Tetra Tech Q3 Earnings & Revenues Top Estimates, Increase Y/Y

Core Viewpoint - Tetra Tech, Inc. reported strong third-quarter fiscal 2025 results, with adjusted earnings per share of 43 cents, exceeding both the Zacks Consensus Estimate and management's guidance range, reflecting robust performance across all segments [1][2]. Revenue & Segmental Performance - Tetra Tech generated revenues of $1.37 billion, a year-over-year increase of 1.9%, surpassing management's guidance of $1.10-$1.20 billion [2] - Adjusted net revenues were $1.15 billion, up 3.9% year over year, exceeding the Zacks Consensus Estimate of $1.14 billion [2] - The backlog at the end of the fiscal third quarter was $4.28 billion, down 18.2% year over year [3] - Revenues from U.S. Federal customers increased by 46% year over year, while U.S. Commercial sales decreased by 4% due to lower renewable energy sales [4] - U.S. State and Local sales rose by 30% year over year, driven by disaster response, while international sales decreased by 1% due to softness in Australia's infrastructure [5] - Government Services Group segment revenues were $429 million, up 29% year over year, while Commercial/International Services Group revenues totaled $633 million, a 2% increase [5] Margin Profile - Subcontractor costs totaled $216.8 million, down 7.6% from the previous year, while other adjusted costs of revenues were $901.5 million, up 1.7% [6] - Adjusted operating income increased by 37.2% year over year to $159.4 million, with an adjusted margin increase of 300 basis points to 11.6% [7] Balance Sheet and Cash Flow - At the end of the fiscal third quarter, Tetra Tech had cash and cash equivalents of $242.8 million, up from $232.7 million at the end of the previous quarter [8] - Long-term debt increased to $862.5 million from $812.6 million [8] - In the first nine months of fiscal 2025, net cash generated from operating activities was $356.8 million, compared to $253.1 million in the prior year [9] - Capital expenditure was $13.4 million, an increase of 18.3% year over year [9] Shareholder-Friendly Policies - Tetra Tech distributed dividends totaling $48 million in the first nine months of fiscal 2025, compared to $43.3 million in the previous year [11] - The company repurchased shares worth $200 million during the same period [11] Fiscal 2025 Outlook - For fiscal 2025, Tetra Tech anticipates net revenues in the range of $4.454-$4.554 billion, compared to earlier expectations of $4.400-$4.765 billion [12] - Adjusted earnings are projected to be $1.49-$1.54 per share, an increase from the previous estimate of $1.42-$1.52 [12] - For the fiscal fourth quarter, management estimates net revenues of $1.04-$1.1 billion and adjusted earnings of 38-43 cents per share [13]