Tetra Tech, Inc. : Tetra Tech Reports Strong Second Quarter Results
05/02/2012| 04:40pm US/Eastern
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Diluted EPS up 25% to $0.35
Record Backlog of $2.03 billion
Increasing FY12 guidance
Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the second
quarter ended April 1, 2012.
Second Quarter Results
Revenue in the quarter was $624.3 million compared to $612.6 million in
the second quarter last year. Revenue, net of subcontractor costs1,
was $476.9 million, up 10.8% compared to $430.3 million in the second
quarter last year. Earnings before interest, taxes, depreciation, and
amortization (EBITDA2), were $49.2 million, up 16.2% compared
to $42.3 million in the second quarter last year. Operating income was
$35.5 million, up 21.5% compared to $29.3 million in the second quarter
last year. Diluted earnings per share (EPS) were $0.35, up 25.0%
compared to $0.28 in the second quarter last year. Backlog was $2.03
billion compared to $1.99 billion at the end of the second quarter last
year. Cash generated from operations was $33.1 million compared to $33.7
million in the second quarter last year.
Six-Month Results
Revenue for the six-month period was $1.31 billion, up 6.8% compared to
$1.22 billion in the year-ago period. Revenue, net of subcontractor
costs, was $968.9 million, up 15.9% compared to $835.9 million in the
year-ago period. EBITDA were $100.3 million, up 11.8% compared to $89.7
million in the year-ago period. Operating income was $71.6 million, up
12.7% compared to $63.6 million in the year-ago period. Diluted EPS were
$0.71, up 10.9% compared to $0.64 (or up 16.4% compared to $0.61
excluding a prior year tax benefit) in the year-ago period. Cash
generated from operations was $71.4 million, up 67.4% compared to $42.6
million in year-ago period.
Tetra Tech's Chairman and CEO, Dan Batrack commented, "Tetra Tech had a
strong second quarter highlighted by growth of 11% in net revenue and
25% in EPS. Our performance this quarter also had a strong volume of new
orders, which contributed to a record backlog of $2.03 billion. We
continue to see strong demand for our water-related services from a
broad base of industrial clients in the U.S. and abroad, and our U.S.
government work has remained stable. As a result of increased confidence
in our business outlook, 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.
2 EBITDA is a non-GAAP financial measure. The Company
believes EBITDA is a useful representation of operating performance
because of significant amounts of acquisition-related non-cash
amortization expense. A table reconciling net income attributable to
Tetra Tech to EBITDA can be found at the end of this release.
In thousands (except EPS data)
Three Months Ended
Six Months Ended
April 1,
2012
April 3,
2011
April 1,
2012
April 3,
2011
Revenue
$
624,345
$
612,566
$
1,306,972
$
1,223,690
Subcontractor costs
(147,453
)
(182,260
)
(338,024
)
(387,805
)
Revenue, net of subcontractor costs
476,892
430,306
968,948
835,885
Operating income
35,543
29,256
71,635
63,581
Interest expense, net
(1,453
)
(1,471
)
(2,763
)
(2,776
)
Income tax expense
(11,769
)
(9,704
)
(23,848
)
(19,970
)
Net income including noncontrolling interests
22,321
18,081
45,024
40,835
Net income attributable to noncontrolling interests
(37
)
(581
)
(130
)
(1,034
)
Net income to Tetra Tech
$
22,284
$
17,500
$
44,894
$
39,801
Earnings per share attributable to Tetra Tech:
Basic
$
0.35
$
0.28
$
0.71
$
0.64
Diluted
$
0.35
$
0.28
$
0.71
$
0.64
Weighted-average common
shares outstanding:
Basic
63,072
62,121
62,846
61,836
Diluted
63,817
62,945
63,497
62,638
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 2012 to
be in the range of $0.42 to $0.45. Revenue, net of subcontractor costs,
for the third quarter is expected to range from $500 million to $540
million. For fiscal 2012, Tetra Tech is increasing its diluted EPS
guidance to a range of $1.59 to $1.66. Revenue, net of subcontractor
costs, for fiscal 2012 is now expected to range from $2.0 billion to
$2.1 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 3, 2012 at 8:00 a.m. (PDT).
Tetra Tech is a leading provider of consulting, engineering, program
management, construction management, and technical services. The Company
supports government and commercial clients by providing innovative
solutions to complex problems focused on water, environment, energy,
infrastructure, and natural resources. With more than 13,000 employees
worldwide, Tetra Tech's capabilities span the entire project life cycle.
Tetra Tech, Inc.
Regulation G Information
Reconciliation of Net Income to EBITDA
In thousands
Three Months Ended
Six Months Ended
April 1,
2012
April 3,
2011
April 1,
2012
April 3,
2011
Net income attributable to Tetra Tech
$
22,284
$
17,500
$
44,894
$
39,801
Interest expense, net
1,453
1,471
2,763
2,776
Income tax expense
11,769
9,704
23,848
19,970
Depreciation
6,794
6,722
13,580
13,392
Amortization
6,917
6,942
15,182
13,723
EBITDA
$
49,217
$
42,339
$
100,267
$
89,662
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 U.S. state and local government
and U.S. commercial services; credit risks associated with certain U.S.
commercial clients; delays in U.S. federal debt ceiling legislation and
shifts in U.S. defense spending; concentration of revenues from U.S.
government agencies and potential funding disruptions by these agencies;
delays in the completion of the U.S. government budget process;
violations of U.S. government contractor regulations; dependence on
winning or renewing U.S. federal, state and local government contracts;
the delay or unavailability of public funding on U.S. government
contracts; the U.S. 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
the interruption of our computer, information and communications
technology and 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.
Tetra Tech, Inc. Jim Wu, Investor Relations Talia Starkey,
Media & Public Relations (626) 470-2844
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