Tetra Tech Reports 5.6% Revenue Growth but 92.9% Decline in Net Income for Q2 Fiscal 2025

Tetra Tech, Inc. reported its financial results for the second quarter and first half of fiscal 2025, revealing a revenue increase of 5.6% to $1.32 billion for the quarter and a 10.6% rise to $2.74 billion for the six-month period ending March 30, 2025. The company's net income for the quarter was $5.4 million, a significant decline of 92.9% compared to $76.5 million in the same quarter last year. For the first half, net income fell to $6.2 million from $151.4 million, reflecting a 95.9% decrease. The earnings per share for the quarter were $0.02, down from $0.28, and for the first half, it was also $0.02 compared to $0.56 in the prior year.

The financial performance was impacted by several factors, including a $92.4 million goodwill impairment charge related to the Global Development Services reporting unit, which was affected by the cancellation of numerous contracts with the U.S. Agency for International Development (USAID). Additionally, Tetra Tech incurred a $115 million legal contingency charge, which further contributed to the decline in profitability. Despite these challenges, the company experienced growth in revenue from U.S. federal government contracts, which rose by 16% year-over-year, driven by increased activity in international development and disaster response.

Operationally, Tetra Tech's Government Services Group (GSG) segment saw a revenue increase of 10.8% in the second quarter and 20.6% in the first half, while the Commercial/International Services Group (CIG) segment reported a modest revenue growth of 1.1% for the quarter and 2.0% for the half. The company also completed the acquisition of Carron + Walsh, a project and cost management firm based in Ireland, for approximately $5.7 million, which is expected to enhance its service offerings in Europe.

As of March 30, 2025, Tetra Tech reported total assets of $4.18 billion, a slight decrease from $4.19 billion at the end of the previous fiscal year. The company had cash and cash equivalents of $179.4 million, down from $232.7 million, and a total debt of $1.01 billion, which includes $575 million in convertible notes. The company’s remaining unsatisfied performance obligations (RUPO) stood at $4.26 billion, indicating a robust pipeline of future work, although this was a decrease from $5.33 billion at the end of the previous fiscal year.

Looking ahead, Tetra Tech anticipates continued growth in its U.S. federal and state government sectors, particularly in clean water and environmental programs. However, the company remains cautious about the potential impacts of ongoing changes in U.S. foreign aid policies on its international development work. The management expressed confidence in its ability to navigate these challenges and leverage its strong market position to drive future growth.