Tetra Tech, Inc. ( TTEK Quick Quote TTEK - Free Report) reported solid results for the second quarter of fiscal 2021 (ended Mar 28, 2021), with earnings surpassing estimates by 10.7%. This was the 15th consecutive quarter of better-than-anticipated results. The company’s adjusted earnings per share in the reported quarter came in at 83 cents, handily outpacing the Zacks Consensus Estimate of 75 cents. Also, earnings increased 13.7% from the year-ago quarter’s 73 cents. The bottom line also topped management’s projection of 73-78 cents per share. Despite such impressive performance, the Pasadena, CA-based company failed to boost investor sentiments as its shares fell 5.4% on Apr 29, to close the trading session at $127.04. Revenues & Segmental Performance
In the fiscal second quarter, Tetra Tech generated adjusted revenues of $754.3 million, reflecting a year-over-year increase of 2.7%. Adjusted net revenues (adjusted revenues minus subcontractor costs) came in at $599.3 million, up 2.5%. The figure surpassed the company’s guidance of $565-$595 million.
Further, Tetra Tech’s revenues exceeded the Zacks Consensus Estimate of $583 million. Backlog at the end of the quarter was $3,150.2 million, down 1.2% from the previous quarter. Revenues from the U.S. Federal customers (accounting for 31% of the quarter’s revenues) were up 6% year over year. Growth in advanced analytics was negated by a delay in international development projects. The U.S. Commercial sales (21% 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 (17% of the quarter’s revenues) increased 32% on strength across municipal infrastructure backed by effective disaster response. International sales (31% of the quarter’s revenues) decreased 5% year over year. The company reports revenues under the segments discussed below: Net sales of Government Services Group came in at $347.1 million, up 8.1% year over year. Revenues from Commercial / International Services Group totaled $252.2 million, underlining a year-over-year decline of 4.3%. Tetra Tech, Inc. Price, Consensus and EPS Surprise Margin Profile
In the fiscal second quarter, Tetra Tech’s subcontractor costs totaled $154.9 million, reflecting a rise of 3.5% from the year-ago quarter. Other costs of revenues (adjusted) were $486.8 million, up 1.1%. Selling, general and administrative expenses (adjusted) were $51.7 million, up 2.4%.
Net income in the reported quarter increased 25.1% year over year to $45.5 million, while adjusted margin expanded 110 basis points to 10.1%. Balance Sheet and Cash Flow
Exiting the fiscal second quarter, Tetra Tech had cash and cash equivalents of $225.3 million, up 37.9% from $163.4 million recorded at the end of the prior quarter. Long-term debt was down 13.7% sequentially to $238.3 million from $276 million.
In the first six months of fiscal 2021, it generated net cash of $157.4 million from operating activities compared with $83.2 million in the year-ago period. Capital expenditure was $4.3 million, down 26.9%. In the same time frame, the company’s proceeds from borrowings amounted to $141.6 million, while repayments totaled $146.3 million. Shareholder-Friendly Policy
In the first six months of fiscal 2021, the company bought back shares worth $30 million and distributed dividends totaling $18.4 million.
Exiting the fiscal second quarter, the company had $178 million worth authorization left under its approved buyback programs. Outlook
For fiscal 2021 (ending September 2021), Tetra Tech anticipates net revenues of $2.45-$2.55 billion compared with $2.40-$2.55 billion guided earlier, while adjusted earnings are predicted to be $3.60-$3.70 compared with $3.45-$3.60 predicted earlier. The bottom-line projection is higher than the $3.26 recorded in fiscal 2020.
For the fiscal third quarter (ending Jun 2021), the company estimates net revenues of $600-$650 million and adjusted earnings per share of 85-90 cents. Zacks Rank & Other Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader industry are Energy Recovery, Inc. ( ERII Quick Quote ERII - Free Report) , Sharps Compliance Corp. ( SMED Quick Quote SMED - Free Report) and Titan International, Inc. ( TWI Quick Quote TWI - Free Report) , each carrying a Zacks Rank #2. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here Energy Recovery delivered an earnings surprise of 232.1%, on average, in the trailing four quarters. Sharps Compliance delivered an earnings surprise of 306.7%, on average, in the trailing four quarters. Titan International delivered an earnings surprise of 32.3%, on average, in the trailing four quarters. 5 Stocks Set to Double
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