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Press release from Business Wire

Tetra Tech Reports Strong Third Quarter Results

<ul class='bwalignl'> <li class='bwlistitemmargb'> <b>Net Revenue exceeded guidance – up 30% to $481 million</b> </li> <li class='bwlistitemmargb'> <b>EBITDA up 29% to $53 million</b> </li> <li class='bwlistitemmargb'> <b>Operating cash up 128% to $56 million</b> </li> <li class='bwlistitemmargb'> <b>Diluted EPS of $0.38 exceeded guidance</b> </li> </ul>

Wednesday, August 03, 2011

Tetra Tech Reports Strong Third Quarter Results16:57 EDT Wednesday, August 03, 2011 PASADENA, Calif. (Business Wire) -- Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the third quarter ended July 3, 2011. Third Quarter Results Revenue in the quarter was $673.8 million, up 19.8% compared to $562.4 million in the year-ago period. Revenue, net of subcontractor costs1, was $480.5 million, up 29.8% compared to $370.1 million in the year-ago period. Earnings before interest, taxes, depreciation, and amortization (EBITDA2) were $52.5 million, up 28.9% compared to $40.8 million in the year-ago period. Operating income was $39.4 million, up 20.5% compared to $32.7 million in the year-ago period. Net income was $23.8 million, up 15.5% compared to $20.6 million in the year-ago period. Diluted earnings per share (EPS) were $0.38, up 15.2% compared to $0.33 in the year-ago period. Backlog was $1.88 billion, up 11.8% compared to $1.68 billion at the end of the year-ago period. Cash generated from operations was $55.8 million, up 127.7% compared to $24.5 million in the year-ago period. Nine-Month Results Revenue for the nine-month period was $1.90 billion, up 20.6% compared to $1.57 billion in the year-ago period. Revenue, net of subcontractor costs, was $1.32 billion, up 26.6% compared to $1.04 billion in the year-ago period. EBITDA were $142.2 million, up 27.9% compared to $111.2 million in the year-ago period. Operating income was $103.0 million, up 17.9% compared to $87.3 million in the year-ago period. Net income was $63.6 million, up 18.6% compared to $53.7 million in the year-ago period. Diluted EPS were $1.01, up 17.4% compared to $0.86 in the year-ago period. Cash generated from operations was $98.4 million, up 52.4% compared to $64.6 million in year-ago period. Tetra Tech's Chairman and CEO, Dan Batrack, said, “Tetra Tech had another solid quarter driven by strength in the commercial and international markets. Demand for our water, mining, and energy services resulted in strong net revenue and earnings, which enabled us to exceed guidance. Our front-end segment margins improved notably due to seasonally higher workloads and staff productivity. Looking forward over the next several quarters, we foresee stability in our government markets and strong growth in our commercial and international markets, bolstered by contributions from recent acquisitions. International clients represent our fastest-growing sector. We expect international work to become the largest revenue contributor within the next several quarters and grow to represent more than 40% of our business.”         In thousands (except EPS data)Three Months EndedNine Months Ended July 3, 2011     June 27, 2010 July 3, 2011     June 27, 2010 Revenue $ 673,792 $ 562,365 $ 1,897,482 $ 1,573,850 Subcontractor costs   (193,288 )   (192,237 )   (581,093 )   (534,295 ) Revenue, net of subcontractor costs 480,504 370,128 1,316,389 1,039,555 Operating income 39,408 32,706 102,989 87,349 Interest expense, net (1,703 ) (336 ) (4,478 ) (943 ) Income tax expense   (12,957 )   (11,731 )   (32,928 )   (32,728 ) Net income including noncontrolling interests 24,748 20,639 65,583 53,678 Net income attributable to noncontrolling interests   (909 )   -     (1,944 )   -   Net income $ 23,839   $ 20,639   $ 63,639   $ 53,678     Earnings per share attributable to Tetra Tech: Basic $ 0.38   $ 0.34   $ 1.03   $ 0.87   Diluted $ 0.38   $ 0.33   $ 1.01   $ 0.86     Weighted-average common shares outstanding: Basic 62,203 61,560 61,967 61,380 Diluted 62,934 62,181 62,745 62,115   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. Tetra Tech expects diluted EPS for the fourth quarter of fiscal 2011 to be in the range of $0.38 to $0.41. Revenue, net of subcontractor costs, for the fourth quarter is expected to range from $460 million to $480 million. For fiscal 2011, Tetra Tech is increasing its diluted EPS guidance to a range of $1.39 to $1.42. Revenue, net of subcontractor costs, for fiscal 2011 is now expected to range from $1.78 billion to $1.80 billion. Webcast Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the third quarter results through a link posted on the Company's website at on August 4, 2011 at 7:00 a.m. (PDT). About Tetra Tech ( Tetra Tech is a leading provider of consulting, engineering, program management, construction, and technical services addressing the resource management and infrastructure markets. The Company supports government and commercial clients by providing innovative solutions focused on water, the environment, and energy. With more than 12,000 employees worldwide, Tetra Tech's capabilities span the entire project life cycle.         Tetra Tech, Inc.Regulation G InformationReconciliation of Net Income to EBITDA   In thousandsThree Months EndedNine Months Ended July 3, 2011     June 27, 2010 July 3, 2011     June 27, 2010 Net income attributable to Tetra Tech $ 23,839 $ 20,639 $ 63,639 $ 53,678 Interest expense, net 1,703 336 4,478 943 Income tax expense 12,957 11,731 32,928 32,728 Depreciation 7,009 5,204 20,401 14,959 Amortization   7,024   2,851   20,747   8,851 EBITDA $ 52,532 $ 40,761 $ 142,193 $ 111,159   Forward-Looking StatementsThis news release contains forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include information concerning future events and the future financial performance of Tetra Tech that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. Readers are urged to read the documents filed by Tetra Tech with the SEC, specifically the most recent reports on Form 10-K, 10-Q, and 8-K, each as it may be amended from time to time, which identify risk factors that could cause actual results to differ materially from the forward-looking statements. Among the important factors or risks that could cause actual results or events to differ materially from those in the forward-looking statements in this release are:worldwide political and economic uncertainties; fluctuations in annual revenue, expenses and operating results; the cyclicality in demand for state and local government and commercial services; credit risks associated with certain commercial clients; concentration of revenues from government agencies and funding disruptions by these agencies; a shift in U.S. defense spending; a delay in the completion of the U.S. government budget process; violations of government contractor regulations; dependence on winning or renewing federal, state and local government contracts; the delay or unavailability of public funding; the government's right to modify, delay, curtail or terminate contracts at its convenience; the failure to properly manage projects; the loss of key personnel or the inability to attract and retain qualified personnel; the use of estimates and assumptions in the preparation of financial statements; the ability to maintain adequate utilization of our workforce; the use of the percentage-of-completion method of accounting; the inability to accurately estimate contract risks, revenue and costs; the failure to win or renew contracts with private and public sector clients; acquisition strategy and integration risks; goodwill or other intangible asset impairment; growth strategy management; backlog cancellation and adjustments; risks associated with international operations; the failure of partners to perform on joint projects; the failure of subcontractors to satisfy their obligations; changes in resource management or infrastructure industry laws, regulations or programs; changes in capital markets and the access to capital; credit agreement covenants; industry competition; volatility of common stock value; liability related to legal proceedings; 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 environmental laws and regulations; force majeure events; protection of intellectual property rights; and reliance on third-party software to run critical systems. Any projections in this release are based on limited information currently available to Tetra Tech, which is subject to change. Although any such projections and the factors influencing them will likely change, Tetra Tech will not necessarily update the information, since Tetra Tech will only provide guidance at certain points during the year. Readers should not place undue reliance on forward-looking statements since such information speaks only as of the date of this release.1 Tetra Tech's revenue includes a significant amount of subcontractor costs and, therefore, the Company believes revenue, net of subcontractor costs, which is a non-GAAP financial measure, provides a valuable perspective on its business results. 2 EBITDA is a non-GAAP financial measure. The Company believes EBITDA is a useful representation of operating performance because of significant amounts of acquisition-related non-cash amortization expense. A table reconciling net income attributable to Tetra Tech to EBITDA can be found at the end of this release. Tetra Tech, Inc.Jorge Casado, Investor RelationsTalia Starkey, Media & Public Relations(626) 470-2844