Water engineering services company Tetra Tech Inc. (TTEK), Tuesday lowered its third-quarter outlook and now expects to post a loss, hurt largely by higher restructuring costs reflecting weakness in Eastern Canada, mining segments and new findings on certain project claims. Following the news, shares of the company plunged over ten percent in after-hours trade.
Pasadena, California-based Tetra Tech now expect a third-quarter loss in the range of $0.30 to $0.50 per share and revenues, net of subcontractor costs, of $440 million to $490 million.
Analysts polled by Thomson Reuters currently expect third quarter earnings of $0.38 per share and revenues of $548.60 million.
Previously, the company expected earnings of $0.32 to $0.42 per share and revenues of $525 million to $575 million for the third quarter.
Tetra Tech anticipates restructuring costs of about $50 million from its Eastern Canadian and mining operations in the third quarter. The increased costs reflect severance and office closure expenses to downsize these operations as project demand slowed amidst poor economic conditions.
Tetra Tech also expects to incur charges to resolve certain project claims of up to $45 million. The claims are primarily related to change orders on lump-sum projects for certain U.S. federal and state government customers that are currently under significant budget pressure.
Chief Executive Dan Batrack said, "The actions we are taking in the third quarter proactively address changes in the market and right-size our operations to immediately return the Company to its historical profitability and trend of margin improvement."
Tetra Tech also said it would buy back up to $100 million of its common stock.
TTEK closed Tuesday's trading at $26.73, up $0.55 or 2.10%, on the Nasdaq. The stock, however, slipped $2.73 or 10.21% in after-hours trade.
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