Pasadena-based Tetra Tech’s stock falls after Trump’s USAID cuts

Tetra Tech, the Pasadena-based consulting and engineering services company, has seen a sharp drop in its stock price this year after the Trump administration slashed foreign aid contracts.

As of Monday, the company’s shares have plunged about 26% since January to close at $29.44 per share.

The stock price decline follows cuts to the U.S. Agency for International Development, hampering humanitarian projects in foreign countries. Tetra Tech focuses on water, environment and sustainable infrastructure, and a substantial chunk of its revenue comes from contracts with federal, state and local government agencies.

Last year, USAID awarded the company several lucrative multiyear contracts. In October, Tetra Tech announced it had won a $5-billion contract from USAID to help developing countries throughout the world.

The 10-year contract included efforts such as improving access to clean water supplies and other critical services. The company also secured other multimillion-dollar USAID contracts, including a $439-million award to strengthen electricity, natural gas and other energy sources in Ukraine, which remains at war with Russia.

Elon Musk, who backed Donald Trump during his campaign for president, has been leading an effort called the Department of Government Efficiency, or DOGE, to slash government spending. Those cuts have hit several government agencies, including USAID. In February, the Trump administration said it would put USAID workers on administrative leave and lay off 1,600 workers with duty stations in the United States, according to USAID’s website.

Last week, Secretary of State Marco Rubio said that the U.S. is slashing 83% of USAID programs, resulting in the elimination of 5,200 contracts.

Some of the federal contracts DOGE terminated included USAID funding for various projects to improve water sanitation, healthcare, education and other important services in developing countries throughout Africa and Asia, according to HigherGov.

Tetra Tech didn’t respond to a request for comment.

When Tetra Tech announced its quarterly earnings in January, the company said in a statement that it had paused some of its work with the federal government, including USAID projects.

Tetra Tech Chief Executive Dan Batrack said in the earnings conference call that month that the company’s USAID contracts had been placed on hold for 90 days.

He noted that USAID accounts for roughly one-third of the work the company does with the federal government and typically 10% of its revenue.

Tetra Tech also works with the U.S. Department of Defense, and its development work centers on places such as the South China Sea that are crucial to national security, priorities that align with Trump’s administration, Batrack said.

“I believe a large portion of our work will be reviewed and determined to be critical and turn back on,” he said during the call.

For the first fiscal quarter that ended Dec. 29, Tetra Tech’s revenue increased 16% year over year to $1.42 billion. Roughly one-third of its revenue came from U.S. federal clients, which includes USAID and federal IT, the company reported. Net income attributable to Tetra Tech was $747,000 in the first fiscal quarter compared with $75 million in 2023.

The drop was mainly because of a $115-million nonrecurring charge for legal costs tied to a lawsuit Tetra Tech settled with the federal government that accused the company of a fraudulent cleanup at the former Hunters Point Naval Shipyard in San Francisco, according to a regulatory filing.

Tetra Tech did not admit any liability.

Tetra Tech was founded in 1966 as the Water Management Group of Tetra Tech Inc. Its projects included “the first remote control submarine for exploration and military” research.

The company, which went public in 1991, helped analyze data used to explore Alaska’s North Slope for oil.