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Tetra Tech (TTEK) Q4 Earnings Top Estimates, Revenues Miss

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Tetra Tech Inc. (TTEK - Free Report) reported fourth-quarter fiscal 2018 adjusted earnings from ongoing operations of 75 cents, beating the Zacks Consensus Estimate of 74 cents. The figure came within the company’s earlier guided range of 70-75 cents.

The technical services company’s adjusted earnings reflected growth of 19% from the prior-year quarter figure of 63 cents. Its bottom line benefited from top-line growth on the back of solid demand for its high-end consulting and engineering services.

For fiscal 2018, the company’s ongoing earnings per share came in at $2.64, which met the guided range of $2.59-$2.64 and was up a robust 24% year over year, driven by impressive sales performance.

Top-Line Details

Revenues in the fiscal fourth quarter came in at $552.7 million, up 4% year over year. Notably, the figure came within the company’s estimated range of $550-575 million. However, the top line missed the Zacks Consensus Estimate of $572 million.

Tetra Tech, Inc. Price, Consensus and EPS Surprise

Tetra Tech, Inc. Price, Consensus and EPS Surprise | Tetra Tech, Inc. Quote

For fiscal 2018, the company’s net revenues came in at a record $2.20 billion, up 8% from the prior year and met the guided range of $2.20-$2.22 billion.

Segmental Break-Up

Revenues of the Government Services Group in the reported quarter came in at $310.8 million, up 10% year over year.

The Commercial / International Services Group revenues came in at $252.9 million, up 0.9%.

Costs & Margin

Subcontractor costs in the quarter under review were $186.6 million, down from $201.2 million recorded a year ago. Cost of revenues in the fiscal fourth quarter were $463.4 million, up 7%.

Selling, general and administrative expenses during the quarter were $42.4 million, down from $46.2 million recorded in the year-ago quarter. Meanwhile, interest expenses in the reported quarter flared up 41.3% to $3.9 million. Ongoing operating margin in the fiscal fourth quarter was 11%, up 30 basis points.

Liquidity & Cash Flow

Exiting the fiscal fourth quarter, Tetra Tech had cash and cash equivalents of $146.2 million, down from $190 million recorded on Oct 1, 2017. Long-term debt came in at $264.7 million, down from $341.3 million reported at the end of fiscal 2017.

For fiscal 2018, net cash from operating activities increased 28.2% year over year to $176.9 million.

Share Repurchase

Tetra Tech is strongly committed toward rewarding its shareholders through dividends and share buyback programs. On Nov 5, 2018, the company declared a quarterly dividend of 12 cents per share payable Dec 14, 2018, to stockholders on record as of Nov 30.

Outlook

Tetra Tech currently anticipates reporting revenues of $525-$575 million and earnings of 60-65 cents per share in first-quarter fiscal 2019.

Additionally, for fiscal 2019, Tetra Tech anticipates earnings to be in the range of $2.75-$2.95 per share. Also, net revenues for the fiscal is currently estimated to be $2.2-$2.4 billion.

Zacks Rank & Key Picks

Tetra Tech currently carries a Zacks Rank #3(Hold).

Some better-ranked stocks in the same space are Atkore International Group Inc. (ATKR - Free Report) , Donaldson Company, Inc. (DCI - Free Report) and Cintas Corporation (CTAS - Free Report) . While Atkore International Group sports a Zacks Rank #1 (Strong Buy), Donaldson and Cintas carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Atkore International Group surpassed estimates thrice in the trailing four quarters, the average beat being 24.46%.

Donaldson exceeded estimates twice in the trailing four quarters, the average beat being 2.29%.

Cintas surpassed estimates in each of the trailing four quarters, the average beat being 7.22%.

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