Tetra Tech : Q3 2021 Supplemental Financial Information

Unaudited Investors Report	2018	2019				2020						2021
($ in Thousands, Except Per Share Data)	Total	Total	1st Qtr	2nd Qtr	6 mos	3rd Qtr	9 mos	4th Qtr	Total	1st Qtr	2nd Qtr	6 mos	3rd Qtr	9 mos
REVENUE - ADJUSTED (1)	2,960,525	3,122,590	797,478	734,128	1,531,606	709,723	2,241,329	753,364	2,994,693	765,104	754,294	1,519,398	801,490	2,320,887
REVENUE, NET OF SUBCONTRACTOR COSTS ["Net Revenue" (2)]
Government Services Group (GSG)	1,212,334	1,329,381	329,706	321,042	650,748	319,234	969,982	330,101	1,300,083	344,918	347,085	692,003	355,949	1,047,952
Commercial / International Services Group (CIG) - Adjusted (1)	996,328	1,076,741	284,279	263,483	547,762	241,037	788,799	259,713	1,048,512	260,252	252,205	512,457	282,041	794,498

NET REVENUE - ADJUSTED (1)		2,208,662		2,406,122		613,985		584,525		1,198,510		560,271		1,758,781		589,814		2,348,595		605,170		599,290		1,204,460		637,990		1,842,450
Remediation and Construction Management (RCM) / Claims		(7,928)		(16,485)		37		(65)		(28)		5		(23)		-		(23)		-		535		535		54		588
OTHER COSTS OF REVENUE - ADJUSTED (1) (3) (6)		1,807,213		1,967,396		505,064		481,476		986,540		450,377		1,436,917		465,464		1,902,381		488,866		486,812		975,678		512,294		1,487,972
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - ADJUSTED (1) (3)		185,146		198,195		46,421		50,440		96,861		50,313		147,174		55,813		202,987		50,052		51,671		101,723		55,889		157,613
ACQUISITION AND INTEGRATION EXPENSES		-		10,351		-		-		-		-		-		-		-		-		-		-		-		-
PURCHASE ACCOUNTING / NON-CORE DISPOSITIONS (GAINS)		9,187		21,785		(800)		(3,155)		(3,955)		(3,944)		(7,899)		1,803		(6,096)		-		-		-		-		-
INCOME FROM OPERATIONS, AS REPORTED		190,086		188,762		63,302		47,530		110,832		63,525		174,356		66,735		241,092		66,252		60,807		127,059		69,807		196,865
INCOME FROM OPERATIONS - ADJUSTED (1) (2) (3) (6)		216,303		240,531		62,502		52,608		115,110		59,581		174,691		68,536		243,227		66,252		60,807		127,059		69,807		196,865
GSG		168,211		185,263		42,048		36,937		78,985		43,100		122,085		48,174		170,259		47,700		46,109		93,809		49,297		143,106
CIG		86,908		104,278		30,833		26,134		56,968		24,354		81,321		30,819		112,140		29,559		26,311		55,869		32,047		87,916
Corporate (4)		(38,816)		(49,010)		(10,379)		(10,463)		(20,843)		(7,873)		(28,715)		(10,457)		(39,172)		(11,007)		(11,613)		(22,619)		(11,537)		(34,157)
RCM / Claims		(17,030)		(19,633)		-		-		-		-		-		-		-		-		-		-		-		-
OPERATING MARGIN - ADJUSTED [% of Net Revenue] (1) (2) (3) (6)		9.8%		10.0%		10.2%		9.0%		9.6%		10.6%		9.9%		11.6%		10.4%		10.9%		10.1%		10.5%		10.9%		10.7%
GSG		13.9%		13.9%		12.8%		11.5%		12.1%		13.5%		12.6%		14.6%		13.1%		13.8%		13.3%		13.6%		13.8%		13.7%
CIG		8.7%		9.7%		10.8%		9.9%		10.4%		10.1%		10.3%		11.9%		10.7%		11.4%		10.4%		10.9%		11.4%		11.1%
Interest Expense		15,524		13,626		3,348		3,500		6,848		3,564		10,412		2,688		13,100		3,026		2,823		5,849		2,737		8,585
INCOME BEFORE INCOME TAX EXPENSE		174,562		175,136		59,954		44,029		103,983		59,961		163,944		64,047		227,991		63,226		57,984		121,210		67,070		188,280
Income Tax Expense		37,605		16,375		12,636		7,616		20,252		14,458		34,710		19,391		54,101		10,778		12,457		23,233		15,146		38,380
NET INCOME ATTRIBUTABLE TO TETRA TECH		136,883		158,668		47,310		36,398		83,708		45,497		129,205		44,654		173,859		52,436		45,517		97,953		51,903		149,856
DILUTED AVERAGE SHARES		56,598		55,936		55,438		55,463		55,380		54,692		55,161		54,603		55,022		54,637		54,736		54,715		54,666		54,698
DILUTED EPS ATTRIBUTABLE TO TETRA TECH, AS REPORTED	$	2.42	$	2.84	$	0.85	$	0.66	$	1.51	$	0.83	$	2.34	$	0.82	$	3.16	$	0.96	$	0.83	$	1.79	$	0.95	$	2.74
ADJUSTED DILUTED EPS (1) (2) (3) (5) (6)	$	2.64	$	3.17	$	0.84	$	0.73	$	1.57	$	0.78	$	2.34	$	0.91	$	3.26	$	0.96	$	0.83	$	1.79	$	0.95	$	2.74
ADJUSTED EBITDA (1) (2) (3) (6)		253,876		269,175		68,730		59,166		127,896		65,832		193,728		74,081		267,809		72,478		66,082		138,560		75,072		213,632
ADJUSTED EBITDA MARGIN [% of Net Revenue]		11.5%		11.2%		11.2%		10.1%		10.7%		11.8%		11.0%		12.6%		11.4%		12.0%		11.0%		11.5%		11.8%		11.6%
DAYS IN SALES OUTSTANDING		85.4		77.6		73.3		71.5		71.5		70.4		70.4		67.7		67.7		67.3		64.9		64.9		64.6		64.6
CASH FLOW FROM OPERATIONS		185,733		208,513		(18,024)		101,223		83,199		111,351		194,550		67,929		262,479		33,180		124,244		157,424		69,114		226,538
CAPITAL EXPENDITURES		9,726		16,198		3,331		2,546		5,877		3,483		9,360		2,885		12,245		1,795		2,502		4,297		1,937		6,234
Y/Y ADJUSTED NET REVENUE GROWTH % (1) (2)		8.6%		8.9%		11.1%		(0.9%)		4.9%		(10.1%)		(0.4%)		(7.9%)		(2.4%)		(1.4%)		2.5%		0.5%		13.9%		4.8%
GSG		13.6%		9.7%		8.7%		1.6%		5.1%		(9.5%)		(0.2%)		(7.7%)		(2.2%)		4.6%		8.1%		6.3%		11.5%		8.0%
CIG		3.0%		8.1%		13.9%		(3.9%)		4.6%		(10.9%)		(0.7%)		(8.1%)		(2.6%)		(8.5%)		(4.3%)		(6.4%)		17.0%		0.7%
NET REVENUE % BY CLIENT TYPE - ADJUSTED
International		28%		30%		34%		33%		34%		30%		32%		31%		32%		31%		31%		31%		34%		32%
U.S. Commercial		27%		24%		24%		24%		24%		25%		24%		24%		24%		22%		21%		22%		21%		22%
U.S. Federal Government		30%		28%		28%		30%		29%		31%		30%		30%		30%		31%		31%		31%		29%		30%
U.S. State & Local Government		15%		18%		14%		13%		13%		14%		14%		15%		14%		16%		17%		16%		16%		16%
NET REVENUE % BY CONTRACT TYPE - ADJUSTED
Fixed-Price		33%		34%		34%		36%		35%		39%		36%		36%		36%		34%		36%		36%		37%		36%
Time-and-Materials		50%		50%		49%		49%		49%		45%		49%		49%		49%		49%		49%		49%		49%		49%
Cost-Plus		17%		16%		17%		15%		16%		16%		15%		15%		15%		17%		15%		15%		14%		15%
BACKLOG		2,663,814		3,091,857		3,165,768		2,989,098		2,989,098		3,066,594		3,066,594		3,239,285		3,239,285		3,188,061		3,150,177		3,150,177		3,249,908		3,249,908

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
6. Excludes Q2 Fiscal 2020 incremental costs to address COVID-19 (primarily severance)

Tetra Tech, Inc.

Regulation G Information

June 27, 2021

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

(in millions)
						2020						2021
Consolidated	2018	2019	1st Qtr	2nd Qtr	6 mos	3rd Qtr	9 mos	4th Qtr	Total	1st Qtr	2nd Qtr	6 mos	3rd Qtr	9 mos
Revenue (As Reported)	2,964.1	3,107.3	797.6	734.1	1,531.7	709.8	2,241.5	753.4	2,994.9	765.1	754.8	1,519.9	801.6	2,321.5
RCM / Non-Cash Claims	(3.6)	15.2	(0.1)	-	(0.1)	(0.1)	(0.2)	-	(0.2)	-	(0.5)	(0.5)	(0.1)	(0.6)
Adjusted Revenue	2,960.5	3,122.5	797.5	734.1	1,531.6	709.7	2,241.3	753.4	2,994.7	765.1	754.3	1,519.4	801.5	2,320.9
Adjusted Subcontractor Costs	(751.8)	(716.4)	(183.5)	(149.6)	(333.1)	(149.4)	(482.7)	(163.6)	(646.1)	(159.9)	(155.0)	(314.9)	(163.5)	(478.4)
Adjusted Net Revenue	2,208.7	2,406.1	614.0	584.5	1,198.5	560.3	1,758.6	589.8	2,348.6	605.2	599.3	1,204.5	638.0	1,842.5
GSG Segment
Revenue	1,694.9	1,820.7	457.4	436.9	894.3	432.2	1,326.5	452.4	1,778.9	468.7	473.8	942.5	488.7	1,431.2
Subcontractor Costs	(482.6)	(491.4)	(127.7)	(115.9)	(243.6)	(112.9)	(356.5)	(122.3)	(478.8)	(123.8)	(126.7)	(250.5)	(132.8)	(383.2)
Adjusted Net Revenue	1,212.3	1,329.3	329.7	321.0	650.7	319.3	970.0	330.1	1,300.1	344.9	347.1	692.0	355.9	1,048.0
CIG Segment
Revenue	1,323.1	1,342.5	351.2	308.4	659.6	291.0	950.6	315.5	1,266.1	311.1	293.1	604.2	327.4	931.6
Non-Cash Claims	10.6	13.7	-	-	-	-	-	-	-	-	-	-	-	-
Adjusted Revenue	1,333.7	1,356.2	351.2	308.4	659.6	291.0	950.6	315.5	1,266.1	311.1	293.1	604.2	327.4	931.6
Subcontractor Costs	(337.4)	(279.5)	(66.9)	(44.9)	(111.8)	(50.0)	(161.8)	(55.7)	(217.5)	(50.8)	(40.9)	(91.7)	(45.4)	(137.1)
Adjusted Net Revenue	996.3	1,076.7	284.3	263.5	547.8	241.0	788.8	259.8	1,048.6	260.3	252.2	512.5	282.0	794.5
RCM Segment
Revenue	14.2	(1.5)	0.1	-	0.1	0.1	0.2	-	0.2	-	0.5	0.5	0.1	0.6
Subcontractor Costs	(11.6)	(1.3)	(0.1)	-	(0.1)	(0.1)	(0.2)	-	(0.2)	-	0.1	0.1	(0.1)	-
Net Revenue	2.6	(2.8)	-	-	-	-	-	-	-	-	0.6	0.6	-	0.6
Reconciliation of Net Income Attributable to Tetra Tech to EBITDA
(in thousands)
						2020						2021
	2018	2019	1st Qtr	2nd Qtr	6 mos	3rd Qtr	9 mos	4th Qtr	Total	1st Qtr	2nd Qtr	6 mos	3rd Qtr	9 mos
Net Income Attributable to Tetra Tech	136,883	158,668	47,310	36,398	83,708	45,497	129,205	44,654	173,859	52,436	45,517	97,953	51,903	149,856
Interest Expense1	15,524	13,626	3,348	3,500	6,848	3,564	10,412	2,688	13,100	3,026	2,823	5,849	2,737	8,585
Depreciation2	19,592	17,285	3,293	3,133	6,426	3,686	10,112	2,905	13,017	2,882	3,073	5,955	3,070	9,026
Amortization2	18,249	11,559	2,942	3,442	6,384	2,570	8,954	2,640	11,594	3,356	2,213	5,569	2,216	7,785
Contingent Consideration	5,753	3,085	-	(971)	(971)	550	(421)	(12,950)	(13,371)	-	-	-	-	-
Goodwill Impairment	-	7,755	-	-	-	-	-	15,800	15,800	-	-	-	-	-
Income Tax Expense (Benefit)	37,605	16,375	12,637	7,615	20,252	14,458	34,710	19,391	54,101	10,778	12,456	23,234	15,146	38,380
EBITDA
233,606	228,353	69,530	53,117	122,647	70,325	192,972	75,128	268,100	72,478	66,082	138,560	75,072	213,632
Acquisition & Integration Expenses	-	10,351	-	-	-	-	-	-	-	-	-	-	-	-
Non-Core Dispositions	3,434	10,945	(800)	(2,184)	(2,984)	(4,493)	(7,477)	(1,047)	(8,524)	-	-	-	-	-
RCM / Non-Cash Claims	16,836	19,526	-	-	-	-	-	-	-	-	-	-	-	-
COVID-19	-	-	-	8,233	8,233	-	8,233	-	8,233	-	-	-	-	-
Adjusted EBITDA	253,876	269,175	68,730	59,166	127,896	65,832	193,728	74,081	267,809	72,478	66,082	138,560	75,072	213,632

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)

		June 27,		September 27,
		2021			2020
Assets
Current assets:
Cash and cash equivalents	$	234,266	$	157,515
Accounts receivable, net		664,393			649,035
Contract assets		91,405			92,632
Prepaid expenses and other current assets		95,576			81,094
Income taxes receivable		20,781			19,509
Total current assets		1,106,421			999,785
Property and equipment, net		36,001			35,507
Right-of-use assets, operating leases		213,236			239,396
Investments in unconsolidated joint ventures		8,180			7,332
Goodwill		1,051,796			993,498
Intangible assets, net		9,160			13,943
Deferred tax assets		34,627			32,052
Other long-term assets		51,500			57,045
Total assets	$	2,510,921		$	2,378,558
Liabilities and Equity
Current liabilities:
Accounts payable	$	132,602	$	111,804
Accrued compensation		193,185			199,801
Contract liabilities		179,127			171,905
Short-term lease liabilities, operating leases		64,911			69,650
Current portion of long-term debt and other short-term borrowings		16,252			49,264
Current contingent earn-out liabilities		16,320			16,142
Other current liabilities		208,951			174,890
Total current liabilities		811,348			793,456
Deferred tax liabilities		17,715			16,316
Long-term debt		234,020			242,395
Long-term lease liabilities, operating leases		173,080			191,955
Long-term contingent earn-out liabilities		14,904			16,475
Other long-term liabilities		67,359			80,588
Equity:
Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares
issued and outstanding at June 27, 2021 and September 27, 2020		-			-
Common stock - authorized, 150,000 shares of $0.01 par value; issued
and outstanding, 54,071 and 53,797 shares at June 27, 2021 and
September 27, 2020, respectively		541			538
Accumulated other comprehensive loss		(102,401)			(161,786)
Retained earnings		1,294,260			1,198,567
Tetra Tech stockholders' equity		1,192,400			1,037,319
Noncontrolling interests		95			54
Total stockholders' equity		1,192,495			1,037,373
Total liabilities and stockholders' equity	$	2,510,921		$	2,378,558

Tetra Tech, Inc.

Consolidated Statements of Income

(unaudited - in thousands, except per share data)

Three Months Ended		Nine Months Ended
June 27,		June 28		June 27,		June 28
2021		2020		2021		2020

Revenue	$
Subcontractor costs
Other costs of revenue
Gross profit
Selling, general and administrative expenses
Contingent consideration - fair value adjustments
Income from operations
Interest expense
Income before income tax expense
Income tax expense
Net income
Net income attributable to noncontrolling interests
Net income attributable to Tetra Tech	$
Earnings per share attributable to Tetra Tech:
Basic	$
Diluted	$
Weighted-average common shares outstanding:
Basic
Diluted

801,633	$	709,771	$	2,321,500	$	2,241,527
(163,590)		(149,494)			(478,461)			(482,768)
(512,347)		(445,880)			(1,488,549)			(1,437,625)
125,696		114,397			354,490			321,134
(55,859)		(50,822)			(157,788)			(148,299)
(30)		(50)			163			1,521
69,807		63,525			196,865			174,356
(2,737)		(3,564)			(8,585)			(10,412)
67,070		59,961			188,280			163,944
(15,146)		(14,458)			(38,380)			(34,710)
51,924		45,503			149,900			129,234
(21)		(6)			(44)			(29)
51,903	$	45,497			149,856		$	129,205
0.96	$	0.84		$	2.77		$	2.38
0.95	$	0.83	$	2.74	$	2.34
54,117		53,985			54,095			54,366
54,666		54,692			54,698			55,161

Tetra Tech, Inc.

Consolidated Statements of Cash Flows

(unaudited - in thousands)

		Nine Months Ended
		June 27,			June 28,
		2021			2020
Cash flows from operating activities:
Net income	$	149,900	$	129,234
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		16,811			19,066
Equity in income of unconsolidated joint ventures		(3,513)			(5,200)
Distributions of earnings from unconsolidated joint ventures		2,773			5,280
Amortization of stock-based awards		16,261			13,494
Deferred income taxes		123			2,767
Provision for losses on accounts receivables		(4,355)			539
Fair value adjustments to contingent consideration		(163)			(1,521)
Gain on sale of property and equipment		(110)			(9,693)
Changes in operating assets and liabilities, net of effects of business acquisitions:
Accounts receivable and contract assets		15,354			148,818
Prepaid expenses and other assets		17,243			1,566
Accounts payable		19,712			(98,029)
Accrued compensation		(7,332)			(39,978)
Contract liabilities		3,083			17,328
Other liabilities		1,389			10,305
Income taxes receivable/payable		(638)			574
Net cash provided by operating activities		226,538			194,550
Cash flows from investing activities:
Payments for business acquisitions, net of cash acquired		(17,154)			(28,505)
Capital expenditures		(6,234)			(9,360)
Proceeds from sale of property and equipment		333			17,162
Net cash used in investing activities		(23,055)			(20,703)
Cash flows from financing activities:
Proceeds from borrowings		165,570			298,364
Repayments on long-term debt		(173,895)			(297,856)
Bank overdrafts		(33,770)			-
Repurchases of common stock		(45,000)			(102,188)
Taxes paid on vested restricted stock		(17,589)			(11,143)
Stock options exercised		10,703			8,263
Dividends paid		(29,241)			(25,590)
Payments of contingent earn-out liabilities		(12,374)			(22,434)
Principal payments on finance leases		(1,908)			-
Net cash used in financing activities		(137,504)			(152,584)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		10,772			(334)
Net increase in cash, cash equivalents and restricted cash		76,751			20,929
Cash, cash equivalents and restricted cash at beginning of period		157,515			120,901
Cash, cash equivalents and restricted cash at end of period	$	234,266		$	141,830
Supplemental information:
Cash paid during the period for:
Interest	$	7,044	$	9,738
Income taxes, net of refunds received of $2.0 million and $1.4 million	$	36,664	$	30,259
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	234,266	$	141,658
Restricted cash		-			172
Total cash, cash equivalents and restricted cash	$	234,266		$	141,830