- Diluted EPS of $0.43, up
39%
- Record operating cash flow of $109
million
- Backlog up 6%
- Declared quarterly dividend of $0.08
per share
Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the
third quarter ended June 28, 2015.
Third Quarter Results
Revenue in the quarter was $575.1 million and revenue, net of
subcontractor costs1, was $421.9 million. Revenue and revenue, net
of subcontractor costs, increased 2% and decreased 1%,
respectively, in the third quarter of fiscal 2015 compared to the
same period in fiscal 2014, excluding the wind-down of the
Remediation and Construction Management (RCM) segment and the
impact from foreign currency translation. Operating income was
$40.7 million and diluted earnings per share (EPS) were $0.43.
Excluding an earn-out gain in the third quarter of fiscal 2014,
operating income in the quarter compared to last year’s third
quarter was up 35%, and EPS were up 39% compared to the third
quarter of fiscal 2014. Cash generated from operations was $109.3
million, up 88% compared to last year’s third quarter.
On July 27, 2015, Tetra Tech’s Board of Directors declared a
quarterly dividend of $0.08 per share payable on September 4, 2015
to stockholders of record as of August 17, 2015. Additionally,
through the first nine months of fiscal 2015, the Company spent
$75.5 million of the approved $200 million share repurchase
program.
Tetra Tech’s Chairman and CEO, Dan Batrack commented, “Our
business delivered solid performance in the third quarter supported
by our water and environmental services for our government and
commercial clients. Since the end of last quarter, we were awarded
$1.4 billion of new contract capacity with our U.S. federal
government clients and backlog in our ongoing operations grew 6%.
We continue to improve our operating margin as demonstrated by the
35% increase in operating income, which contributed to a record
quarterly cash flow from operations of $109 million. Our strong
balance sheet will allow us to invest in our organic growth and
acquisition strategies, while continuing to return capital to our
shareholders through share repurchases and dividends.”
Nine-Month Results
Revenue for the nine-month period was $1.7 billion and revenue,
net of subcontractor costs, was $1.3 billion. Operating income for
the nine-month period was $107.7 million and EPS were $1.14. Cash
generated from operations was $134.1 million.
Operating Results
In thousands (except EPS data) Three
Months Ended Nine Months Ended June 28,
2015
June 29,
2014
%
Y/Y
June 28,
2015
June 29,
2014
%
Y/Y
Revenue $ 575,108 $ 629,502 (9 )% $ 1,720,927 $ 1,861,635 (8 )%
Foreign exchange 15,726 -- -- 48,304 -- -- RCM (16,466 )
(67,083 ) -- (69,046 ) (189,447 ) --
Core revenue
$ 574,368 $ 562,419 2 % $ 1,700,185 $
1,672,188 2 % Revenue, net of subcontractor costs
$
421,899
$
458,756
(8 )%
$
1,291,733
$
1,397,731
(8 )% Foreign exchange 14,172 -- -- 42,920 -- -- RCM (5,754
) (22,430 ) -- (18,446 ) (77,066 ) --
Core revenue, net of subcontractor costs
$
430,317
$
436,326
(1
)%
$
1,316,207
$
1,320,665
0
%
Operating income $ 40,721 $ 39,167 4 % $ 107,732 $ 129,070
(17 )% Foreign exchange 180 -- -- 1,547 -- -- Earn-out gain
-- (8,905 ) -- (3,113 ) (34,878
) -- Subtotal $ 40,901 $ 30,262 35 % $ 106,166 $ 94,192 13 %
RCM 190 5,922 -- 3,605
9,323 -- Core operating income
$
41,091
$
36,184
14 %
$
109,771
$
103,515
6 % EPS $ 0.43 $ 0.41 5 % $ 1.14 $ 1.31 (13 )%
Foreign exchange -- -- -- 0.02 -- -- Earn-out --
(0.10 ) -- -- (0.44 ) --
Subtotal $ 0.43 $ 0.31 39 % $ 1.16 $ 0.87 33 % RCM --
0.06 -- 0.04 0.09
-- EPS $ 0.43 $ 0.37 16 % $ 1.20 $ 0.96
25 %
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 fourth quarter of fiscal 2015 to
be in the range of $0.48 to $0.52. Revenue, net of subcontractor
costs, for the fourth quarter is expected to range from $420
million to $450 million. For fiscal 2015, EPS is expected to range
from $1.63 to $1.67, and cash EPS2 is expected to range from $2.85
to $3.01. Revenue, net of subcontractor costs, for fiscal 2015 is
expected to range from $1.71 billion to $1.74 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 www.tetratech.com/investors on July 30, 2015
at 8:00 a.m. (PT).
About Tetra Tech (www.tetratech.com)
Tetra Tech is a leading provider of consulting, engineering,
program management, and construction management services. The
Company supports commercial and government clients focused on
water, environment, infrastructure, resource management, and
energy. With 13,000 staff worldwide, Tetra Tech provides clear
solutions to complex problems.
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: worldwide political
and economic uncertainties; fluctuations in annual revenue,
expenses, and operating results; the cyclicality in demand for our
overall services; the cyclicality in demand for mining services;
the cyclicality in demand for oil and gas services; concentration
of revenues from U.S. government agencies and potential funding
disruptions by these agencies; violations of U.S. government
contractor regulations; 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;
credit risks associated with certain commercial clients; risks
associated with international operations; 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 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; acquisition strategy and integration risks; goodwill or
other intangible asset impairment; growth strategy management;
backlog cancellation and adjustments; 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; 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; the interruption of systems and information
technology; the ability to impede a business combination based on
Delaware law and charter documents; and stock price volatility. 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 Cash EPS is a non-GAAP financial measure that provides a
valuable perspective on the Company’s financial results. Cash EPS
is defined as cash flow from operations divided by diluted shares
outstanding. Refer to the cash flow statement for reconciliation
from net income to cash flow from operations.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150729006761/en/
Tetra Tech, Inc.Jim Wu, Investor RelationsCharlie MacPherson,
Media & Public Relations(626) 470-2844
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