Tetra Tech (TTEK) Q1 2025 earnings summary

Executive summary

• Achieved record quarterly revenue of $1.42 billion, up 16% year-over-year, with net revenue at $1.2 billion, an 18% increase, and all-time highs in net income, EPS, and backlog.

• Adjusted operating income rose 24% to $138 million; adjusted EPS increased 25% to $0.35, exceeding guidance and consensus.

• Backlog reached a record $5.44 billion, up 15% year-over-year, with $3.7 billion expected to be realized within 12 months.

• High demand for water, environment, and infrastructure services, with expansion in digital automation and technology solutions.

• Major new contract wins and acquisitions contributed to growth.

Financial highlights

• Gross profit increased 16.3% year-over-year to $221.5 million; adjusted operating margin improved to 9.7%.

• Cash flow from operations for the trailing 12 months was $363 million, exceeding net income for the 20th consecutive year.

• DSO improved to 55.9 days, outperforming industry peers.

• Net debt to EBITDA leverage reduced to 1.33x (1.05x adjusted), down from 1.51x a year ago.

• One-time $115 million legal contingency charge impacted GAAP results, reducing net income and EPS.

Outlook and guidance

• FY2025 net revenue guidance: $4.365–$4.765 billion; adjusted EPS: $1.37–$1.52.

• Q2 net revenue guidance: $1.0–$1.1 billion; adjusted EPS: $0.30–$0.33.

• Guidance reflects conservative assumptions for paused USAID/federal work due to a 90-day review; disaster response revenue expected to offset some delays.

• Long-term targets reaffirmed: 6–10% organic growth and 50 bps average annual margin expansion through 2030.

• No material impact from global minimum tax rules expected.