0000831641-17-000006.txt : 20171109 0000831641-17-000006.hdr.sgml : 20171109 20171108201916 ACCESSION NUMBER: 0000831641-17-000006 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20171108 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20171109 DATE AS OF CHANGE: 20171108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TETRA TECH INC CENTRAL INDEX KEY: 0000831641 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 954148514 STATE OF INCORPORATION: DE FISCAL YEAR END: 0928 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19655 FILM NUMBER: 171188002 BUSINESS ADDRESS: STREET 1: 3475 EAST FOOTHILL BOULEVARD CITY: PASADENA STATE: CA ZIP: 91107 BUSINESS PHONE: 6263514664 MAIL ADDRESS: STREET 1: 3475 EAST FOOTHILL BOULEVARD CITY: PASADENA STATE: CA ZIP: 91107 8-K 1 fy2017er8-k.htm 8-K Document

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):
November 8, 2017
 
TETRA TECH, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
0-19655
 
95-4148514
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification Number)
 
3475 East Foothill Boulevard, Pasadena, California  91107
(Address of principal executive office, including zip code)
 
(626) 351-4664
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o






Item 2.02.    Results of Operations and Financial Condition.

On November 8, 2017, Tetra Tech, Inc. (“Tetra Tech”) reported its results of operations for its fourth fiscal quarter and fiscal quarter ended October 1, 2017. A copy of the press release issued by Tetra Tech concerning the foregoing and the event described in Item 8.01 below is furnished herewith as Exhibit 99.1 and is incorporated herein by reference in its entirety.

Tetra Tech also reported that, beginning in fiscal 2018, its operations were further aligned to better serve its clients and markets, resulting in two renamed reportable segments. The Government Services Group ("GSG") reportable segment will primarily include activities with U.S. government clients (federal, state and local) and all activities with development agencies worldwide. The Commercial/International Services Group ("CIG") reportable segment will primarily include activities with U.S. commercial clients and all international activities other than work for development agencies.

Item 5.02.
Departure of Directors of Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b)    Retirement.

On November 6, 2017, Ronald J. Chu retired from his role as Tetra Tech’s Executive Vice President.

(c)    Appointment.

Effective November 6, 2017, the following new executive officers were appointed by the Board of Directors:

Derek G. Amidon, Senior Vice President and President of the Commercial Account Management Division of CIG

Mr. Amidon, age 50, has served as a project manager, key account manager, operations manager, and regional manager since joining Tetra Tech in 2012. He has managed a variety of complex, high profile programs for key Tetra Tech clients, including Fortune 100 companies. His focus has been on leading high value consulting services that deliver scientific, engineering and regulatory solutions for challenging environmental, engineering, permitting and public relations problems for oil and gas, mining, industrial, institutional and custodial trust clients. He has a demonstrated track record in leading complex environmental investigations and developing creative remedial solutions for client environmental liabilities. He has managed projects in the U.S., Africa, Australia, Europe, and the Caribbean. In addition to experience in both public and private consulting and engineering firms over his 24-year career, Mr. Amidon also served in a variety of business leadership and project development roles at Hess Corporation, a leading independent oil and gas company. Mr. Amidon is a registered Professional Engineer. He holds B.S. and M.S. degrees in Civil Engineering from Brigham Young University and a M.S. in Management from Rensselaer Polytechnic Institute.

Roger R. Argus, Senior Vice President of GSG and President of the U.S. Government Division of GSG

Mr. Argus, age 56, is a chemical engineer with 33 years of experience, including 25 years with Tetra Tech, in operational leadership, program and project management, and quality assurance for projects encompassing a broad spectrum of environmental, engineering, and emergency management services. Mr. Argus has also been responsible for managing multidisciplinary contracts and projects in support of the U.S. federal government (i.e., Navy, Army Corps of Engineers, and the Environmental Protection Agency), state and municipal agencies, and private clients nationwide. The scope of his technical experience includes planning and directing environmental field investigations, engineering feasibility studies and designs, construction management, and research and development support for innovative environmental technologies and waste treatment systems. Mr. Argus holds a B.S. in Chemical Engineering from California State University, Long Beach.

Jan K. Auman, Senior Vice President and President of the Global Development Services Division of GSG

Mr. Auman, age 62, has over 40 years of experience managing large, complex international development and technical assistance operations, having served 10 years with the United States federal government and 30 years in the private sector. With 20 years of residence overseas in eight countries, Mr. Auman has hands-on technical expertise in the areas of natural resources management, conflict resolution, political transformation, institutional development, and policy formulation in the Middle East, the South Pacific, the Caribbean, and Africa. Mr. Auman’s overall direction for Tetra Tech's international development operations includes technical, operational, administrative, fiscal, and representational responsibilities involving operations that manage projects in over 60 countries. Mr. Auman joined Tetra Tech through an acquisition in 2007. He holds a B.A. in Political Science

2


and Government from Pennsylvania State University and an M.I.A in International Administration from the School for International Training.

Mark A. Rynning, Senior Vice President and President of the U.S. Infrastructure Division of GSG

Mr. Rynning, age 56, has more than 30 years of experience in the engineering consulting industry, including 27 years with Tetra Tech. He is a registered professional engineer and has served Tetra Tech in numerous capacities including project manager, operations manager, and operating unit leader. He has managed large water infrastructure programs for state and local agencies throughout the United States. Mr. Rynning has broad experience in planning and design of water and wastewater infrastructure, utility master planning, and design of water and wastewater transmission and collection systems. In addition, Mr. Rynning has planned and designed reverse osmosis water treatment plants and advanced wastewater treatment systems. He has provided expert advisory services to numerous municipal clients for utility system acquisitions. He holds a B.S. in Civil Engineering and a Master of Business Administration, both from the University of Florida.

Bernard Teufele, Senior Vice President and President of the Canada and South America Division of CIG

Mr. Teufele, age 52, has over 22 years of consulting engineering experience as a leader of a highly diversified, high-end infrastructure practice and as a technical expert in the field of infrastructure monitoring and asset management. Prior to his current role, Mr. Teufele has managed operating units of increasing size and complexity with a primary focus on infrastructure, environmental sciences, civil transportation, and mining-related services doing work for municipal, provincial, and federal government clients in Canada. He has managed key provincial infrastructure programs in Canada with a particular focus on the monitoring and assessment of roadway infrastructure and the development of asset management programs. Mr. Teufele, who joined Tetra Tech through an acquisition in 2010, has also been instrumental in advancing Tetra Tech’s involvement with private sector infrastructure clients on large alternate delivery projects (design-build and public-private partnership P3 projects). Mr. Teufele has a B.Sc. in Applied Science from the University of British Columbia.

In connection with their promotions, Messrs. Amidon, Argus, Auman, Rynning and Teufele received increases to their base salaries and became eligible for the standard annual bonuses and equity grants awarded to Tetra Tech’s executive officers under the executive compensation program.

In addition to these appointments, effective November 6, 2017, Leslie L. Shoemaker, the former Executive Vice President and President of Water, Environment and Infrastructure, was named Executive Vice President, Operations and President of CIG. She did not receive any changes to her compensation in connection with this change, other than the customary annual bonus and equity grants awarded to Tetra Tech’s executive officers under the executive compensation program.
    
Item 8.01.    Other Events.

On November 6, 2017, Tetra Tech announced that its Board of Directors has declared a $0.10 per share quarterly cash dividend. The dividend is payable on December 15, 2017 to stockholders of record as of the close of business on November 30, 2017. A copy of the press release issued by Tetra Tech concerning the dividend and the results of operations described in Item 2.02 above is furnished herewith as Exhibit 99.1 and is incorporated herein by reference in its entirety.

The information contained in Items 2.02 and 8.01, and in the accompanying exhibit, shall not be incorporated by reference into any filing of Tetra Tech, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this Current Report, including the exhibit hereto, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

Item 9.01.    Financial Statements and Exhibits.

(d)    Exhibits

99.1


3


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
TETRA TECH, INC.
 
 
 
 
 
 
 
 
 
 
Date: 
November 8, 2017
 
By:
/S/ DAN L. BATRACK
 
 
 
 
Dan L. Batrack
 
 
 
 
Chairman and Chief Executive Officer


4
 EX-99.1 2 a201710-kex991.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
 
November 8, 2017


Tetra Tech Reports Fourth Quarter and Fiscal 2017 Results
•
Record quarterly and annual revenue of $735 million and $2.8 billion
•
Record quarterly operating income of $55 million, up 16% year-over-year
•
Record annual operating income of $183 million, up 35% year-over-year
•
Record backlog of $2.54 billion, up 7% year-over-year

Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the fourth quarter and fiscal year ended October 1, 2017.

Fourth Quarter Results
    
For the fourth quarter, Tetra Tech generated record high quarterly revenue, quarterly income and backlog. Results are summarized as follows:

 
 
GAAP
 
Ongoing Operations1 
$ million (except EPS data)
 
Q4-17
% Y/Y
 
Q4-17
% Y/Y
Revenue
 
$735
+1%
 
$729
+10%
Net Revenue2
 
$534
+1%
 
$533
+9%
Operating Income
 
$55
+16%
 
$57
+18%
EPS
 
$0.60
+13%
 
$0.63
+15%
Backlog
 
$2,541
+7%
 
$2,536
+8%

Quarterly Dividend and Share Repurchase Program

On November 6, 2017, Tetra Tech’s Board of Directors declared a quarterly dividend of $0.10 per share payable on December 15, 2017 to stockholders of record as of November 30, 2017. Additionally, the Company has $100 million remaining under the previously approved $200 million share repurchase program.

Comments on Results

Tetra Tech’s Chairman and CEO, Dan Batrack commented, “Tetra Tech had an excellent fourth quarter and finish to a strong fiscal 2017. During the fourth quarter, we generated our highest quarterly revenue, operating income and EPS in the Company’s history. We continue to see demand for our high-end water, environment and infrastructure services, which contributed to our seventh consecutive quarterly increase in backlog. With our record backlog, we’re entering fiscal 2018 in a stronger position than ever.”

_________________________________

1 Refer to Reconciliation of Revenue and Operating Results table for a reconciliation to GAAP. All year-over-year percentages for the fiscal year and the fourth quarter exclude the additional week in Q4-16 as compared to Q4-17. The Company believes the information presented for the one-week difference provides important data for comparative purposes.
2 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.





Fiscal Year Results

For fiscal 2017, Tetra Tech generated record high revenue, income and backlog. Results are summarized as follows:

$ million (except EPS data)
 
GAAP
 
Ongoing Operations1
 
Fiscal 2017
% Y/Y
 
Fiscal 2017
% Y/Y
Revenue
 
$2,753
+7%
 
$2,735
+10%
Net Revenue
 
$2,034
+5%
 
$2,034
+8%
Operating Income
 
$183
+35%
 
$191
+15%
EPS
 
$2.04
+44%
 
$2.13
+16%
Backlog
 
$2,541
+7%
 
$2,536
+8%


Fiscal Year 2018 Segments

Beginning in fiscal 2018, we further aligned our operations to better serve our clients and markets, resulting in two renamed reportable segments. Our Government Services Group ("GSG") reportable segment will primarily include activities with U.S. government clients (federal, state and local) and all activities with development agencies worldwide. Our Commercial/International Services Group ("CIG") reportable segment will primarily include activities with U.S. commercial clients and all international activities other than work for development agencies. This will allow us to capitalize on our growing market opportunities and enhance the development of high-end consulting and technical solutions to meet our growing client demand.

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 2018 to be in the range of $0.50 to $0.55. Net revenue for the first quarter is expected to range from $500 million to $525 million. For fiscal 2018, Tetra Tech expects diluted EPS to be in the range of $2.20 to $2.40 and net revenue to range from $2.05 billion to $2.15 billion.

Webcast

Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the fourth quarter and fiscal year 2017 results through a link posted on the Company’s website at tetratech.com on November 9, 2017 at 8:00 a.m. (PT).


2


Reconciliation of Revenue and Operating Results

In thousands (except EPS data)

 
Three Months Ended
 
Fiscal Year Ended
 
Oct. 1,
2017
 
Oct. 2,
2016
 
%
Y/Y
 
Oct. 1,
2017
 
Oct. 2,
2016
 
%
Y/Y
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
735,188

 
$
728,508

 
1
%
 
$
2,753,360

 
$
2,583,469

 
7
%
RCM
(5,805
)
 
(15,369
)
 
 
 
(18,207
)
 
(52,150
)
 
 
Ongoing revenue
$
729,383

 
$
713,139

 
2
%
 
$
2,735,153

 
$
2,531,319

 
8
%
Ongoing revenue (52 wks)
$
729,383

 
$
662,200

 
10
%
 
$
2,735,153

 
$
2,483,558

 
10
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
735,188

 
$
728,508

 
1
%
 
$
2,753,360

 
$
2,583,469

 
7
%
Subcontractor costs
(201,161
)
 
(197,658
)
 
 
 
(719,350
)
 
(654,264
)
 
 
Net revenue
$
534,027

 
$
530,850

 
1
%
 
$
2,034,010

 
$
1,929,205

 
5
%
RCM
(919
)
 
(4,730
)
 
 
 
86

 
(17,267
)
 
 
Ongoing net revenue
$
533,108

 
$
526,120

 
1
%
 
$
2,034,096

 
$
1,911,938

 
6
%
Ongoing net rev. (52 wks)
$
533,108

 
$
488,540

 
9
%
 
$
2,034,096

 
$
1,875,864

 
8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
$
54,647

 
$
47,189

 
16
%
 
$
183,342

 
$
135,855

 
35
%
Earn-out (gain) expense
225

 
—

 
 
 
(6,923
)
 
2,823

 
 
RCM
1,953

 
2,144

 
 
 
14,712

 
11,834

 
 
Acq. & integration
—

 
2,632

 
 
 
—

 
19,548

 
 
Ongoing operating income
$
56,825

 
$
51,965

 
9
%
 
$
191,131

 
$
170,060

 
12
%
Ongoing op. inc. (52 wks)
$
56,825

 
$
48,253

 
18
%
 
$
191,131

 
$
166,851

 
15
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EPS
$
0.6

 
$
0.53

 
13
%
 
$
2.04

 
$
1.42

 
44
%
Earn-out (gain) expense
—

 
—

 
 
 
(0.08
)
 
0.03

 
 
RCM
0.03

 
0.03

 
 
 
0.17

 
0.14

 
 
Acq. & integration
—

 
0.03

 
 
 
—

 
0.29

 
 
Coffey debt prepayment
—

 
—

 
 
 
—

 
0.03

 
 
Retroactive R&D tax
—

 
—

 
 
 
—

 
(0.03
)
 
 
Ongoing EPS
$
0.63

 
$
0.59

 
7
%
 
$
2.13

 
$
1.88

 
13
%
Ongoing EPS (52 wks)
$
0.63

 
$
0.55

 
15
%
 
$
2.13

 
$
1.84

 
16
%


3


About Tetra Tech

Tetra Tech is a leading, global provider of consulting and engineering services. We are differentiated by Leading with Science® to provide innovative technical solutions to our clients. We support global commercial and government clients focused on water, environment, infrastructure, resource management, energy, and international development. With more than 16,000 associates worldwide, Tetra Tech provides clear solutions to complex problems. For more information about Tetra Tech, please visit tetratech.com, follow us on Twitter (@TetraTech), or like us on Facebook.

CONTACTS:
Jim Wu, Investor Relations
Charlie MacPherson, 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: continuing worldwide political and economic uncertainties; the new U.S. Administration’s potential changes to fiscal and tax policies; the cyclicality in demand for our overall services; the fluctuation in demand for oil and gas, and mining services; risks related to international operations; concentration of revenues from U.S. government agencies and potential funding disruptions by these agencies; 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; compliance with government procurement laws and regulations; credit risks associated with certain clients in certain geographic areas or industries; acquisition strategy and integration risks; goodwill or other intangible asset impairment; 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 ability of our employees to obtain government granted eligibility; 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 adequately recover on our claims for additional contract costs; the failure to win or renew contracts with private and public sector clients; growth strategy management; backlog cancellation and adjustments; risks relating to cyber security breaches; 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; the adoption of new legal requirements; 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; 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; stock price volatility; and the ability to impede a business combination based on Delaware law and charter documents. 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.




4

Tetra Tech, Inc.
Consolidated Balance Sheets
(unaudited - in thousands, except par value)
 
 
October 1,
2017
 
October 2,
2016
 
 
 
 
 
Assets
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
 
$
189,975

 
$
160,459

Accounts receivable net
 
788,767

 
714,336

Prepaid expenses and other current assets
 
49,969

 
46,262

Income taxes receivable
 
13,312

 
14,371

Total current assets
 
1,042,023

 
935,428

 
 
 
 
 
Property and equipment - net
 
56,835

 
67,827

Investments in and advances to unconsolidated joint ventures
 
2,700

 
2,064

Goodwill
 
740,886

 
717,988

Intangible assets - net
 
26,688

 
48,962

Deferred income taxes
 
1,763

 
630

Other long-term assets
 
31,850

 
27,880

Total Assets
 
$
1,902,745

 
$
1,800,779

 
 
 
 
 
Liabilities and Equity
 
 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
 
$
177,638

 
$
158,773

Accrued compensation
 
143,408

 
129,184

Billings in excess of costs on uncompleted contracts
 
117,499

 
88,223

Current portion of long-term debt
 
15,588

 
15,510

Current contingent earn-out liabilities
 
2,024

 
4,296

Other current liabilities
 
81,511

 
85,100

Total current liabilities
 
537,668

 
481,086

 
 
 
 
 
Deferred income taxes
 
43,781

 
60,348

Long-term debt
 
341,283

 
331,501

Long-term contingent earn-out liabilities
 
414

 
4,461

Other long-term liabilities
 
50,975

 
53,980

 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
Equity:
 
 
 
 
Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares
 
 
 
 
issued and outstanding at October 1, 2017 and October 2, 2016
 
—

 
—

Common stock - authorized, 150,000 shares of $0.01 par value; issued
 
 
 
 
and outstanding, 55,873 and 57,042 shares at October 1, 2017 and
 
 
 
 
October 2, 2016, respectively
 
559

 
570

Additional paid-in capital
 
193,835

 
260,340

Accumulated other comprehensive loss
 
(98,500
)
 
(128,008
)
Retained earnings
 
832,559

 
736,357

Tetra Tech stockholders' equity
 
928,453

 
869,259

Noncontrolling interests
 
                     171

 
               144

Total equity
 
           928,624

 
         869,403

Total Liabilities and Equity
 
$
1,902,745

 
$
1,800,779



Tetra Tech, Inc.
Consolidated Statements of Operations
(unaudited - in thousands, except per share data)
 
Three Months Ended
 
Twelve Months Ended
 
October 1,
 
October 2,
 
October 1,
 
October 2,
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Revenue
$
735,188

 
$
728,508

 
$
2,753,360

 
$
2,583,469

Subcontractor costs
(201,161
)
 
(197,658
)
 
(719,350
)
 
(654,264
)
Other costs of revenue
(433,003
)
 
(433,671
)
 
(1,680,372
)
 
(1,598,994
)
Gross profit
101,024

 
97,179

 
353,638

 
330,211

Selling, general and administrative expenses
(46,152
)
 
(47,358
)
 
(177,219
)
 
(171,985
)
Acquisition and integration expenses
—

 
(2,632
)
 
—

 
(19,548
)
Contingent consideration - fair value adjustments
(225
)
 
—

 
6,923

 
(2,823
)
Operating income
54,647

 
47,189

 
183,342

 
135,855

Interest expense - net
(2,779
)
 
(2,888
)
 
(11,581
)
 
(11,389
)
Income before income tax expense
51,868

 
44,301

 
171,761

 
124,466

Income tax expense
(17,381
)
 
(13,117
)
 
(53,844
)
 
(40,613
)
Net income including noncontrolling interests
34,487

 
31,184

 
117,917

 
83,853

Net income from noncontrolling interests
(20
)
 
(79
)
 
(43
)
 
(70
)
Net income attributable to Tetra Tech
$
34,467

 
$
31,105

 
$
117,874

 
$
83,783

 
 
 
 
 
 
 
 
Earnings per share attributable to Tetra Tech:
 
 
 
 
 
 
 
Basic
$
0.61

 
$
0.54

 
$
2.07

 
$
1.44

Diluted
$
0.60

 
$
0.53

 
$
2.04

 
$
1.42

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
Basic
56,338

 
57,309

 
56,911

 
58,186

Diluted
57,326

 
58,192

 
57,913

 
58,966

 
 
 
 
 
 
 
 
Cash dividends paid per share
$
0.10

 
$
0.09

 
$
0.38

 
$
0.34




Tetra Tech, Inc.
Consolidated Statements of Cash Flows
(unaudited - in thousands)
 
 
Twelve Months Ended
 
 
October 1,
 
October 2,
 
 
2017
 
2016
 
 
 
 
 
Cash flows from operating activities:
 
 
 
 
Net income including noncontrolling interests
 
$
117,917

 
$
83,853

 
 
 
 
 
Adjustments to reconcile net income to net cash from operating activities:
 
 
 
 
Depreciation and amortization
 
45,756

 
45,588

Equity in income of unconsolidated joint ventures
 
(4,699
)
 
(1,652
)
Distributions of earnings from unconsolidated joint ventures
 
4,052

 
2,796

Stock-based compensation
 
13,450

 
12,964

Excess tax benefits from stock-based compensation
 
—

 
(918
)
Deferred income taxes
 
(9,957
)
 
6,051

Provision for doubtful accounts
 
2,847

 
8,082

Fair value adjustments to contingent consideration
 
(6,923
)
 
2,823

Gain on disposal of property and equipment
 
(103
)
 
(537
)
Lease termination costs and related asset impairment
 
0

 
             2,946

 
 
 
 
 
Changes in operating assets and liabilities, net of effects of business acquisitions:
 
 
 
 
Accounts receivable
 
(64,781
)
 
9,062

Prepaid expenses and other assets
 
(8,317
)
 
3,720

Accounts payable
 
18,597

 
(3,002
)
Accrued compensation
 
13,413

 
8,434

Billings in excess of costs on uncompleted contracts
 
28,298

 
(13,874
)
Other liabilities
 
2,167

 
(19,321
)
Income taxes receivable/payable
 
(13,725
)
 
(4,995
)
Net cash provided by operating activities
 
         137,992

 
         142,020

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Capital expenditures
 
(9,741
)
 
(11,945
)
Payments for business acquisitions, net of cash acquired
 
(8,039
)
 
(81,259
)
Changes in restricted cash
 
—

 
(2,519
)
Proceeds from sale of property and equipment
 
905

 
3,076

Investments in unconsolidated joint ventures
 
(85
)
 
(1,368
)
        Net cash used in investing activities
 
         (16,960)

 
         (94,015)

 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Payments on long-term debt
 
(233,865
)
 
(148,485
)
Proceeds from borrowings
 
243,553

 
229,049

Payments of contingent earn-out liabilities
 
(1,319
)
 
(3,251
)
Debt pre-payment costs
 
—

 
(1,935
)
Excess tax benefits from stock-based compensation
 
—

 
918

Repurchases of common stock
 
(100,000
)
 
(99,500
)
Distributions paid to noncontrolling interests
 
(24
)
 
(402
)
Dividends paid
 
(21,672
)
 
(19,735
)
Net proceeds from issuance of common stock
 
18,555

 
17,953

        Net cash used in financing activities
 
(94,772
)
 
(25,388
)
 
 
 
 
 


 
 
 
 
 
Effect of foreign exchange rate changes on cash
 
3,256

 
2,516

 
 
 
 
 
Net increase in cash and cash equivalents
 
29,516

 
25,133

Cash and cash equivalents at beginning of year
 
160,459

 
135,326

Cash and cash equivalents at end of year
 
$
189,975

 
$
160,459

 
 
 
 
 
Supplemental information:
 
 
 
 
Cash paid during the year for:
 
 
 
 
Interest
 
$
11,504

 
$
12,575

Income taxes, net of refunds received of $2.1 million and $3.2 million
 
$
72,578

 
$
35,273




Tetra Tech, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regulation G Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
October 1, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Revenue to Revenue, Net of Subcontractor Costs ("Net Revenue")
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
2017
 
2014
 
2015
 
1st Qtr
 
2nd Qtr
 
6 mos
 
3rd Qtr
 
9 mos
 
4th Qtr
 
Total
 
1st Qtr
 
2nd Qtr
 
6 mos
 
3rd Qtr
 
9 mos
 
4th Qtr
 
Total
Consolidated (as reported)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
    2,483.8
 
    2,299.3
 
      560.7
 
      627.4
 
    1,188.1
 
      666.9
 
    1,855.0
 
      728.5
 
    2,583.5
 
      668.9
 
      663.8
 
    1,332.6
 
      685.5
 
    2,018.2
 
      735.2
 
    2,753.4

Subcontractor Costs
     (623.9)
 
     (580.6)
 
     (139.8)
 
     (148.6)
 
     (288.4)
 
     (168.2)
 
     (456.6)
 
     (197.7)
 
     (654.3)
 
     (179.3)
 
     (151.8)
 
     (331.1)
 
     (187.1)
 
     (518.2)
 
     (201.2)
 
(719.4
)
Net Revenue
    1,859.9
 
    1,718.7
 
      420.9
 
      478.8
 
      899.7
 
      498.7
 
    1,398.4
 
      530.8
 
    1,929.2
 
      489.6
 
      512.0
 
    1,001.5
 
      498.4
 
    1,500.0
 
      534.0
 
    2,034.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
WEI Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
    1,018.5
 
      993.6
 
      240.4
 
      226.0
 
      466.4
 
      264.7
 
      731.1
 
      297.2
 
    1,028.3
 
      287.1
 
      268.9
 
      556.1
 
      279.6
 
      835.7
 
      310.7
 
    1,146.4

Subcontractor Costs
     (207.4)
 
     (230.4)
 
       (61.0)
 
       (59.6)
 
     (120.6)
 
       (73.4)
 
     (194.0)
 
       (80.9)
 
     (274.8)
 
       (86.1)
 
       (68.3)
 
     (154.4)
 
       (69.5)
 
     (223.9)
 
       (75.6)
 
(299.5
)
Net Revenue
      811.1
 
      763.2
 
      179.4
 
      166.4
 
      345.8
 
      191.3
 
      537.1
 
      216.3
 
      753.5
 
      201.0
 
      200.6
 
      401.7
 
      210.1
 
      611.8
 
      235.1
 
      846.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RME Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
    1,332.6
 
    1,282.0
 
      315.7
 
      403.9
 
      719.7
 
      414.9
 
    1,134.5
 
      435.2
 
    1,569.7
 
      396.0
 
      418.9
 
      814.9
 
      417.5
 
    1,232.4
 
      434.0
 
    1,666.4

Subcontractor Costs
     (363.3)
 
     (349.9)
 
       (81.4)
 
       (94.6)
 
     (175.9)
 
     (109.9)
 
     (285.9)
 
     (125.3)
 
     (411.2)
 
     (109.3)
 
     (103.9)
 
     (213.1)
 
     (130.0)
 
     (343.2)
 
     (136.0)
 
(479.2
)
Net Revenue
      969.3
 
      932.1
 
      234.3
 
      309.3
 
      543.8
 
      305.0
 
      848.6
 
      309.9
 
    1,158.5
 
      286.7
 
      315.0
 
      601.8
 
      287.5
 
      889.2
 
      298.0
 
    1,187.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ongoing Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
    2,262.7
 
    2,212.7
 
      539.9
 
      616.6
 
    1,156.5
 
      661.7
 
    1,818.2
 
      713.1
 
    2,531.3
 
      660.7
 
      663.8
 
    1,324.4
 
      681.3
 
    2,005.8
 
      729.4
 
    2,735.2

Subcontractor Costs
     (482.3)
 
     (517.3)
 
     (126.2)
 
     (140.8)
 
     (267.0)
 
     (165.4)
 
     (432.4)
 
     (187.1)
 
     (619.4)
 
     (172.9)
 
     (148.1)
 
     (321.0)
 
     (183.8)
 
     (504.8)
 
     (196.3)
 
(701.1
)
Net Revenue
    1,780.4
 
    1,695.4
 
      413.7
 
      475.8
 
      889.5
 
      496.3
 
    1,385.8
 
      526.0
 
    1,911.9
 
      487.8
 
      515.7
 
    1,003.4
 
      497.5
 
    1,501.0
 
      533.1
 
    2,034.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RCM Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
      221.1
 
        86.6
 
        20.8
 
        10.8
 
        31.6
 
          5.2
 
        36.8
 
        15.4
 
        52.2
 
          8.2
 
0
 
          8.2
 
          4.2
 
        12.4
 
          5.8
 
        18.2

Subcontractor Costs
     (141.6)
 
       (63.3)
 
       (13.6)
 
         (7.8)
 
       (21.4)
 
         (2.8)
 
       (24.2)
 
       (10.6)
 
       (34.9)
 
         (6.4)
 
         (3.7)
 
       (10.1)
 
         (3.3)
 
       (13.4)
 
         (4.9)
 
(18.3
)
Net Revenue
        79.5
 
        23.3
 
          7.2
 
          3.0
 
        10.2
 
          2.4
 
        12.6
 
          4.8
 
        17.3
 
          1.8
 
         (3.7)
 
         (1.9)
 
          0.9
 
         (1.0)
 
          0.9
 
(0.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Reconciliation of Net Income Attributable to Tetra Tech to EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
2017
 
2014
 
2015
 
1st Qtr
 
2nd Qtr
 
6 mos
 
3rd Qtr
 
9 mos
 
4th Qtr
 
Total
 
1st Qtr
 
2nd Qtr
 
6 mos
 
3rd Qtr
 
9 mos
 
4th Qtr
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income Attributable to Tetra Tech
   108,266
 
     39,074
 
     23,239
 
      3,744
 
     26,983
 
     25,694
 
     52,678
 
     31,105
 
     83,783
 
     26,562
 
     26,862
 
     53,424
 
     29,983
 
     83,407
 
     34,467
 
   117,874
Interest Expense1
      9,490
 
      7,363
 
      1,660
 
      4,251
 
      5,911
 
      2,590
 
      8,501
 
      2,888
 
     11,389
 
      2,908
 
      3,099
 
      6,007
 
      2,795
 
      8,802
 
      2,779
 
     11,581
Depreciation2
     26,452
 
     23,110
 
      5,303
 
      5,968
 
     11,271
 
      5,912
 
     17,183
 
      5,573
 
     22,756
 
      5,251
 
      5,764
 
     11,015
 
      5,345
 
     16,360
 
      5,848
 
     22,207
Amortization2
     27,288
 
     20,206
 
      4,311
 
      5,447
 
      9,757
 
      6,331
 
     16,088
 
      5,990
 
     22,078
 
      5,940
 
      5,898
 
     11,838
 
      5,607
 
     17,445
 
      5,341
 
     22,786
Contingent Consideration
    (58,694)
 
     (3,113)
 
      1,001
 
      1,822
 
      2,823
 
0
 
      2,823
 
0
 
      2,823
 
0
 
     (7,149)
 
     (7,149)
 
0
 
     (7,149)
 
         225
 
     (6,923)
Goodwill and other IA Impairment
0
 
     60,763
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Income Tax Expense
     35,668
 
     41,093
 
      8,030
 
      8,661
 
     16,692
 
     10,805
 
     27,497
 
     13,117
 
     40,613
 
     10,358
 
     12,990
 
     23,348
 
     13,114
 
     36,462
 
     17,382
 
     53,844
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBITDA
   148,470
 
   188,496
 
     43,544
 
     29,893
 
     73,437
 
     51,332
 
   124,770
 
     58,673
 
   183,442
 
     51,019
 
     47,464
 
     98,483
 
     56,844
 
   155,327
 
     66,042
 
   221,369
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition Expenses
0
 
0
 
0
 
      7,925
 
      7,925
 
0
 
      7,925
 
0
 
      7,925
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Integration Expenses
0
 
0
 
0
 
      7,986
 
      7,986
 
      1,005
 
      8,991
 
      2,632
 
     11,623
 
0
 
0
 
0
 
0
 
0
 
0
 
0
RCM
     42,193
 
      6,813
 
      5,089
 
         201
 
      5,291
 
      3,840
 
      9,131
 
      1,968
 
     11,098
 
      2,887
 
      7,970
 
     10,857
 
      1,127
 
     11,984
 
      1,666
 
     13,650
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ongoing EBITDA
   190,663
 
   195,309
 
     48,633
 
     46,005
 
     94,639
 
     56,177
 
   150,817
 
     63,273
 
   214,088
 
     53,906
 
     55,434
 
   109,340
 
     57,971
 
   167,311
 
     67,708
 
   235,019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Includes amortization of deferred financing fee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 Varies slightly from the Statements of Cash Flows, which includes amortization of deferred financing fee