Q1 2025 Tetra Tech Inc Earnings Call
U.S. Department of Labor.
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Speaker Change: Good morning and thank you for joining the Tetra Tech earnings call. As a reminder, Tetra Tech is also simulcasting this presentation with slides in the investor's section of its website at tetratech.com.
Speaker Change: With us today from management are Dan Batrack, Chairman and Chief Executive Officer, Steve Burdick, Chief Financial Officer, and Leslie Shoemaker, Chief Innovation Officer.
Speaker Change: They will provide a brief overview of the results and will then open up the call for questions.
Speaker Change: I would like to direct your attention to the Safe Harbor Statement in today's presentation.
Speaker Change: Today's discussion contains forward-looking statements about future business and financial expectations.
Speaker Change: Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in Tetra Tech's periodic reports filed with the SEC.
Speaker Change: Accept as required by law, Tetra Tech undertakes no obligation to update its forward-looking statements.
Speaker Change: In addition, since management will be presenting some non-GAAP financial measures as references, the appropriate GAAP financial reconciliations are posted in the Investors section of Tetra Tech's website.
Speaker Change: At this time, I would like to inform you that all participants are in a listen-only mode.
Speaker Change: At the request of the company, we will open up the conference for questions and answers after the presentation.
Speaker Change: With that, I would now like to turn the call over to Dan Batrack. Please go ahead, Mr. Batrack.
Dan Batrack: Thank you very much, Paul. And good morning. And welcome to our first quarter of fiscal year 2025's earnings conference call.
That's been a very eventful month of January so far.
Dan Batrack: Just over three weeks ago, the Eaton fire struck right here.
Dan Batrack: in Pasadena within about a mile of our corporate headquarters and an equally destructive fire occurred a little over 20 miles away from our headquarters in the Palisades here in Los Angeles County.
Dan Batrack: Unfortunately, some of the Tetra Tech staff did lose their homes, and many, many that work here in our Pasadena headquarters were evacuated, and in fact still
Dan Batrack: some still remain evacuated all the way up until today. But most importantly, all of the Tetra Tech staff are safe and we certainly do
Dan Batrack: And our condolences to those that were unfortunate because there were fatalities in both of the fires. So it was not a great start to the month just from a personal impact to Tetra Tech staff and individuals throughout Los Angeles County.
Speaker Change: Just 10 days ago, January brought us the inauguration of President Trump and the incoming of his new administration.
Speaker Change: and they are rapidly aligning the government to their policies, their programs, adjusting contracts to areas that are in line with their mandate as they're bringing it, and much of it's been implemented through executive orders and other actions.
Speaker Change: In fact, just beginning this week, just a few days ago, our USAID or foreign development contracts, for the most part, have all been put on hold.
Speaker Change: for up to 90 days while the administration embarks upon a review of all of these existing contracts.
Now, while these may seem like a lot of change,
Speaker Change: in the industry. It's not that dissimilar from what we've seen in temporary government shutdowns. We have seen programs that have been put on hold, typically comes quite quickly when a budget hasn't been arrived at through Congress. And so we have.
Speaker Change: seen this in a different form, maybe it wasn't executive actions, but we have seen the net effect be quite similar here in the marketplace and here at Tetra Tech. But no doubt Tetra Tech's strength has always been in our ability to respond and to adapt to change.
Speaker Change: whether it's mobilizing our staff to respond to fires or other disasters or hurricanes or aligning our staff with our clients priorities. We can move quite quickly. Our staff are in extremely high demand and the ability to put them on other programs during these periods is actually quite high.
Speaker Change: Our services across the board continue to be in very high demand.
Speaker Change: for things such as providing clean, secure water supplies, ensuring a healthy environment, or designing and putting in place resilient infrastructure such that it will be not impacted in the future regarding disasters or any other items.
Speaker Change: Now presenting with me today, I have Steve Burdick, our Chief Financial Officer who will be providing additional details on our financial performance and capital allocation for the company. I also have Dr. Leslie Shoemaker who will provide remarks on some of our key growth markets.
Speaker Change: But before I get to, or before we get to our drivers and outlook for fiscal year 2025, I'd like to first share with you the results of our first quarter.
Speaker Change: We had a very strong first quarter and beginning of fiscal year 2025.
Speaker Change: For the quarter, we achieved new record results, and not just record results for what we would normally perform in the first quarter, but high points for any quarter in the entire history of the company.
Speaker Change: In fact, our net revenue, which increased to $1.2 billion in the quarter, and again that's for net revenue, it was up 18% from the prior year to an all-time record for any quarter in the company's history.
Speaker Change: Property income was $138 million for the quarter, an increase of 24% from the prior year.
Speaker Change: And by the way, I'll make a note, a year ago.
Speaker Change: that was a record high. So by having income being up 24% from a record first quarter
Speaker Change: was really quite impressive here for the company. And of course, that's an all-time high for first quarter for the company.
Speaker Change: The strong performance resulted in earnings per share increase of 25% over the previous year to $0.35 for the quarter, which was above our own guidance range and, of course, above consensus that were provided in the marketplace.
Speaker Change: and through all of this and with this very large revenue.
Speaker Change: being recognized in the quarter. It was even more impressive that our backlog grew, and it grew to 5.44 billion dollars, up 15 percent.
from the first quarter of last year.
Speaker Change: I would like to discuss and present our Performance by Segment.
Speaker Change: Both of our segments contributed significantly to this outstanding performance in the first quarter.
Speaker Change: For the first quarter, the Government Services Group, or GSG segment, increased its revenue by 36 percent.
Speaker Change: year over year to $601 million. And this is the first quarter we've ever had a GSG segment over 600 million. So it was really quite a quite an accomplishment. Now GSG generated a margin of 13.9% margin for the quarter.
Speaker Change: The GSG's revenue growth was largely driven by significantly higher than anticipated work in Ukraine for a USAID client.
Speaker Change: While this is extremely important work, and it's been quite successful supporting the U.S. government in this critical mission, the contracts that we have do carry lower margins.
due to the cost-reimbursable nature of the contracts.
If you took out the Ukraine work...
Speaker Change: that we did this last quarter, you would have seen GSG's margin at about 15.4 percent, which is extremely strong for the first quarter of the year where we have holidays, such as here in the U.S., Thanksgiving, Christmas, and other times off. So to be in the 15s, and in fact above 15 percent for this first quarter, extremely strong for the company.
Speaker Change: The Commercial International Group, or CIG segment, delivered a 13% margin, quite pleased with that. It's up 50 basis points from last year, which is right in line with our forecasted annual increase in margins.
Speaker Change: The CIG segment had net revenue of $596 million, which was up 4% year-on-year. And I will note...
Speaker Change: This is the closest balance we've had between government services at $601 million, CIG at $596 million. We really have about half of our work in GSG and about half of our revenues in CIG. Really quite balanced for the company.
Speaker Change: Such that even though the decision by one of our subsidiaries to settle the 100 point litigation.
Speaker Change: It did result in a onetime charge that is material to the first quarter earnings that decision will not materially impact our results our strategy going forward.
For those of you on the call or looking at our information.
Speaker Change: I refer you to our Reg G and to the appendix of this presentation.
Speaker Change: GAAP to adjusted reconciliation.
Speaker Change: No.
Speaker Change: Cash flows generated from operations for the trailing 12 months were $363 million.
Speaker Change: Cash flows have continued to exceed income by more than 100%.
Speaker Change: When looking back over our historical financial results, we noticed that our cash flow from operations has exceeded net income every fiscal year for the last two decades.
Speaker Change: Our focus on working capital and cash flows resulted in a DSO of about $55 nine days much better than our industry peers, we're more.
Speaker Change: And 80 days.
Speaker Change: Our target is to keep the GSO as well below 60 days, we consider this a high watermark for working capital to be sustainable over the long term as we continue to make cash flows from operations of priority.
Speaker Change: Also our DSO provide significant insight into our core business as it reflects the outstanding work that our project managers to lead to higher quality projects.
Speaker Change: And highly satisfied clients and a broad portfolio across all of our end markets and geographies.
Speaker Change: Our net debt on EBITDA was at a leverage of 133 times, which is much lower than our average one year ago, which stood at 111.
Speaker Change: 1.51 times.
Speaker Change: Now on an adjusted basis without this one time charge.
Speaker Change: Net leverage was at one five times.
Speaker Change: So as we continue to execute on high quality operating results with strong cash flows and a healthy working capital. We will continue to have the ability to invest in strategic initiatives, which will provide higher returns to our shareholders.
Speaker Change: For those following along in the presentation I would like to present, a capital allocation overview.
Speaker Change: But prior to diving into these details I'd like to point out that Tetra Tech is one of the few firms who is able to provide an increasing dividend.
Speaker Change: APAC our shares make acquisitions.
Speaker Change: All the while lowering our net debt leverage.
Speaker Change: And with that I would say that we have a very strong balance sheet, probably the strongest balance sheet in our history as well as the significant amount of liquidity available to invest in organic and acquisitive priorities.
Speaker Change: We have a well balanced mix of fixed and floating rate debt to mitigate the interest rate risk as we look to invest in key strategic priorities.
Speaker Change: We have a strong pipeline for acquisitions, which is aligned towards technical leaders, especially in the water and environmental spaces, where we have led the market for the last 20 years.
Speaker Change: Now regarding our dividend program I want to announce that our board of directors approved a five 8% dividend, which is a 12% increase year over year to be paid in the second quarter.
Speaker Change: This is our 39th consecutive quarterly dividend with an annual double digit increase in the amounts paid and this remains a priority for the company.
Speaker Change: And as we've revised our capital structure to take advantage of the credit market to support our financing needs I wanted to point out our ability to reduce our average interest rate by 57 bps to 344% this quarter.
Speaker Change: Versus last or last year, this which is an environment of higher interest rates for longer.
Speaker Change: And based on reaching a lower leverage.
Speaker Change: At the end of last year, we did reinstitute, our stock buyback program this last quarter.
Speaker Change: $95 million.
Speaker Change: Do have available a significant portion of the $400 million from the stock buyback plan approved by our board of directors as part of our capital allocation strategy to use for future stock buybacks.
Speaker Change: And I am quite pleased to share. These strong results for the first quarter of 2025 I wanted to thank all of our shareholders and analysts for your support and I will now hand, the call back over to Leslie and Dan to discuss Tetra Tech's future global and improvement opportunities as well as our fiscal 2020.
Speaker Change: Five guidance Leslie.
Leslie Shoemaker: Thank you Steve.
Speaker Change: As Dan mentioned earlier, we see continued strong demand for our services, especially for essential water services.
Speaker Change: Water is at the forefront of recovery needs post disasters and the central cities in growing communities across the United States and internationally.
Speaker Change: Today, we are working with our clients to recharge aquifers to fight seawater intrusion in coastal regions, such as our innovative water treatment design in Hampton roads, Virginia.
Speaker Change: We're training contaminated groundwater to create reliable new water supply is worldwide.
Speaker Change: From water treatment in Dayton, Ohio, all the way to military facilities in Australia.
Speaker Change: And we are designing the new structures that will be used to protect hurricane prone regions along the coastline.
Speaker Change: The United States.
Speaker Change: Here in the U S. Our inland waterways locks and dams systems have just begun the first significant upgrade in over 50 years led by the Army Corps of engineers.
Speaker Change: Designers are currently supporting the update this inland navigation system across the U S, which is essential to Interstate commerce.
Speaker Change: And we've actually been the innovators and many of those designs with first of a kind solution.
Speaker Change: Across our water market, we're employing our triple S or software subscription solutions, and our downstream technologies to leverage AI and optimize and automate water systems.
Speaker Change: Our training engineers scientists and technical professionals.
Speaker Change: Our experience working on the largest U S disasters and our proprietary software systems.
Speaker Change: What make tetra techs, the leading U S consulting and engineering firm for response to fires Hurricanes and tornadoes.
Speaker Change: We've worked on disaster response and recovery for many years, but it is increasingly integrated into our services both in preparing for disasters as well as in responding to post disaster.
Speaker Change: We look at disaster response, and recovery is three distinct phases phase one is focused on supporting the monitoring and response immediately post disaster.
Speaker Change: We also maintain over 500 clients 500 contracts with clients throughout the.
Speaker Change: State and local governments are high risk regions coast to coast.
Speaker Change: Now we've been working for just three months on Hurricanes hurt Milton and Helane across the southeastern United States.
Speaker Change: And are now just beginning our support for the Eaton in palisade fires in California.
After about a year and the second phase begins to perform the more detailed damage assessment and consulting services that ultimately will lay the groundwork for the longer term engineering design.
Speaker Change: And ultimately spend 10 years or more.
Speaker Change: Today, we're continuing to support mowing and recovering from the line of fire, which due to its island location in severity as complex restoration needs such as the design of entirely new landfill structures to receive the final recipes.
Speaker Change: Hurricanes had even more significant long term needs for recovery planning and engineering that are directly in the services that Tetra Tech provides.
Speaker Change: Today, we are designing flight protection structures, and providing resiliency services to address the severe damage caused by hurricane Harvey in Texas and Hurricane Maria in Puerto Rico that occurred in 2017.
Speaker Change: Today, we're continuing to innovate in this space by integrating our AI solutions with our deep knowledge of recovering practices.
Speaker Change: For example, we are currently using artificial intelligence to analyze post fire satellite imagery and provide first of a kind landslide risk assessments using this technology.
Speaker Change: With the increasing frequency and severity of disasters. This is becoming a significant driver for our business.
Speaker Change: And with that I'd like to turn the call over to Dan to present our guidance.
Dan Batrack: Thank you Leslie.
Dan Batrack: I'd now like to present, our guidance for the second quarter.
Dan Batrack: The fiscal year and our updated guidance for all of fiscal year 2025, our guidance is as follows.
Dan Batrack: For the second quarter, our net revenue.
Dan Batrack: Revenue guidance ranges from 1 billion to $1 1 billion.
Dan Batrack: With an associated adjusted earnings per share up 30%.
Dan Batrack: The 33.
Dan Batrack: The updated guidance for the entire year for net revenue.
Dan Batrack: For a range of 4.365 billion.
Dan Batrack: 476 5 billion.
Dan Batrack: With an associated adjusted earnings per share of $1 37 to $1 52.
Dan Batrack: Following along on the webcast or Europe have access to the presentation. You can take a look at the assumptions with respect to intangible amortization tax rate and other items.
Dan Batrack: Any modeling questions that you may have.
Dan Batrack: In summary, we.
Dan Batrack: We had a really good first quarter and we achieved all time record revenues.
Dan Batrack: For revenue net revenue backlog for any quarter in the history of the company and we're seeing really strong demand for our differentiated leading with science services across our core business areas of water environment and infrastructure markets that we work in.
Dan Batrack: All around the world.
Dan Batrack: More specifically our disaster preparedness response and recovery services have never been in higher demand.
And for our water design services continue to grow both here in the United States, and the United Kingdom, and our federal practice or our fit practice is supporting the needed modernization of government services that with a more lean federal government workforce. This is going to be very highly aligned and in high demand with the new administration's pri.
Dan Batrack: <unk> <unk>.
Dan Batrack: Together these drivers and actually it is a change in the mix of our business, adding in more disaster response supported our increase in the upper end of our earnings per share guidance for all of fiscal year 2025.
Dan Batrack: And with that now I'd like to have the call open for questions. So Paul.
Dan Batrack: Our ready to receive any questions that you may have.
Speaker Change: Thank you quick question and answer session will begin now please be aware that there will be a 32nd pause in our webcast to allow for buffer.
Speaker Change: At this time audio participants are invited to submit their questions. Please remember to mute the audio function on your computer before you speak if youre using a speakerphone. Please pick up the handset before pressing any numbers if you will.
Speaker Change: Like to ask a question. Please press one on your Touchtone phone.
Speaker Change: Our first question is from Tim Mulrooney with William Blair. Please proceed with your question.
Tim Mulrooney: Yes. Good morning. Thank you for taking my questions just a couple of quick ones.
Speaker Change: The guide just to level set everybody can you walk us through what's assumed at the midpoint of your guidance range for USAID work and good luck.
Tim Mulrooney: What gives you confidence.
Speaker Change: But some of this work.
Tim Mulrooney: We'll likely turned back on.
Tim Mulrooney: After that 90 day review.
Speaker Change: Yes, it's a good question so.
Speaker Change: We have assumed.
Speaker Change: In the first quarter.
Speaker Change: Work on an annual basis, because the midpoint for our annual guidance is this the question at the midpoint.
Speaker Change: Assume that we would do approximately $400 million worth of USAID work for the entire year now.
Speaker Change: Now in the first quarter, we did about $200 million.
Speaker Change: So we have assumed that we would do approximately another 200 at the midpoint between now and the end of the fiscal year.
Speaker Change: What we've assumed while we.
Speaker Change: While we are on hold for 90 days.
Speaker Change: There is a number of different scenarios that can.
Speaker Change: Can unfold during this review practice.
Speaker Change: One of the projects can be put back on.
Speaker Change: Continuation and that can take place anywhere between now and the 90 day period.
Speaker Change: The delay can be put on extent can be extended and they can put.
Speaker Change: And put these days out into the future or they can make a determination that the projects are actually terminated.
Speaker Change: So with respect to our original forecast that we had we brought it down by about a third to a half.
Speaker Change: So we're going to do that much less work for eight.
Speaker Change: So we assume that what we did in the first quarter, we will basically do the rest of that similar amount over the next three quarters.
Speaker Change: If for some reason I will take a worst case scenario because this is what we built into the low end and I'll tell you it might even extend towards the midpoint.
Speaker Change: If you did turn all of our work off.
Speaker Change: I will go through a theoretical.
Speaker Change: Assessment very quickly as if everything got turned off so.
Speaker Change: So if it did get turned off that would mean, we would initiate the mobilization and the contracts were terminated you would demobilize. The projects you would send people back home and I believe that the demobilization cost to be incurred on these cost reimbursable contracts with yield roughly that mid point now if you said where.
Speaker Change: Worst case, and what's recoverable and not maybe you get towards the low end, but I'll tell you even if things don't get turned back on I believe it will take us roughly to the midpoint of our guidance that we have provided for fiscal year 2025, now if they get turned back on obviously that moves us.
Speaker Change: Could either be through demobilization, you incur payments in revenues or continued work at you can receive revenues contributing.
Speaker Change: Contributing and that if it did get turned back on and then continue through the rest of the year that would take us to the high end.
Speaker Change: If it gets turned on after this 90 day period. So I think that we've really been very conservative and I'll tell you in this level of this period of somewhat <unk>.
Speaker Change: Certainty now it's not that we have lots of data and it's uncertain.
Speaker Change: We are today Thursday morning.
Speaker Change: Three days and one hour into the stop work orders. So there's very little information things are just getting clarified and you saw even earlier. This week grants were put on hold.
Speaker Change: And then they were put back on in a 24 hour period, so to say that.
Speaker Change: To say that this isn't a fluid process.
Speaker Change: It is a very fluid process. So we've been very conservative we wanted to actually incorporated into our annual guidance.
Speaker Change: What I.
Speaker Change: I'd call it reasonably worst case could be and that it would support both are certainly the lower and with its already been fully embedded frankly with respect to aid mostly even to the midpoint.
Speaker Change: Okay. That's very helpful. So it sounds like the midpoint of your guide is almost worse case scenario, where you're just talking demobilization revenue because nothing really gets turned back on but is that really.
Speaker Change: Your expectation I mean, you've been doing that while prolonged.
Speaker Change: Prolonged time these eight projects some of them.
Speaker Change: I know.
Speaker Change: Areas of the world that are strategically important is.
Speaker Change: Is it your expectation that some of these projects likely grow.
Speaker Change: Turned back on after the 90 day review and if Thats not a FERC question, that's fine I can skip to do another one.
Speaker Change: Well I'll share with you our perspective, because our perspective is in line with.
Speaker Change: Essentially every administration's priority and I believe including this administration's priority overall with respect to foreign policy.
Speaker Change: <unk> heard us say this before foreign policy.
Speaker Change: Is made up of three legs relates to foreign policy number one is a diplomacy, that's the president meeting with other presidents and ambassadors and certainly that's important.
Speaker Change: Second is defense.
That is false and receiving where there is when there is no other way other than a military option, but the third leg is development.
Speaker Change: We've had individuals on our board such as Admiral truly.
Speaker Change: We are very close with our clients and department of defense and Theres. Many many white papers and recognition that one dollar of development will save between 10 and $100 of defense.
Speaker Change: And so the returns.
The development is somewhere between 10% to a 100 times.
Speaker Change: The projects that we work on for development.
Speaker Change: Clearly part of National Security.
Speaker Change: And are also associated very closely with the most highly sought after foreign.
Speaker Change: Development in diplomacy. So for example, I'll give you just a couple of very quickly.
Speaker Change: National Security is centered around places like the South China Sea.
Speaker Change: And the work that we do in the Philippines basically covers the entire eastern portion of the South China Sea.
Speaker Change: So by supporting development work in Philippines, we have access to Subic Bay, the largest naval facility in that region. We have access to Clark Airport space. These are all former.
Speaker Change: U S defense facilities work, we're doing in Vietnam on the west side.
Speaker Change: The South China Sea FERC were doing cleaning up agent Orange from the Vietnam conflict that the U S was engaged and has access to Camden Bay work, we're doing in Indonesia, and Malaysia. It covers the entire southern portion of the South China Sea. So these areas are critical to U S National security.
Speaker Change: Certainly I can give you examples in other portions of the world. So the work that we're doing are highly aligned with national security and the highest priority of not only previous administrations. This administration. So for those reasons I believe a large portion of our work will be review and determined to be critical and turned back on.
Speaker Change: Yeah.
Speaker Change: Albeit.
Speaker Change: Just to make sure we bracket things.
Speaker Change: Just explain how we've updated both the mid and lower point to even account for delayed portions, but as you get turned on that will take us back to the mid point and above up to the high end. So that's.
Speaker Change: That's our perspective and it's not it's not grown from are determined what we think here looking within Tetra Tech. This is based on the priorities previously illustrations and the current administration as they have been very vocal about.
Speaker Change: Yeah, Okay. That's the point is well taken.
Speaker Change: You've framed it really well for investors. So I appreciate that I'll leave it there. Thank you very much.
Speaker Change: Okay. Thank you Tim.
Speaker Change: Thank you. Our next question is from Sangeeta Jain with Keybanc capital markets. Please proceed with your question.
Sangeeta Jain: Hey, good morning, Thanks for taking my question.
Speaker Change: Then if you could help us understand the disaster response I think there's some.
Speaker Change: The revenue that you factored into the top end of your guidance. So if you can help us understand how much flex there is beyond what is in your guidance for this year and next year.
Speaker Change: Yes, Great question Great question so the.
Speaker Change: Coming into this year.
Speaker Change: We assume that we'd continue work.
Speaker Change: Response to the Hurricanes, we had great visibility that took place at the beginning of the year, but the fires of course.
Speaker Change: Are we.
Speaker Change: We think that here in fiscal year 2025, our new revenues that will start here in the latter part of Q2 since we're already two days from February.
Speaker Change: We will start this work quite quickly and by the way just as a quick update we think we'll have a dozen teams in the field by the way the at the last of the active fires just been put out this last weekend, we expect that.
Speaker Change: With the president having come out here in southern California, and put priority on this but we expect to have more than a dozen teams out in the field by the end of this week and yes that does mean tomorrow.
Speaker Change: And we expect that we'll have 100 different teams.
Speaker Change: Out in the field are doing the assessment to clear these sites for debris removal in the coming weeks. So this is going to go from.
Speaker Change: From the fire just being put out to being in the field quite quickly. So we assume that was the case sort of $40 million to $50 million of incremental revenue will be included and we've put that into our guidance for fiscal year 2025 that was not in it before.
Speaker Change: But at this.
Speaker Change: Temporary hole or stopped work on USAID.
Speaker Change: And what.
Speaker Change: What we've used as an offset so we think that the from a revenue standpoint, what is not fully recognized during this 90 day.
Speaker Change: Hold period will be made up for it the disaster after disaster, where it is more profitable we have more dedicated staff, where we have higher utilization.
Speaker Change: Overtime hours these types of things and so that would cause that's what caused us on our upper end not to remove our revenue up because the contribution from the hires to be specific.
Speaker Change: Will offset any type of production we had during this short.
Speaker Change: Stand-down periods with a federal government on systems.
Speaker Change: But since it's higher margin that allowed us to increase the profit or the operating income and earnings per share for the year. That's why you saw the upper ends EPS actually go up.
Speaker Change: That's the dollar amount we have we think that with respect to you said next year. We think this is about a 18 month.
Speaker Change: Process, that's sort of an average time, we spent about that amount of time on the campfire win.
The entire city of Paradise burned down that was a response activity with our partners there.
Speaker Change: It was about an 18 month process and in fact, the numbers would be larger in 2020.
Speaker Change: Six because we're already four months into 2025 before we get started so we have just a little over half of the year end 2025, and so you can expect that 40% to 50 to be half again more maybe even double in 2026.
Steve Burdick: Okay, that's super helpful and maybe for Steve.
Steve Burdick: Our leverage is hovering around the low end of your target range. It's been a couple of years since you made a major acquisition.
Steve Burdick: Can you talk to us about your thinking around the M&A pipeline and the types of opportunities that you may be looking at.
Steve Burdick: Yes, I think.
Steve Burdick: We're very fortunate we have.
Steve Burdick: A huge.
Steve Burdick: Acquisition pipeline, we do we are very prudent in terms of how we allocate our capital to make sure that acquisitions that we bring into Tetra Tech don't make Tetra Tech just bigger better and those those acquisitions are really focused on.
Steve Burdick: Technical leadership, so areas that Leslie you had talked about as part of her presentation today.
Steve Burdick: Especially in the water and environmental spaces.
Steve Burdick: <unk> is really what we're looking at.
Steve Burdick: And from a geographic presence we have.
Steve Burdick: We have opportunities across the complete geography, where we.
Steve Burdick: Currently operate which is.
Steve Burdick: Australia, and Asia Pacific North America, which includes U S Canada.
Steve Burdick: In the U K and northern Europe. So.
Steve Burdick: It's really along those lines and it's.
Steve Burdick: <unk>.
Steve Burdick: I would say.
Steve Burdick: Yes, it's Ben.
Steve Burdick: Almost almost two years to the date since we closed our PFS, which was our largest acquisition but.
Steve Burdick: It's like I said, it's not just.
Steve Burdick: Acquisitions to get bigger or larger solution.
Steve Burdick: But really what's can make tetra tech.
<unk>.
Steve Burdick: And Thats whats in our pipeline.
Steve Burdick: Yeah.
Steve Burdick: Great I appreciate it it's so much thank you.
Speaker Change: Thank you. Our next question is from <unk> Khan with RBC capital markets. Please proceed with your question.
Speaker Change: Okay, great. Thanks for all the color on some of the puts and takes in it I just want to follow up a little bit on some of the other buckets and as you think about.
Speaker Change: The rest of fiscal 2025, obviously, there's some puts and takes on the civil and Dod side as long as you can just put a finer point on it.
Speaker Change: Expectations on how those two segments, maybe evolve for the rest of the year. Thank you.
Speaker Change: Okay. Good good question and I know this is Ben.
Speaker Change: And the last.
Speaker Change: 10 days has been an awful lot of focus on foreign assistance of foreign development USA.
Speaker Change: USA specifically in the state Department.
Speaker Change: But it is only one third of the work we do for the federal government. So.
Our U S Department of Defense work has been has been growing well.
Speaker Change: <unk> seen their budgets are in place they're funding is untouched in the priorities.
Speaker Change: Have given primacy within the budget. So we expect that work is going to continue to.
Speaker Change: Growing at sort of between 5% and 10% rate as we've indicated and we've seen.
Speaker Change: No signs of <unk>.
Speaker Change: Really changes and in fact, we think that some of that might even get accelerated and those growth rates may go to the upper hand.
Speaker Change: Some have asked.
Speaker Change: What type of work you can do there.
Speaker Change: Well, if youre going to add more certainly been indications of grow the size of the Navy decides and therefore, if youre going to have another ship you have to have a port our peer Ohio location to put it and so while they are constructing at the work that we do is absolutely critical with respect to access.
Speaker Change: Settlement can you get there what are you going to do on the design.
Speaker Change: All of the things that would have to be done.
Speaker Change: Would do and Thats right in the.
In alignment with ourselves so ports Harper stands navigation channels total protection and of course modernization up both on the civilian side.
Speaker Change: On the department of Defense, if youre going to do it with a more lean workforce, particularly if youre going to focus on the fighting for us or the readiness of the back office. So to speak the people that support it will need to be more efficient through a modernization and use of everything from guests AI and other data analytics and thats, what our federal practice.
Speaker Change: And that represent about represents about 10% of all the revenues and Petrofac. So interestingly enough I know it doesn't get as much.
Speaker Change: Headlines.
Speaker Change: Probably my fault for not speaking enough for clearly enough about it but our federal practice is as big as or slightly larger than our entire foreign assistance program with USA.
Speaker Change: And so the modernization program for the federal government is another area that we see growing we put generally between 5% to 10%, but probably at the upper end of that and so those.
Speaker Change: Very strong.
Speaker Change: Areas, we have under our civilian programs. So defense, we see clear we have lots of backlog and we see it the strong and growing at the upper end of our range. Our civilian work is pretty barrier that we have some of the areas that we're doing with federal Aviation administration.
Speaker Change: Is very high priority.
Speaker Change: There was an accident in Washington D C yesterday.
Speaker Change: Highlights the need for modernization and additional communications, Besides just air traffic controllers, and moving us to space based communications and navigation systems, even in local landings situations such as taking.
Speaker Change: Taking place that you can just last night in Washington D. C area. So we see that increasing in priority as part of Modernizations part of safety as part of a reduced cost for running these systems. So we see that.
Speaker Change: More funding and more priority.
Speaker Change: Other areas I know way debate questions frequently about what about environmental protection Agency EPA.
Speaker Change: A lot of the work we do for the Environmental Protection Agency, everyone response activities.
Speaker Change: It's not.
Speaker Change: You.
Speaker Change: Looking at climate change are you doing research a lot of this is response work. So when you had the train derailment and though there was a settlement just this week between.
Speaker Change: Between the federal Department of Justice on the.
The rail operator.
Speaker Change: In East Palestine.
Speaker Change: We're doing the response and let's say the response activities and responding to these types of test disasters knows no political party.
Speaker Change: And so that work we see is unaffected so I think the non federal.
Speaker Change: Foreign assistance work, but I've spoken I've already.
Speaker Change: And we've discussed the potential risks and opportunities there, but I think most of our civilian department of defense remains untouched in fact, I think the growth rates are even higher there.
Speaker Change: Great and then well that's great color and then just maybe moving over to kind of the commercial bucket. It sounds like that's been trending well, but maybe if you can just update us on and a lot of executive orders flying around recently announcements by data center build out so just net net.
Speaker Change: How are your conversations with your commercial customers trending whether list of private investment <unk>.
Speaker Change: Maybe some of the broader infrastructure announcements over here. Thanks.
Speaker Change: Well it's interesting.
Speaker Change: Hi, Tom.
Speaker Change: Comments from investors or.
Speaker Change: Individuals within the company in other parts of the business, saying that areas such as oil and gas for LNG exports from the U S. But you also have become a bigger energy export at this must be taking.
Speaker Change: This must be taking off like.
Speaker Change: Like the Spacex rocket.
Speaker Change: But.
Speaker Change: But we've actually seen that move forward, we've seen additional work with respect to permitting permitting and feasibility studies, we've seen additional request for.
Speaker Change: Technical evaluations for co location of power generation adjacent to data centers or <unk>.
Speaker Change: Chip apps.
Speaker Change: I found very interesting we've been.
Speaker Change: Contracted for evaluating some.
Speaker Change: LNG or natural gas fired.
Speaker Change: Our cogeneration power plants between some of the oil majors and some of the turbine manufacturers. So you can actually put a four five.
Speaker Change: Gigawatt power generation.
Speaker Change: Adjacent to.
Speaker Change: One of these facilities, so that it limits or eliminates the need for transmission and connections to interconnects and so the work that this should be a big build out the <unk>.
Speaker Change: Cost will be dropped dramatically and so we've been engaged in the us. So I would say its theres been an uptick in exploration of these but as far as actually going from a standstill to we're breaking ground tomorrow.
Speaker Change: Still seen that move.
Speaker Change: Through a progression process I don't want to use the word slow, but I would say, it's progressing it's not from zero to 100 miles in this past 10 days since the.
Speaker Change: Duration.
Speaker Change: Great and then just one last one and then I'll pass the line I guess, the our estimated exposure you have to various buckets is about call. It 55% water, and then 30%, 35% and sort of environmental and.
Speaker Change: Renewables just maybe if you can just talk about that other environmental on renewables bucket and just curious whether it's across public customers private customers. Just some of the kind of trends or commentary you're hearing as it relates to renewables and it seems like the new administration is a bit honed in on win but just talk about the mix of work you have in that other 30% to 35%.
Marketplace.
Speaker Change: Yes.
Speaker Change: Not familiar with that particular breakdown I can share with you how we look at it so we have 85%, which would be water and environment and the environmental work. We do is specifically associated with protecting watersheds groundwater surface water or other water sources. So the environmental.
Speaker Change: Work is completely integrated and integral to law protection of water. So that's why we say 85% of our revenues.
Speaker Change: Our water and environment, but the environment is.
Speaker Change: Completely linked to the driver of water program, so that 85% I don't really see impacted by.
Speaker Change: The the.
Speaker Change: The headline risk of environmental program shopping with us So thats thats not the case with respect to renewables other than hydropower.
Speaker Change: We do not include that in our 85%. So when you say clean energy or renewable that's not part of our 85% that's part of the other 15%.
Speaker Change: And the other 15% is roughly I don't want to get too wonky on numbers here, but about 10% as high performance buildings and the other 5% is renewables renewables do include on and offshore wind.
Speaker Change: No it's not in favor on codes solar.
Speaker Change: Which.
Speaker Change: Which is a component.
Speaker Change: But what we're doing here in the United States that 5% of our revenue that's renewable.
Speaker Change: That is not here just in the United States is primarily in the U S. Canada, Canada is we have many turbines there Australia, which has a priority in offshore wind generation is moving forward in Europe, which is primarily U K, which is well advance of where we are so if you take that 5% and take.
Speaker Change: The renewable portion for the United States that it may not be in favor with this administration.
Speaker Change: The big three for Us for renewables, Australia U S and U K and it's probably about a third so if you want to say about one 5% of our revenue is in renewables with respect to that Mike.
Speaker Change: Not be in favor.
Speaker Change: I would say there is a component of it with respect to win but there's also a component of that one 5% that it's other renewable energy such as.
<unk>.
Speaker Change: Carbon sequestration from natural gas coal fired superb coal fired power plants, where you have complete carbon sequestration and so it's not just win so if you really look at it it's a pretty small part of our overall portfolio. When you break that down to the U S for <unk>.
Speaker Change: Great. Thanks, very much for that.
Alan: Great. Thanks Alan.
Speaker Change: Thank you. Our next question is from Tate Sullivan with Maxim Group. Please proceed with your question.
Speaker Change: Alright. Thank you. Thank you Dan for your previous comments on on the USAID.
Speaker Change: Firmed no other federal government agency has halted work for you or your competitors at this time.
Speaker Change: Are you concerned that this USA decision or.
Speaker Change: That could have order could set a precedent for other agencies.
Speaker Change: Well it's interesting.
Speaker Change: I won't speak to regarding our competitors saw.
Speaker Change: Comment on what what they've been on hold but but I assume what we've received as really across anybody doing work for that agency. We have received some.
Speaker Change: Stop work orders for some.
Speaker Change: Some of the I'll call. It scientific research work, it's a small part for the environmental Protection Agency.
Speaker Change: So EPA we.
Speaker Change: We had thought that there may have been a stop work orders coming because of the.
Speaker Change: Cessation of grant funding that took place in the Mr. Summed it. The next day. So we were speculating it might come from National Science Foundation, where we do work on brands. That's been untouched, that's moving forward, but a very small amount of EPA.
Speaker Change: On the R&D research part of it while they are doing an evaluation.
Speaker Change: So.
Speaker Change: But I would put that.
Speaker Change: I don't know if I call it the noise, but I'd call it.
Speaker Change: Quite small, but just to be clear.
Speaker Change: It has extended beyond just.
Speaker Change: You won't say to a certain extent I will say that what came out and it really didn't affect us there was orders that came out during that very small.
Speaker Change: A week ago, just after inauguration, but all dei programs or anything associated with those.
Speaker Change: Not only put on hold but were terminated effective immediately and I think that may have extended to other agencies for programs where.
Speaker Change: On associated with HHS and things like that.
Speaker Change: Okay. Thank you.
Speaker Change: And just to remove some source of uncertainty for this current core can you quantify if you can the amount of USAID work booked in backlog.
Speaker Change: In fiscal <unk>, 25, and an amount of USAID and current backlog and the amount in total backlog.
Speaker Change: It's possible yes.
Speaker Change: We don't breakout.
Speaker Change: The percentage of work, we have by any particular end client.
Speaker Change: Within our backlog.
Speaker Change: But I will say that.
Speaker Change: Overall, it's obviously whatever we recognized in the quarter would be in our total so I'll just go to the total generally the USAID had has funded us for more than a year.
Speaker Change: So this last year USAID.
Speaker Change: Because of Ukraine, being a bigger part.
Speaker Change: Normally it's about 10% of our revenue are a third of our federal because Ukraine was up maybe around 13%. So total aid was maybe.
Speaker Change: A year ago in 2024.
Between $5 50, and 600 this year, we thought it would be flat at about 600 carriers more than a year's worth of <unk>.
Speaker Change: Backlog so.
Speaker Change: You can extrapolate from there.
Speaker Change: Remember in our in our backlog.
Speaker Change: Thank you very much is Steve Oded can you touch on the decision to settle or accrue for one hunters point litigation.
Speaker Change: What is the.
Speaker Change: Accounting change and the litigation landscape or can you comment on that.
Speaker Change: Well, you've covered us quite a while and this is something that's been around for.
Speaker Change: 10, 15 years so.
Speaker Change: <unk> got to a point where.
Speaker Change: Our subsidiary <unk>.
Speaker Change: <unk> was able to come to an agreement with the government that that really allows us to.
Speaker Change: Eliminate almost want to.
Speaker Change: See quite eliminate fully yet but.
Speaker Change: The future litigation costs.
Speaker Change: <unk> lawyers.
Speaker Change: Going to court for.
Speaker Change: Years, and so it really takes all of that off the table.
Speaker Change: And that was that was the purpose of us finally deciding to.
Speaker Change: The subtle with with the government.
Speaker Change: Okay. Thank.
Speaker Change: Thank you.
Speaker Change: Thank you Jay.
Thank you. Our next question is from Justin Hauke with Baird. Please proceed with your question.
Great. Thank you for all the color here that's been helpful on helping us understand everything.
Speaker Change: I guess I wanted to clarify one more point on the USAID contribution in the quarter. I think you said it was about $200 million of revenue.
Speaker Change: Curious how much of that was.
Speaker Change: Ukraine, specifically and maybe the same question for 2024 then.
Speaker Change: The $5 50 to 600 million that you said that you did in 2024, how much of that was what is Ukraine, specifically just to kind of help isolate cap bucket versus the rest of your USA business.
Speaker Change: Hello.
Speaker Change: So in Q1.
Speaker Change: Ukraine was about $150 million.
Speaker Change: For 2025, so this first quarter and so we were just a little over $50 million for the <unk>.
Speaker Change: Our remaining USAID work, which put us.
Speaker Change: The $200 million number you use there.
Speaker Change: And with respect to.
Speaker Change: What we.
What we had done a year ago and just in 2024.
Speaker Change: In Ukraine work.
Speaker Change: Yeah.
Speaker Change: Is that the second part of the question.
Speaker Change: Yes, yes.
Speaker Change: Yeah, we did just a little under a little under 300 I think it was like $282 90 for fiscal year 2024, that's about what we did in.
Speaker Change: In Ukraine.
Speaker Change: Okay Alright.
Speaker Change: Alright, thank you.
Speaker Change: And I guess my last one just as a high level question for you Dan but.
Speaker Change: Outside of <unk>.
Speaker Change: Kind of the immediate effects of the executive borders.
Speaker Change: <unk>.
Speaker Change: Some of the other.
Speaker Change: I don't know, maybe maybe tail risks or things are just funding priority changes, whether it's portions of the IRA roll back or maybe.
Speaker Change: <unk> fast rule I know theres, the drinking water standards, but it didn't look like the.
Speaker Change: The affluence and discharged law was halted.
Speaker Change: I mean, just high level thinking about.
Speaker Change: Risk to some of these more.
Speaker Change: And structural programs.
Speaker Change: Being changed in.
I don't know if that requires something outside of an executive order, but just.
Speaker Change: How much risk is there.
Speaker Change: Some of that can be rolled back.
Speaker Change: Isn't captured here and kind of your initial expectations.
Speaker Change: Yes.
Speaker Change: Really good questions, just because I think that.
Speaker Change: There is a glass half full is the glass half empty and then there is where I think tetra Tech is which is an objective measurement of where it is and what the impacts of the programs are.
Speaker Change: I think it's highly speculative within minutes.
Speaker Change: Infrastructure projects would be put on hold I think they're being put on review and I've seen already and you saw this between the election and the inauguration.
Speaker Change: There was fatigue.
Speaker Change: Our criticism or programs that were put in place by the previous administration to be rescinded and then immediately put back in place and an identical format.
Speaker Change: With the Trump name on it.
Speaker Change: So it's had a review and now it's been sanctioned why this current administration.
Speaker Change: And we've actually had waivers put on mint.
Speaker Change: This.
Speaker Change: Mall, but some waivers put on that illustrate exactly that so I know that.
Speaker Change: Some have said, while it's possible you're aid work won't be put on and its a contagion thats going to somehow contaminate the rest of this.
Speaker Change: We've been very cautious and judicious and I would say that.
Speaker Change: In my tenure in the company, which is not insignificant.
Speaker Change: We've always been conservative and practical as to what's real and I would just point to our backlog as a real life example of everyone else everyone ads in what they have under contract, but they havent contracts and don't have rewards, but they have an idea in Qs and you think they're going to get what they think they're going to get promised by some other client.
Speaker Change: And what do we do only what's been funded month horizon and so the estimates that we've put in here and I'll go to <unk>. As an example, you would not find another firm theres been more cautious about the P fast ramp up in revenues and contributions to the company and Tetra Tech you will not find another company.
Speaker Change: And so when questions are don't you think <unk> is going to be a problem and will that impact you.
Speaker Change: We've not put much in that bucket at all so I do find it interesting that this shadow has been introduced by some that these poor boating impacts will happen. These are shadows for areas that we have not even included in our revenue forecast. So if these do move forward Youll actually see Tetra tech move to outperform even if they just remain.
Speaker Change: And where they are or even pull back you could watch tetra tech move forward.
Speaker Change: One thing I heard this morning, it's interesting.
Speaker Change: I heard <unk> is of course, I'm very close to our operations. It's my true love in the business.
Speaker Change: I, just love our clients and projects.
Speaker Change: That's what floats my boat, so I was talking to our folks and saying so what's the impact on what's being turned on what's being turned off or what's the timing.
Speaker Change: That's really interesting at Tetra Tech with USAID, because this is getting all the attention at the moment at 10% of your revenue. He says the 90% foundational work that Tetra Tech has is unshakable.
Speaker Change: And that there are other companies that have larger percentages and in fact.
Speaker Change: Is driving them to the point of.
Speaker Change: Concern and Theres, even rumors on some sizable companies that will move into bankruptcy and the comment was when the storm passes there may be a substantially removal of competitors and those standing with contract capacity to respond may actually be yielded much much more work than they had before because there is less people to perform.
Speaker Change: The work and Furthermore, if the new administration is focused on we want certainty of price. We want an exact number maybe the wolf work will move from cost plus at 6% to 8% margin to fixed price that will be higher based on contribution and so one of our various senior executives or we could come out the other side of this.
Speaker Change: With more work because there's less people to perform it and more of the work on a fixed price at margins substantially higher that could be as much as doubled.
Speaker Change: On our delivery of value to the government client.
Speaker Change: I know that Theres, a lot of storms that come by here, maybe when the storm blows through a lot of the chatter has been removed and those that are strong and fundamental.
Speaker Change: We'll be standing in a better position than ever before.
Speaker Change: So.
Speaker Change: I do know some have written quite.
Speaker Change: A quite dark interpretation of what could take place.
Speaker Change: But I think there is.
Speaker Change: The reality is it's neither half full or half empty. It is where it is and there's lots of opportunity to come out the other side much stronger adjustment.
Speaker Change: I appreciate all that thank you for the comments.
Speaker Change: So all up in the air but.
Speaker Change: That's good perspective, thank you.
Justin: Thank you Justin.
Speaker Change: Our next question is from Michael Dudas with vertical Research partners. Please proceed with your question.
Michael Dudas: Hi, good morning, gentlemen.
Speaker Change: Good morning, Michael.
Speaker Change: Dan can you remind us.
Speaker Change: The targets that you've put forth last May's investor day.
Speaker Change: They are just generally.
Speaker Change: And given all the noise has been extremely low.
Speaker Change: Any impact on those thoughts whether it's a high end low end or just once we get a storm passes.
And can we set and you have opportunities too.
Speaker Change: <unk> reading, which see that over the next several years.
Speaker Change: Yes, I think that's a really good question unbelief Baidu asked that.
Speaker Change: Because.
Speaker Change: There's a lot of noise and it's amazing the amount of noise began to build after the election and of course, it's reached its current percent, though here in the last 10 days, but to remind.
Speaker Change: Our participants on this call investors analysts and others and all stakeholders, but we've indicated that we expect between now and 2030, petrofac, but organically grow between 6% and 10% rate.
Speaker Change: And we've said that we anticipate as an average over that period, we would expand our operating margin by 50 basis points. So those are the two metrics and you can extrapolate those and you get the numbers that we presented at our 2030 plan.
Speaker Change: <unk>.
Speaker Change: <unk>.
Speaker Change: Hey, we said couple of things that are unusual.
Speaker Change: I think that when people make firms make those types of.
Speaker Change: Long term.
Speaker Change: Targets.
Speaker Change: This is Joe again, subtracting very unlike others. They say, we're going to get there, but it's all back end loaded and we said, it's not backend loaded we're going to actually achieve those on a relatively linear basis and I don't see that changing I think that even the midpoint of our revised guidance here, even taking into account. These.
Speaker Change: Potential.
Speaker Change: Challenges in the near term is still up within that range, it's up to 6%, but nothing is a perfect linear with no deviation.
Speaker Change: On the line, but I don't see any I don't see any thing that changes our investment thesis on those growth rates at all.
Speaker Change: Fact of the change in the mix of the work that we have.
Speaker Change: Actually moving our.
Speaker Change: Margin expansion.
Speaker Change: Even faster now.
Speaker Change: This is actually going to happen.
Speaker Change: Where it's going to get turned back on and Youre going to find will still meet those those margin expansion goals, but Michael I don't see anything that has changed.
Speaker Change: Fundamental long term drivers are tailwind.
Speaker Change: Coastal protection because of extreme weather events.
Speaker Change: It doesn't matter, if you call it global warming or climate change or severe storm, but one year up to your waste and water.
Speaker Change: It doesn't matter, what you're calling on the same is true with other disasters water scarcity.
Speaker Change: There is no single valve, we're looking for it but there is no single valve to turn to redirect water from Northern California, and Southern California, and even if there is and it can be re engineered.
Speaker Change: The fundamental drivers of water scarcity, you need more than a single source.
Speaker Change: There is a drought in northern California in the Sacramento.
Speaker Change: Robert Delta becomes.
Speaker Change: Low flow you still need something else. So work that we're doing a desalination on water reuse.
Speaker Change: On storm water capture and other alternative water sources.
Speaker Change: Drivers that are a lot longer than four years or longer than 2030.
Speaker Change: And energy alternative energy supply I would tell you all of these are fundamental drivers that we see fully intact, which to turn it to investors our investment thesis is fully intact.
Speaker Change: Unimpeded by this last 10 days so.
Speaker Change: So no we don't see any changes in there is the numbers that we.
Speaker Change: We presented in our May of 2020 for investors day.
Speaker Change: That's very helpful. My follow up is so given what you just put forth given the extreme volatility and purchase share price do you think capital allocation could lean more towards investing in Tetra Tech shares given where your balance sheet leverage is and the opportunity. We see in front of you that's something investors may be able to anticipate.
Speaker Change: Well, yes, that's a great question because one thing that we've indicated is we're committed number one to our dividend Steve talked about 12% increase this quarter and we revisit that every year, which is coming up in this next cycle.
Speaker Change: Quarterly report, you'll see but we've also said that we would be constructive.
Speaker Change: Depending on price point with respect to being engaged in our own stock buyback and what we indicated when we got to the low end of our leverage range, which is down about one we hit a hole 99, and we moved in and we initiated a buyback at this last quarter as Steve.
Speaker Change: And you can imagine that.
Speaker Change: Stock prices seen some volatility here you may see us become more constructive in that area. The system the new message from US and spent a message we've indicated all the time and the only thing that would mitigate that is acquisitions that are highly accretive to the company and making us as Steve said better. So I would put the acquisitions ahead. So we have something.
Speaker Change: Large and that would materially use our.
Speaker Change: Our <unk>.
Speaker Change: Just our leverage point you'd watch it on either M&A, which should drive top line and drive margin.
Speaker Change: Watch us take it and redirect it towards.
Speaker Change: Toward our spot because you've just indicated and again, that's not a new position for us that has been our position perennially.
Speaker Change: Thanks for.
Speaker Change: We're asking that just as a reminder of.
Speaker Change: What our position is.
Speaker Change: Thank you very much.
Speaker Change: Thank you very much Michael.
Speaker Change: Yeah.
Speaker Change: This will conclude our Q&A session I will now turn the conference back over to Dan metric to conclude.
Dan Batrack: Thank you very much Paul and I want to thank.
Speaker Change: All of you.
Speaker Change: All of our shareholders all of the analysts that follow us and all of the stakeholders.
Speaker Change: And equally.
Speaker Change: Importantly, and maybe especially at this time more importantly employees, who tetra tech that are doing a phenomenal job.
Speaker Change: With our clients, we do have a significant number of individuals that are engaged in foreign development for the benefit of the <unk>.
Speaker Change: Added States of America.
Speaker Change: Particularly I'd like to commend them for that being focused on the mission supporting our client and doing just a great job and ill be really looking forward to speaking with all of you in 90 days as some of these items that we've tried to address with the changing environment here again.
Speaker Change: Over the last 10 days.
Speaker Change: And I think that.
Speaker Change: I think that some will find that the volatility introduced was maybe not.
Speaker Change: Well founded but we'll see when we report out in 90 days from now so thank you all and I look forward to talking to you then.
Speaker Change: Alright.