Tetra Tech Reports Strong First Quarter Results and Raises Full Fiscal Year Guidance
- Revenue increased 37% to $1.23 billion, and net revenue increased 38% to $1.02 billion
- EBITDA increased 32% to $131 million
- Backlog reached $4.74 billion, up 24% year-over-year
- Raised guidance for increased EPS growth of 20% for fiscal 2024
- Awarded multiple high-value contracts, including a $5 billion water framework contract for the Republic of Ireland and an $800 million U.S. Army Corps of Engineers PFAS remediation contract
- Record first quarter EPS of $1.40
- Strong positive operating cash flow of $353 million over the trailing twelve months
- None.
Insights
The reported increase in revenue and net revenue for Tetra Tech, Inc. signifies a robust upward trajectory, indicative of the company's successful expansion and operational efficiency. The 37% year-over-year growth in revenue and 38% in net revenue reflect a strong market position and effective strategy execution. The EBITDA growth of 32% is particularly noteworthy, as it suggests that the company is not only increasing its top-line figures but also managing its operating expenses and cost of sales effectively to improve profitability.
The backlog of $4.74 billion, a 24% year-over-year increase, is a critical metric as it provides visibility into future revenues and suggests a solid order book that could sustain revenue growth. The raised guidance for fiscal year 2024, with an expected 20% EPS growth and a 20% IFRS EBITDA margin, is a strong indicator for investors about the company's confidence in its future performance and operational efficiency.
Tetra Tech's positioning as a 'pure play' leader in water and environmental consulting is a strategic advantage, as it allows the company to concentrate on a niche market with growing demand due to increasing global focus on sustainability and environmental protection. The company's Leading with Science® approach and focus on high-end consulting services differentiate it from competitors and align with global trends towards more sustainable practices.
The successful integration of RPS Group, resulting in EBITDA margin improvement and revenue synergies, is a testament to the company's effective M&A strategy. The synergies leading to over $100 million in new contracts won highlight the potential for cross-selling and leveraging complementary capabilities to drive further growth.
The contracts awarded to Tetra Tech, such as the $5 billion water framework contract in Ireland and the $800 million PFAS remediation contract with the U.S. Army Corps of Engineers, underscore the increasing demand for environmental services. These contracts not only contribute significantly to the company's backlog and future revenue stream but also reinforce the importance of Tetra Tech's services in addressing critical environmental challenges like water quality, PFAS contamination and ecosystem restoration.
The company's commitment to improving the lives of one billion people by 2030 through sustainable solutions is an ambitious goal that aligns with global sustainability objectives and may enhance the company's reputation and brand value. This commitment, coupled with the company's focus on innovation and technology in its service offerings, positions Tetra Tech favorably in the eyes of environmentally conscious investors and clients.
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Revenue
, up$1.23 billion 37% Y/Y
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Net revenue
, up$1.02 billion 38% Y/Y
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EBITDA
, up$131 million 32% Y/Y
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Backlog of
, up$4.74 billion 24% Y/Y
- Increasing Fiscal Year 2024 net revenue and EPS full year guidance
As the pure play global leader in water and environmental consulting and engineering, Tetra Tech produces higher margins, organic growth rates and cash flows than the industry. For fiscal 2024, Tetra Tech is raising guidance for increased EPS growth of
In the past 90 days, the Company was awarded more than 1,000 individual high-end consulting projects addressing the entire water cycle. During the first quarter of fiscal 2024, Tetra Tech announced the award of a
First Quarter Highlights
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Revenue increased
37% to with double-digit organic growth$1.23 billion -
EBITDA increased
32% to ; on pace to reach$131 million in FY24, doubling in the past 3 years$575 million -
Record first quarter EPS of
$1.40 -
Largest first quarter backlog ever, up
24% year-over-year - Industry leading DSO of 55 days
-
RPS Group integration exceeding expectations:
- RPS EBITDA margin exceeded10% , up more than 600 basis points in less than one year
- RPS revenue synergies with more than in new contracts won$100 million
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1Non-GAAP financial measures which the Company believes provide valuable perspectives on its business results. Refer to tables in the Regulation G Information for reconciliations to the comparable GAAP metrics.
Executive Management Comments
Dan Batrack, Chairman and CEO, commented, “Tetra Tech began fiscal 2024 with a strong first quarter as revenue was up in all of our key end markets, building on our record performance of the prior year. Based on the strength of our end markets, our strong results in the first quarter, and the increasing realization of revenue synergies with RPS, we have raised our full year guidance for both net revenue and EPS, with a forecasted
Steve Burdick, Chief Financial Officer, said, “In addition to our record first quarter revenue and earnings, we continue to generate strong positive operating cash flow with
Jill Hudkins, President, stated, “These results demonstrate the value of Tetra Tech’s pure play focus on the water cycle that continues to drive increasing demand for our high-end services. Tetra Tech’s key differentiator is our Leading with Science® approach to the water cycle; from client-funded research and development, watershed management, water supply and treatment, to flood protection and marine navigation.”
Leslie Shoemaker, PhD., Chief Sustainability Officer, added, “Tetra Tech is changing lives through science, technology, and innovation. Our goal is to improve the lives of one billion people around the world by 2030, providing sustainable solutions across our water and environment markets by optimizing water management, preserving biodiversity, and mitigating climate change.”
Recent Key Wins
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$5 billion Republic of Ireland water framework contract, improving water quality and enhancing watershed protection for 4 million people
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$800 million U.S. Army Corps of Engineers PFAS remediation contract, preventing future environmental contamination and protecting lives at more than 500 military bases
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Great Lakes environmental restoration contract, providing environmental restoration of the world’s largest freshwater watershed and improving the lives of 34 million people$450 million
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United Utilities Better Rivers AMP 8 program, reducing wastewater overflows and enhancing watershed quality for 7 million people in$125 million North West England
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USAID Land and Resource Governance contract, protecting land, water, and resources for more than 100 million vulnerable households in developing countries$34 million
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USAID Biodiversity and Ecosystem Conservation contract, preserving ecosystems and enhancing community livelihoods for 16 million people in$24 Million Cambodia
Quarterly Dividend and Share Repurchase Program
On January 29, 2024, Tetra Tech’s Board of Directors approved the Company’s 39th consecutive quarterly dividend at an amount of
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 2024 to range from
Webcast
Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the first quarter of fiscal 2024 results through a link posted on the Company’s website at tetratech.com on February 1, 2024, at 8:00 a.m. (PT).
About Tetra Tech
Tetra Tech is the leader in water, environment and sustainable infrastructure, providing high-end consulting and engineering services for projects worldwide. With 27,000 employees working together, Tetra Tech provides clear solutions to complex problems by Leading with Science® to address the entire water cycle, protect and restore the environment, design sustainable and resilient infrastructure, and support the clean energy transition. For more information about Tetra Tech, please visit tetratech.com or follow us on LinkedIn and Facebook.
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2Reconciliation of the net revenue guidance to the most directly comparable GAAP measure is not available without unreasonable efforts because the Company cannot predict the magnitude and timing of all the components required to provide such reconciliation with sufficient precision.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as "anticipate," "expect," "could," "may," "intend," "plan" and "believe," among others, generally identify forward-looking statements. These forward-looking statements are based on currently available operating, financial, economic and other information, and are subject to a number of risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. A variety of factors, many of which are beyond our control, could cause actual future results or events to differ materially from those projected in the forward-looking statements in this release, including but not limited to: continuing worldwide political and economic uncertainties; the
Non-GAAP Financial Measures
To supplement the financial results presented in accordance with generally accepted accounting principles in
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Jim Wu, Investor Relations
Charlie MacPherson, Media & Public Relations
(626) 470-2844
Source: Tetra Tech, Inc.
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