Tetra Tech (TTEK) 30 Apr 202020 Q2 Earnings call transcript

Good morning, and thank you for joining the Tetra Tech Earnings Call. By now, you should have received a copy of the press release.

If you have not, please contact the company’s corporate office at 626-351-4664.

As a reminder, Tetra Tech is also simulcasting this presentation with slides in the Investors section of its website at www.tetratech.com.

This call is being recorded at the request of Tetra Tech, and this broadcast is the copyright property of Tetra Tech. information of or Tetra this prior without of permission written Tech rebroadcast in part whole the Any is prohibited. from and Financial today Chief us management Batrack, Dan With Chairman Executive Officer; Steve Officer. Chief Burdick, are and They we’ll for up and the open a will the brief provide of results, overview questions. call

statements in to from the due direct Actual forward-looking uncertainties, future statement law, the growth today’s financial as Safe to obligation expectations. in those various risks forward-looking today’s including I’d like the contains about to presentation. periodic by may statements. statements no risks and Tech’s Tetra to reports described significantly differ forward-looking update Tetra results required projected SEC. in Tech takes your attention filed its Harbor Today’s discussion with and Except

presenting website. management the will I’d posted this are presentation. the some financial since open financial appropriate answers mode. company, listen-only Tech’s conference questions measures after in like up request the are and inform addition, that will of At the Tetra for we as At GAAP the of non-GAAP all references, In participants you in reconciliations a to the time, Investors section be

to Please call turn would to Dan over Batrack. With I that, go like Batrack. Mr. ahead, the

this responses year Tech’s been on areas Tetra across the next recent the And you an you overview we’re very have for into I’m fiscal XXXX our to fiscal what Thank business, Year giving to Quarter morning, Fiscal XXXX of seeing are our of Great. focused Second much, that and and year. good Stacy. forward welcome and we Call. Earnings looking remainder key Conference what

than slide. associated Tetra today. diversified for we evident the the saw been onset front of strong has In next pandemic, business discuss I’d started quarter. impacts more second Tech’s COVID-XX very like to We resilient up another that strength model the I’ll highlight never the quarter the which pace on of the on with March, and

Our essential of generated billion. a water, infrastructure robust services have very environment and backlog $X

in a long-term cash liquidity ratio Our and X.Xx, of flow. commitment with continuing strong to earnings to debt discipline low resulted has high financial very

times supporting efforts We’re today business us clients and entering the and allows seamlessly our on to into with strong these company our focus model, a very uncertain which future.

address call, and For with and on capital financial provide the an our actions our our Steve recent this circumstances outlook market COVID-XX the performance begin then and our to Financial Chief global response Burdick, I’ll customer by then due overview of unusual brought and our I’ll of assessment. an our pandemic, have I’ll overview allocation. Officer,

Tech hygiene coming Early staff. remote essential Tetra working services, implemented, We which Tech prior to what The government quickly response to in a March, widespread Tetra does. wherever the possible stay-at-home most orders, and program. company-wide implemented we included for enhanced practices distancing and orders social COVID-XX global expanded this the was implemented of to was our encouraged it out, stay-at-home exempting

of in uninterrupted. their our the we as events the most precipitous our for clients clients and at downturn the time, to some same work essentially price resulted responded of project business. do we saw with concurrently which drop, cancellations, These continue happened gas unanticipated essential some But the oil of

quickly. our activities current We implemented within actually field operations. distancing proud our which adjustments remote our Tetra to quite where of, to for needed were our they clients. short-term very here team negotiated Tech, operations Our XX% throughout and I’m moved moved working social with We practices

are facility safety expand of emergency and today, as Tetra We new Tech even add time, XXX COVID-XX plan consulting, our scope this and medical coordinated fully include to we and of offices business our all provide services work continuity operational. appropriate to Throughout and with and where services pandemic clients designs. preparation health

work new very on is Our is remote project environment. to the and very and our active, working in proving effective workforce high-end continues be bidding work

our history cycles Tetra through recessionary many than more traded demonstrated XX-year company. been and Tech’s as almost has resilience over a XX-year publicly performance

has needs. water quickly and adapted And more to even in science high-end on Our the is means in critical clients’ relevant and focus our will changes our with environmental work so our today more likely leading be approach even services future.

our supporting and as clients the to balance systems And analytics, position sheet manage well employ this their strong needs through provides consulting to advanced disruption global economy. high-end are Our consistent in services the and performance have this through our increased design which they adapted time, remotely. us needed navigate financial to

like call financial the cash Steve second Chief Financial our an quarter of and overview our over now Officer, I’d to positions. turn provide details of our review our liquidity Burdick, to the to and

So Steve?

Dan. Thanks,

Dan end I’d as like financial as to So of now quarter. results financial well the at for the of the second quarter as condition fiscal the said, review our XXXX second

So across markets. had of overall, we end our growth most

by completion our disaster large recovery dispose and business. the projects last to impacted XXXX in However, turnkey year our of Canadian decision our was of growth pipeline rate

net XX%, XX%. up So basis, would if an we and have On revenue our excluded these have adjusted two the XXXX million fiscal been X% of revenue about quarter net up would revenue increased the and quarter second compared impacts, been $XXX prior the about by comparable is and $XXX fiscal of quarter our when second we year guidance million revenue of with second the in line to revenue of range the $XXX provided. in to million XXXX,

to on percentage and was year. increased basis, our share line currency earnings the over the per last at backlog with year earnings adjusted than constant And over increased revenue $X $X.XX compared billion. X% a guidance per by and prior X% top by a up to in higher line $X.XX increase, also Our share at

following the presentation those to and slide like of Page on the that are for I’d adjustments. you reconciling So X, and non-GAAP summarize

continued we of we about to gains in per business, XXXX non-core equipment the realized sell our to due Canadian the a the pipeline quarter the previously, which gain share. First, fourth dispositions. quarter, equipment $X.XX in as on to our resulted decision in we And discussed construction of divest second

Secondly, probably liability. of – less of we earn-out a liabilities. a total X% relative estimated amount to non-operating small represents less The than recorded than gain our net true-up the

addition to we disruption from end COVID-XX these actions our markets the the the quarter. on by impacts resulting pandemic In end towards second take gains, the of did to related created non-operating the

in or net our timely amounted in March These The also our about charges U.S. our actions the consistent where about the with the per by outside aimed total weakening worsening about countries to align which project revenue anticipated revenues, term do of macroeconomic $X million The cost in situation aggregate we and decrease also in share. longer QX. cancellations. structure by these we resulted and million revenue The $X in $X.XX impacted the to FX of and where $XX rate foreign $X.XX. business, EPS currencies by negatively of impacted backlog million variances delays

is current outlook ensure positive of Tetra many balance in proactively sheet protecting liquidity. on income Tech focused the economic flows as uncertain cash more in than excess adequate to the ways, remains even So generating our net and

So balance to like results I and sheet our our would review report second cash position. quarter on

our the totaled trailing from the we same at operations operations operations on million. per cash second net basis $X.XX over XX second over to when income Cash that in XXX% quarter. XX-month to look flow compared term, generated amounted quarter the This longer over for a And the about back flow trailing cash from share generated period. months, from $XXX we

and flows days working sequential focus days in last Our improvement decreasing a from of on to is second year capital days also outstanding This XX resulted last and quarter. seven sales cash the two our from improvement of days in an quarter.

times our And million. at activities, $XXX we And and net quarter, target net to our with utilized these million two to at of times. X.X for in during payments Our debt-to-EBITDA stock stands buybacks cash the settled to about even our than in $XXX remains times, less close debt which second about acquisitions, dividend shareholders. one

capital IT for shareholders. base in Segue, we allocation balance a acquisition growth during to second sheet calls the which And our paid of the is On of our May per XX% regarding balance $X.XX expands and the last our rate our long-term returning want business, of of of a strategy, client completed our dividend. our Board cash announce managing federal dividend approved and consecutive over our quarter, our to investing XXth program, business. in which our the Directors increase dividend, a at month year’s be of will share, And I that which

or Since about quarter, we $X.X paid the program share this in dividend the of utilized we On a combined $XX out six our dividend started years under we’ve second annual we Furthermore, remaining million ago, stock million million during buyback each And the per our $X.XX paid dividends. $XXX programs. we increased quarter year. stock previously approved on basis, program. have buyback both in second

strong just strategy as times, ensuring capital is ample sheet balance difficult liquidity. and as have we these And during our implementing a successfully allocation important

the in $XXX QX end $XXX to of available at cash facility amounting both under for credit well terms amounting to balance have $XXX funds our We of million hand of the sheet liquidity total on quarter. as end million of form in million as the at available our a of and the the second

quarter. results pleased over the will Dan. with very now and these time your back share to second thank am to hand able for to I I today, for the to you you call financial be I want

that discuss in water, long-term clients water categories, Tetra and and sectors. by much, hold the Thank as in water, ranking at relevant environmental positions Steve. fundamental like seven you large. our News-Record. are dams the services Number energy, critical in environmental Engineering now emergency for additional needs Tech Tetra represent and and services provides management X very government and reservoirs, response to We our The in I communities essential, the published clients renewable would Tech’s the leading

in supply, we Tech. modernize risks diversify The water critical continuing with power of unchanged, is and diversification are continued the also climate permitting we Renewable water see unabated. movement water support to aspects, continuing supplies, sources utilities and benefit macro we wastewater energy generation services associated states and this demand other large management water-related the demand see watershed will that protection throughout and having are and crisis. and of their change trends them And flood treatment, trends that for and Tetra on

on $XX stimulate the XX-year government. And of modernization built fundamental support order in the and record in a supporting in has track economy, needs Tech contract Tetra every has to address the recessionary government governments. local cycle, capacity federal U.S. spending increased to billion federal

civilian experience position us and existing be both coming of government related, a relationships programs will that across new defense support and to base clients, broad Our both well and up.

recovery. fire respond XXX Our supporting to tornadoes United we customer them experienced maintain now plan, from the to in help States contracts year, over I’d municipalities standing we’re to recover recent even are teams were prepare, response with We you more last with for outlook. Tennessee, essential disasters. California emergency today. mobilized our and across like response provide the Currently, while

In performance and the our federal and international but quarters, especially strong first business, across second all our clients. our was by driven growth for of

third quarter see As least U.S. The we minimal four and expect evaluate impact. federal to enter a ranging the is we indications the we significant. the impacts range to of government sectors, where see for early more from customer our

We civilian have programs. and across a defense both base large, federal broad client

that municipalities Longer-term, increases likely state response local. programs midsized growth and funding market been an government large stimulus year and XXXX, fiscal broad into due coverage to typically services. us both It’s water and for to build our disaster our essential opportunities excellent create additional for with will

impacts here be to We medium. to expect low

with market local place. very contracting Currently, meetings programs the and have work to state is active quickly virtualized stable moved bidding municipalities new really taking systems. opportunities their and in Larger quite and the

primarily United local However, be offset which expect by while today, see to funding would budgets, clients. in see Kingdom Australian later future and the it the into year. we on we Canadian, pressures The us year sector is for federal even or may stimulus next government and international state that don’t in our

Here, we of the and for immediate associated gas saw oil commodity-related with our some some impacts mining and businesses clients.

and programs is be base, revenue, geography we We for initiates stable to half U.S. its finally, recover of geography. moves expect clients own or of expect portion the increase that And remain sector most each stimulus our which about the impacted. international as commercial client public its our to to

right work regulatory that commercial discretionary permitting has such financial Our affected and work been upgrades to due sector. is restoration and environmental in now. almost this it’s the with and oil The immediately less forward or gas customers as driven, impacted work for our services, disruption moving was

impact As on a a before on stay-at-home our we the changes quite pandemic we resulting as COVID-XX six uncertainties be orders duration it conditions. has become dependent in macroeconomic seen not last our the and have The company. weeks, number apparent have assessed, just largely during markets exist of business that that will of the

Tech’s at second reliable. least of with be fiscal XXXX time, at half cannot financial results be this precision the Tetra for to enough estimated,

fiscal provide clarity guidance end withdrawing Tetra of net share. earnings is on accordingly, if for fiscal But So quarter it is Tech per and say our intent to our will revenue and I XXXX previously clients. improved prior third provided the markets to there’s the of end our guidance XXXX

clients air of capital of buildings global our pandemic, disruption services associated in in continued over concern inside with A spending. of summary, analytic our the are reaffirms the sustainable and and the In infrastructure. in such and increasingly importance to of spite this environment leading and improved near-term as efficiently presence sites adapting heightened focus solutions, environment with for of in seeing approach health our demand their as cleanup our water, essential science we rapidly and contaminated the and quality advanced changes and places

in of and authorized of this is Our uncertainty. backlog approved us $X billion stability time provides work and during

to management disruption capital and and Tetra result us coming allocation. Tech’s the prepared This strong of access well capital sheet the balance recovery a to post-COVID for our approach that’s peak is current up. disciplined period financial has and

And to up like summary, Stacy, questions. call open to with that the I’d

from ahead. with Robert Baird. [Operator first Please comes Instructions] go Wittmann Andrew question Our W.

Hey, taking thanks question, for my guys.

mean outlook two wanted little on high I kind on if you a type, here. wondering during update us low put helpful obviously, and quickly could that everything up course medium, out think that to I does customer meat your heard around bit here on follow-up customer low mean just hits, little of XX% high? unless would start here. have a you’re I a be and I come just X% your this, bit zero, I But more directional does of everyone so with that Dan, indicators. like low, talk your helpful given to a commentary medium low this. bone I and today means, by with what what changing Anything little to bit the was just for thinking round is are about

Sure, Andy.

indicators First with those are of all, respect to. referring to what

medium a what are low, going So forward basis. and of expect see we the impact to business high on we what be our

and – right to this low. I’ll So would move be

X% it we be typically So low, would that impact no would at think all. than something less to

guidance. very the government, federal impact it have and are grow So we would to X% than that at impact say would we’d XX%, in seeing that of would perhaps the less X% case expected here, from When was be low think we our we all. no previous it

a less on we from is, low or say, go-forward what previously basis. So X% indicated had

perhaps something Medium range of from more is sort broad than to XX%. of X% a up anywhere to

impact go-forward range. of on medium in that So of something be high would be that excess a would XX%. would be in basis. sort And again, And

with of numbers or numbers general of forward of that sort those our ranges outlook we descriptors for are clients. those qualitative So would associate

helpful. commentary, commercial is obviously, your that business Well, most given the clearly impacted. great. That’s here, Okay,

commercial talk segment So I you in been understand CIG business. how just about shutting the as things articulated I and during a down down about, has of more have call understand or WYG earlier try segment number in of parts the there’s trended the in instance, wanted pipeline Certainly, to moving particular your that your material conference the quarter. winding well. for to

that the progressed I us you underlying quarter organic CIG understand us trend how the really line kind was through and of kind to it for the to have an to hoping the take could to was into – for segment all revenue move imagine of in then in what the January, and idea it’s significant, trending into through were as where beyond? XQ more and that try March understand where February impacts I quarter, here we walk

explanation. a glad out. That’s more is pointed and Andy, a could good that you bit I’m use question, area CIG an

the about revenue commercial at But headline and took group gross and in international what just into that total it a a X%. and appear net were minus actually we shrunk would by doesn’t couple account revenue that take had revenue you were this If FX. numbers look foreign meaningful and number, for we our saw the exchange Australia, our items Number quarter. adjusted UK. in If a quite little valuation in the exchange, then one, between revenue actually in adjusted bit or for rates of actually reduction FX we actually primarily and Canada in a reported

and of Burdick actually that that minus even piping talked our normalized we transparent, XXXX and in Parkland have in take for year has adjusted the Canadian the wound X%. our adjust starting down. have and But actually would if piping pipeline would But year-over-year the midstream Steve very were a FX, that. that increased to successfully liquidation our about equipment million, XX% actually that that an one our some put to back $XX that at a simply revenue earlier a we contributed activity or you the revenue in, ago see ago, you for reconciliation for the year is $XX and net item But activities tried year contribute about rate. ago, we X% if communicate million, earnings turnkey cash, you actually turnkey Canada to our a we QX of

a and When we the that exit. a down with just for couple the year-on-year rest of it adjusted the percent, to business of for which comparisons FX, elected accounted of associated and wind

and over group saw January at a during will And well the because of And hope oil were our quarter? the at of and better insight year-over-year the market, question rest to we home. second performed of transitioning into your this that really and So basis transitioning, month the growing we and the heavy trend really, how some industry respect the folks saw stopped. was March, XX%. February. it say with to of was the associated part reduction work office in But in I the to energy a did that how the I helps of quite quite a with that is it from is, gas and working We where internationally, is the on

took people took that April mid-March. home have them and we have We actually did of XX,XXX not impact of XX% moved mean bit that all in that in seen a I we a temporal impact. place actually because

internationally it’s bit so quite did because but our the international platform that American been operations. And impact as CIG, on that than have U.S. our more our U.S. ongoing not a an impact, something represents operations as not – long

And so the that of impact accounted for it in of another portion – March.

to now. Okay, in going but Thank for with leave chime little great. bit more it helpful. I’m question there a later, That’s another I’ll you.

you, Andy. Thank Great.

next Sean Capital comes ahead. go from with Markets. Our Eastman question KeyBanc Please

share shoots whether are Hi guys an just out from sets here Dan, taking wanted of opportunity coming kind Tetra understand new can for back thanks onto what growth my this, a perspective trajectory? a trying questions. quickly could look Tech get structure out? side could you nimble on for and we sense get of perspective, Just how to or how how green just the on this, earnings market cost I to of potential kind come of other

while of to Sean. moving out question, late this of in short-term impact Tech great human stronger March, disruptive likely the profitability a remotely impact we more would a see say the it’s a an health company. working and is bit Tetra our higher life of certainly certainly flexible And it workforce and is Tetra Tech, coming and local the Well, a was even tragic quite I to that possible.

actually cloud. this computing the our years. individuals. the given XX,XXX estate an of moved of real our on to workforce for has had that enterprise-wide We’ve of to We’ve amount We’ve perspective to moved cloud. we This to the support had ERP the advantage need We plan moved number commercial actually our a great having a of us storage new system.

it a felt real-life a you them academically, and always test. get take and give so when to chance but we home staff your of should And this work, XX% do move

have spent and some years, know the So we’ve high And hold you’d company me with that. done those extremely time actually to for myself over the I that standards.

to expectations is exceeded So saying something. say that really my it’s

to Tech us just individuals Tetra I folks the thank put the so would quite together who like made this. efficient platforms And that through and

have could And cost with water putting company expand this We’ve we pandemic think a very, to from we and new that cybersecurity clients our quickly that IT another a critical our the from were distancing infrastructure I actually the – to our has the water state had well our into us systems. respect our federal operate event out and just federal demand lower remotely has local and well with to in more of So place moved of come systems or before. seen than with clients practice for shutdown actually climb in to the We’ve was quite systems been efficient, the allowing growing cybersecurity we seen we monitor of that orders. facilities. made structured respect protection to actually investments there out that to clients actually these accessing served very

through those So as we’re that opportunities period new even now seeing this right are uncertainty. of grow items

revenue more hadn’t this. seen we stronger in I with of a we even going we and new opportunities had out come markets efficient could before So base with than think this more into cost

could margins even actually And so coming had better in. in what than it we result

more out I back And for uncertainty the sort here on out month to get or maybe what putting bit XXXX? or watching question Interesting there comfortable things color could I with withdraw guys for lies next a the those to other now? in just of where you right so stuff. get guidance think exactly just that fiscal you’re and events goalposts trying little understanding the the And decision maybe is had

Tech wasn’t years it’s to one after the certainly as because think moving thought guidance – for of to be asked many work have But widening is getting for lightly and happened And clients you Tetra and our what would public item clarity. is some looking ourselves, that has here. XX it I or glad provide withdraw that before. a never unprecedented having, it the taken listed certainly the I’m gave for But publicly question quarter company, next year will We next not firms. their that XX% bit the we back on an that more for a budgets we we’re continue out the staff clarity of through the our clarity to can office, until extended returning not as time. give It’s we move to what we of us quarter. actually for could period actually

June extent, little any budgets, probably I and Others And only And this at late, being get bit that the just a our corporation. is of to of are quarter have I component to their wanted a perpetuity clients roughly it. that for the our we what to shareholders back bit last lifted would It’s days. certain come during would we revise XX that like out priorities, middle them of stay-at-home come to time. over encompasses that to that think if restrictions provide of seeing suggest without back their their go will But the more of to now. jurisdictions. do remain and difficult to the believe happen a of many most next thing the X, as you in roughly guidance actually to the and all funding, insight clarity

in meaningful us can be. you with appropriate range see they allow priorities provide to how on how marketplace that our think see and how It’s will work, performing the month, our visibility, that’s that guidance. we’re I over move something forward, clients how the we and get actually but evaluate would what So that this on performance more their so we’ll not an and much next

provide moving that But and believe I do driven I to to with third to to did uncertainty, of the respect prior into getting better Steve updated be quarter. guidance clients programs of insight the as end work by mentioned is and able back our timing largely priorities had is, forward. their and getting So will we that

for one me. last just And great. Okay,

you work industry the and of business gas where the terms out specifically. immediate seeing portions an I and sensitive, In more guys you’re of and heavy oil that impact think called economically are the

Tech’s a get means margins? trying Just Tetra to for sense that overall pressure what for

we base. Well, labor. have very portion The a is flexible biggest cost

Second the line rest inception corporate as of overall cost is of estate. that we and we really from our the indirect with the amount the we’ve very company, staff work do, since the in We and on of structure, keeping including spoken focused real our programs. support our and have the are our clients

compliance overall, about other programs So regulatory the is of dollar drivers, consent have of the have than fact, on times. a in that requirements, our more amount around for it, revenues probably half half decrees as matter and regulatory of of revenue it had is related commercial mandated or that that items gas dates specific and We and our impacted oil only our actual of work X% were we fields, small. relatively do

go that So I uninterrupted. to forward expect

variability. and margins relatively very smaller field our And guidance, about it structure. a numbers in be some able so a updated specific the be But we’re modest we’ll should modest to to I but flexible think would it’s I provide portion, our anticipate talking would be impact it that commercial nature to could because there I be respect with of where of that’s think cost because really the our

So we that’s to that costs not are supporting revenue carry there. don’t need

guys. I helpful. time. appreciate Very the Thanks

Thank you, Sean.

Please with comes question Stifel. Noelle from Dilts ahead. next go Our

morning. guys. Hi, Good

talked repeatedly are first GSG. example, how question ask I your you’ve think into Tetra years, utilization, people the The in think good about that comment When I also, last best you to ties I that recently, Tech, very for of asset and made. your about over kind wanted seen you’ve

do utilization saying, same few cost we the that if to we how next you impact I So ability would as not the those about when though, probably don’t where quarters, you’d capacity element? that At over rebound, even think is hold think have a expecting you reduce about on hold need My time, maybe it. the margin the and to sense here that think you’re you’re folks.

model? utilization we we do that think how So look element as business the about at

question. good a That’s

– first where what our first that. that we we to instance clients, we of we have other backlog change time move in and our we more a see our to – staff all, our of actually every areas one end the in First redeploy markets, is is every when can have employ more we work, move

So was first that move. our

saw portions them them allow oil and move a we a project. civil working, right of or the their an technical to when will background on and gas have We a who’s the would federal commercial, in work over. go electrical to if they engineer downturn engineer or and So municipal we project

So to staff to of move the much first goal capability retain the as possible. is as our

for we’ll or on groups However, and oil in if gas, is not focused won’t and is of believe sometimes going than return there in if two, a we that would make call more portions and it market going near the But two. away case And what going actually return that call are away a judgment we between market. and it’s those the a quarter are or adjustments. future, it’s the relatively to appropriate highly

And so did. what that’s we

place remote we’ve see like gone But to across to to a virtual at something staff to utilization, They’re training actually immediately locations less attributed travel. company are less to we will Our or ones only. what time And time airports. conferences moving it we instead to, of taken actually offices traveling from anticipate little They’re has fewer up didn’t the and airplanes. very and this to was doing our of has we’ve have in respect utilization one I locations. meetings through remote bit what carefully online actually looked up? say, our actually spending moving They’re to With where less it going working. spending slightly And this caused go in so March.

has typically a of what would up all removing be that off So utilization of caused indirect to our bit. time actually go little

Now at first we’d it’s great. glance, say,

don’t Our revenue go changed markets the count hasn’t other our we reduction is going are than to head up, think much back. coming from small

cycles ensure to providing the careful, it up. billing So high actually in quality was But utilization fared? how when we and that the one our of this like flow utilization very books not this office. flow back of the thing of one to to has the to they and utilization see increased through It’s aspects as the contributed were is guidance, our as through really would being we’re

XX or and just was they as work working – as that as working were of payable in just on So technical billable a it while completes much back is it’s office. hours evaluation the

So actually the see could increased have of of assuming we quality we our efficiency performance same level company. across utilization, or

do what keep So them short that we we how seen staff at respect I the to and addresses in hope least with term and utilization. we’ve with what

helpful. very That’s Yes.

talked and local you bit vulnerability in of the we recent the where there years from to but you’ve know coming have can think a bit state seen budgets, might that about to in way more compare I and how you’re this sort local about past when under are exposure to. the on you pressure a think a tied be us you’re help of that of call, funding understand I state budget you markets about topic, general a bond about that know the cycles? think and long-term more Is lot infrastructure of when I thinking terms and going you how Second measures. funds critical the

immediately. at something that That’s looked here we’ve Yes.

this Fortunately, Probably crisis. and management the biggest that. recession or XXXX period or the was seen we go financial saw a recessionary look as not financial a we’ve disruption as is did at take a that team back the global company. We first previous

like a fast. and move on they some crisis, little very of yesterday. conservative with XXXX, didn’t a Much late like to are. clarity local I until they what the They in four availability bit see time respect saw have They budgets bottomed cycle, – just their at their first commercial a get clients. there but the half, more now we While global saw with we we was seems seems hate so later. seeing move our the impacts years quick, What of about funds XXXX while state to use in respect word about in we’re three slower, long the another the our until and – respects ago XXXX, spending financial –

and the some later. very in few disruption seen a So we I’ve was term, little statistics. it saw short years actually

years. we’re can years. market to what to two typically the in. portions based we the just speak was of it’s saw really four say Some I on It much closer

did backstop immediate believe So There’s not The very to possible respect potentially And potentially place. and near low We federal with going impact the – this an certainly, this. timing we although different all or issue does very as we’re crisis put certainly impact reality different to as years. term, time. see many bit unprecedented takes the naïve in on that’s this, little they are on that was with to right in to be the has bidding is size It on be low. proposals potential to of presentation, submitted an municipal medium the no transparent based not as stepping government anything medium medium to have has areas level low of financial anticipated our that activities now being many contributions in but And of it’s an different in a highest periods the on don’t actually that clear there and the now. the own take I’ve would things was fact, commentaries. estimated expect impact. it Every future vagarities. seeing to even its we what financial and of the to But and had heard business is we’re that of

much. very Thanks

and Our next comes Boenning go ahead. Please Scattergood. Ryan from Connors with question

my for question. Great. Good taking morning. Thanks

to sometimes Many smaller markets. are kind of of So much has fragmented a the very – They do players. competitors question serving your Dan, are industry. leader with smaller the regional you’re in

But on good potential let’s suddenly of unintended that for larger resources. terms the So government financial available. greater distortions, the any in the the companies support is obviously, say. other favor you’ve of are hand, news And out got is making creates

go verticals, challenged like are competitors there be I some take a the about been is some that? thinking of maybe that won’t players what that? I maintaining back prior to keeping those things markets more in if available mean the in that And staff competitors of capacity while access could of of staff the – ramifications those M&A of these as irrational smaller also reductions kind around place mean you of this to on ramifications money So being question larger of PPP don’t some there the have what and some chance might many your are of able at will not? that

private you share company, to a not." have staff, all this thing certainly, Tetra with we my I Tech. response say, the years we and while a may at very means, would requirement, discussion be the have that’s – that there’s thinking public to have The alluded bit the And company Tech as they to we concerned We’ve this of acquisitive. No with "I’m keep a items is when about which more I’ll reporting you’re our joining a about then than been these long "Well, because of – many doubt public term." to, one you these may are here that, quarterly scale all inquire if fragmented as we had and And committed Tetra would what we you you you the over of downturn, true. companies whereas we’ve a discussions smaller are, And one because participants. just

company we for mentored are for that what’s would the been private my We individuals running number clients, a key career, we for their and make of back counseled the larger make of best what’s a our best best all and and programs on what’s been and conglomerate, the we would are decisions public have same part were over decisions. and I’ve decisions, the I best those. public the back company I make, in when we were with when for years the a XXXXs, were

then the – a Yes. They firm is conference of asked answer revenue do? was happen. call that have a will are smaller How all going is there And keep I your question, will employees? don’t believe yes. so They Indefinitely, said committed on you long plan this get I you when your the other was, to PPP are where we’re PPP the I going was, answer very that the day don’t money. you what the was And for keep was said, down? to them? out, a And to that. money

Tech what stead. very clients, has in I their respect or stimulus whether well your right programs not right you are to for So your think, the making actions have decisions Tetra and the with money, for for staff left

business with we in want been don’t us has in best through six performance won’t through projects. and on global manage financial we fundamental our with will commodity the And We respect construction I through pandemic. our staff, say disciplined, way how we’ve that just several oil crisis, underlying – the – this will gas drops I ago a decisions and stead best XXXX call conservative make and mining us the and disciplined, leave to election wouldn’t it I say to because the their the financial our even through it’s sheet how believe that dot-com to we XXXX, exit and other I the the we held run in years clients moves problems, balance and items best good the

to are of people, decision actually us. for good making be I affect whatsoever, for so good is and, what not who not committed believe regardless ultimately, one workforce happens, them their And to will

keep Okay. what the people of at at complicate money when matters I and business. thing worse PPP up, or if who that keeping to exiting be terms is going bidding driving just are because is people in could those those could of to there on I to are drying irrationally players, breakeven the challenged, I the guess that of pricing the then altogether right impact even markets presumably, like for they’re doing business and you’re those more what who not pricing busy rightsizing be going markets? mean, are trying I’m in yourself, presuming be folks mean kind are

of So, kind of that what be impact the could issue? industry-wide

The is technical the on based federal believe negotiation. technical government don’t case. the technical most is I we that’s selection is work of Bill, we the I capability. have, selected is won’t say highest the the and say work I – but would get of ranking That initial Brooks through which work have for all we

property business low are commodity participate on focus we not keen innovation not because get of market. that nobody technical get does of – have that in So will the very, with and exist Tetra work. – it’s a go we how selected. why in selected you the not engineering because very the get intellectual And We the fact, Tech else get selected in in owns. We patents you differentiators to doesn’t

institutional with that’s strictly primarily And get if is back client that a and low us. based that or for knowledge clients. the XX, low client exist We selected XX, on select actually on to engineer going their of years our goes price XX because doesn’t history price, not right

best not price. low be expect We to value,

And can so they’ll on up be and two these one And ranked if the then add they’ll of have the XX, numbers. from lowest every to X from on bids we highest, based be the we single open number they many and to price. to time, price. lowest to And technically don’t one they technical open from the solicitations, rank XX, them up technical ranking will

that price on company. And how staff below their long-term a winning sell at actually their we solution not based our will those run is point so

it. Got

Okay, that’s is good – actually that color. a

kind of last theme of Now, the just one is on from me keeping on pricing. –

be As of to evolution is – we potential there. look the still going spending infrastructure at

to the talk is I with margin that the state Can of – dynamics how we for shift? government way and to to are county that look dynamics that the and the mix share the you you mean state local from from federal to the as the federal and local? and to the types margin the smaller goes what think wallet versa, what’s about with what different big different down pricing different extent question vice customers deal all I evolves?

on less so type. Well, clients more contract so it’s it’s on and

some two. there the is between will say linkage that I Although

So, a negotiate can’t I fixed definitized. direct our we’ve items other X% fringe G&A and a federal where know, this employee be type, Those overhead items typically X%. They issued spoken That’s Under our fees. benefits, CPFF. the be, as of don’t cost-plus pay fee, or indirects, government, with to before. contract salaries, would contract and typically

That type assessment revenue. about of our do. XX% plus kind we A is first that that research that its cost of lot So its kind we do, of range. that sort in of represents of first of

plus. a development the Administration, program. navigation to globally. that Aviation space-based The doesn’t uncertainty We locations, work, international for so that’s remote first work very instance, of exist it, cost and its cost-plus which program, that’s its is by has So Federal program, kind, a nature in

are margins a the generally higher, for rate we’ll materials sort So negotiate Time where and a a of that in lower. bit range, given sometimes not little engineer.

risk then is job And fixed price, hour. is that that actually project, of because fixed is risk put that that in there our of So, the program the XX%. X% to identified let’s That range. it would depending where standard an we’ve take sort the $XXX work number under be of price to on associated a years we on of staff that, on with to goal XX% firm sort and probably three with say, five the is a civil Margins have, about the which of we represents engineer some half the north completing materials. inherent would run of we time

XX% which price, our of risks So on typically, revenues. I’m we’re is that. be with would XX% But XX% it even on say, say respect or taking fixed would of – will I to I our sorry, greater. But margins around the

work risk doing taken plans a construction do we’ve management We at or construction construction risk. on that done technical are fixed designs to at before. or not or this We’ve price work

impacted labor weather doing work that or So, we’re materials because not by or we’re or prices strikes internally. commodity

So, might fixed work is price the very business. than the quite this different of in risk companies other even in nature see you

time. okay. your for it, helpful. That’s very Got Thanks

Thank you, Ryan.

will Batrack I now This turn Dan over will conclude the to Q&A to session. conclude. conference the

hope of want services that I safe really I to environment insights, services. bit that clear, staying are you your I that speaking by call. we you speak end all the phone next absolutely prior guidance. little I provide you with committed the update And example not the in the for behalf you of questions whatever all sustainability on clarity. and our if importantly, Thank employees And and Tech, of with I’ll to quarter with in And happen with you essential location you support at look your would of your certainly and Tech. very with safety, most the And status supporting Tetra quarterly are to infrastructure again, be residing. our forward much, leading very and are this we you thank quarter be of Tetra clients speaking at like by on XX,XXX on of promoting a to to Stacy. essential our do current to an things later water, We’ll say

Bye. safe. stay and much very you thank So,

and all parties conference this our gentlemen, for and may for today. now disconnect. concludes – participating, for day. nice you All your Thank have Ladies a