Tetra Tech’s fourth quarter performance surpassed Wall Street’s revenue and profit expectations, with management attributing the results to robust demand for water infrastructure and environmental services, particularly in international markets. CEO Dan Batrack highlighted strength in UK and Ireland water programs and solid execution in U.S. state and local projects, emphasizing the company’s focus on front-end consulting and digital automation for water systems. Management also noted that advanced planning helped the federal segment navigate the U.S. government shutdown, sustaining year-on-year growth despite industry-wide disruptions.
Is now the time to buy TTEK? Find out in our full research report (it’s free for active Edge members).
Tetra Tech (TTEK) Q4 CY2025 Highlights:
- Revenue: $1.04 billion vs analyst estimates of $974.9 million (13.4% year-on-year decline, 6.4% beat)
- EPS (GAAP): $0.40 vs analyst estimates of $0.32 (25.9% beat)
- Adjusted EBITDA: $147.3 million vs analyst estimates of $135.1 million (14.2% margin, 9.1% beat)
- The company lifted its revenue guidance for the full year to $4.23 billion at the midpoint from $4.15 billion, a 1.8% increase
- EPS (GAAP) guidance for Q1 CY2026 is $0.32 at the midpoint, missing analyst estimates by 5.5%
- Operating Margin: 13.6%, up from 1.9% in the same quarter last year
- Backlog: $3.95 billion at quarter end, down 27.3% year on year
- Market Capitalization: $10.18 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Tetra Tech’s Q4 Earnings Call
- Tim Mulrooney (William Blair) asked about the drivers behind federal business resilience during the government shutdown. CEO Dan Batrack credited advanced planning and ongoing Army Corps contracts for sustaining growth through the disruption.
- Sabahat Khan (RBC Capital Markets) questioned how guidance reflects variable international trends and potential shutdown risks. Batrack clarified that guidance assumes mid-range growth but could shift lower if new shutdowns occur, while state and local funding remains robust.
- Sangita Jain (KeyBanc Capital Markets) probed the company’s willingness to increase leverage for larger acquisitions. Batrack explained that higher leverage would only be considered for transformative deals, with ongoing smaller acquisitions expected to continue under conservative balance sheet management.
- Andrew Wittmann (Baird) inquired about the significance of recent nuclear permitting and FAA contracts. Batrack described these as incremental opportunities, with most impact expected in future years rather than the current outlook.
- Michael Dudas (Vertical Research Partners) explored whether the company will shift its mix between U.S. and international business. Batrack responded that the company remains agnostic to geography, following client priorities and market funding, with water infrastructure expected to remain core.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will monitor (1) the pace of new U.S. federal contract awards as government funding stabilizes, (2) signs of sustained double-digit growth in UK and Ireland water markets, and (3) progress in integrating recent acquisitions such as Halvik and Providence. We will also track execution on digital automation initiatives and expansion in defense-related consulting.
Tetra Tech currently trades at $39, up from $37.10 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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