EX-99.1 2 a07-13057_1ex99d1.htm EX-99.1

Exhibit 99.1

May 2, 2007

Tetra Tech Reports Second Quarter Results

Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the second quarter ended April 1, 2007.  The Company achieved the high end of its earnings guidance for the quarter.

Second Quarter Results

Revenue in the quarter was $346.0 million, up 8.5% from $318.9 million, and revenue, net of subcontractor costs, was $236.3 million, down 0.6% from $237.7 million for the same quarter last year.  Income from operations for the quarter was $18.4 million, up 13.3% from $16.2 million for the same quarter last year.  Net income for the second quarter was $10.4 million, up 16.1% from $9.0 million for the same quarter last year.  Diluted earnings per share (EPS) from continuing operations was $0.18, up 28.6% from $0.14 for the same quarter last year.  The second quarter results were positively impacted by approximately $1.0 million of net litigation settlements.  Backlog at the end of the second quarter was a record $1.085 billion, up 15.3% from $941 million at the end of the same quarter last year. Cash provided by operations for the quarter was $22.0 million.

Six Month Results

Revenue for the first six months was $715.2 million, up 8.3% from $660.1 million, and revenue, net of subcontractor costs, was $481.1 million, an increase of 2.9% from $467.5 million for the same period last year.  Income from operations for the first six months was $39.7 million, up 19.2% from $33.3 million for the same period last year.  Net income for the first six months was $19.8 million, up 16.8% from $17.0 million for the same period last year.  Diluted EPS for the first six months was $0.34, up 17.2% from $0.29 for the same period last year.

Reflecting on the second quarter results, Tetra Tech CEO Dan Batrack stated, “We are pleased with our continued strong performance, particularly the significant increase in our backlog.  We remain focused on providing outstanding services to our customers and expanding the business strategically.”




 

 

 

Three Months Ended

 

Six Months Ended

 

In thousands (except EPS data)

 

April 1,
2007

 

April 2,
 2006

 

April 1,
 2007

 

April 2,
2006

 

Revenue

 

$

346,019

 

$

318,892

 

$

715,172

 

$

660,084

 

Revenue, net of subcontractor costs

 

236,259

 

237,716

 

481,130

 

467,475

 

Income from operations

 

18,378

 

16,224

 

39,743

 

33,347

 

Interest expense, net

 

(495

)

(1,873

)

(1,244

)

(4,105

)

Loss on retirement of debt

 

 

 

(4,226

)

 

Income tax expense

 

(7,500

)

(6,246

)

(14,464

)

(12,649

)

Income from continuing operations

 

10,383

 

8,105

 

19,809

 

16,593

 

Income from discontinued operations, net of tax

 

26

 

859

 

26

 

394

 

Net income

 

$

10,409

 

$

8,964

 

$

19,835

 

$

16,987

 

 

 

 

 

 

 

 

 

 

 

Basic EPS:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.18

 

$

0.14

 

$

0.34

 

$

0.29

 

Income from discontinued operations, net of tax

 

 

0.02

 

 

0.01

 

Net income

 

$

0.18

 

$

0.16

 

$

0.34

 

$

0.30

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.18

 

$

0.14

 

$

0.34

 

$

0.29

 

Income from discontinued operations, net of tax

 

 

0.02

 

 

 

Net income

 

$

0.18

 

$

0.16

 

$

0.34

 

$

0.29

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

57,838

 

57,262

 

57,773

 

57,182

 

Diluted

 

58,323

 

57,806

 

58,270

 

57,724

 

 

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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 diluted EPS for the third quarter of fiscal 2007 to be in the range of $0.19 to $0.21.  Revenue, net of subcontractor costs, for the third quarter is expected to range from $245 million to $260 million.  For fiscal 2007, Tetra Tech now expects diluted EPS to be $0.73 to $0.78.  Revenue, net of subcontractor costs, for fiscal 2007 is expected to range from $975 million to $1.015 billion.

Webcast

Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the second quarter results through a link posted on the Company’s web site at www.tetratech.com on May 3, 2007 at 8:00 a.m. (PDT).

About Tetra Tech (www.tetratech.com)

Tetra Tech is a leading provider of consulting, engineering, and technical services. With approximately 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.

CONTACTS:
Jorge Casado, Investor Relations
Talia Starkey, Media & Public Relations
(626) 351-4664

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: 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

3




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.

4




TETRA TECH, INC.

Condensed Consolidated Balance Sheets

(in thousands, except par value)

 

 

 

April 1,

 

October 1,

 

 

 

2007

 

2006

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

22,564

 

$

65,353

 

Accounts receivable - net

 

348,496

 

346,543

 

Prepaid expenses and other current assets

 

23,622

 

21,757

 

Income taxes receivable

 

10,260

 

5,063

 

Current assets of discontinued operations

 

593

 

865

 

Total current assets

 

405,535

 

439,581

 

Property and equipment:

 

 

 

 

 

Equipment, furniture, and fixtures

 

83,609

 

79,225

 

Leasehold improvements

 

9,097

 

8,798

 

Total

 

92,706

 

88,023

 

Accumulated depreciation and amortization

 

(59,273

)

(56,033

)

Property and equipment - net

 

33,433

 

31,990

 

 

 

 

 

 

 

Deferred income taxes

 

10,129

 

12,909

 

Income taxes receivable

 

33,800

 

33,800

 

Goodwill

 

158,976

 

158,581

 

Intangible assets - net

 

6,522

 

4,507

 

Other assets

 

15,688

 

17,893

 

Non-current assets of discontinued operations

 

2,418

 

2,418

 

Total Assets

 

$

666,501

 

$

701,679

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

98,620

 

$

104,626

 

Accrued compensation

 

58,800

 

67,592

 

Billing in excess of costs on uncompleted contracts

 

43,924

 

41,345

 

Deferred income taxes

 

17,689

 

15,386

 

Current portion of long-term obligations

 

627

 

17,760

 

Other current liabilities

 

33,189

 

42,200

 

Current liabilities of discontinued operations

 

370

 

359

 

Total current liabilities

 

253,219

 

289,268

 

Long-term obligations

 

33,583

 

57,608

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding as of April 1, 2007 and October 1, 2006

 

 

 

Common stock - authorized, 85,000 shares of $0.01 par value; issued and outstanding 57,883 and 57,676 shares as of April 1, 2007 and October 1, 2006, respectively

 

580

 

577

 

Additional paid in capital

 

270,507

 

265,444

 

Accumulated other comprehensive income (loss)

 

(4

)

1

 

Retained earnings

 

108,616

 

88,781

 

Total stockholders’ equity

 

379,699

 

354,803

 

Total Liabilities and Stockholders’ Equity

 

$

666,501

 

$

701,679

 

 




TETRA TECH, INC.

Condensed Consolidated Statements of Income

(unaudited - in thousands, except per share data)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

April 1,

 

April 2,

 

April 1,

 

April 2,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

346,019

 

$

318,892

 

$

715,172

 

$

660,084

 

Subcontractor costs

 

109,760

 

81,176

 

234,042

 

192,609

 

Revenue, net of subcontractor costs

 

236,259

 

237,716

 

481,130

 

467,475

 

Other contract costs

 

191,112

 

191,155

 

391,564

 

376,527

 

Gross profit

 

45,147

 

46,561

 

89,566

 

90,948

 

Selling, general and administrative expenses

 

26,769

 

30,337

 

49,823

 

57,601

 

Income from operations

 

18,378

 

16,224

 

39,743

 

33,347

 

Interest expense - net

 

495

 

1,873

 

1,244

 

4,105

 

Loss on retirement of debt

 

 

 

4,226

 

 

Income from continuing operations before income tax expense

 

17,883

 

14,351

 

34,273

 

29,242

 

Income tax expense

 

7,500

 

6,246

 

14,464

 

12,649

 

Income from continuing operations

 

10,383

 

8,105

 

19,809

 

16,593

 

Income from discontinued operations, net of tax

 

26

 

859

 

26

 

394

 

Net income

 

$

10,409

 

$

8,964

 

$

19,835

 

$

16,987

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.18

 

$

0.14

 

$

0.34

 

$

0.29

 

Income from discontinued operations, net of tax

 

 

0.02

 

 

0.01

 

Net income

 

$

0.18

 

$

0.16

 

$

0.34

 

$

0.30

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.18

 

$

0.14

 

$

0.34

 

$

0.29

 

Income from discontinued operations, net of tax

 

 

0.02

 

 

 

Net income

 

$

0.18

 

$

0.16

 

$

0.34

 

$

0.29

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

57,838

 

57,262

 

57,773

 

57,182

 

Diluted

 

58,323

 

57,806

 

58,270

 

57,724

 

 




TETRA TECH, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited - in thousands)

 

 

 

Six Months Ended

 

 

 

April 1,

 

April 2,

 

 

 

2007

 

2006

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

19,835

 

$

16,987

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

6,211

 

6,663

 

Stock-based compensation

 

2,566

 

2,248

 

Deferred income taxes

 

5,083

 

8,231

 

Write-off of unamortized debt financing costs

 

1,069

 

 

Provision for losses on contracts and related receivables

 

410

 

199

 

Gain on sale of discontinued operations

 

(44

)

(1,415

)

Gain on disposal of property and equipment

 

(192

)

(3

)

 

 

 

 

 

 

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

 

 

 

 

 

Accounts receivable

 

(2,923

)

21,450

 

Prepaid expenses and other assets

 

(1,545

)

(1,829

)

Accounts payable

 

(6,949

)

(38,434

)

Accrued compensation

 

(8,792

)

1,341

 

Billings in excess of costs on uncompleted contracts

 

2,579

 

(4,514

)

Other current liabilities

 

(8,362

)

987

 

Income taxes receivable/payable

 

(4,905

)

3,152

 

Net cash provided by operating activities

 

4,041

 

15,063

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(4,635

)

(5,857

)

Payments for business acquisitions

 

(4,124

)

(1,900

)

Proceeds from sale of discontinued operations

 

1,890

 

3,475

 

Proceeds from sale of property and equipment

 

253

 

125

 

Net cash used in investing activities

 

(6,616

)

(4,157

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Payments on long-term obligations

 

(98,158

)

(11,159

)

Proceeds from borrowings under long-term obligations

 

57,000

 

10,000

 

Payment of deferred financing fees

 

(1,032

)

 

Net proceeds from issuance of common stock

 

1,976

 

3,018

 

Net cash (used in) provided by financing activities

 

(40,214

)

1,859

 

 

 

 

 

 

 

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

(42,789

)

12,765

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

65,353

 

26,861

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

22,564

 

$

39,626

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

$

4,398

 

$

4,418

 

Income taxes, net of refunds received

 

$

14,279

 

$

722