Tetra Tech : Supplemental Financial Information - FY20 Q1

Unaudited Investors Report		2017		2018								2019								2020
($ in Thousands, Except Per Share Data)		Total		Total		1st Qtr		2nd Qtr		6 mos		3rd Qtr		9 mos		4th Qtr		Total		1st Qtr
REVENUE - ADJUSTED (1)		2,735,153		2,960,525		715,978		727,266		1,443,244		825,464		2,268,708		853,882		3,122,590		797,478
REVENUE, NET OF SUBCONTRACTOR COSTS ["Net Revenue" (2)]
Government Services Group (GSG)		1,067,158		1,212,334		303,281		316,041		619,322		352,563		971,885		357,496		1,329,381		329,707
Commercial / International Services Group (CIG) - Adjusted (1)		966,938		996,328		249,506		274,084		523,590		270,471		794,061		282,680		1,076,741		284,279
NET REVENUE - ADJUSTED (1)		2,034,096		2,208,662		552,787		590,125		1,142,912		623,034		1,765,946		640,176		2,406,122		613,986
Remediation and Construction Management (RCM) / Claims		(86)		(7,928)		577		(4,741)		(4,165)		162		(4,002)		(12,483)		(16,485)		37
OTHER COSTS OF REVENUE - ADJUSTED (1) (3)		1,665,852		1,807,213		454,119		487,725		941,846		505,056		1,446,901		520,495		1,967,396		505,064
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - ADJUSTED (1) (3)		177,113		185,146		42,961		47,889		90,848		52,640		143,489		54,706		198,195		46,421
ACQUISITION AND INTEGRATION EXPENSES		-		-		-		-		-		-		-		10,351		10,351		-
PURCHASE ACCOUNTING / NON-CORE DISPOSITIONS (GAINS)		(6,923)		9,187		-		1,028		1,028		500		1,528		20,257		21,785		(800)
INCOME FROM OPERATIONS, AS REPORTED
	183,342		190,086		55,711		47,545		103,256		64,841		168,097		20,664		188,762		63,302
INCOME FROM OPERATIONS - ADJUSTED (1) (2) (3)
	191,131		216,303		55,707		54,511		110,218		65,338		175,556		64,975		240,531		62,501
GSG		138,199		168,211		37,413		44,803		82,217		52,487		134,703		50,560		185,263		42,048
CIG		90,817		86,908		27,099		20,869		47,968		27,025		74,993		29,285		104,278		30,832
Corporate (4)		(37,885)		(38,816)		(8,805)		(11,161)		(19,967)		(14,174)		(34,140)		(14,870)		(49,010)		(10,379)
RCM / Claims		(14,712)		(17,030)		4		(5,938)		(5,934)		3		(5,931)		(13,702)		(19,633)		1
OPERATING MARGIN - ADJUSTED [% of Net Revenue] (1) (2) (3)		9.4%		9.8%		10.1%		9.2%		9.6%		10.5%		9.9%		10.1%		10.0%		10.2%
GSG		13.0%		13.9%		12.3%		14.2%		13.3%		14.9%		13.9%		14.1%		13.9%		12.8%
CIG		9.4%		8.7%		10.9%		7.6%		9.2%		10.0%		9.4%		10.4%		9.7%		10.8%
Interest Expense
	11,581		15,524		2,897		3,164		6,061		3,546		9,607		4,019		13,626		3,349
INCOME BEFORE INCOME TAX EXPENSE (BENEFIT)		171,761		174,562		52,814		44,381		97,195		61,295		158,491		16,645		175,136		59,953
Income Tax Expense (Benefit)		53,844		37,605		10,782		(11,563)		(781)		12,044		11,263		5,112		16,375		12,636
NET INCOME ATTRIBUTABLE TO TETRA TECH		117,874		136,883		41,997		55,911		97,907		49,233		147,141		11,526		158,668		47,310
DILUTED AVERAGE SHARES		57,913		56,598		56,366		55,985		56,161		55,768		56,034		55,618		55,936		55,438
DILUTED EPS ATTRIBUTABLE TO TETRA TECH, AS REPORTED	$	2.04	$	2.42	$	0.75	$	1.00	$	1.74	$	0.88	$	2.63	$	0.21	$	2.84	$	0.85
ADJUSTED DILUTED EPS (1) (2) (3) (5)	$	2.13	$	2.64	$	0.70	$	0.70	$	1.40		0.89		2.28		0.88		3.17	$	0.84
ADJUSTED EBITDA (1) (2) (3)		235,019		253,876		63,922		60,909		124,831		71,854		196,686		72,489		269,175		68,729
ADJUSTED EBITDA MARGIN [% of Net Revenue]		11.6%		11.5%		11.6%		10.3%		10.9%		11.5%		11.1%		11.3%		11.2%		11.2%
DAYS IN SALES OUTSTANDING		83.1		85.4		83.3		78.2		78.2		80.1		80.1		77.6		77.6		73.3
CASH FLOW FROM OPERATIONS		144,982		185,733		(15,302)		114,550		99,248		14,136		113,384		95,129		208,513		(18,024)
CAPITAL EXPENDITURES		9,741		9,726		3,853		3,325		7,178		2,822		9,999		6,199		16,198		3,331
Y/Y ADJUSTED NET REVENUE GROWTH % (1) (2)		6.4%		8.6%		1.7%		10.8%		6.2%		9.5%		7.4%		13.6%		8.9%		11.1%
GSG		12.2%		13.6%		(2.2%)		8.8%		3.1%		17.1%		7.8%		15.0%		9.7%		8.7%
CIG		0.6%		3.0%		6.8%		13.3%		10.1%		1.0%		6.8%		11.8%		8.1%		13.9%
NET REVENUE % BY CLIENT TYPE - ADJUSTED
International		30%		28%		30%		31%		31%		29%		30%		32%		30%		34%
U.S. Commercial		27%		27%		25%		24%		24%		24%		24%		23%		24%		24%
U.S. Federal Government		30%		30%		28%		27%		28%		28%		28%		28%		28%		28%
U.S. State & Local Government		13%		15%		17%		18%		17%		19%		18%		17%		18%		14%
NET REVENUE % BY CONTRACT TYPE - ADJUSTED
Fixed-Price		32%		33%		34%		35%		34%		33%		34%		35%		34%		34%
Time-and-Materials		49%		50%		49%		49%		49%		52%		50%		49%		50%		49%
Cost-Plus		19%		17%		17%		16%		17%		15%		16%		16%		16%		17%
BACKLOG		2,541,105		2,663,814		2,793,108		2,814,077		2,814,077		2,833,990		2,833,990		3,091,857		3,091,857		3,165,768

1. Excludes Remediation and Construction Management, non-cash claim settlements
2. Non-GAAPfinancial measure. For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures, please visit tetratech.com/investor-presentations.html
3. Excludes purchase accounting and non-core dispositions, and acquisition and integration expenses
4. Corporate costs not allocable to the segments (e.g., acquisition costs, amortization expense, stock option expense, etc.)
5. Excludes non-recurring tax benefits

Tetra Tech, Inc.

Regulation G Information

December 29, 2019

Reconciliation of Revenue to Revenue, Net of Subcontractor Costs ("Net Revenue")(in millions)

							2019				2020
Consolidated	2017		2018	1st Qtr	2nd Qtr	6 mos	3rd Qtr	9 mos	4th Qtr	Total	1st Qtr
Revenue (As Reported)	2,753.4		2,964.1	717.4	722.6	1,440.0	825.8	2,265.8	841.5	3,107.3	797.6
RCM / Non-Cash Claims	(18.2)		(3.6)	(1.4)	4.6	3.2	(0.3)	2.8	12.4	15.2	(0.1)
Adjusted Revenue	2,735.2		2,960.5	716.0	727.2	1,443.2	825.5	2,268.6	853.9	3,122.5	797.5
Subcontractor Costs, Less RCM	(701.0)		(751.8)	(163.2)	(137.1)	(300.3)	(202.5)	(502.7)	(213.7)	(716.4)	(183.5)
Adjusted Net Revenue	2,034.2		2,208.7	552.8	590.1	1,142.9	623.0	1,765.9	640.2	2,406.1	614.0
GSG Segment
Revenue	1,487.6		1,694.9	412.0	417.5	829.5	492.0	1,321.5	499.2	1,820.7	457.4
Subcontractor Costs	(420.4)		(482.6)	(108.7)	(101.5)	(210.2)	(139.4)	(349.6)	(141.7)	(491.3)	(127.7)
Net Revenue	1,067.2		1,212.3	303.3	316.0	619.3	352.6	971.9	357.5	1,329.4	329.7
CIG Segment
Revenue	1,326.0		1,323.1	317.8	322.5	640.3	347.8	988.0	354.5	1,342.5	351.2
Non-Cash Claims	-		10.6	-	-	-	-	-	13.7	13.7	-
Adjusted Revenue	1,326.0		1,333.7	317.8	322.5	640.3	347.8	988.0	368.2	1,356.2	351.2
Subcontractor Costs	(359.1)		(337.4)	(68.3)	(48.4)	(116.7)	(77.3)	(194.0)	(85.5)	(279.5)	(66.9)
Adjusted Net Revenue	966.9		996.3	249.5	274.1	523.6	270.5	794.0	282.7	1,076.7	284.3
RCM Segment
Revenue	18.2		14.2	1.4	(4.6)	(3.2)	0.3	(2.8)	1.3	(1.5)	0.1
Subcontractor Costs	(18.3)		(11.6)	(0.9)	(0.1)	(1.0)	(0.1)	(1.2)	(0.1)	(1.3)	(0.1)
Net Revenue	(0.1)		2.6	0.5	(4.7)	(4.2)	0.2	(4.0)	1.2	(2.8)	-
Reconciliation of Net Income Attributable to Tetra Tech to EBITDA
(in thousands)
							2019				2020
	2017		2018	1st Qtr	2nd Qtr	6 mos	3rd Qtr	9 mos	4th Qtr	Total	1st Qtr
Net Income Attributable to Tetra Tech	117,874		136,883	41,997	55,911	97,907	49,233	147,141	11,526	158,668	47,310
Interest Expense1	11,581		15,524	2,897	3,164	6,061	3,546	9,607	4,019	13,626	3,349
Depreciation2	22,207		19,592	4,297	4,212	8,510	4,166	12,675	4,611	17,285	3,293
Amortization2	22,786		18,249	3,977	2,244	6,221	2,396	8,618	2,941	11,559	2,942
Contingent Consideration	(6,923)		5,753	-	1,028	1,028	500	1,528	1,557	3,085	-
Goodwill Impairment	-		-	-	-	-	-	-	7,755	7,755	-
Income Tax Expense (Benefit)	53,844		37,605	10,782	(11,563)	(781)	12,044	11,263	5,112	16,375	12,636
EBITDA	221,369		233,606	63,950	54,996	118,946	71,885	190,832	37,521	228,353	69,530
Acquisition & Integration Expenses	-		-	-	-	-	-	-	10,351	10,351	-
Non-core dispositions	-		3,434	-	-	-	-	-	10,945	10,945	(800)
RCM / Non-Cash Claims	13,650		16,836	(28)	5,913	5,885	(31)	5,854	13,672	19,526	(1)
Adjusted EBITDA	235,019		253,876	63,922	60,909	124,831	71,854	196,686	72,489	269,175	68,729

1. Includes amortization of deferred financing fee
2. Varies slightly from the Statements of Cash Flows, which includes amortization of deferred financing fee

Tetra Tech, Inc.

Consolidated Balance Sheets

(unaudited - in thousands, except par value)

	December 29,		September 29,
		2019			2019
Assets
Current assets:
Cash and cash equivalents	$	110,833	$	120,732
Accounts receivable, net		735,128			768,720
Contract assets		111,115			114,324
Prepaid expenses and other current assets		94,697			62,196
Income taxes receivable		10,483			13,820
Total current assets		1,062,256			1,079,792
Property and equipment, net		40,438			39,441
Right-of-use assets, operating leases		223,930			-
Investments in unconsolidated joint ventures		7,172			6,873
Goodwill		937,068			924,820
Intangible assets, net		14,081			16,440
Deferred tax assets		27,827			28,385
Other long-term assets		39,781			51,657
Total assets	$	2,352,553		$	2,147,408
Liabilities and Equity
Current liabilities:
Accounts payable	$	140,228	$	206,609
Accrued compensation		124,286			203,384
Contract liabilities		203,818			165,611
Short-term lease liabilities, operating leases		70,958			-
Current portion of long-term debt		12,546			12,572
Current contingent earn-out liabilities		22,825			24,977
Other current liabilities		137,815			156,801
Total current liabilities		712,476			769,954
Deferred tax liabilities		13,134			12,971
Long-term debt		322,496			263,949
Long-term lease liabilities, operating leases		172,121			-
Long-term contingent earn-out liabilities		21,598			28,015
Other long-term liabilities		83,963			83,055
Commitments and contingencies
Equity:
Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares
issued and outstanding at December 29, 2019 and September 29, 2019		-			-
Common stock - authorized, 150,000 shares of $0.01 par value; issued
and outstanding, 54,728 and 54,565 shares at December 29, 2019 and
September 29, 2019, respectively		547			546
Additional paid-in capital		60,747			78,132
Accumulated other comprehensive loss		(145,015)			(160,584)
Retained earnings		1,110,312			1,071,192
Tetra Tech stockholders' equity		1,026,591			989,286
Noncontrolling interests		174			178
Total stockholders' equity		1,026,765			989,464
Total liabilities and stockholders' equity	$	2,352,553		$	2,147,408

Tetra Tech, Inc.

Consolidated Statements of Income

(unaudited - in thousands, except per share data)

		Three Months Ended
	December 29,		December 30,
		2019			2018
Revenue	$	797,623	$	717,431
Subcontractor costs		(183,600)			(164,067)
Other costs of revenue		(504,286)			(454,680)
Gross profit		109,737			98,684
Selling, general and administrative expenses		(46,435)			(42,973)
Income from operations		63,302			55,711
Interest expense		(3,349)			(2,897)
Income before income tax expense		59,953			52,814
Income tax expense		(12,636)			(10,782)
Net income		47,317			42,032
Net income attributable to noncontrolling interests		(7)			(35)
Net income attributable to Tetra Tech	$	47,310	$	41,997
Earnings per share attributable to Tetra Tech:
Basic	$	0.87	$	0.76
Diluted	$	0.85	$	0.75
Weighted-average common shares outstanding:
Basic		54,560			55,390
Diluted		55,438			56,366

Tetra Tech, Inc.

Consolidated Statements of Cash Flows

(unaudited, in thousands)

			Three Months Ended
		December 29,		December 30,
			2019			2018
Cash flows from operating activities:
Net income	$	47,317	$	42,032
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization			6,235			8,274
Equity in income of unconsolidated joint ventures			(1,675)			(581)
Distributions of earnings from unconsolidated joint ventures			1,447			1,002
Amortization of stock-based awards			4,482			4,530
Deferred income taxes			2,173			(1,424)
Provision for doubtful accounts			3,121			3,073
Gain on sale of property and equipment			(897)			(104)
Changes in operating assets and liabilities, net of effects of business acquisitions:
Accounts receivable and contract assets			40,919			14,528
Prepaid expenses and other assets			(2,053)			(3,936)
Accounts payable			(66,381)			(40,859)
Accrued compensation			(79,098)			(68,957)
Contract liabilities			38,207			6,090
Other liabilities			(14,917)			9,015
Income taxes receivable/payable			3,096			12,015
Net cash used in operating activities			(18,024)			(15,302)
Cash flows from investing activities:
Capital expenditures			(3,331)			(3,853)
Proceeds from sale of property and equipment			455			115
Net cash used in investing activities			(2,876)			(3,738)
Cash flows from financing activities:
Proceeds from borrowings			198,364			45,727
Repayments on long-term debt			(141,550)			(62,668)
Repurchases of common stock			(21,177)			(25,000)
Taxes paid on vested restricted stock			(10,818)			(6,740)
Stock options exercised			1,413			2,314
Dividends paid			(8,190)			(6,654)
Payments of contingent earn-out liabilities			(9,236)			(6,000)
Net cash provided by (used in) financing activities
		8,806			(59,021)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			2,200			(1,626)
Net decrease in cash, cash equivalents and restricted cash			(9,894)			(79,687)
Cash, cash equivalents and restricted cash at beginning of period			120,901			148,884
Cash, cash equivalents and restricted cash at end of period		$	111,007		$	69,197
Supplemental information:
Cash paid during the period for:
Interest	$	3,082	$	2,229
Income taxes, net of refunds received of $0.3 million and $0.6 million	$	5,579	$	2,231
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	110,833	$	66,502
Restricted cash			174			2,695
Total cash, cash equivalents and restricted cash		$	111,007		$	69,197