EX-99.1 2 a08-13112_1ex99d1.htm EX-99.1

Exhibit 99.1

 

April 30, 2008

 

Tetra Tech Reports Second Quarter Results
Exceeding Revenue and Earnings Guidance

 

·             Net Revenue up 21.6%

 

·             Net Income up 31.4%

 

·             Backlog up 39.2%

 

Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the second quarter ended March 30, 2008.  The Company exceeded both its revenue and earnings guidance for the quarter.

 

Second Quarter Results

 

Revenue in the quarter was $461.4 million, up 33.3% from $346.0 million, and revenue, net of subcontractor costs, was $287.4 million, up 21.6% from $236.3 million for the same quarter last year. Income from operations for the quarter was $24.8 million, up 35.1% from $18.4 million for the same quarter last year.  Net income for the quarter was $13.7 million, up 31.4% from $10.4 million for the same quarter last year.  Diluted earnings per share (EPS) for the quarter was $0.23, up 27.8% from $0.18 for the same quarter last year.  Backlog at the end of the quarter was a record $1.51 billion, up 39.2% from $1.08 billion at the end of the same quarter last year.  Cash generated from operations improved in the second quarter to $44.4 million, compared to $22.0 million for the same quarter last year.

 

Compared to the second quarter of fiscal 2007, Tetra Tech’s federal government business grew 25.8%, driven by increased workload with the U.S. Agency for International Development and the U.S. Department of Defense; state and local business grew 9.8%, due largely to regulatory-driven water programs; and commercial business grew 21.2%, driven largely by wind energy projects.

 

Six Month Results

 

Revenue for the first six months was $931.8 million, up 30.3% from $715.2 million, and revenue, net of subcontractor costs, was $564.5 million, an increase of 17.3% from $481.1 million for the same period last year.  Income from operations for the first six months was $47.5 million, up 19.6% from $39.7 million for the same period last year.  Net income for the first six months was $26.6 million, up 34.0% from $19.8 million for the same period last year.  Diluted EPS for the first six months was $0.45, up 32.4% from $0.34 for the same period last year.  Cash generated from operations improved in the first six months to $26.3 million, compared to $3.9 million for the same period last year.

 

Tetra Tech’s Chairman and CEO Dan Batrack remarked, “We are pleased with the Company’s strong second quarter results, which reflect success in delivering on our growth strategies in water, alternative energy, and environmental programs.  Our performance was highlighted by the largest volume of new orders in the Company’s history, which contributed to record net revenue

 


 

and backlog.  We continued to improve our operating margin and cash flow.  Looking forward, we expect to deliver solid performance in fiscal 2008.”

 

 

 

Three Months Ended

 

Six Months Ended

 

In thousands (except EPS data)

 

March 30,
2008

 

April 1,
2007

 

March 30,
2008

 

April 1,
2007

 

Revenue

 

$

461,386

 

$

346,019

 

$

931,773

 

$

715,172

 

Revenue, net of subcontractor costs

 

287,351

 

236,259

 

564,512

 

481,130

 

Income from operations

 

24,829

 

18,378

 

47,540

 

39,743

 

Interest expense, net

 

(1,456

)

(495

)

(2,116

)

(1,244

)

Loss on retirement of debt

 

—

 

—

 

—

 

(4,226

)

Income tax expense

 

(9,700

)

(7,500

)

(18,851

)

(14,464

)

Income from continuing operations

 

13,673

 

10,383

 

26,573

 

19,809

 

Income from discontinued operation, net of tax

 

—

 

26

 

—

 

26

 

Net income

 

$

13,673

 

$

10,409

 

$

26,573

 

$

19,835

 

 

 

 

 

 

 

 

 

 

 

Basic EPS:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.23

 

$

0.18

 

$

0.45

 

$

0.34

 

Income from discontinued operation, net of tax

 

—

 

—

 

—

 

—

 

Net income

 

$

0.23

 

$

0.18

 

$

0.45

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.23

 

$

0.18

 

$

0.45

 

$

0.34

 

Income from discontinued operation, net of tax

 

—

 

—

 

—

 

—

 

Net income

 

$

0.23

 

$

0.18

 

$

0.45

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

58,601

 

57,838

 

58,412

 

57,773

 

Diluted

 

59,084

 

58,323

 

59,079

 

58,270

 

 

2


 

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 2008 to be in the range of $0.22 to $0.24.  Revenue, net of subcontractor costs, for the third quarter is expected to range from $285 million to $305 million.  For fiscal 2008, Tetra Tech is raising its earnings guidance, and now expects diluted EPS to be $0.90 to $0.94.  Revenue, net of subcontractor costs, for fiscal 2008 is now expected to range from $1.15 billion to $1.19 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 web site at www.tetratech.com on May 1, 2008 at 8:00 a.m. (PDT).

 

About Tetra Tech (www.tetratech.com)

 

Tetra Tech is a leading provider of consulting, engineering, and technical services. With approximately 8,500 associates located in the United States and internationally, the Company supports commercial and government clients in the areas of resource management and infrastructure.  Tetra Tech’s services include research and development, applied science and technology, engineering design, program management, construction management, construction, and operations and maintenance.

 

CONTACTS:
Jorge Casado, Investor Relations
Talia Starkey, Media & Public Relations
(626) 351-4664

 

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: 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

 

3


 

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.

 

4


 

TETRA TECH, INC.

Condensed Consolidated Balance Sheets

(in thousands, except par value)

 

 

 

March 30,
2008

 

September 30,
2007

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

28,020

 

$

76,741

 

Accounts receivable - net

 

470,434

 

437,315

 

Prepaid expenses and other current assets

 

30,765

 

28,496

 

Income taxes receivable

 

9,725

 

—

 

Deferred income taxes

 

1,532

 

—

 

Current assets of discontinued operation

 

300

 

304

 

Total current assets

 

540,776

 

542,856

 

Property and equipment:

 

 

 

 

 

Land and buildings

 

6,705

 

6,630

 

Equipment, furniture and fixtures

 

106,395

 

100,391

 

Leasehold improvements

 

11,685

 

10,738

 

Total

 

124,785

 

117,759

 

Accumulated depreciation and amortization

 

(65,517

)

(63,382

)

Property and equipment - net

 

59,268

 

54,377

 

Deferred income taxes

 

8,615

 

12,342

 

Income taxes receivable

 

17,844

 

33,800

 

Goodwill

 

204,784

 

180,952

 

Intangible assets - net

 

14,275

 

5,166

 

Other assets

 

14,506

 

15,576

 

Non-current assets of discontinued operation

 

2,418

 

2,418

 

Total Assets

 

$

862,486

 

$

847,487

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

143,709

 

$

154,560

 

Accrued compensation

 

72,497

 

78,029

 

Billings in excess of costs on uncompleted contracts

 

78,384

 

55,172

 

Deferred income taxes

 

—

 

13,035

 

Income taxes payable

 

—

 

1,576

 

Current portion of long-term obligations

 

3,731

 

3,304

 

Other current liabilities

 

44,317

 

42,805

 

Total current liabilities

 

342,638

 

348,481

 

Long-term obligations

 

64,744

 

81,080

 

Other long-term liabilities

 

3,522

 

2,223

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding as of March 30, 2008 and September 30, 2007

 

—

 

—

 

Common stock - authorized, 85,000 shares of $0.01 par value; issued and outstanding 58,806 and 58,387 shares as of March 30, 2008 and September 30, 2007, respectively

 

588

 

584

 

Additional paid-in capital

 

289,351

 

280,022

 

Accumulated other comprehensive loss

 

(64

)

(37

)

Retained earnings

 

161,707

 

135,134

 

 

 

 

 

 

 

Total stockholders’ equity

 

451,582

 

415,703

 

Total Liabilities and Stockholders’ Equity

 

$

862,486

 

$

847,487

 

 


 

TETRA TECH, INC.

Condensed Consolidated Statements of Income

(unaudited - in thousands, except per share data)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

March 30,
2008

 

April 1,
2007

 

March 30,
2008

 

April 1,
2007

 

Revenue

 

$

461,386

 

$

346,019

 

$

931,773

 

$

715,172

 

Subcontractor costs

 

(174,035

)

(109,760

)

(367,261

)

(234,042

)

Revenue, net of subcontractor costs

 

287,351

 

236,259

 

564,512

 

481,130

 

Other contract costs

 

(229,583

)

(191,112

)

(450,495

)

(391,564

)

Gross profit

 

57,768

 

45,147

 

114,017

 

89,566

 

Selling, general and administrative expenses

 

(32,939

)

(26,769

)

(66,477

)

(49,823

)

Income from operations

 

24,829

 

18,378

 

47,540

 

39,743

 

Interest expense - net

 

(1,456

)

(495

)

(2,116

)

(1,244

)

Loss on retirement of debt

 

—

 

—

 

—

 

(4,226

)

Income from continuing operations before income tax expense

 

23,373

 

17,883

 

45,424

 

34,273

 

Income tax expense

 

(9,700

)

(7,500

)

(18,851

)

(14,464

)

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

13,673

 

10,383

 

26,573

 

19,809

 

Income from discontinued operation, net of tax

 

—

 

26

 

—

 

26

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

13,673

 

$

10,409

 

$

26,573

 

$

19,835

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.23

 

$

0.18

 

$

0.45

 

$

0.34

 

Income from discontinued operation, net of tax

 

—

 

—

 

—

 

—

 

Net income

 

$

0.23

 

$

0.18

 

$

0.45

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.23

 

$

0.18

 

$

0.45

 

$

0.34

 

Income from discontinued operation, net of tax

 

—

 

—

 

—

 

—

 

Net income

 

$

0.23

 

$

0.18

 

$

0.45

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

58,601

 

57,838

 

58,412

 

57,773

 

Diluted

 

59,084

 

58,323

 

59,079

 

58,270

 

 


 

TETRA TECH, INC

Condensed Consolidated Statements of Cash Flows

(unaudited - in thousands)

 

 

 

Six Months Ended

 

 

 

March 30,
2008

 

April 1,
2007

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

26,573

 

$

19,835

 

 

 

 

 

 

 

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

 

 

 

 

 

Depreciation and amortization

 

8,374

 

6,211

 

Stock-based compensation

 

3,923

 

2,566

 

Excess tax benefits from stock-based compensation

 

(266

)

(139

)

Deferred income taxes

 

8,345

 

5,083

 

Write-off of unamortized debt financing costs

 

—

 

1,069

 

Provision for losses on contracts and related receivables

 

4,579

 

410

 

Gain on sale of discontinued operation

 

—

 

(44

)

Gain on disposal of property and equipment

 

(1,182

)

(192

)

 

 

 

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

Accounts receivable

 

(583

)

(2,923

)

Prepaid expenses and other assets

 

(1,688

)

(1,545

)

Accounts payable

 

(19,143

)

(6,949

)

Accrued compensation

 

(9,659

)

(8,792

)

Billings in excess of costs on uncompleted contracts

 

20,577

 

2,579

 

Other liabilities

 

1,923

 

(8,362

)

Income taxes receivable/payable

 

(15,483

)

(4,905

)

Net cash provided by operating activities

 

26,290

 

3,902

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(10,221

)

(4,635

)

Payments for business acquisitions, net of cash acquired

 

(53,951

)

(4,124

)

Proceeds from sale of discontinued operations

 

1,005

 

1,890

 

Proceeds from sale of property and equipment

 

1,721

 

253

 

Net cash used in investing activities

 

(61,446

)

(6,616

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Payments on long-term obligations

 

(31,275

)

(98,158

)

Proceeds from borrowings under long-term obligations

 

15,000

 

57,000

 

Payment of deferred financing fees

 

—

 

(1,032

)

Excess tax benefits from stock-based compensation

 

266

 

139

 

Net proceeds from issuance of common stock

 

2,444

 

1,976

 

Net cash used in financing activities

 

(13,565

)

(40,075

)

 

 

 

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

(48,721

)

(42,789

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

76,741

 

65,353

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

28,020

 

$

22,564

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

$

2,445

 

$

4,398

 

Income taxes, net of refunds received

 

$

21,330

 

$

14,279