Exhibit 99.1

 

January 21, 2004

 

Tetra Tech Reports First Quarter 2004 Results

 

Pasadena, California.  Tetra Tech, Inc. (NASDAQ: TTEK) today announced first quarter results for fiscal year 2004.  Gross revenue for the quarter ended December 28, 2003 was $337.1 million, up 44.6% from gross revenue of $233.1 million for the same quarter last year.  Revenue, net of subcontractor costs(1), for the quarter was $241.7 million, up 33.6% from $181.0 million a year ago.  Income from operations for the quarter was $23.9 million, 39.8% more than the $17.1 million for last year’s first quarter.  Net income for the quarter was $12.9 million, up 41.6% from $9.1 million a year ago.  Diluted earnings per share were 23 cents compared to 17 cents for the previous year, a 35.3% increase.

 

For the first quarter of fiscal 2004, guidance for diluted earnings per share was 22 to 24 cents, and for revenue, net of subcontractor costs, was $220 million to $235 million.

 

Summary of Financial Results:

($ in thousands, except per share data)

 

		First Quarter Ended
		Dec. 28, 2003			Dec. 29, 2002
Gross Revenue		$	337,102		$	233,080
Revenue, Net of Subcontractor Costs(1)		241,705			180,982
Income from Operations		23,941			17,123
Net Income		12,942			9,139
EPS - Basic		0.24			0.17
EPS - Diluted		0.23			0.17
Basic Shares Outstanding		54,269			53,286
Diluted Shares Outstanding		57,395			55,005

 

(1) The former net revenue financial statement caption has been changed to revenue, net of subcontractor costs.  This change has not affected the amount or the methodology used to calculate this amount.

 

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 material corporate transactions that may be completed 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’s fiscal year 2004 guidance remains unchanged.  Tetra Tech expects diluted earnings per share for the second quarter of 2004 to be approximately 25 cents.  Revenue, net of subcontractor costs, for that quarter is expected to range from approximately $240 million to $250 million.

 

 

About Tetra Tech (www.tetratech.com)

 

Tetra Tech is a leading provider of consulting, engineering and technical services.  With nearly 9,000 associates located in the United States and internationally, the Company supports commercial and government clients in the areas of resource management and infrastructure.  Tetra Tech’s services include research and development, applied science and technology, engineering design, construction management, and operations and maintenance.

 

Investors will have the opportunity to access a live audio-visual webcast concerning the first quarter results through a link posted on the Company’s web site at www.tetratech.com on January 22, 2004 at 8:00 a.m. (PST)

 

CONTACT: Li-San Hwang, CEO, or Mike Bieber, Investor Relations, (626) 351-4664

 

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:  acquisition strategy risks; fluctuations in quarterly operating results and stock price; the impact of downturns in the financial markets on clients; management of growth strategy; credit risks associated with commercial clients; the consolidation of client base; loss of key personnel or the inability to attract and retain qualified personnel; changes in existing laws and regulations; concentration of revenues from agencies of the Federal government and reductions in spending by these agencies; audit of contracts with governmental agencies; losses under fixed-price contracts or termination of contracts at the client’s discretion; backlog cancellation or adjustment; inability to find qualified subcontractors; competition; risks of professional and other liabilities; conflict of interest issues; and foreign currency fluctuations.  The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in Tetra Tech’s most recent reports on Form 10-Q and Form 10-K, each as it may be amended from time to time.  Tetra Tech’s results of operations for the fiscal quarter ended December 28, 2003 are not necessarily indicative of Tetra Tech’s operating results for any future periods.  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.  Such information speaks only as of the date of this release.

 

 

TETRA TECH, INC.

Statement of Operating Information
($ in thousands, except per share data)

 

		QUARTER ENDED
		DECEMBER 28, 2003			DECEMBER 29, 2002			% CHANGE
		(UNAUDITED)			(UNAUDITED)
Gross Revenue		$	337,102		$	233,080		44.6
Subcontractor Costs		95,397			52,098			83.1
Revenue, Net of Subcontractor Costs(1)		241,705			180,982			33.6
Other Contract Costs(1)		193,846			143,374			35.2
Gross Profit		47,859			37,608			27.3
Selling, General and Administrative Expenses		23,918			20,485			16.8
Income from Operations		23,941			17,123			39.8
Interest Expense		2,401			2,193			9.5
Interest Income		29			301			(90.4	)
Net Interest		2,372			1,892			25.4
Income Before Income Tax Expense		21,569			15,231			41.6
Income Tax Expense		8,627			6,092			41.6
Net Income		$	12,942		$	9,139		41.6
Earnings Per Share - Diluted		$	0.23		$	0.17		35.3
Average Shares Outstanding - Diluted		57,395			55,005			4.3
Percentage of Revenue, Net of Subcontractor Costs
Revenue, Net of Subcontractor Costs		100.0		%	100.0		%
Other Contract Costs		80.2		%	79.2		%
Gross Profit		19.8		%	20.8		%
Selling, General and Administrative Expenses		9.9		%	11.3		%
Income from Operations		9.9		%	9.5		%
Net Interest		1.0		%	1.0		%
Income Before Income Tax Expense		8.9		%	8.4		%
Income Tax Expense		3.6		%	3.4		%
Income Before Cumulative Effect of Accounting Change		5.4		%	5.0		%
Cumulative Effect of Accounting Change		0.0		%	0.0		%
Net Income		5.4		%	5.0		%

(1)           The former Net Revenue and Cost of Net Revenue financial statement captions have been changed to Revenue, Net of Subcontractor Costs and Other Contract Costs, respectively. This change has not affected the respective amounts or the methodology used to calculate these amounts.

 

 

TETRA TECH, INC.

PRELIMINARY BALANCE SHEET INFORMATION
($ in thousands, except share data)

 

		DECEMBER 28, 2003			SEPTEMBER 28, 2003
		(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents		$	23,868		$	33,164
Accounts Receivable - Net		189,184			167,717
Unbilled Receivables - Net		169,424			164,818
Contract Retentions		4,838			4,286
Prepaid Expenses and Other Current Assets		27,458			26,037
Income Taxes Receivable		28,189			20,825
Total Current Assets		442,961			416,847
PROPERTY AND EQUIPMENT:
Equipment, Furniture and Fixtures		86,061			84,133
Leasehold Improvements		10,619			10,123
Total		96,680			94,256
Accumulated Depreciation and Amortization		(55,779		)	(53,469		)
PROPERTY AND EQUIPMENT - NET		40,901			40,787
GOODWILL - NET		210,792			210,792
INTANGIBLE AND OTHER ASSETS - NET		25,342			25,054
TOTAL ASSETS		$	719,996		$	693,480
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts Payable		$	90,508		$	93,265
Accrued Compensation		38,850			46,743
Billings in Excess of Costs on Uncompleted Contracts		20,233			16,307
Other Current Liabilities		26,919			26,562
Deferred Income Taxes		29,390			28,992
Current Portion of Long-Term Obligations		25,079			11,597
Total Current Liabilities		230,979			223,466
LONG-TERM OBLIGATIONS		108,606			107,463
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred Stock - Authorized, 2,000,000 Shares of $.01 Par Value; None Issued and Outstanding		—			—
Exchangeable Stock of a Subsidiary		13,239			13,239
Common stock - Authorized, 85,000,000 Shares of $.01 Par Value; Issued and Outstanding 54,452,120 and 54,089,704 Shares at December 28, 2003 and September 28, 2003, Respectively		545			541
Additional Paid-In Capital		221,484			216,908
Accumulated Other Comprehensive Loss		(49		)	(387		)
Retained Earnings		145,192			132,250
Total Stockholders’ Equity		380,411			362,551
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	719,996		$	693,480

 

 

 

TETRA TECH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)

 

		Three Months Ended
		DECEMBER 28, 2003			DECEMBER 29, 2002
		(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	12,942		$	9,139
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4,454			3,315
Deferred income taxes		398			—
Provision for losses on receivables		819			770
Loss on disposal of property and equipment		52			—
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		(22,271		)	(8,374		)
Unbilled receivables		(4,620		)	9,690
Contract retentions		(552		)	131
Prepaid expenses and other assets		(2,348		)	(4,444		)
Accounts payable		(2,757		)	(12,121		)
Accrued compensation		(7,893		)	(5,014		)
Billings in excess of costs on uncompleted contracts		3,926			2,989
Other current liabilities		513			2,537
Income taxes receivable/payable		(5,985		)	(653		)
Net Cash Used In Operating Activities		(23,322		)	(2,035		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(4,319		)	(1,705		)
Proceeds on sale of property and equipment		424			—
Net Cash Used In Investing Activities		(3,895		)	(1,705		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term obligations		(17,698		)	(182		)
Proceeds from borrowings under long-term obligations		32,324			—
Proceeds from issuance of common stock		3,201			176
Net Cash Provided By (Used In) Financing Activities		17,826			(6		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		95			71
NET DECREASE IN CASH AND CASH EQUIVALENTS		(9,296		)	(3,675		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		33,164			46,345
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	23,868		$	42,670
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest		$	4,359		$	4,128
Income taxes, net of refunds received		$	14,109		$	6,746