EX-99.1 2 a08-20477_1ex99d1.htm EX-99.1

Exhibit 99.1

 

July 30, 2008

 

Tetra Tech Reports Record Third Quarter Results
Exceeding Revenue and Earnings Guidance

 

 

·

Net Revenue up 29.6%

 

 

 

 

·

Net Income up 29.8%

 

 

 

 

·

Backlog up 29.3%

 

Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the third quarter ended June 29, 2008.  The Company exceeded both its revenue and earnings guidance for the quarter.

 

Third Quarter Results

 

Revenue in the quarter was $564.3 million, up 39.7% from $404.0 million, and revenue, net of subcontractor costs, was $332.3 million, up 29.6% from $256.3 million for the same quarter last year. Income from operations for the quarter was $28.1 million, up 27.0% from $22.1 million for the same quarter last year.  Net income for the quarter was $16.1 million, up 29.8% from $12.4 million for the same quarter last year.  Diluted earnings per share (EPS) for the quarter was $0.27, up 28.6% from $0.21 for the same quarter last year.  Backlog at the end of the quarter was a record $1.57 billion, up 29.3% from $1.22 billion at the end of the same quarter last year.  Cash generated from operations improved in the third quarter to $16.8 million, up 114.4% from $7.8 million for the same quarter last year.

 

Compared to the third quarter of fiscal 2007, Tetra Tech’s federal government business grew 34.0%, driven by increased workload with the U.S. Agency for International Development and the U.S. Department of Defense; state and local business grew 12.6%, due largely to regulatory-driven water programs; and commercial business grew 36.0%, driven largely by wind energy projects.

 

Nine Month Results

 

Revenue for the first nine months was $1.496 billion, up 33.7% from $1.119 billion, and revenue, net of subcontractor costs, was $896.8 million, an increase of 21.6% from $737.5 million for the same period last year.  Income from operations for the first nine months was $75.6 million, up 22.3% from $61.8 million for the same period last year.  Net income for the first nine months was $42.7 million, up 32.4% from $32.3 million for the same period last year.  Diluted EPS for the first nine months was $0.72, up 30.9% from $0.55 for the same period last year.  Cash generated from operations improved in the first nine months to $43.1 million, up 267.0% from $11.7 million for the same period last year.

 

Tetra Tech’s Chairman and CEO Dan Batrack remarked, “We are very pleased with the Company’s third quarter results. This excellent performance was driven by our strategy to focus on water, environmental, and alternative energy solutions. We are confident in our outlook for fiscal 2008.”

 



 

 

 

Three Months Ended

 

Nine Months Ended

 

In thousands (except EPS data)

 

June 29,
2008

 

July 1,
2007

 

June 29,
2008

 

July 1,
2007

 

Revenue

 

$

564,277

 

$

403,951

 

$

1,496,050

 

$

1,119,123

 

Revenue, net of subcontractor costs

 

332,269

 

256,326

 

896,781

 

737,456

 

Income from operations

 

28,050

 

22,085

 

75,591

 

61,828

 

Interest expense, net

 

(483

)

(657

)

(2,600

)

(1,901

)

Loss on retirement of debt

 

 

 

 

(4,226

)

Income tax expense

 

(11,432

)

(9,026

)

(30,283

)

(23,490

)

Income from continuing operations

 

16,135

 

12,402

 

42,708

 

32,211

 

Income from discontinued operation, net of tax

 

 

26

 

 

52

 

Net income

 

$

16,135

 

$

12,428

 

$

42,708

 

$

32,263

 

 

 

 

 

 

 

 

 

 

 

Basic EPS:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.27

 

$

0.21

 

$

0.73

 

$

0.56

 

Income from discontinued operation, net of tax

 

 

 

 

 

Net income

 

$

0.27

 

$

0.21

 

$

0.73

 

$

0.56

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.27

 

$

0.21

 

$

0.72

 

$

0.55

 

Income from discontinued operation, net of tax

 

 

 

 

 

Net income

 

$

0.27

 

$

0.21

 

$

0.72

 

$

0.55

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

58,943

 

58,030

 

58,590

 

57,859

 

Diluted

 

59,833

 

58,786

 

59,331

 

58,452

 

 

2



 

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 fourth quarter of fiscal 2008 to be in the range of $0.27 to $0.29.  Revenue, net of subcontractor costs, for the fourth quarter is expected to range from $325 million to $345 million.  For fiscal 2008, Tetra Tech is raising its earnings guidance, and now expects diluted EPS to be $0.99 to $1.01.  Revenue, net of subcontractor costs, for fiscal 2008 is now expected to range from $1.22 billion to $1.24 billion.

 

Webcast

 

Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the third quarter results through a link posted on the Company’s web site at www.tetratech.com on July 31, 2008 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 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.

 

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)

 

 

 

June 29,
2008

 

September 30,
2007

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

49,364

 

$

76,741

 

Accounts receivable - net

 

537,064

 

437,315

 

Prepaid expenses and other current assets

 

36,210

 

28,496

 

Income taxes receivables

 

8,160

 

 

Deferred income taxes

 

2,561

 

 

Current assets of discontinued operation

 

300

 

304

 

Total current assets

 

633,659

 

542,856

 

 

 

 

 

 

 

Property and equipment:

 

 

 

 

 

Land and buildings

 

6,635

 

6,630

 

Equipment, furniture and fixtures

 

110,112

 

100,391

 

Leasehold improvements

 

11,648

 

10,738

 

Total

 

128,395

 

117,759

 

Accumulated depreciation and amortization

 

(68,173

)

(63,382

)

Property and equipment - net

 

60,222

 

54,377

 

 

 

 

 

 

 

Deferred income taxes

 

8,316

 

12,342

 

Income taxes receivable

 

16,424

 

33,800

 

Goodwill

 

206,955

 

180,952

 

Intangible assets - net

 

13,188

 

5,166

 

Other assets

 

13,328

 

15,576

 

Non-current assets of discontinued operation

 

2,418

 

2,418

 

Total Assets

 

$

954,510

 

$

847,487

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

177,725

 

$

154,560

 

Accrued compensation

 

79,136

 

78,029

 

Billings in excess of costs on uncompleted contracts

 

90,725

 

55,172

 

Deferred income taxes

 

 

13,035

 

Income taxes payable

 

 

1,576

 

Current portion of long-term obligations

 

4,019

 

3,304

 

Other current liabilities

 

54,330

 

42,805

 

Total current liabilities

 

405,935

 

348,481

 

 

 

 

 

 

 

Long-term obligations

 

63,236

 

81,080

 

Other long-term liabilities

 

3,927

 

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 June 29, 2008 and September 30, 2007

 

 

 

Common stock - authorized, 85,000 shares of $0.01 par value; issued and outstanding 59,435 and 58,387 shares as of June 29, 2008 and September 30, 2007, respectively

 

594

 

584

 

Additional paid-in capital

 

303,091

 

280,022

 

Accumulated other comprehensive loss

 

(115

)

(37

)

Retained earnings

 

177,842

 

135,134

 

Total stockholders’ equity

 

481,412

 

415,703

 

Total Liabilities and Stockholders’ Equity

 

$

954,510

 

$

847,487

 

 



 

Tetra Tech, Inc.

Condensed Consolidated Statements of Income

(unaudited - in thousands, except per share data)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

June 29,

 

July 1,

 

June 29,

 

July 1,

 

 

 

2008

 

2007

 

2008

 

2007

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

564,277

 

$

403,951

 

$

1,496,050

 

$

1,119,123

 

Subcontractor costs

 

(232,008

)

(147,625

)

(599,269

)

(381,667

)

Revenue, net of subcontractor costs

 

332,269

 

256,326

 

896,781

 

737,456

 

 

 

 

 

 

 

 

 

 

 

Other contract costs

 

(266,379

)

(202,313

)

(716,874

)

(593,877

)

Gross profit

 

65,890

 

54,013

 

179,907

 

143,579

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

(37,840

)

(31,928

)

(104,316

)

(81,751

)

Income from operations

 

28,050

 

22,085

 

75,591

 

61,828

 

 

 

 

 

 

 

 

 

 

 

Interest expense - net

 

(483

)

(657

)

(2,600

)

(1,901

)

Loss on retirement of debt

 

 

 

 

(4,226

)

Income from continuing operations before income tax expense

 

27,567

 

21,428

 

72,991

 

55,701

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

(11,432

)

(9,026

)

(30,283

)

(23,490

)

Income from continuing operations

 

16,135

 

12,402

 

42,708

 

32,211

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operation, net of tax

 

 

26

 

 

52

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

16,135

 

$

12,428

 

$

42,708

 

$

32,263

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.27

 

$

0.21

 

$

0.73

 

$

0.56

 

Income from discontinued operation

 

 

 

 

 

Net income

 

$

0.27

 

$

0.21

 

$

0.73

 

$

0.56

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.27

 

$

0.21

 

$

0.72

 

$

0.55

 

Income from discontinued operation

 

 

 

 

 

Net income

 

$

0.27

 

$

0.21

 

$

0.72

 

$

0.55

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

58,943

 

58,030

 

58,590

 

57,859

 

Diluted

 

59,833

 

58,786

 

59,331

 

58,452

 

 



 

TETRA TECH, INC

Condensed Consolidated Statements of Cash Flows

(unaudited - in thousands)

 

 

 

Nine Months Ended

 

 

 

June 29,

 

July 1,

 

 

 

2008

 

2007

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

42,708

 

$

32,263

 

 

 

 

 

 

 

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

 

 

 

 

 

Depreciation and amortization

 

13,398

 

9,841

 

Stock-based compensation

 

6,140

 

4,242

 

Excess tax benefits from stock-based compensation

 

(1,060

)

(420

)

Deferred income taxes

 

9,034

 

4,106

 

Write-off of unamortized debt financing costs

 

 

1,069

 

Provision for losses on contracts and related receivables

 

7,561

 

1,737

 

Gain on sale of discontinued operation

 

 

(262

)

Gain on disposal of property and equipment

 

(1,214

)

(341

)

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(69,734

)

(66,272

)

Prepaid expenses and other assets

 

(7,752

)

(2,294

)

Accounts payable

 

13,505

 

28,636

 

Accrued compensation

 

(3,021

)

(4,619

)

Billings in excess of costs on uncompleted contracts

 

32,918

 

9,131

 

Other liabilities

 

12,931

 

(4,448

)

Income taxes receivable/payable

 

(12,310

)

(625

)

Net cash provided by operating activities

 

43,104

 

11,744

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(13,831

)

(8,124

)

Payments for business acquisitions, net of cash acquired

 

(58,508

)

(30,174

)

Proceeds from sale of discontinued operations

 

2,689

 

3,045

 

Proceeds from sale of property and equipment

 

2,026

 

425

 

Net cash used in investing activities

 

(67,624

)

(34,828

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Payments on long-term obligations

 

(31,415

)

(98,410

)

Proceeds from borrowings under long-term obligations

 

15,000

 

88,000

 

Payment of deferred financing fees

 

 

(1,032

)

Excess tax benefits from stock-based compensation

 

1,060

 

420

 

Net proceeds from issuance of common stock

 

12,498

 

6,399

 

Net cash used in financing activities

 

(2,857

)

(4,623

)

 

 

 

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

(27,377

)

(27,707

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

76,741

 

65,353

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

49,364

 

$

37,646

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

$

3,258

 

$

5,552

 

Income taxes, net of refunds received

 

$

28,736

 

$

20,019