Tetra Tech, Inc. (TTEK Quick QuoteTTEK - Free Report) reported better-than-expected results for first-quarter fiscal 2022 (ended December 2021). Its earnings beat the Zacks Consensus Estimate by 15.53%, being the 18th consecutive quarter of better-than-expected results. Its sales also surpassed estimates by 1.17%.

The company’s adjusted earnings per share in the reported quarter were $1.19, surpassing the Zacks Consensus Estimate of $1.03. Quarterly earnings expanded 24% from the year-ago reported figure of 96 cents.

The bottom line also surpassed management’s projection of 98 cents to $1.03 per share.

Revenues & Segmental Performance

In the fiscal first quarter, Tetra Tech generated adjusted revenues of $858.5 million, reflecting a year-over-year increase of 12.2%. Adjusted net revenues (adjusted revenues minus subcontractor costs) were $679.3 million, up 12.3% year over year. The quarterly top line came above the company’s guidance of $630-$680 million.

Tetra Tech’s revenues exceeded the Zacks Consensus Estimate of $671.5 million.

Backlog at the end of the quarter was $3,448.3 million, down 0.9% from the previous quarter.

Revenues from the U.S. Federal customers (accounting for 27% of the quarter’s revenues) were down 1% year over year. The U.S. Commercial sales (21% of the quarter’s revenues) increased 7% year over year on higher environmental programs.

The U.S. State and Local sales (18% of the quarter’s revenues) increased 29% on strength across municipal infrastructure and disaster response. International sales (34% of the quarter’s revenues) increased 20% year over year, backed by infrastructure developments.

The company reports revenues under the segments discussed below:

Net sales of Government Services Group were $327.1 million, up 7.4% year over year. Revenues from Commercial/International Services Group totaled $352.2 million, underlining a year-over-year increase of 17.2%.

Margin Profile

In the fiscal first quarter, Tetra Tech’s subcontractor costs totaled $179.2 million, reflecting a rise of 12.1% from the year-ago quarter. Other costs of revenues were $543.9 million, up 11.3%. Selling, general and administrative expenses were $52.6 million, up 5.2% from the year-ago quarter.

Operating income (adjusted) in the reported quarter increased 24.9% year over year to $82.8 million, while the adjusted margin expanded 120 basis points to 12.2%.

Balance Sheet and Cash Flow

Exiting the fiscal first quarter, Tetra Tech had cash and cash equivalents of $205.5 million, up 23.3% from $166.6 million recorded at the end of the prior quarter. Long-term debt increased 23.4% sequentially to $246.9 million.

In the quarter, the company generated net cash of $82.4 million from operating activities compared with $33.2 million in the year-ago quarter. Capital expenditure was $1.5 million, down 15.4% year over year. In the quarter, the company’s proceeds from borrowings amounted to $50.8 million, while repayments totaled $4 million.

Shareholder-Friendly Policies

Tetra Tech bought back shares worth $50 millionand distributed dividends totaling $10.8 million in the first quarter of fiscal 2022. These compare favorably with share buybacks of $15 million and dividends of $9.2 million distributed in first-quarter fiscal 2021.

Exiting the fiscal first quarter, the company had $498 million worth of authorization left under its approved buyback programs.

On Jan 31, 2022, the company’s board of directors approved the payment of a quarterly cash dividend of 20 cents per share. The company will pay out the dividend on Feb 25 to shareholders of record as of Feb 11, 2022.

Outlook

For fiscal 2022 (ending September 2022), Tetra Tech anticipates net revenues of $2.65-$2.80 billion, higher than $2.60-$2.80 billion stated previously. Adjusted earnings are predicted to be $4.15-$4.30, up from the previously mentioned $4.00-$4.20.

For the second quarter of fiscal 2022 (ending March 2022), the company estimates net revenues of $620-$670 million and adjusted earnings per share of 86-91 cents.