Tetra Tech Inc
) reported fiscal third-quarter 2014 earnings of 41 cents per share
that came a penny below the Zacks Consensus Estimate. However, the
earnings marked a significant improvement from the prior-year
quarter loss of 47 cents a share.
Tetra Tech, Inc - Earnings Surprise |
The year-over-year growth was driven by the absence of charges
related to the Remediation and Construction Management (RCM)
segment for its fixed-price construction projects that impacted the
prior-year quarter earnings. This apart, in the third-quarter of
2013, the company was also impacted by the goodwill impairment
charges that did not occur in this quarter.
Total revenue increased 2.3% to $629.5 million from $614.8
million in the prior-year period. Revenues, net of subcontractor
costs, were $458.8 million as compared with $475.1 million in the
year-earlier quarter. Total revenue was well ahead of the Zacks
Consensus Estimate of $492 million.
Revenues benefited from the strength in the company's front-end
Engineering and Consulting Services and Technical Support Services
segments, which together contributed about 80% of the company's
Backlog levels increased 6% sequentially and 1.6% year over year
to $1.9 billion in the quarter.
Other Financial Details
Tetra Tech's cash from operations for the quarter was $58.1
million, up from $53.3 million in the comparable prior-year
Tetra Tech also intends to buyback all of the remaining $53
million (as on Jun 29, 2014) of the existing $100 million share
repurchase authorization by the end of this fiscal year.
Following the earnings release, management provided guidance for
the fourth quarter and updated its guidance for full-year
Tetra Tech expects earnings for the fourth quarter of fiscal
2014 in the range of 30-40 cents a share. Revenues, net of
subcontractor costs, for the fourth quarter, are expected to range
from $450 million to $500 million.
For fiscal 2014, Tetra Tech lowered its earnings guidance.
Earnings per share are expected in the band of $1.61-$1.71 as
compared with the prior projection of $1.75-$1.85. Revenues, net of
subcontractor costs, for fiscal 2014, are expected in the range of
$1.85-$1.9 billion, down from $1.9-$2.0 billion forecasted
The Zacks Consensus Estimate for the fourth quarter and fiscal
2014 earnings per share is currently pegged at 49 cents and $1.80
The company is also planning an operational review of its RCM
business, which continues to be sluggish owing to the unfavorable
conditions in the construction market. Following the evaluation,
Tetra Tech expects to initiate a transformation process aimed at
reducing risks and augmenting margins in the fourth quarter. The
company has not included the impact of RCM operational review in
the guidance provided this quarter.
Currently, Tetra Tech has a Zacks Rank #3 (Hold). Some other
stocks that warrant a look in the pollution control industry
include Metalico Inc. (
), Progressive Waste Solutions Ltd. (
) and Ingersoll-Rand Plc (
). All three stocks carry a Zacks Rank #2 (Buy).
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