- Record Q3 EPS of $0.52, up 18%
Y/Y
- Record Q3 operating income of $46
million, up 17% Y/Y
- Record backlog of $2.53 billion, up
12% Y/Y
Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the
third quarter ended July 2, 2017.
Third Quarter Results
Revenue in the third quarter totaled $685 million, up 3%
year-over-year. For ongoing1 operations, revenue, net of
subcontractor costs (net revenue) 2, was $498 million, consistent
with the same period in fiscal 2016. Operating income for the third
quarter was $46 million, up 17% year-over-year. On an ongoing
basis, operating income totaled $47 million, up 7% year-over-year.
Earnings per share (EPS) were $0.52, up 18% year-over-year, and on
an ongoing basis totaled $0.53, up 6% over the prior-year quarter.
Backlog of $2.53 billion was up 12% year-over-year.
Quarterly Dividend and Share Repurchase Program
On July 31, 2017, Tetra Tech’s Board of Directors declared a
quarterly dividend of $0.10 per share payable on September 1, 2017
to stockholders of record as of August 17, 2017. Additionally, the
Company has $140 million remaining under the previously approved
$200 million share repurchase program. The Company anticipates
expending $100 million in share repurchases in fiscal year 2017, of
which $60 million was completed in the first nine months.
Comments on Results
Tetra Tech’s Chairman and CEO, Dan Batrack commented, “Tetra
Tech generated record-high third quarter earnings, operating
income, and backlog. Our U.S. federal and U.S. state and local
markets continued to grow at double-digit organic rates in the
third quarter, with revenues increasing 10% and 16%, respectively.
Conversely, our oil and gas markets, particularly in Canada, have
become increasingly challenged. Despite the downturn in this
market, our backlog reached a record high of $2.5 billion, up 12%
year-over-year, giving us confidence that growth will continue
across our other end markets.”
Nine-Month Results
Revenue for the nine-month period was $2.0 billion and net
revenue was $1.5 billion. Operating income for the nine-month
period was $129 million and EPS was $1.44, up 45% and 62%,
respectively, from the prior year period. On an ongoing basis, EPS
totaled $1.50, up 16% year-over-year.
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 ongoing diluted EPS for the fourth quarter of
fiscal 2017 to range from $0.60 to $0.62. Net revenue for the
fourth quarter is expected to range from $500 million to $520
million. For fiscal 2017, ongoing diluted EPS is expected to range
from $2.10 to $2.12 and net revenue is expected to range from $2.00
billion to $2.02 billion.
Webcast
Investors will have the opportunity to access a live
audio-visual webcast and supplemental financial information
concerning the third quarter 2017 results through a link posted on
the Company’s website at tetratech.com on August 3, 2017 at 8:00
a.m. (PT).
Reconciliation of Revenue and Operating
Results
In thousands (except EPS data)
Three Months Ended Nine Months Ended July
2, June 26, % July
2, June 26, %
2017 2016 Y/Y 2017 2016
Y/Y Revenue $ 685,539 $ 666,869 3 % $ 2,018,171 $
1,854,961 9 % Subcontractor costs (187,061 ) (168,235
) (518,188 ) (456,606 ) Net revenue $
498,478 $ 498,634 0 % $ 1,499,983 $ 1,398,355
7 % Revenue $ 685,539 $ 666,869 3 % $ 2,018,171 $
1,854,961 9 % RCM (4,192 ) (5,202 )
(12,401 ) (36,781 ) Ongoing revenue $ 681,347
$ 661,667 3 % $ 2,005,770 $ 1,818,180 10 %
Net revenue $ 498,478 $ 498,634 0 % $ 1,499,983 $
1,398,355 7 % RCM (902 ) (2,372 ) 1,006
(12,537 ) Ongoing net revenue $ 497,576
$ 496,262 0 % $ 1,500,989 $ 1,385,818 8 %
Operating income $ 45,884 $ 39,085 17 % $ 128,695 $
88,667 45 % Earn-out (gain) expense – – (7,149 ) 2,823 RCM 1,251
4,023 12,759 9,691 Acq. & integration –
1,005 – 16,916
Ongoing operating income $ 47,135 $ 44,113 7 % $
134,305 $ 118,097 14 % EPS $ 0.52 $
0.44 18 % $ 1.44 $ 0.89 62 % Earn-out (gain) expense – – (0.08 )
0.03 RCM 0.01 0.05 0.14 0.10 Acq. & integration – 0.01 – 0.27
Coffey debt prepayment – – – 0.03 Retroactive R&D tax –
– – (0.03 )
Ongoing EPS $ 0.53 $ 0.50 6 % $ 1.50 $ 1.29
16 %
About Tetra Tech
Tetra Tech is a leading, global provider of consulting and
engineering services. We are differentiated by Leading with
Science® to provide innovative technical solutions to our clients.
We support global commercial and government clients focused on
water, environment, infrastructure, resource management, energy,
and international development. With 16,000 associates worldwide,
Tetra Tech provides clear solutions to complex problems. For more
information about Tetra Tech, please visit tetratech.com, follow us
on Twitter (@TetraTech), or like us on Facebook.
Forward-Looking Statements
This 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: continuing
worldwide political and economic uncertainties; the new U.S.
Administration’s potential changes to fiscal and tax 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; 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 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; and the ability to impede
a business combination based on Delaware law and charter documents.
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 Refer to Reconciliation of Revenue and Operating Results table
for a reconciliation to GAAP.
2 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170802006400/en/
Tetra Tech, Inc.Jim Wu, Investor RelationsCharlie MacPherson,
Media & Public Relations(626) 470-2844
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