EX-99.1 2 a10-21063_1ex99d1.htm EX-99.1

Exhibit 99.1

 

November 10, 2010

 

Tetra Tech Reports Fourth Quarter and Fiscal 2010 Results

 

·                  Q4 Net Revenue up 15% to $421 million — Exceeded Guidance

·                  Q4 Diluted EPS up 13% to $0.37 — Exceeded Guidance

·                  Q4 Backlog up 17% to $1.85 billion

 

Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the fourth quarter and fiscal year ended October 3, 2010.

 

Fourth Quarter Results

 

Revenue in the quarter was $627.4 million, up 9.1% compared to $575.1 million in the fourth quarter last year.  Revenue, net of subcontractor costs(1), was $420.7 million, up 14.6% compared to $367.0 million in the fourth quarter last year.  Operating income was $37.1 million, up 13.6% compared to $32.7 million in the fourth quarter last year.  Net income was $23.1 million, up 12.9% compared to $20.5 million in the fourth quarter last year.  Diluted EPS were $0.37, up 12.7% compared to $0.33 in the fourth quarter last year.  Backlog was $1.85 billion, up 17.1% compared to $1.58 billion at the end of fiscal 2009, and up 10.4% compared to $1.68 billion at the end of the third quarter of 2010.  Cash from operations was $42.3 million, compared to $90.8 million in the fourth quarter last year.  Last year’s $90.8 million of cash from operations included a tax refund of $39.8 million.

 

Fiscal Year Results

 

Revenue for fiscal 2010 was $2,201.2 million, compared to $2,287.5 million in fiscal 2009.  Revenue, net of subcontractor costs, was $1,460.2 million, compared to $1,386.1 million in fiscal 2009.  Operating income was $124.5 million, compared to $121.9 million in fiscal 2009.  Net income was $76.8 million, compared to $87.0 million in fiscal 2009.  Last year’s $87.0 million of net income was positively impacted by $13.0 million of income tax benefits.  Diluted EPS in fiscal 2010 were $1.24, compared to $1.43 in fiscal 2009.  Last year’s $1.43 of diluted EPS included approximately $0.21 of income tax benefits.  Cash from operations was $106.8 million, compared to $198.2 million in fiscal 2009.  Last year’s $198.2 million of cash from operations included a tax refund of $39.8 million.

 

Tetra Tech’s Chairman and CEO, Dan Batrack said, “Tetra Tech finished the year with strong fourth quarter performance that resulted in 9% organic net revenue growth, 17% backlog growth, and net revenue and EPS that exceeded our guidance.  Our fourth quarter performance was driven by growth in our front-end consulting and engineering services across a broad range of customers.  Our backlog, the recent acquisition of BPR, and continuing demand for our front-end services are more than offsetting weak demand for back-end services that we anticipate will continue into fiscal 2011.”

 

(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.

 


 

 

 

Three Months Ended

 

Fiscal Year Ended

 

 

 

Oct. 3,

 

Sept. 27,

 

Oct. 3,

 

Sept. 27,

 

In thousands (except EPS data)

 

2010

 

2009

 

2010

 

2009

 

Revenue

 

$

627,383

 

$

575,120

 

$

2,201,232

 

$

2,287,484

 

Subcontractor costs

 

(206,707

)

(208,150

)

(741,002

)

(901,347

)

 

 

 

 

 

 

 

 

 

 

Revenue, net of subcontractor costs

 

420,676

 

366,970

 

1,460,230

 

1,386,137

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

37,124

 

32,693

 

124,474

 

121,889

 

Interest expense, net

 

(444

)

(444

)

(1,387

)

(2,684

)

Income tax expense

 

(13,539

)

(11,754

)

(46,268

)

(32,177

)

Net income

 

$

23,141

 

$

20,495

 

$

76,819

 

$

87,028

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.38

 

$

0.34

 

$

1.25

 

$

1.45

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.37

 

$

0.33

 

$

1.24

 

$

1.43

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

61,580

 

60,750

 

61,430

 

60,135

 

Diluted

 

61,999

 

61,905

 

62,087

 

60,994

 

 

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 2011 to be in the range of $0.31 to $0.33.  Revenue, net of subcontractor costs, for the first quarter is expected to range from $380 million to $410 million.  For fiscal 2011, Tetra Tech expects diluted EPS to be $1.28 to $1.40.  Revenue, net of subcontractor costs, for fiscal 2011 is expected to range from $1.6 billion to $1.7 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 11, 2010 at 7:00 a.m. (PST).

 

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About Tetra Tech (www.tetratech.com)

Tetra Tech is a leading provider of consulting, engineering, program management, construction, and technical services addressing the resource management and infrastructure markets. The Company supports government and commercial clients by providing innovative solutions focused on water, the environment, and energy. With approximately 12,000 employees worldwide, Tetra Tech’s capabilities span the entire project life cycle.

 

CONTACTS:
Jorge Casado, Investor Relations
Talia Starkey, 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:  worldwide political and economic uncertainties; fluctuations in annual revenue, expenses and operating results; the cyclicality in demand for state and local government and commercial services; credit risks associated with certain commercial clients; concentration of revenues from government agencies and funding disruptions by these agencies; a shift in U.S. defense spending; a delay in the completion of the U.S. government budget process; violations of government contractor regulations; dependence on winning or renewing federal, state and local government contracts; the delay or unavailability of public funding; the 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 reliance on third-party software to run critical 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

 

3


 

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

(in thousands, except par value)

 

 

 

October 3,
2010

 

September 27,
2009

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

220,933

 

$

89,185

 

Accounts receivable - net

 

566,642

 

506,316

 

Prepaid expenses and other current assets

 

49,889

 

55,167

 

Income taxes receivable

 

7,249

 

5,222

 

 

 

 

 

 

 

Total current assets

 

844,713

 

655,890

 

 

 

 

 

 

 

Property and equipment:

 

 

 

 

 

Land and buildings

 

11,707

 

10,555

 

Equipment, furniture and fixtures

 

145,210

 

126,249

 

Leasehold improvements

 

18,104

 

13,740

 

 

 

 

 

 

 

Total

 

175,021

 

150,544

 

Accumulated depreciation and amortization

 

(95,638

)

(79,616

)

 

 

 

 

 

 

Property and equipment - net

 

79,383

 

70,928

 

 

 

 

 

 

 

Goodwill

 

394,422

 

319,685

 

Intangible assets - net

 

45,995

 

33,769

 

Other assets

 

17,176

 

17,633

 

 

 

 

 

 

 

Total Assets

 

$

1,381,689

 

$

1,097,905

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

166,450

 

$

149,352

 

Accrued compensation

 

93,243

 

88,793

 

Billings in excess of costs on uncompleted contracts

 

85,221

 

105,162

 

Deferred income taxes

 

21,851

 

9,645

 

Current portion of long-term debt

 

5,002

 

4,320

 

Other current liabilities

 

101,260

 

74,964

 

Total current liabilities

 

473,027

 

432,236

 

 

 

 

 

 

 

Deferred income taxes

 

12,506

 

4,615

 

Long-term debt

 

122,510

 

6,530

 

Other long-term liabilities

 

25,513

 

8,046

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding as of October 3, 2010 and September 27, 2009

 

—

 

—

 

Common stock - authorized, 150,000 shares of $0.01 par value; issued and outstanding, 61,755 and 61,257 shares as of October 3, 2010 and September 27, 2009, respectively

 

618

 

613

 

Additional paid-in capital

 

368,865

 

350,571

 

Accumulated other comprehensive income

 

18,763

 

12,226

 

Retained earnings

 

359,887

 

283,068

 

Total stockholders’ equity

 

748,133

 

646,478

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Equity

 

$

1,381,689

 

$

1,097,905

 

 


 

Tetra Tech, Inc.

Consolidated Statements of Income

(in thousands, except per share data)

 

 

 

Three Months Ended

 

Fiscal Year Ended

 

 

 

October 3,

 

September 27,

 

October 3,

 

September 27,

 

 

 

2010

 

2009

 

2010

 

2009

 

Revenue

 

$

627,383

 

$

575,120

 

$

2,201,232

 

$

2,287,484

 

Subcontractor costs

 

(206,707

)

(208,150

)

(741,002

)

(901,347

)

Other costs of revenue

 

(338,672

)

(294,676

)

(1,172,542

)

(1,108,512

)

Selling, general and administrative expenses

 

(44,880

)

(39,601

)

(163,214

)

(155,736

)

Operating income

 

37,124

 

32,693

 

124,474

 

121,889

 

 

 

 

 

 

 

 

 

 

 

Interest expense - net

 

(444

)

(444

)

(1,387

)

(2,684

)

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

36,680

 

32,249

 

123,087

 

119,205

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

(13,539

)

(11,754

)

(46,268

)

(32,177

)

 

 

 

 

 

 

 

 

 

 

Net income

 

$

23,141

 

$

20,495

 

$

76,819

 

$

87,028

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.38

 

$

0.34

 

$

1.25

 

$

1.45

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.37

 

$

0.33

 

$

1.24

 

$

1.43

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

61,580

 

60,750

 

61,430

 

60,135

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

61,999

 

61,905

 

62,087

 

60,994

 

 


 

TETRA TECH, INC

Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Fiscal Year Ended

 

 

 

October 3,

 

September 27,

 

 

 

2010

 

2009

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

76,819

 

$

87,028

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

 

 

Depreciation and amortization

 

33,491

 

27,256

 

Stock-based compensation

 

10,178

 

9,392

 

Excess tax benefits from stock-based compensation

 

(754

)

(2,025

)

Deferred income taxes

 

11,641

 

(3,772

)

Provision for losses on contracts and related receivables

 

7,179

 

24,207

 

Exchange gain

 

(205

)

(20

)

Gain on disposal of property and equipment

 

(1,480

)

(296

)

 

 

 

 

 

 

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

 

 

 

 

 

Accounts receivable

 

(23,161

)

156,174

 

Prepaid expenses and other assets

 

6,275

 

(10,769

)

Accounts payable

 

(10,002

)

(104,268

)

Accrued compensation

 

4,582

 

(12,935

)

Billings in excess of costs on uncompleted contracts

 

(19,957

)

(5,102

)

Other liabilities

 

9,590

 

(3,180

)

Income taxes receivable/payable

 

2,618

 

36,558

 

Net cash provided by operating activities

 

106,814

 

198,248

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(21,584

)

(19,803

)

Payments for business acquisitions, net of cash acquired

 

(78,905

)

(114,743

)

Proceeds from sale of discontinued operation

 

—

 

192

 

Proceeds from sale of property and equipment

 

3,128

 

1,055

 

Net cash used in investing activities

 

(97,361

)

(133,299

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Payments on long-term debt

 

(2,673

)

(168,711

)

Proceeds from borrowings

 

120,000

 

118,290

 

Excess tax benefits from stock-based compensation

 

754

 

2,025

 

Net proceeds from issuance of common stock

 

3,353

 

20,336

 

Net cash provided by (used in) financing activities

 

121,434

 

(28,060

)

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

861

 

1,394

 

 

 

 

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

131,748

 

38,283

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

89,185

 

50,902

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

220,933

 

$

89,185

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid (received) during the period for:

 

 

 

 

 

Interest

 

$

1,287

 

$

2,475

 

Income taxes, net of refunds received

 

$

32,407

 

$

(152

)