EX-99.1 2 a10-9007_1ex99d1.htm EX-99.1

Exhibit 99.1

 

April 28, 2010

 

Tetra Tech Reports Second Quarter Results

 

Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the second quarter ended March 28, 2010.

 

Second Quarter Results

 

Revenue in the quarter was $469.5 million, and revenue, net of subcontractor costs(1), was $325.9 million.  These figures compare to $522.3 million and $332.2 million, respectively, for the same quarter last year.  Operating income was $23.5 million and net income was $14.3 million, compared to $27.8 million and $19.2 million, respectively, for the same quarter last year.  Diluted EPS were $0.23, compared to $0.32 for the same quarter last year.  Last year’s $0.32 of diluted EPS included a discrete tax benefit of $0.055.  Backlog was $1.67 billion, compared to $1.66 billion at the end of the same quarter last year and $1.61 billion at the end of the first quarter of 2010.  Cash generated from operations was $45.2 million, compared to $74.3 million generated in the same quarter last year.

 

Six Month Results

 

Revenue for the first six months was $1,011.5 million, and revenue, net of subcontractor costs, was $669.4 million.  These figures compare to $1,161.0 million and $662.2 million, respectively, for the same period last year.  Operating income was $54.6 million and net income was $33.0 million, compared to $56.4 million and $35.5 million, respectively, for the same period last year.  Diluted EPS were $0.53, compared to $0.59 for the same period last year.  Last year’s $0.59 of diluted EPS included a discrete tax benefit of $0.055.  Cash generated from operations was $40.0 million, compared to $46.6 million generated in the same period last year.

 

Tetra Tech’s Chairman and CEO, Dan Batrack commented, “Our second quarter results were in line with our net revenue and EPS guidance.  New orders were strong this quarter, which drove backlog growth sequentially and year-over-year.  Cash generation increased our net cash position to more than $100 million, providing us a strong balance sheet for future growth.  Federal and commercial wind energy construction management awards remain delayed due to the continued slow pace of federal spending and the commercial market downturn.  Accordingly, we are forecasting that the remainder of fiscal 2010 will reflect net revenue growth in our front-end consulting and engineering services and a modest net revenue decline in our back-end construction management services.”

 


(1) Tetra Tech’s revenue includes a significant amount of subcontractor costs and, therefore, the Company believes revenue, net of subcontractor costs, which is a non-GAAP financial measure, provides a valuable perspective on its business results.

 



 

 

 

Three Months Ended

 

Six Months Ended

 

In thousands (except EPS data)

 

March 28,
2010

 

March 29,
2009

 

March 28,
2010

 

March 29,
2009

 

Revenue

 

$

469,528

 

$

522,305

 

$

1,011,485

 

$

1,160,988

 

Subcontractor costs

 

(143,594

)

(190,091

)

(342,059

)

(498,748

)

Revenue, net of subcontractor costs

 

325,934

 

332,214

 

669,426

 

662,240

 

Operating income

 

23,527

 

27,830

 

54,643

 

56,446

 

Interest expense, net

 

(352

)

(852

)

(607

)

(1,768

)

Income tax expense

 

(8,846

)

(7,764

)

(20,998

)

(19,156

)

Net income

 

$

14,329

 

$

19,214

 

$

33,038

 

$

35,522

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.23

 

$

0.32

 

$

0.54

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.23

 

$

0.32

 

$

0.53

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

61,511

 

60,014

 

61,291

 

59,832

 

Diluted

 

62,168

 

60,771

 

62,083

 

60,480

 

 

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 2010 to be in the range of $0.27 to $0.31.  Revenue, net of subcontractor costs, for the third quarter is expected to range from $350 million to $370 million.  For fiscal 2010, Tetra Tech now expects diluted EPS to be $1.10 to $1.18.  Revenue, net of subcontractor costs, for fiscal 2010 is now expected to range from $1.375 billion to $1.425 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 website at www.tetratech.com on April 29, 2010 at 8:00 a.m. (PDT).

 

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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 approximately 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 and commercial services; credit risks associated with certain commercial clients; 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; violations of government contractor regulations; dependence on winning or renewing federal, state and local government contracts; the delay or unavailability of public funding; 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 ability to maintain adequate utilization of our workforce; 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 and integration risks; goodwill or other intangible asset 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 failure of subcontractors to satisfy their obligations; changes in resource management or infrastructure industry laws, regulations or programs; 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; liability related to legal proceedings; the ability to obtain adequate bonding; employee, agent or partner misconduct; employee risks related to international travel; safety programs; conflict of interest issues; liabilities relating to environmental laws and regulations; force majeure events; protection of intellectual property rights; and the completion of the enterprise resource planning system. Any projections in this release are based on limited information currently available to

 

3



 

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

(unaudited - in thousands, except par value)

 

 

 

March 28,
2010

 

September 27,
2009

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

112,573

 

$

89,185

 

Accounts receivable - net

 

449,665

 

506,316

 

Prepaid expenses and other current assets

 

54,106

 

55,167

 

Income taxes receivable

 

17,725

 

5,222

 

Total current assets

 

634,069

 

655,890

 

 

 

 

 

 

 

Property and equipment:

 

 

 

 

 

Land and buildings

 

11,612

 

10,555

 

Equipment, furniture and fixtures

 

132,505

 

126,249

 

Leasehold improvements

 

14,096

 

13,740

 

Total

 

158,213

 

150,544

 

Accumulated depreciation and amortization

 

(88,166

)

(79,616

)

Property and equipment - net

 

70,047

 

70,928

 

 

 

 

 

 

 

Goodwill

 

335,717

 

319,685

 

Intangible assets - net

 

31,483

 

33,769

 

Other assets

 

16,405

 

17,633

 

Total Assets

 

$

1,087,721

 

$

1,097,905

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

118,727

 

$

149,352

 

Accrued compensation

 

69,879

 

88,793

 

Billings in excess of costs on uncompleted contracts

 

87,041

 

105,162

 

Deferred income taxes

 

18,483

 

9,645

 

Current portion of long-term debt

 

4,625

 

4,320

 

Other current liabilities

 

66,566

 

74,964

 

Total current liabilities

 

365,321

 

432,236

 

 

 

 

 

 

 

Deferred income taxes

 

7,696

 

4,615

 

Long-term debt

 

5,580

 

6,530

 

Other long-term liabilities

 

11,212

 

8,046

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding as of March 28, 2010 and September 27, 2009

 

 

 

Common stock - authorized, 150,000 shares of $0.01 par value; issued and outstanding, 61,708 and 61,257 shares as of March 28, 2010 and September 27, 2009, respectively

 

617

 

613

 

Additional paid-in capital

 

363,241

 

350,571

 

Accumulated other comprehensive income

 

17,948

 

12,226

 

Retained earnings

 

316,106

 

283,068

 

Total stockholders’ equity

 

697,912

 

646,478

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Equity

 

$

1,087,721

 

$

1,097,905

 

 



 

Tetra Tech, Inc.

Condensed Consolidated Statements of Income

(unaudited - in thousands, except per share data)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

March 28,

 

March 29,

 

March 28,

 

March 29,

 

 

 

2010

 

2009

 

2010

 

2009

 

Revenue

 

$

469,528

 

$

522,305

 

$

1,011,485

 

$

1,160,988

 

Subcontractor costs

 

(143,594

)

(190,091

)

(342,059

)

(498,748

)

Other costs of revenue

 

(262,429

)

(265,893

)

(536,139

)

(531,578

)

Selling, general and administrative expenses

 

(39,978

)

(38,491

)

(78,644

)

(74,216

)

Operating income

 

23,527

 

27,830

 

54,643

 

56,446

 

 

 

 

 

 

 

 

 

 

 

Interest expense - net

 

(352

)

(852

)

(607

)

(1,768

)

Income before income tax expense

 

23,175

 

26,978

 

54,036

 

54,678

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

(8,846

)

(7,764

)

(20,998

)

(19,156

)

 

 

 

 

 

 

 

 

 

 

Net income

 

$

14,329

 

$

19,214

 

$

33,038

 

$

35,522

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.23

 

$

0.32

 

$

0.54

 

$

0.59

 

Diluted

 

$

0.23

 

$

0.32

 

$

0.53

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

61,511

 

60,014

 

61,291

 

59,832

 

Diluted

 

62,168

 

60,771

 

62,083

 

60,480

 

 



 

TETRA TECH, INC

Condensed Consolidated Statements of Cash Flows

(unaudited - in thousands)

 

 

 

Six Months Ended

 

 

 

March 28,

 

March 29,

 

 

 

2010

 

2009

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

33,038

 

$

35,522

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

 

 

Depreciation and amortization

 

15,957

 

12,485

 

Stock-based compensation

 

5,353

 

4,557

 

Excess tax benefits from stock-based compensation

 

(743

)

(96

)

Deferred income taxes

 

12,158

 

2,989

 

Provision for losses on contracts and related receivables

 

4,754

 

11,219

 

Exchange (gain) loss

 

(151

)

117

 

(Gain) loss on disposal of property and equipment

 

(767

)

24

 

 

 

 

 

 

 

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

 

 

 

 

 

Accounts receivable

 

52,350

 

86,673

 

Prepaid expenses and other assets

 

1,294

 

(4,503

)

Accounts payable

 

(31,148

)

(57,081

)

Accrued compensation

 

(19,946

)

(27,016

)

Billings in excess of costs on uncompleted contracts

 

(18,121

)

(12,212

)

Other liabilities

 

(2,686

)

572

 

Income taxes receivable/payable

 

(11,294

)

(6,634

)

Net cash provided by operating activities

 

40,048

 

46,616

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(9,495

)

(9,791

)

Payments for business acquisitions, net of cash acquired

 

(12,216

)

(94,688

)

Proceeds from sale of discontinued operation

 

 

192

 

Proceeds from sale of property and equipment

 

1,640

 

122

 

Net cash used in investing activities

 

(20,071

)

(104,165

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Payments on long-term debt

 

(550

)

(69,365

)

Proceeds from borrowings

 

 

116,000

 

Excess tax benefits from stock-based compensation

 

743

 

96

 

Net proceeds from issuance of common stock

 

2,556

 

2,056

 

Net cash provided by financing activities

 

2,749

 

48,787

 

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

662

 

76

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

23,388

 

(8,686

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

89,185

 

50,902

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

112,573

 

$

42,216

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

$

648

 

$

1,431

 

Income taxes, net of refunds received

 

$

20,560

 

$

22,683