EX-99.1 3 a08-4247_1ex99d1.htm EX-99.1

Exhibit 99.1

 

January 30, 2008

 

Tetra Tech Reports First Quarter Results

 

                  Exceeds Earnings Guidance

 

                  EPS up 37.5%

 

                  Backlog up 25.9%

 

Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the first quarter ended December 30, 2007. The Company exceeded its earnings guidance for the quarter.

 

Revenue in the quarter was $470.4 million, up 27.4% from $369.2 million, and revenue, net of subcontractor costs, was $277.2 million, up 13.2% from $244.9 million for the same quarter last year. Income from operations for the quarter was $22.7 million, up 6.3% from $21.4 million for the same quarter last year. Net income for the quarter was $12.9 million, up 36.9% from $9.4 million for the same quarter last year. First quarter 2007 results were favorably affected by a $4.0 million litigation reserve reversal, which was offset by a $4.2 million charge from the early retirement of senior notes. Diluted earnings per share (EPS) for the quarter was $0.22, up 37.5% from $0.16 for the same quarter last year. Backlog at the end of the quarter was a record $1.30 billion, up 25.9% from $1.03 billion at the end of the same quarter last year. Cash used in operations was $18.1 million for each of the first quarters of fiscal 2007 and 2008.

 

Compared to the first quarter of fiscal 2007, Tetra Tech’s federal government business grew 7.1%, driven by the Company’s ARD acquisition; state and local business grew 33.6%, driven by municipal combined sewer overflow (CSO) programs; and commercial business grew 11.9%, driven by contributions across all segments.

 

Reflecting on the first quarter results, Tetra Tech’s CEO Dan Batrack remarked, “The first quarter was one of the Company’s strongest growth periods in the past three years. We continued to see broad-based demand for our services across all of our end markets. We reached a new record backlog of $1.3 billion and achieved a sequential reduction in our days in sales outstanding this quarter. Looking forward, we expect to achieve annual revenue and EPS growth of more than 15%.”

 



 

 

 

Three Months Ended

 

In thousands (except EPS data)

 

December 30,
2007

 

December 31,
2006

 

Revenue

 

$

470,387

 

$

369,153

 

Revenue, net of subcontractor costs

 

277,161

 

244,871

 

Income from operations

 

22,711

 

21,365

 

Interest expense, net

 

(660

)

(749

)

Loss on retirement of debt

 

 

(4,226

)

Income tax expense

 

(9,151

)

(6,964

)

Net income

 

$

12,900

 

$

9,426

 

 

 

 

 

 

 

EPS:

 

 

 

 

 

Basic

 

$

0.22

 

$

0.16

 

Diluted

 

$

0.22

 

$

0.16

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

 

58,313

 

57,712

 

Diluted

 

59,163

 

58,220

 

 

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 second quarter of fiscal 2008 to be in the range of $0.19 to $0.21. Revenue, net of subcontractor costs, for the second quarter is expected to range from $260 million to $280 million. For fiscal 2008, Tetra Tech is narrowing its earnings guidance, and now expects diluted EPS to be $0.87 to $0.93. Revenue, net of subcontractor costs, for fiscal 2008 is expected to range from $1.11 billion to $1.21 billion.

 

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 31, 2008 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 approximately 8,500 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, construction, and operations and maintenance.

 

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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 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.

 

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TETRA TECH, INC.

Condensed Consolidated Balance Sheets

(in thousands, except par value)

 

 

 

December 30,
2007

 

September 30,
2007

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

18,160

 

$

76,741

 

Accounts receivable - net

 

472,119

 

437,315

 

Prepaid expenses and other current assets

 

32,023

 

28,496

 

Income taxes receivables

 

7,494

 

 

Deferred income taxes - assets

 

4,297

 

 

Current assets of discontinued operations

 

300

 

304

 

Total current assets

 

534,393

 

542,856

 

Property and equipment:

 

 

 

 

 

Land and buildings

 

6,667

 

6,630

 

Equipment, furniture and fixtures

 

102,652

 

100,391

 

Leasehold improvements

 

10,896

 

10,738

 

Total

 

120,215

 

117,759

 

Accumulated depreciation and amortization

 

(64,512

)

(63,382

)

Property and equipment - net

 

55,703

 

54,377

 

Deferred income taxes

 

7,958

 

12,342

 

Income taxes receivable

 

19,078

 

33,800

 

Goodwill

 

194,971

 

180,952

 

Intangible assets - net

 

16,914

 

5,166

 

Other assets

 

12,994

 

15,576

 

Non-current assets of discontinued operations

 

2,418

 

2,418

 

Total Assets

 

$

844,429

 

$

847,487

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

153,216

 

$

154,560

 

Accrued compensation

 

53,592

 

78,029

 

Billings in excess of costs on uncompleted contracts

 

71,096

 

55,172

 

Deferred income taxes

 

 

13,035

 

Income taxes payable

 

 

1,576

 

Current portion of long-term obligations

 

3,197

 

3,304

 

Other current liabilities

 

51,948

 

42,794

 

Current liabilities of discontinued operations

 

2

 

11

 

Total current liabilities

 

333,051

 

348,481

 

Long-term obligations

 

74,764

 

81,080

 

Other long-term liabilities

 

4,432

 

2,223

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding as of December 30, 2007 and September 30, 2007

 

 

 

Common stock - authorized, 85,000 shares of $0.01 par value; issued and outstanding 58,506 and 58,387 shares as of December 30, 2007 and September 30, 2007, respectively

 

585

 

584

 

Additional paid-in capital

 

283,572

 

280,022

 

Accumulated other comprehensive (loss) income

 

(9

)

(37

)

Retained earnings

 

148,034

 

135,134

 

Total stockholders’ equity

 

432,182

 

415,703

 

Total Liabilities and Stockholders’ Equity

 

$

844,429

 

$

847,487

 

 



 

TETRA TECH, INC.

Condensed Consolidated Statements of Income

(unaudited - in thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

December 30,

 

December 31,

 

 

 

2007

 

2006

 

 

 

 

 

 

 

Revenue

 

$

470,387

 

$

369,153

 

Subcontractor costs

 

(193,226

)

(124,282

)

Revenue, net of subcontractor costs

 

277,161

 

244,871

 

Other contract costs

 

(220,912

)

(200,452

)

Gross profit

 

56,249

 

44,419

 

Selling, general and administrative expenses

 

(33,538

)

(23,054

)

Income from operations

 

22,711

 

21,365

 

 

 

 

 

 

 

Interest expense - net

 

(660

)

(749

)

Loss on retirement of debt

 

 

(4,226

)

Income before income tax expense

 

22,051

 

16,390

 

Income tax expense

 

(9,151

)

(6,964

)

Net income

 

$

12,900

 

$

9,426

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

Basic

 

$

0.22

 

$

0.16

 

 

 

 

 

 

 

Diluted

 

$

0.22

 

$

0.16

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

 

58,313

 

57,712

 

 

 

 

 

 

 

Diluted

 

59,163

 

58,220

 

 



 

TETRA TECH, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited - in thousands)

 

 

 

Three Months Ended

 

 

 

December 30,

 

December 31,

 

 

 

2007

 

2006

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

12,900

 

$

9,426

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

Depreciation and amortization

 

4,327

 

3,231

 

Stock-based compensation

 

1,710

 

1,089

 

Excess tax benefits from stock-based compensation

 

(208

)

(53

)

Deferred income taxes

 

5,175

 

6,111

 

Write-off of unamortized debt financing costs

 

 

1,069

 

Provision for losses on contracts and related receivables

 

2,407

 

578

 

Gain on disposal of property and equipment

 

(1,032

)

(41

)

 

 

 

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

Accounts receivable

 

(2,218

)

(4,880

)

Prepaid expenses and other assets

 

(1,686

)

728

 

Accounts payable

 

(9,367

)

632

 

Accrued compensation

 

(28,522

)

(26,073

)

Billings in excess of costs on uncompleted contracts

 

13,289

 

3,026

 

Other liabilities

 

(1,522

)

(8,015

)

Income taxes receivable/payable

 

(13,361

)

(4,883

)

Net cash used in operating activities

 

(18,108

)

(18,055

)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(4,314

)

(2,137

)

Payments for business acquisitions, net of cash acquired

 

(34,179

)

(100

)

Proceeds from sale of discontinued operations

 

1,005

 

1,531

 

Proceeds from sale of property and equipment

 

1,386

 

42

 

Net cash used in investing activities

 

(36,102

)

(664

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Payments on long-term obligations

 

(6,108

)

(72,989

)

Proceeds from borrowings under long-term obligations

 

 

57,000

 

Excess tax benefits from stock-based compensation

 

208

 

53

 

Net proceeds from issuance of common stock

 

1,529

 

675

 

Net cash used in financing activities

 

(4,371

)

(15,261

)

 

 

 

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

(58,581

)

(33,980

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

76,741

 

65,353

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

18,160

 

$

31,373

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest, net of refunds received

 

$

1,378

 

$

3,299

 

Income taxes, net of refunds received

 

$

12,676

 

$

5,717