EX-99.1 2 a06-3620_1ex99d1.htm EXHIBIT 99

Exhibit 99.1

 

January 25, 2006

 

Tetra Tech Reports First Quarter Results

 

Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the first quarter ended January 1, 2006. In the quarter, diluted earnings per share (“EPS”) from continuing operations, before the effect of stock option expense under SFAS 123R, was $0.17 compared to $0.12 for the same quarter last year, a 41.7% increase. Diluted EPS from continuing operations, after the effect of stock option expense under SFAS 123R, was $0.15.  Revenue was $341.2 million, and revenue, net of subcontractor costs, was $229.8 million in the quarter.

 

 

 

Three Months Ended

 

In thousands (except EPS data)

 

Jan. 1, 2006

 

Jan. 2, 2005

 

Income from continuing operations before the effect of SFAS 123R(a) (b)

 

$

9,549

 

$

6,860

 

Income from continuing operations

 

8,488

 

6,860

 

 

 

 

 

 

 

Diluted EPS from continuing operations:

 

 

 

 

 

Income from continuing operations before the effect of SFAS 123R(a)

 

$

0.17

 

$

0.12

 

Income from continuing operations

 

$

0.15

 

$

0.12

 

 


 

(a)      A non-GAAP financial measure; see “Non-GAAP Financial Measure” below.

 

(b)      Effective as of the beginning of fiscal 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (Revised 2004) – Share-Based Payment (“SFAS 123R”) using the modified prospective application method.  Accordingly, the results of operations for the current fiscal period include expense related to the fair value of its stock-based compensation awards.

 

First Quarter Results

 

Revenue for the first quarter was $341.2 million, up 10.2% from $309.7 million for the same quarter last year. Revenue, net of subcontractor costs, for the quarter was $229.8 million, up 1.7% from $225.9 million for the same quarter last year. Income from operations was $17.1 million, up 21.8% from $14.1 million for the same period last year. Net income for the first quarter was $8.0 million, up 1.5% from $7.9 million for the same period last year. Diluted EPS from net income was $0.14 compared to $0.14 for the same period last year.

 



 

Tetra Tech continued the wind-down and divestitures of non-core businesses in the first quarter and expects to complete the wind-down and divestitures of the remaining non-core businesses in the second quarter.  This resulted in $0.01 of diluted loss per share from discontinued operations for the quarter.  Tetra Tech may recognize a gain, if any, next quarter upon completing the divestiture of businesses.

 

 

 

Three Months Ended

 

In thousands (except EPS data)

 

Jan. 1, 2006

 

Jan. 2, 2005

 

Revenue

 

$

341,192

 

$

309,666

 

Revenue, net of subcontractor costs

 

229,759

 

225,867

 

Income from operations

 

17,123

 

14,056

 

 

 

 

 

 

 

Income from continuing operations

 

8,488

 

6,860

 

Income (loss) from discontinued operations, net of tax

 

(465

)

1,043

 

Net income

 

$

8,023

 

$

7,903

 

 

 

 

 

 

 

Basic EPS:

 

 

 

 

 

Income from continuing operations

 

$

0.15

 

$

0.12

 

Income (loss) from discontinued operations, net of tax

 

(0.01

)

0.02

 

Net income

 

$

0.14

 

$

0.14

 

 

 

 

 

 

 

Diluted EPS:

 

 

 

 

 

Income from continuing operations

 

$

0.15

 

$

0.12

 

Income (loss) from discontinued operations, net of tax

 

(0.01

)

0.02

 

Net income

 

$

0.14

 

$

0.14

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

 

57,102

 

56,469

 

Diluted

 

57,641

 

56,977

 

 

2



 

Non-GAAP Financial Measure

 

Management of the Company believes that income before the effect of SFAS 123R is useful information because it allows investors to assess the Company’s earnings trend. Such non-GAAP information is also integral to Management’s internal evaluation of the Company’s performance. The following table reconciles the Company’s reported GAAP net income and EPS to the non-GAAP financial measure:

 

 

 

Three Months Ended

 

In thousands (except EPS data)

 

Jan. 1, 2006

 

Jan. 2, 2005

 

Income from continuing operations before the effect of SFAS 123R

 

$

9,549

 

$

6,860

 

Effect of SFAS 123R, net of tax

 

(1,061

)

 

Income from continuing operations

 

8,488

 

6,860

 

Income (loss) from discontinued operations, net of tax

 

(465

)

1,043

 

Net income - as reported per GAAP

 

$

8,023

 

$

7,903

 

 

 

 

 

 

 

Diluted EPS:

 

 

 

 

 

Income from continuing operations before the effect of SFAS 123R

 

$

0.17

 

$

0.12

 

Effect of SFAS 123R, net of tax

 

(0.02

)

 

Income from continuing operations

 

0.15

 

0.12

 

Income (loss) from discontinued operations, net of tax

 

(0.01

)

0.02

 

Net income - as reported per GAAP

 

$

0.14

 

$

0.14

 

 

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 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 EPS for the second quarter of fiscal 2006 to be in the range of $0.15 to $0.17, excluding the anticipated gain from discontinued operations and before the effect of SFAS 123R.  Revenue, net of subcontractor costs, for the second quarter is expected to range from $220 million to $230 million.  For fiscal 2006, guidance remains unchanged.  Tetra Tech expects diluted EPS, before the effect of SFAS 123R, to be in the range of $0.68 to $0.75 for fiscal 2006. Revenue, net of subcontractor costs, for fiscal 2006 is expected to range from $850 million to $950 million.

 

3



 

The effect of SFAS 123R on diluted EPS is expected to be approximately $0.09 to $0.10 during fiscal 2006.

 

Webcast

 

Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the first quarter results through a link posted on the Company’s web site at www.tetratech.com on January 26, 2006 at 8:00 a.m. (PST).

 

About Tetra Tech (www.tetratech.com)

 

Tetra Tech is a leading provider of consulting, engineering, and technical services. With over 7,500 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, program management, construction management, and operations and maintenance.

 

CONTACT: Mike Bieber, (626) 351-4664

 

4



 

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, 10Q, 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; the impact of downturns in the financial markets and reductions in government budgets; volatility of common stock value; concentration of revenues from government agencies and funding disruptions by these agencies; failure to properly manage projects; acquisition strategy risks; management of growth strategy; use of the percentage-of-completion method of accounting; adverse resolution of an IRS examination; loss of key personnel or the inability to attract and retain qualified personnel; implementation of the enterprise resource planning system; international operations risks; credit risks associated with commercial clients; 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 and adjustments; client base consolidation; failure of partners to perform on joint projects; inability to find qualified subcontractors; changes in existing environmental laws, regulations, or programs; competition; restrictive covenants in debt agreements; risks of professional and other liabilities; adverse resolution of litigation; conflict of interest issues; changes in accounting for equity-related compensation; expenses associated with corporate governance; and disruption of operations due to computer viruses or terrorism. 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.

 

5



 

TETRA TECH, INC.

Condensed Consolidated Balance Sheets

(in thousands, except par value)

 

 

 

January 1,
2006

 

October 2,
2005

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

14,692

 

$

26,861

 

Accounts receivable - net

 

315,654

 

304,905

 

Prepaid expenses and other current assets

 

25,835

 

20,936

 

Income taxes receivable

 

18,219

 

64

 

Current assets of discontinued operations

 

7,424

 

40,090

 

Total current assets

 

381,824

 

392,856

 

 

 

 

 

 

 

Property and equipment:

 

 

 

 

 

Equipment, furniture, and fixtures

 

73,214

 

70,863

 

Leasehold improvements

 

9,057

 

9,021

 

Total

 

82,271

 

79,884

 

 

 

 

 

 

 

Accumulated depreciation and amortization

 

(50,652

)

(48,248

)

Property and equipment - net

 

31,619

 

31,636

 

 

 

 

 

 

 

Deferred income taxes

 

8,203

 

7,469

 

Income taxes receivable

 

33,800

 

33,800

 

Goodwill

 

159,175

 

159,175

 

Intangible and other assets - net

 

26,455

 

16,399

 

Noncurrent assets of discontinued operations

 

2,435

 

8,708

 

 

 

 

 

 

 

Total assets

 

$

643,511

 

$

650,043

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts Payable

 

$

73,571

 

$

88,508

 

Accrued compensation

 

39,724

 

50,935

 

Billings in excess of costs on uncompleted contracts

 

45,165

 

48,560

 

Deferred income taxes

 

17,048

 

7,009

 

Current portion of long-term obligations

 

17,713

 

12,285

 

Other current liabilites

 

47,606

 

45,137

 

Current liabilities of discontinued operations

 

3,772

 

18,809

 

Total current liabilities

 

244,599

 

271,243

 

 

 

 

 

 

 

Long-term obligations

 

84,026

 

74,138

 

 

 

 

 

 

 

Noncurrent liabilities of discontinued operations

 

 

47

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding as of January 1, 2006 and October 2, 2005

 

 

 

Common stock - authorized, 85,000 shares of $0.01 par value; issued and outstanding 57,156 and 57,048 shares as of January 1, 2006 and October 2, 2005, respectively

 

572

 

570

 

Additional Paid in Capital

 

253,391

 

251,112

 

Accumulated other comprehensive income

 

724

 

757

 

Retained earnings

 

60,199

 

52,176

 

 

 

 

 

 

 

Total stockholders’ equity

 

314,886

 

304,615

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

643,511

 

$

650,043

 

 



 

TETRA TECH, INC.

Condensed Consolidated Statements of Income

(Unaudited - in thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

January 1,
2006

 

January 2,
2005

 

Revenue

 

$

341,192

 

$

309,666

 

Subcontractor costs

 

111,433

 

83,799

 

Revenue, net of subcontractor costs

 

229,759

 

225,867

 

Other contract costs

 

185,372

 

188,549

 

Gross profit

 

44,387

 

37,318

 

Selling, general and administrative expenses

 

27,264

 

23,262

 

Income from operations

 

17,123

 

14,056

 

Interest expense - net

 

2,232

 

2,468

 

Income from continuing operations before income tax expense

 

14,891

 

11,588

 

Income tax expense

 

6,403

 

4,728

 

Income from continuing operations

 

8,488

 

6,860

 

Income (loss) from discontinued operations, net of tax

 

(465

)

1,043

 

Net income

 

$

8,023

 

$

7,903

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

Income from continuing operations

 

$

0.15

 

$

0.12

 

Income (loss) from discontinued operations, net of tax

 

(0.01

)

0.02

 

Net income

 

$

0.14

 

$

0.14

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

Income from continuing operations

 

$

0.15

 

$

0.12

 

Income (loss) from discontinued operations, net of tax

 

(0.01

)

0.02

 

Net income

 

$

0.14

 

$

0.14

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

 

57,102

 

56,469

 

Diluted

 

57,641

 

56,977

 

 

 

 

 

 

 

Percentage of revenue, net of subcontractor costs:

 

 

 

 

 

Revenue, net of subcontractor costs

 

100.0

%

100.0

%

Other contract costs

 

80.7

%

83.5

%

Gross profit

 

19.3

%

16.5

%

Selling, general and administrative expenses

 

11.9

%

10.3

%

Income from operations

 

7.4

%

6.2

%

Interest expense - net

 

1.0

%

1.1

%

Income from continuing operations before income tax expense

 

6.4

%

5.1

%

Income tax expense

 

2.8

%

2.1

%

Income from continuing operations

 

3.6

%

3.0

%

Income (loss) from discontinued operations, net of tax

 

-0.2

%

0.5

%

Net income

 

3.4

%

3.5

%