Tetra Tech Reports 15.7% Revenue Growth to $1.42 Billion, Net Income Declines Due to Legal Charges

Tetra Tech, Inc. reported a significant increase in financial performance for the first quarter of fiscal 2025, with revenues reaching $1.42 billion, a 15.7% increase from $1.23 billion in the same period last year. The company's net income, however, saw a sharp decline, dropping to $778,000 from $74.98 million in the prior year, primarily due to a $115 million legal contingency charge. This resulted in an effective tax rate of 94.9% for the quarter, compared to 26.1% in the previous year. The earnings per share attributable to Tetra Tech were effectively zero, down from $0.28 in the first quarter of fiscal 2024.

The company experienced notable growth across its client sectors, particularly in U.S. federal and state and local government services, which saw revenue increases of 31.3% and 34.5%, respectively. The Government Services Group (GSG) segment reported a revenue increase of 30.7%, driven by heightened activity in international development and disaster response efforts. In contrast, the Commercial/International Services Group (CIG) segment's revenue grew by only 2.9%, reflecting a slowdown in large infrastructure projects.

Tetra Tech's operational metrics indicate a strong demand for its services, with a remaining unsatisfied performance obligation (RUPO) of $5.39 billion as of December 29, 2024, up from $5.33 billion at the end of the previous fiscal year. The company also reported a cash and cash equivalents balance of $248.1 million, alongside $724.3 million available under its credit facilities, providing a solid liquidity position to support ongoing operations and potential acquisitions.

Strategically, Tetra Tech has continued to expand its capabilities through acquisitions, including LS Technologies and Convergence Controls & Engineering, which were integrated into the GSG segment. These acquisitions contributed approximately $31 million to the revenue growth in the quarter. The company also reactivated its stock repurchase program, buying back 600,007 shares for $25 million, reflecting a commitment to returning value to shareholders.

Looking ahead, Tetra Tech anticipates continued growth driven by increased demand for its consulting and engineering services, particularly in water and environmental management. The company expects to leverage its strong backlog and RUPO to sustain revenue growth, although it remains cautious about potential impacts from legal contingencies and market conditions.