Tetra Tech Reports Record Third Quarter Results Exceeding Revenue and Earnings Guidance

Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the third quarter ended June 29, 2008. The Company exceeded both its revenue and earnings guidance for the quarter. Third Quarter Results Revenue in the quarter was $564.3 million, up 39.7% from $404.0 million, and revenue, net of subcontractor costs, was $332.3 million, up 29.6% from $256.3 million for the same quarter last year. Income from operations for the quarter was $28.1 million, up 27.0% from $22.1 million for the same quarter last year. Net income for the quarter was $16.1 million, up 29.8% from $12.4 million for the same quarter last year. Diluted earnings per share (EPS) for the quarter was $0.27, up 28.6% from $0.21 for the same quarter last year. Backlog at the end of the quarter was a record $1.57 billion, up 29.3% from $1.22 billion at the end of the same quarter last year. Cash generated from operations improved in the third quarter to $16.8 million, up 114.4% from $7.8 million for the same quarter last year. Compared to the third quarter of fiscal 2007, Tetra Tech’s federal government business grew 34.0%, driven by increased workload with the U.S. Agency for International Development and the U.S. Department of Defense; state and local business grew 12.6%, due largely to regulatory-driven water programs; and commercial business grew 36.0%, driven largely by wind energy projects. Nine Month Results Revenue for the first nine months was $1.496 billion, up 33.7% from $1.119 billion, and revenue, net of subcontractor costs, was $896.8 million, an increase of 21.6% from $737.5 million for the same period last year. Income from operations for the first nine months was $75.6 million, up 22.3% from $61.8 million for the same period last year. Net income for the first nine months was $42.7 million, up 32.4% from $32.3 million for the same period last year. Diluted EPS for the first nine months was $0.72, up 30.9% from $0.55 for the same period last year. Cash generated from operations improved in the first nine months to $43.1 million, up 267.0% from $11.7 million for the same period last year. Tetra Tech’s Chairman and CEO Dan Batrack remarked, "We are very pleased with the Company’s third quarter results. This excellent performance was driven by our strategy to focus on water, environmental, and alternative energy solutions. We are confident in our outlook for fiscal 2008.” In thousands (except EPS data)   Three Months Ended   Nine Months Ended June 29, 2008   July 1, 2007 June 29, 2008   July 1, 2007 Revenue $ 564,277 $ 403,951 $ 1,496,050 $ 1,119,123 Revenue, net of subcontractor costs 332,269 256,326 896,781 737,456 Income from operations 28,050 22,085 75,591 61,828 Interest expense, net (483 ) (657 ) (2,600 ) (1,901 ) Loss on retirement of debt – – – (4,226 ) Income tax expense (11,432 ) (9,026 ) (30,283 ) (23,490 ) Income from continuing operations 16,135 12,402 42,708 32,211 Income from discontinued operation, net of tax   –     26     –     52   Net income $ 16,135   $ 12,428   $ 42,708   $ 32,263   Basic EPS: Income from continuing operations $ 0.27 $ 0.21 $ 0.73 $ 0.56 Income from discontinued operation, net of tax   –     –     –     –   Net income $ 0.27   $ 0.21   $ 0.73   $ 0.56     Diluted EPS: Income from continuing operations $ 0.27 $ 0.21 $ 0.72 $ 0.55 Income from discontinued operation, net of tax   –     –     –     –   Net income $ 0.27   $ 0.21   $ 0.72   $ 0.55     Weighted average common shares outstanding: Basic 58,943 58,030 58,590 57,859 Diluted 59,833 58,786 59,331 58,452 Business Outlook The following statements are based on current expectations. These statements are forward-looking and the actual results could differ materially. These statements do not include the potential impact of transactions that may be completed or developments that become evident after the date of this release. The Business Outlook section should be read in conjunction with the information on forward-looking statements at the end of this release. Tetra Tech expects diluted EPS for the fourth quarter of fiscal 2008 to be in the range of $0.27 to $0.29. Revenue, net of subcontractor costs, for the fourth quarter is expected to range from $325 million to $345 million. For fiscal 2008, Tetra Tech is raising its earnings guidance, and now expects diluted EPS to be $0.99 to $1.01. Revenue, net of subcontractor costs, for fiscal 2008 is now expected to range from $1.22 billion to $1.24 billion. Webcast Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the third quarter results through a link posted on the Company’s web site at www.tetratech.com on July 31, 2008 at 8:00 a.m. (PDT). About Tetra Tech (www.tetratech.com) Tetra Tech is a leading provider of consulting, engineering, and technical services. With approximately 8,500 associates located in the United States and internationally, the Company supports commercial and government clients in the areas of resource management and infrastructure. Tetra Tech’s services include research and development, applied science and technology, engineering design, program management, construction management, construction, and operations and maintenance. Forward-Looking Statements This news release contains forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include information concerning future events and the future financial performance of Tetra Tech that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. Readers are urged to read the documents filed by Tetra Tech with the SEC, specifically the most recent reports on Form 10-K, 10-Q, and 8-K, each as it may be amended from time to time, which identify risk factors that could cause actual results to differ materially from the forward-looking statements. Among the important factors or risks that could cause actual results or events to differ materially from those in the forward-looking statements in this release are: fluctuations in quarterly operating results; the impact of downturns in the financial markets and reductions in government budgets; volatility of common stock value; concentration of revenues from government agencies and funding disruptions by these agencies; failure to properly manage projects; acquisition strategy risks; management of growth strategy; use of the percentage-of-completion method of accounting; adverse resolution of an IRS examination; loss of key personnel or the inability to attract and retain qualified personnel; implementation of the enterprise resource planning system; international operations risks; credit risks associated with commercial clients; violations of government contractor regulations; competitive bidding for government contracts; the affect of a negative government audit; the inability to accurately estimate contract risks, revenue, and costs; backlog cancellation and adjustments; client base consolidation; failure of partners to perform on joint projects; inability to find qualified subcontractors; changes in existing environmental laws, regulations, or programs; competition; restrictive covenants in debt agreements; risks of professional and other liabilities; adverse resolution of litigation; conflict of interest issues; changes in accounting for equity-related compensation; expenses associated with corporate governance; and disruption of operations due to computer viruses or terrorism. Any projections in this release are based on limited information currently available to Tetra Tech, which is subject to change. Although any such projections and the factors influencing them will likely change, Tetra Tech will not necessarily update the information, since Tetra Tech will only provide guidance at certain points during the year. Readers should not place undue reliance on forward-looking statements since such information speaks only as of the date of this release.