Tetra Tech Reports Strong First Quarter 2021 Results

Rhea-AI Summary

Tetra Tech, a leader in consulting and engineering services, reported strong first-quarter results for the period ending December 27, 2020. Revenue reached $765 million, with net revenue at $605 million. Operating income increased by 5% year-over-year to $66 million, and EPS rose 13% to $0.96. The company generated $33 million in cash from operations, up significantly due to a reduction in days sales outstanding. With a backlog of $3.2 billion, Tetra Tech's outlook for fiscal 2021 is optimistic, raising guidance for EPS and net revenue.

Positive

• Revenue totaled $765 million in Q1 2021.
• Net revenue was $605 million, indicating strong core performance.
• Operating income increased by 5% year-over-year to $66 million.
• Earnings per share (EPS) rose by 13% to $0.96.
• Cash generated from operations increased by $51 million year-over-year to $33 million.
• Backlog at the end of the quarter was $3.2 billion.
• Dividend increased by 13% to $0.17 per share.
• Share repurchase of $15 million completed.

Negative

• None.

Tetra Tech, Inc. (NASDAQ: TTEK), a leading provider of high-end consulting and engineering services, today announced results for the first quarter ended December 27, 2020.

First Quarter Results

Revenue in the first quarter totaled $765 million and revenue, net of subcontractor costs (net revenue)¹, was $605 million. Operating income was $66 million, up 5% year-over-year, driven by a 70 basis point increase in operating margin. Earnings per share (“EPS”) was $0.96, up 13% year-over-year. Cash generated from operations was $33 million, up $51 million year-over-year driven by a six day reduction in days sales outstanding (“DSO”) year-over-year. Backlog at the end of the quarter was $3.2 billion.

Quarterly Dividend and Share Repurchase Program

On January 25, 2021, Tetra Tech’s Board of Directors declared a $0.17 per share dividend, a 13% increase over the prior year, payable on February 26, 2021 to stockholders of record as of February 10, 2021. In the first quarter, Tetra Tech repurchased $15 million of common stock. Additionally, as of December 27, 2020, the Company had $193 million remaining under the approved share repurchase program.

Chairman and CEO Comments

Tetra Tech’s Chairman and CEO, Dan Batrack, commented, “Tetra Tech continued its strong momentum into fiscal year 2021 with first quarter results that exceeded our forecast for both net revenue and earnings. Our results were led by 11% net revenue growth in water and environmental programs for our U.S. state and local government clients and a 70 basis point increase in operating margin. Our Leading with Science^® approach is in high demand by our clients, augmented by a suite of proprietary technologies and tools we call the Tetra Tech Delta. The new U.S. administration’s priorities in climate change and infrastructure are well aligned with our market leading positions in water, environment, sustainable infrastructure and renewable energy. Given the strength of our performance to date and outlook, we are increasing guidance for both net revenue and EPS for fiscal 2021.”

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1 Non-GAAP financial measures which the Company believes provide valuable perspectives on its business results. Refer to Reconciliation of GAAP and non-GAAP Item.

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 EPS for the second quarter of fiscal 2021 to range from $0.73 to $0.78 and net revenue to range from $565 million to $595 million. For fiscal 2021, Tetra Tech is increasing its guidance outlook and now expects EPS to range from $3.45 to $3.60 and net revenue to range from $2.40 billion to $2.55 billion. ²

Webcast

Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the first quarter 2021 results through a link posted on the Company’s website at tetratech.com on January 28, 2021 at 8:00 a.m. (PT).

Reconciliation of GAAP and Non-GAAP Item
In thousands
		Three Months Ended
		Dec. 27, 2020		Dec. 29, 2019

FAQ

What were Tetra Tech's first quarter revenue results for fiscal 2021?

Tetra Tech reported first quarter revenue of $765 million, with net revenue of $605 million.

What is Tetra Tech's EPS for the first quarter ended December 27, 2020?

The earnings per share (EPS) for the first quarter was $0.96, reflecting a 13% increase year-over-year.

What is Tetra Tech's guidance for EPS and net revenue for fiscal 2021?

Tetra Tech has increased its guidance for EPS to range from $3.45 to $3.60 and net revenue to range from $2.40 billion to $2.55 billion.

How much cash did Tetra Tech generate from operations in the first quarter?

Tetra Tech generated $33 million in cash from operations, a significant increase from the previous year.