- Record Revenue $1.21 billion, up 36% Y/Y
- Record EBITDA $119 million, up 33% Y/Y
- Record Backlog $4.39 billion, up 25% Y/Y
- Increasing Net Revenue and EPS guidance for FY23
Tetra Tech, Inc. (NASDAQ: TTEK), a leading provider of high-end
consulting and engineering services, today announced results for
the third quarter ended July 2, 2023.
Third Quarter Results
Tetra Tech achieved record quarterly results in key financial
metrics including revenue, net revenue, EBITDA, and backlog.
Revenue in the third quarter totaled $1.21 billion and revenue, net
of subcontractor costs (net revenue)1, was $988 million, up 36% and
37%, respectively, over last year. EBITDA1 was $119 million, up 33%
year-over-year. Earnings per share (“EPS”) was $1.12; adjusted EPS
was $1.29, up 19% over the third quarter of fiscal 20221. Cash
generated from operations was $133 million, up 35% over the same
period last year. Backlog increased to an all-time high of $4.39
billion, up 25% year-over-year.
Quarterly Dividend
On August 7, 2023, Tetra Tech’s Board of Directors approved its
37th consecutive quarterly dividend at an amount of $0.26 per
share, a 13% increase year-over-year, payable on September 6, 2023,
to stockholders of record as of August 23, 2023.
Chairman and CEO Comments
Tetra Tech Chairman and CEO, Dan Batrack, commented, “Tetra Tech
delivered another quarter of record financial performance driven by
our differentiated Leading with Science® services in water,
environment and sustainable infrastructure. We are seeing
increasing demand from both our commercial and government clients
to address the impacts of climate change including water scarcity,
infrastructure vulnerability, and environmental degradation. This
has resulted in a significant broad-based increase in project
awards from our key clients in North America, U.K., and Australia.
The combination with RPS is exceeding our expectations, including
the speed of margin expansion and the identification of revenue
synergies. Based on our strong performance and record high backlog,
we are increasing our net revenue and earnings per share guidance
for fiscal 2023.”
____________________ 1 Non-GAAP financial measures which the
Company believes provide valuable perspectives on its business
results. Refer to tables at the end of the release and Regulation G
Information for reconciliations to the comparable GAAP metrics.
Nine-Month Results
Revenue for the nine-month period was $3.26 billion and net
revenue was $2.69 billion, up 25% and 28%, respectively, over the
same period in fiscal 2022. EBITDA was $328 million, up 26%. EPS
was $4.10, up 23%, and adjusted EPS was $3.80, an increase of 17%
over the first nine months of last year. The days sales outstanding
(DSO) improved to a record low 58 days.
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. The Company
is relying on the exception provided in the applicable SEC rules to
exclude the reconciliation of adjusted EPS to EPS for future
outlook, the most directly comparable GAAP measure, since it is not
able to predict with sufficient precision acquisition, integration
and intangible amortization expenses related to the RPS
transaction. Similarly, the Company is not able to provide a
reconciliation of net revenue to revenue since it is not able to
predict with sufficient precision subcontractor costs.
For fiscal 2023, Tetra Tech is increasing adjusted EPS guidance
to range from $5.22 to $5.27 and is increasing net revenue guidance
to range from $3.16 billion to $3.21 billion. Tetra Tech expects
adjusted EPS for the fourth quarter of fiscal 2023 to range from
$1.40 to $1.45 and net revenue to range from $790 million to $840
million.
RPS is expected to contribute additional net revenue of
approximately $175 million in the fourth quarter and $500 million
for fiscal 2023. The impact to adjusted EPS, excluding acquisition,
integration and intangible amortization expenses, is expected to be
approximately $0.03 accretive for the fourth quarter and $0.01
accretive for fiscal 2023.
Webcast
Investors will have the opportunity to access a live
audio-visual webcast and supplemental financial information
concerning the third quarter of fiscal 2023 results through a link
posted on the Company’s website at tetratech.com on August 10,
2023, at 8:00 a.m. (PT).
Reconciliation of GAAP and Non-GAAP
Items
In thousands (except EPS data)
Three Months Ended
Nine Months Ended
July 2,
2023
July 3,
2022
July 2,
2023
July 3,
2022
Revenue
$
1,208,947
$
890,231
$
3,261,938
$
2,601,485
Subcontractor costs
(221,387
)
(169,745
)
(568,252
)
(502,024
)
Net revenue
$
987,560
$
720,486
$
2,693,686
$
2,099,461
EPS
$
1.12
$
1.09
$
4.10
$
3.32
Acq. & integration costs
0.03
-
0.55
-
FX hedge gain
-
-
(1.23
)
-
Earn-out charge
-
-
0.13
-
COVID-19 credits
-
(0.01
)
-
(0.07
)
RPS intangible amort.
0.14
-
0.25
-
Adjusted EPS
$
1.29
$
1.08
$
3.80
$
3.25
About Tetra Tech
Tetra Tech is a leading provider of high-end consulting and
engineering services for projects worldwide. With 27,000 employees
working together, Tetra Tech provides clear solutions to complex
problems in water, environment, sustainable infrastructure,
renewable energy, and international development. We are Leading
with Science® to provide sustainable and resilient solutions for
our clients. For more information about Tetra Tech, please visit
tetratech.com or follow us on LinkedIn, Twitter, and Facebook.
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
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 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 2, 2022. 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 included in this release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809142620/en/
Jim Wu, Investor Relations Charlie MacPherson, Media &
Public Relations (626) 470-2844
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