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8-K - 8-K - TETRA TECH INCa13-4018_18k.htm

Exhibit 99.1

 

January 30, 2013

 

Tetra Tech Reports First Quarter Results

·                 Operating Income up 16% to $42 million

·                 Diluted earnings per share up 14% to $0.41

·                 Increasing FY13 guidance

 

Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the fiscal 2013 first quarter ended December 30, 2012.

 

First Quarter Results

 

Revenue in the quarter was $658.5 million compared to $682.6 million in the first quarter last year.  Revenue, net of subcontractor costs1, was $497.2 million compared to $492.1 million in the first quarter last year.  Operating income was $41.8 million, up 15.8% compared to $36.1 million in the first quarter last year.  Diluted earnings per share (EPS) were $0.41, up 13.9% compared to $0.36 in the first quarter last year.  Earnings before interest, taxes, depreciation, and amortization (EBITDA2), were $54.1 million, up 5.9% compared to $51.1 million in the first quarter last year.  Backlog was $1.9 billion, compared to $1.9 billion at the end of the first quarter last year.  Cash generated from operations was $17.8 million in the quarter.

 

Tetra Tech’s Chairman and CEO, Dan Batrack commented, “We continued to shift our portfolio towards the higher demand international and U.S. commercial markets, which led to improved margin this past quarter.  In addition, we closed our previously announced acquisition of Parkland, which significantly expands our work for oil & gas customers to approximately 10% of our business.  With our growth in the international and U.S. commercial markets, we are increasing both our EPS and net revenue guidance.”

 

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 second quarter of fiscal 2013 to be in the range of $0.38 to $0.42.  Revenue, net of subcontractor costs, for the second quarter is expected to range from $500 million to $550 million.  For fiscal 2013, Tetra Tech is increasing guidance for its diluted EPS and revenue, net of subcontractor costs.  Fiscal 2013 EPS is now expected to range from $1.85 to $1.96.  Revenue, net of subcontractor costs, for fiscal 2013 is expected to range from

 


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.

 



 

$2.15 billion to $2.35 billion.

 

In thousands (except EPS data)

 

Three Months Ended

 

 

December 30,
2012

 

 

January 1,
2012

 

Revenue

 

$

658,545

 

 

$

682,627

 

Subcontractor costs

 

(161,347

)

 

(190,571

)

Revenue, net of subcontractor costs

 

497,198

 

 

492,056

 

Operating income

 

41,809

 

 

36,093

 

Interest expense, net

 

(1,185

)

 

(1,311

)

Income tax expense

 

(14,228

)

 

(12,079

)

Net income including noncontrolling interests

 

26,396

 

 

22,703

 

Net income attributable to noncontrolling interests

 

(172

)

 

(93

)

Net income attributable to Tetra Tech

 

$

26,224

 

 

$

22,610

 

 

 

 

 

 

 

 

Earnings per share attributable to Tetra Tech:

 

 

 

 

 

 

Basic

 

$

0.41

 

 

$

0.36

 

Diluted

 

$

0.41

 

 

$

0.36

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

Basic

 

63,864

 

 

62,433

 

Diluted

 

64,608

 

 

63,068

 

 

Webcast

 

Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the first quarter results through a link posted on the Company’s website at www.tetratech.com on January 31, 2013 at 8:00 a.m. (PST).

 

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.

 

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Tetra Tech, Inc.

Regulation G Information

Reconciliation of Net Income to EBITDA

 

In thousands

 

Three Months Ended

 

 

 

December 30,
2012

 

January 1,
2012

 

Net income attributable to Tetra Tech

 

$

26,224

 

$

22,610

 

Interest expense, net

 

1,185

 

1,311

 

Income tax expense

 

14,228

 

12,079

 

Depreciation

 

6,808

 

6,786

 

Amortization

 

5,633

 

8,264

 

EBITDA

 

$

54,078

 

$

51,050

 

 

 

 

 

 

 

 

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 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

 

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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.

 

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Tetra Tech, Inc.

 

Condensed Consolidated Balance Sheets

 

(unaudited - in thousands, except par value)

 

 

 

December 30,
2012

 

September 30,
2012

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

151,604

 

$

104,848

 

Accounts receivable - net

 

674,894

 

700,480

 

Prepaid expenses and other current assets

 

48,521

 

48,168

 

Income taxes receivable

 

18,869

 

5,817

 

Total current assets

 

893,888

 

859,313

 

 

 

 

 

 

 

Property and equipment - net

 

71,591

 

74,309

 

Investments in and advances to unconsolidated joint ventures

 

2,959

 

3,279

 

Goodwill

 

644,149

 

635,958

 

Intangible assets - net

 

78,690

 

74,231

 

Other assets

 

23,698

 

23,940

 

 

 

 

 

 

 

 

 

Total Assets

 

$

1,714,975

 

$

1,671,030

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

131,354

 

$

154,003

 

Accrued compensation

 

104,391

 

128,086

 

Billings in excess of costs on uncompleted contracts

 

94,511

 

90,909

 

Deferred income taxes

 

18,965

 

20,809

 

Current portion of long-term debt

 

1,856

 

2,031

 

Estimated contingent earn-out liabilities

 

20,089

 

35,407

 

Other current liabilities

 

66,698

 

72,549

 

Total current liabilities

 

437,864

 

503,794

 

 

 

 

 

 

 

Deferred income taxes

 

33,883

 

24,268

 

Long-term debt

 

147,808

 

81,047

 

Other long-term liabilities

 

44,214

 

42,054

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

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

 

-

 

-

 

Common stock - authorized, 150,000 shares of $0.01 par value; issued and outstanding, 64,374 and 63,837 shares as of December 30, 2012 and September 30, 2012, respectively

 

644

 

638

 

Additional paid-in capital

 

443,437

 

433,009

 

Accumulated other comprehensive income

 

25,539

 

31,017

 

Retained earnings

 

580,530

 

554,306

 

Tetra Tech stockholders’ equity

 

1,050,150

 

1,018,970

 

Noncontrolling interests

 

1,056

 

897

 

Total equity

 

1,051,206

 

1,019,867

 

 

 

 

 

 

 

 

 

Total Liabilities and equity

 

$

1,714,975

 

$

1,671,030

 

 



 

Tetra Tech, Inc.

 

Condensed Consolidated Statements of Income

 

(unaudited - in thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

December 30,

 

January 1,

 

 

 

2012

 

2012

 

 

 

 

 

 

 

Revenue

 

$

658,545

 

$

682,627

 

Subcontractor costs

 

(161,347)

 

(190,571)

 

Other costs of revenue

 

(408,995)

 

(407,336)

 

Selling, general and administrative expenses

 

(46,394)

 

(48,627)

 

Operating income

 

41,809

 

36,093

 

 

 

 

 

 

 

Interest expense - net

 

(1,185)

 

(1,311)

 

Income before income tax expense

 

40,624

 

34,782

 

 

 

 

 

 

 

Income tax expense

 

(14,228)

 

(12,079)

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

26,396

 

22,703

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

(172)

 

(93)

 

 

 

 

 

 

 

Net income attributable to Tetra Tech

 

$

26,224

 

$

22,610

 

 

 

 

 

 

 

Earnings per share attributable to Tetra Tech:

 

 

 

 

 

Basic

 

$

0.41

 

$

0.36

 

Diluted

 

$

0.41

 

$

0.36

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

Basic

 

63,864

 

62,433

 

Diluted

 

64,608

 

63,068

 

 



 

Tetra Tech, Inc.

 

Condensed Consolidated Statements of Cash Flows

 

(unaudited - in thousands)

 

 

 

Three Months Ended

 

 

 

December 30,

 

January 1,

 

 

 

2012

 

2012

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income including noncontrolling interests

 

$

26,396

 

$

22,703

 

 

 

 

 

 

 

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

 

 

 

 

 

Depreciation and amortization

 

12,595

 

15,206

 

Equity in earnings of unconsolidated joint ventures

 

(649)

 

(969)

 

Distributions of earnings from unconsolidated joint ventures

 

947

 

1,079

 

Stock-based compensation

 

2,534

 

2,916

 

Excess tax benefits from stock-based compensation

 

(390)

 

(35)

 

Deferred income taxes

 

5,624

 

494

 

Provision for doubtful accounts

 

2,538

 

2,879

 

Exchange loss (gain)

 

189

 

(14)

 

Loss (gain) on disposal of property and equipment

 

90

 

(84)

 

 

 

 

 

 

 

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

 

 

 

 

 

Accounts receivable

 

25,513

 

(10,669)

 

Prepaid expenses and other assets

 

78

 

11,172

 

Accounts payable

 

(23,564)

 

(19,241)

 

Accrued compensation

 

(24,215)

 

(9,004)

 

Billings in excess of costs on uncompleted contracts

 

3,544

 

8,796

 

Other liabilities

 

(114)

 

9,650

 

Income taxes receivable/payable

 

(13,360)

 

3,434

 

Net cash provided by operating activities

 

17,756

 

38,313

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(4,274)

 

(4,593)

 

Payments for business acquisitions, net of cash acquired

 

(14,505)

 

(2,574)

 

Proceeds from sale of property and equipment

 

292

 

377

 

Net cash used in investing activities

 

(18,487)

 

(6,790)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Payments on long-term debt

 

(22,551)

 

(11,012)

 

Proceeds from borrowings

 

89,234

 

546

 

Payments of earn-out liabilities

 

(22,372)

 

(9,368)

 

Net change in overdrafts

 

122

 

(738)

 

Excess tax benefits from stock-based compensation

 

390

 

35

 

Net proceeds from issuance of common stock

 

3,089

 

2,990

 

Net cash provided by (used in) financing activities

 

47,912

 

(17,547)

 

 

 

 

 

 

 

EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH

 

(425)

 

1,250

 

 

 

 

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

46,756

 

15,226

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

104,848

 

90,494

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

151,604

 

$

105,720

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

$

532

 

$

1,107

 

Income taxes, net of refunds received

 

$

21,220

 

$

8,772