Tetra Tech Q4 Earnings & Revenues Top Estimates, Increase Y/Y

Core Insights - Tetra Tech, Inc. (TTEK) reported adjusted earnings of 45 cents per share for Q4 fiscal 2025, exceeding the Zacks Consensus Estimate of 40 cents and management's guidance of 38-43 cents, marking an 18.4% year-over-year increase driven by strong segment performance [1][9] Revenue & Segmental Performance - Tetra Tech generated revenues of $1.33 billion, a 3.2% year-over-year decrease, while adjusted net revenues were $1.16 billion, reflecting a 16.2% year-over-year increase, surpassing management's guidance of $1.04-$1.1 billion and the Zacks Consensus Estimate of $1.06 billion [2][9] - The backlog at the end of Q4 was $4.14 billion, down 23% year over year [3] - Revenues from U.S. Federal customers increased by 22% year over year, accounting for 21% of total revenues, while U.S. Commercial sales decreased by 2% due to lower renewable energy sales [4] - U.S. State and Local sales rose by 19% year over year, driven by municipal water infrastructure and digital water automation, and international sales increased by 9% year over year, supported by the UK's water and Canada's clean energy programs [5] Margin Profile - Subcontractor costs totaled $166.8 million, down 27.5% year over year, while other adjusted costs of revenues were $889.2 million, down 1.1% [6] - Adjusted operating income increased by 12.4% year over year to $171.4 million, with the adjusted margin rising by 180 basis points to 12.9% [7] Balance Sheet and Cash Flow - At the end of Q4, Tetra Tech had cash and cash equivalents of $167.5 million, down from $232.7 million a year ago, and long-term debt decreased to $763.4 million from $812.6 million [8] - In fiscal 2025, Tetra Tech generated net cash of $457.7 million from operating activities, up from $358.7 million in the prior year, with capital expenditure at $18.6 million, a 2.7% year-over-year increase [10] Shareholder-Friendly Policies - Tetra Tech distributed dividends totaling $65 million in fiscal 2025, an increase from $58.8 million in the previous year, and repurchased shares worth $250 million [11] Fiscal 2026 Outlook - For fiscal 2026, Tetra Tech anticipates net revenues in the range of $4.05-$4.25 billion, a decrease from $4.62 billion in fiscal 2025, with adjusted earnings projected at $1.40-$1.55 per share, down from $1.56 per share in fiscal 2025 [12] - For Q1 fiscal 2026, management estimates net revenues of $950 million-$1.0 billion and adjusted earnings of 30-33 cents per share [13]