EX-99.1 3 a04-4751_1ex99d1.htm EX-99.1

Exhibit 99.1

 

April 21, 2004

 

Tetra Tech Reports Second Quarter 2004 Results

 

Pasadena, California.  Tetra Tech, Inc. (NASDAQ: TTEK) today announced second quarter results for fiscal year 2004.  Revenue for the quarter ended March 28, 2004 was $331.4 million, up 35.0% from $245.5 million for the same quarter last year.  Revenue, net of subcontractor costs, was $242.8 million for the quarter, up 25.9% from $192.9 million a year ago.  Income from operations for the quarter was $24.0 million, 12.4% more than the $21.3 million for last year’s second quarter.  Net income for the quarter was $13.0 million, up 14.0% from $11.4 million a year ago.  Diluted earnings per share were 23 cents compared to 21 cents for the previous year, a 9.5% increase.

 

For the second quarter of fiscal 2004, revised guidance for diluted earnings per share was 23 cents, and guidance for revenue, net of subcontractor costs, was $240 million to $250 million.

 

Revenue for the six months ended March 28, 2004 was $668.5 million, up 39.7% from $478.5 million for the same period last year.  Revenue, net of subcontractor costs, for the six months was $484.5 million, up 29.6% from $373.9 million a year ago.  Income from operations for the six-month period was $47.9 million, 24.6% more than the $38.4 million for the six-month period last year.  Net income for the six-month period was $26.0 million, compared to a net loss of $94.1 million last year, due to the cumulative effect of accounting change of $114.7 million in 2003.  Diluted earnings per share before the cumulative effect of accounting change for the six-month period were 45 cents compared to 37 cents last year, a 21.6% increase.

 

Summary of Financial Results:

(in thousands, except per share data)

 

 

 

Second Quarter Ended

 

Six Months Ended

 

 

 

March 28, 2004

 

March 30, 2003

 

March 28, 2004

 

March 30, 2003

 

Revenue

 

$

331,395

 

$

245,464

 

$

668,497

 

$

478,544

 

Revenue, Net of  Subcontractor Costs

 

242,818

 

192,870

 

484,523

 

373,852

 

Income from Operations

 

23,965

 

21,324

 

47,906

 

38,447

 

Income Before Cumulative Effect of Accounting Change

 

13,029

 

11,425

 

25,971

 

20,564

 

Net Income/(Loss)

 

13,029

 

11,425

 

25,971

 

(94,105

)

 

 

 

 

 

 

 

 

 

 

EPS Before Cumulative Effect of Accounting Change:

 

 

 

 

 

 

 

 

 

Basic(1)

 

0.23

 

0.21

 

0.47

 

0.38

 

Diluted

 

0.23

 

0.21

 

0.45

 

0.37

 

Basic Shares Outstanding(1)

 

55,885

 

54,608

 

55,695

 

54,565

 

Diluted Shares Outstanding

 

57,465

 

55,419

 

57,430

 

55,212

 

 


(1) EPS-basic and basic shares outstanding have been revised for the periods ended March 30, 2003 to include 1,235,000 shares of common stock issuable upon the exchange of exchangeable shares of a subsidiary.

 



 

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 expects diluted earnings per share for the third quarter of 2004 to be approximately 26 to 28 cents.  Revenue, net of subcontractor costs, is expected to range from approximately $255 million to $270 million for the third quarter.   For the fiscal year, Tetra Tech expects diluted earnings per share to range from approximately $1.05 to $1.09.  Revenue, net of subcontractor costs, is expected to range from approximately $1.00 billion to $1.04 billion for the fiscal year.

 

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 second quarter results through a link posted on the Company’s web site at www.tetratech.com on April 22, 2004 at 8:00 a.m. (PDT).

 

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: fluctuations in quarterly operating results; acquisition strategy risks; management of growth strategy; volatility of common stock value; concentration of revenues from government agencies and funding disruptions by these agencies; the impact of downturns in the financial markets and reductions in government budgets; credit risks associated with commercial clients; failure to properly manage projects; violations of government contractor regulations; competitive bidding for government contracts; the affect of a negative government audit; the inability to accurately estimate contract risks, revenue and costs; backlog cancellation or adjustment; client base consolidation; failure of partners to perform on joint projects; inability to find qualified subcontracts; loss of key personnel or the inability to attract and retain qualified personnel; changes in existing laws, regulations or programs; competition; risks of professional and other liabilities; adverse resolution of litigation; conflict of interest issues; adverse resolution of an IRS examination; changes in financial accounting standards; expenses associated with corporate governance; implementation of the ERP system; disruption of operations due to computer viruses or terrorism; 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 March 28, 2004 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

 

2



 

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.

 

3



 

TETRA TECH, INC.

Unaudited Statements of Operations

(in thousands, except per share data)

 

 

 

QUARTER ENDED

 

SIX MONTHS ENDED

 

 

 

MARCH 28, 2004
(UNAUDITED)

 

MARCH 30, 2003
(UNAUDITED)

 

%
 CHANGE

 

MARCH 28, 2004
(UNAUDITED)

 

MARCH 30, 2003
(UNAUDITED)

 

%
CHANGE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

331,395

 

$

245,464

 

35.0

 

$

668,497

 

$

478,544

 

39.7

 

Subcontractor costs

 

88,577

 

52,594

 

68.4

 

183,974

 

104,692

 

75.7

 

Revenue, net of subcontractor costs

 

242,818

 

192,870

 

25.9

 

484,523

 

373,852

 

29.6

 

Other contract costs

 

194,701

 

151,075

 

28.9

 

388,547

 

294,449

 

32.0

 

Gross profit

 

48,117

 

41,795

 

15.1

 

95,976

 

79,403

 

20.9

 

Selling, general and administrative expenses

 

24,152

 

20,471

 

18.0

 

48,070

 

40,956

 

17.4

 

Income from operations

 

23,965

 

21,324

 

12.4

 

47,906

 

38,447

 

24.6

 

Interest expense

 

2,380

 

2,331

 

2.1

 

4,781

 

4,524

 

5.7

 

Interest income

 

131

 

50

 

162.0

 

160

 

351

 

-54.4

 

Net interest

 

2,249

 

2,281

 

-1.4

 

4,621

 

4,173

 

10.7

 

Income before income tax expense

 

21,716

 

19,043

 

14.0

 

43,285

 

34,274

 

26.3

 

Income tax expense

 

8,687

 

7,618

 

14.0

 

17,314

 

13,710

 

26.3

 

Income before cumulative effect of accounting change

 

13,029

 

11,425

 

14.0

 

25,971

 

20,564

 

26.3

 

Cumulative effect of accounting change

 

0

 

0

 

0.0

 

0

 

114,669

 

-100.0

 

Net income

 

$

13,029

 

$

11,425

 

14.0

 

$

25,971

 

$

(94,105

)

-127.6

 

Earnings per share before cumulative effect of accounting change - diluted

 

$

0.23

 

$

0.21

 

9.5

 

$

0.45

 

$

0.37

 

21.6

 

Weighted average shares outstanding - diluted

 

57,465

 

55,419

 

3.7

 

$

57,430

 

$

55,212

 

4.0

 

Percentage of revenue, net of subcontractor costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue, net of subcontractor costs

 

100.0

%

100.0

%

 

 

100.0

%

100.0

%

 

 

Other contract costs

 

80.2

%

78.3

%

 

 

80.2

%

78.8

%

 

 

Gross profit

 

19.8

%

21.7

%

 

 

19.8

%

21.2

%

 

 

Selling, general and administrative expenses

 

9.9

%

10.6

%

 

 

9.9

%

11.0

%

 

 

Income from operations

 

9.9

%

11.1

%

 

 

9.9

%

10.2

%

 

 

Net interest

 

0.9

%

1.2

%

 

 

1.0

%

1.1

%

 

 

Income before income tax expense

 

9.0

%

9.9

%

 

 

8.9

%

9.1

%

 

 

Income tax expense

 

3.6

%

3.9

%

 

 

3.6

%

3.7

%

 

 

Income before cumulative effect of accounting change

 

5.4

%

6.0

%

 

 

5.3

%

5.4

%

 

 

Cumulative effect of accounting change

 

0.0

%

0.0

%

 

 

0.0

%

30.7

%

 

 

Net income

 

5.4

%

6.0

%

 

 

5.3

%

-25.3

%

 

 

 



 

TETRA TECH, INC.

Preliminary Balance Sheet

(in thousands, except par value)

 

 

 

MARCH 28,
2004

 

SEPTEMBER 28,
2003

 

 

 

(UNAUDITED)

 

 

 

ASSETS

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

 

$

34,656

 

$

33,164

 

Accounts receivable - net

 

175,814

 

167,717

 

Unbilled receivables - net

 

183,597

 

164,818

 

Contract retentions

 

4,757

 

4,286

 

Prepaid expenses and other current assets

 

23,929

 

26,037

 

Income taxes receivable

 

31,158

 

20,825

 

Total current assets

 

453,911

 

416,847

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT:

 

 

 

 

 

Equipment, furniture and fixtures

 

85,531

 

84,133

 

Leasehold improvements

 

10,757

 

10,123

 

Total

 

96,288

 

94,256

 

Accumulated depreciation and amortization

 

(57,182

)

(53,469

)

PROPERTY AND EQUIPMENT - NET

 

39,106

 

40,787

 

 

 

 

 

 

 

GOODWILL

 

253,045

 

210,792

 

 

 

 

 

 

 

INTANGIBLE AND OTHER ASSETS - NET

 

26,617

 

25,054

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

772,679

 

$

693,480

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Accounts payable

 

$

92,541

 

$

93,265

 

Accrued compensation

 

44,024

 

46,743

 

Billings in excess of costs on uncompleted contracts

 

17,944

 

16,307

 

Other current liabilities

 

28,162

 

26,562

 

Deferred income taxes

 

29,105

 

28,992

 

Current portion of long-term obligations

 

55,006

 

11,597

 

Total current liabilities

 

266,782

 

223,466

 

 

 

 

 

 

 

LONG - TERM OBLIGATIONS

 

108,278

 

107,463

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

Preferred stock - authorized, 2,000 shares of $.01 par value; none issued and outstanding

 

 

 

Exchangeable stock of a subsidiary

 

13,238

 

13,239

 

Common stock - authorized, 85,000 shares of $.01 par value; issued and outstanding 54,868 and 54,090 shares at March 28, 2004 and September 28, 2003, respectively

 

549

 

541

 

Additional paid-in capital

 

225,757

 

216,908

 

Accumulated other comprehensive loss

 

(146

)

(387

)

Retained earnings

 

158,221

 

132,250

 

Total stockholders’ equity

 

397,619

 

362,551

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

772,679

 

$

693,480

 

 



 

TETRA TECH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in thousands)

 

 

 

Three Months Ended

 

 

 

MARCH 28,
2004

 

MARCH 30,
2003

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income (loss)

 

$

13,029

 

$

11,425

 

 

 

 

 

 

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

Cumulative effect of accounting change

 

 

 

Depreciation and amortization

 

4,369

 

3,468

 

Deferred income taxes

 

(285

)

 

Provision for losses on receivables

 

1,516

 

1,083

 

Loss on disposal of property and equipment

 

652

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities, net of effects of acquisitions:

 

 

 

 

 

Accounts receivable

 

13,063

 

13,316

 

Unbilled receivables

 

(12,330

)

(22,460

)

Contract retentions

 

81

 

198

 

Prepaid expenses and other assets

 

3,130

 

1,711

 

Accounts payable

 

(7,500

)

(8,901

)

Accrued compensation

 

3,873

 

2,411

 

Billings in excess of costs on uncompleted contracts

 

(2,289

)

(2,461

)

Other current liabilities

 

(2,021

)

209

 

Income taxes receivable

 

(2,166

)

(7,397

)

Net cash used in operating activities

 

13,122

 

(7,398

)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(2,893

)

(2,295

)

Payments for business acquisitions, net of cash acquired

 

(31,371

)

(72,193

)

Proceeds on sale of property and equipment

 

477

 

 

Net cash used in investing activities

 

(33,787

)

(74,488

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Payments on long-term obligations

 

(25,402

)

(5,393

)

Proceeds from borrowings under long-term obligations

 

55,001

 

65,000

 

Net proceeds from issuance of common stock

 

1,862

 

499

 

Net cash provided by financing activities

 

31,460

 

60,106

 

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

(8

)

521

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

10,788

 

(21,259

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

23,868

 

42,670

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

34,656

 

$

21,411

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

459

 

191

 

Income taxes, net of refunds received

 

10,883

 

15,394