- Revenue $1.26 billion, up 40% Y/Y
- Net revenue $1.06 billion, up 44% Y/Y
- Quarterly adjusted EBITDA $153 million, up 51% Y/Y
- Backlog of $4.79 billion, up $1.05 billion Y/Y
- Initiates FY24 revenue and EPS guidance at double-digit
growth
Tetra Tech, Inc. (NASDAQ: TTEK), a leading provider of high-end
consulting and engineering services, today announced results for
the fourth quarter and fiscal year ended October 1, 2023.
Fourth Quarter Results
Tetra Tech achieved record quarterly results in key financial
metrics including revenue, net revenue, operating income, EBITDA,
adjusted EPS and backlog. Revenue in the fourth quarter totaled
$1.26 billion and revenue, net of subcontractor costs (net
revenue)1, was $1.06 billion, up 40% and 44%, respectively, over
last year. Adjusted EBITDA1 was $153 million, up 51%
year-over-year. GAAP EPS was $1.00. Adjusted EPS was $1.78, up 41%
year-over year, which excluded the final RPS integration costs,
including office consolidations and non-recurring tax charges. Cash
generated from operations was $122 million, up 103% over the same
period last year. Backlog increased to an all-time high of $4.79
billion, up $1.05 billion and 28% year-over-year.
Quarterly Dividend
On November 13, 2023, Tetra Tech’s Board of Directors approved
the Company’s 38th consecutive quarterly dividend at an amount of
$0.26 per share, a 13% increase year-over-year, payable on December
13, 2023, to stockholders of record as of November 30, 2023.
Fiscal Year Results
Tetra Tech also achieved record annual results with all-time
highs for revenue, net revenue, operating income, adjusted EBITDA,
earnings and cash flow. Revenue for fiscal 2023 was $4.52 billion
and net revenue was $3.75 billion, up 29% and 32%, respectively,
over fiscal 2022. Adjusted EBITDA was $481 million, up 33% compared
to last year. GAAP EPS was $5.10; adjusted EPS was $5.58, an
increase of 24% over last fiscal year. The days sales outstanding
(DSO) improved to a record low 54 days, contributing to an all-time
high cash provided by operations of $368 million.
__________________
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.
Chairman and CEO Comments
Tetra Tech Chairman and CEO, Dan Batrack, commented, “As we
completed fiscal year 2023, our differentiated Leading with
Science® approach to the water, environment and sustainable
infrastructure markets generated the highest financial results of
any quarter and year in our history. In addition to our all-time
high results in revenue, earnings and backlog, we accomplished
significant strategic milestones this year, including closing the
largest transaction in our history, enhancing our capital
structure, and expanding our Tetra Tech Delta technologies to
include a subscription software practice.
“Our clients are continuing to increase funding for water and
environmental programs, including climate change mitigation and
adaptation to address water security, coastal flooding, energy
transition and biodiversity protection. With our market leadership
in these key areas, we booked nearly $2 billion in new orders in
the fourth quarter and increased our backlog by more than $1
billion over last year. Building on this momentum, we expect
double-digit revenue growth in fiscal 2024 and further margin
expansion.”
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 EPS for the first quarter of fiscal 2024 to
range from $1.30 to $1.38 and net revenue to range from $950
million to $1.00 billion. For fiscal 2024, Tetra Tech expects EPS
to range from $5.70 to $6.00, and net revenue to range from $4.05
billion to $4.25 billion.2 The first quarter and fiscal 2024 EPS
guidance ranges are on a GAAP basis inclusive of all intangible
amortization expenses. On a comparable basis, fiscal 2023 EPS was
$5.10. The midpoint of the fiscal 2024 net revenue and EPS guidance
represents a 11% and 15% year-over-year increase, respectively.
Webcast
Investors will have the opportunity to access a live
audio-visual webcast and supplemental financial information
concerning the fourth quarter of fiscal 2023 results through a link
posted on the Company’s website at tetratech.com on November 16,
2023, at 8:00 a.m. (PT).
__________________
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.
Reconciliation of GAAP and Non-GAAP
Items In thousands (except EPS data)
Three Months Ended
Fiscal Year Ended
Oct. 1, 2023
Oct. 2, 2022
% Y/Y
Oct. 1, 2023
Oct. 2, 2022
% Y/Y
Revenue
$
1,260,612
$
902,562
40
%
$
4,522,550
$
3,504,048
29
%
Subcontractor costs
(203,209
)
(166,443
)
(771,461
)
(668,468
)
Net revenue
$
1,057,403
$
736,119
44
%
$
3,751,089
$
2,835,580
32
%
EPS
$
1.00
$
1.55
$
5.10
$
4.86
Acq. / Integration costs
0.12
–
0.56
–
Lease impairments
0.22
–
0.22
–
Earn-out adjustments
0.06
–
0.19
–
FX hedge gain
–
(0.28
)
(1.24
)
(0.28
)
Non-recurring tax items
0.26
–
0.38
–
COVID-19 credits
–
(0.01
)
–
(0.08
)
Adjusted EPS incl. RPS IA
1.66
1.26
32
%
5.21
4.50
16
%
RPS intang. amort. (IA)
0.12
–
0.37
–
Adjusted EPS
$
1.78
$
1.26
41
%
$
5.58
$
4.50
24
%
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 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/20231115103622/en/
Jim Wu, Investor Relations Charlie MacPherson, Media &
Public Relations (626) 470-2844
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