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Tetra Tech (TTEK) Beats Q3 Earnings & Revenue Estimates

Tetra Tech, Inc. TTEK reported better-than-expected results for third-quarter fiscal 2018 (ended June 2018).

Earnings/Revenues

Quarterly adjusted earnings came in at 71 cents per share, up 34% year over year. The bottom line also outpaced the Zacks Consensus Estimate of 65 cents.

Revenues in the fiscal third quarter came in at $570.4 million, up 14.4% year over year. The top line also surpassed the Zacks Consensus Estimate of $541 million.

Segmental Break-Up

Revenues of the Government Services Group in the reported quarter came in at $301 million, up 13.1% year over year.

The Commercial / International Services Group revenues came in at $267.8 million, up 15.7% year over year.

Tetra Tech, Inc. Price, Consensus and EPS Surprise

Tetra Tech, Inc. Price, Consensus and EPS Surprise | Tetra Tech, Inc. Quote

Costs/Margins

Subcontractor costs in the quarter under review were $194.4 million, up from $187.1 million recorded in the year-ago period. Cost of revenues in the fiscal third quarter were $460.8 million, up 12.9% year over year. Gross profit margin in the quarter was 14.3%, up 110 basis points year over year.

Selling, general and administrative expenses during the quarter were $53.9 million, up from $44.4 million recorded in the year-ago quarter. Meanwhile, interest expenses in the June-end quarter flared up 55.5% year over year to $4.3 million. Operating margin in the fiscal third quarter was 7.3%, up 60 bps year over year.

Balance Sheet/Cash Flow

Exiting the fiscal third quarter, Tetra Tech had cash and cash equivalents of $214 million, up from $190 million recorded as of Oct 1, 2017. Long-term debt came in at $419 million, up from $341.3 million reported at the end of fiscal 2017.

In the nine-month period ended fiscal 2018, the company generated $67.4 million cash from operating activities, down from $71.6 million recorded in the comparable period last year. Capital expenditures totaled $6.3 million, down 9.6% year over year.

Outlook

Tetra Tech is poised to boost its near-term revenues and profitability on the back of continued growth in demand across all end-markets. The company currently anticipates reporting revenues of $550-$575 million and earnings of 70-75 cents per share in fourth-quarter fiscal 2018.

Additionally, Tetra Tech has raised its earnings view for fiscal 2018 from $2.50-$2.62 per share to $2.59-$2.64 per share. Also, net revenue guidance for the fiscal is currently pegged at $2.20-$2.22 billion, instead of the prior projection of $2.15-$2.25 billion.

Zacks Rank and Key Picks

Tetra Tech currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the Zacks Industrial Products sector are listed below:

Altra Industrial Motion Corp. AIMC currently sports a Zacks Rank of 1 (Strong Buy). The company pulled off an average positive earnings surprise of 4.01% over the last four quarters. You can see the complete list of today's Zacks Rank #1 Rank stocks here .

Chart Industries, Inc. GTLS also flaunts a Zacks Rank of 1. The company recorded an average positive earnings surprise of 29.36% over the trailing four quarters.

Barnes Group, Inc. B holds a Zacks Rank #2 (Buy). The company came up with an average positive earnings surprise of 6.88% during the same time frame.

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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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