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Tetra Tech (TTEK) Q1 Earnings & Revenues Beat Estimates

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Tetra Tech, Inc. (TTEK - Free Report) reported impressive results for the first quarter of fiscal 2021 (ended Dec 27, 2020), with earnings surpassing estimates by 17.1%. This was the 14th consecutive quarter of better-than-anticipated results.

The company’s adjusted earnings per share in the reported quarter came in at 96 cents, handily outpacing the Zacks Consensus Estimate of 82 cents. Also, earnings increased 14.3% from the year-ago quarter’s 84 cents.

The bottom line also topped management’s projection of 78-83 cents per share.

Revenues & Segmental Performance

In the fiscal first quarter, Tetra Tech generated adjusted revenues of $765.1 million, reflecting a year-over-year decline of 4.1%. Adjusted net revenues (adjusted revenues minus subcontractor costs) came in at $605.2 million, down 1.5%. The figure surpassed the company’s guidance of $570-$600 million.

Further, Tetra Tech’s revenues exceeded the Zacks Consensus Estimate of $589 million.

Backlog at the end of the quarter was $3,188.1 million, down 1.6% from the previous quarter.

Revenues from the U.S. Federal customers (accounting for 31% of the quarter’s revenues) were up 8% year over year. Growth in advanced analytics was negated by a delay in international development projects.

The U.S. Commercial sales (22% of the quarter’s revenues) declined 7% year over year on lower discretionary industrial programs. Stability was witnessed in regulatory-driven programs.

The U.S. State and Local sales (16% of the quarter’s revenues) increased 11% on strength in the municipal digital water system businesses. International sales (31% of the quarter’s revenues) decreased 8% year over year.

The company reports revenues under the segments discussed below:

Net sales of Government Services Group came in at $344.9 million, up 4.6% year over year.
 
Revenues from Commercial / International Services Group totaled $260.3 million, underlining a year-over-year decline of 8.4%.

Tetra Tech, Inc. Price, Consensus and EPS Surprise

Tetra Tech, Inc. Price, Consensus and EPS Surprise

Tetra Tech, Inc. price-consensus-eps-surprise-chart | Tetra Tech, Inc. Quote

Margin Profile

In the fiscal first quarter, Tetra Tech’s subcontractor costs totaled $159.9 million, reflecting a decline of 12.9% from the year-ago quarter. Other costs of revenues (adjusted) were $488.9 million, down 3.1%. Selling, general and administrative expenses (adjusted) were $50.1 million, flaring up 8%.

Net income in the reported quarter increased 10.8% year over year to $52.4 million, while adjusted margin expanded 70 basis points 10.9%.

Balance Sheet and Cash Flow

Exiting the fiscal first quarter, Tetra Tech had cash and cash equivalents of $163.4 million, up 3.7% from the $157.5 million recorded at the end of the prior quarter. Long-term debt was up 13.9% sequentially to $276 million.

During the quarter, the company’s proceeds from borrowings amounted to $123.5 million, while repayments totaled $114.8 million.

In the first three months of fiscal 2021, it generated net cash of $33.2 million from operating activities against $18 million used in the year-ago period. Capital expenditure was $1.8 million, down 46.1%.

Shareholder-Friendly Policy

In fiscal first quarter, the company bought back shares worth $15 million and distributed dividends totaling $9.2 million.

Exiting the fiscal first quarter, the company had $193 million worth authorization left under its approved buyback programs.

Outlook

For fiscal 2021 (ending September 2021), Tetra Tech anticipates net revenues of $2.40-$2.55 compared with $2.35-$2.55 billion guided earlier, while adjusted earnings are predicted to be $3.45-$3.60, compared with $3.30-$3.50, predicted earlier. The bottom-line projection is higher than the $3.26 recorded in fiscal 2020.

For the fiscal second quarter (ending March 2020), the company estimates net revenues of $565-$595 million and adjusted earnings per share of 73-78 cents.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks are AGCO Corporation (AGCO - Free Report) , AptarGroup, Inc. (ATR - Free Report) and Dover Corporation (DOV - Free Report) . While AGCO currently sports a Zacks Rank #1 (Strong Buy), AptarGroup and Dover carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO delivered a positive earnings surprise of 434.48%, on average, in the trailing four quarters.

AptarGroup delivered a positive earnings surprise of 10.91%, on average, in the trailing four quarters.

Dover delivered a positive earnings surprise of 18.1%, on average, in the trailing four quarters.

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