Tetra Tech(TTEK) - 2025 Q1 - Quarterly Report

Revenue Growth - In Q1 fiscal 2025, revenue increased by 15.7% year-over-year, totaling $1.42 billion, driven by growth across all client sectors, particularly U.S. federal and state/local governments [123]. - U.S. federal government revenue grew by 31.3$501.8 million, primarily due to increased international development and IT system modernization activities [125]. - U.S. state and local government revenue rose by 34.5% to $203.0 million, largely due to disaster response activities related to Hurricanes Helene and Milton [126]. - U.S. commercial revenue increased by 5.0$233.6 million, attributed to heightened demand for environmental services and high-performance buildings [127]. - International revenue grew by 2.0% to $482.1 million, reflecting ongoing projects and contracts outside the U.S. [124]. - The Government Services Group (GSG) accounted for 52.9$751,782, primarily due to increased U.S. federal government activities related to international development [137]. - The Commercial/International Group revenue rose by 2.9% to $688,235, reflecting increased water consulting services in the UK [139]. - The revenue growth excluding acquisitions was 13.1$1,420,561, an increase of 15.7% compared to 1,228,267 in the same quarter of fiscal 2024 [130]. Acquisitions and Integration - The company acquired LS Technologies and Convergence Controls & Engineering, enhancing its capabilities in advanced data analytics and cybersecurity [120]. - Revenue from recent acquisitions contributed 31 million to overall revenue growth, indicating successful integration of new businesses [123]. Income and Expenses - Net income attributable to Tetra Tech decreased to $747, down 99.0$74,972 in the prior year, largely due to a $115 million legal contingency charge [130]. - Adjusted income from operations increased by 23.8$137,526, excluding the non-recurring legal contingency charge [133]. - The effective tax rate for the first quarter of fiscal 2025 was 94.9%, significantly higher than 26.1% in the prior year, influenced by the legal contingency charge [135]. Cash Flow and Financial Position - Cash and cash equivalents at December 29, 2024, totaled $248.1 million, with an additional$724.3 million available under the credit facility [143]. - The backlog as of December 29, 2024, was $5,435 million, slightly up from$5,376 million on September 29, 2024 [142]. - The company generated $13.1 million in cash from operations during the first quarter of fiscal 2025 [143]. - As of December 29, 2024, cash and cash equivalents increased to$248.1 million, up by $15.4 million or 6.6$232.7 million on September 29, 2024 [144]. - Net cash provided by operating activities for the first quarter of fiscal 2025 was $13.1 million, an increase of$3.8 million or 41.3% compared to $9.2 million in the prior-year quarter [144]. - The company reported a net cash increase of$15.4 million for the quarter, down 48.4% from $29.9 million in the same period last year [144]. - Capital expenditures for investing activities remained consistent at$3.4 million for both the first quarters of fiscal years 2025 and 2024 [145]. - Net cash provided by financing activities was approximately $19 million, similar to the prior-year quarter, with net borrowings increasing by$10 million to fund $25 million in share repurchases [146]. Debt and Borrowing - The company has a total borrowing capacity of$1.55 billion, with $325 million in outstanding borrowings under the Amended Credit Agreement as of December 29, 2024 [151]. - The weighted-average interest rate on outstanding borrowings under the Amended Credit Agreement was 5.98$325 million in outstanding borrowings under the Amended Credit Agreement, consisting of $250 million under the New Term Loan Facility and$75 million under the Amended Revolving Credit Facility [166]. - The applicable margin for borrowings under the Amended Credit Agreement is based on the company's Consolidated Leverage Ratio, calculated quarterly [166]. Shareholder Returns - In the first quarter of fiscal 2025, the company repurchased 600,007 shares at an average price of $41.67 per share, totaling$25 million [155]. - The Board of Directors declared a quarterly cash dividend of $0.058 per share, payable on February 26, 2025 [156]. Foreign Exchange and Risk Management - For the first quarter of fiscal 2025, 33.9$108.8 million, compared to an increase of $63.1 million in the prior-year period [168]. - The company is exposed to interest rate risk under its Amended Credit Agreement, with borrowing options based on a Eurocurrency rate or a base rate for loans in U.S. dollars [166]. - The Amended Credit Agreement matures on February 18, 2027 [166]. - The company attempts to minimize currency exposure by matching revenue and expenses in the same currency for contracts [167]. - Foreign currency gains and losses were immaterial for the first quarters of fiscal 2025 and 2024 [167]. - The company has foreign currency exchange rate exposure primarily due to currency translation related to its foreign subsidiaries [168].