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The Top 5 Analyst Questions From Tetra Tech’s Q1 Earnings Call

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Tetra Tech delivered a first quarter marked by notable top-line growth and a strong market response, despite significant operational shifts. Management emphasized the company’s ability to replace lost federal revenue after the abrupt reduction in USAID and State Department contracts, pointing to the resilience of its diverse client base. CEO Dan Batrack highlighted that, with the loss of its largest client, “the diversity of our clients, diversity of the services we provide and the geographies that we operate in” helped drive one of the highest revenue quarters in company history. Growth was attributed to robust state and local government demand, particularly in water and environmental services, as well as disaster response, which offset a sharp decline in federal backlog.

Is now the time to buy TTEK? Find out in our full research report (it’s free).

Tetra Tech (TTEK) Q1 CY2025 Highlights:

  • Revenue: $1.10 billion vs analyst estimates of $1.04 billion (4.9% year-on-year growth, 6.6% beat)
  • EPS (GAAP): $0.02 vs analyst expectations of $0.30 (93.3% miss)
  • Adjusted EBITDA: $143.9 million vs analyst estimates of $139.2 million (13% margin, 3.4% beat)
  • The company lifted its revenue guidance for the full year to $4.77 billion at the midpoint from $4.57 billion, a 4.4% increase
  • EPS (GAAP) guidance for Q2 CY2025 is $0.38 at the midpoint, beating analyst estimates by 11.1%
  • Operating Margin: 3.6%, down from 11.2% in the same quarter last year
  • Backlog: $4.31 billion at quarter end, down 9.2% year on year
  • Market Capitalization: $9.64 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 Tetra Tech’s Q1 Earnings Call

  • Tim Mulrooney (William Blair) asked about potential risks to state and local business from federal spending cuts. CEO Dan Batrack responded that most state and local contracts are insulated by bonds and user fees, and he does not anticipate near-term pressure.

  • Tim Mulrooney (William Blair) inquired about regulatory risks from proposed EPA changes. Batrack noted that 90% of environmental work is state-driven, with federal changes likely to have limited direct impact, aside from potential upside in PFAS remediation.

  • Sangita Jain (KeyBanc) questioned core margin progression after the exit from USAID. Batrack stated margins should improve faster than the previous 50 basis-point target, with a higher baseline margin profile for the business.

  • Ryan Connors (Northcoast Research) asked about utilization rates following USAID contract reductions. Batrack confirmed utilization dropped in the affected group but was offset by high demand elsewhere, such as disaster response work.

  • Michael Dudas (Vertical Research Partners) requested an outlook on international business, particularly Australia and the UK. Batrack cited election-related delays and tariff uncertainty as near-term headwinds but expects long-term growth as policy clarity improves.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be closely monitoring (1) the pace at which new defense and digital automation contracts ramp up to offset lost USAID work, (2) margin progression as the business mix shifts toward higher-value services, and (3) the stabilization and growth of the international portfolio, particularly in the UK, Ireland, and Australia. Execution on recent acquisitions and clarity on global trade policy will also be key milestones.

Tetra Tech currently trades at $36.10, up from $30.88 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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