Yahoo Finance Why Is Tetra (TTEK) Up 2.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Tetra Tech (TTEK). Shares have added about 2.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Tetra due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Tetra Tech Beats on Q2 Earnings, Raises 2024 Guidance
Tetra Tech reported second-quarter fiscal 2024 (ended Mar 31, 2024) adjusted earnings of $1.42 per share, which surpassed the Zacks Consensus Estimate of $1.31. The bottom line surged 21.4% year over year driven by strong momentum in each of its segments.
The bottom line also surpassed management’s projection of earnings of $1.25-$1.35 per share.
Revenue & Segmental Performance
Tetra Tech generated adjusted revenues of $1.3 billion, reflecting a year-over-year increase of 8.1%. Adjusted net revenues (adjusted revenues minus subcontractor costs) were $1.1 billion, up 9% year over year. The quarterly top line surpassed the management’s guidance of $990 million-$1.04 billion.
Tetra Tech’s revenues exceeded the Zacks Consensus Estimate of $1.0 billion.
The backlog at the end of the fiscal quarter was $4.7 billion, up 24% year over year.
Revenues from U.S. Federal customers (accounting for 31% of the quarter’s revenues) were up 14% year over year, supported by higher federal environmental sales. U.S. Commercial sales (17% of the quarter’s revenues) decreased 2% year over year due to environmental remediation timing.
U.S. State and Local sales (11% of the quarter’s revenues) increased 14% year over year, driven by strength in advanced water treatment. International sales (41% of the quarter’s revenues) were up 17% year over year, backed by increased U.K. water planning and design sales.
Tetra Tech reports revenues under the segments discussed below:
Net sales of the Government Services Group segment were $466 million, up 15% year over year. The Zacks Consensus Estimate for the segment’s revenues was $429 million. Revenues from the Commercial/International Services Group segment totaled $586 million, representing a year-over-year increase of 10%. The consensus estimate for the segment’s revenues was $601 million.
Margin Profile
In the fiscal second quarter, Tetra Tech’s subcontractor costs totaled $199 million, reflecting an increase of 5.5% from the year-ago quarter. Other costs of revenues (adjusted) were $845.1 million, up 5.5% from the fiscal second quarter of 2023. Selling, general and administrative expenses were $89.8 million, up 9.1% from the year-ago fiscal quarter.
Operating income (adjusted) increased 34.1% year over year to $118 million while the adjusted margin decreased 210 basis points to 11.2%.
Balance Sheet and Cash Flow
While exiting second-quarter fiscal 2024, Tetra Tech had cash and cash equivalents of $210.3 million compared with $168.8 million recorded at the end of the fourth quarter of fiscal 2023. Long-term debt was $951 million compared with $879.5 million recorded at the end of fourth-quarter fiscal 2023.
In the first six months of fiscal 2024, Tetra Tech generated net cash of $112.2 million from operating activities compared with $113.1 million in the prior fiscal year’s comparable period. Capital expenditure was $7.5 million, down 27.5% year over year. In the said fiscal period, TTEK’s proceeds from borrowings amounted to $180 million while repayments on long-term debt totaled $110 million.
Shareholder-Friendly Policies
Tetra Tech distributed dividends totaling $27.8 million in the first six months of fiscal 2024. This compares favorably with dividends of $24.4 million distributed in the year-ago fiscal period.
Fiscal 2024 Outlook Raised
For fiscal 2024 (ending September 2024), Tetra Tech anticipates net revenues to be $4.21- $4.31 billion compared with $4.15-$4.30 billion expected earlier. Adjusted earnings are predicted to be $6.15-$6.25 per share compared with $5.90-$6.20 predicted earlier.
For the third quarter of fiscal 2024 (ending June 2024), management estimates net revenues to be $1.05-$1.10 billion. Adjusted earnings are projected to be $1.50 - $1.55 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, Tetra has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Tetra has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Tetra Tech, Inc. (TTEK) : Free Stock Analysis Report
