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 backlog exceeding $5.23 billion, up 19% year-over-year, driven by strong demand for water, environment, and infrastructure services.

• EBITDA margin expanded to 13.3%, with EBITDA up 32% to $129 million; operating income for the nine months rose 43% to $357 million.

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

• Announced a five-for-one stock split effective after market close on September 6, 2024, and a 12% increase in quarterly dividend to $0.29.

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

Financial highlights

• Year-to-date net revenue increased 18% to over $3.18 billion, with EBITDA up 41% to $414 million and 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; Q3 net income attributable was $85.8 million.

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

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

• Days sales outstanding (DSO) at 54 days, an industry-leading metric, improved by 4 days year-over-year.

Outlook and guidance

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

• Full-year 2024 revenue guidance: $4.27–$4.32 billion (midpoint up 15% from 2023); EPS: $6.23–$6.28 (midpoint up 23%).

• Organic growth rate expected to remain 6%–10% annually through 2030, with 50 basis points annual EBITDA margin expansion.

• Guidance excludes contributions from future acquisitions.

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