EX-99.1 2 a09-20123_1ex99d1.htm EX-99.1

Exhibit 99.1

 

July 29, 2009

 

Tetra Tech Reports Third Quarter Results
Exceeding Net Revenue and EPS Guidance

 

·                  Record net revenue: $356.9 million

·                  Diluted EPS: $0.51, including $0.16 tax benefit from prior years

·                  Cash from operations: $60.8 million

 

Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the third quarter ended June 28, 2009.

 

Third Quarter Results

 

Revenue in the quarter was $551.4 million, down 2.3% from $564.3 million, and revenue, net of subcontractor costs, was $356.9 million, up 7.4% from $332.3 million for the same quarter last year. Income from operations was $32.8 million, up 16.8% from $28.1 million for the same quarter last year.  Net income was $31.0 million, up 92.2% from $16.1 million for the same quarter last year.  Diluted earnings per share (EPS) were $0.51, up 88.2% from $0.27 for the same quarter last year.  Diluted EPS included approximately $0.16 from a tax benefit related to prior years’ research and experimentation tax credits.  Backlog was $1.70 billion, up 8.2% from $1.57 billion at the end of the same quarter last year.  Cash generated from operations improved to $60.8 million, up 261.8% from $16.8 million for the same quarter last year.  Cash generated from operations in the third quarter benefited from a $39.8 million cash refund related to the second quarter IRS settlement.

 

Commenting on the third quarter results, Tetra Tech’s Chairman and CEO Dan Batrack remarked, “During this challenging economic environment, I am pleased to report very strong performance in the third quarter.  We were successful in winning several key new orders, and completed three acquisitions in the quarter.  The quarter’s financial results were highlighted by strong cash generation, improved operating margin, and tax benefits.  The Company remains on track for a solid fiscal 2009.”

 

Nine Month Results

 

Revenue for the first nine months was $1,712.4 million, up 14.5% from $1,496.1 million, and revenue, net of subcontractor costs, was $1,019.2 million, an increase of 13.6% from $896.8 million for the same period last year.  Income from operations was $89.2 million, up 18.0% from $75.6 million for the same period last year.  Net income was $66.5 million, up 55.8% from $42.7 million for the same period last year.  Diluted EPS were $1.10 including tax benefits, up 52.3% from $0.72 for the same period last year.  Cash generated from operations improved to $107.4 million, up 149.3% compared to $43.1 million for the same period last year.

 



 

In thousands (except EPS data)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

June 28,
2009

 

June 29,
2008

 

June 28,
2009

 

June 29,
2008

 

Revenue

 

$

551,376

 

$

564,277

 

$

1,712,364

 

$

1,496,050

 

Revenue, net of subcontractor costs

 

356,927

 

332,269

 

1,019,167

 

896,781

 

Income from operations

 

32,751

 

28,050

 

89,196

 

75,591

 

Interest expense, net

 

(473

)

(483

)

(2,240

)

(2,600

)

Income tax expense

 

(1,267

)

(11,432

)

(20,423

)

(30,283

)

Net income

 

$

31,011

 

$

16,135

 

$

66,533

 

$

42,708

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.52

 

$

0.27

 

$

1.11

 

$

0.73

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.51

 

$

0.27

 

$

1.10

 

$

0.72

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

60,123

 

58,943

 

59,947

 

58,590

 

Diluted

 

61,108

 

59,833

 

60,707

 

59,331

 

 

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 2009 to be in the range of $0.30 to $0.33.  Revenue, net of subcontractor costs, for the fourth quarter is expected to range from $330 million to $360 million.  For fiscal 2009, Tetra Tech is raising its EPS guidance and now expects diluted EPS to be $1.40 to $1.43, which includes $0.22 in year to date tax benefits.  Revenue, net of subcontractor costs, for fiscal 2009 is expected to range from $1.35 billion to $1.38 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 30, 2009 at 8:00 a.m. (PDT).

 

2



 

About Tetra Tech (www.tetratech.com)

 

Tetra Tech is a leading provider of consulting, engineering, program management, construction, and technical services addressing the resource management and infrastructure markets.  The Company supports government and commercial clients by providing innovative solutions focused on water, the environment, and energy.  With more than 10,000 employees worldwide, Tetra Tech’s capabilities span the entire project life cycle.

 

CONTACTS:
Jorge Casado, Investor Relations
Talia Starkey, Media & Public Relations
(626) 470-2844

 

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:  worldwide political and economic uncertainties; fluctuations in annual revenue, expenses and operating results; the cyclicality in demand for state and local government services; concentration of revenues from government agencies and funding disruptions by these agencies; a shift in U.S. defense spending; a delay in the completion of the U.S. government budget process; impact of downturns in the financial markets and reductions in government budgets; violations of government contractor regulations; dependence on winning or renewing federal, state and local government contracts; the government’s right to modify, delay, curtail or terminate contracts at its convenience; the failure to properly manage projects; the loss of key personnel or the inability to attract and retain qualified personnel; the use of estimates and assumptions in the preparation of financial statements; the use of the percentage-of-completion method of accounting; the inability to accurately estimate contract risks, revenue and costs; the failure to win or renew contracts with private and public sector clients; acquisition strategy risks; goodwill impairment; growth strategy management; adverse resolution of an IRS examination; backlog cancellation and adjustments; risks associated with international operations; the failure of partners to perform on joint projects; the inability to find qualified subcontractors; the failure of subcontractors to satisfy their obligations; changes in existing environmental laws, regulations or programs; credit risks associated with commercial clients; changes in capital markets and the access to capital; credit agreement covenants; industry competition; the volatility of common stock value; liability risks and the ability to obtain or maintain adequate insurance; the ability to obtain adequate bonding; safety programs; conflict of interest issues; force majeure events; protection of intellectual property rights; and the implementation of the enterprise resource planning system. 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.

 

3



 

TETRA TECH, INC.

Condensed Consolidated Balance Sheets

(unaudited - in thousands, except par value)

 

 

 

June 28,
2009

 

September 28,
2008

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

48,275

 

$

50,902

 

Accounts receivable - net

 

555,799

 

625,786

 

Prepaid expenses and other current assets

 

54,188

 

36,774

 

Income taxes receivable

 

7,203

 

4,275

 

Deferred income taxes

 

 

2,316

 

Total current assets

 

665,465

 

720,053

 

 

 

 

 

 

 

Property and equipment:

 

 

 

 

 

Land and buildings

 

9,505

 

7,588

 

Equipment, furniture and fixtures

 

123,359

 

112,780

 

Leasehold improvements

 

13,392

 

10,804

 

Total

 

146,256

 

131,172

 

Accumulated depreciation and amortization

 

(77,322

)

(69,784

)

Property and equipment - net

 

68,934

 

61,388

 

 

 

 

 

 

 

Deferred income taxes

 

 

6,498

 

Income taxes receivable

 

 

14,953

 

Goodwill

 

310,210

 

221,545

 

Intangible assets - net

 

30,124

 

14,609

 

Other assets

 

17,522

 

15,081

 

Assets of discontinued operation

 

1,415

 

2,418

 

 

 

 

 

 

 

Total Assets

 

$

1,093,670

 

$

1,056,545

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

169,681

 

$

223,304

 

Accrued compensation

 

74,542

 

101,699

 

Billings in excess of costs on uncompleted contracts

 

97,936

 

100,336

 

Deferred income taxes

 

16,795

 

 

Current portion of long-term obligations

 

6,346

 

3,926

 

Other current liabilities

 

67,891

 

58,634

 

Total current liabilities

 

433,191

 

487,899

 

 

 

 

 

 

 

Deferred income taxes

 

3,554

 

 

Long-term obligations

 

48,531

 

53,292

 

Other long-term liabilities

 

6,236

 

3,840

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding as of June 28, 2009 and September 28, 2008

 

 

 

Common stock - authorized, 150,000 shares of $0.01 par value; issued and outstanding 60,469 and 59,875 shares as of June 28, 2009 and September 28, 2008, respectively

 

605

 

599

 

Additional paid-in capital

 

331,988

 

314,860

 

Accumulated other comprehensive income

 

6,992

 

15

 

Retained earnings

 

262,573

 

196,040

 

Total stockholders’ equity

 

602,158

 

511,514

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Equity

 

$

1,093,670

 

$

1,056,545

 

 



 

Tetra Tech, Inc.

Condensed Consolidated Statements of Income

(unaudited - in thousands, except per share data)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

June 28,

 

June 29,

 

June 28,

 

June 29,

 

 

 

2009

 

2008

 

2009

 

2008

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

551,376

 

$

564,277

 

$

1,712,364

 

$

1,496,050

 

Subcontractor costs

 

(194,449

)

(232,008

)

(693,197

)

(599,269

)

Revenue, net of subcontractor costs

 

356,927

 

332,269

 

1,019,167

 

896,781

 

Other contract costs

 

(282,258

)

(266,379

)

(813,835

)

(716,874

)

Gross profit

 

74,669

 

65,890

 

205,332

 

179,907

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

(41,918

)

(37,840

)

(116,136

)

(104,316

)

Income from operations

 

32,751

 

28,050

 

89,196

 

75,591

 

 

 

 

 

 

 

 

 

 

 

Interest expense - net

 

(473

)

(483

)

(2,240

)

(2,600

)

Income before income tax expense

 

32,278

 

27,567

 

86,956

 

72,991

 

Income tax expense

 

(1,267

)

(11,432

)

(20,423

)

(30,283

)

 

 

 

 

 

 

 

 

 

 

Net income

 

$

31,011

 

$

16,135

 

$

66,533

 

$

42,708

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.52

 

$

0.27

 

$

1.11

 

$

0.73

 

Diluted

 

$

0.51

 

$

0.27

 

$

1.10

 

$

0.72

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

60,123

 

58,943

 

59,947

 

58,590

 

Diluted

 

61,108

 

59,833

 

60,707

 

59,331

 

 



 

TETRA TECH, INC

Condensed Consolidated Statements of Cash Flows

(unaudited - in thousands)

 

 

 

Nine Months Ended

 

 

 

June 28,

 

June 29,

 

 

 

2009

 

2008

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

66,533

 

$

42,708

 

 

 

 

 

 

 

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

 

 

 

 

 

Depreciation and amortization

 

19,400

 

13,398

 

Stock-based compensation

 

6,988

 

6,140

 

Excess tax benefits from stock-based compensation

 

(400

)

(1,060

)

Deferred income taxes

 

4,411

 

9,034

 

Provision for losses on contracts and related receivables

 

14,674

 

7,561

 

Exchange loss (gain)

 

32

 

(245

)

Gain on disposal of property and equipment

 

(76

)

(1,214

)

 

 

 

 

 

 

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

 

 

 

 

 

Accounts receivable

 

92,629

 

(69,734

)

Prepaid expenses and other assets

 

(10,808

)

(7,752

)

Accounts payable

 

(76,759

)

13,505

 

Accrued compensation

 

(27,157

)

(3,021

)

Billings in excess of costs on uncompleted contracts

 

(12,495

)

32,918

 

Other liabilities

 

(531

)

13,176

 

Income taxes receivable/payable

 

31,008

 

(12,310

)

Net cash provided by operating activities

 

107,449

 

43,104

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(13,324

)

(13,831

)

Payments for business acquisitions, net of cash acquired

 

(102,828

)

(58,508

)

Proceeds from sale of discontinued operation

 

192

 

2,689

 

Proceeds from sale of property and equipment

 

324

 

2,026

 

Net cash used in investing activities

 

(115,636

)

(67,624

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Payments on long-term obligations

 

(120,296

)

(31,415

)

Proceeds from borrowings under long-term obligations

 

118,168

 

15,000

 

Excess tax benefits from stock-based compensation

 

400

 

1,060

 

Net proceeds from issuance of common stock

 

6,471

 

12,498

 

Net cash provided by (used in) financing activities

 

4,743

 

(2,857

)

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

817

 

 

 

 

 

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

(2,627

)

(27,377

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

50,902

 

76,741

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

48,275

 

$

49,364

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid (received) during the period for:

 

 

 

 

 

Interest

 

$

1,986

 

$

3,258

 

Income taxes, net of refunds received

 

$

(14,816

)

$

28,736