Tetra Tech, Inc. TTEK is witnessing solid orders from the U.S. federal, U.S. state & local, U.S. commercial and international client sectors. Its Government Services Group segment is benefiting from higher international development, advanced water treatment work and continued support for the USA energy programs. Net sales from the segment increased 12% year over year in the fourth quarter of fiscal 2024 (ended September 2024). 

Also, increased activity on clean energy and environmental services programs is supporting the Commercial / International Services Group segment. Revenues from the segment increased 5% year over year in the fiscal fourth quarter. Driven by strength across its business, the company expects revenues to be in the range of $1.09-$1.15 billion in the first quarter of fiscal 2025 (ended December 2024), representing a year-over-year increase of 10% at the midpoint.

Tetra Tech remains focused on acquiring businesses to gain access to new customers, regions and product lines. In May 2024, the company acquired Convergence Controls & Engineering, a systems integration and engineering services company. This acquisition enables Tetra Tech to offer a comprehensive line of integrated automation platform solutions to its clients across the water and energy sectors.

TTEK’s acquisition of LS Technologies (in February 2024) introduced additional capabilities and clients to its federal IT practice within its Government Services Group segment. Also, the RPS Group buyout (in January 2023) expanded TTEK’s water practice in the United Kingdom and strengthened its foothold in renewable energy and environmental management.

The company remains committed to rewarding its shareholders through dividend payouts. For instance, in fiscal 2024, it paid out dividends of $58.8 million, up 12.9% year over year. In fiscal 2023, TTEK distributed dividends totaling $52.1 million. Also, it hiked the quarterly dividend rate by 12% in July 2024.

TTEK’s Price Performance

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In the past year, shares of the Zacks Rank #3 (Hold) company have gained 29% compared with the industry’s 27.7% growth.

Despite the positives, rising costs and expenses have been a major concern for Tetra Tech. The company's total cost of sales (including subcontractor costs and other costs of revenues) increased 13.2% in the fourth quarter of fiscal 2024 due to higher input costs. Also, the company’s selling, general and administrative expenses increased 20% year over year in the fiscal fourth quarter due to rising marketing costs. Escalating costs pose a threat to the bottom line.

Given its extensive geographic presence, it faces headwinds from unfavorable foreign currency movements. Any increase in the U.S. dollar’s value relative to the local currencies of the foreign markets may affect the top line in the quarters ahead.

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Tetra Tech, Inc. (TTEK) : Free Stock Analysis Report

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