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Tetra Tech Wins EPA Contract

Zacks Equity Research

Tetra Tech, Inc. (TTEK) has been selected to deliver technical support to the U.S. Environmental Protection Agency (:EPA) Office of Water. The contract is valued at $108 million and is for a period of five years.

In this multiple award contract Tetra Tech will help the EPA Office of Water Assessment and Watershed Protection Division in assessing and monitoring water quality conditions. The company’s scope of work includes implementation of point and nonpoint source pollution controls, and development of tools for ecosystem restoration.

Tetra Tech has already been involved in the watershed protection work of the EPA Office of Water. The current contract further extends the existing relation of more than 30 years with the EPA Office of Water. The stakeholders of the EPA Office comprise the 10 EPA regional offices, other federal agencies, state and local governments, regulated commercial interests, and the public.   

Tetra Tech is an expert in water resources engaged in front-end environmental activities for oil and gas projects. The addition of pipeline planning and engineering expert, REI, is a strategic fit for Tetra Tech. The combination allows Tetra Tech to provide a complete range of services to the rapidly growing shale oil market.  

The company is also performing well in its international market, benefiting from the rising demand for water related services. Good returns from the US as well as international markets led the company to increase its revenue guidance for fiscal 2012. However, weak economic condition remains a matter of concern.  A major portion of Tetra Tech’s revenue is derived from the U.S. federal government agencies; hence, any delay in preparing budgets would have a material impact on revenue. Major competitors of the company are AECOM Technology Corporation (ACM), Arcadis NV (ARCAY) and SHAW Group Inc. (SHAW).

Tetra Tech Inc. is a leading provider of consulting, engineering, program management, construction and technical services focusing on resource management and infrastructure. It serves clients by providing cost-effective and innovative solutions to fundamental needs like water, environmental and alternative energy services.

We currently maintain our Neutral rating on Tetra Tech Inc. with a Zacks #4 Rank (short-term Sell recommendation) over the next one-to-three months.

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