Tetra Tech(US:TTEK)2021-11-24 21:09Company Performance - Revenue for fiscal 2021 increased by 7.3% to $3,213.5 million compared to $2,994.9 million in fiscal 2020[203]. - Net income attributable to Tetra Tech for fiscal 2021 was $232.8 million, reflecting a 33.9% increase from $173.9 million in fiscal 2020[203]. - Diluted earnings per share for fiscal 2021 rose to $4.26, a 34.8% increase from $3.16 in fiscal 2020[203]. - Operating income increased by $37.6 million, or 15.6%, in fiscal 2021 compared to fiscal 2020, reaching $278.7 million[206]. - Adjusted income from operations rose by $32.2 million, or 13.2%, in fiscal 2021, totaling $275.4 million[206]. - U.S. state and local government revenue increased by 22.2% in fiscal 2021, driven by growth in municipal water infrastructure projects[198]. - U.S. federal government revenue grew by 8.8% in fiscal 2021, supported by acquisitions and increased analytics activity[199]. - U.S. commercial revenue decreased by 5.4% in fiscal 2021 due to reduced industrial activity amid the COVID-19 pandemic[200]. - International revenue increased by 7.9% in fiscal 2021, reflecting government stimulus spending and increased commercial activity[201]. Business Segments - Revenue distribution by reportable segment in fiscal 2021: Government Services Group (GSG) at 60.5% and Commercial/International Services Group (CIG) at 41.2%[27]. - GSG provides services in water, environment, sustainable infrastructure, and disaster management, supporting U.S. government clients and development agencies[28]. - CIG supports U.S. commercial clients and international clients, focusing on renewable energy, industrial, and aerospace markets[37]. - CIG created a new High Performance Buildings division, transferring operations with annual revenue of approximately $170 million from the GSG reportable segment to the CIG reportable segment[50]. - Revenue net of subcontractor costs for GSG increased by $120.3 million, or 9.3%, in fiscal 2021, reaching $1.42 billion[210]. Strategic Initiatives - Tetra Tech's growth strategy includes selective acquisitions to broaden service offerings and expand geographic presence[65]. - The company regularly evaluates acquisition opportunities to enhance strategic growth, focusing on strengthening market leadership and driving organic growth[70]. - Acquisitions are funded through cash, debt, or equity, and are seen as a key component of the growth strategy[71]. - Business development activities are supported by centralized resources to enhance corporate branding and marketing efforts[61]. - The company has completed two strategic acquisitions, expected to generate $25 million in synergies annually[110]. Sustainability and Innovation - Tetra Tech aims to be Climate Positive & Carbon Negative by 2030, with a commitment to develop Science Based Targets[69]. - The company has established a Sustainability Program with metrics aligned to the Global Reporting Initiative (GRI) framework, focusing on environmental, economic, and governance impacts[68]. - Tetra Tech's proprietary technologies, known as Tetra Tech Delta, enhance competitive advantage through advanced data analytics and AI-enabled solutions[22]. - The company is investing $30 million in research and development for new technologies aimed at enhancing service delivery[108]. - A new sustainability initiative is projected to reduce operational costs by 15% over the next three years[111]. Workforce and Culture - The company had approximately 21,000 employees at fiscal 2021 year-end, with a significant percentage holding technical and professional degrees[89]. - The company is committed to diversity, equity, and inclusion, with initiatives monitored by a dedicated council[91]. - The company maintains a strong internal networking program to facilitate collaboration and access to technical solutions across its operations[63]. - The company’s ability to attract and retain qualified personnel is critical for providing services and conducting business effectively[132]. Financial Health and Risks - The company's backlog at the end of fiscal 2021 was $3.5 billion, an increase of $241 million, or 7.4%, compared to fiscal 2020[77]. - Approximately two-thirds of the backlog is expected to be recognized as revenue in fiscal 2022, although there are uncertainties regarding realization and profitability[76]. - The company faces risks related to international operations, including legal, political, and economic risks, as well as currency exchange rate fluctuations[111]. - The company must comply with various procurement laws and regulations, and violations could result in sanctions or loss of government contractor status, significantly affecting profits and revenue[120]. - The company is exposed to collection risks if clients in specific geographic areas or industries face adverse conditions, potentially impacting revenue[121][122]. Market Conditions - Ongoing economic uncertainties may impact client spending, with potential revenue fluctuations of up to 10%[113]. - The demand for U.S. government-related services is driven by government program funding, and any significant reduction in federal spending could adversely impact the company's business[115]. - Economic downturns and reductions in government spending could lead to project delays, cancellations, and increased credit losses for the company[108]. - The competitive landscape includes a wide range of firms, from small regional companies to large international firms, impacting service delivery and pricing strategies[73]. Legal and Compliance - Legal proceedings and disputes could result in substantial monetary penalties, potentially exceeding existing insurance coverage[162]. - The company faces significant risks related to employee misconduct and non-compliance with laws, which could lead to fines, penalties, and a negative impact on revenue and profits[165]. - The company must comply with stringent environmental laws, which could result in substantial liabilities if not adhered to[170]. Stock and Shareholder Information - The company repurchased 479,369 shares at an average price of $125.16 per share for a total cost of $60.0 million in fiscal 2021[191]. - The remaining balance under the stock repurchase program as of October 3, 2021, was $147.8 million[191]. - Dividends declared and paid in fiscal 2021 totaled $0.74 per share, with $0.34 in the first two quarters and $0.40 in the last two quarters[190].