Tetra Tech (TTEK) 1 Aug 24 2024 Q3 Earnings call transcript

Tetra Tech's third quarter earnings call for fiscal year 2024 highlighted the company's robust performance, setting new records in revenue, net revenue, backlog, and earnings per share. The call, led by Dan Batrack, CEO, and Steve Burdick, CFO, emphasized the company's strategic focus on high-end consulting and environmental services, particularly in the water sector.

Record Breaking Performance

The third quarter of fiscal year 2024 saw Tetra Tech achieve record-breaking results, with net revenue increasing by 12% to $1.11 billion, and EBITDA increasing by 32% to $129 million. This strong performance was driven by the company's emphasis on front-end advisory and consulting work, which expanded margins to 13.3%, a 120-basis-point increase from the previous year.

Strategic Focus and Expansion

Tetra Tech's strategic focus on high-end consulting and water, environment, and sustainable infrastructure sectors has proven successful, with the company reporting a backlog of over $5 billion, an increase of 19% year-over-year. This growth is attributed to the company's success in expanding its margins, with the Commercial International Group segment generating a 13.9% margin, up from 11% last year.

Global Water Markets and Innovations

The call also highlighted Tetra Tech's expertise in global water markets and its innovative approaches to high-performance buildings, particularly in the areas of cooling for high-tech data centers and chip fabs. These initiatives align with the company's strategic focus on sustainable infrastructure and its commitment to lead the market with its advanced water treatment expertise.

Financial and Capital Allocation

Steve Burdick, CFO, provided an update on the company's financial performance, including a 41% increase in EBITDA and a 43% increase in operating income. Burdick also announced a 12% increase in the quarterly dividend, reflecting the company's strong financial health and commitment to shareholder value. Additionally, Tetra Tech's successful capital allocation strategy, including its disciplined approach to M&A, was highlighted, with a focus on technology innovations and a strong pipeline for acquisitions.

Looking Ahead

The call concluded with an optimistic outlook for fiscal year 2024, with increased guidance for net revenue and earnings per share. Tetra Tech's focus on high-end consulting and environmental services, coupled with its strategic investments in technology and innovation, positions the company well for continued growth and success in the coming years.