Tetra Tech, Inc. TTEK reported second-quarter fiscal 2024 (ended Mar 31, 2024) adjusted earnings of $1.42 per share, which surpassed the Zacks Consensus Estimate of $1.31. The bottom line surged 21.4% year over year driven by strong momentum in each of its segments.
The bottom line also surpassed management’s projection of earnings of $1.25-$1.35 per share.
Revenue & Segmental Performance
Tetra Tech generated adjusted revenues of $1.3 billion, reflecting a year-over-year increase of 8.1%. Adjusted net revenues (adjusted revenues minus subcontractor costs) were $1.1 billion, up 9% year over year. The quarterly top line surpassed the management’s guidance of $990 million-$1.04 billion.
Tetra Tech’s revenues exceeded the Zacks Consensus Estimate of $1.0 billion.
The backlog at the end of the fiscal quarter was $4.7 billion, up 24% year over year.
Revenues from U.S. Federal customers (accounting for 31% of the quarter’s revenues) were up 14% year over year, supported by higher federal environmental sales. U.S. Commercial sales (17% of the quarter’s revenues) decreased 2% year over year due to environmental remediation timing.
U.S. State and Local sales (11% of the quarter’s revenues) increased 14% year over year, driven by strength in advanced water treatment. International sales (41% of the quarter’s revenues) were up 17% year over year, backed by increased U.K. water planning and design sales.
Tetra Tech reports revenues under the segments discussed below:
Net sales of the Government Services Group segment were $466 million, up 15% year over year. The Zacks Consensus Estimate for the segment’s revenues was $429 million. Revenues from the Commercial/International Services Group segment totaled $586 million, representing a year-over-year increase of 10%. The consensus estimate for the segment’s revenues was $601 million.
Tetra Tech, Inc. Price and EPS Surprise 
Tetra Tech, Inc. price-eps-surprise | Tetra Tech, Inc. Quote
Margin Profile
In the fiscal second quarter, Tetra Tech’s subcontractor costs totaled $199 million, reflecting an increase of 5.5% from the year-ago quarter. Other costs of revenues (adjusted) were $845.1 million, up 5.5% from the fiscal second quarter of 2023. Selling, general and administrative expenses were $89.8 million, up 9.1% from the year-ago fiscal quarter.
Operating income (adjusted) increased 34.1% year over year to $118 million while the adjusted margin decreased 210 basis points to 11.2%.
Balance Sheet and Cash Flow
While exiting second-quarter fiscal 2024, Tetra Tech had cash and cash equivalents of $210.3 million compared with $168.8 million recorded at the end of the fourth quarter of fiscal 2023. Long-term debt was $951 million compared with $879.5 million recorded at the end of fourth-quarter fiscal 2023.
In the first six months of fiscal 2024, Tetra Tech generated net cash of $112.2 million from operating activities compared with $113.1 million in the prior fiscal year’s comparable period. Capital expenditure was $7.5 million, down 27.5% year over year. In the said fiscal period, TTEK’s proceeds from borrowings amounted to $180 million while repayments on long-term debt totaled $110 million.
Tetra Tech, carrying a current Zacks Rank #3 (Hold), distributed dividends totaling $27.8 million in the first six months of fiscal 2024. This compares favorably with dividends of $24.4 million distributed in the year-ago fiscal period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fiscal 2024 Outlook Raised
For fiscal 2024 (ending September 2024), Tetra Tech anticipates net revenues to be $4.21-$4.31 billion compared with $4.15-$4.30 billion expected earlier. Adjusted earnings are predicted to be $6.15-$6.25 per share compared with $5.90-$6.20 predicted earlier.
For the third quarter of fiscal 2024 (ending June 2024), management estimates net revenues to be $1.05-$1.10 billion. Adjusted earnings are projected to be $1.50 – $1.55 per share.
Performance of Other Industrial Companies
IDEX Corporation’s IEX second-quarter 2024 adjusted earnings of $1.88 per share surpassed the Zacks Consensus Estimate of $1.75. On a year-over-year basis, the bottom line decreased approximately 10.1%.
IDEX’s net sales of $800.5 million underperformed the consensus estimate of $805 million. The top line also decreased 5.3% year over year.
A. O. Smith Corporation’s AOS second-quarter 2024 adjusted earnings of $1.00 per share surpassed the Zacks Consensus Estimate of 99 cents. The bottom line increased 6% on a year-over-year basis.
Net sales of $978.8 million missed the consensus estimate of $995 million. However, the top line inched up 1% year over year, driven by strong demand for commercial water heaters in North America.
W.W. Grainger, Inc. GWW has reported earnings per share of $9.62 in second-quarter 2024, beating the Zacks Consensus Estimate of $9.58. The bottom line improved 0.1% year over year.
Grainger’s quarterly revenues rose 3.5% year over year to $4.24 billion. The top line missed the consensus estimate of $4.27 billion.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.2% per year. So be sure to give these hand picked 7 your immediate attention.
Tetra Tech, Inc. (TTEK) : Free Stock Analysis Report
A. O. Smith Corporation (AOS) : Free Stock Analysis Report
W.W. Grainger, Inc. (GWW) : Free Stock Analysis Report
IDEX Corporation (IEX) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
