TTEK

A month has gone by since the last earnings report for Sterling Infrastructure (STRL). Shares have lost about 15.8% in that time frame, underperforming the S&P 500. But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Sterling Infrastructure due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Sterling Infrastructure, Inc. before we dive into how investors and analysts have reacted as of late. Sterling Infrastructure, Inc. delivered a strong second quarter of 2026, with adjusted earnings and revenues topping the Zacks Consensus Estimate and increasing sharply year over year. Results were driven by outsized growth in E-Infrastructure Solutions, supported by strong organic execution and contributions from the CEC and Stone Ridge acquisitions.Transportation Solutions revenues declined as Sterling accelerated the reallocation of resources toward higher-margin E-Infrastructure opportunities. Meanwhile, Building Solutions remained pressured by relatively flat homebuilder activity and continued housing affordability challenges. Adjusted earnings were $5.80 per share, beating the consensus mark of $5.20 by 11.5%. In the year-ago quarter, the company reported adjusted earnings per share (EPS) of $2.69.Revenues of $1.17 billion surpassed the consensus estimate of $1.07 billion by 9.2% and increased 90.1% from $614.5 million in the year-ago quarter. Acquisitions, including CEC and Stone Ridge, contributed $250.8 million to revenues during the quarter.Signed backlog ended the quarter at $4.33 billion, up 116% year over year, while combined backlog increased 150% to $5.62 billion. Second-quarter book-to-burn ratios were 1.4x for signed backlog and 1.3x for combined backlog, excluding the impact of the Stone Ridge acquisition.Beyond signed work, the company’s pipeline of high-probability future-phase opportunities exceeded $1.4 billion. Sterling’s signed backlog, unsigned awards and future-phase opportunities represented a total addressable pool of more than $7 billion, up more than $2.5 billion from the end of 2025. Operating leverage remained a key highlight as profit growth outpaced the top line. Gross profit increased to $290 million from $143.1 million a year ago, while gross margin improved to 24.8% from 23.3%, an expansion of roughly 150 basis points.Operating income reached $219.3 million compared with $104.6 million in the prior-year quarter. Adjusted EBITDA rose 104% year over year to $256.7 million, while adjusted EBITDA margin improved to 22% from 20.4%. E-Infrastructure Solutions was the primary growth engine, with segment revenues, which accounted for 78% of total revenues, jumping to $905 million from $310.4 million in the year-ago quarter. Management attributed the performance to strong results across organic and acquired operations. The legacy site development business generated 111% revenue growth, reflecting expansion across all regions, while CEC’s electrical services revenues increased 140% from the pre-acquisition second quarter. Profitability in the segment also increased sharply. Adjusted operating income climbed to $217.8 million from $87.7 million. E-Infrastructure signed backlog rose 165% year over year, with mission-critical projects, including data centers, manufacturing and semiconductor facilities, representing 92% of segment backlog.Transportation Solutions revenues, which represented 13% of total revenues, declined to $156.7 million from $196.8 million. The decrease reflected Sterling’s ongoing shift of resources from transportation projects toward higher-margin E-Infrastructure opportunities. Despite lower revenues, adjusted operating income increased to $30.5 million from $28.3 million, and adjusted operating margin expanded to 19.5% from 14.4%.Building Solutions remained the softer spot. Revenues, which accounted for 9% of total revenues, slipped to $106.5 million from $107.3 million. Adjusted operating income declined to $10.5 million from $11.8 million as relatively flat homebuilder activity and affordability pressures weighed on performance. Cash generation remained a notable support for the balance sheet. Net cash provided by operating activities totaled $328 million during the first six months of 2026, up from $170.3 million in the year-ago period. Cash and cash equivalents ended June at $464.5 million, up from $390.7 million at the end of 2025. Sterling repurchased $35.3 million of common stock during the first half of the year. Long-term debt stood at $268.7 million at quarter-end compared with $275.9 million at the end of 2025, while capital expenditures totaled $69.6 million. Confidence in its operating momentum translated into higher full-year targets. Sterling raised its 2026 revenue guidance to $4-$4.15 billion from the prior range of $3.70-$3.80 billion, indicating strong execution, expanding backlog and contributions from the Stone Ridge acquisition. Earnings are now expected to be $17.25-$17.85 per share, up from the previous forecast of $16.50-$17.15. Adjusted earnings are projected at $19.70-$20.30 per share compared with the prior outlook of $18.40-$19.05. The company also lifted EBITDA guidance to $829-$854 million from $801-$831 million and adjusted EBITDA guidance to $891-$916 million from the earlier range of $843-$873 million. It turns out, estimates review have trended upward during the past month. Currently, Sterling Infrastructure has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy. Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Sterling Infrastructure has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Sterling Infrastructure belongs to the Zacks Engineering - R and D Services industry. Another stock from the same industry, Tetra Tech (TTEK), has gained 2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026. Tetra reported revenues of $1.11 billion in the last reported quarter, representing a year-over-year change of -3.9%. EPS of $0.42 for the same period compares with $0.43 a year ago. Tetra is expected to post earnings of $0.47 per share for the current quarter, representing a year-over-year change of +4.4%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged. The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Tetra. Also, the stock has a VGM Score of D. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sterling Infrastructure, Inc. (STRL) : Free Stock Analysis Report Tetra Tech, Inc. (TTEK) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

A month has gone by since the last earnings report for Tetra Tech (TTEK). Shares have added about 12.9% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Tetra due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Tetra Tech, Inc. before we dive into how investors and analysts have reacted as of late. Tetra Tech posted third-quarter fiscal 2026 adjusted earnings of 42 cents per share, down 2.3% year over year but ahead of the Zacks Consensus Estimate of 40 cents by 5%.Net revenues were $1.11 billion, down 3.9% year over year, but topped the consensus mark of $1.08 billion by 2.8%. Backlog ended the quarter at $4.49 billion, up 4.9% sequentially, supported by new wins across water infrastructure, defense and digital automation markets. On a GAAP basis, Tetra Tech reported revenues of $1.31 billion compared with $1.37 billion in the year-ago quarter. Revenues from U.S. federal customers, accounting for 20% of the quarter’s net revenues, increased 12% year over year, excluding USAID, Department of State and episodic disaster-response activities. Growth was supported by higher activity with the Navy and U.S. Army Corps of Engineers. U.S. commercial revenues, representing 20% of the total, rose 1% as gains in power transmission offset lower renewable-energy activity.U.S. state and local revenues, accounting for 13% of net revenues, increased 5% year over year, driven by strength in municipal water treatment, partly offset by lower flood-protection work. International revenues, representing 47% of the total, advanced 12% on growth in U.K. water and digital water automation programs. The Commercial/International Services Group delivered net revenues of $634.2 million, up 9.3% year over year. Government Services Group net revenues were $474.3 million, down 17.2% from the prior-year quarter on a reported basis. Excluding USAID, Department of State and episodic disaster-response activities, GSG net revenues increased 7%, reflecting strength in water infrastructure and defense programs. The company continued to manage its costs while maintaining capacity for growth investments. In the fiscal third quarter, Tetra Tech’s subcontractor costs totaled $200 million, down 7.8% from the year-ago quarter. Other costs of revenues (adjusted) were $865.4 million, down 4% from the third quarter of fiscal 2025. Selling, general and administrative expenses (adjusted) declined 1.6% year over year to $85.2 million.Adjusted operating income decreased 4.2% year over year to $158 million, while the adjusted operating margin remained unchanged at 14.3%. While exiting the fiscal third quarter, Tetra Tech had cash and cash equivalents of $230.8 million compared with $167.5 million recorded at the end of fiscal 2025. Long-term debt was $801.1 million compared with $763.4 million at fiscal 2025-end.In the first nine months of fiscal 2026, Tetra Tech generated net cash of $466.6 million from operating activities compared with $356.8 million in the prior-year period. Capital expenditures were $14 million, up 11.5% year over year. Its proceeds from borrowings totaled $245 million, while repayments on long-term debt were $210 million. Tetra Tech distributed dividends totaling $52.5 million in the first nine months of fiscal 2026, up from $48 million in the prior-year period. The company also repurchased shares worth $202 million compared with $200 million in the first nine months of fiscal 2025. For fiscal 2026 (ending September 2026), Tetra Tech expects net revenues in the range of $4.315-$4.365 billion. At the midpoint, the outlook implies 8% year-over-year growth after excluding USAID, Department of State and episodic disaster-response activities.Adjusted earnings are projected in the range of $1.56-$1.59 per share. The company expects adjusted EBITDA margin to expand 70 basis points year over year. For the fiscal fourth quarter, management forecasts net revenues of $1.12-$1.17 billion. Adjusted earnings are expected in the range of 45-48 cents per share. In the past month, investors have witnessed a upward trend in estimates revision. Currently, Tetra has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a score of C on the value side, putting it in the middle 20% for this investment strategy. Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Tetra has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tetra Tech, Inc. (TTEK) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, July 30, 2026, at 7 a.m. ET Chief Executive Officer and President - Roger Argus Chief Financial Officer - Steve Burdick Operator: Good morning, and thank you for joining the Tetra Tech earnings call. As a reminder, Tetra Tech is also simulcasting this presentation with slides in the Investors section of its webcast at tetratech.com. This call is being recorded at the request of Tetra Tech, and this broadcast is the copyrighted property of Tetra Tech. Any rebroadcast of this information in whole or part without the prior written permission of Tetra Tech is prohibited. With us today from management are Roger Argus, Chief Executive Officer and President; Steve Burdick, Chief Financial Officer. They will provide a brief overview of the results, and we'll then open up the call for questions. I would like to direct your attention to the safe harbor statement in today's presentation. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in Tetra Tech's periodic reports filed with the SEC. Except as required by law, Tetra Tech undertakes no obligation to update its forward-looking statements. In addition, since management will file, we'll be presenting some non-GAAP financial measures as references, the appropriate GAAP financial reconciliations are posted in the Investors section of Tetra Tech's website. With that, I would now like to turn the call over to Roger Argus. Please go ahead, Mr. Argus. Roger Argus: Thank you, Latania. Good morning, and welcome to our fiscal year 2026 third quarter earnings conference call. We had a strong third quarter with growth primarily driven by our U.S. federal and international end markets, both of which increased at double-digit rates. We received significant new orders during the quarter, including commercial orders for data centers and sediment restoration projects, driving our backlog up by more than $200 million in the quarter. Our performance resulted in our increasing guidance for fiscal 2026. For the call today, I will begin with an overview of our third quarter's performance and the client markets that are driving our growth. Steve Burdick, our Chief Financial Officer, will provide additional detail on our financial performance and capital allocation. We delivered a strong third quarter with positive performance across key financial metrics. Net revenue was $1.1 billion for the quarter, exceeding the upper end of our guidance and supported by strong demand for high-end leading with science approach to water, environment and sustainable infrastructure. Earnings per share of $0.42 also exceeded the upper end of our guidance. We generated cash flow of $229 million from operations in the quarter and $467 million year-to-date, which is an all-time high for the first 3 quarters of a year. And importantly, our backlog was up for the second consecutive quarter, increasing sequentially by 5% to just under $4.5 billion. Overall, the quarter was in line with our expectations and the increased backlog provides us with good visibility into the fourth quarter and the end of the fiscal year. Both of our business segments performed well in the third quarter. The Government Services Group or GSG grew by 7% in the third quarter on a year-over-year basis and generated a strong margin of 17.5%. Demand remains solid for both of our U.S. federal and state and local government markets, especially in water, environment and defense. The Commercial/International Group or CIG also performed well. with revenue up 9% from the prior year and an associated margin of 15.1%. CIG's growth was from a diversified mix of clients across water, power and energy and mining markets worldwide. I would now like to provide an overview of our net revenue by customer. Our international work was up 12% on a year-over-year basis and represented 47% of our business. Revenue growth was driven by water programs in the U.K., Ireland and the Netherlands an increase in infrastructure work in Canada and growth in mining and digital automation revenues in Australia. In the U.S., our U.S. federal work was up 12% from last year and represented 20% of our business. This growth was driven by our work for the U.S. federal government and infrastructure, planning and environment for defense and civilian clients. Our U.S. commercial business was up 1% compared to last year and represented 20% of our business. Revenues for Energy and transmission-related services continue to increase, accompanied by stronger mining and minerals project activity. However, these gains were partially offset by the decline in renewable energy work including the cancellation of remaining offshore wind programs along the Atlantic Coast. Our U.S. state and local business grew by 5% this quarter. We continue to see strong growth and longer-term orders in municipal water, including new projects for PFAS treatment, digital systems modernization, water reuse and desalination. We had a strong quarter for new orders and our backlog was up $208 million, increasing by 5% sequentially from the prior quarter. As we stated before, we take a conservative approach to backlog. We include only work that is contracted, funded and authorized. This gives us high-quality visibility into future performance and increases our confidence in our project pipeline. Our backlog growth was supported by several important wins across priority markets. In the United States, we added just under $300 million in contract capacity from the Army Corps of Engineers Mobile and Norfolk districts, where we have worked for decades. Mobile district includes the critical U.S. Gulf Coast regions as well as supporting international programs in Central and South America. The Norfolk District is a central hub for supporting the world's largest naval base innovation in coastal resiliency and the critical East Coast shipping channels. We also added new state and local programs, including being awarded the lead designer role for the largest dedicated municipal PFOS treatment system in the United States located in Dayton, Ohio. And this quarter, we were pleased to see that our U.S. commercial orders were also very strong. Commercial orders were led by digital automation for data centers, power and transmission services and sediment restoration programs. I will now turn the call over to Steve Burdick, our Chief Financial Officer, to discuss our financial results and capital allocation in more detail. Steve? Steven Burdick: Thanks, Roger. As Roger said, I'd like to now provide an update on our reported year-to-date fiscal 2026 GAAP results, working capital, cash flows and capital allocation. So as Roger just discussed in the call, our market-leading focus on the front-end technical design and engineering for water and environmental projects are carrying higher margins across all of our end markets. As such, even as the reported revenue was down from last year due primarily to the decrease in revenue of our USA customer and the revenues from onetime disasters last year, our operating income increased significantly and adjusted EBITDA on net revenue for the first 9 months has increased by about 80 points over in fiscal '26 compared to fiscal '25. These results further support our long-term strategic goals to improving EBITDA margins by 50 basis points annually. More often over the last year, I've been asked by our shareholders and others what our margins look like on a net service revenue or NSR basis, which would be similar to how others in the industry report their margins. I've looked at that question and can tell you that our EBITDA margin would be about 240 basis points higher this year to date on an NSR basis. Now as a result of our ability to enhance our profit margins and further manage our working capital, we were able to increase EPS and come in well above our previous guidance range for the third quarter. Now regarding our working capital. Cash flows generated from operations for the first 9 months of the year were at a historical record of $467 million, which represents a significant 31% improvement over fiscal 2025. And consistent with each of the last consecutive 21 years, our operating cash flows have continued to exceed net income. Our focus on working capital and cash flows has resulted in our DSO reflecting an industry-leading standard of 56 days, which is similar to last year and an improvement compared to Q2 of this year. This lower DSO metric provides significant insight into our core business as it reflects outstanding work that our project managers lead relative to higher-quality projects and highly satisfied clients in our broad portfolio across all of our end markets and geographies. Now our net debt target is about 1 to 2x and our actual net debt on EBITDA was at a leverage of 0.88x, which is lower than our leverage ratio 1 year ago when it stood at 0.96x. So as we continue to execute on high-quality results with increasing margins, operating cash flows in excess of net income and lower working capital KPIs we will continue to provide higher returns for our shareholders and those higher shareholder financial returns are reflected in an improving return on capital employed, which now stands at over 20%. So with that perspective, I now present our capital allocation strategy and overview. We have a very strong balance sheet our operating cash flows was $567 million for the trailing 12-month period. Now Roger will discuss our strategic global areas later in the presentation but I do want to point out that our balance sheet and cash flows provide us with significant liquidity available to invest in organic and acquisitive growth priorities in order to take advantage of these key business opportunities such as technology and automation, which continues to provide us a dominant position in those markets. Year-to-date, we have closed acquisitions of technical leaders focused on defense, such as Habit in the U.S. and Providence in Australia. And regarding our dividend program, I'm pleased to announce that our Board of Directors approved a quarterly cash dividend, which is an 11% increase year-over-year to be paid in the fourth quarter. This is our 45th consecutive quarterly dividend with annual double-digit increases in the amounts paid. And based on our lower leverage, we have continued our stock buyback program this year. In the third quarter, we increased our buyback to $100 million. And for the first 9 months of 2026, we bought back a total of $200 million. We do have $398 million available from our stock buyback plan that was approved by our Board of Directors as part of our capital allocation strategy. I'm very pleased to share these strong year-to-date results for fiscal 2026, which has enabled us to increase shareholder value as we can pay increasing dividends, increase our stock buybacks, engage in accretive acquisitions, all the while deleveraging our balance sheet. I want to thank you for your support, and I will now hand the call back over to Roger to discuss our global opportunities in water for 2026 and beyond. Roger Argus: Thank you, Steve. Across our key regions, our clients are increasing their investment in water-related priorities that align directly with Tetra Tech's core strengths. These priorities leverage Tetra Tech's expertise in high-end water treatment, water quality management hydropower infrastructure, digital systems and cybersecurity. In the U.S., where we work with more -- over 500 municipal clients, we are seeing clients continuing to plan for modernization and expansion of their facilities while proactively integrating rate increases, bonds and commercial funding sources. We also see new programs in the U.S. to expand hydro power to meet increased demand, such as the Lake Chalon program, which we announced last week. In the U.K. and Ireland, large regulated investment cycles are supporting growth across our key markets in water quality, leakage management and desalination. The U.K.'s AMP cycle includes approximately GBP 105 billion of water sector investment through the year 2030. Across the U.K., Ireland and the Netherlands, we hold over GBP 2 billion in contract capacity to provide differentiated solutions such as our smart sewer systems and our Water net league detection system. In Canada, federal infrastructure and hydropower investments are supporting demand for our water, environment and infrastructure services. We expect hydropower investments to continue to expand to address increased demand for clean and reliable energy. One of our key clients, Hydro-Quebec, plans to add 11 gigawatts in new capacity driving new opportunities for us in hydropower, modernization, transmission and water treatment. And in Australia, water agencies are accelerating deployment of digital automation and cybersecurity to improve operations and prepare for AI-enabled optimization. Market forecasts estimate more than $17 billion of digital water investments in Australia over the next decade. We have provided additional water automation services used today by utilities such as the Water Corporation in Western Australia and for South Australia Waters system modernization. I'd now like to present our guidance for the fourth quarter and the entire 2026 fiscal year. Our guidance is as follows. For the fourth quarter, net revenue guidance is from $1.12 billion to $1.17 billion. Adjusted earnings per share guidance is from $0.45 to $0.48 and for the full fiscal year of 2026, our net revenue guidance is from $4.315 billion with $4.365 billion, and our increased adjusted earnings per share guidance is from $1.56 and to $1.59. The right side of this slide presents the FY '26 net revenue growth, which is up 8% year-over-year at the midpoint with an associated margin expansion of 70 basis points year-over-year at the midpoint. You can read the FY '26 assumptions on our slide, but I'll highlight a few. Intangible amortization of $34 million, depreciation of $23 million, interest expense of $30 million, an effective tax rate of 27.3% and this guidance does not include contributions from future acquisitions. In summary, we had a strong third quarter as demonstrated by our financial metrics in revenue, margin, cash generation and backlog. Demand for Tetra Tech's differentiated leading with science services continues to drive sustained growth for us in water-related work globally. Our focus on water is also bringing us new opportunities in hydropower, digital automation, data centers, mining and resilient infrastructure. Strong cash flows supports our strategy to deploy our cash to grow organically and through acquisition while also returning cash to our shareholders. And with our outperformance in the third quarter, we have raised our guidance for the full fiscal year 2026. I think we'll now take your questions. . Operator: Thank you. At this time, the question-and-answer session will begin now. The first question comes from Rene Gagliardo with William Blair. Unknown Analyst: This is Rene on for Tim Marine. I just have 1 question about the. We saw the backlog was up year-over-year for the first time in several quarters and up sequentially now for 2 quarters in a row. To talk about two of the primary drivers behind that backlog growth, we've seen some announcements recently, particularly on the commercial and federal side we're hoping to get a little more detail about where you're seeing momentum. Roger Argus: Thanks, Rene. Yes, I'm very encouraged by our continued backlog growth. As you mentioned, the 5% sequential growth was our second quarter in a row with growing backlog. And I'd like to highlight as well that -- for us, backlog includes only contracted, funded and authorized work, which means our project teams can begin work on these projects. So as you mentioned, we highlighted some recent press releases such as the PBOS treatment system in Daytona, visual automation in Los Angeles and also a $27 million award from the FAA for airspace modernization. So for us, the backlog has grown across all of our end markets. We've highlighted a few specific ones that we felt are of particular interest, including commercial orders. We see the scope of work that we provide for data centers is expanding -- we started with more of the engineering commissioning type work, expanded into feasibility studies. As we discussed on our last quarterly call, and now doing -- continuing to do the feasibility studies, but also doing work related to power and water supply associated with the development of new data centers. And we were also encouraged in the commercial sector by new works late in the quarter for settlement remediation programs. And one of the things that I really especially like about some of the orders that we received in the quarter is that they are really just initial funding for longer term, in some cases, multiyear programs, so it gives us encouragement and really pleased to see the backlog growth. Operator: Next question comes from Sabahat Khan with RBC Capital. Sabahat Khan: Great. Thanks, and I guess just maybe on a similar line of questioning, I guess, can you talk through -- there were a lot of moving pieces here between last year and early this year around DOS work kind of getting shifted away, diligent impacts, procurement sort of headwinds across the U.S. government. Can you just maybe projects aside, maybe just the operating backdrop, the ability of the Government and other U.S. agencies, even just private sector customers to bring work to the market in this environment. Maybe just a bit of background on where we are today versus maybe this time last year. Roger Argus: Thanks, Sabahat. Great question. Just I'll start with the U.S. federal government. I mean we did -- last year went through the longest shutdown in history. The government has approved a budget, which they're operating under now. So there were some headwinds early in the year due to that shutdown, obviously. But even with the budget in place, we're continuing to see challenges in the U.S. federal government placing orders and awarding work. It's due to a number of reasons. The constrained contracting office staff pool, basically came in last year, and there was a significant reduction in force in terms of staffing for the U.S. federal government, and that created some bottlenecks in terms of issuing task orders and getting work out to the contractors. So that remains an issue. And I know the government is trying to navigate it, but we haven't really seen any substantial change on our end in terms of the flow of work. I mean we still did work as we've announced, and we've got great backlog growth as last quarter. So it is slowing, but it's still very constrained in that regard. I think on the commercial side, while they don't have those same constraints, I think that uncertainty in the marketplace around whether it be regulatory enforcement or compliance requirements are in place. So those aren't particularly affected, which is most of our work. But I think the general uncertainty around this U.S. administration causes some of the clients to be cautious in their awards of new programs. Again, we've seen really nice awards in the commercial sector in the last quarter. in spite of these headwinds. So we're encouraged by that. But the overall sense of -- I would use the word maybe trepidation has changed because of uncertainty associated with I would call geopolitical issues. The war in Iran, obviously, creates some supply chain issues related to fuel and other things. So there's overall pressures on the market. Sabahat Khan: Great. And then just based on, I guess, thinking about your medium-term outlook based on how the year has evolved, I think the last commentary we got on that was, look, the company is still committed to sort of the fiscal '30 targets that you laid out. Given where we are in the year, I'm not sure if we can comment directionally anything on fiscal '27. But how are you feeling about the medium-term targets just trying to gauge and we're getting questions on do we return to maybe a run rate growth level in fiscal '27? So anything you can share on that front? Roger Argus: Well, it's early for us to comment on FY '27. We are encouraged by the backlog growth that we experienced in Q3, and we're really focused on Q4 in terms of continuing that trend and building a stable base of work that will carry us into the new fiscal year. Sabahat Khan: And then one quick one, I guess, on the DOS USA work, some amount of flow through over the course of this year. Just a view on that. Is that something that could potentially continue into next year? And then if there ends up being sort of a steady state amount that continues, is that eventually just become part of the base business? How should we sort of think about that from RN, whether it's modeling or just how management views that business for line? Roger Argus: Yes. Thanks, Saba. That's a great question. U.S. AID does not exist anymore. Department of State does and will continue on and is a client of ours. So while we have had these the year-over-year issues associated with the decline in ad the sort of precipitous drop-off. We do see work with the Department of State continuing. They are going to be a client of ours. I think that there's a lot of political uncertainty around some of the work that we do with AID in particular, the Ukraine work. So it's hard for us to at least at this point, give a clear view into the future on that. But it has been continuing for us and will continue at some level in the future. Operator: The next question comes from Sangita Jain with KeyBanc Capital. Sangita Jain: If I can continue on the department estate question that was asked previously. Given that Department of State is a customer of yours, and you have several other federal agencies to our customers, do you just start holding this into regular GST revenue and not even discuss it as episodic, do you think that is possible? Roger Argus: Eventually, yes. Sangita Jain: What are the things that you're kind of waiting on before you decide to do that? Roger Argus: Well, I think that for one thing, the predominance of our USA work was completed in Q4 of FY '25 so waiting for that to sunset, I think, is an important factor in our consideration around how we consider Department of State work moving forward. I think that, as I mentioned in the previous response, we've maintained a level of conservatism around what we forecast in terms of the contribution from the remaining Department of State work. But I think we will continue to have some conservatism around that. But over time, is we're hopeful that the work there will stabilize, and our confidence will increase and then it will be considered a normal part of our business. Sangita Jain: Got it. And then if I can ask on U.S. commercial. I know international commercial was pretty strong has been the last couple of quarters. So can you reference what's going on in the U.S. as you transect the slowdown in renewables, et cetera, going into next year? Roger Argus: Right. Well, there is still a renewable practice that's ongoing. The offshore wind practice was estimate is probably the right word. So we do have continuing renewables practice in the U.S. Our power and energy practice in the U.S. is growing. As I mentioned earlier, the data center work as well continues to grow, and we've -- we're receiving orders around sediment restoration now, which includes really front-end work associated with potential long-term implementation around those segment projects. So -- also, I mean, data centers for us is relatively small. I think it's around $60 million for the year. But we're seeing an expanded scope of services that our clients are coming to. So we're very encouraged by the data center that we're doing. Operator: The next question comes from Ryan Connors with Northcoast. Ryan Connors: So I wondered if we could dive a little deeper into the state and local business, Roger. I think one of the takeaways from the industrial side of the water industry in this earnings season has been that there is a bit of a downshift in the environment there. So I'm wondering how you're seeing that market evolve? Is there -- I know you mentioned it's still pretty solid. But any shift in the cadence of projects or the types of projects or the composition of funding of those projects. Anything you can tell us about how that particular market is evolving here? Roger Argus: That's a great question as well. Last quarter, we sort of signaled that the federal government has proposed some budgets that would include cuts for co-funding of some of the brand money that goes to state and municipal clients for water programs. So we expressed a little caution around that. The final budgets are not complete. I know that the -- one version of a budget when Congress came back with the state revolving funds funded at the same level or maybe slightly more next year. So the final budgets aren't final in that regard. So we've been cautious and watching very closely, but our municipal water treatment business, for example, was still up double digits year-over-year in Q3. So we haven't seen an impact there. As I mentioned during my prepared remarks, our clients are looking at other sources of funding. The demand remains stronger. They have the population to serve and provide water. And so they have to find a way to do that, and they've looked at rate increases. I know San Diego, where I lived it had a rate increase and other sources of funding, including some legal settlements that have occurred in recent months. So we've not seen it in the municipal water treatment area where we have seen it though is in the flood protection space. And that, in fact, there's been a reduction in federal co-funding around flood protection work. So flood protection is a small part of our U.S. state and local market, but we have seen an impact there. And in fact, more than 20 states have filed lawsuits against the federal government because the federal government is withholding promised flood protection funding co-funding for their projects. So that's one area where we've seen some impact. Again, it's a smaller part of our overall state and local business, but the municipal water treatment, which is the predominance of work, again, is still up double digits, and we haven't seen any impact. Ryan Connors: Got it. Okay. That's really helpful. And then secondly, bigger picture question, but obviously, concerns around AI disrupting your business model have weighed on the stock this year. I wanted to give you a chance to address that as you continue to learn more and more about what these new AI models are capable of and how they do present risks or opportunities for you? I mean how are you seeing that evolve in terms of how you view AI in the industry? And what kind of risks and opportunities it creates for Tetra Tech. Roger Argus: Thanks. Tetra Tech is a front-end applied science, technical and engineering firm. We provide the very front-end work that requires temporal knowledge of the geology that we work in, the site-specific information, the regulatory framework, the community priorities, all of these things that are -- require local knowledge and knowledge of the specific field conditions that we work in. For us -- and we use that information and our technical expertise to develop what I call bespoke solutions, custom solutions for our clients a unique problems. So we pride ourselves on our ability to technically solve the most complex problems related to water using that site specific knowledge and our technical expertise. For us, AI is an enabler for our technical experts. You'll notice and I described what we do, we are not the downstream commodity design company that has an offshore center of excellence that does routine type design work that is repetitive and potentially displaced by AI. So for us, we view AI as a tool. It's an enabler for our technical experts and it allows us to provide better solutions to evaluate more alternatives and to assess larger data sets to develop better solutions for our clients, which is what we do. Tetra Tech has always been a user of the latest technology to support our clients and differentiate us in the marketplace. So in particular, in water, where demand is high, whether it's water supply or water treatment, the challenges are more complicated. Our clients need our technical expertise enabled by AI and other digital tools to address the problems and satisfy the requirements of their projects. So for us, we see AI as an enabler going to help us provide better solutions to our clients and grow market share as well as gain margin expansion on our fixed price projects as well. Operator: The next question comes from Andrew Wittmann with Baird. Andrew J. Wittmann: One of my questions have been asked and answered, but maybe one for Steve. Just -- as you think about the margin expansion potential in the company, I see at the Investor Day, you laid out kind of this view that you could have around 50 basis points a year. And this year, you're obviously doing better than that. I guess the guide here, EBITDA margin is up 70 basis points. How should we think about that as it relates to '27? Do you feel like some of the benefits that you got this year was maybe pull forward and maybe next year because it's never going to be a straight line. We should think of it as not a straight line, maybe 2 years is 100%, but maybe this year is 70% next year, 30%. I'm not trying to get that specific. Just trying to get your way of thinking about it with your knowledge of your current utilization rates and the mix of projects that are in our backlog. And just kind of feel you off for how we should be thinking about the margin outlook for the company? Steven Burdick: Yes. I think, Andy, good question. And I think you've thought about all the different moving pieces that I think about all the time, too, in terms of -- as we pointed out back in our Investor Day back in 2023, we had already implemented a plan, and we were progressing on that plan very well, where over the last probably 6 or 7 years prior to that, we were improving our margin by about 50 basis points a year on average. And some years is a little more, some years it is a little less, but on average. And we had a plan that we've implemented since then to be about 50 basis points a year. And you're right. Some years, it could be a little less and some a little more. But just to point out from -- in fiscal '23, our margin was where we were from '23 to '24, we increased it by about 70 basis points. From '24 to '25, we increased it by about 80 basis points. This year, we're about 70. And so everything that we're doing to improve it is working. And next year, we think 50 is about right, but it could be a little less, it could be a little bit more based on history. And I think we'll have a better idea when we provide '27 guidance. Andrew J. Wittmann: Fair enough. Thank you for thoughts on that. Just one other quick one. Maybe I missed it. Did you mention how much Ukraine work -- AID work is in the fourth quarter guide? It's just asking because I know that in the third quarter, it came a little bit above kind of what you're thinking? I'm just wondering, did you comment, can you comment on 4Q contribution? Steven Burdick: Yes. It's probably about the same as Q3. So Q3 was about $66 million in total. So it's probably in that range for Q4. Andrew J. Wittmann: And then, Roger, it was interesting to hear you talking about the mining end markets -- at one point in Tetra Tech's history, this was a pretty significant portion of what you're doing. And it's been interesting that like commodity prices for copper, gold, our 2 key areas of investment have been really high for a while. And I was wondering when we start hearing more about greater investment here. And maybe it's not even for new mines, maybe it's remediation. I don't know what kind of work you're seeing I know that not just those commodities, but things like uranium have been big things for you in the past. I just was wondering kind of -- do you feel like this is kind of a blip on the radar? Or do you feel like there's something beginning here where a mining cycle could benefit Tetra Tech more materially than it has really for quite some time again. Just love to get your thoughts about kind of where that business is today and what you think it could be in the next year . Roger Argus: And we do have a strong mining practice, and it is global. We work for large multinational mining clients and I guess my first reaction to your question is for me to predict the commodity prices that wouldn't even venture to go there. And you're right that the work that we're seeing is driven in part by the prices that you mentioned as well as demand for the rare earth elements. So for us, we've got -- we've got work in all of those areas, and we continue to work with our clients closely and follow their lead in terms of where they're doing exploration, research as well as new mine development as well and including the long-term maintenance of tailings and other aspects of historic mining activities. So I'd say we're watching it very closely. We're staying very close to our clients. We've got the technical capabilities and the ability to ramp should larger projects start to come to market. So we're encouraged. But I think at this point, I'd be reticent to saying that we're seeing the beginning of a larger cycle or anything like that. I don't have that crystal ball. Operator: This will conclude the Q&A session. I will now turn the conference back over to Roger Argus to conclude. Roger Argus: Thank you, Latania. In closing, I'd like to thank you for your insight, your questions and your interest in Tetra Tech. Recent awards and future opportunities continue to demonstrate the strength of our business and the enduring alignment of our differentiated water services with the priorities of our clients worldwide. I look forward to speaking with you again next quarter. Thank you, and goodbye. Operator: Ladies and gentlemen, this concludes our conference call for today. Thank you all for participating, and have a nice day. All parties may disconnect now. Before you buy stock in Tetra Tech, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Tetra Tech wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,405!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,344,091!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 7, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Tetra Tech (TTEK) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Tetra Tech, Inc. TTEK posted third-quarter fiscal 2026 adjusted earnings of 42 cents per share, down 2.3% year over year but ahead of the Zacks Consensus Estimate of 40 cents by 5%.Net revenues were $1.11 billion, down 3.9% year over year, but topped the consensus mark of $1.08 billion by 2.8%. Backlog ended the quarter at $4.49 billion, up 4.9% sequentially, supported by new wins across water infrastructure, defense and digital automation markets. On a GAAP basis, TTEK reported revenues of $1.31 billion compared with $1.37 billion in the year-ago quarter. Revenues from U.S. federal customers, accounting for 20% of the quarter’s net revenues, increased 12% year over year, excluding USAID, Department of State and episodic disaster-response activities. Growth was supported by higher activity with the Navy and U.S. Army Corps of Engineers. U.S. commercial revenues, representing 20% of the total, rose 1% as gains in power transmission offset lower renewable-energy activity.U.S. state and local revenues, accounting for 13% of net revenues, increased 5% year over year, driven by strength in municipal water treatment, partly offset by lower flood-protection work. International revenues, representing 47% of the total, advanced 12% on growth in U.K. water and digital water automation programs.Tetra Tech reports revenues under the segments discussed below:The Commercial/International Services Group delivered net revenues of $634.2 million, up 9.3% year over year. Government Services Group net revenues were $474.3 million, down 17.2% from the prior-year quarter on a reported basis. Excluding USAID, Department of State and episodic disaster-response activities, GSG net revenues increased 7%, reflecting strength in water infrastructure and defense programs. Tetra Tech, Inc. price-consensus-eps-surprise-chart | Tetra Tech, Inc. Quote TTEK continued to manage its costs while maintaining capacity for growth investments. In the fiscal third quarter, Tetra Tech’s subcontractor costs totaled $200 million, down 7.8% from the year-ago quarter. Other costs of revenues (adjusted) were $865.4 million, down 4% from the third quarter of fiscal 2025. Selling, general and administrative expenses (adjusted) declined 1.6% year over year to $85.2 million.Adjusted operating income decreased 4.2% year over year to $158 million, while the adjusted operating margin remained unchanged at 14.3%. While exiting the fiscal third quarter, Tetra Tech had cash and cash equivalents of $230.8 million compared with $167.5 million recorded at the end of fiscal 2025. Long-term debt was $801.1 million compared with $763.4 million at fiscal 2025-end.In the first nine months of fiscal 2026, Tetra Tech generated net cash of $466.6 million from operating activities compared with $356.8 million in the prior-year period. Capital expenditures were $14.1 million, up 5.4% year over year. TTEK’s proceeds from borrowings totaled $245 million, while repayments on long-term debt were $210 million. Tetra Tech distributed dividends totaling $52.5 million in the first nine months of fiscal 2026, up from $48 million in the prior-year period. The company also repurchased shares worth $202 million compared with $200 million in the first nine months of fiscal 2025. For fiscal 2026 (ending September 2026), Tetra Tech expects net revenues in the range of $4.315-$4.365 billion. At the midpoint, the outlook implies 8% year-over-year growth after excluding USAID, Department of State and episodic disaster-response activities.Adjusted earnings are projected in the range of $1.56-$1.59 per share. The company expects adjusted EBITDA margin to expand 70 basis points year over year.For the fiscal fourth quarter, management forecasts net revenues of $1.12-$1.17 billion. Adjusted earnings are expected in the range of 45-48 cents per share. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Constellium SE CSTM came out with quarterly earnings of $1.04 per share in the second quarter of 2026, beating the Zacks Consensus Estimate of $0.91 per share. This compares with earnings of $0.25 per share a year ago.Constellium posted revenues of $2.75 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 3.5%. This compares with year-ago revenues of $2.1 billion.Generac Holdings Inc. GNRC came out with quarterly earnings of $2.91 per share in the second quarter of 2026, beating the Zacks Consensus Estimate of $1.95 per share. This compares with earnings of $1.65 per share a year ago.Generac Holdings posted revenues of $1.17 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.37%. This compares with year-ago revenues of $1.06 billion.Graco Inc. GGG reported second-quarter 2026 adjusted earnings of 91 cents per share, up 17% from 78 cents in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of 81 cents by 12.4%.The company’s net sales rose 3% year over year to $590.6 million but lagged the consensus estimate of $609 million by 3%. Organic order backlog (excluding acquisitions) rose 28% from the end of 2025. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tetra Tech, Inc. (TTEK) : Free Stock Analysis Report Graco Inc. (GGG) : Free Stock Analysis Report Generac Holdings Inc. (GNRC) : Free Stock Analysis Report Constellium SE (CSTM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Tetra Tech, Inc.? Here are five stocks we like better. Tetra Tech exceeded third-quarter guidance, reporting $1.1 billion in net revenue, adjusted EPS of $0.42 and record year-to-date operating cash flow of $467 million. Backlog rose 5% sequentially to nearly $4.5 billion. Growth was led by U.S. federal and international markets, which increased 12% each, while demand remained strong for water, environmental, defense, infrastructure and data-center services. However, federal task-order timing and some commercial spending remain constrained by policy and geopolitical uncertainty. The company raised its fiscal 2026 adjusted EPS outlook to $1.56–$1.59 and forecast revenue of $4.315–$4.365 billion. Tetra Tech also increased its dividend by 11% and repurchased $100 million of shares during the quarter. Tetra Tech (NASDAQ:TTEK) reported fiscal 2026 third-quarter results that exceeded its guidance range, supported by double-digit growth in U.S. federal and international markets, higher backlog and strong operating cash flow. The company raised its full-year adjusted earnings per share outlook following the quarter. Chief Executive Officer and President Roger Argus said net revenue reached $1.1 billion in the quarter, exceeding the high end of the company’s guidance, while adjusted earnings per share of $0.42 also came in above expectations. Operating cash flow totaled $229 million during the quarter and $467 million through the first nine months of fiscal 2026, which Argus described as a record for the first three quarters of a fiscal year. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now Backlog increased by $208 million, or 5% sequentially, to just under $4.5 billion. Argus said the company counts only contracted, funded and authorized work in its backlog, providing what he characterized as high-quality visibility into future activity. The Government Services Group grew 7% year over year and posted a 17.5% margin in the third quarter. Demand was particularly solid in water, environmental and defense work for U.S. federal as well as state and local government customers, according to Argus. → 3 Value ETFs to Consider as Growth Stocks Lag Behind The Commercial International Group increased revenue 9% from a year earlier and reported a 15.1% margin. Growth reflected a diversified set of water, power and energy, and mining assignments around the world. International revenue rose 12% year over year and accounted for 47% of the business, driven by water programs in the U.K., Ireland and Netherlands; infrastructure work in Canada; and mining and digital automation revenue in Australia. U.S. federal revenue increased 12% and represented 20% of total business, aided by infrastructure, planning and environmental work for defense and civilian customers. U.S. commercial revenue increased 1% and represented 20% of the business. Growth in energy, transmission, mining and minerals work was partly offset by lower renewable-energy activity and the cancellation of remaining Atlantic Coast offshore wind programs. U.S. state and local revenue grew 5%, with continuing demand for municipal water projects involving PFAS treatment, digital modernization, water reuse and desalination. The company cited several new awards and contract additions that supported backlog growth. These included nearly $300 million in contract capacity with the U.S. Army Corps of Engineers’ Mobile and Norfolk districts, as well as a lead designer role for what Argus said will be the largest dedicated municipal PFAS treatment system in the U.S., located in Dayton, Ohio. → 5 AI Stocks Are Pulling Back—Which Growth Catalysts Still Look Strongest? Commercial orders were led by digital automation services for data centers, power and transmission assignments, and sediment-restoration programs. During the question-and-answer session, Argus said the company’s data-center work has broadened from engineering and commissioning into feasibility studies and work related to power and water supplies for new facilities. He said data-center revenue is currently about $60 million for the year. Chief Financial Officer Steve Burdick said operating income rose significantly despite reported revenue declining from the prior year, primarily because of lower revenue from the company’s USA customer and the absence of certain one-time disaster work recorded last year. He said the company’s focus on front-end technical design and engineering work in water and environmental markets has supported higher margins. Adjusted EBITDA margin on net revenue increased about 80 basis points through the first nine months of fiscal 2026 compared with the same period in fiscal 2025, Burdick said. On a net service revenue basis, he said EBITDA margin would be about 240 basis points higher year to date. The company’s days sales outstanding stood at 56 days, similar to the prior year and improved from the fiscal second quarter. Tetra Tech’s net debt-to-EBITDA leverage was 0.88 times, compared with 0.96 times a year earlier, while return on capital employed exceeded 20%. Tetra Tech reported $567 million of trailing-12-month operating cash flow and said it intends to use its balance sheet and cash generation to support organic growth and acquisitions. Year to date, it closed acquisitions of defense-focused technical firms Halvik in the U.S. and Providence in Australia. The board approved a quarterly cash dividend that is 11% higher than the year-ago payment, marking the company’s 45th consecutive quarterly dividend with annual double-digit increases, according to Burdick. The company also increased its third-quarter share repurchase activity to $100 million, bringing nine-month buybacks to $200 million. It has $398 million remaining under its board-approved repurchase authorization. Argus said federal work continues to face administrative constraints following staffing reductions at U.S. government contracting offices. While Tetra Tech continues to win work and build backlog, he said the flow of task orders and awards remains constrained. He also cited uncertainty surrounding the U.S. administration and geopolitical conditions as factors causing some commercial customers to be cautious about initiating new programs. Regarding the former U.S. Agency for International Development business, Argus said USAID “does not exist anymore,” while the Department of State will remain a client. He said the company expects Department of State work to continue at some level but remains conservative in forecasting its contribution, particularly amid uncertainty around aid-related programs and work in Ukraine. Burdick said Ukraine-related aid work contributed about $66 million in the third quarter and is expected to be in a similar range in the fourth quarter. In municipal water, Argus said Tetra Tech’s water treatment business remained up double digits year over year in the third quarter despite uncertainty around certain federal funding programs. He said municipalities are pursuing rate increases, bonds, commercial financing and other sources to fund needed projects. Flood protection has seen a more direct impact from reduced federal co-funding, though he said it represents a smaller part of the company’s state and local business. For the fiscal fourth quarter, Tetra Tech forecast net revenue of $1.12 billion to $1.17 billion and adjusted earnings per share of $0.45 to $0.48. For fiscal 2026, the company raised its adjusted EPS outlook to $1.56 to $1.59 and projected net revenue of $4.315 billion to $4.365 billion. At the midpoint, the outlook implies 8% year-over-year net revenue growth and 70 basis points of margin expansion. The guidance excludes contributions from future acquisitions. Argus said water-related demand remains a central driver of the company’s global growth opportunities, including in hydropower, digital automation, resilient infrastructure, mining and data centers. He said the company views artificial intelligence as an enabler for its technical professionals, helping them evaluate larger data sets and develop site-specific solutions, rather than as a replacement for its front-end applied science and engineering services. Tetra Tech, Inc is a leading provider of consulting and engineering services with a focus on water, environment, infrastructure, resource management and energy sectors. Headquartered in Pasadena, California, the company delivers end-to-end solutions that encompass planning, design, engineering, program management and construction management. Tetra Tech's multidisciplinary teams integrate science, technology and advisory services to address complex challenges in areas such as water resources, environmental remediation, sustainable infrastructure and renewable energy. The company's core offerings include environmental assessments and cleanup, water treatment and reuse, coastal and marine engineering, climate resilience planning, and engineering design for transportation and built environments. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Tetra Tech Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by double-digit growth in U.S. federal and international markets, specifically within high-end water treatment, environmental services, and sustainable infrastructure. Backlog reached nearly $4.5 billion, a 5% sequential increase, supported by a conservative 'contracted, funded, and authorized' methodology that ensures high visibility into future revenue. International growth of 12% was fueled by large-scale water programs in the U.K., Ireland, and the Netherlands, alongside digital automation and mining projects in Australia. The U.S. federal business grew 12% despite a constrained contracting environment, led by infrastructure planning and environmental work for defense and civilian agencies. Management attributed margin expansion to a strategic focus on front-end technical design and engineering, which commands higher premiums than downstream commodity design work. The U.S. commercial segment saw growth in data center digital automation and power services, which helped offset the total cancellation of remaining Atlantic Coast offshore wind programs. Full-year fiscal 2026 guidance was raised to reflect strong third-quarter performance and a robust project pipeline in water-related priorities globally. The company is targeting 50 basis points of annual EBITDA margin expansion, supported by a shift toward higher-value technical services and digital tool integration. Growth in the U.K. is underpinned by the AMP cycle, which includes approximately GBP 105 billion of water sector investment through 2030. Management views AI as a strategic enabler for their technical experts to evaluate larger data sets and develop bespoke solutions, rather than a threat to their high-end consulting model. The capital allocation strategy prioritizes organic growth and accretive acquisitions in technology and automation, while maintaining a net debt target of 1x to 2x EBITDA. U.S. federal contracting remains bottlenecked due to a significant reduction in force within government contracting offices, slowing the issuance of task orders. A reduction in federal co-funding for flood protection has led to lawsuits from over 20 states, though this remains a small portion of Tetra Tech's state and local business. The company is managing the sunset of episodic USAID work, with plans to eventually fold remaining Department of State revenue into regular Government Services Group reporting. Geopolitical uncertainty and supply chain pressures related to global conflicts are contributing to a sense of 'trepidation' and caution among some commercial clients. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that their 'bespoke' solutions require site-specific and regulatory knowledge that AI cannot currently replicate. AI is being used to improve margins on fixed-price projects by allowing experts to assess more alternatives and larger data sets efficiently. Management noted that while they have exceeded their 50 basis point target recently (achieving 70-80 points), they view 50 points as the sustainable long-term average. The shift toward 'Net Service Revenue' (NSR) reporting was discussed, noting that EBITDA margins would appear approximately 240 basis points higher on an NSR basis. Data center work is expanding from initial engineering and commissioning into feasibility studies for power and water supply, totaling about $60 million for the year. Strong commercial orders in sediment restoration and digital automation are helping to stabilize the segment following the offshore wind downturn.

This article first appeared on GuruFocus. Net Revenue: $1.1 billion for the third quarter, exceeding the upper end of guidance. Adjusted Earnings Per Share (EPS): $0.42, exceeding the upper end of guidance. Cash Flow from Operations: $229 million in the quarter; $467 million year-to-date, an all-time high for the first three quarters. Backlog: Increased sequentially by 5% to just under $4.5 billion, up $208 million in the quarter. Government Services Group (GSG) Revenue: Grew 7% year-over-year with a margin of 17.5%. Commercial/International Group (CIG) Revenue: Up 9% year-over-year with a margin of 15.1%. International Revenue: Up 12% year-over-year, representing 47% of business. US Federal Revenue: Up 12% year-over-year, representing 20% of business. US Commercial Revenue: Up 1% year-over-year, representing 20% of business. US State and Local Revenue: Grew 5% in the quarter. Operating Income: Increased significantly year-over-year. Adjusted EBITDA Margin (on Net Revenue): Increased by about 80 basis points year-over-year for the first nine months. Days Sales Outstanding (DSO): 56 days. Net Debt Leverage: 0.88x EBITDA. Return on Capital Employed (ROCE): Over 20%. Stock Buyback: $100 million in the third quarter; $200 million year-to-date. Dividend: Board approved an 11% year-over-year increase in the quarterly cash dividend. Fiscal Q4 2026 Net Revenue Guidance: $1.12 billion to $1.17 billion. Fiscal Q4 2026 Adjusted EPS Guidance: $0.45 to $0.48. Fiscal Full Year 2026 Net Revenue Guidance: $4.315 billion to $4.365 billion. Fiscal Full Year 2026 Adjusted EPS Guidance: $1.56 to $1.59. Warning! GuruFocus has detected 7 Warning Signs with HNI. Is TTEK fairly valued? Test your thesis with our free DCF calculator. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Strong third-quarter performance with net revenue of $1.1 billion and EPS of $0.42, both exceeding guidance. Record cash flow from operations of $467 million year-to-date, a 31% improvement over fiscal 2025. Backlog increased by 5% sequentially to nearly $4.5 billion, driven by wins in federal, commercial, and state/local markets. Government Services Group (GSG) grew 7% year-over-year with a strong margin of 17.5%. International revenue grew 12% year-over-year, driven by water programs in the UK, Ireland, Netherlands, Canada, and Australia. US commercial revenue grew only 1% year-over-year, partially offset by a decline in renewable energy work and cancellation of offshore wind programs. Uncertainty in US federal government contracting due to constrained staffing and budget bottlenecks, slowing task order awards. Geopolitical uncertainties, including the war in Iran and US administration policies, are causing client caution in awarding new programs. Flood protection work in the US state and local market has been impacted by reduced federal co-funding, with over 20 states filing lawsuits. The decline in USAID work and ongoing political uncertainty around Department of State programs, particularly Ukraine-related, creates revenue unpredictability. Here are the key highlights from the Tetra Tech Inc (NASDAQ:TTEK) earnings call transcript, focusing on the most significant Q&A exchanges. Q: Can you discuss the primary drivers behind the recent backlog growth, particularly on the commercial and federal side?A: Roger Argus (CEO): We are very encouraged by the 5% sequential backlog growth, our second consecutive quarter of growth. This includes only contracted, funded, and authorized work. Growth was seen across all end markets. On the commercial side, the scope of work for data centers is expanding from engineering and commissioning into feasibility studies and work related to power and water supply. We also saw new orders for sediment remediation programs. Many of these orders are initial funding for longer-term, multiyear programs, which is especially encouraging. Q: Can you talk about the operating backdrop for the US government and private sector customers, given the challenges from last year's shutdown and procurement headwinds?A: Roger Argus (CEO): While the government has a budget now, we continue to see challenges in the US federal government placing orders due to constrained contracting office staff from last year's reduction in force. This remains a bottleneck. On the commercial side, general uncertainty around the US administration causes some clients to be cautious. However, we still saw nice commercial awards last quarter. Overall, there is pressure from geopolitical issues like the war in Iran, which creates supply chain concerns. Q: How should we think about the margin expansion potential for the company, given the 70 basis point improvement this year versus the 50 basis point annual target?A: Steven Burdick (CFO): The 50 basis point annual improvement is an average. Some years will be a little more, some a little less. From fiscal '23 to '24, we increased by 70 basis points; from '24 to '25, by 80 basis points; and this year, we are at about 70. Our plan is working. For next year, we think 50 basis points is about right, but it could be a little less or a little more based on history. We will have a better idea when we provide fiscal '27 guidance. Q: How are you seeing the US state and local market evolve, especially given potential federal funding cuts for water programs?A: Roger Argus (CEO): We have been cautious, but our municipal water treatment business was still up double digits year-over-year in Q3. Clients are looking at other funding sources like rate increases and legal settlements. However, we have seen an impact in the flood protection space due to a reduction in federal co-funding, with over 20 states filing lawsuits. Flood protection is a smaller part of our state and local business, but the predominant municipal water treatment work remains strong. Q: How do you view the risks and opportunities that AI creates for Tetra Tech?A: Roger Argus (CEO): Tetra Tech provides front-end, bespoke solutions that require site-specific knowledge and technical expertise. We are not a downstream commodity design firm that could be displaced by AI. For us, AI is an enabler for our technical experts, allowing them to evaluate more alternatives and assess larger data sets to develop better solutions. We see AI helping us grow market share and gain margin expansion on fixed-price projects. Q: Can you provide an update on the Department of State (DOS) work and whether it could eventually become part of the base business?A: Roger Argus (CEO): USAID no longer exists, but the Department of State is still a client. The year-over-year issues are due to the precipitous drop-off in USAID work. We see DOS work continuing, but there is political uncertainty around some of it, particularly the Ukraine work. We maintain conservatism in our forecasts. Over time, as the work stabilizes and our confidence increases, it will be considered a normal part of our business. Q: What is the contribution of the Ukraine/AID work expected to be in the fourth quarter?A: Steven Burdick (CFO): It will be about the same as the third quarter, which was approximately $66 million in total. Q: Do you feel the mining end market is beginning a new cycle that could benefit Tetra Tech more materially?A: Roger Argus (CEO): We have a strong global mining practice. The work we are seeing is driven by commodity prices for copper and gold, as well as demand for rare earth elements. We are staying close to our clients and have the technical capabilities to ramp up if larger projects come to market. However, I would be reticent to say we are seeing the beginning of a larger cycle; I don't have that crystal ball. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Tetra Tech (TTEK) came out with quarterly earnings of $0.42 per share, beating the Zacks Consensus Estimate of $0.4 per share. This compares to earnings of $0.43 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +5.00%. A quarter ago, it was expected that this consulting and engineering services company would post earnings of $0.31 per share when it actually produced earnings of $0.34, delivering a surprise of +9.68%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Tetra, which belongs to the Zacks Engineering - R and D Services industry, posted revenues of $1.11 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 2.60%. This compares to year-ago revenues of $1.15 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Tetra shares have lost about 0.1% since the beginning of the year versus the S&P 500's gain of 8.5%. While Tetra has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Tetra was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.47 on $1.15 billion in revenues for the coming quarter and $1.55 on $4.31 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Engineering - R and D Services is currently in the top 34% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Mayville Engineering (MEC), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 4. This company is expected to post quarterly loss of $0.08 per share in its upcoming report, which represents a year-over-year change of -180%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Mayville Engineering's revenues are expected to be $149.69 million, up 13.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tetra Tech, Inc. (TTEK) : Free Stock Analysis Report Mayville Engineering Company, Inc. (MEC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Revenue $1.31 billion; Net Revenue $1.11 billion Operating Income $158 million; EBITDA $173 million EPS $0.42 Backlog $4.49 billion, up 5% sequentially YTD performance drives increased FY26 guidance PASADENA, Calif., July 29, 2026--(BUSINESS WIRE)--Tetra Tech, Inc. (NASDAQ: TTEK), a global provider of high-end technical and engineering services, Leading with Science® in water, environment and sustainable infrastructure, today announced results for the third quarter ended June 28, 2026. Revenue and revenue, net of subcontractor costs (net revenue)1, in the third quarter totaled $1.31 billion and $1.11 billion, respectively. Net revenue increased 8% Y/Y excluding USAID / DOS and episodic disaster response. Operating income was $158 million, EBITDA1 was $173 million, and EPS was $0.42. Backlog was $4.49 billion at the end of the third quarter, up 5% sequentially. Cash from operations was $229 million in the third quarter and $567 million over the trailing twelve months, resulting in a DSO of 56 days. Recent Key Wins U.S. Army Corps of Engineers Norfolk District multiple-award contract for engineering services U.S. Army Corps of Engineers Mobile District multiple-award contract for water infrastructure U.S. EPA Office of Water single-award water quality and ecological monitoring contract U.S. Federal Aviation Administration single-award airspace redesign task order contract L.A. Department of Water & Power multiple-award environmental and digital automation contract California Wastewater Authority digital systems integration contract Scotland Excel engineering and technical consultancy framework contract Chelan County Public Utility District hydropower dam modernization contract City of Dayton Department of Water PFAS water treatment design contract Hyperscale AI Data Center power system digital automation and cybersecurity contract Executive Management Comments Roger Argus, Chief Executive Officer, commented, "We delivered a strong third quarter with growth primarily driven by U.S. federal and international end markets, both increasing at a double-digit rate. We received significant new orders during the quarter, including commercial orders for data center and sediment restoration projects, driving our backlog up by more than $200 million. The Company’s performance year-to-date resulted in our increasing guidance for fiscal 2026." Steve Burdick, Chief Financial Officer, stated, "Tetra Tech generated its strongest cash flow on record with $467 million from operations through the first three quarters of fiscal 2026. Our ability to consistently generate more cash than net income has allowed the Company to fund acquisitions, increase the stock buybacks, and pay higher dividends, while still deleveraging our net debt." Quarterly Dividend and Share Repurchase Program On July 27, 2026, Tetra Tech’s Board of Directors approved a quarterly dividend in the amount of $0.072 per share, an 11% increase year-over-year, payable on August 27, 2026, to stockholders of record as of August 13, 2026. This is the 45th consecutive double-digit increase in the Company’s quarterly dividend. In the third quarter of fiscal 2026, Tetra Tech repurchased $100 million of common stock. Additionally, as of June 28, 2026, the Company had $398 million remaining under its share repurchase program. Nine-Month Results Revenue for the nine-month period was $3.74 billion and net revenue was $3.20 billion. Net revenue increased 8% Y/Y excluding USAID / DOS and episodic disaster response. Operating income was $430 million, adjusted EBITDA was $466 million, and EPS was $1.18; cash flows generated from operations were $467 million. 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 the fourth quarter of fiscal 2026, Tetra Tech expects net revenue2 to range from $1.12 billion to $1.17 billion and EPS to range from $0.45 to $0.48. For fiscal 2026, Tetra Tech is increasing adjusted EPS3 guidance to range from $1.56 to $1.59. Tetra Tech is narrowing the fiscal 2026 net revenue range to $4.315 billion to $4.365 billion, which represents an increased midpoint for the year. Webcast Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the third quarter of fiscal 2026 results through a link posted on the Company’s website at tetratech.com on July 30, 2026, at 8:00 a.m. (PT). About Tetra Tech Tetra Tech is the leader in water, environment and sustainable infrastructure, providing high-end technical 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. 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 in this release. View source version on businesswire.com: https://www.businesswire.com/news/home/20260729563017/en/ Contacts Jim Wu, Investor RelationsCharlie MacPherson, Media & Public Relations(626) 470-2844