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Tetra Tech Delivers In-Line Q4 Earnings, Revises Guidance

Premium technical services company Tetra Tech Inc.TTEK reported weaker-than-expected results for fourth-quarter fiscal 2015.

Quarterly earnings per share from ongoing operations came in at 50 cents, up 38.9% year over year. However, the bottom line matched the Zacks Consensus Estimate. The company's earnings benefited from operating efficiency and stringent cost management.

Tetra Tech Inc. (TTEK) - Earnings Surprise | FindTheCompany

For full-year fiscal 2015, earnings from ongoing operations were $1.63 per share, up 27.3% year over year.

Inside the Headlines

Revenues, net of subcontractor costs, fell 7.6% year over year to $427 million. The figure also lagged the Zacks Consensus Estimate of $440 million. The year-over-year decline in revenues was triggered by fall in sales of both Water, Environment and Infrastructure as well as Resource Management & Energy segments.

Water, Environment and Infrastructure segment's net revenue fell 10% year over year to $178.9 million.

Also, net revenue from Resource Management and Energy segment declined 6.8% year over year to $243.2 million.

On the other hand, Remediation and Construction Management segment's revenues came in at $4.8 million, up 98.6% year over year.

For full-year fiscal 2015, net revenue was $1718.7 million compared with $1859.9 million recorded at the end of fiscal 2014.

In the quarter under review, total backlog level fell 5.4% year over year to $1.9 billion. Ongoing operating income increased 24.3% year over year to $45.7 million.

Liquidity & Cash Flow

As of Sep 27, 2015, Tetra Tech's cash and cash equivalents were $135.3 million compared with $122.4 million as of Sep 28, 2014. Long-term debt was $181 million compared with $192.8 million as of Sep 28, 2014.

As of Sep 27, 2015, the company's cash from operations escalated 27.8% year over year to $162.8 million.

In fiscal 2015, Tetra Tech disbursed $118 million to its shareholders, $18 million as dividends and the remaining $100 million in the form of a share repurchase program. However, the company still has another $100 million left for distribution, as its previously launched repurchase program had a gross worth of $200 million.

Outlook Revised

Tetra Tech aims to improve its business by strategic internationalization of its operations. Backed by the Coffey acquisition, the company intends to fortify its engineering and consulting business across the U.S., U.K., Asia Pacific and Australia.

Based on the existing market scenario, the company expects earnings within 35-40 cents and revenues in a range of $400-$450 million for first-quarter fiscal 2016. For full-year fiscal 2016, earnings are anticipated within $1.70-$1.90 per share and revenues are projected in a band of $1.65-$1.85 billion.

To Conclude

Tetra Tech boasts a solid liquidity position that will likely act as one of its major strengths going forward, providing investment opportunities for both organic and inorganic growth. Apart from this, the company's solid backlog levels, coupled with its multi-billion government contracts, are expected to drive growth as well.

Other Stocks to Consider

Tetra Tech currently holds a Zacks Rank #2 (Buy). Other well-ranked stocks in the industry include Advanced Emissions Solutions, Inc. ADES , Eldorado Resorts, Inc. ERI and H2O Innovation Inc. HEOFF . All three stocks carry the same Zacks Rank as Tetra Tech.

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TETRA TECH NEW (TTEK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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