Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. TETRA TECH INC (831641) 10-Q published on May 03, 2019 at 3:40 pm
Reporting Period: Mar 30, 2019
In August 2018, the Securities and Exchange Commission (“SEC”) published Release No. 33-10532, Disclosure Update and Simplification, which adopted amendments to certain disclosure requirements that have become redundant, duplicative, overlapping, outdated or superseded, considering other SEC disclosure requirements, U.S. GAAP, or changes in the information environment. While most of the amendments eliminate outdated or duplicative disclosure requirements, the final rule amends the interim financial statement requirements to include a reconciliation of changes in stockholders’ equity in the notes or as a separate statement for each period for which a statement of comprehensive income is required to be filed. The new interim reconciliation of changes in stockholders’ equity is included herein as a separate statement. Additionally, we removed the disclosure on cash dividends paid per share from our consolidated statements of income.
Valuation allowances of $22.3 million in Australia were released due to sufficient positive evidence obtained during the second quarter of fiscal 2019. The valuation allowances are primarily related to net operating loss and R&D credit carryforwards and other temporary differences. We evaluated the positive evidence against any negative evidence and determined that it is more likely than not that the deferred tax assets will be realized. The factors used to assess the likelihood of realization were the past performance of the related entities, our forecast of future taxable income, and available tax planning strategies that could be implemented to realize the deferred tax assets. Excluding the net deferred tax benefits from the TCJA and valuation allowance releases, our effective tax rate in the first half of fiscal 2019 was 24.8% compared to 23.0% in first half of fiscal 2018.
Revenue, net of subcontractor costs, and adjusted revenue, net of subcontractor costs, increased $52.6 million, or 9.9%, and $57.7 million, or 10.8%, respectively, in the second quarter of fiscal 2019 compared to the prior-year quarter. These increases reflect continued broad-based growth in our U.S. state and local government project-related infrastructure revenue. In addition, our revenue from disaster response and recovery planning projects increased compared to last year's second quarter. Overall, our U.S. state and local government adjusted revenue, net of subcontractor costs, increased $29.0 million, or 38.7%, in the second quarter of fiscal 2019 compared to the prior-year quarter. Additionally, in the second quarter of fiscal 2019, our international adjusted revenue, net of subcontractor costs, increased $34.6 million, or 23.2%, compared to last-year quarter, primarily due to increased oil and gas and infrastructure activity. These increases were partially offset by the impact of the third quarter fiscal 2018 divestiture of our non-core utility field services operations.
Revenue and revenue, net of subcontractor costs, increased $12.8 million, or 4.1%, and $32.2 million, or 13.3%, respectively, in the second quarter of fiscal 2019 compared to the year-ago quarter. For the first half of fiscal 2019, revenue and revenue, net of subcontractor costs, decreased $1.0 million, or 0.2%, and increased $48.0 million, or 10.1%, respectively, compared to the year-ago period. These amounts include the aforementioned contribution from our NDY acquisition. In addition, these year-over-year comparisons were impacted by the divestiture of our non-core utility field services operations in the third quarter of fiscal 2018. Excluding the net impact of the acquisition/divestiture, revenue increased 10.2% and 2.3% in the second quarter and first half of fiscal 2019, respectively, compared to the same periods last year. On the same basis, revenue, net of subcontractor costs, increased 19.9% and 11.9% in the second quarter and first half of fiscal 2019, respectively, compared to the same periods last year. These increases primarily reflect increased international revenue, particularly for oil and gas and infrastructure activities in Western Canada.
Capital Requirements. Our primary sources of liquidity are cash flows from operations and borrowings under our credit facilities. Our primary uses of cash are to fund working capital, capital expenditures, stock repurchases, cash dividends and repayment of debt, as well as to fund acquisitions and earn-out obligations from prior acquisitions. We believe that our existing cash and cash equivalents, operating cash flows and borrowing capacity under our credit agreement, as described below, will be sufficient to meet our capital requirements for at least the next 12 months. On November 5, 2018, the Board of Directors authorized a new stock repurchase program under which we could repurchase up to $200 million of our common stock in addition to the $25 million remaining under the previous stock repurchase program. In the first half of fiscal 2019, we expended the remaining $25 million under the previous stock purchase program and an additional $25 million under the new program. As a result, we have $175 million of stock purchase authorization remaining as of March 31, 2019.