EX-99.1 2 a13-11364_1ex99d1.htm EX-99.1

Exhibit 99.1

 

May 1, 2013

 

Tetra Tech Reports Second Quarter Results

 

·                  Net revenue up 9% to $521 million

 

·                  EBITDA up 10% to $54 million

 

·                  Diluted earnings per share up 9% to $0.38

 

Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the second quarter ended March 31, 2013.

 

Second Quarter Results

 

Revenue in the quarter was $642.0 million compared to $624.3 million in the second quarter last year.  Revenue, net of subcontractor costs(1), was $520.9 million, up 9.2% compared to $476.9 million in the second quarter last year.  Earnings before interest, taxes, depreciation, and amortization (EBITDA(2)), were $54.2 million, up 10.1% compared to $49.2 million in the second quarter last year.  Operating income was $37.7 million, up 6.0% compared to $35.5 million in the second quarter last year.  Diluted earnings per share (EPS) were $0.38, up 8.6% compared to $0.35 in the second quarter last year.  Backlog was $2.03 billion compared to $2.03 billion at the end of the second quarter last year.  Cash generated from operations was $44.3 million, up 33.8% compared to $33.1 million in the second quarter last year.

 

Six-Month Results

 

Revenue for the six-month period was $1.30 billion compared to $1.31 billion in the year-ago period.  Revenue, net of subcontractor costs, was $1.02 billion, up 5.1% compared to $968.9 million in the year-ago period.  EBITDA were $108.3 million, up 8.0% compared to $100.3 million in the year-ago period.  Operating income was $79.5 million, up 10.9% compared to $71.6 million in the year-ago period.  Diluted EPS were $0.78, up 9.9% compared to $0.71 in the year-ago period.  Cash generated from operations was $62.0 million compared to $71.4 million in year-ago period.

 

Tetra Tech’s Chairman and CEO, Dan Batrack commented, “We generated second quarter results that were in-line with our expectations and guidance.  We continue to experience strong demand for our water and environmental services from commercial clients, especially with our oil & gas customers.  U.S. commercial and international clients now represent 59% of our net revenue.”

 

(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

 

Six Months Ended

 

 

 

March 31,
2013

 

April 1,
2012

 

March 31,
2013

 

April 1,
2012

 

Revenue

 

$

641,999

 

$

624,345

 

$

1,300,544

 

$

1,306,972

 

Subcontractor costs

 

(121,052

)

(147,453

)

(282,399

)

(338,024

)

Revenue, net of subcontractor costs

 

520,947

 

476,892

 

1,018,145

 

968,948

 

Operating income

 

37,667

 

35,543

 

79,476

 

71,635

 

Interest expense, net

 

(2,136

)

(1,453

)

(3,320

)

(2,763

)

Income tax expense

 

(10,659

)

(11,769

)

(24,888

)

(23,848

)

Net income including noncontrolling interests

 

24,872

 

22,321

 

51,268

 

45,024

 

Net income attributable to noncontrolling interests

 

(52

)

(37

)

(225

)

(130

)

Net income to Tetra Tech

 

$

24,820

 

$

22,284

 

$

51,043

 

$

44,894

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Tetra Tech:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.38

 

$

0.35

 

$

0.79

 

$

0.71

 

Diluted

 

$

0.38

 

$

0.35

 

$

0.78

 

$

0.71

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

64,551

 

63,072

 

64,376

 

62,846

 

Diluted

 

65,472

 

63,817

 

65,208

 

63,497

 

 

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.

 

As Tetra Tech previously announced, due to anticipated weakness in Eastern Canada and mining, Tetra Tech is updating its guidance for fiscal 2013.  Tetra Tech expects diluted EPS for the third quarter of fiscal 2013 to be in the range of $0.32 to $0.42.  Revenue, net of subcontractor costs, for the third quarter is expected to range from $525 million to $575 million.  For fiscal 2013, Tetra Tech now expects diluted EPS to be $1.60 to $1.75.  Revenue, net of subcontractor costs, for fiscal 2013 is now expected to range from $2.15 billion to $2.25 billion.

 

2


 

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 website at www.tetratech.com on May 2, 2013 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 14,000 staff 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

 

Six Months Ended

 

 

 

March 31,
2013

 

April 1,
2012

 

March 31,
2013

 

April 1,
2012

 

Net income attributable to Tetra Tech

 

$

24,820

 

$

22,284

 

$

51,043

 

$

44,894

 

Interest expense, net

 

2,136

 

1,453

 

3,320

 

2,763

 

Income tax expense

 

10,659

 

11,769

 

24,888

 

23,848

 

Depreciation

 

7,522

 

6,794

 

14,330

 

13,580

 

Amortization

 

9,051

 

6,917

 

14,684

 

15,182

 

EBITDA

 

$

54,188

 

$

49,217

 

$

108,265

 

$

100,267

 

 

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:  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 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

 

3


 

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.

Condensed Consolidated Balance Sheets

(unaudited - in thousands, except par value)

 

 

 

March 31,
2013

 

September 30,
2012

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

159,575

 

$

104,848

 

Accounts receivable - net

 

687,120

 

700,480

 

Prepaid expenses and other current assets

 

53,167

 

48,168

 

Income taxes receivable

 

21,294

 

5,817

 

Total current assets

 

921,156

 

859,313

 

 

 

 

 

 

 

Property and equipment - net

 

93,192

 

74,309

 

Investments in and advances to unconsolidated joint ventures

 

3,586

 

3,279

 

Goodwill

 

777,739

 

635,958

 

Intangible assets - net

 

106,859

 

74,231

 

Other assets

 

25,402

 

23,940

 

 

 

 

 

 

 

Total Assets

 

$

1,927,934

 

$

1,671,030

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

148,136

 

$

154,003

 

Accrued compensation

 

97,881

 

128,086

 

Billings in excess of costs on uncompleted contracts

 

79,131

 

90,909

 

Deferred income taxes

 

19,550

 

20,809

 

Current portion of long-term debt

 

1,730

 

2,031

 

Estimated contingent earn-out liabilities

 

29,699

 

35,407

 

Other current liabilities

 

69,884

 

72,549

 

Total current liabilities

 

446,011

 

503,794

 

 

 

 

 

 

 

Deferred income taxes

 

38,631

 

24,268

 

Long-term debt

 

264,047

 

81,047

 

Long-term estimated contingent earn-out liabilities

 

71,803

 

16,132

 

Other long-term liabilities

 

29,749

 

25,922

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding as of March 31, 2013 and September 30, 2012

 

—

 

—

 

Common stock - authorized, 150,000 shares of $0.01 par value; issued and outstanding, 64,925 and 63,837 shares as of March 31, 2013 and September 30, 2012, respectively

 

649

 

638

 

Additional paid-in capital

 

457,428

 

433,009

 

Accumulated other comprehensive income

 

13,377

 

31,017

 

Retained earnings

 

605,349

 

554,306

 

Tetra Tech stockholders’ equity

 

1,076,803

 

1,018,970

 

Noncontrolling interests

 

890

 

897

 

Total equity

 

1,077,693

 

1,019,867

 

 

 

 

 

 

 

Total Liabilities and equity

 

$

1,927,934

 

$

1,671,030

 

 


 

Tetra Tech, Inc.

Consolidated Statements of Income

(unaudited - in thousands, except per share data)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

March 31,

 

April 1,

 

March 31,

 

April 1,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

641,999

 

$

624,345

 

$

1,300,544

 

$

1,306,972

 

Subcontractor costs

 

(121,052

)

(147,453

)

(282,399

)

(338,024

)

Other costs of revenue

 

(435,827

)

(388,915

)

(844,822

)

(796,251

)

Selling, general and administrative expenses

 

(47,453

)

(52,434

)

(93,847

)

(101,062

)

Operating income

 

37,667

 

35,543

 

79,476

 

71,635

 

Interest expense - net

 

(2,136

)

(1,453

)

(3,320

)

(2,763

)

Income before income tax expense

 

35,531

 

34,090

 

76,156

 

68,872

 

Income tax expense

 

(10,659

)

(11,769

)

(24,888

)

(23,848

)

Net income including noncontrolling interests

 

24,872

 

22,321

 

51,268

 

45,024

 

Net income attributable to noncontrolling interests

 

(52

)

(37

)

(225

)

(130

)

Net income attributable to Tetra Tech

 

$

24,820

 

$

22,284

 

$

51,043

 

$

44,894

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Tetra Tech:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.38

 

$

0.35

 

$

0.79

 

$

0.71

 

Diluted

 

$

0.38

 

$

0.35

 

$

0.78

 

$

0.71

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

64,551

 

63,072

 

64,376

 

62,846

 

Diluted

 

65,472

 

63,817

 

65,208

 

63,497

 

 


 

Tetra Tech, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited - in thousands)

 

 

 

Six Months Ended

 

 

 

March 31,

 

April 1,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

Net income including noncontrolling interests

 

$

51,268

 

$

45,024

 

 

 

 

 

 

 

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

 

 

 

 

 

Depreciation and amortization

 

29,322

 

29,071

 

Loss on settlement of foreign currency forward contract

 

270

 

286

 

Equity in income of unconsolidated joint ventures

 

(1,929

)

(1,553

)

Distributions of earnings from unconsolidated joint ventures

 

1,549

 

1,595

 

Stock-based compensation

 

4,840

 

5,648

 

Excess tax benefits from stock-based compensation

 

(866

)

(147

)

Deferred income taxes

 

4,880

 

(2,533

)

Provision for doubtful accounts

 

2,164

 

3,721

 

Fair value adjustments to contingent consideration

 

(946

)

(214

)

Gain on disposal of property and equipment

 

(237

)

(69

)

 

 

 

 

 

 

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

 

 

 

 

 

Accounts receivable

 

75,183

 

11,038

 

Prepaid expenses and other assets

 

(4,139

)

11,234

 

Accounts payable

 

(31,180

)

(23,392

)

Accrued compensation

 

(33,220

)

(13,777

)

Billings in excess of costs on uncompleted contracts

 

(15,732

)

(1,156

)

Other liabilities

 

(6,208

)

10,791

 

Income taxes receivable/payable

 

(13,001

)

(4,178

)

Net cash provided by operating activities

 

62,018

 

71,389

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Capital expenditures

 

(13,634

)

(7,983

)

Payments for business acquisitions, net of cash acquired

 

(168,092

)

(2,831

)

Payment in settlement of foreign currency forward contract

 

(4,177

)

(4,192

)

Receipt in settlement of foreign currency forward contract

 

3,907

 

3,906

 

Changes in restricted cash

 

470

 

—

 

Proceeds from sale of property and equipment

 

962

 

497

 

Net cash used in investing activities

 

(180,564

)

(10,603

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Payments on long-term debt

 

(113,978

)

(51,837

)

Proceeds from borrowings

 

296,389

 

13,025

 

Payments of earn-out liabilities

 

(24,015

)

(18,055

)

Excess tax benefits from stock-based compensation

 

866

 

147

 

Net proceeds from issuance of common stock

 

14,561

 

8,882

 

Net cash provided by (used in) financing activities

 

173,823

 

(47,838

)

 

 

 

 

 

 

Effect of foreign exchange rate changes on cash

 

(550

)

2,585

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

54,727

 

15,533

 

Cash and cash equivalents at beginning of period

 

104,848

 

90,494

 

Cash and cash equivalents at end of period

 

$

159,575

 

$

106,027

 

 

 

 

 

 

 

Supplemental information:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

$

2,494

 

$

2,839

 

Income taxes, net of refunds received

 

$

31,531

 

$

30,974