Good morning and thank you for joining Tetra Tech's Earnings Call. As a reminder, Tetra Tech is simulcasting this presentation with slides in the Investor section of its website at tetratech.com. This call is being recorded at the request of Tetra Tech, and the broadcast is the copyrighted property of Tetra Tech. Any rebroadcast of this information in whole or in part without prior written permission of Tetra Tech is prohibited. With us on today's call from Management are Dan Batrack, Chairman and Chief Executive Officer; Steve Burdick, Chief Financial Officer; and Leslie Shoemaker, Chief Innovation Officer. They will provide a brief overview of the results and we will then open up the call for questions. I would like to direct your attention to the safe harbor statement in today's presentation. Today's discussion contains forward-looking statements about future business and financial expectations. 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, except as required by law, Tetra Tech undertakes no obligation to update its forward-looking statements. In addition, since management will be presenting some non-GAAP financial measures as references, the appropriate GAAP financial reconciliations are posted in the investor section of Tetra Tech's website. At this time, I would like to inform you that all participants are in a listen-only mode. At the request of the company, we will open up the conference for questions and answers after the presentation. With that, I would now like to turn the call over to Dan Batrack. Please go ahead, Mr. Batrack.

Great. Thank you very much, Sheri, and good morning, and welcome to our fourth quarter and our entire fiscal year 2024 earnings conference call. It seems like it's been a long time ago, but it's actually been a week and two days since we had a major election here in the United States, not only for the Executive Branch with the President, but the Congress, both the Senate and the House. Starting a week ago Tuesday during the election, we began receiving phone calls, emails, and inquiries about what this change in administration would mean for Tetra Tech and its business. Questions came from shareholders, analysts, and different stakeholders. As a company, we've been around for nearly six decades, and we've experienced many transitions of administrations. In fact, we've been present through every one of them. Looking back, our position has been that, whether there is a Democrat or Republican administration, it hasn't significantly impacted Tetra Tech's operations due to the critical nature of our work. However, some suggest that past performance may not indicate future results, and this transition is unique. It gave us pause to review our business and reflect on our current insights. As of now, the new administration hasn't been sworn into office yet, but we took some time to evaluate our business and how it might interact with this administration. One significant area we're focusing on today is coastal protection in the U.S. We believe this is crucial now more than ever. It's only been a little over 30 days since large hurricanes, Helene and Milton, impacted the Florida coast and the Atlantic seaboard. Whether under a Democrat or Republican administration, the need to protect coastlines and citizens while addressing impacts from storms knows no party lines. We see this essential for the future, just as it has been for the past 60 years. We also provide essential services to our defense clients, not only in the United States but also in the United Kingdom and Australia. The services we provide have become increasingly vital, whether modernizing infrastructure, supporting growth, or enhancing ports and harbors. This work remains essential moving forward. On-shoring and rebuilding capabilities for high-end manufacturing is also a significant growth area for us. We have developed a robust high-performance buildings practice that is over $0.5 billion in size, fully capable of supporting leading-edge high-end manufacturing facilities. The capital investment from manufacturers is projected to drive this forward. The core of our business undeniably revolves around water. We estimate that 85% to 90% of all our work concerns this area, focusing on modernizing water supplies, safeguarding against cyberattacks, and addressing emerging contaminants. Remarkably, about 90% of funding for municipal water systems comes from state and local levels, along with consumers. We see this area as unaffected. Renewable energy is another priority that we have closely examined. This trend isn't new but has developed over many years, across multiple administrations. Demand remains strong at both federal and state levels. The cost for renewable energy in the U.S. is competitive with fossil fuels, and investments in offshore wind are significant. Tetra Tech is currently the largest player in offshore wind permitting and development in the UK and Australia. If there are fluctuations in U.S. investments in renewable energy, we are well-positioned internationally to capitalize on those opportunities. I am particularly enthusiastic about our Subscription Software Solutions, our 3S service line, which has evolved from a concept two years ago to an actively subscribed service that is yielding positive results for our clients. Dr. Leslie Shoemaker is leading this initiative, and I look forward to her insights later. To conclude my opening remarks, I want to emphasize the positives we have seen as we close out fiscal year 2024 and begin fiscal year 2025. I hope to address many topics today and am eager for your questions. Now, I would like to hand the call over to Steve Burdick, our Chief Financial Officer, for details regarding our financial performance, along with capital allocation priorities.

Thank you, Dan. I would like to provide an update on the results for fiscal year 2024, as well as our working capital and cash flow. Revenue and net revenue both increased by 15% over fiscal 2023. Our top-line revenue reached a record $5.2 billion, and net revenue was also at an all-time high of $4.3 billion, driven by strong market performance across all geographies. Operating income increased at a higher rate than revenue, as we've continued to focus on water and environmental projects with higher margins across all of our end markets. For this year, operating income was $501 million, up 40% year-over-year, with our operating margin improving by 60 basis points compared to the previous year. Adjusted EBITDA margin also saw a 70 basis point increase. In comparing our fiscal 2024 results to our 2030 growth targets set during our Investor Day earlier this year, I'm pleased to report that we reached the high end of our revenue growth range of 15% and surpassed our EBITDA margin forecast with annual improvements of 50 basis points. Our EPS has now reached an all-time high of $1.23, reflecting a 21% increase over last year, driven by our core operating margins. On a pre-split basis, our adjusted EPS is $6.32, which exceeded the top end of our guidance for fiscal 2024. Now, shifting focus to our working capital and cash flow for this year, cash flows from operations reached $359 million, exceeding our net income for the year. Historically, our cash flow from operations has exceeded net income for over two decades, and our efficient management of working capital has led to a DSO of 54.9 days, an industry-leading KPI. This low DSO reflects our projects' quality and the high satisfaction of our clients across our diverse portfolio. We've made significant progress in reaching our target leverage of 1 to 2 times. As of year-end, our net debt to EBITDA was at 1.0 times, demonstrating improvement from the 2.2 times leverage seen post-acquisition of RPS. With healthy cash flows and working capital, we can continue investing in strategic initiatives that yield higher, long-term returns for shareholders. Regarding our capital allocation, we have a robust balance sheet and significant liquidity to invest in organic growth and acquisitions. We have balanced fixed and floating rate debt to manage interest rate risks and improved our capital structure to support financing needs effectively. Our average interest rate has decreased by 143 basis points to 3.94%. We are pursuing acquisitions aligned with our global and technical leadership in the water and environmental space. Our Board of Directors recently approved a 12% increase in our dividend program, marking our 42nd consecutive quarterly dividend with annual double-digit increases. We are also maintaining a strong pipeline for future acquisitions as part of our capital allocation strategy. In summary, given our solid cash flows and balance sheet, Tetra Tech remains well-positioned to deliver high returns for shareholders through dividends, stock buybacks, and strategic investments. I'm pleased to share these robust results for fiscal 2024, and now I will turn the presentation over to Dan and Leslie to discuss some of Tetra Tech's future opportunities, including our guidance for fiscal year 2025.

Thank you, Steve. I'd like to address clear priorities set by our local, state, and federal governments regarding maintaining secure water supplies and protecting essential water resources. In the United Kingdom, we are seeing increased investment in water, which has driven new contracts and accelerated implementation schedules for water treatment and leak elimination from wastewater systems. The goals set in this years’ AMP 8 cycle, which is a five-year planning initiative, incentivize our clients to seek efficiencies provided by our Subscription Software Solutions. For example, we are introducing our award-winning CSOC subscription solution to optimize water systems in the U.K. This system has been successfully adopted by cities in both the United States and Europe, saving over $1 billion in capital costs. It's important to emphasize that this is tested technology, proven in various markets. Additionally, the current focus of AMP 8 involves reducing system-wide water leakage. Many U.K. utilities are currently utilizing our WaterNet system to enhance their leakage identification and optimization programs. In the U.S., water programs remain a priority to meet growth and consumer demand. Recently, California passed a new $10 billion water bond, and states like Colorado and Minnesota are redirecting funds toward important water initiatives. We have recently secured a $56 million design project in Virginia that exemplifies our clients' growing desire for innovative water treatment solutions addressing PFAS and emerging contaminants, all while maintaining cost-effectiveness. Now, I'd like to address coastal impacts due to extreme weather events mentioned earlier. These events are occurring with increasing frequency and severity; since 2020, 98 events costing over $1 billion have occurred in the U.S. Damage from Hurricanes Helene and Milton, occurring in the past 60 days, is estimated at upwards of $100 billion. Our teams are active in North Carolina and Florida, aiding clients in recovery efforts and planning for future incidents. We collaborate with state, local, and commercial clients to mitigate risks, adapt systems, and respond to extreme flooding events. Our technology is helping clients preemptively address these challenges through early warning systems and rapid post-disaster responses. Our FusionMap and OceansMap subscription software solutions leverage real-time satellite imagery, data feeds, enhanced scanning abilities, and AI-enabled modeling to provide timely information for decision-making. Recently, we have established enterprise agreements with commercial clients for coastal and flood risk management, now covering over 75,000 square miles. We are also witnessing increased interest among commercial and government users in adopting our software solutions to future-proof their programs. I look forward to providing further updates on our Subscription Software Solutions, or 3S program in upcoming quarters as this emerging market continues to evolve.

Thank you, Leslie. I'd like to cover our outlook on U.S. federal spending within the sectors we serve. For context, approximately 40% of our revenues are derived from international clients contracted outside the U.S. An additional 30% of our work is for U.S. commercial and state and local markets, leaving around 30% of our revenues associated with federal clients, which are approximately evenly distributed among defense, civilian, and USAID programs. In recent years, including during the previous administration, we've witnessed noticeable growth in defense and civilian services, largely through our expanded federal IT practices. The combined defense-related resiliency and modernization work, alongside IT cybersecurity and aviation services, indicates that about two-thirds of our federal work is related to high-priority programs. Our USAID projects consist of a variety of water, energy, and economic initiatives globally, typically involving multiyear commitments in strategically important regions like the Asia Pacific. While new administration priorities have yet to be clarified, we anticipate USAID programs will be incorporated into defense and diplomacy efforts to fulfill upcoming foreign policy objectives. Our U.S. Federal outlook anticipates growth within a 5% to 10% range, reflecting a conservative estimate for USAID services. We expect stability in our defense resiliency and water services for this client segment. For fiscal year 2025, our growth expectations for the four client sectors are nested within the already outlined ranges. For federal clients, we project 5% to 10% growth, while state and local clients may yield typical double-digit growth rates ranging from 10% to 15%. In the commercial sector, we foresee 5% to 10% growth, largely driven by advanced manufacturing and brownfield redevelopment initiatives. On the international front, growth rates are anticipated within the 5% to 10% range, propelled by the rising demand for renewable energy in the U.K. and Australia, expansion of water programs in the U.K. and Ireland, as well as the growth of our high-performance buildings services worldwide. I now would like to present our guidance for the first quarter of fiscal year 2025, which expects net revenue in the range of $1.09 billion to $1.15 billion, with diluted earnings per share guidance of $0.32 to $0.34. This represents a 10% growth in net revenue and an 18% growth in earnings per share for Q1. For the entire year, guidance for net revenue is set at $4.565 billion to $4.765 billion, with earnings per share of $1.40 to $1.50. Our assumptions for fiscal year 2025 are included on the accompanying slide, detailing amortization by quarter. We expect $35 million for the year, equating to $0.09 per share, is included in our guidance. Our effective tax rate is projected at 27.5%, depreciation at $25 million, and interest expenses forecasted between $31 million to $35 million. With the recent stock split, we now have a total of 272 million diluted shares outstanding. Importantly, both quarterly and annual guidance excludes any contributions from potential acquisitions either in part or as a whole.

Yes. Dan and Steve, thank you for taking my questions. And Leslie too. My first question is just on your renewables practice with the recent election emphasis on a resurgence in fossil fuels and the rhetoric surrounding U.S. energy independence and the potential repeal of the IRA. How do you see overall growth in your renewables practice in the next year or two? How large is that business for you today? And how has it performed recently?

Yes, great question. Our renewable energy practice generates about $200 million annually, and a significant portion of that is hydropower, which comprises around half of our renewable energy segment. It's often overlooked; hydropower is indeed clean, renewable, and abundant in both the U.S. and Canada. Typically, the greatest share of renewable energy generation output in North America comes from hydropower, measured in gigawatts. Wind energy represents our next largest segment and has been experiencing robust growth, particularly in offshore wind, not only here in the U.S. but also in countries like Australia, which has made significant commitments to offshore wind. Overall, we expect double-digit growth from our renewable energy segment moving forward, and we do not perceive it as reliant solely on the IRA. The economics driving renewable energy are strong, and the commitment by states in places like California, Washington, and Oregon further supports the resilience of this sector, which will include both renewable and fossil fuel initiatives.

That's correct. In our prioritization strategy for capital allocation moving forward, we will first focus on investing in our organic growth ventures. Secondly, we maintain a long-standing cash dividend program with annual double-digit growth. We also aim to invest in strategic opportunities that would add value to the company through acquisitions. Following the RPS acquisition, we paused our stock buyback program while working to bring our net debt-to-EBITDA back to a range of 1 to 2 times. Now that we've achieved a leverage ratio of approximately 1.0 times, we are poised to reactivate the stock buyback program alongside our acquisition efforts, provided that leverage remains favorable.

Yes. Thank you for taking my question. Dan and Steve, can you clarify the growth ranges presented on Slide 14? What factors contribute to the lower end versus the higher end of these ranges?

Good question, Sangita. The growth range reflects our cautious perspective. The lower end would involve a material reduction in U.S. federal government funding, particularly affecting international development. We’ve taken a conservative stance because we anticipate the beginning of the year will remain strong due to funded programs for the year. The high end assumes robust investment continuing, which has the potential to push us higher. Key components contributing to this variability may include increases in our backlog and opportunities with high-performance projects that yield higher margins. The areas driving the upper end will be work related to our high-performance buildings and facilities associated with chip fabrication and data centers.

Good morning. Can you discuss the margin profiles across your federal programs, particularly the differences between defense, civilian, and USAID initiatives?

Certainly. USAID programs operate on a cost-plus basis, yielding lower margins of approximately 6% to 8%. In contrast, our defense and civilian work are comparable, generally operating in the mid-teens range. The mixed margins show that if USAID revenues decline, higher-margin business remains, improving our overall margins. The shift in focus to higher-margin work aligns with our growth strategy as we seek to navigate the potential fluctuations in government funding. Regarding workforce flexibility, approximately 80% to 85% of our staff possess skills that can be transitioned across projects. While some highly specialized individuals may face limitations, the majority of our professionals, such as engineers, can shift seamlessly to meet diverse business needs. The digital transformation we've undergone, particularly during the pandemic, allows us to deploy talent efficiently across geographies, maximizing productivity and minimizing disruption. In terms of the competitive landscape, despite the influx of new entrants into the water and environmental sector, our focus remains on delivering tailored solutions rather than competing on price. Clients are seeking reliable, technically-sophisticated solutions that address both short-term needs and long-term operational cost savings. We aim to differentiate ourselves through investments in technology and intellectual property, ensuring we provide the best possible outcomes for our clients instead of being drawn into low-cost competition. On the topic of international acquisitions, while we maintain a strong presence in the U.S. market, we are open to pursuing high-quality companies abroad that can enhance our technical capabilities. We are particularly interested in intellectual property-rich firms that align with our mission of leading with science. As we look ahead, our focus will remain on acquiring innovative companies that complement our current offerings. Thank you, everyone, for your continued support during fiscal year 2024. We are committed to achieving similar success in fiscal year 2025 and look forward to sharing updates in our next quarterly report. Have a great day, everyone!

Ladies and gentlemen, this concludes our conference for today. Thank you for your participation, and have a nice day. All parties may now disconnect.