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Tetra Tech Reports Fourth Quarter and Fiscal 2013 Results

  • Q4 Net Revenue and EPS in-line with guidance
  • Q4 Net Revenue $532 million / Q4 EPS $0.39
  • FY14 EPS Guidance: $1.60 – $1.80

PASADENA, Calif.--(BUSINESS WIRE)--Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the fourth quarter and fiscal year ended September 29, 2013.

Fourth Quarter Results

Revenue in the fourth quarter was $698.4 million compared to $719.4 million in the same period last year. Revenue, net of subcontractor costs1, in the fourth quarter was $531.5 million compared to $536.3 million in the fourth quarter last year. Operating income was $40.6 million compared to $48.5 million in the fourth quarter last year. Diluted earnings per share (EPS) were $0.39 compared to $0.47 in the fourth quarter last year. Backlog was $1.91 billion compared to $2.14 billion at the end of the fourth quarter last year. Cash generated from operations was $22.5 million compared to $29.8 million in the fourth quarter last year.

Fiscal Year Results

Revenue for fiscal 2013 was $2.61 billion compared to $2.71 billion in fiscal 2012. Revenue, net of subcontractor costs, was $2.02 billion compared to $2.02 billion in fiscal 2012. Excluding the fiscal 2013 third quarter non-cash goodwill impairment charge, operating income was $76.8 million compared to $166.4 million in fiscal 2012. Diluted loss per share was $0.03 for fiscal 2013. Excluding the goodwill impairment charge, EPS were $0.70 per share compared to EPS of $1.63 in fiscal 2012. Cash generated from operations was $137.8 million compared to $158.0 million in fiscal 2012.

On June 17, 2013, Tetra Tech’s Board of Directors (the “Board”) authorized the repurchase of up to $100 million of its common stock (the “Stock Repurchase Program”). The Stock Repurchase Program was amended by the Board, effective on November 18, 2013, extending the program through fiscal 2014 and revising the pricing parameters to enable repurchases at a higher stock price. There is no guarantee as to the exact number of shares that will be repurchased under the program.

Tetra Tech’s Chairman and CEO, Dan Batrack, commented, “Tetra Tech finished the year with solid performance in the fourth quarter, in-line with the Company’s guidance. Over the last quarter, we have seen Eastern Canada and mining stabilize on a sequential basis, as we anticipated. In fiscal 2014, without additional acquisitions, we expect to grow net revenue approximately 10%, led by our U.S. commercial programs that are expected to increase approximately 10-15%. Overall, our expansion of international and U.S. commercial work is anticipated to result in EBITDA margin of 11-12% in fiscal 2014. The investments we made in key growth markets have provided us with a strong foundation for the coming year.”

 

In thousands (except EPS data)

  Three Months Ended     Fiscal Year Ended
Sep. 29,   Sep. 30, Sep. 29,   Sep. 30,
2013 2012 2013 2012
Revenue $ 698,376 $ 719,405 $ 2,613,755 $ 2,711,075
Subcontractor costs   (166,831 )   (183,149 )   (588,923 )   (689,005 )
Revenue, net of subcontractor costs

531,545

536,256

2,024,832

2,022,070

 

Operating Income

40,626

48,471

20,218

166,367

Interest expense, net (2,355 ) (1,389 ) (7,686 ) (5,571 )
Income tax expense   (12,930 )   (16,542 )   (14,038 )   (56,064 )
Net income (loss) including noncontrolling interests

25,341

30,540

(1,506

)

104,732

Net income attributable to noncontrolling interests  

(140

)

 

(108

)

 

(635

)

 

(352

)

Net income (loss) attributable to Tetra Tech

$

25,201

 

$

30,432

 

 

$

(2,141

)

$

104,380

 
 

Earnings (loss) per share attributable to Tetra Tech:

Basic $ 0.39   $ 0.48   $ (0.03 ) $ 1.65  
Diluted $ 0.39   $ 0.47   $ (0.03 ) $ 1.63  
 

Weighted-average common shares outstanding:

Basic 64,272 63,623

 

64,544 63,217
Diluted 64,853 64,396

 

64,544 63,934
 

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 first quarter of fiscal 2014 to be in the range of $0.35 to $0.40. Revenue, net of subcontractor costs, for the first quarter is expected to range from $440 million to $500 million. For fiscal 2014, Tetra Tech expects diluted EPS to be $1.60 to $1.80 and cash EPS2 to be $2.30 to $2.60. Revenue, net of subcontractor costs, for fiscal 2014 is expected to range from $2.1 billion to $2.3 billion.

Webcast

Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the fourth quarter results through a link posted on the Company’s website at www.tetratech.com on November 14, 2013 at 8:00 a.m. (PT).

About Tetra Tech (www.tetratech.com)

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 14,000 staff worldwide, Tetra Tech’s capabilities span the entire project life cycle.

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; the effect of sequestration under the Budget Control Act of 2011; fluctuations in annual revenue, expenses and operating results; the cyclicality in demand for our overall services; the cyclicality in demand for mining services; the cyclicality in demand for oil and gas services; concentration of revenues from U.S. government agencies and potential funding disruptions by these agencies; violations of U.S. government contractor regulations; dependence on winning or renewing U.S. 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; credit risks associated with certain commercial clients; risks associated with international operations; the failure to comply with worldwide anti-bribery laws; the failure to comply with domestic and international export laws; 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 workforce utilization; the use of the percentage-of-completion method of accounting; the inability to accurately estimate and control contract 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; the failure of partners to perform on joint projects; the failure of subcontractors to satisfy their obligations; requirements to pay liquidated damages based on contract performance; changes in resource management, environmental or infrastructure industry laws, regulations or programs; changes in capital markets and the access to capital; credit agreement covenants; industry competition; liability related to legal proceedings, investigations and disputes; the availability of third-party insurance coverage; the ability to obtain adequate bonding; the failure to adequately recover on our claims for additional contract costs; employee, agent or partner misconduct; employee risks related to international travel; safety programs; conflict of interest issues; liabilities relating to reports and opinions; liabilities relating to environmental laws and regulations; force majeure events; protection of intellectual property rights; the interruption of systems and information technology; the ability to impede a business combination based on Delaware law and charter documents; and stock price volatility. 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.

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 Cash EPS defined as cash flow from operations divided by diluted shares outstanding. Cash EPS is a non-GAAP financial measure that provides a valuable perspective on the Company’s financial results.

Contacts

Tetra Tech, Inc.
Jim Wu, Investor Relations
Charlie MacPherson, Media & Public Relations
(626) 470-2844