Tetra Tech, Inc.

What they do

Tetra Tech provides high-end consulting, engineering, program management and construction management services to public and private clients in water, environment and sustainable infrastructure. In fiscal 2025, the company worked on over 100,000 projects in more than 100 countries with more than 25,000 associates. It serves U.S. federal, state and local government, U.S. commercial and international clients, and is primarily labor-intensive rather than capital-intensive. The company reports two segments: Government Services Group and Commercial/International Services Group.

Revenue drivers

• Government Services Group (GSG) — Provides technical and engineering services primarily to U.S. government clients (federal, state and local), including defense and civilian agencies, in water, environment, sustainable infrastructure, IT and disaster management. U.S. federal government was 25.9% of Q3 FY26 revenue.
• Commercial/International Services Group (CIG) — Provides technical and engineering services to U.S. commercial clients and international clients in commercial and government sectors. International was 42.8% and U.S. commercial was 18.0% of Q3 FY26 revenue.
• U.S. state and local government — Provides engineering design and other services to state and local clients, especially in water infrastructure, flood protection and solid waste. This sector was 13.3% of Q3 FY26 revenue.

Recent performance

In Q3 FY26, revenue was $1.31 billion, net revenue was $1.11 billion, operating income was $158 million, EBITDA was $173 million, and EPS was $0.42. Net revenue increased 8% year-over-year excluding USAID/DOS and episodic disaster response. Backlog was $4.49 billion at quarter end, up 5% sequentially. For the nine months, revenue was $3.74 billion and net revenue was $3.20 billion, with operating income of $430 million, adjusted EBITDA of $466 million, EPS of $1.18, and cash from operations of $467 million.

Strategy

Tetra Tech's mission is to be the world's leading consulting and engineering firm solving global challenges in water and the environment. The company emphasizes its Leading with Science approach, supported by advanced analytics, AI, machine learning and digital technology. It focuses on high-end consulting, engineering and technology services, with a disciplined project management culture. Recent key wins include multiple-award contracts with the U.S. Army Corps of Engineers, U.S. EPA, FAA, and international frameworks such as Scotland Excel. The company also invests in acquisitions, stock buybacks and dividends.

Risks

• Project performance risk — Failure to complete projects on time, meet performance standards, or manage costs could result in losses or client claims, reducing profitability.
• Government contract dependence — A significant portion of revenue comes from U.S. federal government contracts, which are subject to funding, political and regulatory changes.
• International exposure — With 42.8% of Q3 FY26 revenue from international clients, the company is exposed to currency, regulatory and geopolitical risks in markets like Australia, Canada and the UK.
• Labor-intensive model — Revenue depends on attracting and retaining qualified employees; delays or cancellations can lead to underutilized workforce costs.

Outlook

For Q4 FY26, Tetra Tech expects net revenue of $1.12 billion to $1.17 billion and EPS of $0.45 to $0.48. For fiscal 2026, the company increased adjusted EPS guidance to $1.56 to $1.59 and narrowed net revenue guidance to $4.315 billion to $4.365 billion. This guidance reflects year-to-date performance and does not include potential impacts from transactions or developments after the release date.