Tetra Tech, Inc. (TTEK Quick QuoteTTEK - Free Report) reported second-quarter fiscal 2024 (ended Mar 31, 2024) adjusted earnings of $1.42 per share, which surpassed the Zacks Consensus Estimate of $1.31. The bottom line surged 21.4% year over year driven by strong momentum in each of its segments.

The bottom line also surpassed management’s projection of earnings of $1.25-$1.35 per share.

Revenue & Segmental Performance

Tetra Tech generated adjusted revenues of $1.3 billion, reflecting a year-over-year increase of 8.1%. Adjusted net revenues (adjusted revenues minus subcontractor costs) were $1.1 billion, up 9% year over year. The quarterly top line surpassed the management’s guidance of $990 million-$1.04 billion.

Tetra Tech’s revenues exceeded the Zacks Consensus Estimate of $1.0 billion.

The backlog at the end of the fiscal quarter was $4.7 billion, up 24% year over year.

Revenues from U.S. Federal customers (accounting for 31% of the quarter’s revenues) were up 14% year over year, supported by higher federal environmental sales. U.S. Commercial sales (17% of the quarter’s revenues) decreased 2% year over year due to environmental remediation timing.

U.S. State and Local sales (11% of the quarter’s revenues) increased 14% year over year, driven by strength in advanced water treatment. International sales (41% of the quarter’s revenues) were up 17% year over year, backed by increased U.K. water planning and design sales.

Tetra Tech reports revenues under the segments discussed below:

Net sales of the Government Services Group segment were $466 million, up 15% year over year. The Zacks Consensus Estimate for the segment’s revenues was $429 million. Revenues from the Commercial/International Services Group segment totaled $586 million, representing a year-over-year increase of 10%. The consensus estimate for the segment’s revenues was $601 million.

Margin Profile

In the fiscal second quarter, Tetra Tech’s subcontractor costs totaled $199 million, reflecting an increase of 5.5% from the year-ago quarter. Other costs of revenues (adjusted) were $845.1 million, up 5.5% from the fiscal second quarter of 2023. Selling, general and administrative expenses were $89.8 million, up 9.1% from the year-ago fiscal quarter.

Operating income (adjusted) increased 34.1% year over year to $118 million while the adjusted margin decreased 210 basis points to 11.2%.

Balance Sheet and Cash Flow

While exiting second-quarter fiscal 2024, Tetra Tech had cash and cash equivalents of $210.3 million compared with $168.8 million recorded at the end of the fourth quarter of fiscal 2023. Long-term debt was $951 million compared with $879.5 million recorded at the end of fourth-quarter fiscal 2023.

In the first six months of fiscal 2024, Tetra Tech generated net cash of $112.2 million from operating activities compared with $113.1 million in the prior fiscal year’s comparable period. Capital expenditure was $7.5 million, down 27.5% year over year. In the said fiscal period, TTEK’s proceeds from borrowings amounted to $180 million while repayments on long-term debt totaled $110 million.

Shareholder-Friendly Policies

Tetra Tech, carrying a current Zacks Rank #3 (Hold), distributed dividends totaling $27.8 million in the first six months of fiscal 2024. This compares favorably with dividends of $24.4 million distributed in the year-ago fiscal period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fiscal 2024 Outlook Raised

For fiscal 2024 (ending September 2024), Tetra Tech anticipates net revenues to be $4.21-$4.31 billion compared with $4.15-$4.30 billion expected earlier. Adjusted earnings are predicted to be $6.15-$6.25 per share compared with $5.90-$6.20 predicted earlier.

For the third quarter of fiscal 2024 (ending June 2024), management estimates net revenues to be $1.05-$1.10 billion. Adjusted earnings are projected to be $1.50 - $1.55 per share.

Performance of Other Industrial Companies

IDEX Corporation’s (IEX Quick QuoteIEX - Free Report) second-quarter 2024 adjusted earnings of $1.88 per share surpassed the Zacks Consensus Estimate of $1.75. On a year-over-year basis, the bottom line decreased approximately 10.1%.

IDEX’s net sales of $800.5 million underperformed the consensus estimate of $805 million.  The top line also decreased 5.3% year over year.

A. O. Smith Corporation’s (AOS Quick QuoteAOS - Free Report) second-quarter 2024 adjusted earnings of $1.00 per share surpassed the Zacks Consensus Estimate of 99 cents. The bottom line increased 6% on a year-over-year basis.

Net sales of $978.8 million missed the consensus estimate of $995 million. However, the top line inched up 1% year over year, driven by strong demand for commercial water heaters in North America.

W.W. Grainger, Inc. (GWW Quick QuoteGWW - Free Report) has reported earnings per share of $9.62 in second-quarter 2024, beating the Zacks Consensus Estimate of $9.58. The bottom line improved 0.1% year over year.

Grainger’s quarterly revenues rose 3.5% year over year to $4.24 billion. The top line missed the consensus estimate of $4.27 billion.