Tetra Tech, Inc. operates as a global provider of specialized consulting and engineering services. The firm organizes its activities into two primary ...
Tetra Tech, Inc. is a leading global provider of high-end consulting and engineering services, with a primary focus on water, environment, and sustainable infrastructure. Founded in 1966, the company has grown through strategic acquisitions and internal growth to become a leader in its field. Tetra Tech operates through two main ...Tetra Tech, Inc. is a leading global provider of high-end consulting and engineering services, with a primary focus on water, environment, and sustainable infrastructure. Founded in 1966, the company has grown through strategic acquisitions and internal growth to become a leader in its field. Tetra Tech operates through two main divisions: Government Services Group (GSG) and Commercial/International Services Group (CIG). GSG serves federal, state, and local government agencies, offering solutions in water resource management, environmental monitoring, data intelligence, and civil infrastructure. CIG serves clients in natural resources, energy, utilities, and sustainable infrastructure markets, providing services from data collection to project management and operations support. The company is known for its 'Leading with Science' approach, integrating advanced data analytics and engineering innovation into its projects. With more than 25,000 employees and 500 offices worldwide, Tetra Tech generates annual revenue of approximately $5 billion. Financially, the company has shown strong performance, with a market capitalization of around $9.2 billion, a price-to-earnings ratio of 21.2, and a net profit margin of 8.6%. The leadership team includes CEO Roger R. Argus, who took over from Dan Batrack, and CFO Steven M. Burdick. Tetra Tech is committed to sustainability and has been recognized for its efforts in climate change and greenhouse gas management. The company is headquartered in Pasadena, California, and listed on NASDAQ under the symbol TTEK.
YoYYoY means Year-over-Year. It compares the latest annual value with the previous annual value to show long-term trend strength.
QoQQoQ means Quarter-over-Quarter. It compares the latest quarter with the immediately previous quarter to show short-term momentum changes.
RevenueThe total money that came through the front door from selling things, before paying a single bill. Think of it as the grand total of every credit card swipe from customers. (YoY compares this year to last year's performance, while QoQ compares the current three months to the previous three).
$5.4B
+4.7%
+7.2%
Net IncomeThe absolute bottom line. If the company paid every single supplier, employee, banker, and tax collector, this is the actual money left in their pocket at the end of the day.
$247.7M
-25.7%
+17.0%
Gross MarginThe basic markup. If they sell a $100 pair of sneakers, this percentage tells you how much of that price tag is profit right after paying for the rubber and shoelaces, but before paying for things like store rent or TV commercials.
+17.7%
+6.0%
+5.9%
Operating MarginThe 'day job' efficiency score. Out of every dollar a customer spends, this shows how many cents the company keeps after making the product AND paying for all the everyday corporate overhead (like salaries, marketing, and keeping the lights on).
+11.1%
+15.6%
+12.0%
Net MarginThe final take-home percentage. When you strip away every conceivable cost, tax, and interest payment, this is the exact number of cents the company truly gets to keep from every dollar in sales.
+4.6%
-29.0%
+9.1%
Free Cash FlowThe holy grail of corporate cash. It's the spendable, physical money left over after the business pays for its daily operations AND buys the big, expensive upgrades (like new factories or servers) it needs to survive. This is the 'free' money they can use to pay dividends or buy back stock.
$439.1M
+28.9%
+41.3%
FCF MarginThe ultimate cash conversion rate. It shows how good the company is at turning regular sales directly into cold, hard, spendable cash. A high percentage means the business is an absolute cash-printing machine.
+8.1%
+23.1%
+31.7%
Debt / EquityThe financial risk gauge. It compares how much of the company's empire was built using borrowed money (loans) versus the owners' own money (shareholders). A high number means they are heavily leveraged and playing a riskier game; a low number means they are playing it safe.
55.5%
-0.1%
-7.2%
Current RatioThe 12-month survival check. It simply compares the cash they have right now (plus things they can quickly turn into cash) against the immediate bills they absolutely must pay this year. A score above 1 means they have enough in the wallet to cover the upcoming bills without panicking.
1.18x
-5.9%
-5.6%
Total AssetsThe absolute size of the company's empire. It bundles together absolutely everything of value they own—from the cash in the register and the inventory in the warehouse, to the software patents in the vault and the factories on the ground.
Operator: Good morning, and thank you for joining the Tetra Tech earnings call. As a reminder, Tetra Tech is also simulcasting this presentation with slides in the Investors section of its webcast at tetratech.com. This call is being recorded at the request of Tetra Tech, and this broadcast is the copyrighted property of Tetra Tech. Any rebroadcast of this information in whole or part without the prior written permission of Tetra Tech is prohibited. With us today from management are Roger Argus, Chief Executive Officer and President; Steve Burdick, Chief Financial Officer. They will provide a brief overview of the results, and we'll then open up the call for questions. I would like to direct your attention to the safe harbor statement in today's presentation. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in Tetra Tech's periodic reports filed with the SEC. Except as required by law, Tetra Tech undertakes no obligation to update its forward-looking statements. In addition, since management will file, we'll be presenting some non-GAAP financial measures as references, the appropriate GAAP financial reconciliations are posted in the Investors section of Tetra Tech's website. With that, I would now like to turn the call over to Roger Argus. Please go ahead, Mr. Argus.
Roger Argus: Thank you, Latania. Good morning, and welcome to our fiscal year 2026 third quarter earnings conference call. We had a strong third quarter with growth primarily driven by our U.S. federal and international end markets, both of which increased at double-digit rates. We received significant new orders during the quarter, including commercial orders for data centers and sediment restoration projects, driving our backlog up by more than $200 million in the quarter. Our performance resulted in our increasing guidance for fiscal 2026. For the call today, I will begin with an overview of our third quarter's performance and the client markets that are driving our growth. Steve Burdick, our Chief Financial Officer, will provide additional detail on our financial performance and capital allocation. We delivered a strong third quarter with positive performance across key financial metrics. Net revenue was $1.1 billion for the quarter, exceeding the upper end of our guidance and supported by strong demand for high-end leading with science approach to water, environment and sustainable infrastructure. Earnings per share of $0.42 also exceeded the upper end of our guidance. We generated cash flow of $229 million from operations in the quarter and $467 million year-to-date, which is an all-time high for the first 3 quarters of a year. And importantly, our backlog was up for the second consecutive quarter, increasing sequentially by 5% to just under $4.5 billion. …
