Tetra Tech Reports Fourth Quarter and Fiscal 2012 Results

PASADENA, Calif. --(Business Wire)--

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.

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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.

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

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 (News - Alert), 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 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.