Q3 2026 Tetra Tech Inc (Delaware) Earnings Call Transcript
Key Points
- 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.
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,
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