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- **Record Growth & Margins**: FY2025 revenue +10%, operating margin +80bps to 14.3%, driven by fixed-price contracts and reduced low-margin work.
- **Backlog Dynamics**: Flat YoY at $4.14B due to shorter federal contracts, but state/local/backlog up 10%-15%.
- **M&A & Capital Allocation**: $250M buybacks in FY2025, active pipeline for 2%-7% revenue contributions via acquisitions.
- **Strategic Shifts**: Data center water management, defense, and international infrastructure (UK, Canada) driving growth. Federal delays in digital initiatives, but repositioning for ports and defense markets.

**【CEO Summary Section】**
- **Record Financial Performance**: Q4 and FY2025 ended with record net revenue ($1.07B), operating income ($168M), and EPS ($0.44). FY2025 revenue grew 10%, operating income 23%, and EPS 29%.
- **Margin Expansion**: Operating margin expanded to 14.3% (up 80bps YoY), driven by fixed-price contracts (50% of revenue) and reduced low-margin USAID work.
- **Strategic Shifts**: Transitioned to higher-margin water infrastructure, data center water management, and defense projects. International growth (45% of revenue) led by UK, Canada, and Australia.
- **Backlog Dynamics**: Flat YoY at $4.14B due to shorter federal task orders, but state/local and commercial backlogs offset federal contraction.

**【CFO Financial Commentary】**
- **Financial Strength**: GAAP net income $420M, Non-GAAP EPS $1.56 (24% YoY growth). Cash flow from operations $458M, net debt $600M (leverage 0.9x).
- **Capital Allocation**: $250M buybacks in FY2025, $598M remaining under buyback plan. M&A pipeline active, targeting 2%-7% revenue contributions annually.
- **Dividend Growth**: 12% dividend increase to $0.44Q4, reflecting 42nd consecutive dividend payout.

**【Q&A Key Highlights】**
- **Backlog & Revenue Decoupling**: Federal contracts now issued quarterly vs. annually, reducing visibility but maintaining revenue. State/local and commercial backlogs grew 10%-15%.
- **International Growth**: UK ($23M contract), Canada ($200B infrastructure), and Australia (bottoming out after 10% decline). Data center water management a key growth driver.
- **M&A Strategy**: Strong balance sheet ( revolver dry powder, 2% interest rate) enables acquisitions at 1-2x EBITDA. Focus on mid-sized firms with complementary water expertise.
- **Digital Initiatives**: SaaS revenue flat at $25M due to federal delays, but repositioning for ports, defense, and international markets (e.g., Heathrow).

Tetra Tech, Inc. (TTEK) Q4 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

TTEK

TTEK fundamentals

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