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Tetra Tech Inc. (TTEK - Analyst Report) reported its first-quarter fiscal 2013 earnings per share from continuing operations of 41 cents, in line with the Zacks Consensus Estimate and 15.8% above the prior-year earnings of 36 cents.  Profits during the quarter were driven by strong growth in both the international and the U.S. commercial markets.

Total Revenue

Total revenue in the quarter was $658.5 million compared with $682.6 million in the prior year period. Revenue, net of subcontractor costs, was $497.2 million compared with $492.1 million in the prior-year quarter. Subcontractor cost in the quarter was $161.3 million compared with $190.6 million in the prior-year quarter.

The company benefited in the quarter from a high demand in the international and U.S. commercial markets as well as the Parkland acquisition. Backlog was $1.9 billion at the end of the reported quarter, flat year over year.

Income

Earnings before interest, taxes, depreciation, and amortization (EBITDA), were $54.1 million, up 5.9% compared with $51.1 million in the first of fiscal 2012. Operating income in the quarter amounted to $41.8 million compared with $36.1 million in the prior-year quarter.

Cash Flow

Tetra Tech generated cash flow from operations of $17.8 million compared with $38.3 million in the prior-year period.

Outlook

The company expects diluted earnings per share to be in the range of 38 cents to 42 cents in the second quarter of fiscal 2013. Revenue, net of subcontractor cost, is expected to be in the range of $500 million to $550 million in the quarter.

Tetra Tech increased its fiscal 2013 earnings per share and revenue guidance based on its growth in international and US commercial markets. For fiscal 2013 earnings per share are expected to be in the range of $1.85 to $1.96 (up from prior guidance of $1.80 to $1.85) and revenue, net of subcontractor cost, is expected to be in the range of $2.15 billion to $2.35 billion (up from prior guidance of $2.1 billion to $2.3 billion).

The company is deriving significant benefits from its acquisition of Parkland, which enabled the company to expand its operations for oil & gas customers to approximately 10% of its business.

However, demand for state and local government services is cyclical and vulnerable to economic downturns; and if the economy weakens, its revenues, profits and 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 businesses.

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.

Tetra Tech Inc. currently has a Zacks #2 Rank (Buy). The other companies that can also be considered at the moment are Donaldson Co. (DCI - Snapshot Report) and Tyco International (TYC - Analyst Report), both of which have a Zacks Rank #2. 

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