Tetra Tech : Q2 2024 Earnings Conference Slides

Q2-24 EARNINGS CALL

May 2, 2024

Dan Batrack, Chairman & CEO Steve Burdick, Executive VP & CFO Leslie Shoemaker, Executive VP & CSO

WATER	ENVIRONMENT	SUSTAINABLE INFRASTRUCTURE

Forward-Looking Statements &

Non-GAAP Financial Measures

All statements in this communication other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including any statements of the plans, strategies and objectives for future operations, profitability, strategic value creation, risk profile and investment strategies, and any statements regarding future economic conditions or performance, and the expected financial and operational results of Tetra Tech. Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. These statements involve risks and uncertainties, such as those related to fluctuations in Tetra Tech's quarterly operating results and stock price, and the other risks detailed from time to time in Tetra Tech's SEC reports. Any forward-looking statements are made as of the date hereof. We do not intend, and undertake no obligation, to update any forward-looking statement.

To supplement the financial results presented in accordance with generally accepted accounting principles in the United States ("GAAP"), we present certain non-GAAP financial measures within the meaning of Regulation G under the Securities Exchange Act of 1934, as amended. We provide these non-GAAP financial measures because we believe they provide a valuable perspective on our financial results. However, non-GAAP measures have limitations as analytical tools and should not be considered in isolation and are not in accordance with, or a substitute for, GAAP measures. In addition, other companies may define non-GAAP measures differently which limits the ability of investors to compare non-GAAP measures of Tetra Tech to those used by our peer companies. A reconciliation of these non-GAAP financial measures is available in the Appendix at the end of this communication.

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Q2-24 Record Results

Net Revenue

Q2 RECORD $1.05B

$0.97B

+9%*

Q2-23Q2-24

*+12% Y/Y excluding Ukraine and Disaster Response Note: Refer to Regulation G for reconciliation summary.

EBITDA

Q2 RECORD $135M

$105M

+28%

Q2-23Q2-24

EPS

Q2 RECORD

$1.42

$1.06

+34%

Q2-23Q2-24

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Performance by Segment (Q2-24)

Segment	Net Revenue ($M)		OI Margin (%)	Comments
			$466				13.7%
	$436		12.0%			Federal Environmental up
GSG					•
	+15%*		+170	•	Advanced Water Treatment up
			•	Federal IT up
					bps
		Q2-23	Q2-24		Q2-23	Q2-24
			$586	13.0%
	$534		9.8%			RPS Margin up
CIG					•
			+320	•	Renewable Energy up
		+10%
				bps	•	U.K. Water Planning and Design up

Q2-23Q2-24

Q2-23Q2-24

*GSG Y/Y excludes Ukraine and disaster response

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Net Revenue by Customer (Q2-24)

Customer	% of	Y/Y	Comments
Net Rev.
U.S. Federal	31%	+14%*	• Federal Environmental up

U.S. State & Local

11%

+14%*

• Advanced Water Treatment up

U.S. Commercial

17%

-2%

• Environmental Remediation timing

International

41%

+17%

• U.K. Water Planning and Design up

*U.S. Federal Y/Y excludes Ukraine; U.S. State and Local Y/Y excludes disaster response

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Backlog (Q2-24)
			$4.74B
		$4.27B	+ 11%
			Y/Y
	$3.61B
$3.15B
Q2-21	Q2-22	Q2-23	Q2-24

Recent Key Wins

• $464 million multiple-award U.S. Army Environmental Remediation Services contract, investigating and remediating harmful contaminants, including PFAS at Army installations throughout the U.S.
• $375 million NASA Environmental contract, providing technical consultation and assessing innovative approaches to restore contaminated sites and improve climate resiliency
• $150 million multiple-award U.S. Army Corps of Engineers contract, providing architect-engineeringservices to support sustainable infrastructure
• $55 million single-award Environmental Services contract, closing and dewatering ponds and remediating combusted coal residuals
• $22 million single-award U.K. Government Project Management and Design Services contract, designing building systems to reduce emissions and increase energy efficiency

$1.3 billion of New Orders in the Quarter

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Financial Overview (1H-24)

Net Revenue ($ in millions)

	$2,068
$1,706	+21% Y/Y
1H-23	1H-24

Operating Income ($ in millions)

	$229
$185	+23% Y/Y
1H-23	1H-24

EBITDA ($ in millions)

	$266
$209	+27% Y/Y
1H-23	1H-24

Diluted EPS

	$2.81
$2.40	+17% Y/Y
1H-23	1H-24

EBITDA increases continue to exceed Net Revenue growth

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Cash Flow Overview (Q2-24)

Cash Flow from Ops TTM ($ in millions)

	$368
$272	+35% Y/Y
Q2-23	Q2-24

Days Sales Outstanding

59
	55	4-day
		improvement
Q2-23	Q2-24

Net Debt Leverage

2.1x
	1.4x	Target:
	1.0x-2.0x
Q2-23	Q2-24

Cashflow from Operations has exceeded Net Income every year for the last two decades

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FY24 Capital Allocation

Cash Flow

$368M

TTM

• $800M existing liquidity available

Debt Facilities • Balance of fixed (60%) & variable (40%) rate debt

• Invest in organic & acquisitive strategic priorities

• Strong strategically aligned pipeline

Acquisitions • Technical leadership

• Water & Environment focus

Dividends &	• Q3-24: $0.29 per share, +12% Y/Y
• 36th consecutive double-digit Y/Y dividend increase
Stock Buyback
	• Previously approved buyback: $348M available

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2024 Sustainability Report Highlights

Operational Metrics

1.32 MT CO₂e

Scope 1 and 2

per employee / down 6.9%

Scope 1: 12,515.90 MT CO₂e down 7.9%

Scope 2: 22,213.16 MT CO₂e down 16%

Scope 3: 41,168.08 MT CO₂e added employee commuting

Billion People Challenge

625 million

people's lives improved

GHG reduction from client projects far exceeds GHG emissions from Tetra Tech internal operations

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