Back to top

Analyst Blog

Tetra Tech Inc. (TTEK - Analyst Report) reported its second-quarter fiscal 2011 earnings per share of 28 cents, below the Zacks Consensus Estimate of 29 cents but above the prior-year earnings of 23 cents. The company had a strong second quarter with high double-digit growth in revenue, earnings and backlog.

Total Revenue

Total revenue in the quarter was $612.6 million, an increase of 30.5% year over year. Revenue, net of subcontractor costs, was $430.3 million compared with $325.9 million in the prior-year quarter. Subcontractor cost in the quarter was $182.3 million compared with $143.6 million.

Tetra Tech’s revenue from the international market more than tripled during the quarter due to increased mining activity and contribution from recent acquisitions made in Canada. An improvement in economic environment increased revenue by 14% year over year. Backlog increased 18.7% year over year to $1.99 billion at the end of the reported quarter.

Income

Operating income in the quarter amounted to $29.3 million compared with $23.5 million in the prior-year quarter.

Cash Flow

Tetra Tech generated cash from operations of $33.7 million compared with $45.2 million in the prior-year period.

Outlook

The company expects diluted earnings per share to be in the range of 33 cents to 37 cents in the third quarter of fiscal 2011. Revenue, net of subcontractor cost, is expected to be in the range of $450 million to $475 million in the quarter.

For fiscal 2011, revenue, net of subcontractor cost, is expected to be in the range of $1.7 billion to $1.8 billion and diluted earnings per share are expected to be in the range of $1.34 to $1.42.

Demand for state and local government services is cyclical and vulnerable to economic downturns; if the economy weakens, its revenues, profits and its financial condition may deteriorate. The company derives a majority of its revenue from government agencies, and any disruption in government funding or in its relationship with those agencies could adversely affect its business.

Tetra Tech Inc. is a leading provider of consulting, engineering, program management, construction and technical services focusing on resource management and infrastructure. It serves clients by providing cost-effective and innovative solutions to fundamental needs for water, environmental and alternative energy services. It typically begins at the earliest stage of a project by applying science to problems and developing solutions tailored to clients' needs and resources. Its solutions may span the entire life cycle of the project and include applied science, research and technology, engineering, design, construction management, construction, operations and maintenance, and information technology. Major competitors of Tetra Tech are Arcadis NV (ARCAY.PK), Shaw Group Inc. and URS Corporation (URS - Analyst Report).

We currently maintain our Neutral rating on Tetra Tech Inc. with a Zacks #2 Rank (short-term Buy recommendation) over the next one-to-three months.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%