DEF: Tetra Tech Reports Record FY25, Sets 2026 Annual Meeting

Tetra Tech announces its 2026 Annual Meeting of Stockholders, highlighting record financial performance in fiscal year 2025 and proposing key governance and employee stock plan amendments.

Summary

• The 2026 Annual Meeting of Stockholders will be held on Thursday, February 19, 2026, at 10:00 a.m. Pacific Time.
• Stockholders will vote on the election of six directors, an advisory resolution to approve named executive officers' compensation, an amendment to the Employee Stock Purchase Plan (ESPP), and the ratification of PricewaterhouseCoopers LLP as the independent registered public accounting firm for fiscal year 2026.
• Fiscal Year 2025 saw record annual results for revenue ($5,443 million), net revenue ($4,617 million), adjusted earnings ($1.56 EPS), and operating cash flow ($554.685 million).
• The company returned $426 million to stockholders over the last three years through dividends and stock repurchases.
• The proposed ESPP amendment seeks to increase the maximum number of shares authorized for issuance by 10,000,000 and modify purchase timing from annually to semi-annually, increasing the annual contribution limit per participant to $10,000.
• Two incumbent directors, Ms. Obiaya and Dr. Ritrievi, were not nominated for re-election, while Mr. Jeffrey R. Feeler and Ms. M. Susan Hardwick joined the Board in December 2025 and are standing for election for the first time.

Sentiment

Score: 8

Explanation: The filing highlights record financial performance across key metrics, strong corporate governance, and significant achievements in sustainability and employee development. While backlog and revenue targets were slightly missed, the overall operational and financial results are presented as exceptional, indicating a very positive outlook and strong management execution.

Positives

• Achieved record annual results in FY 2025 for revenue ($5,443 million), net revenue ($4,617 million), adjusted earnings ($1.56 EPS), and operating cash flow ($554.685 million).
• Operating income increased by 18% to $604 million in FY 2025 compared to FY 2024.
• Adjusted EPS increased by 24% to $1.56 in FY 2025 compared to FY 2024.
• Operating cash flow of $554.685 million in FY 2025 significantly exceeded the target of $376 million.
• Returned $426 million to stockholders over the last three years through dividends and stock repurchases.
• Increased quarterly dividend from $0.01 at inception to $0.065 per share in December 2025, representing a 364% increase over this period.
• Maintains strong corporate governance practices, including approximately 90% independent directors and a robust Presiding Director role.
• High employee participation in professional development training, with 23,783 employees participating in 2024, representing 36% of the workforce.
• Average hours of training per employee increased by 21% to 17.86 hours in 2024.
• Achieved a 36% decrease in Scope 1 and 2 GHG emissions per employee from the 2021 baseline.
• 42% of operations used renewable sources of energy for utilities in 2024, with a 2030 goal of 100%.
• Enterprise-wide Total Recordable Incident Rate (TRIR) of 0.37 in 2024, which is 54% better than the industry average.
• Lost Workday Incident Rate (LWDIR) of 0.12 in 2024, which is 60% better than the industry average.
• Successfully completed acquisitions and integrations of SAGE Automation and Carron and Walsh, promoting revenue growth synergies.
• Maintained industry-leading low voluntary employee turnover rates.
• All directors and executive officers met stock ownership guidelines as of FYE 2025.

Negatives

• Backlog decreased from $5,376,056 thousand in FY 2024 to $4,139,502 thousand in FY 2025, falling below the target of $5,650,000 thousand.
• Revenue of $5,442,590 thousand in FY 2025 was below the target of $5,700,000 thousand.
• Two incumbent directors, Ms. Obiaya and Dr. Ritrievi, were not nominated for re-election to the Board.

Risks

• Forward-looking sustainability goals are aspirational and do not constitute assurances that such goals will be achieved.
• Historical and forward-looking sustainability-related statements may be based on standards that are still developing, internal company controls and processes that continue to evolve, and assumptions that are subject to change.
• Sustainability-related figures and percentages in this report include estimates or approximations and may be based on assumptions or incomplete data.
• Detailed risk factors are discussed under Part IItem 1A. Risk Factors in the Annual Report on Form 10-K for the year ended September 28, 2025, and other U.S. Securities and Exchange Commission (SEC) filings.

Future Outlook

The company is ideally positioned to provide sustainable solutions in a changing world, focusing on 'Leading with Science'. It aims for continued operational excellence through sustained growth of high-margin, highly differentiated service offerings and plans to achieve 2030 sustainability goals. The company also plans to continue its disciplined capital allocation strategy, including returning cash to stockholders.

Management Comments

• "Tetra Tech's differentiated high-end consulting services are more in demand than ever before. With our focus on Leading with Science, we are ideally positioned to provide the sustainable solutions that are needed in a changing world." Dan Batrack, Chairman and Chief Executive Officer.
• "We look forward to seeing you at the 2026 Annual Meeting." Dan Batrack, Chairman and Chief Executive Officer.
• "We believe supporting a safe and inclusive workplace is everyone's responsibility in every office and on every project."

Industry Context

Tetra Tech operates as a leading global provider of high-end consulting and engineering services, specializing in water, environment, and sustainable infrastructure. Its 'Leading with Science' approach, coupled with advanced analytics, AI, machine learning, and digital technology, positions it strongly in an industry increasingly focused on sustainable solutions. The company's consistent top rankings by Engineering News-Record (ENR) in categories like water treatment, environmental management, and consulting studies underscore its competitive advantage and market leadership.

Comparison to Industry Standards

• Ranked #1 in water treatment for 12 consecutive years by Engineering News-Record (ENR).
• Ranked #1 in consulting studies, environmental management, environmental science, wind power, hydro plants, site assessment and compliance, and green government offices in 2025 by ENR.
• Ranked in the top 10 in numerous categories by ENR, including dams and reservoirs, marine and port facilities, power, solar power, solid waste, chemical and soil remediation, and hazardous waste.
• Enterprise-wide Total Recordable Incident Rate (TRIR) of 0.37 in 2024 is 54% better than the industry average (NAICS Code 541 Professional, Scientific, and Technical Services, BLS Data 2023).
• Lost Workday Incident Rate (LWDIR) of 0.12 in 2024 is 60% better than the industry average (NAICS Code 541 Professional, Scientific, and Technical Services, BLS Data 2023).
• Employee turnover rates are among the lowest in the industry.
• Proposed ESPP annual contribution limit of $10,000 better aligns with industry standards and best practices.

Management Changes

Corporate Governance

Related Party Transactions

• No related person or related party transactions in FY 2025.

Stakeholder Impact

• Shareholders: Positive impact from record financial performance, increased dividends, stock repurchases, and strong corporate governance. Opportunity to vote on key proposals at the Annual Meeting. Potential dilution from ESPP share increase, but also increased employee alignment.
• Employees: Enhanced opportunities for stock ownership through the amended ESPP (increased shares and annual contribution limit). Continued investment in professional development, health, and safety programs. Low voluntary turnover rates indicate a positive work environment.
• Customers: Benefit from the company's focus on 'Leading with Science' and innovative, sustainable solutions in water, environment, and sustainable infrastructure.
• Management: Executive compensation program designed to motivate and align with long-term stockholder value, with a majority of compensation being performance-based and at-risk.

Next Steps

• Hold the 2026 Annual Meeting of Stockholders on February 19, 2026, to vote on director elections, executive compensation, ESPP amendment, and auditor ratification.
• Continue to implement the contract management process to minimize risk and surprises.
• Improve key management metrics and reporting.
• Improve corporate-wide marketing functions and processes.
• Win key/targeted program competitions.
• Further implement the enterprise resource planning system migration plan.
• Identify succession candidates for all executive positions.
• Target corporate general and administrative expenses not to exceed a specified percentage of revenue.
• Reduce legal and risk management insurance expenses while maintaining service levels.
• Continue to achieve 2030 sustainability goals, including a 50% reduction in GHG emissions from the 2021 baseline and 100% renewable energy for utilities.
• Begin semi-annual ESPP purchases after December 15, 2026, if the amendment is approved.

Key Dates

Recommendation

Tetra Tech demonstrates exceptional financial health with record revenue, net revenue, operating income, adjusted EPS, and operating cash flow in FY 2025. The company's consistent return of capital to stockholders through dividends and repurchases, coupled with a 364% dividend increase since inception, signals strong financial discipline and shareholder-friendly policies. Strategic focus on high-end consulting and engineering services, particularly in sustainable infrastructure, aligns with growing global demand. Robust corporate governance, industry-leading safety metrics, and a commitment to employee development further strengthen the company's long-term prospects. While backlog saw a decrease, the overall performance and strategic positioning suggest continued strong growth and value creation, making it a compelling 'strong buy' for investors.

Keywords

Tetra Tech, Proxy Statement, Annual Meeting, Financial Performance, FY2025 Results, Revenue, Net Revenue, Adjusted EPS, Operating Cash Flow, Dividends, Stock Repurchases, Corporate Governance, Executive Compensation, Employee Stock Purchase Plan, ESPP, Director Election, PricewaterhouseCoopers LLP, Sustainability, GHG Emissions, Water Management, Environmental Consulting, Engineering Services, Sustainable Infrastructure, Capital Allocation, Board of Directors, Risk Management, Shareholder Value