Tetra Tech (NasdaqGS:TTEK) Q1 2026 Earnings call January 29, 2026 11:00 AM ET Company ParticipantsDan Batrack - CEORoger Argus - PresidentSabahat Khan - Managing Director of Global ResearchSteve Burdick - EVP and CFOTim Mulrooney - Group Head of Global ServicesConference Call ParticipantsAndy Wittmann - Senior Research AnalystMichael Dudas - Partner and Equity Research AnalystSangita Jain - Senior Equity Research AnalystOperatorGood morning, and thank you for joining the Tetra Tech earnings call. As a remin ...

Financial Data and Key Metrics Changes - The company reported net revenue of $987 million for the first quarter, an increase of 8% from the prior year [5] - Operating income rose to $131 million, up 12% year-over-year [5] - Adjusted earnings per share (EPS) increased by 17% to $0.34, while GAAP EPS was reported at $0.40 [5][12] Business Segment Performance - The Government Services segment generated $382 million in revenue, growing 5% despite a U.S. government shutdown [6] - The Commercial and International Group segment's revenue increased by 10% to $605 million, driven by growth in the UK and Ireland [6][7] - Margins for both segments improved by 40 basis points, with Government Services at 18% and Commercial International at 13% [6][7] Market Data and Key Metrics Changes - Federal work increased by 7%, primarily due to projects with the U.S. Army Corps of Engineers [8] - U.S. state and local markets grew by 10%, driven by municipal water treatment and digital water modernization [8] - International work accounted for 48% of total revenues, growing at a rate of 13% [9] Company Strategy and Industry Competition - The company focuses on water supply, treatment, flood control, and environmental stewardship, which remain in high demand [3] - Strategic growth areas include technology and automation, with plans for acquisitions to enhance capabilities [17][24] - The company aims to leverage its strong balance sheet for investments in growth opportunities [16][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in revenue growth despite challenges like the government shutdown, expecting federal orders to increase in the second half of the fiscal year [10][11] - The company anticipates continued strong demand in water and environmental services, with a forecasted revenue growth rate of 5%-10% for international markets [25][26] - Management highlighted the importance of bipartisan support for future growth, particularly in federal spending [59] Other Important Information - The company announced a 12% increase in its quarterly cash dividend, marking the 47th consecutive quarterly dividend [17] - A stock buyback program was initiated, with $50 million repurchased in the first quarter [18] - The company divested its Norway operation, which was deemed non-core, while acquiring Halvik and Providence to enhance its consulting services [77][80] Q&A Session Summary Question: Strength in Federal Business - Management noted that the 7% growth in federal business was supported by advanced planning and strong relationships with clients, particularly the U.S. Army Corps of Engineers [35][38] Question: International Business Performance - The UK and Ireland have shown strong double-digit growth, while Canada is performing well with significant infrastructure investments [40][42] - Australia is recovering from previous declines, moving from -15% growth to flat performance [44][46] Question: Guidance and Market Conditions - Management indicated that guidance reflects a midpoint of 9% revenue growth, with potential risks from government shutdowns impacting the low end of the range [56][58] Question: M&A Focus and Strategy - The company is looking for strategic acquisitions that could justify higher leverage, with a focus on partnerships that transform the industry [65][66] - Management emphasized the importance of maintaining shareholder value while pursuing growth through acquisitions [72][74]