Tetra Tech Beats Q2 Earnings & Revenue Estimates, Raises 26' View
Tetra Tech, Inc.TTEK posted second-quarter fiscal 2026 adjusted earnings of 34 cents per share, up 3% year over year and ahead of the Zacks Consensus Estimate of 31 cents by 9.7%.
Net revenues were $1.05 billion, down 4.9% year over year, but topped the consensus mark of $999 million by 5.1%. Backlog ended the quarter at $4.28 billion, up 8% sequentially, supported by solid demand across water and environmental end markets.
On a GAAP basis, TTEK reported revenues of $1.22 billion compared with $1.32 billion in the year-ago quarter.
Tetra Tech Benefited From CIG Growth Offset by GSG
Revenues from U.S. Federal customers (accounting for 20% of the quarter’s revenues) were up 11% year over year, supported by a solid pipeline of projects from the Defense and U.S. Army Corps of Engineers. U.S. Commercial sales (19% of the quarter’s revenues) decreased 2% year over year due to lower renewable energy sales.
U.S. State and Local sales (14% of the quarter’s revenues) increased 9% year over year, driven by strength in municipal water infrastructure. International sales (47% of the quarter’s revenues) were up 12% year over year, driven by strength in the UK’s water and digital water automation programs
Tetra Tech reports revenues under the segments discussed below:
The Commercial/International Services Group (CIG) delivered net revenues of $591.2 million, up 9.6% year over year. Government Services Group (GSG) net revenues were $458.5 million, down 18.8% from the prior-year quarter. The mix across the two operating groups continued to be a key swing factor in consolidated results, with CIG strength partially offsetting lower year-over-year volume in GSG.
Tetra Tech, Inc. Price, Consensus and EPS Surprise
Tetra Tech, Inc. price-consensus-eps-surprise-chart | Tetra Tech, Inc. Quote
TTEK's Margin Profile
TTEK continued to manage its financing costs while maintaining capacity for growth investments. In the fiscal second quarter, Tetra Tech’s subcontractor costs totaled $170.5 million, reflecting a decrease of 21.9% from the year-ago quarter. Other costs of revenues (adjusted) were $835.5 million, down 6.1% from the second quarter of fiscal 2025. Selling, general and administrative expenses (adjusted) were $82.6 million, down 1.8% from the year-ago fiscal quarter.
Adjusted operating income increased 1.1% year over year to $131.5 million while the adjusted margin increased 70 basis points to 12.5%.
Tetra Tech’s Balance Sheet and Cash Flow
While exiting the fiscal second quarter, Tetra Tech had cash and cash equivalents of $223.6 million compared with $167.5 million recorded at the end of fiscal 2025. Long-term debt was $880.2 million compared with $763.4 million recorded at the end of fiscal 2025.
In the first six months of fiscal 2026, Tetra Tech generated net cash of $237.6 million from operating activities compared with $7.2 million in the prior fiscal year period. Capital expenditure was $10.1 million, up 12.2% year over year. In the first six months of fiscal 2026, TTEK’s proceeds from borrowings amounted to $240 million while repayments on long-term debt were $125 million.
Shareholder-Friendly Policies
Tetra Tech distributed dividends totaling $33.9 million in the first six months of fiscal 2026. This compares favorably with dividends of $30.9 million distributed in the previous fiscal year period. It repurchased shares worth $102 million in the same period compared with $175 million in the previous fiscal year period.
TTEK’s Fiscal 2026 Outlook
For fiscal 2026 (ending September 2026), Tetra Tech anticipates net revenues to be in the range of $4.25-$4.40 billion, higher than $4.15-$4.30 billion projected earlier. However, the projection is lower than the net revenues of $4.62 billion reported in fiscal 2025. Adjusted earnings are currently predicted to be $1.50-$1.58 per share compared with $1.46-$1.56 guided previously. It reported earnings of $1.56 per share in fiscal 2025.
For the fiscal third quarter, management estimates net revenues to be in the range of $1.05-$1.10 billion. Adjusted earnings are projected to be in the band of 38-41 cents per share.
TTEK’s Zacks Rank and Other Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks are discussed below:
DXP EnterprisesDXPE presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DXP Enterprises’ earnings surpassed the consensus estimate by 52.8% in the last reported quarter. In the past 60 days, the Zacks Consensus Estimate for DXPE’s 2026 earnings has increased 17.2%.
Kennametal KMT presently sports a Zacks Rank of 1. Kennametal’s earnings surpassed the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 35.4%. In the past 60 days, the Zacks Consensus Estimate for Kennametal’s fiscal 2026 earnings has increased 9%.
Powell IndustriesPOWL currently carries a Zacks Rank of 2. Powell’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 12.9%. In the past 60 days, the Zacks Consensus Estimate for Powell’s fiscal 2026 earnings has increased 3%.
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