Tetra Tech predicts 3Q loss, shares drop

Tetra Tech cuts sales outlook, predicts loss in 3Q due to restructuring and other charges

Associated Press

NEW YORK (AP) -- Consulting and engineering services company Tetra Tech Inc. said Tuesday it will take a loss in the fiscal third quarter as it absorbs about $95 million in charges.

The company is cutting the size of its eastern Canadian and mining operations because of weak demand. It will record about $50 million in restructuring charges, mostly from severance and office closure costs. The Pasadena, Calif., company will also take up to $45 million in charges related to project claims that it has disputed. The claims stem from change orders for U.S. government customers that are under pressure to cut budgets.

Tetra Tech stock fell $2.98, or 11 percent, to $23.75 in aftermarket trading.

The company said it expects to take a loss of 30 cents to 50 cents per share during the quarter, which runs through June, including the charges. It had previously predicted profit of 32 cents to 42 cents per share. Analysts polled by FactSet had expected profit of 37 cents per share.

The company also cut its outlook for revenue, after subcontractor costs, to $440 million to $490 million, rather than $525 million to $575 million.

Tetra Tech said $40 million of the restructuring costs will be one-time charges. It is analyzing the value of the divisions that it's shrinking and will update investors in its third quarter earnings release if it has to take a charge because their worth has declined.

The company also said Tuesday that it approved the repurchase of up to $100 million in stock. Buying back company stock can help make shareholders' stakes more valuable.

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