EX-99.1 2 a12-26502_1ex99d1.htm EX-99.1

Exhibit 99.1

 

November 7, 2012

 

Tetra Tech Reports Fourth Quarter and Fiscal 2012 Results

 

·                 Q4 Net Revenue up 13% to $536 million

 

·                 FY12 Net Revenue up 13% to $2.02 billion

 

·                 Record backlog up 10% to $2.14 billion

 

Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the fourth quarter and fiscal year ended September 30, 2012.

 

Fourth Quarter Results

 

Revenue in the fourth quarter was $719.4 million compared to $675.7 million in the same period last year. Revenue, net of subcontractor costs1, in the fourth quarter was $536.3 million, up 12.7% compared to $475.9 million in the same period last year. Operating income was $48.5 million, up 11.6% compared to $43.4 million in the fourth quarter last year. Diluted earnings per share (EPS) were $0.47, up 11.9% compared to $0.42 in the fourth quarter last year. Diluted EPS included costs related to the reorganization of the Company’s operations, including the elimination of the Engineering and Architecture Services (EAS) segment, and purchase accounting-related adjustments, resulting in a net diluted EPS reduction of $0.01. Earnings before interest, taxes, depreciation, and amortization (EBITDA2), were $62.9 million, up 11.5% compared to $56.4 million in the fourth quarter last year. Backlog was a record high $2.14 billion, up 9.7% compared to $1.95 billion at the end of the fourth quarter last year. Cash generated from operations was $29.8 million compared to $33.2 million in the fourth quarter last year.

 

Fiscal Year Results

 

Revenue for fiscal 2012 was $2.71 billion compared to $2.57 billion in fiscal 2011. Revenue, net of subcontractor costs, was $2.02 billion, up 12.8% compared to $1.79 billion in fiscal 2011. Operating income was $166.4 million, up 13.6% compared to $146.4 million in fiscal 2011. Diluted EPS were $1.63, up 14.0% compared to $1.43 in fiscal 2011. EBITDA were $222.3 million, up 11.9% compared to $198.6 million in fiscal 2011. Cash generated from operations was $158.0 million, up 20.1% compared to $131.6 million in fiscal 2011.

 

Tetra Tech’s Chairman and CEO, Dan Batrack commented, “Tetra Tech finished the year with a strong fourth quarter that resulted in 13% net revenue growth and 10% backlog growth. Based on net revenue, our international business is now the largest client sector and the fastest growth market, having grown 19% organically in the fourth quarter. Our record backlog, expansions into Brazil and oil & gas, and the realigned organization provide a solid foundation for continued growth in 2013.”

 

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 EBITDA is a non-GAAP financial measure. The Company believes EBITDA is a useful representation of operating performance because of significant amounts of acquisition-related non-cash amortization expense. A table reconciling net income attributable to Tetra Tech to EBITDA can be found at the end of this release.

 


 

In thousands (except EPS data)

 

Three Months Ended

 

Fiscal Year Ended

 

 

Sep. 30,
2012

 

Oct. 2,
2011

 

Sep. 30,
2012

 

Oct. 2,
2011

Revenue

 

$

719,405

 

 

$

675,662

 

 

$

2,711,075

 

 

$

2,573,144

 

Subcontractor costs

 

(183,149

)

 

(199,724

)

 

(689,005

)

 

(780,817

)

Revenue, net of subcontractor costs

 

536,256

 

 

475,938

 

 

2,022,070

 

 

1,792,327

 

Operating income

 

48,470

 

 

43,433

 

 

166,367

 

 

146,422

 

Interest expense, net

 

(1,389

)

 

(1,452

)

 

(5,571

)

 

(5,930

)

Income tax expense

 

(16,542

)

 

(14,582

)

 

(56,064

)

 

(47,510

)

Net income including noncontrolling interests

 

30,539

 

 

27,399

 

 

104,732

 

 

92,982

 

Net income attributable to noncontrolling interests

 

(107

)

 

(1,000

)

 

(352

)

 

(2,943

)

Net income attributable to Tetra Tech

 

$

30,432

 

 

$

26,399

 

 

$

104,380

 

 

$

90,039

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Tetra Tech:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.48

 

 

$

0.42

 

 

$

1.65

 

 

$

1.45

 

Diluted

 

$

0.47

 

 

$

0.42

 

 

$

1.63

 

 

$

1.43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

63,623

 

 

62,310

 

 

63,217

 

 

62,053

 

Diluted

 

64,396

 

 

62,864

 

 

63,934

 

 

62,775

 

 

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 2013 to be in the range of $0.37 to $0.41. Revenue, net of subcontractor costs, for the first quarter is expected to range from $490 million to $540 million. For fiscal 2013, Tetra Tech expects diluted EPS to be $1.80 to $1.95. Revenue, net of subcontractor costs, for fiscal 2013 is expected to range from $2.1 billion to $2.3 billion.

 

2


 

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 8, 2012 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 13,000 employees worldwide, Tetra Tech’s capabilities span the entire project life cycle.

 

Tetra Tech, Inc.

Regulation G Information

Reconciliation of Net Income to EBITDA

 

In thousands

 

Three Months Ended

 

Fiscal Year Ended

 

 

Sep. 30,
2012

 

Oct. 2,
2011

 

Sep. 30,
2012

 

Oct. 2,
2011

Net income attributable to Tetra Tech

 

$

30,432

 

 

$

26,399

 

 

$

104,380

 

 

$

90,039

 

Interest expense, net

 

1,389

 

 

1,452

 

 

5,571

 

 

5,930

 

Income tax expense

 

16,542

 

 

14,582

 

 

56,064

 

 

47,510

 

Depreciation

 

6,994

 

 

6,737

 

 

26,651

 

 

27,138

 

Amortization

 

7,552

 

 

7,232

 

 

29,634

 

 

27,979

 

EBITDA

 

$

62,909

 

 

$

56,402

 

 

$

222,300

 

 

$

198,596

 

 

CONTACTS:
Jim Wu, 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; the effect of the Budget Control Act of 2011; fluctuations in annual revenue, expenses and operating results; the cyclicality in demand for U.S. state and local government and U.S. commercial services; credit risks associated with certain U.S. commercial clients; concentration of revenues from U.S. government agencies and

 

3


 

potential funding disruptions by these agencies; violations of U.S. government contractor regulations; dependence on winning or renewing U.S. federal, state and local 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; risks associated with international operations; 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 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; 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; 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; the interruption of computer, information and communications technology and systems; 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.

 

4


 

Tetra Tech, Inc.

Consolidated Balance Sheets

(in thousands, except par value)

 

 

 

 

September 30,
2012

 

October 2,
2011

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

 $

104,848

 

 $

90,494

 

Accounts receivable - net

 

700,480

 

657,179

 

Prepaid expenses and other current assets

 

48,168

 

84,612

 

Income taxes receivable

 

5,817

 

6,817

 

Total current assets

 

859,313

 

839,102

 

 

 

 

 

 

 

Property and equipment - net

 

74,309

 

77,536

 

Investments in and advances to unconsolidated joint ventures

 

3,279

 

3,454

 

Goodwill

 

635,958

 

569,414

 

Intangible assets - net

 

74,231

 

81,053

 

Other assets

 

23,940

 

23,429

 

Total Assets

 

 $

1,671,030

 

 $

1,593,988

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

 $

154,003

 

 $

164,819

 

Accrued compensation

 

128,086

 

110,937

 

Billings in excess of costs on uncompleted contracts

 

90,909

 

84,754

 

Deferred income taxes

 

20,809

 

22,870

 

Current portion of long-term debt

 

2,031

 

2,556

 

Estimated contingent earn-out liabilities

 

35,407

 

64,119

 

Other current liabilities

 

72,549

 

81,654

 

Total current liabilities

 

503,794

 

531,709

 

 

 

 

 

 

 

Deferred income taxes

 

24,268

 

25,394

 

Long-term debt

 

81,047

 

144,868

 

Other long-term liabilities

 

42,054

 

36,767

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding as of September 30, 2012 and October 2, 2011

 

-

 

-

 

Common stock - authorized, 150,000 shares of $0.01 par value; issued and outstanding, 63,837 and 62,495 shares as of September 30, 2012 and October 2, 2011, respectively

 

638

 

625

 

Additional paid-in capital

 

433,009

 

399,420

 

Accumulated other comprehensive income

 

31,017

 

4,754

 

Retained earnings

 

554,306

 

449,926

 

Tetra Tech stockholders’ equity

 

1,018,970

 

854,725

 

Noncontrolling interests

 

897

 

525

 

Total equity

 

1,019,867

 

855,250

 

Total Liabilities and equity

 

 $

1,671,030

 

 $

1,593,988

 

 


 

Tetra Tech, Inc.

Consolidated Statements of Income

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Fiscal Year Ended

 

 

 

September 30,

 

 

October 2,

 

 

September 30,

 

 

October 2,

 

 

 

2012

 

 

2011

 

 

2012

 

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

  $

719,405

 

 

  $

675,662

 

 

  $

2,711,075

 

 

  $

2,573,144

 

Subcontractor costs

 

(183,149

)

 

(199,724

)

 

(689,005

)

 

(780,817

)

Other costs of revenue

 

(447,675

)

 

(377,586

)

 

(1,663,065

)

 

(1,454,374

)

Selling, general and administrative expenses

 

(57,398

)

 

(55,055

)

 

(211,884

)

 

(193,286

)

Contingent consideration - fair value adjustments

 

17,287

 

 

136

 

 

19,246

 

 

1,755

 

Operating income

 

48,470

 

 

43,433

 

 

166,367

 

 

146,422

 

Interest expense - net

 

(1,389

)

 

(1,452

)

 

(5,571

)

 

(5,930

)

Income before income tax expense

 

47,081

 

 

41,981

 

 

160,796

 

 

140,492

 

Income tax expense

 

(16,542

)

 

(14,582

)

 

(56,064

)

 

(47,510

)

Net income including noncontrolling interests

 

30,539

 

 

27,399

 

 

104,732

 

 

92,982

 

Net income attributable to noncontrolling interests

 

(107

)

 

(1,000

)

 

(352

)

 

(2,943

)

Net income attributable to Tetra Tech

 

  $

30,432

 

 

  $

26,399

 

 

  $

104,380

 

 

  $

90,039

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Tetra Tech:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

  $

0.48

 

 

  $

0.42

 

 

  $

1.65

 

 

  $

1.45

 

Diluted

 

  $

0.47

 

 

  $

0.42

 

 

  $

1.63

 

 

  $

1.43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

63,623

 

 

62,310

 

 

63,217

 

 

62,053

 

Diluted

 

64,396

 

 

62,864

 

 

63,934

 

 

62,775

 

 


 

TETRA TECH, INC

Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Fiscal Year Ended

 

 

 

September 30,

 

 

October 2,

 

 

 

2012

 

 

2011

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income including noncontrolling interests

 

  $

104,732

 

 

  $

92,982

 

 

 

 

 

 

 

 

Adjustments to reconcile net income including noncontrolling interests to net cash from operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

56,902

 

 

55,684

 

Loss on settlement of foreign currency forward contract

 

286

 

 

293

 

Equity in earnings of unconsolidated joint ventures

 

(2,916

)

 

(4,877

)

Distributions of earnings from unconsolidated joint ventures

 

3,194

 

 

4,802

 

Stock-based compensation

 

10,839

 

 

10,582

 

Excess tax benefits from stock-based compensation

 

(624

)

 

(104

)

Deferred income taxes

 

(5,512

)

 

1,720

 

Provision for doubtful accounts

 

4,768

 

 

3,733

 

Impairment of goodwill

 

914

 

 

-

 

Fair value adjustments to contingent consideration

 

(19,246

)

 

(1,755

)

Fair value adjustments to assets held for sale

 

3,437

 

 

-

 

Exchange (gain) loss

 

(139

)

 

1,288

 

Lease termination costs

 

1,261

 

 

1,281

 

Loss (gain) on disposal of property and equipment

 

191

 

 

(231

)

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Accounts receivable

 

(39,960

)

 

2,046

 

Prepaid expenses and other assets

 

26,284

 

 

(28,324

)

Accounts payable

 

(14,529

)

 

(34,013

)

Accrued compensation

 

15,678

 

 

11,157

 

Billings in excess of costs on uncompleted contracts

 

2,425

 

 

(1,669

)

Other liabilities

 

7,371

 

 

6,475

 

Income taxes receivable/payable

 

2,665

 

 

10,553

 

Net cash provided by operating activities

 

158,021

 

 

131,623

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Capital expenditures

 

(25,106

)

 

(18,901

)

Payments for business acquisitions, net of cash acquired

 

(55,014

)

 

(269,996

)

Payment in settlement of foreign currency forward contract

 

(4,192

)

 

(4,216

)

Receipt in settlement of foreign currency forward contract

 

3,906

 

 

3,923

 

Change in restricted cash

 

-

 

 

(5,000

)

Investments in unconsolidated joint ventures

 

(430

)

 

(530

)

Proceeds from sale of property and equipment

 

1,037

 

 

879

 

Net cash used in investing activities

 

(79,799

)

 

(293,841

)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Payments on long-term debt

 

(120,792

)

 

(43,047

)

Proceeds from borrowings

 

52,672

 

 

67,618

 

Payments of earn-out liabilities

 

(18,055

)

 

-

 

Distributions paid to noncontrolling interests

 

(9

)

 

(1,702

)

Excess tax benefits from stock-based compensation

 

624

 

 

104

 

Net proceeds from issuance of common stock

 

18,166

 

 

8,378

 

Net cash (used in) provided by financing activities

 

(67,394

)

 

31,351

 

 

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

3,526

 

 

428

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

14,354

 

 

(130,439

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

 

90,494

 

 

220,933

 

CASH AND CASH EQUIVALENTS AT END OF YEAR

 

  $

104,848

 

 

  $

90,494

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

Interest

 

  $

5,279

 

 

  $

4,226

 

Income taxes, net of refunds received

 

  $

58,126

 

 

  $

33,715