Jill Hudkins: I would say as expected as Dan’s commented on prior calls, as well as myself which is having spent my whole career in the water treatment arena, when our clients move forward on programs once there is a final regulation. And so until there is a final US EPA regulation for PFAS, there’s going to be continued conversation about the levels that utilities will be requested or required to treat to. And so I think it’s as expected. It’s going to mostly be on the watershed side for characterization until the final US EPA regulations are established. And there will also be another at that point another 24 months typically for compliance.
Tate Sullivan: Okay. Great. Thank you. And just one more to fit in please either Dan or Steve, you mentioned — you put a sentence in the press release about the repurchase capacity. Just how are you thinking about repurchases relative to acquisitions at this point a year on from RPS please?
Steve Burdick: Yes. No, I think as many people noted and as we explained a little over 1.5 years ago as we were preparing for and figuring out the financing to do or to complete RPS, we put our share repurchases on hold. And as we’ve brought our leverage down to kind of the midpoint between our range, we’re starting to once again think about, does that make sense from a capital allocation a long-term value for our shareholders. So that is something that we are starting to think about, now that we’ve paid that down quite a bit. And so that’s why that’s there.
Tate Sullivan: Okay. Great. Thank you all.
Steve Burdick: Thank you, Tate.
Operator: Thank you. Our next question is from Andy Wittmann with Robert W. Baird. Please proceed with your question.
Andy Wittmann: Great. Thanks. Good morning. Thank you for taking our question. I guess I’ll just build on that last one. And Dan, you mentioned that the M&A pipeline is strong. I’m just curious, as you look at the opportunities that are in that pipeline, are there larger deals in there that you would consider doing? I guess I asked that because, I guess it’s an implication if RPS is far enough along now that you’re willing to do something else bigger that would take management time the way larger deals can typically do.
Dan Batrack: That’s a great question. I have said, we’ve got an incredible track record of companies between 100 and 1,000 people. So if you’d ask what’s our normal diet, we’ve had 100 people, 300 people, 500 people, 1,000 people. So that’s been sort of our one to two acquisitions, three acquisitions a year in that size range. And then we’ve had a few that are larger. So we’ve had about five, six plus years ago coffee [ph] In Australia that rounded us out that was a few thousand people, UK with white young green, 2,000, 3,000 people and then 5,000 people. So these have been every sort of two to three years. There are others out there that actually fit that are in this. I would say that the management’s time — and I would say that means my time and Steve’s time is relatively deminimis with respect to RPS.
This has moved into integration of execution within our operations. Actually, out of all of them, RPS arguably has gone the smoothest, it’s the largest. But it’s actually gone the smoothest with respect to each of the different areas. People are working together. And in many respects, they wouldn’t know they haven’t been here for a long, long period of time. So I would say, if there’s something else at the size of RPS or larger, which means sort of $1 billion a year revenue, we’re ready and we’ve got the resources. And I will tell you that, there’d be no inhibition whatsoever with respect to management’s ability to manage it, integrate it, and make it even more successful than either of the two entities were before they joined us. So we’re up ready to go.
Now, with respect to, does it actually going to happen, it needs to fit two criteria. It’s got to fit our strategic — maybe three criteria. It’s got to fit our strategic direction. We’re not going to start making shoes, and we’re not going to compete with SpaceX. So, we know what we do. We want to be the global leader as we are today, in water, environment, sustainable infrastructure. And we want to further the distance that we have with respect to our number one ranking. So, if they fit with that criteria strategically there in. Number two, culturally, we want people that are culturally aligned that want to be front-end, best scientists and technical engineers that are differentiated by providing the best technical solutions to our clients broaden.
They fit those two criteria, then we’ve got the last one, which Steve holds me to task all the time as it needs to make financial sense for the company, and it needs to be accretive for the company and to our shareholders so that it actually adds value to the financial structure of the corporation and support our returns to shareholders. So those are one, two, three. There are companies out there that meet that, but with respect to, are we still busy with RPS or anything else, we’re ready to go. And if we find the right opportunities, we will make them actionable. But I’d like Steve’s comments, so we did include it here with intent. We have no — there’s no intent for the company to move its leverage down to sub one. If we don’t find the right entities that we will take action on.
We’re going to deploy the capital back to our shareholders either through dividends or buybacks in the event that we don’t have a strategic entity through M&A to join the company. So, we are going to use our capital allocation, to ensure that it goes back to shareholders.
Andy Wittmann: That was a thorough answer. Thank you. I guess, I’m going to ask for just another kind of angle on that one just because I haven’t asked it before, or at least in a while. But there’s been private equity that has moved into the consulting and the environmental consulting space. I think today, more than we’ve seen in the last while, some pretty highly regarded companies. I’m just curious, as they look to transact, while you’ve never been an auction buyer, a buyer from a banker, are these companies candidates, do you think? Or could they be a good fit inside of Tetra Tech? I’m just kind of curious as to your thought process on that now that the company has grown — your company has grown to a larger size?
Dan Batrack: Yes. It’s a really good question. I’ve had the great fortune — good fortune to have been in this industry for a while. And I do recall that, it seems like yesterday, when the only thing PE ever stood for was a professional engineering license. We didn’t know that was private equity in million years. That’s changed. Nowadays, it wouldn’t — nobody knows that PE stands for professional engineering, it’s only private equity. Now, the thing I’ve seen over the past few years, it’s remarkable. That if you go back, pre the increased interest rates, I don’t want to wander too far on this, but there was no cost of capital. They could lever up eight times, nine times. I saw some private equities go to 10 times. They require management teams to roll over 40%.
