Tetra Tech Q3 Loss Widens

Zacks Equity Research

Tetra Tech Inc.(TTEK) reported third-quarter fiscal 2013 loss of 47 cents per share (excluding one-time items), wider than the Zacks Consensus Estimate loss of 41 cents. The loss was also higher compared with the prior-year loss of 45 cents a share.  

Total Revenue

Total revenue in the reported quarter was down 10.2% to $614.8 million compared with $684.7 million in the prior-year period. Revenues, net of subcontractor costs, were $475.1 million compared with $516.9 million in the year-earlier quarter. However, revenues were well ahead of the Zacks Consensus Estimate of $480 million.

Backlog was $1.90 billion at the end of the reported quarter, reflecting a 7.8% decline from a backlog of $2.06 billion in the prior-year quarter.

The company benefited from high demand for its water and environmental services from commercial clients in the quarter. Revenues from the U.S. commercial and international business grew 16% while the organic growth in the oil & gas division was 25%.

Segment-Wise Revenues

Engineering and Consulting Services revenues came in at $251.2 million compared with $297.0 million in the year-earlier quarter.

Technical Support Services reported revenues of $222.1 million compared with $258.4 million in year-ago quarter.

Remediation and Construction Management revenues totaled $162.6 million compared with $153.9 million in prior-year quarter.

Balance Sheet & Cash Flow

Exiting the quarter, cash and cash equivalents at quarter-end was $104.8 million with long-term debt of $208.4 million.

Tetra Tech generated cash flow from operations of $115.3 million compared with $128.2 million in the prior-year period.

Outlook

Management believes the lingering weakness in Eastern Canada and mining may adversely impact its business in the upcoming quarters. However, management expects revenues from oil & gas to double in 2013 to $300 million.

The company expects earnings to be in the range of 30 cents to 40 cents per share in the fourth quarter of fiscal 2013. Revenues, net of subcontractor cost, are expected to be in the range of $500 million to $540 million in the coming quarter.

Tetra Tech has lowered its fiscal 2013 earnings per share and revenue guidance. For fiscal 2013, earnings per share are expected to be in the range of 62 cents to 72 cents, down from its prior guidance of $1.60 to $1.75. Management has also lowered its revenue guidance and now expects to report revenues, net of subcontractor cost, in the range of $1.99 billion to $2.03 billion, compared with its prior guidance of $2.15 billion to $2.25 billion.

Tetra Tech has a Zacks Rank #5 (Sell) which is not a good investment option at the moment. However, other stocks worth considering at the moment are Perma-Fix Environmental Services Inc. (PESI), Progressive Waste Solutions Ltd. (BIN)and Pure Cycle Corporation (PCYO). All three have a Zacks Rank #2 (Buy).

Read the Full Research Report on TTEK

Read the Full Research Report on PESI

Read the Full Research Report on PCYO

Read the Full Research Report on BIN

Zacks Investment Research



More From Zacks.com