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Tetra Tech Q2 EPS beat estimates, rising 3%, while net revenues topped forecasts despite a Y/Y drop.
TTEK saw strong demand in water, environmental and international markets, boosting backlog 8%.
Raised FY2026 revenue and earnings outlook reflects confidence despite GSG segment weakness.
Tetra Tech, Inc. (TTEK - Free Report) posted second-quarter fiscal 2026 adjusted earnings of 34 cents per share, up 3% year over year and ahead of the Zacks Consensus Estimate of 31 cents by 9.7%.
Net revenues were $1.05 billion, down 4.9% year over year, but topped the consensus mark of $999 million by 5.1%. Backlog ended the quarter at $4.28 billion, up 8% sequentially, supported by solid demand across water and environmental end markets.
On a GAAP basis, TTEK reported revenues of $1.22 billion compared with $1.32 billion in the year-ago quarter.
Tetra Tech Benefited From CIG Growth Offset by GSG
Revenues from U.S. Federal customers (accounting for 20% of the quarter’s revenues) were up 11% year over year, supported by a solid pipeline of projects from the Defense and U.S. Army Corps of Engineers. U.S. Commercial sales (19% of the quarter’s revenues) decreased 2% year over year due to lower renewable energy sales.
U.S. State and Local sales (14% of the quarter’s revenues) increased 9% year over year, driven by strength in municipal water infrastructure. International sales (47% of the quarter’s revenues) were up 12% year over year, driven by strength in the UK’s water and digital water automation programs
Tetra Tech reports revenues under the segments discussed below:
The Commercial/International Services Group (CIG) delivered net revenues of $591.2 million, up 9.6% year over year. Government Services Group (GSG) net revenues were $458.5 million, down 18.8% from the prior-year quarter. The mix across the two operating groups continued to be a key swing factor in consolidated results, with CIG strength partially offsetting lower year-over-year volume in GSG.
Tetra Tech, Inc. Price, Consensus and EPS Surprise
TTEK continued to manage its financing costs while maintaining capacity for growth investments. In the fiscal second quarter, Tetra Tech’s subcontractor costs totaled $170.5 million, reflecting a decrease of 21.9% from the year-ago quarter. Other costs of revenues (adjusted) were $835.5 million, down 6.1% from the second quarter of fiscal 2025. Selling, general and administrative expenses (adjusted) were $82.6 million, down 1.8% from the year-ago fiscal quarter.
Adjusted operating income increased 1.1% year over year to $131.5 million while the adjusted margin increased 70 basis points to 12.5%.
Tetra Tech’s Balance Sheet and Cash Flow
While exiting the fiscal second quarter, Tetra Tech had cash and cash equivalents of $223.6 million compared with $167.5 million recorded at the end of fiscal 2025. Long-term debt was $880.2 million compared with $763.4 million recorded at the end of fiscal 2025.
In the first six months of fiscal 2026, Tetra Tech generated net cash of $237.6 million from operating activities compared with $7.2 million in the prior fiscal year period. Capital expenditure was $10.1 million, up 12.2% year over year. In the first six months of fiscal 2026, TTEK’s proceeds from borrowings amounted to $240 million while repayments on long-term debt were $125 million.
Shareholder-Friendly Policies
Tetra Tech distributed dividends totaling $33.9 million in the first six months of fiscal 2026. This compares favorably with dividends of $30.9 million distributed in the previous fiscal year period. It repurchased shares worth $102 million in the same period compared with $175 million in the previous fiscal year period.
TTEK’s Fiscal 2026 Outlook
For fiscal 2026 (ending September 2026), Tetra Tech anticipates net revenues to be in the range of $4.25-$4.40 billion, higher than $4.15-$4.30 billion projected earlier. However, the projection is lower than the net revenues of $4.62 billion reported in fiscal 2025. Adjusted earnings are currently predicted to be $1.50-$1.58 per share compared with $1.46-$1.56 guided previously. It reported earnings of $1.56 per share in fiscal 2025.
For the fiscal third quarter, management estimates net revenues to be in the range of $1.05-$1.10 billion. Adjusted earnings are projected to be in the band of 38-41 cents per share.
TTEK’s Zacks Rank and Other Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks are discussed below:
DXP Enterprises’ earnings surpassed the consensus estimate by 52.8% in the last reported quarter. In the past 60 days, the Zacks Consensus Estimate for DXPE’s 2026 earnings has increased 17.2%.
Kennametal (KMT - Free Report) presently sports a Zacks Rank of 1. Kennametal’s earnings surpassed the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 35.4%. In the past 60 days, the Zacks Consensus Estimate for Kennametal’s fiscal 2026 earnings has increased 9%.
Powell Industries (POWL - Free Report) currently carries a Zacks Rank of 2. Powell’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 12.9%. In the past 60 days, the Zacks Consensus Estimate for Powell’s fiscal 2026 earnings has increased 3%.
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Tetra Tech Beats Q2 Earnings & Revenue Estimates, Raises 26' View
Key Takeaways
Tetra Tech, Inc. (TTEK - Free Report) posted second-quarter fiscal 2026 adjusted earnings of 34 cents per share, up 3% year over year and ahead of the Zacks Consensus Estimate of 31 cents by 9.7%.
Net revenues were $1.05 billion, down 4.9% year over year, but topped the consensus mark of $999 million by 5.1%. Backlog ended the quarter at $4.28 billion, up 8% sequentially, supported by solid demand across water and environmental end markets.
On a GAAP basis, TTEK reported revenues of $1.22 billion compared with $1.32 billion in the year-ago quarter.
Tetra Tech Benefited From CIG Growth Offset by GSG
Revenues from U.S. Federal customers (accounting for 20% of the quarter’s revenues) were up 11% year over year, supported by a solid pipeline of projects from the Defense and U.S. Army Corps of Engineers. U.S. Commercial sales (19% of the quarter’s revenues) decreased 2% year over year due to lower renewable energy sales.
U.S. State and Local sales (14% of the quarter’s revenues) increased 9% year over year, driven by strength in municipal water infrastructure. International sales (47% of the quarter’s revenues) were up 12% year over year, driven by strength in the UK’s water and digital water automation programs
Tetra Tech reports revenues under the segments discussed below:
The Commercial/International Services Group (CIG) delivered net revenues of $591.2 million, up 9.6% year over year. Government Services Group (GSG) net revenues were $458.5 million, down 18.8% from the prior-year quarter. The mix across the two operating groups continued to be a key swing factor in consolidated results, with CIG strength partially offsetting lower year-over-year volume in GSG.
Tetra Tech, Inc. Price, Consensus and EPS Surprise
Tetra Tech, Inc. price-consensus-eps-surprise-chart | Tetra Tech, Inc. Quote
TTEK's Margin Profile
TTEK continued to manage its financing costs while maintaining capacity for growth investments. In the fiscal second quarter, Tetra Tech’s subcontractor costs totaled $170.5 million, reflecting a decrease of 21.9% from the year-ago quarter. Other costs of revenues (adjusted) were $835.5 million, down 6.1% from the second quarter of fiscal 2025. Selling, general and administrative expenses (adjusted) were $82.6 million, down 1.8% from the year-ago fiscal quarter.
Adjusted operating income increased 1.1% year over year to $131.5 million while the adjusted margin increased 70 basis points to 12.5%.
Tetra Tech’s Balance Sheet and Cash Flow
While exiting the fiscal second quarter, Tetra Tech had cash and cash equivalents of $223.6 million compared with $167.5 million recorded at the end of fiscal 2025. Long-term debt was $880.2 million compared with $763.4 million recorded at the end of fiscal 2025.
In the first six months of fiscal 2026, Tetra Tech generated net cash of $237.6 million from operating activities compared with $7.2 million in the prior fiscal year period. Capital expenditure was $10.1 million, up 12.2% year over year. In the first six months of fiscal 2026, TTEK’s proceeds from borrowings amounted to $240 million while repayments on long-term debt were $125 million.
Shareholder-Friendly Policies
Tetra Tech distributed dividends totaling $33.9 million in the first six months of fiscal 2026. This compares favorably with dividends of $30.9 million distributed in the previous fiscal year period. It repurchased shares worth $102 million in the same period compared with $175 million in the previous fiscal year period.
TTEK’s Fiscal 2026 Outlook
For fiscal 2026 (ending September 2026), Tetra Tech anticipates net revenues to be in the range of $4.25-$4.40 billion, higher than $4.15-$4.30 billion projected earlier. However, the projection is lower than the net revenues of $4.62 billion reported in fiscal 2025. Adjusted earnings are currently predicted to be $1.50-$1.58 per share compared with $1.46-$1.56 guided previously. It reported earnings of $1.56 per share in fiscal 2025.
For the fiscal third quarter, management estimates net revenues to be in the range of $1.05-$1.10 billion. Adjusted earnings are projected to be in the band of 38-41 cents per share.
TTEK’s Zacks Rank and Other Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks are discussed below:
DXP Enterprises (DXPE - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DXP Enterprises’ earnings surpassed the consensus estimate by 52.8% in the last reported quarter. In the past 60 days, the Zacks Consensus Estimate for DXPE’s 2026 earnings has increased 17.2%.
Kennametal (KMT - Free Report) presently sports a Zacks Rank of 1. Kennametal’s earnings surpassed the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 35.4%. In the past 60 days, the Zacks Consensus Estimate for Kennametal’s fiscal 2026 earnings has increased 9%.
Powell Industries (POWL - Free Report) currently carries a Zacks Rank of 2. Powell’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 12.9%. In the past 60 days, the Zacks Consensus Estimate for Powell’s fiscal 2026 earnings has increased 3%.