Tetra Tech Inc. (TTEK) reported fourth-quarter and full year fiscal 2011 financial results, with earnings per share of 42 cents, above the Zacks Consensus Estimate of 40 cents and the prior-year earnings of 35 cents per share.
For fiscal 2011, earnings per share were $1.43, above the Zacks Consensus Estimate of $1.41 cents and $1.21 in fiscal 2010. The company achieved record results this year, exceeding its 15% long-term growth goals for revenue and income. Tetra Tech benefited from strong demand for its water-related services provided to mining, energy and industrial clients.
Total Revenue
Total revenue in the quarter was $675.7 million, an increase of 16.0% year over year. Revenue, net of subcontractor costs, was $475.9 million compared with $391.4 million in the prior-year quarter. Subcontractor cost in the quarter was lower at $199.7 million compared with $206.7 million a year ago.
For fiscal 2011, total revenue in the quarter was $2,573.1 million, an increase of 19.3% year over year. Revenue, net of subcontractor costs, was $1,792.3 million compared with $1,431.0 million in the prior-year quarter. Subcontractor cost in the quarter was $780.8 million compared with $741.0 million.
Backlog at the end of the year was $1.95 billion, up 5.2% from $1.85 billion at the end of fiscal 2010.
Income
Operating income in the quarter amounted to $43.4 million compared with $37.1 million in the prior-year quarter.
Cash Flow
Tetra Tech generated cash from operations of $33.2 million in the fourth quarter compared with $42.3 million in the prior-year period.
Outlook
The company expects diluted earnings per share to be in the range of 33 cents to 36 cents in the first quarter of fiscal 2012. Revenue, net of subcontractor cost, is expected to be in the range of $450 million to $500 million in the quarter.
For fiscal 2011, revenue, net of subcontractor cost, is expected to be in the range of $1.78 billion to $1.80 billion and diluted earnings per share are expected in a band of $1.50 to $1.63. Revenue, net of subcontractor costs, for fiscal 2012 is expected to range from $1.9 billion to $2.1 billion. During the year the company will benefit from growth in the international and commercial markets and stability in the government markets.
Tetra Tech Inc. is a leading provider of consulting, engineering, program management, construction and technical services focusing on resource management and infrastructure. It serves clients by providing cost-effective and innovative solutions to fundamental needs in areas like water, environmental and alternative energy resources. It typically begins at the earliest stage of a project by applying science to problems and developing solutions tailored to clients' needs and resources. Its solutions may span the entire life cycle of the project and include applied science, research and technology, engineering, design, construction management, construction, operations and maintenance, and information technology. The major competitors of Tetra Tech are Arcadis NV (ARCAY.PK), Shaw Group Inc. (SHAW) and URS Corporation (URS).
We currently maintain our Neutral rating on Tetra Tech Inc. with a Zacks #2 Rank (short-term Buy recommendation) over the next one-to-three months.
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