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Tetra Tech Inc. (TTEK - Free Report) reported fourth-quarter fiscal 2017 adjusted earnings from ongoing operations of 63 cents, beating the Zacks Consensus Estimate of 61 cents. Earnings were higher than the company’s earlier guided range of 60-62 cents.
The technical services company even fared better year over year, with adjusted earnings reflecting growth of 6.8% relative to the prior-year quarter’s tally of 59 cents. The company’s earnings benefited from a strong top-line growth on the back of solid demand for its high-end water, environment and infrastructure services.
For fiscal 2017, the company’s ongoing earnings per share came in at $2.13, marginally higher than the guided range of $2.10-$2.12 and up a robust 13% from the year-ago tally, driven by impressive sales performance.
Inside the Headlines
Net revenues rose 0.6% year over year to $534 million, comfortably beating the Zacks Consensus Estimate of $518.5 million. Moreover, the figure surpassed the company’s estimated range of $500-520 million.
Tetra Tech’s ongoing revenues grew 2.3% year over year.
For fiscal 2017, the company’s net revenues came in at a record $2.03 billion, up 5.8% over the prior year and higher than the guided range of $2-$2.02 billion. Additionally, revenues from ongoing operations rose 8% to $2.74 billion on a year-over-year basis.
Coming to the segments, Water, Environment and Infrastructure revenues grew 8.7% year over year to $235.1 million. This segment mainly gained from strong infrastructure and environmental projects.
Net revenue from Resource Management and Energy dipped 3.8% year over year to $298 million. International development projects contributed to sales growth, which was more than offset by sluggish oil and gas markets.
Tetra Tech, Inc. Price, Consensus and EPS Surprise
In the quarter under review, backlog from ongoing operations reached a record high of $2.54 billion, a jump of 8% year over year, driven by a number of single-award contracts. Also, ongoing operating income was up 9.4% year over year to $57 million. This is the seventh consecutive quarter of backlog growth for the company.
Significant Developments
During the quarter, Tetra Tech clinched a five-year $356 million single-award engineering and technical support services contract with the Federal Aviation Administration (“FAA”). Per the Navigation Technical Assistance Contract II (“NAVTAC II”), the company will offer technical support services for research, planning, implementation, maintenance as well as decommissioning of the FAA’s landing, navigation and lighting systems.
This apart, during the reported quarter, the company acquired leading sustainable infrastructure design firm, Glumac, which would broaden the company’s high-end sustainable infrastructure design capabilities. The acquisition will enable Tetra Tech to offer additional technically-differentiated green infrastructure capabilities which will help its clients conserve resources and optimize operating costs.
Liquidity & Cash Flow
At the end of the quarter on Oct 1, 2017, Tetra Tech’s cash and cash equivalents were $190 million, up from $160.5 million a year ago. Long-term debt was $341.3 million, substantially up from $331.5 million as of Oct 2, 2016.
For fiscal 2017, net cash from operating activities fell 2.8% year over year to $138 million.
Share Repurchase
Tetra Tech is strongly committed toward rewarding its shareholders through dividends and share buyback programs. On Nov 6, 2017, the company declared a quarterly dividend of 10 cents per share payable on Dec 15, 2017, to stockholders of record as of Nov 30.
Currently, Tetra Tech has $100 million remaining under the previously approved $200 million share repurchase program.
Business Segment Restructuring
The company announced that it is renaming its reportable segments to align its operations better, effective from the beginning of fiscal 2018. The new Government Services Group ("GSG") segment will encompass operations with U.S. government clients (federal, state and local) and all activities with development agencies. The other segment, Commercial/International Services Group ("CIG"), will include activities with U.S. commercial clients and all international activities excluding work performed for development agencies.
Outlook
Concurrent with the quarterly earnings release, Tetra Tech provided top and bottom-line guidance for both the upcoming quarter and fiscal 2018. The company expects first-quarter fiscal 2018 earnings per share to be in the range of 50-55 cents. Net revenue for the fiscal first quarter is expected to lie within $500-$525 million.
For fiscal 2018, Tetra Tech projects earnings per share to be in the range of $2.20-$2.40 and net revenue lie within $2.05-$2.15 billion.
Our Take
Tetra Tech ended the quarter on a high note, with impressive top and bottom-line performance and sturdy year-over-year growth. Going forward, the company’s robust backlog levels signal bright days ahead. Based on continued execution of its business model, Tetra Tech remains bullish about its growth across all four client sectors, namely, U.S. federal, U.S. state and local, the U.S. commercial work and finally international.
The company believes that the solid pipeline of projects in the Department of Defense and development-related services, in the United States will continue to propel growth of its federal business. Going forward, we believe Tetra Tech has a solid base for future growth, driven by its strong backlog levels, plus a robust pipeline with major government organizations like the U.S. Department of State, U.S. Army Corp. of Engineers and U.S. Air Force awarding it billion-dollar deals.
However, demand for the company’s services is cyclical, and vulnerable to economic downturns and reductions in the government and private industry spending.
Tetra Tech currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks worth considering in the same space include Alamo Group, Inc. (ALG - Free Report) , Avery Dennison Corporation (AVY - Free Report) and Deere & Company (DE - Free Report) . While Alamo Group sports a Zacks Rank #1 (Strong Buy), Avery Dennison and Deere & Company carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alamo Group has a decent earnings surprise history, surpassing estimates twice in the trailing four quarters with an average beat of 6.1%.
Avery Dennison has an impressive earnings surprise history, exceeding estimates in the trailing four quarters with an average beat of 6.9%.
Deere & Company has an excellent earnings surprise history, exceeding estimates in the trailing four quarters with an average beat of 55.1%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively. And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Tetra Tech (TTEK) Q4 Earnings & Revenues Beat Estimates
Tetra Tech Inc. (TTEK - Free Report) reported fourth-quarter fiscal 2017 adjusted earnings from ongoing operations of 63 cents, beating the Zacks Consensus Estimate of 61 cents. Earnings were higher than the company’s earlier guided range of 60-62 cents.
The technical services company even fared better year over year, with adjusted earnings reflecting growth of 6.8% relative to the prior-year quarter’s tally of 59 cents. The company’s earnings benefited from a strong top-line growth on the back of solid demand for its high-end water, environment and infrastructure services.
For fiscal 2017, the company’s ongoing earnings per share came in at $2.13, marginally higher than the guided range of $2.10-$2.12 and up a robust 13% from the year-ago tally, driven by impressive sales performance.
Inside the Headlines
Net revenues rose 0.6% year over year to $534 million, comfortably beating the Zacks Consensus Estimate of $518.5 million. Moreover, the figure surpassed the company’s estimated range of $500-520 million.
Tetra Tech’s ongoing revenues grew 2.3% year over year.
For fiscal 2017, the company’s net revenues came in at a record $2.03 billion, up 5.8% over the prior year and higher than the guided range of $2-$2.02 billion. Additionally, revenues from ongoing operations rose 8% to $2.74 billion on a year-over-year basis.
Coming to the segments, Water, Environment and Infrastructure revenues grew 8.7% year over year to $235.1 million. This segment mainly gained from strong infrastructure and environmental projects.
Net revenue from Resource Management and Energy dipped 3.8% year over year to $298 million. International development projects contributed to sales growth, which was more than offset by sluggish oil and gas markets.
Tetra Tech, Inc. Price, Consensus and EPS Surprise
Tetra Tech, Inc. Price, Consensus and EPS Surprise | Tetra Tech, Inc. Quote
In the quarter under review, backlog from ongoing operations reached a record high of $2.54 billion, a jump of 8% year over year, driven by a number of single-award contracts. Also, ongoing operating income was up 9.4% year over year to $57 million. This is the seventh consecutive quarter of backlog growth for the company.
Significant Developments
During the quarter, Tetra Tech clinched a five-year $356 million single-award engineering and technical support services contract with the Federal Aviation Administration (“FAA”). Per the Navigation Technical Assistance Contract II (“NAVTAC II”), the company will offer technical support services for research, planning, implementation, maintenance as well as decommissioning of the FAA’s landing, navigation and lighting systems.
This apart, during the reported quarter, the company acquired leading sustainable infrastructure design firm, Glumac, which would broaden the company’s high-end sustainable infrastructure design capabilities. The acquisition will enable Tetra Tech to offer additional technically-differentiated green infrastructure capabilities which will help its clients conserve resources and optimize operating costs.
Liquidity & Cash Flow
At the end of the quarter on Oct 1, 2017, Tetra Tech’s cash and cash equivalents were $190 million, up from $160.5 million a year ago. Long-term debt was $341.3 million, substantially up from $331.5 million as of Oct 2, 2016.
For fiscal 2017, net cash from operating activities fell 2.8% year over year to $138 million.
Share Repurchase
Tetra Tech is strongly committed toward rewarding its shareholders through dividends and share buyback programs. On Nov 6, 2017, the company declared a quarterly dividend of 10 cents per share payable on Dec 15, 2017, to stockholders of record as of Nov 30.
Currently, Tetra Tech has $100 million remaining under the previously approved $200 million share repurchase program.
Business Segment Restructuring
The company announced that it is renaming its reportable segments to align its operations better, effective from the beginning of fiscal 2018. The new Government Services Group ("GSG") segment will encompass operations with U.S. government clients (federal, state and local) and all activities with development agencies. The other segment, Commercial/International Services Group ("CIG"), will include activities with U.S. commercial clients and all international activities excluding work performed for development agencies.
Outlook
Concurrent with the quarterly earnings release, Tetra Tech provided top and bottom-line guidance for both the upcoming quarter and fiscal 2018. The company expects first-quarter fiscal 2018 earnings per share to be in the range of 50-55 cents. Net revenue for the fiscal first quarter is expected to lie within $500-$525 million.
For fiscal 2018, Tetra Tech projects earnings per share to be in the range of $2.20-$2.40 and net revenue lie within $2.05-$2.15 billion.
Our Take
Tetra Tech ended the quarter on a high note, with impressive top and bottom-line performance and sturdy year-over-year growth. Going forward, the company’s robust backlog levels signal bright days ahead. Based on continued execution of its business model, Tetra Tech remains bullish about its growth across all four client sectors, namely, U.S. federal, U.S. state and local, the U.S. commercial work and finally international.
The company believes that the solid pipeline of projects in the Department of Defense and development-related services, in the United States will continue to propel growth of its federal business. Going forward, we believe Tetra Tech has a solid base for future growth, driven by its strong backlog levels, plus a robust pipeline with major government organizations like the U.S. Department of State, U.S. Army Corp. of Engineers and U.S. Air Force awarding it billion-dollar deals.
However, demand for the company’s services is cyclical, and vulnerable to economic downturns and reductions in the government and private industry spending.
Tetra Tech currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks worth considering in the same space include Alamo Group, Inc. (ALG - Free Report) , Avery Dennison Corporation (AVY - Free Report) and Deere & Company (DE - Free Report) . While Alamo Group sports a Zacks Rank #1 (Strong Buy), Avery Dennison and Deere & Company carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alamo Group has a decent earnings surprise history, surpassing estimates twice in the trailing four quarters with an average beat of 6.1%.
Avery Dennison has an impressive earnings surprise history, exceeding estimates in the trailing four quarters with an average beat of 6.9%.
Deere & Company has an excellent earnings surprise history, exceeding estimates in the trailing four quarters with an average beat of 55.1%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>