Tetra Tech, Inc. TTEK reported fourth-quarter fiscal 2024 (ended Sept. 30, 2024) adjusted earnings of 38 cents per share, which surpassed the Zacks Consensus Estimate of 37 cents. The bottom line surged 15% year over year, driven by the strong momentum in each of its segments.

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TTEK’s Revenue & Segmental Performance

Tetra Tech generated revenues of $1.37 billion, reflecting a year-over-year increase of 9%. Adjusted net revenues (adjusted revenues minus subcontractor costs) were $1.14 billion, up 8% year over year. The quarterly top line met the upper end of the management’s guided range of $1.09-$1.14 billion.

Tetra Tech’s adjusted revenues also exceeded the Zacks Consensus Estimate of $1.13 billion.

The backlog at the end of the fiscal fourth quarter was $5.38 billion, up 12% year over year.

Revenues from U.S. Federal customers (accounting for 33% of the quarter’s revenues) were up 12% year over year, supported by strength across civilian and coastal marine navigation sectors. U.S. Commercial sales (18% of the quarter’s revenues) increased 3% year over year, driven by higher renewable energy and environmental remediation sales.

U.S. State and Local sales (12% of the quarter’s revenues) increased 9% year over year, driven by strength in advanced water treatment. International sales (37% of the quarter’s revenues) were up 6% year over year, backed by strength in the infrastructure sector.

Tetra Tech reports revenues under the segments discussed below:

Net sales of the Government Services Group segment were $513 million, up 12% year over year. Revenues from the Commercial/International Services Group segment totaled $632 million, representing a year-over-year increase of 5%.

TTEK's Margin Profile

In the fiscal fourth quarter, Tetra Tech’s subcontractor costs totaled $230 million, reflecting an increase of 13.2% from the year-ago quarter. Other costs of revenues (adjusted) were $899.2 million, up 6.4% from the fiscal fourth quarter of 2023. Selling, general and administrative expenses (adjusted) were $92.7 million, up 20% from the year-ago fiscal quarter.

Operating income increased 33.4% year over year to $143.3 million, while the adjusted margin increased 50 basis points to 13.3%.

Tetra Tech’s Balance Sheet and Cash Flow

While exiting the fiscal fourth quarter, Tetra Tech had cash and cash equivalents of $232.7 million compared with $168.8 million recorded at the end of the fourth quarter of fiscal 2023. Long-term debt was $812.6 million compared with $879.5 million recorded at the end of fourth-quarter fiscal 2023.

In fiscal 2024, Tetra Tech generated net cash of $358.7 million from operating activities compared with $368.5 million in the prior fiscal year. Capital expenditure was $18.1 million, down 32.7% year over year. In fiscal 2024, TTEK’s proceeds from borrowings amounted to $217 million, while repayments on long-term debt totaled $287 million.

Shareholder-Friendly Policies

Tetra Tech distributed dividends totaling $58.8 million in fiscal 2024. This compares favorably with dividends of $52.1 million distributed in the previous fiscal year. It repurchased shares worth $12.9 million in the same period.

TTEK’s Fiscal 2025 Outlook

For fiscal 2025 (ending September 2025), Tetra Tech anticipates net revenues to be in the range of $4.565-$4.765 billion, higher than $4.322 billion reported in fiscal 2024. Adjusted earnings are predicted to be $1.40-$1.50 per share compared with $1.26 reported in fiscal 2024.

For the fiscal first quarter (ending December 2024), management estimates net revenues to be in the range of $1.09-$1.15 billion. Adjusted earnings are projected to be in the band of 32-34 cents per share.

Zacks Rank & Stocks to Consider

TTEK currently carries a Zacks Rank #3 (Hold). Here are some better-ranked stocks from the same space:

Kadant Inc. KAI presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It has a trailing four-quarter average earnings surprise of 17.2%. The Zacks Consensus Estimate for KAI’s 2024 earnings has improved 1.8% in the past 60 days.

Atmus Filtration Technologies Inc. ATMU presently has a Zacks Rank of 2 and a trailing four-quarter earnings surprise of 13.8%, on average. The consensus estimate for ATMU’s 2024 earnings has increased 1.3% in the past 60 days.

Generac Holdings GNRC presently carries a Zacks Rank of 2. GNRC delivered a trailing four-quarter earnings surprise of 10.8%, on average. The Zacks Consensus Estimate for Generac Holdings’ 2024 earnings has increased 5.1% in the past 60 days.

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