 |
NEWS
RELEASE January 28, 2026 |
- Revenue $1.21 billion; Net Revenue $1.04 billion
- Net Revenue up 8% excluding USAID/DOS and Q1-25 Hurricanes
- Operating Income $141 million; Adjusted EBITDA $147 million
- EPS $0.40; Adjusted EPS $0.35
- Raising FY26 Net Revenue and EPS guidance
Pasadena, California. Tetra Tech, Inc. (NASDAQ: TTEK), a leading provider of high-end consulting and engineering services in water, environment and sustainable infrastructure, today announced results for the first quarter ended December 28, 2025.
Revenue and revenue, net of subcontractor costs (net revenue)1, in the first quarter totaled $1.21 billion and $1.04 billion, respectively. Operating income was $141 million and adjusted EBITDA1 was $147 million; adjusted EBITDA margin up 140 basis points year-over-year. EPS was $0.40 and adjusted EPS1 was $0.35. Backlog was $3.95 billion at the end of the first quarter. Cash from operations was $72 million in the first quarter and $517 million over the trailing 12 months.
Q1 FY26 Highlights (Excluding USAID / DOS)
- Adjusted EBITDA margin improved 80 basis points year-over-year
- EPS up 17% year-over-year
- DSO improved to 51 days
- Halvik acquisition expands high-end data analytics and resilient infrastructure optimization
- Providence acquisition further advances front-end program advisory services
- $151 billion ten-year multiple award contract for the U.S. Missile Defense Agency SHIELD program
- $500 million multiple-award contract for environmental services for USACE Baltimore District
- A$88 million single-award contract for coastal infrastructure planning services for Australia Defense
- $60 million multiple-award contract for waterway design services for USACE Portland District
- A$57 million single-award contract for naval facility resilience for Australia Defense
| 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. |
Executive Management Comments
Dan Batrack, Chairman and CEO, commented, “Tetra Tech began fiscal 2026 with a strong first quarter as net revenue was up 8% and EPS up 17%. Subsequent to the first quarter, we announced two strategic acquisitions, further expanding our front-end consulting business for our defense clients. As expected, our margin increased by 80 basis points, with our higher margin front-end advisory and technical consulting business growing at a double-digit rate. With the promotion of Roger Argus to CEO effective after our annual shareholders meeting, I see continued progress toward achieving our 2030 vision and direction and the associated financial targets.”
Roger Argus, President and CEO-designate, stated, “We continued to see significant demand for our differentiated services in water, environment, and sustainable infrastructure across our global operations. During the quarter, we grew our government business with municipal water and defense clients, and on the commercial side, we saw an increase in power and transmission projects to support energy demand. As a result, we are increasing our guidance for 2026 and are well positioned to achieve our 2030 goals.”
Quarterly Dividend and Share Repurchase Program
On January 26, 2026, Tetra Tech’s Board of Directors approved the Company’s 47th consecutive quarterly dividend at an amount of $0.065 per share, a 12% increase year-over-year, payable on February 27, 2026, to stockholders of record as of February 12, 2026. In the first quarter, Tetra Tech repurchased $50 million of common stock. Additionally, as of December 28, 2025, the Company had $548 million remaining under its share repurchase programs.
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.
For fiscal 2026, Tetra Tech is increasing the full year guidance for net revenue2 to range from $4.15 billion to $4.30 billion and adjusted EPS3 to range from $1.46 to $1.56. For the second quarter of fiscal 2026, Tetra Tech expects net revenue to range from $975 million to $1.025 billion and EPS to range from $0.30 to $0.33.
Webcast
Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the first quarter of fiscal 2026 results through a link posted on the Company’s website at tetratech.com on January 29, 2026, at 8:00 a.m. (PT).
| 2 | Reconciliation of the net revenue guidance to the most directly comparable GAAP measure is not available without unreasonable efforts because the Company cannot predict the magnitude and timing of all the components, including subcontractor costs, required to provide such reconciliation with sufficient precision. |
| 3 | The only adjustments in our guidance for EPS are to exclude the gain on business disposition and contingent consideration in the first quarter of fiscal 2026. |
Reconciliation of GAAP and Non-GAAP Items
In thousands (except EPS data)
| Three Months Ended | |||||
| December 28, 2025 |
December 29, 2024 | ||||
| Revenue | $ | 1,210,663 | $ | 1,420,561 | |
| USAID/DOS | (56,374 | ) | (283,905 | ) | |
| Revenue excl. USAID/DOS | $ | 1,154,289 | $ | 1,136,656 | |
| Revenue | $ | 1,210,663 | $ | 1,420,561 | |
| Subcontractor costs | (173,487 | ) | (223,231 | ) | |
| Net revenue | $ | 1,037,176 | $ | 1,197,330 | |
| USAID/DOS | (50,606 | ) | (238,517 | ) | |
| Net revenue excl. USAID/DOS | $ | 986,570 | $ | 958,813 | |
| Operating Income | $ | 140,994 | $ | 22,526 | |
| Contingent consideration | (7,447 | ) | (366 | ) | |
| Legal contingency | - | 115,000 | |||
| Adjusted Operating Income | $ | 133,547 | $ | 137,160 | |
| USAID/DOS | (2,746 | ) | (19,987 | ) | |
| Adjusted OI excl. USAID/DOS | $ | 130,801 | $ | 117,173 | |
| EPS | $ | 0.40 | $ | 0.00 | |
| Contingent consideration | (0.02 | ) | - | ||
| Gain on business disposition | (0.03 | ) | - | ||
| Legal contingency | - | 0.35 | |||
| Adjusted EPS | $ | 0.35 | $ | 0.35 | |
| USAID/DOS | (0.01 | ) | (0.06 | ) | |
| Adjusted EPS excl. USAID/DOS | $ | 0.34 | $ | 0.29 | |
About Tetra Tech
Tetra Tech is the leader in water, environment and sustainable infrastructure, providing high-end consulting and engineering services for projects worldwide. With more than 25,000 employees working together, Tetra Tech provides clear solutions to complex problems by Leading with Science® to address the entire water cycle, protect and restore the environment, and design sustainable and resilient infrastructure. For more information about Tetra Tech, please visit tetratech.com or follow us on LinkedIn and Facebook.
CONTACTS:
Jim Wu, Investor Relations
Charlie MacPherson, Media & Public Relations
(626) 470-2844 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 current expectations and beliefs of Tetra Tech’s management and 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; 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 September 28,
2025. 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 set forth above in this release.
Tetra Tech, Inc.
Balance Sheet - Unaudited
(unaudited - in thousands, except par value)
| December 28, | September 28, | |||
| 2025 | 2025 | |||
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | 269,448 | 167,459 | ||
| Accounts receivable, net | 1,082,417 | 1,158,928 | ||
| Contract assets | 140,429 | 138,232 | ||
| Prepaid expenses and other current assets | 112,145 | 98,768 | ||
| Assets held-for-sale | - | 57,502 | ||
| Total current assets | 1,604,439 | 1,620,889 | ||
| Property and equipment, net | 65,395 | 66,148 | ||
| Right-of-use assets, operating leases | 199,552 | 197,618 | ||
| Goodwill | 2,065,914 | 2,049,874 | ||
| Intangible assets, net | 113,567 | 121,160 | ||
| Deferred tax assets | 92,638 | 106,238 | ||
| Other non-current assets | 123,222 | 120,247 | ||
| Total assets | 4,264,727 | 4,282,174 | ||
| Liabilities and Equity | ||||
| Current liabilities: | ||||
| Accounts payable | 196,730 | 204,725 | ||
| Accrued compensation | 221,817 | 346,912 | ||
| Contract liabilities | 435,373 | 420,254 | ||
| Short-term lease liabilities, operating leases | 69,681 | 69,099 | ||
| Current contingent earn-out liabilities | 18,093 | 24,826 | ||
| Liabilities held-for-sale | - | 25,115 | ||
| Other current liabilities | 279,100 | 288,113 | ||
| Total current liabilities | 1,220,794 | 1,379,044 | ||
| Deferred tax liabilities | 20,171 | 21,333 | ||
| Long-term debt | 834,256 | 763,363 | ||
| Long-term lease liabilities, operating leases | 154,444 | 154,695 | ||
| Non-current contingent earn-out liabilities | 33,299 | 32,135 | ||
| Other non-current liabilities | 155,125 | 151,440 | ||
| Total liabilities | 2,418,089 | 2,502,010 | ||
| Equity: | ||||
| Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding at December 28, 2025 and September 28, 2025 | - | - | ||
| Common stock - authorized, 750,000 shares of $0.01 par value; issued and outstanding, 260,811 and 261,418 shares at December 28, 2025 and September 28, 2025, respectively | 2,608 | 2,614 | ||
| Accumulated other comprehensive loss | (76,356 | ) | (95,777 | ) |
| Retained earnings | 1,919,840 | 1,872,948 | ||
| Tetra Tech stockholders' equity | 1,846,092 | 1,779,785 | ||
| Noncontrolling interests | 546 | 379 | ||
| Total stockholders' equity | 1,846,638 | 1,780,164 | ||
| Total liabilities and stockholders' equity | 4,264,727 | 4,282,174 | ||
Tetra Tech, Inc.
Consolidated Statements of Income
(unaudited - in thousands, except per share data)
| Three Months Ended | |||||
| December 28, | December 29, | ||||
| 2025 | 2024 | ||||
| Revenue | $ | 1,210,663 | $ | 1,420,561 | |
| Subcontractor costs | (173,487 | ) | (223,231 | ) | |
| Other costs of revenue | (816,805 | ) | (975,853 | ) | |
| Gross profit | 220,371 | 221,477 | |||
| Selling, general and administrative expenses | (86,824 | ) | (84,317 | ) | |
| Legal contingency costs | - | (115,000 | ) | ||
| Contingent consideration - fair value adjustments | 7,447 | 366 | |||
| Income from operations | 140,994 | 22,526 | |||
| Interest expense, net | (7,128 | ) | (7,218 | ) | |
| Other non-operating income | 7,710 | - | |||
| Income before income tax expense | 141,576 | 15,308 | |||
| Income tax expense | (36,354 | ) | (14,530 | ) | |
| Net income | 105,222 | 778 | |||
| Net income attributable to noncontrolling interests | (194 | ) | (31 | ) | |
| Net income attributable to Tetra Tech | $ | 105,028 | $ | 747 | |
| Earnings per share attributable to Tetra Tech: | |||||
| Basic | $ | 0.40 | $ | - | |
| Diluted | $ | 0.40 | $ | - | |
| Weighted-average common shares outstanding: | |||||
| Basic | 260,809 | 267,854 | |||
| Diluted | 262,731 | 271,886 | |||
Tetra Tech, Inc.
Consolidated Statements of Cash Flows
(unaudited - in thousands)
| Three Months Ended | |||||
| December 28, | December 29, | ||||
| 2025 | 2024 | ||||
| Cash flows from operating activities: | |||||
| Net income | $ | 105,222 | $ | 778 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||
| Depreciation and amortization | 13,996 | 16,063 | |||
| Amortization of stock-based awards | 8,182 | 8,142 | |||
| Deferred income taxes | 13,085 | 767 | |||
| Provision for losses on accounts receivables | 960 | - | |||
| Gain on sale of divested business | (7,710 | ) | - | ||
| Fair value adjustments to contingent consideration | (7,447 | ) | (366 | ) | |
| Other non-cash items | 861 | 1,141 | |||
| Changes in operating assets and liabilities, net of effects of divestiture: | |||||
| Accounts receivable and contract assets | 79,945 | (91,725 | ) | ||
| Prepaid expenses and other assets | (17,927 | ) | (26,186 | ) | |
| Accounts payable | (8,824 | ) | 44,194 | ||
| Accrued compensation | (126,658 | ) | (101,641 | ) | |
| Contract liabilities | 13,213 | 27,527 | |||
| Income taxes receivable/payable | 2,450 | (1,538 | ) | ||
| Cash settled contingent earn-out liability | - | (2,720 | ) | ||
| Other liabilities | 2,919 | 138,627 | |||
| Net cash provided by operating activities | 72,267 | 13,063 | |||
| Cash flows from investing activities: | |||||
| Capital expenditures | (4,152 | ) | (3,433 | ) | |
| Proceeds from divested business, net | 41,612 | - | |||
| Net cash provided by (used in) investing activities | 37,460 | (3,433 | ) | ||
| Cash flows from financing activities: | |||||
| Proceeds from borrowings | 70,000 | 90,000 | |||
| Repayments on long-term debt | - | (15,000 | ) | ||
| Repurchases of common stock | (50,000 | ) | (25,000 | ) | |
| Shares repurchased for tax withholdings on share-based awards | (11,864 | ) | (13,307 | ) | |
| Payments of contingent earn-out liabilities | - | (145 | ) | ||
| Stock options exercised | 10 | 114 | |||
| Dividends paid | (16,937 | ) | (15,549 | ) | |
| Principal payments on finance leases | (2,083 | ) | (1,719 | ) | |
| Net cash provided by (used in) financing activities | (10,874 | ) | 19,394 | ||
| Effect of exchange rate changes on cash and cash equivalents | 2,223 | (13,609 | ) | ||
| Net increase in cash and cash equivalents | 101,076 | 15,415 | |||
| Cash and cash equivalents at beginning of period | 168,372 | 232,689 | |||
| Cash and cash equivalents at end of period | $ | 269,448 | $ | 248,104 | |
Tetra Tech, Inc.
Regulation G Information
December 28, 2025
Reconciliation of Revenue to Revenue, Net of Subcontractor Costs ("Net Revenue")
(in millions)
| 2025 | 2026 | |||||||||||||||||||
| 2023 | 2024 | 1st Qtr | 2nd Qtr | 6 Mos | 3rd Qtr | 9 Mos | 4th Qtr | Full Year | 1st Qtr | |||||||||||
| Consolidated | ||||||||||||||||||||
| Revenue | 4,522.6 | 5,198.7 | 1,420.6 | 1,322.1 | 2,742.7 | 1,369.8 | 4,112.5 | 1,330.1 | 5,442.6 | 1,210.7 | ||||||||||
| Subcontractor Costs | (771.5 | ) | (876.8 | ) | (223.3 | ) | (218.4 | ) | (441.7 | ) | (216.8 | ) | (658.5 | ) | (166.8 | ) | (825.3 | ) | (173.5 | ) |
| Net Revenue | 3,751.1 | 4,321.9 | 1,197.3 | 1,103.7 | 2,301.0 | 1,153.0 | 3,454.0 | 1,163.3 | 4,617.3 | 1,037.2 | ||||||||||
| GSG Segment | ||||||||||||||||||||
| Revenue | 2,300.7 | 2,624.2 | 791.4 | 698.9 | 1,490.2 | 709.4 | 2,199.6 | 628.9 | 2,828.6 | 525.5 | ||||||||||
| Subcontractor Costs | (484.3 | ) | (540.5 | ) | (144.0 | ) | (134.6 | ) | (278.5 | ) | (136.8 | ) | (415.3 | ) | (88.4 | ) | (503.7 | ) | (93.4 | ) |
| Net Revenue | 1,816.4 | 2,083.7 | 647.4 | 564.3 | 1,211.7 | 572.6 | 1,784.3 | 540.5 | 2,324.9 | 432.1 | ||||||||||
| CIG Segment | ||||||||||||||||||||
| Revenue | 2,292.7 | 2,634.4 | 644.9 | 637.8 | 1,282.6 | 676.6 | 1,959.1 | 721.2 | 2,680.2 | 704.2 | ||||||||||
| Subcontractor Costs | (358.0 | ) | (396.2 | ) | (94.9 | ) | (98.3 | ) | (193.2 | ) | (96.1 | ) | (289.4 | ) | (98.3 | ) | (387.7 | ) | (99.1 | ) |
| Net Revenue | 1,934.7 | 2,238.2 | 550.0 | 539.5 | 1,089.4 | 580.5 | 1,669.7 | 622.9 | 2,292.5 | 605.1 | ||||||||||
Reconciliation of Net Income Attributable to Tetra Tech to Adjusted EBITDA
(in thousands)
| 2025 | 2026 | ||||||||||||||||||
| 2023 | 2024 | 1st Qtr | 2nd Qtr | 6 Mos | 3rd Qtr | 9 Mos | 4th Qtr | Full Year | 1st Qtr | ||||||||||
| Net Income Attributable to Tetra Tech | 273,420 | 333,382 | 747 | 5,388 | 6,135 | 113,844 | 119,979 | 127,745 | 247,724 | 105,028 | |||||||||
| Income Tax Expense | 127,526 | 130,023 | 14,530 | 25,700 | 40,230 | 42,815 | 83,045 | 46,624 | 129,668 | 36,354 | |||||||||
| Interest Expense1 | 46,537 | 37,271 | 7,218 | 8,491 | 15,709 | 8,287 | 23,996 | 6,806 | 30,802 | 7,128 | |||||||||
| Depreciation | 19,980 | 23,722 | 5,402 | 5,248 | 10,650 | 5,410 | 16,059 | 5,115 | 21,175 | 5,608 | |||||||||
| Amortization | 41,226 | 49,955 | 10,660 | 8,629 | 19,289 | 8,287 | 27,577 | 9,524 | 37,101 | 8,387 | |||||||||
| FX Hedge Gain | (89,402 | ) | - | - | - | - | - | - | - | - | - | ||||||||
| Gain on sale of divested business | - | - | - | - | - | - | - | - | - | (7,710 | ) | ||||||||
| EBITDA | 419,287 | 574,353 | 38,557 | 53,456 | 92,013 | 178,643 | 270,656 | 195,814 | 466,470 | 154,795 | |||||||||
| Contingent Consideration | 12,255 | 2,541 | (366 | ) | (1,931 | ) | (2,297 | ) | (58 | ) | (2,355 | ) | (9,873 | ) | (12,228 | ) | (7,447 | ) | |
| Goodwill Impairment | - | - | - | 92,416 | 92,416 | - | 92,416 | - | 92,416 | - | |||||||||
| Acquisition & Integration Expenses2 | 49,554 | 7,138 | - | - | - | - | - | - | - | - | |||||||||
| Legal Contingency Costs | - | - | 115,000 | - | 115,000 | - | 115,000 | - | 115,000 | - | |||||||||
| Adjusted EBITDA | 481,096 | 584,032 | 153,191 | 143,941 | 297,132 | 178,585 | 475,717 | 185,941 | 661,658 | 147,348 | |||||||||
1 Includes write-off of deferred debt origination fees of $3.8M in fiscal 2023 2 Includes lease impairment charge of $16.4M in fiscal 2023