Record Revenue $1.16 billion, up 36% Y/Y
Record Net Revenue $970 million, up 39% Y/Y
EPS $0.80; Adjusted EPS $1.17, up 19% Y/Y
Record Backlog of $4.27 billion, up 18% Y/Y
Increasing Net Revenue and EPS guidance for FY23

Tetra Tech, Inc. (NASDAQ:TTEK), a leading provider of high-end consulting and engineering services, today announced results for the second quarter ended April 2, 2023.

Second Quarter Results

Tetra Tech achieved record quarterly results in key financial metrics including revenue, net revenue and backlog. Revenue in the second quarter totaled $1.16 billion and revenue, net of subcontractor costs (net revenue)¹, was $970 million, up 36% and 39%, respectively, over last year. Adjusted EBITDA¹ was $105 million, up 30% year-over-year. Earnings per share ("EPS") was $0.80; adjusted EPS was $1.17, up 19% over the second quarter of fiscal 2022.¹ Backlog increased to a record high of $4.27 billion, up 18% year-over-year.

Quarterly Dividend

On May 8, 2023, Tetra Tech's Board of Directors approved its 36^th consecutive quarterly dividend at an amount of $0.26 per share, a 13% increase year-over-year, payable on June 6, 2023, to stockholders of record as of May 24, 2023. The approved dividend represents nine consecutive double-digit annual increases of dividend payouts.

Chairman and CEO Comments

Tetra Tech Chairman and CEO, Dan Batrack, commented, "Tetra Tech continued to generate record high revenue and earnings by solving the world's most complex challenges by Leading with Science^® in the areas of water, environment and sustainable infrastructure. While Tetra Tech's business is performing at an all-time high level, the addition of the RPS Group has significantly expanded our access to the global renewable energy and sustainable infrastructure markets. We saw strong double digit top line growth across both our government and commercial end markets. Based on our strong year-to-date performance and record high backlog, we are increasing our net revenue and earnings per share guidance for fiscal 2023."

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¹ Non-GAAP financial measures which the Company believes provide valuable perspectives on its business results. Refer to tables at the end of the release and Regulation G Information for reconciliations to the comparable GAAP metrics.

Six-Month Results

Revenue for the six-month period was $2.05 billion and net revenue was $1.71 billion, up 20% and 24%, respectively, over the same period in fiscal 2022. Adjusted EBITDA was $209 million, up 23%. EPS was $2.98, and adjusted EPS was $2.51, an increase of 16% over last fiscal year.

Business Outlook

The following statements are based on current expectations. These statements are forward-looking, and the actual results could differ materially. These statements do not include the potential impact of transactions that may be completed or developments that become evident after the date of this release. The Business Outlook section should be read in conjunction with the information on forward-looking statements at the end of this release. The Company is relying on the exception provided in the applicable SEC rules to exclude the reconciliation of adjusted EPS to EPS for future outlook, the most directly comparable GAAP measure, since it is not able to predict with sufficient precision acquisition, integration and intangible amortization expenses related to the RPS transaction. Similarly, the Company is not able to provide a reconciliation of net revenue to revenue since it is not able to predict with sufficient precision subcontractor costs.

For fiscal 2023, Tetra Tech is increasing adjusted EPS guidance to range from $5.07 to $5.17 and is increasing net revenue guidance to range from $3.10 billion to $3.20 billion. Tetra Tech expects adjusted EPS for the third quarter of fiscal 2023 to range from $1.15 to $1.20 and net revenue to range from $750 million to $800 million.

RPS is expected to contribute additional net revenue of approximately $150 million to $175 million in the third quarter and $450 million to $500 million for fiscal 2023. The impact to adjusted EPS, excluding acquisition, integration and intangible amortization expenses, is expected to be neutral for the third quarter and fiscal 2023.

Webcast

Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the second quarter of fiscal 2023 results through a link posted on the Company's website at tetratech.com on May 11, 2023, at 8:00 a.m. (PT).

Reconciliation of GAAP and Non-GAAP Items In thousands (except EPS data)

	Three Months Ended						Six Months Ended
	April 2, 2023			April 3, 2022			April 2, 2023			April 3, 2022

Revenue	$	1,158,226		$	852,744		$	2,052,991		$	1,711,255
Subcontractor costs		(188,661	)		(153,103	)		(346,865	)		(332,280	)
Net revenue	$	969,565		$	699,641		$	1,706,126		$	1,378,975

EPS	$	0.80		$	0.98		$	2.98		$	2.23
Acq. & integration costs		0.43			-			0.52			-
FX hedge gain		(0.29	)		-			(1.23	)		-
Earn-out charge		0.12			-			0.13			-
COVID-19 credits		-			-			-			(0.06	)
RPS intangible amort.		0.11			-			0.11			-
Adjusted EPS	$	1.17		$	0.98		$	2.51		$	2.17

About Tetra Tech

Tetra Tech is a leading provider of high-end consulting and engineering services for projects worldwide. With 27,000 associates working together, Tetra Tech provides clear solutions to complex problems in water, environment, sustainable infrastructure, renewable energy, and international development. We are Leading with Science^® to provide sustainable and resilient solutions for our clients. For more information about Tetra Tech, please visit tetratech.com, follow us on Twitter (@TetraTech), or like us on Facebook.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as "anticipate," "expect," "could," "may," "intend," "plan" and "believe," among others, generally identify forward-looking statements. These forward-looking statements are based on currently available operating, financial, economic and other information, and are subject to a number of risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. A variety of factors, many of which are beyond our control, could cause actual future results or events to differ materially from those projected in the forward-looking statements in this release, including but not limited to: continuing worldwide political and economic uncertainties; the U.S. Administration's potential changes to fiscal policies; the cyclicality in demand for our overall services; the fluctuation in demand for oil and gas, and mining services; risks related to international operations; concentration of revenues from U.S. government agencies and potential funding disruptions by these agencies; dependence on winning or renewing U.S. government contracts; the delay or unavailability of public funding on U.S. government contracts; the U.S. government's right to modify, delay, curtail or terminate contracts at its convenience; compliance with government procurement laws and regulations; the impact of global pandemics like COVID-19; credit risks associated with certain clients in certain geographic areas or industries; acquisition strategy and integration risks; goodwill or other intangible asset impairment; the failure to comply with worldwide anti-bribery laws; the failure to comply with domestic and international export laws; the failure to properly manage projects; the loss of key personnel or the inability to attract and retain qualified personnel; the ability of our employees to obtain government granted eligibility; the use of estimates and assumptions in the preparation of financial statements; the ability to maintain adequate workforce utilization; the use of the percentage-of-completion method of accounting; the inability to accurately estimate and control contract costs; the failure to adequately recover on our claims for additional contract costs; the failure to win or renew contracts with private and public sector clients; growth strategy management; backlog cancellation and adjustments; risks relating to cyber security breaches; the failure of partners to perform on joint projects; the failure of subcontractors to satisfy their obligations; requirements to pay liquidated damages based on contract performance; the adoption of new legal requirements; changes in resource management, environmental or infrastructure industry laws, regulations or programs; changes in bank and capital markets and the access to capital; credit agreement covenants; industry competition; liability related to legal proceedings, investigations, and disputes; the availability of third-party insurance coverage; the ability to obtain adequate bonding; employee, agent, or partner misconduct; employee risks related to international travel; safety programs; conflict of interest issues; liabilities relating to reports and opinions; liabilities relating to environmental laws and regulations; force majeure events; protection of intellectual property rights; stock price volatility; the ability to impede a business combination based on Delaware law and charter documents; and other risks and uncertainties as may be described in Tetra Tech's periodic filings with the Securities and Exchange Commission, including those described in the "Risk Factors" section of Tetra Tech's Annual Report on Form 10-K for the fiscal year ended October 2, 2022. Readers should not place undue reliance on forward-looking statements since such information speaks only as of the date of this release. Tetra Tech does not intend to update forward-looking statements and expressly disclaims any obligation to do so.

Non-GAAP Financial Measures

To supplement the financial results presented in accordance with generally accepted accounting principles in the United States ("GAAP"), we present certain non-GAAP financial measures within the meaning of Regulation G under the Securities Exchange Act of 1934, as amended. We provide these non-GAAP financial measures because we believe they provide a valuable perspective on our financial results. However, non-GAAP measures have limitations as analytical tools and should not be considered in isolation and are not in accordance with, or a substitute for, GAAP measures. In addition, other companies may define non-GAAP measures differently which limits the ability of investors to compare non-GAAP measures of Tetra Tech to those used by our peer companies. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included in this release.

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Tetra Tech Reports Record Second Quarter Results