margins in GSG by 60 basis points and CIG by 230 basis
points over the third quarter of last year. With increased
profitability and record backlog, we are raising our full year
guidance for net revenue and earnings, which represents forecasted
EPS growth of 23% for fiscal 2024.”
Quarterly Dividend and Share Repurchase Program
On July 29, 2024, Tetra Tech’s Board of Directors approved the
Company’s 41st consecutive quarterly dividend at an amount of $0.29
per share, a 12% increase year-over-year, payable on August 30,
2024, to stockholders of record as of August 15, 2024. Tetra Tech
has $348 million remaining under its $400 million share repurchase
program.
Five-for-One Stock Split
On July 29, 2024, Tetra Tech’s Board of Directors approved a
five-for-one stock split of the Company’s common stock. The split
will be effected through an amendment to Tetra Tech’s Restated
Certificate of Incorporation, which will result in a proportionate
increase in the number of shares of authorized common stock. The
stock split is intended to make shares more accessible to a broader
base of investors and enhance liquidity in the trading of the
Company’s shares. Each record holder of common stock as of the
close of market on September 5, 2024, will receive four additional
shares of common stock. The stock split is expected to be effective
after close of trading on September 6, 2024. Trading is expected to
commence on a split-adjusted basis at market open on September 9,
2024.
Nine-Month Results
Revenue for the nine-month period was $3.82 billion and net
revenue was $3.18 billion, up 17% and 18%, respectively, over the
same period in fiscal 2023. Operating income was $357 million, up
43%. EPS was $4.40 up from $4.10 for same period last year; last
year included a one-time gain from the integrated FX hedge which
increased EPS by $1.23.
Business Outlook
The following statements are based on current expectations.
These statements are forward-looking, and the actual results could
differ materially. These statements do not include the potential
impact of transactions that may be completed or developments that
become evident after the date of this release. The Business Outlook
section should be read in conjunction with the information on
forward-looking statements at the end of this release.
For fiscal 2024, Tetra Tech is raising EPS guidance to range
from $6.23 to $6.28, an increase of 23% at the midpoint
year-over-year, and is raising net revenue guidance to range from
$4.27 billion to $4.32 billion2, an increase of 15% at the midpoint
year-over-year. Tetra Tech expects EPS for the fourth quarter of
fiscal 2024 to range from $1.82 to $1.87 and net revenue to range
from $1.09 billion to $1.14 billion.
Third Quarter Earnings Webcast
Investors will have the opportunity to access a live
audio-visual webcast on the Company’s Investor Relations website at
tetratech.com/investors on August 1, 2024, at 8:00 a.m. (PT). The
webcast replay will be available following the call.
About Tetra Tech
Tetra Tech is the leader in water, environment and sustainable
infrastructure, providing high-end consulting and engineering
services for projects worldwide. With 28,000 employees working
together, Tetra Tech provides clear solutions to complex problems
by Leading with Science® to address the entire water cycle, protect
and restore the environment, design sustainable and resilient
infrastructure, and support the clean energy transition. For more
information about Tetra Tech, please visit tetratech.com or follow
us on LinkedIn and Facebook.
_______________ 1 Non-GAAP financial measures which the Company
believes provide valuable perspectives on its business results.
Refer to tables in the Regulation G Information for reconciliations
to the comparable GAAP metrics. 2 Reconciliation of the net revenue
guidance to the most directly comparable GAAP measure is not
available without unreasonable efforts because the Company cannot
predict the magnitude and timing of all the components required to
provide such reconciliation with sufficient precision.
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These statements include, but are not limited to, statements that
address our forward stock split and the use of words such as
"anticipate," "expect," "could," "may," "intend," "plan" and
"believe," among others, generally identify forward-looking
statements. These forward-looking statements are based on current
expectations and beliefs of Tetra Tech’s management and currently
available operating, financial, economic and other information, and
are subject to a number of risks and uncertainties. Readers are
cautioned that these forward-looking statements are only
predictions and may differ materially from actual future events or
results. A variety of factors, many of which are beyond our
control, could cause actual future results or events to differ
materially from those projected in the forward-looking statements
in this release, including but not limited to: continuing worldwide
political and economic uncertainties; the U.S. Administration’s
potential changes to fiscal policies; the cyclicality in demand for
our overall services; the fluctuation in demand for oil and gas,
and mining services; risks related to international operations;
concentration of revenues from U.S. government agencies and
potential funding disruptions by these agencies; dependence on
winning or renewing U.S. government contracts; the delay or
unavailability of public funding on U.S. government contracts; the
U.S. government’s right to modify, delay, curtail or terminate
contracts at its convenience; compliance with government
procurement laws and regulations; the impact of global pandemics
like COVID-19; credit risks associated with certain clients in
certain geographic areas or industries; acquisition strategy and
integration risks; goodwill or other intangible asset impairment;
the failure to comply with worldwide anti-bribery laws; the failure
to comply with domestic and international export laws; the failure
to properly manage projects; the loss of key personnel or the
inability to attract and retain qualified personnel; the ability of
our employees to obtain government granted eligibility; the use of
estimates and assumptions in the preparation of financial
statements; the ability to maintain adequate workforce utilization;
the use of the percentage-of-completion method of accounting; the
inability to accurately estimate and control contract costs; the
failure to adequately recover on our claims for additional contract
costs; the failure to win or renew contracts with private and
public sector clients; growth strategy management; backlog
cancellation and adjustments; risks relating to cyber security
breaches; the failure of partners to perform on joint projects; the
failure of subcontractors to satisfy their obligations;
requirements to pay liquidated damages based on contract
performance; the adoption of new legal requirements; changes in
resource management, environmental or infrastructure industry laws,
regulations or programs; changes in bank and capital markets and
the access to capital; credit agreement covenants; industry
competition; liability related to legal proceedings,
investigations, and disputes; the availability of third-party
insurance coverage; the ability to obtain adequate bonding;
employee, agent, or partner misconduct; employee risks related to
international travel; safety programs; conflict of interest issues;
liabilities relating to reports and opinions; liabilities relating
to environmental laws and regulations; force majeure events;
protection of intellectual property rights; stock price volatility;
the ability to impede a business combination based on Delaware law
and charter documents; and other risks and uncertainties as may be
described in Tetra Tech’s periodic filings with the Securities and
Exchange Commission, including those described in the “Risk
Factors” section of Tetra Tech’s Annual Report on Form 10-K for the
fiscal year ended October 1, 2023. Readers should not place undue
reliance on forward-looking statements since such information
speaks only as of the date of this release. Tetra Tech does not
intend to update forward-looking statements and expressly disclaims
any obligation to do so.
Non-GAAP Financial Measures
To supplement the financial results presented in accordance with
generally accepted accounting principles in the United States
(“GAAP”), we present certain non-GAAP financial measures within the
meaning of Regulation G under the Securities Exchange Act of 1934,
as amended. We provide these non-GAAP financial measures because we
believe they provide a valuable perspective on our financial
results. However, non-GAAP measures have limitations as analytical
tools and should not be considered in isolation and are not in
accordance with, or a substitute for, GAAP measures. In addition,
other companies may define non-GAAP measures differently which
limits the ability of investors to compare non-GAAP measures of
Tetra Tech to those used by our peer companies. A reconciliation of
these non-GAAP financial measures to the most directly comparable
GAAP financial measures is available at
tetratech.com/investors.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240731929572/en/
Jim Wu, Investor Relations Charlie MacPherson, Media &
Public Relations (626) 470-2844
Tetra Tech (NASDAQ:TTEK)
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