Tetra Tech (TTEK) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 revenue of $1.34 billion, up 11%–12% year-over-year, and record net revenue of $1.11 billion, with backlog at an all-time high of $5.23 billion, up 19% year-over-year.

• EBITDA rose 32% to $129 million, with margin expanding 120 basis points to 13.3%; operating income for the nine months increased 43% to $357 million.

• EPS reached $1.59 in Q3, up 42% year-over-year; nine-month EPS was $4.40, up 53% year-over-year excluding last year's FX hedge gain.

• Raised full-year 2024 guidance for both revenue and EPS, reflecting strong performance and visibility.

• Announced a five-for-one stock split effective after market close on September 6, 2024, and a 12% increase in quarterly dividend.

Financial highlights

• Year-to-date net revenue increased 18% to over $3 billion; EBITDA up 41% to $414 million; operating income up 43% to $357 million.

• Q3 net revenue reached $1.11 billion, up 12% year-over-year; Q3 gross profit was $223 million.

• Cash flow from operations for the quarter was $141 million, exceeding net income by 64%; trailing 12-month cash flow up 23% to $376 million.

• DSO improved to 54 days, four days better than last year and well below the industry average.

• Cash and cash equivalents at June 30, 2024 were $212.3 million, with $499.3 million available under the revolving credit facility.

Outlook and guidance

• FY2024 revenue guidance raised to $4.27–$4.32 billion (midpoint +15% year-over-year); EPS: $6.23–$6.28 (midpoint +23% year-over-year).

• Q4 2024 net revenue guidance: $1.09–$1.14 billion; EPS: $1.82–$1.87.

• Guidance excludes contributions from future acquisitions.

• Long-term organic growth target of 6–10% annually, with expected 50 basis points of annual EBITDA margin expansion.

• Management expects continued revenue growth in U.S. federal, commercial, and international sectors in Q4 2024, supported by federal funding and sustainability trends.