EX-99.1 2 a11-11627_1ex99d1.htm EX-99.1

Exhibit 99.1

 

May 4, 2011

 

Tetra Tech Reports Strong Second Quarter Results

 

·                  Net Revenue up 32% to $430 million

 

·                  Diluted EPS up 21% to $0.28

 

·                  Backlog up 19% to $1.99 billion

 

·                  Increasing FY11 guidance

 

Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the second quarter ended April 3, 2011.

 

Second Quarter Results

 

Revenue in the quarter was $612.6 million, up 30.5% compared to $469.5 million in the second quarter last year.  Revenue, net of subcontractor costs(1), was $430.3 million, up 32.0% compared to $325.9 million in the second quarter last year.  Operating income was $29.3 million, up 24.4% compared to $23.5 million in the second quarter last year.  Net income was $17.5 million, up 22.1% compared to $14.3 million in the second quarter last year.  Diluted earnings per share (EPS) were $0.28, up 20.6% compared to $0.23 in the second quarter last year.  Backlog was $1.99 billion, up 18.7% compared to $1.67 billion at the end of the second quarter last year.  Cash generated from operations was $33.7 million compared to $45.2 million in the second quarter last year.

 

Six-Month Results

 

Revenue for the six-month period was $1.22 billion, up 21.0% compared to $1.01 billion in the year-ago period.  Revenue, net of subcontractor costs, was $835.9 million, up 24.9% compared to $669.4 million in the year-ago period.  Operating income was $63.6 million, up 16.4% compared to $54.6 million in the year-ago period.  Net income was $39.8 million, up 20.5% compared to $33.0 million in the year-ago period.  Diluted EPS were $0.64, up 19.4% compared to $0.53 in the year-ago period.  Cash generated from operations was $42.6 million, up 6.4% compared to $40.1 million in year-ago period.

 

Commenting on the quarter’s results, Tetra Tech’s Chairman and CEO, Dan Batrack, remarked, “Tetra Tech had a strong second quarter highlighted by growth of 32% in net revenue, 21% in EPS, and 19% in backlog.  Our international business more than tripled as a result of strong organic growth in mining and recent Canadian acquisitions.  Net revenue in our commercial business grew 14%, driven by the improving economy.  Despite budgetary concerns, our federal business remained strong as a result of long-term high-priority and regulatory-driven programs.  We are increasingly confident in the Company’s business outlook due to strong demand for our water-related services in mining, energy, and international development.  As a result, we are increasing our net revenue and EPS guidance for the year.”

 


(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.

 



 

In thousands (except EPS data)

 

Three Months Ended

 

Six Months Ended

 

 

 

April 3,
2011

 

March 28,
2010

 

April 3,
2011

 

March 28,
2010

 

Revenue

 

$

612,566

 

$

469,528

 

$

1,223,690

 

$

1,011,485

 

Subcontractor costs

 

(182,260

)

(143,594

)

(387,805

)

(342,059

)

Revenue, net of subcontractor costs

 

430,306

 

325,934

 

835,885

 

669,426

 

Operating income

 

29,256

 

23,527

 

63,581

 

54,643

 

Interest expense, net

 

(1,471

)

(352

)

(2,776

)

(607

)

Income tax expense

 

(9,704

)

(8,846

)

(19,970

)

(20,998

)

Net income including noncontrolling interests

 

18,081

 

14,329

 

40,835

 

33,038

 

Net income attributable to noncontrolling interests

 

(581

)

 

(1,034

)

 

Net income

 

$

17,500

 

$

14,329

 

$

39,801

 

$

33,038

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Tetra Tech:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.28

 

$

0.23

 

$

0.64

 

$

0.54

 

Diluted

 

$

0.28

 

$

0.23

 

$

0.64

 

$

0.53

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

62,121

 

61,511

 

61,836

 

61,291

 

Diluted

 

62,945

 

62,168

 

62,638

 

62,083

 

 

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 2011 to be in the range of $0.33 to $0.37.  Revenue, net of subcontractor costs, for the third quarter is expected to range from $450 million to $475 million.  For fiscal 2011, Tetra Tech is increasing its diluted EPS guidance to a range of $1.34 to $1.42.  Revenue, net of subcontractor costs, for fiscal 2011 is now expected to range from $1.7 billion to $1.8 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 May 5, 2011 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 approximately 12,000 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; 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; volatility of common stock value; liability related to legal proceedings; the availability of third-party insurance coverage; 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 reliance on third-party software to run critical systems. 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)

 

 

 

April 3,
2011

 

October 3,
2010

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

90,941

 

$

220,933

 

Accounts receivable - net

 

598,908

 

566,642

 

Prepaid expenses and other current assets

 

53,435

 

49,889

 

Income taxes receivable

 

8,033

 

7,249

 

Total current assets

 

751,317

 

844,713

 

 

 

 

 

 

 

Property and equipment:

 

 

 

 

 

Land and buildings

 

11,729

 

11,707

 

Equipment, furniture and fixtures

 

157,150

 

145,210

 

Leasehold improvements

 

23,425

 

18,104

 

Total

 

192,304

 

175,021

 

Accumulated depreciation and amortization

 

(108,409

)

(95,638

)

Property and equipment - net

 

83,895

 

79,383

 

 

 

 

 

 

 

 Investments in and advances to unconsolidated joint ventures

 

3,273

 

140

 

 Goodwill

 

561,237

 

394,422

 

 Intangible assets - net

 

78,479

 

45,995

 

 Other assets

 

21,984

 

17,036

 

Total Assets

 

$

1,500,185

 

$

1,381,689

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

136,260

 

$

166,450

 

Accrued compensation

 

94,948

 

93,243

 

Billings in excess of costs on uncompleted contracts

 

75,601

 

79,401

 

Deferred income taxes

 

12,407

 

21,851

 

Current portion of long-term debt

 

4,383

 

5,002

 

Contingent earn-out liabilities

 

35,569

 

10,513

 

Other current liabilities

 

77,474

 

90,747

 

Total current liabilities

 

436,642

 

467,207

 

 

 

 

 

 

 

Deferred income taxes

 

33,955

 

12,506

 

Long-term debt

 

141,653

 

122,510

 

Other long-term liabilities

 

50,508

 

31,333

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 Stockholders’ Equity:

 

 

 

 

 

Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding as of April 3, 2011 and October 3, 2010

 

 

 

Common stock - authorized, 150,000 shares of $0.01 par value; issued and outstanding, 62,330 and 61,755 shares as of April 3, 2011 and October 3, 2010, respectively

 

623

 

618

 

Additional paid-in capital

 

384,659

 

368,865

 

Accumulated other comprehensive income

 

38,275

 

18,763

 

Retained earnings

 

399,688

 

359,887

 

Total Tetra Tech stockholders’ equity

 

823,245

 

748,133

 

Noncontrolling interests

 

14,182

 

 

 Total stockholders’ equity

 

837,427

 

748,133

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Equity

 

$

1,500,185

 

$

1,381,689

 

 



 

Tetra Tech, Inc.

Condensed Consolidated Statements of Income

(unaudited - in thousands, except per share data)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

April 3,

 

March 28,

 

April 3,

 

March 28,

 

 

 

2011

 

2010

 

2011

 

2010

 

Revenue

 

$

612,566

 

$

469,528

 

$

1,223,690

 

$

1,011,485

 

Subcontractor costs

 

(182,260

)

(143,594

)

(387,805

)

(342,059

)

Other costs of revenue

 

(355,445

)

(262,429

)

(685,372

)

(536,139

)

Selling, general and administrative expenses

 

(45,605

)

(39,978

)

(86,932

)

(78,644

)

Operating income

 

29,256

 

23,527

 

63,581

 

54,643

 

Interest expense - net

 

(1,471

)

(352

)

(2,776

)

(607

)

Income before income tax expense

 

27,785

 

23,175

 

60,805

 

54,036

 

Income tax expense

 

(9,704

)

(8,846

)

(19,970

)

(20,998

)

Net income including noncontrolling interests

 

18,081

 

14,329

 

40,835

 

33,038

 

Net income attributable to noncontrolling interests

 

(581

)

 

(1,034

)

 

Net income attributable to Tetra Tech

 

$

17,500

 

$

14,329

 

$

39,801

 

$

33,038

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Tetra Tech:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.28

 

$

0.23

 

$

0.64

 

$

0.54

 

Diluted

 

$

0.28

 

$

0.23

 

$

0.64

 

$

0.53

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

62,121

 

61,511

 

61,836

 

61,291

 

Diluted

 

62,945

 

62,168

 

62,638

 

62,083

 

 



 

TETRA TECH, INC

Condensed Consolidated Statements of Cash Flows

(unaudited - in thousands)

 

 

 

Six Months Ended

 

 

 

April 3,

 

March 28,

 

 

 

2011

 

2010

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income including noncontrolling interests

 

$

40,835

 

$

33,038

 

 

 

 

 

 

 

Adjustments to reconcile net income including noncontrolling interests to net cash from operating activities:

 

 

 

 

 

Depreciation and amortization

 

27,376

 

15,957

 

Loss on settlement of foreign currency forward contract

 

293

 

28

 

Equity in earnings of unconsolidated joint ventures

 

(2,428

)

(632

)

Distributions of earnings from unconsolidated joint ventures

 

2,503

 

1,646

 

Stock-based compensation

 

5,314

 

5,353

 

Excess tax benefits from stock-based compensation

 

(90

)

(743

)

Deferred income taxes

 

(4,445

)

12,158

 

Provision for doubtful accounts

 

1,354

 

4,754

 

Exchange gain

 

(328

)

(151

)

Gain on disposal of property and equipment

 

(148

)

(767

)

 

 

 

 

 

 

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

 

 

 

 

 

Accounts receivable

 

42,848

 

52,350

 

Prepaid expenses and other assets

 

(10,043

)

280

 

Accounts payable

 

(60,729

)

(31,148

)

Accrued compensation

 

96

 

(19,946

)

Billings in excess of costs on uncompleted contracts

 

(10,931

)

(18,121

)

Other liabilities

 

2,791

 

(2,686

)

Income taxes receivable/payable

 

8,372

 

(11,294

)

Net cash provided by operating activities

 

42,640

 

40,076

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(9,476

)

(9,495

)

Payments for business acquisitions, net of cash acquired

 

(188,031

)

(12,216

)

Payment in settlement of foreign currency forward contract

 

(4,216

)

(3,960

)

Receipt in settlement of foreign currency forward contract

 

3,923

 

3,932

 

Proceeds from sale of property and equipment

 

340

 

1,640

 

Net cash used in investing activities

 

(197,460

)

(20,099

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Payments on long-term debt

 

(2,403

)

(550

)

Proceeds from borrowings

 

21,867

 

 

Distributions paid to noncontrolling interests

 

(501

)

 

Excess tax benefits from stock-based compensation

 

90

 

743

 

Net proceeds from issuance of common stock

 

5,373

 

2,556

 

Net cash provided by financing activities

 

24,426

 

2,749

 

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

402

 

662

 

 

 

 

 

 

 

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

(129,992

)

23,388

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

220,933

 

89,185

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

90,941

 

$

112,573

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

   Interest

 

$

1,998

 

$

648

 

   Income taxes, net of refunds received

 

$

14,856

 

$

20,560