EX-99.1 2 a05-2335_1ex99d1.htm EX-99.1

Exhibit 99.1

 

January 26, 2005

 

Tetra Tech Reports First Quarter 2005 Results

 

Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the first quarter ended January 2, 2005.  Revenue for the first quarter was $348.3 million, up 3.3% over revenue of $337.1 million for the same quarter last year.  Revenue, net of subcontractor costs, for the first quarter was $243.1 million, increasing 0.6% from $241.7 million for the same quarter last year.  Income from operations for the first quarter was $15.8 million, or 33.9% less than income from operations of $23.9 million for the same period last year.  Net income for the first quarter was $7.9 million, or 38.9% less than net income of $12.9 million for the same period last year.  Diluted earnings per share was 14 cents compared to diluted earnings per share of 23 cents for the same period last year, a 39.1% decrease.

 

Unaudited - in thousands, except EPS

 

 

 

First Quarter Ended

 

 

 

January 2,
2005

 

December 28,

2003

 

Revenue

 

$

348,342

 

$

337,102

 

Revenue, Net of Subcontractor Costs

 

243,097

 

241,705

 

Income from Operations

 

15,828

 

23,941

 

Net Income

 

7,903

 

12,942

 

 

 

 

 

 

 

Earnings Per Share (EPS):

 

 

 

 

 

Basic

 

$

0.14

 

$

0.23

 

Diluted

 

$

0.14

 

$

0.23

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

Basic

 

56,469

 

55,504

 

Diluted

 

56,977

 

57,395

 

 

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 corporate transactions that may be completed 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 earnings per share for the second quarter of fiscal 2005 to be in the range of 15 cents to 17 cents.  Revenue, net of subcontractor costs, for the second quarter is expected to range from approximately $235 million to $245 million.  For the fiscal year, Tetra Tech’s guidance remains unchanged.  Tetra Tech expects diluted earnings per share for the year

 


 

to range from approximately $0.76 to $0.83, and revenue, net of subcontractor costs, for the year, to range from approximately $1.0 billion to $1.1 billion.

 

Webcast

 

Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the first quarter results through a link posted on the Company’s web site at www.tetratech.com on January 27, 2005 at 8:00 a.m. (PST).

 

About Tetra Tech (www.tetratech.com)

 

Tetra Tech is a leading provider of consulting, engineering and technical services.  With over 8,000 associates located in the United States and internationally, the Company supports commercial and government clients in the areas of resource management, infrastructure and communications.  Tetra Tech’s services include research and development, applied science and technology, engineering design, program management, construction management, and operations and maintenance.

 

CONTACT: Li-San Hwang, CEO or Mike Bieber, Investor Relations (626) 351-4664

 

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: fluctuations in quarterly operating results; the impact of downturns in the financial markets and reductions in government budgets; volatility of common stock value; concentration of revenues from government agencies and funding disruptions by these agencies; failure to properly manage projects; acquisition strategy risks; management of growth strategy; use of the percentage-of-completion method of accounting; adverse resolution of an IRS examination; loss of key personnel or the inability to attract and retain qualified personnel; implementation of the enterprise resource planning system; international operations risks; credit risks associated with commercial clients; violations of government contractor regulations; competitive bidding for government contracts; the affect of a negative government audit; the inability to accurately estimate contract risks, revenue and costs; backlog cancellation and adjustments; client base consolidation; failure of partners to perform on joint projects; inability to find qualified subcontractors; changes in existing environmental laws, regulations or programs; competition; restrictive covenants in debt agreements; risks of professional and other liabilities; adverse resolution of litigation; conflict of interest issues; changes in accounting for equity-related compensation; expenses associated with corporate governance; and disruption of operations due to computer viruses or terrorism.  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.

 

2


 

TETRA TECH, INC.

Condensed Consolidated Balance Sheets

(in thousands, except par value)

 

 

 

January 2,
2005

 

October 3,
2004

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

 

$

20,568

 

$

48,032

 

Accounts receivable - net

 

391,280

 

374,630

 

Prepaid expenses and other current assets

 

27,107

 

23,857

 

Income taxes receivable

 

3,846

 

6,148

 

Total current assets

 

442,801

 

452,667

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT:

 

 

 

 

 

Equipment, furniture and fixtures

 

89,373

 

87,159

 

Leasehold improvements

 

9,713

 

9,694

 

Total

 

99,086

 

96,853

 

Accumulated depreciation and amortization

 

(58,552

)

(55,572

)

PROPERTY AND EQUIPMENT - NET

 

40,534

 

41,281

 

 

 

 

 

 

 

INCOME TAXES RECEIVABLE

 

33,800

 

33,800

 

 

 

 

 

 

 

GOODWILL

 

260,822

 

254,553

 

 

 

 

 

 

 

INTANGIBLE AND OTHER ASSETS - NET

 

24,146

 

26,206

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

802,103

 

$

808,507

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Accounts payable

 

$

89,886

 

$

111,038

 

Accrued compensation

 

44,483

 

55,493

 

Billings in excess of costs on uncompleted contracts

 

25,283

 

28,941

 

Deferred income taxes

 

4,869

 

4,421

 

Current portion of long-term obligations

 

18,735

 

59,024

 

Other current liabilities

 

44,186

 

48,921

 

Total current liabilities

 

227,442

 

307,838

 

 

 

 

 

 

 

DEFERRED INCOME TAXES

 

11,090

 

11,027

 

 

 

 

 

 

 

LONG-TERM OBLIGATIONS

 

156,624

 

92,142

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding as of January 2, 2005, and October 3, 2004

 

—

 

—

 

Exchangeable stock of a subsidiary

 

1,426

 

1,426

 

Common stock - authorized, 85,000 shares of $0.01 par value; issued and outstanding 56,428 and 56,305 shares as of January 2, 2005 and October 3, 2004 respectively

 

564

 

563

 

Additional paid-in capital

 

244,543

 

243,490

 

Accumulated other comprehensive income

 

865

 

375

 

Retained earnings

 

159,549

 

151,646

 

TOTAL STOCKHOLDERS’ EQUITY

 

406,947

 

397,500

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

802,103

 

$

808,507

 

 


 

TETRA TECH, INC.

Condensed Consolidated Statements of Income

(Unaudited - in thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

January 2,
2005

 

December 28,
2003

 

%
Change

 

 

 

 

 

 

 

 

 

Revenue

 

$

348,342

 

$

337,102

 

3.3

 

Subcontractor costs

 

105,245

 

95,397

 

10.3

 

Revenue, net of subcontractor costs

 

243,097

 

241,705

 

0.6

 

Other contract costs

 

202,053

 

193,846

 

4.2

 

Gross profit

 

41,044

 

47,859

 

-14.2

 

Selling, general and administrative expenses

 

25,216

 

23,918

 

5.4

 

Income from operations

 

15,828

 

23,941

 

-33.9

 

Interest expense - net

 

2,478

 

2,372

 

4.5

 

Income before income tax expense

 

13,350

 

21,569

 

-38.1

 

Income tax expense

 

5,447

 

8,627

 

-36.9

 

Net income

 

$

7,903

 

$

12,942

 

-38.9

 

Earnings per share:

 

 

 

 

 

 

 

Basic

 

$

0.14

 

$

0.23

 

-39.1

 

Diluted

 

$

0.14

 

$

0.23

 

-39.1

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

56,469

 

55,504

 

1.7

 

Diluted

 

56,977

 

57,395

 

-0.7

 

 

 

 

 

 

 

 

 

Percentage of revenue, net of subcontractor costs:

 

 

 

 

 

 

 

Revenue, net of subcontractor costs

 

100.0

%

100.0

%

 

 

Other contract costs

 

83.1

%

80.2

%

 

 

Gross profit

 

16.9

%

19.8

%

 

 

Selling, general and administrative expenses

 

10.4

%

9.9

%

 

 

Income from operations

 

6.5

%

9.9

%

 

 

Interest expense - net

 

1.0

%

1.0

%

 

 

Income before income tax expense

 

5.5

%

8.9

%

 

 

Income tax expense

 

2.2

%

3.6

%

 

 

Net income

 

3.3

%

5.3

%

 

 

 


 

TETRA TECH, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited - in thousands)

 

 

 

Three Months Ended

 

 

 

January 2,
2005

 

December 28,
2003

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

7,903

 

$

12,942

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash used by operating activities:

 

 

 

 

 

Depreciation and amortization

 

4,233

 

4,454

 

Deferred income taxes

 

251

 

398

 

Provision for losses on receivables

 

2,528

 

819

 

(Gain) loss on disposal of property and equipment

 

(60

)

52

 

 

 

 

 

 

 

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

 

 

 

 

 

Accounts receivable

 

(19,177

)

(27,443

)

Prepaid expenses and other assets

 

(1,689

)

(2,348

)

Accounts payable

 

(21,152

)

(2,757

)

Accrued compensation

 

(11,010

)

(7,893

)

Billings in excess of costs on uncompleted contracts

 

(3,658

)

3,926

 

Other current liabilities

 

(3,592

)

513

 

Income taxes receivable/payable

 

(2,396

)

(5,985

)

Net cash used in operating activities

 

(47,819

)

(23,322

)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(3,274

)

(4,319

)

Payments for business acquisitions, net of cash acquired

 

(2,228

)

—

 

Proceeds on sale of property and equipment

 

444

 

424

 

Net cash used in investing activities

 

(5,058

)

(3,895

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Payments on long-term obligations

 

(807

)

(17,698

)

Proceeds from borrowings under long-term obligations

 

25,000

 

32,323

 

Net proceeds from issuance of common stock

 

971

 

3,201

 

Net cash provided by financing activities

 

25,164

 

17,826

 

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

249

 

95

 

 

 

 

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

(27,464

)

(9,296

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

48,032

 

33,164

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

20,568

 

$

23,868

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

$

4,543

 

$

4,359

 

Income taxes, net of refunds received

 

$

7,506

 

$

14,109