Tetra Tech(TTEK) - 2024 Q4 - Annual Report

Company Performance - Tetra Tech ranked 1 in Water Treatment and Desalination for 11 consecutive years and also achieved top rankings in various consulting and engineering categories in 2024[9]. - The company worked on over 100,000 projects across more than 100 countries in fiscal 2024, supported by a workforce of 30,000 associates[9]. - Revenue for fiscal 2024 reached $5,198,679 thousand, a 15.0$4,522,550 thousand in fiscal 2023[124]. - Gross profit increased to $866,440 thousand, reflecting a 19.5$725,029 thousand in the previous year[124]. - Net income attributable to Tetra Tech was $333,382 thousand, a 21.9$273,420 thousand in the prior year[124]. - Diluted earnings per share (EPS) increased to $1.23, up 20.6$1.02 in fiscal 2023[126]. - The company’s backlog at the end of fiscal 2024 was $5.4 billion, an increase of$586 million, or 12.2%, compared to fiscal 2023 year-end[40]. - The company generated 38.5% of its revenue from international operations, primarily in Canada, Australia, Europe, and the United Kingdom[60]. Revenue Breakdown - Revenue from the Government Services Group (GSG) accounted for 47.8% of total revenue in fiscal 2024, while the Commercial/International Services Group (CIG) contributed 53.6%[17]. - CIG's revenue from U.S. federal government clients increased to 32.2% in fiscal 2024, up from 30.7% in 2023 and 30.4% in 2022[27]. - International clients accounted for 38.5% of CIG's revenue in fiscal 2024, compared to 36.7% in 2023 and 31.0% in 2022[27]. - U.S. federal government revenue grew by 20.8% to $1,676.0 million, primarily due to increased international development and environmental activities[120]. - International revenue rose by 20.6$1,999.9 million, supported by higher renewable energy revenue and contributions from recent acquisitions[122]. - Fiscal 2024 revenue breakdown: 32% from U.S. federal government, 12% from U.S. state and local government, 18% from U.S. commercial clients, and 38% from international clients[206]. Strategic Initiatives - Tetra Tech's proprietary technologies, collectively known as Tetra Tech Delta, provide a competitive advantage through advanced data analytics and AI-enabled solutions[14]. - The company emphasizes sustainable solutions in water management and environmental programs, addressing regulatory requirements and improving operational efficiencies[18]. - CIG's strategic growth plans include selective acquisitions to enhance service offerings and expand geographic presence[32]. - The company initiated the Billion People Challenge in 2021, aiming to improve the lives of one billion people by 2030[35]. - The company actively engages in disaster response and community resilience services, utilizing specialized software and advanced analytics for effective management[20]. Acquisitions and Growth - In fiscal 2023, the company completed the acquisition of RPS Group plc for a total of 784 million, funded with debt[36]. - The company acquired LS Technologies in Q2 of fiscal 2024, enhancing its capabilities in advanced data analytics and cybersecurity for U.S. government clients[36]. - The company acquired Convergence Controls & Engineering in Q3 of fiscal 2024, focusing on process automation and systems integration solutions[36]. - Recent acquisitions contributed 332 million to revenue growth, with $115 million attributed to U.S. federal government revenue[119]. Financial Management - The company employs a comprehensive risk management strategy, including general liability and cyber liability insurance policies[46]. - The company regularly evaluates acquisition opportunities to strengthen its market leadership and drive organic growth[36]. - The company declared and paid dividends totaling$0.220 per share in fiscal 2024, compared to $0.196,$0.172, $0.148, and$0.128 per share in fiscal 2023, 2022, 2021, and 2020 respectively[112]. - The company maintained a consolidated leverage ratio of 1.38x and a consolidated interest coverage ratio of 13.94x, in compliance with financial covenants[148]. Risks and Challenges - The company faces risks related to project completion and performance standards, which could adversely affect profitability if not managed effectively[58]. - Economic downturns and reduced client spending could lead to a deterioration in revenue, profits, and overall financial condition[60]. - The company operates in a highly competitive environment, which may force price concessions and impact market share if competitiveness is not maintained[60]. - The company relies on timely collection of receivables to generate cash flow, and delays in payment could negatively impact operations[74]. - Cybersecurity incidents could adversely impact operations and result in significant costs and reputational harm[71]. Compliance and Regulations - The company is subject to various procurement laws and regulations, and violations could result in sanctions or loss of government contractor status, significantly reducing profits and revenue[89]. - The company must comply with U.S. federal, state, local, and foreign laws related to government contracts, which are subject to regular audits[89]. - The company is subject to evolving data privacy laws, and non-compliance could lead to significant fines and operational disruptions[100]. Employee and Workplace Initiatives - The company is committed to maintaining a healthy and safe work environment, providing training to all associates to support safe work execution[49]. - The company emphasizes diversity, equity, inclusion, and accessibility, with initiatives to attract a diverse range of candidates and promote an inclusive culture[49]. - The company offers a wide range of internal and external learning and development opportunities to support employee growth and skill enhancement[49].