Earnings Call Q4 25 November 13, 2025 Dan Batrack, Chairman & CEO Steve Burdick, Executive VP & CFO Roger Argus, President Forward-Looking Statements & Non-GAAP Financial Measures All statements in this communication other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including any statements of the plans, strategies and objectives for future operations, profitability, strategic value creation, risk profile and investment strategies, a ...

Core Points - U.S. stocks experienced a decline, with the Dow Jones index dropping over 100 points on Thursday [1] - Spectrum Brands Holdings Inc reported a quarterly adjusted EPS of $2.61, significantly exceeding the analyst consensus estimate of $0.86 [1] - The company's quarterly sales were $733.500 million, which fell short of the analyst consensus estimate of $741.111 million [1] Company Performance - Spectrum Brands Holdings shares surged 13.2% to $60.28 following the earnings report [2] - Ondas Holdings Inc saw a 24.4% increase in shares to $6.86 after reporting better-than-expected third-quarter results and raising FY25 sales guidance [4] - Firefly Aerospace Inc's shares rose 21.7% to $22.29 after exceeding quarterly financial expectations and raising FY25 sales guidance [4] - Cellebrite DI Ltd shares increased by 21.7% to $19.44 after reporting strong third-quarter results and raising FY25 sales guidance [4] - Sealed Air Corp shares gained 19.9% to $43.60 [4] - Dillard's Inc reported better-than-expected quarterly results, leading to an 18.3% rise in shares to $720.00 [4] - Digi International Inc shares jumped 17.5% to $42.30 following positive quarterly results [4] - Sally Beauty Holdings Inc shares rose 17.5% to $17.27 after reporting upbeat quarterly results [4] - Tetra Tech Inc gained 11.9% to $36.31 following strong quarterly earnings [4] - On Holding AG shares increased by 7.4% to $44.58 after reporting positive third-quarter earnings and issuing FY2025 sales guidance above expectations [4] - Nice Ltd shares rose 6.3% to $132.14 following strong quarterly sales [4]

Core Insights - Tetra Tech reported quarterly earnings of $0.45 per share, exceeding the Zacks Consensus Estimate of $0.40 per share, and showing an increase from $0.38 per share a year ago, resulting in an earnings surprise of +12.50% [1] - The company achieved revenues of $1.16 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 9.12%, and showing a slight increase from $1.14 billion year-over-year [2] Earnings Performance - Tetra Tech has consistently surpassed consensus EPS estimates over the last four quarters, indicating strong performance in earnings [2] - The company also topped consensus revenue estimates four times in the past four quarters, reflecting robust revenue growth [2] Stock Performance and Outlook - Tetra shares have declined approximately 19.7% year-to-date, contrasting with the S&P 500's gain of 16.4%, indicating underperformance in the market [3] - The future performance of Tetra's stock will largely depend on management's commentary during the earnings call and the subsequent revisions of earnings estimates [3][4] Earnings Estimates and Industry Outlook - The current consensus EPS estimate for the upcoming quarter is $0.30 on revenues of $968 million, while for the current fiscal year, it is $1.46 on revenues of $4.08 billion [7] - The Pollution Control industry, to which Tetra belongs, is currently ranked in the top 35% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Revenue and Earnings - Revenue increased 9% year-over-year to $4.79 billion for fiscal 2025[3] - Fourth quarter net revenue reached a record $1.16 billion, with operating income up 26% year-over-year to $181 million[4] - Annual EPS was $0.93, with adjusted annual EPS at a record $1.56, reflecting a 24% increase year-over-year[4] - Total revenue for 2025 reached $5,442.6 million, a 4.7% increase from 2024's total of $5,198.7 million[26] - Net revenue for 2025 was $4,617.3 million, up from $4,321.9 million in 2024, reflecting a growth of 6.9%[26] - Adjusted EBITDA for 2025 increased to $661.7 million, a rise of 13.4% from $584.0 million in 2024[27] - The GSG segment generated $2,673.9 million in revenue for 2025, up from $2,483.4 million in 2024, marking an increase of 7.7%[26] - The CIG segment reported revenue of $2,844.6 million in 2025, compared to $2,786.7 million in 2024, reflecting a growth of 2.1%[26] Cash Flow and Dividends - Operating cash flow for the year was a record $458 million, up 28% year-over-year[4] - The company paid cash dividends of $0.065 per share in the three months ended September 28, 2025, compared to $0.058 in the prior year, an increase of 12.1%[21] - Tetra Tech's Board approved a quarterly dividend of $0.065 per share, a 12% increase year-over-year[7] - Cash flows from operating activities for the fiscal year ended September 28, 2025, were $457,685, an increase of 27.6% compared to $358,708 in 2024[24] Financial Position - Cash and cash equivalents decreased to $168,372 at the end of the fiscal year 2025 from $232,689 in 2024, a decline of 27.6%[24] - Total assets increased to $4,282,174 as of September 28, 2025, compared to $4,192,676 in 2024, representing a growth of 2.1%[19] - Total liabilities rose to $2,502,010 in 2025, up from $2,362,263 in 2024, indicating an increase of 5.9%[19] - Long-term debt decreased to $763,363 in 2025 from $812,634 in 2024, a reduction of 6.1%[19] Profitability - Net income attributable to Tetra Tech for the fiscal year ended September 28, 2025, was $247,724, down 25.7% from $333,382 in 2024[21] - Basic earnings per share attributable to Tetra Tech for the three months ended September 28, 2025, was $0.49, up from $0.36 in the same period of 2024, reflecting a growth of 36.1%[21] - The company reported a net income tax expense of $129.7 million for 2025, compared to $130.0 million in 2024, a slight decrease of 0.2%[27] - Interest expense for 2025 was $30.8 million, up from $37.3 million in 2024, indicating a decrease of 17.4%[27] Future Outlook - For fiscal 2026, net revenue is expected to range from $4.05 billion to $4.25 billion, indicating a year-over-year growth of 5% to 11%[10] - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[26] - The backlog for high-voltage engineering projects doubled in the fourth quarter, indicating strong demand for services[8] Stock Repurchase - The company repurchased $50 million of common stock in the fourth quarter, with $598 million remaining under approved repurchase programs[7] Subcontractor Costs - Subcontractor costs for 2025 totaled $825.3 million, an increase from $876.8 million in 2024, showing a decrease of 5.9%[26]

Core Insights - Tetra Tech, Inc. (TTEK) is set to announce its fourth-quarter fiscal 2025 results on November 12, with expected revenues of $1.07 billion, reflecting a 6.9% decline year-over-year, while adjusted earnings are projected at 40 cents per share, indicating a 5.3% increase from the previous year [1][9]. Group 1: Financial Performance Expectations - The consensus estimate for Tetra Tech's earnings has remained stable over the past 60 days, with a history of outperforming estimates in the last four quarters, averaging a surprise of 7.1% [2]. - The company anticipates overall revenues for the fourth quarter to be between $1.0 billion and $1.1 billion, with the Commercial / International Services Group (CIG) segment expected to see a 6.2% year-over-year revenue increase to $619 million [4]. Group 2: Factors Influencing Performance - Increased activity in U.S. Federal and State & Local client sectors is expected to positively impact Tetra Tech's quarterly results, particularly through its Government Services Group (GSG) segment, which benefits from a strong pipeline of advanced water infrastructure projects and disaster response programs [3]. - The CIG segment is likely to benefit from higher planning and design activities in water programs in the UK and Ireland, as well as strength in the high-performance buildings market [4]. - Recent acquisitions, including SAGE Group Holdings and Carron + Walsh, are expected to enhance Tetra Tech's digital automation solutions and expand its European presence, contributing positively to revenues [5]. Group 3: Challenges and Risks - Rising input costs and expenses are anticipated to negatively impact Tetra Tech's performance, with significant exposure to overseas markets potentially leading to foreign currency headwinds affecting profitability [6][9].

Core Insights - Sarasin & Partners LLP sold 4,273,853 shares of Tetra Tech, valued at approximately $155.35 million, during Q3 2025, reducing its holdings to 409,723 shares worth $13.8 million, which is 0.14% of its $10.2 billion U.S. equity portfolio [2][3] Company Overview - Tetra Tech provides consulting and engineering services, focusing on water resources, climate change, energy management, and infrastructure, generating revenue from government contracts, commercial clients, and international development agencies [4][6] - The company reported a total revenue of $5.20 billion and a net income of $333.38 million for the trailing twelve months (TTM) [3] Market Performance - Tetra Tech's stock price as of October 9, 2025, was $34.30, reflecting a 30.7% decline over the past year and underperforming the S&P 500 by 47.6 percentage points [3] - The stock has seen a recovery of 16% since April 2025, following a strong fiscal third quarter where earnings per share increased by 34% year over year [10] Client Base - Primary customers include federal, state, and local governments, utilities, natural resource companies, and organizations focused on sustainable infrastructure and environmental solutions [5][6] Investment Implications - The significant reduction in Sarasin's position in Tetra Tech, by over 90%, suggests a lack of confidence in the company's future business prospects, potentially due to headwinds from government spending cuts and increased scrutiny on government contracts [9][10]

Core Insights - Zacks Premium offers tools for investors to enhance their stock market strategies, including daily updates on Zacks Rank and Industry Rank, research reports, and stock screens [1][2] Zacks Style Scores - Zacks Style Scores are indicators that rate stocks based on value, growth, and momentum methodologies, helping investors identify stocks likely to outperform the market in the next 30 days [2][3] - Stocks are rated from A to F, with A indicating the highest potential for outperformance [3] Value Score - The Value Score focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, and Price/Sales to find attractive investment opportunities [3] Growth Score - The Growth Score evaluates a company's future prospects by analyzing projected and historical earnings, sales, and cash flow to identify stocks with sustainable growth potential [4] Momentum Score - The Momentum Score identifies trends in stock prices and earnings outlooks, helping investors time their entry into positions based on recent price changes and earnings estimate revisions [5] VGM Score - The VGM Score combines the three Style Scores to provide a comprehensive rating, identifying stocks with the best value, growth forecasts, and momentum [6] Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to guide investors in building successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +23.64% since 1988, significantly outperforming the S&P 500 [7][8] Stock to Watch: Tetra Tech (TTEK) - Tetra Tech is a leading provider of consulting and technical services, focusing on water, environmental, and alternative energy solutions for a diverse client base [11] - TTEK holds a 3 (Hold) rating on the Zacks Rank, with a VGM Score of A and a Momentum Style Score of B, indicating potential for upward movement [12] - Recent earnings estimates for TTEK have been revised upwards, with the Zacks Consensus Estimate increasing by $0.04 to $1.51 per share, and an average earnings surprise of +7.1% [12][13]

Group 1: Company Performance - Tetra Tech, Inc. (TTEK) has shown solid momentum, particularly in its Government Services Group (GSG) segment, which saw net sales increase by 15.1% year over year in the first nine months of fiscal 2025 due to advanced water infrastructure projects and disaster response programs [1][9] - The Commercial / International Services Group (CIG) segment experienced a revenue increase of approximately 1% year over year, driven by higher planning and design activities in water programs in the UK and Ireland, as well as growth in the high-performance buildings market [1][9] Group 2: Acquisitions and Expansion - Tetra Tech has strengthened its product portfolio through strategic acquisitions, including SAGE Group Holdings and Carron + Walsh, enhancing its digital automation capabilities and expanding its presence in Europe [2] - The acquisition of Convergence Controls & Engineering allows Tetra Tech to offer integrated automation platform solutions across the water and energy sectors, further solidifying its GSG segment [3] Group 3: Shareholder Returns - The company is committed to rewarding shareholders, distributing dividends totaling $48 million (up 10.9% year over year) and repurchasing shares worth $200 million in the first nine months of fiscal 2025 [4] - Tetra Tech increased its dividend rate by 16.7% in May 2025, reflecting its strong financial position [4] Group 4: Financial Challenges - Despite positive revenue growth, Tetra Tech faces challenges from rising costs, with total cost of sales increasing by 6.9% in the first nine months of fiscal 2025 due to higher input costs [6] - The company reported high selling, general, and administrative expenses of $255 million during the same period, which could impact profitability [6] - Tetra Tech's long-term debt rose to $862.5 million, primarily due to the SAGE acquisition, raising concerns about financial obligations [7]

Core Insights - The article emphasizes the importance of utilizing Zacks Premium for investors to enhance their stock market strategies and confidence in investing [1] Zacks Style Scores - Zacks Style Scores are indicators designed to help investors select stocks with the highest potential to outperform the market within 30 days, rated from A to F based on value, growth, and momentum characteristics [3] - The Value Score identifies attractive and discounted stocks using various financial ratios such as P/E and Price/Sales [4] - The Growth Score focuses on a company's financial health and future outlook, analyzing projected and historical earnings and cash flow [5] - The Momentum Score helps investors capitalize on price trends by assessing recent price changes and earnings estimate shifts [6] - The VGM Score combines all three Style Scores, providing a comprehensive indicator for evaluating stocks based on value, growth, and momentum [7] Zacks Rank and Performance - The Zacks Rank is a proprietary model that leverages earnings estimate revisions to guide investors in building successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +23.75% since 1988, significantly outperforming the S&P 500 [8] - There are typically over 800 top-rated stocks available, making it essential for investors to utilize Style Scores to narrow down their choices [9] - For optimal returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B, while also considering 3 (Hold) stocks with similar scores for potential upside [10] Company Spotlight: Tetra Tech (TTEK) - Tetra Tech is a leading provider of consulting and technical services, focusing on water, environmental, and alternative energy solutions for a diverse client base, including government agencies [12] - TTEK holds a 3 (Hold) Zacks Rank and has a VGM Score of A, indicating strong growth potential with a forecasted year-over-year earnings growth of 19.8% for the current fiscal year [13] - The company has seen a recent upward revision in earnings estimates, with the Zacks Consensus Estimate increasing by $0.04 to $1.51 per share, alongside an average earnings surprise of +7.1% [13][14]

Industry Overview - The Zacks Pollution Control industry is experiencing strong demand for air pollution control products due to increasing greenhouse gas emissions and associated health risks [1] - Stringent regulations and emission standards globally are expected to continue driving demand for industry participants [1][5] Major Trends - Rapid urbanization and rising greenhouse gas emissions from the industrial sector are increasing the demand for air quality control systems [4] - Public awareness of health risks related to air pollution is fueling market growth [4] - The expansion of infrastructure projects in developing countries is boosting demand for pollution abatement equipment [4] - Strict emission standards and laws implemented globally are augmenting demand for pollution-control equipment [5] - The adoption of AI and IoT in industrial processes is enabling real-time monitoring of air pollution sources, driving demand for pollution abatement technologies [5] Challenges - The growing preference for renewable energy sources is restraining demand for industrial emission-abatement products [6] - Supportive government policies for renewable energy and the rapid adoption of electric vehicles are negatively impacting the industry's prospects [6] Industry Performance - The Zacks Pollution Control industry has underperformed the broader Industrial Products sector and the S&P 500 index over the past year, declining 7.3% compared to the sector's increase of 9.6% and the S&P 500's increase of 15.5% [9] Valuation - The industry is currently trading at a forward P/E ratio of 20.20X, compared to the S&P 500's 22.85X and the sector's 19.81X [12] Key Companies - **Atmus Filtration**: A leader in industrial filtration with a Zacks Rank 2 (Buy), has seen a 32.3% share price increase over the past year [17][18] - **Donaldson Company**: Engaged in manufacturing filtration systems, holds a Zacks Rank 2, and has gained 1% in the past year [21][22] - **Fuel Tech**: Develops air pollution control technology, with a Zacks Rank 2 and a 163.9% share price increase over the past year [25][26] - **Tetra Tech**: Provides consulting and engineering services, holds a Zacks Rank 3 (Hold), and has seen a 20.1% increase in shares over the past six months despite a 23.5% decline over the past year [29][30]