TETRA TECH, INC. Q1-21 EARNINGS CALL
January 28, 2021
Dan Batrack, Chairman & CEO Steve Burdick, Executive VP & CFO
WATER | ENVIRONMENT | SUSTAINABLE INFRASTRUCTURE | RENEWABLE ENERGY |
Forward Looking Statements &
Non-GAAP Financial Measures
Certain statements contained in this presentation are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties, such as those related to fluctuations in the Company's quarterly operating results and stock price, and the other risks detailed from time to time in the Company's SEC reports.
To supplement the financial results presented in accordance with generally accepted accounting principles in the United States ("GAAP"), we present certain non-GAAP financial measures within the meaning of Regulation G under the Securities Exchange Act of 1934, as amended. We provide these non-GAAP financial measures because we believe they provide a valuable perspective on our financial results. However, non-GAAP measures have limitations as analytical tools and should not be considered in isolation and are not in accordance with, or a substitute for, GAAP measures. In addition, other companies may define non-GAAP measures differently which limits the ability of investors to compare non-GAAP measures of Tetra Tech to those used by our peer companies. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is available at investor.tetratech.com.
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Q1-21 Results
Net Revenue
$608M $605M
0%
Q1-20Q1-21
Note: Excludes Canadian turn-key pipeline disposition.
EPSBacklog
$0.96 | $3.17B | $3.19B |
$0.85
+13% | +1% |
Q1-20 | Q1-21 | Q1-20 | Q1-21 |
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Net Revenue by Customer (Q1-21)
Customer | % of | Y/Y | Comments | |
Net Rev. | ||||
U.S. Federal | 31% | +8% | • | Advanced analytics up |
• | International development projects delayed | |||
U.S. State & Local | 16% | +11% | • Municipal digital water services up | |
• | Disaster response stable | |||
International | 31% | -8% | • | International government stable |
• | Commercial discretionary down | |||
U.S. Commercial | 22% | -7% | • Discretionary industrial programs down | |
• | Regulatory driven programs stable | |||
Note: International Y/Y excludes Canadian turn-key pipeline disposition.
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Performance by Segment (Q1-21)
Segment | OI Margin (% of Net Rev.) | Comments |
13.8% | ||
12.8% | ||
GSG | • Advanced analytics and digital water up | |
• | Higher utilization | |
Q1-20 | Q1-21 |
11.4% | |
10.8% | |
CIG | • Focus on high-end consulting services |
Q1-20Q1-21
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Backlog (Q1-21)
3000
2500
$2.8B
2000
1500
1000
500
$3.2B
Funded and
Authorized Work
Significant Awards | Contract | Funded |
Ceiling | Value | |
USACE Environmental Services | $185M | ― |
Contract | ||
U.S. Army Task Orders | ― | $25M |
U.S. Navy Architect-Engineer | $150M | ― |
Sustainable Infrastructure Contract | ||
U.S. EPA Task Orders | ― | $15M |
USAID Renewable Energy and | $25M | ― |
Climate Change Contract | ||
U.S DOE Task Orders | ― | $14M |
FEMA Disaster Resilience Contract | $50M | ― |
Int'l Dev. Task Orders | ― | $132M |
0
Q1-19 | Q2-19 | Q3-19 | Q4-19 | Q1-20 | Q2-20 | Q3-20 | Q4-20 | Q1-21 |
Federal Contract Capacity: $20B
Various Commercial | ― | $271M |
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Financial Overview (GAAP) Q1-21
Revenue ($ in millions)
$798 | $765 | COVID-19 |
Impact | ||
Turn-key | ||
pipeline | ||
Q1-20 | Q1-21 | disposition |
Operating Income ($ in millions)
$63 | $66 |
Margin up | |
70 bps Y/Y | |
Q1-20 | Q1-21 |
Net Revenue ($ in millions)
$614 | $605 | +3% Q/Q |
Guidance: | ||
$570M - $600M | ||
Q1-20 | Q1-21 |
Diluted EPS
$0.85 | $0.96 | 25% tax rate |
Q1-21: $0.87 | ||
Q1-20: $0.81 | ||
Guidance: | ||
$0.78 - $0.83 | ||
Q1-20 | Q1-21 |
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Cash Flow Overview
Cash Flow from Operations ($ in millions)
$33 | Improved | |
working | ||
$(18) | capital | |
+$51M Y/Y | ||
Q1-20 | Q1-21 |
DSO | |
73 | 67 |
6-day | |
improvement | |
Y/Y | |
Q1-20 | Q1-21 |
Net Debt ($ in millions) | ||
$224 | ||
$139 | Net debt/ | |
EBITDA: 0.5x | ||
Q1-20 | Q1-21 |
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Capital Allocation Q1-21
TTM Cash From
Operations: $314M
• | Geographic expansion | |
Acquisitions | • | Add technical capabilities |
• | New Clients | |
Return to | • | $9M in dividends |
• | $15M buyback | |
Shareholders | ||
• | $193M buyback capacity remaining | |
Current | • | Net Debt/EBITDA: 0.5x |
Leverage | ||
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Addressing Our Clients' Climate Change Priorities
Market | Priorities | Tetra Tech Differentiation |
WATER
ENVIRONMENT
SUSTAINABLE INFRASTRUCTURE
RENEWABLE ENERGY
- Secure water supplies
- Watershed management
- Emerging contaminants
- Sustainable natural resource management
- Flood protection infrastructure
- Sustainable and healthy buildings
- Global carbon footprint reduction
- U.S. rejoining Paris Accord
- ENR: #1 Water 17 years in a row
- 50+ year relationship with U.S. Federal Govt
- Contracts with >500 U.S. municipalities
- ENR: #1 Environmental Management
- Fortune 500 relationships for environmental consulting
- ENR: #1 Dams & Reservoirs
- Global High Performance Buildings practice
- ENR: #1 Hydro and Wind Power
- Leading position in U.S. offshore wind
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U.S. Federal
- $1.4 trillion fiscal 2021 Appropriations approved in December 2020
- Leverage Tetra Tech's $20B in U.S. Federal contract capacity
Agency | New Administration Priorities | Tetra Tech Recent Wins |
DEFENSE
CIVILIAN
INTERNATIONAL DEVELOPMENT
• Management of emerging contaminants | • $185M U.S. Army Environmental Services |
• High-end green buildings and facilities | • $150M U.S. Navy A-E Sustainable Infrastructure |
• Watershed management | • $50M FEMA Disaster Resilience |
• Environmental restoration | • $68M U.S. EPA Superfund Contract |
• Renewable energy programs | • $25M USAID Renewable Energy and Climate Change |
• Climate change programs | • $39M Clean Energy Central Asia Contract |
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Leader in
ESG Programs
Kentucky Water Optimization
- Cost savings of $200M
- Prevented 2 billion gallons of contaminated water from entering river
Clean Energy Central Asia
- Secure and sustainable energy to benefit 72 million people
Coral Triangle Sustainable
Ecosystem Program
- Long term protection of sustainable fisheries and ecosystem essential to livelihood of 360 million people
Chesapeake Bay Restoration
- Ecosystem protection of the largest U.S. estuary
- 64,000 square-mile watershed; 18 million people
Wisconsin River Recovery
• 7.5 million cubic yards of PCB contaminated sediment removed
Colombia Land Rights
• Providing legal land titles to 20,000 rural landowners, including 10,000 women landowners
Access to Justice Program
- Improving the accountability of the justice sector in Afghanistan for 40 million people
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Guidance
Net Revenue | EPS | ||
Q2-21 | $565M | - $595M | $0.73 - $0.78 |
FY-21 | $2.40B | - $2.55B | $3.45 - $3.60 |
Assumptions FY-21
- Includes intangible amortization of $9 million or $0.12 per share
- 25% effective tax rate for remainder of FY-21
- 54.5 million average diluted shares
- Excludes contributions from future acquisitions
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Summary
- Solid start to fiscal 2021
- Strongly aligned with global climate change driven priorities in:
- Water
- Environment
- Sustainable Infrastructure
- Renewable Energy
- Increasing FY21 guidance
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Questions & Answers
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Attachments
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Disclaimer
Tetra Tech Inc. published this content on 27 January 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 January 2021 22:45:00 UTC.
