TTEK 10-K & 10-Q changes, risk factors and insider trading

In fiscal 2024,2025, we generated 38.5%37.4% of our revenue from our international operations, primarily in Australia, Canada, Australia, Europe, the United Kingdom and from international clients for work that is performed by our domestic operations. International business is subject to a variety of risks, including: imposition of governmental controls and changes in laws, regulations or policies; lack of developed legal systems to enforce contractual rights; greater risk of uncollectible accounts and longer collection cycles; currency exchange rate fluctuations, devaluations and other conversion restrictions; uncertain and changing tax rules, regulations and rates; the potential for civil unrest, acts of terrorism, force majeure, war or other armed conflict and greater physical security risks, which may cause us to have to leave a country quickly; logistical and communication challenges; changes in regulatory practices, including trade policies, new or increased tariffs on certain imports from other countries and possible retaliatory tariffs, and taxes; changes in labor conditions; general economic, political and financial conditions in foreign markets; and exposure to civil or criminal liability under the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act, the Canadian Corruption of Foreign Public Officials Act, the Brazilian Clean Companies Act, the anti-boycott rules, trade and export control regulations as well as other international regulations.

Our backlog at fiscal 20242025 year-end was $5.4$4.1 billion, an increase of $586 million, or 12.2%, compared to fiscal 2023 year-end.billion. We include in backlog only those contracts for which funding has been provided and work authorizations have been received. We cannot guarantee that the revenue projected in our backlog will be realized or, if realized, will result in profits. In addition, project delays, suspensions, terminations, cancellations, reductions in scope, or other adjustments do occur from time to time in our industry due to considerations beyond our control and may have a material impact on the value of reported backlog with a corresponding adverse impact on future revenues and profitability. For example, certain of our contracts with the U.S. federal government and other clients are terminable at the discretion of the client, with or without cause. These types of backlog reductions could adversely affect our revenue and margins. As a result of these factors, our backlog as of any particular date is an uncertain indicator of our future earnings.

Our project sites often put our employees and others in close proximity with mechanized equipment, moving vehicles, chemical and manufacturing processes and highly regulated materials. We maintain an enterprise-wide group of health and safety professionals to help ensure that the services we provide are delivered safely and in accordance with standard work processes. Unsafe job sites and office environments have the potential to increase employee turnover, increase the cost of a project to our clients, expose us to types and levels of risk that are fundamentally unacceptable and raise our operating costs. The implementation of our safety processes and procedures are monitored by various agencies, including the U.S. Mine Safety and Health Administration (“MSHA”), and rating bureaus and may be evaluated by certain clients in cases in which safety requirements have been established in our contracts. Our failure to meet these requirements or our failure to properly implement and comply with our safety program could result in reduced profitability, harm to our reputation, the loss of projects or clients or potential litigation, and could have a material adverse effect on our business, operating results or financial condition.

To prepare consolidated financial statements in conformity with generally accepted accounting principles in the U.S., management is required to make estimates and assumptions as of the date of the consolidated financial statements. These estimates and assumptions affect the reported values of assets, liabilities, revenue and expenses as well as disclosures of contingent assets and liabilities. For example, we typically recognize revenue over the life of a contract based on the proportion of costs incurred to date compared to the total costs estimated to be incurred for the entire project. Areas requiring significant estimates by our management include: the application of the percentage-of-completion method of accounting and revenue recognition on contracts, change orders and contract claims, including related unbilled accounts receivable; unbilled accounts receivable, including amounts related to requests for equitable adjustment to contracts that provide for price redetermination, primarily with the U.S. federal government. These amounts are recorded only when they can be reliably estimated and realization is probable;: provisions for uncollectible receivables, client claims and recoveries of costs from subcontractors, vendors and others; provisions for income taxes, research and development tax credits, valuation allowances and unrecognized tax benefits; and value of goodwill and recoverability of intangible assets.

We account for most of our contracts on the percentage-of-completion method of revenue recognition. Generally, our use of this method results in recognition of revenue and profit ratably over the life of the contract, based on the proportion of costs incurred to date to total costs expected to be incurred for the entire project. The effects of revisions to estimated revenue and costs, including the achievement of award fees and the impact of change orders and claims, are recorded when the amounts are known and can be reasonably estimated. Such revisions could occur in any period and their effects could be material. Although we have historically made reasonably reliable estimates of the progress towards completion of long-term contracts, the uncertainties inherent in the estimating process make it possible for actual costs to vary materially from estimates, including reductions or reversals of previously recorded revenue and profit.

While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective. Vulnerabilities in our systems pose material risks to our business. Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents. Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences. Vulnerabilities in our systems pose material risks to our business. We have not and may not in the future, however, detect and remediate all such vulnerabilities including on a timely basis. Further, we have and may in the future experience delays in developing and deploying remedial measures and patches designed to address identified vulnerabilities. Any of these events could damage our reputation and have a material adverse effect on our business, financial condition, results of operations and cash flows.

There are several additional factors that could materially affect our U.S. government contracting business, which could cause U.S. government agencies to delay or cancel programs, to reduce their orders under existing contracts, to exercise their rights to terminate contracts or not to exercise contract options for renewals or extensions. Such factors, which include the following, could have a material adverse effect on our revenue or the timing of contract payments from U.S. government agencies: the failure of the U.S. government to complete its budget and appropriations process before its fiscal year-end; changes in and delays or cancellations of government programs, procurements, requirements or appropriations; budget constraints or policy changes resulting in delay or curtailment of expenditures related to the services we provide; uncertainty regarding how future budget and program decisions will unfold; and re-competes of government contracts.

Our inability to win or renew U.S. government contracts during regulatedcompetitive procurement processes could harm our operations and significantly reduce or eliminate our profits.

U.S. government contracts are awarded through a regulatedcompetitive procurement process. The U.S. federal government has increasingly relied upon multi-year contracts with pre-established terms and conditions, such as indefinite delivery/indefinite quantity (“IDIQ”) contracts, which generally require those contractors who have previously been awarded the IDIQ to engage in an additional competitive bidding process before a task order is issued. As a result, new work awards tend to be smaller and of shorter duration, since the orders represent individual tasks rather than large, programmatic assignments. In addition, we believe that there has been an increase in the award of federal contracts based on a low-price, technically acceptable criteria emphasizing price over qualitative factors, such as past performance. As a result, pricing pressure may reduce our profit margins on future federal contracts. Moreover, even if we are qualified to work on a government contract, we may not be awarded the contract because of existing government policies designed to protect small businesses and under-represented minority contractors. Our inability to win or renew government contracts during regulatedcompetitive procurement processes could harm our operations and significantly reduce or eliminate our profits.

A number of government programs require contractors to have certain kinds of government granted eligibility, such as personnel security clearance and facility clearance credentials. Depending on the project, eligibility can be difficult and time-consuming to obtain. If we or our employees are unable to obtain or retain the necessary eligibility, we may not be able to win new business, and our existing customers could terminate their contracts with us or decide not to renew them. To the extent we cannot obtain or maintain the required facility clearance and personnel security clearances for our employees working on a particular contract, we may not derive the revenue or profit anticipated from such contract.

Because we have historically acquired a significant number of companies, goodwill and other intangible assets represent a substantial portion of our assets. As of fiscal 20242025 year-end, our goodwill was $2.0 billion and other intangible assets were $160.6$121.2 million. We are required to perform a goodwill impairment test for potential impairment at least on an annual basis. We also assess the recoverability of the unamortized balance of our intangible assets when indications of impairment are present based on expected future profitability and undiscounted expected cash flows and their contribution to our overall operations. The goodwill impairment test requires us to determine the fair value of our reporting units, which are the components one level below our reportable segments. In determining fair value, we make significant judgments and estimates, including assumptions about our strategic plans with regard to our operations. We also analyze current economic indicators and market valuations to help determine fair value. To the extent economic conditions that would impact the future operations of our reporting units change, our goodwill may be deemed to be impaired, and we would be required to record a non-cash charge that could result in a material adverse effect on our financial position or results of operations. Our fiscal 2025 operating income reflects a non-cash goodwill impairment charge of $92.4 million related to our Global Development Services reporting unit due to the cancellation of USAID contracts (see Note 6, "Goodwill and Intangible Assets" of the "Notes to Consolidated Financial Statements" included in Item 8). We had no goodwill impairment in fiscal 2024,2024 2023and or 2022.2023.

We may be subject to substantial liabilities under environmental laws and regulations.

The tax regimes to which we are subject or under which we operate are unsettled and may be subject to significant change. The issuance of additional guidance related to existing or future tax laws, or changes to tax laws, tax treaties or regulations proposed or implemented by the current or a future U.S. presidential administration, Congress, taxing authorities in other jurisdictions, including jurisdictions outside of the United States, or by bodies such as the European Commission or the Organisation for Economic Co-operation and Development ("OECD"), could materially affect our tax obligations (including the cost of compliance) and effective tax rate. For example, on July 4, 2025, the U.S. government enacted legislation commonly referred to as the One Big Beautiful Bill Act, which includes changes to the taxation of business entities, and we are evaluating the future impact of certain of these changes on our financial statements. To the extent that such changes have a negative impact on us, including as a result of related uncertainty, these changes may adversely impact our business, financial condition, results of operations, and cash flows.

In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws. For example, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (collectively, “CCPA”) applies to personal information of consumers, business representatives, and employees who are California residents, and requires businesses to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights. The CCPA provides for administrative fines of up to $7,500 per violation and allows private litigants affected by certain data breaches to recover significant statutory damages. Other states, such as Virginia and Colorado, have also passed comprehensive privacy laws, and similar laws are being considered in several other states, as well as at the federal and local levels.

General. InOur revenue growth of 4.7% in fiscal 2024,2025 our revenue increased 15.0% compared to fiscal 2023was primarily reflectingdue to increased activity in ourthe U.S. state and local and U.S. federal and internationalgovernment client sectors. ThisThe revenueoverall growth includes $332$80 million from our recent acquisitions, that did not have comparable revenue for all of fiscal 2023.2024. Excluding the impact of these acquisitions, our revenue increased 7.6%3.2% compared to thelast prior-yearfiscal period.year.

(2) Includes revenue generated from non-U.S. clients, primarily in Australia, Canada and the United Kingdom, Australia and Canada.Kingdom.

In fiscal 2024,2025, our U.S. state and local government revenue grew 28.8% compared to fiscal 2024 partially due to increased disaster response activity related to Hurricanes Helene and Milton. Excluding the disaster response work, our U.S. state and local government revenue increased 13.3% in fiscal 2025 compared to last fiscal yearyear. This growth was due to continued investment by our clients in cleanwater drinkinginfrastructure, water;including this growth was offset by lower disaster response revenue of approximately $46 million primarily due to the wind-down of hurricane related projects in the southeastern U.S. last year. Excluding our disaster response activities, our U.S. state and local government revenue increased 12.4% in fiscal 2024 compared to fiscal 2023, primarily reflecting continued increased revenue from advanceddigital water treatment projects.automation. Most of our work for the U.S. state and local governments relates to critical water and environmental programs, which we expect to continue to grow in fiscal 2025.2026.

Our U.S. commercial revenue growthdeclined of1.1% 4.6% thisin fiscal year was2025 primarily due to increasedlower planning and permitting projectsactivity related to renewable energyenergy, generationpartially andoffset transmission.by increased environmental services compared to fiscal 2024. We expect revenue growth to continue in our U.S. commercial businessrevenue, excluding renewable energy, to grow in fiscal 2025.2026.

Our revenue growth in fiscal 20242025 reflects increases in both ofour ourGSG and CIG reportable segments. OurFor fiscal 2025, our GSG segment's revenue and revenue, net of subcontractor costs, increased $324.5$190.6 million, or 15.0%,7.7%, and $274.5$219.8 million, or 16.8%,11.5%, respectively, in fiscal 2024 compared to last year. Our CIG segment's revenue increased $362.1$57.9 million, or 14.9%,2.1%, and revenue, net of subcontractor costs, increased $296.2$75.7 million, or 14.0%3.1% in fiscal 20242025 compared to fiscal 2023.2024. The fiscal 20242025 results for GSG and CIG segments are described below under "Government Services Group" and "Commercial/International Group", respectively.

The following table reconciles our reported results to non-U.S. GAAP adjusted results,results. For fiscal 2025, our adjusted results exclude a non-cash goodwill impairment charge of $92.4 million related to our GDS reporting unit, which resulted from the aforementioned cancellation of USAID programs in the second quarter of fiscal 2025. This charge is further described in Note 6, "Goodwill and Intangible Assets" of the “Notes to Consolidated Financial Statements”. Additionally, for fiscal 2025, our adjusted results exclude a non-recurring charge of $115.0 million related to legal contingencies as described in Note 18, "Commitments and Contingencies" of the “Notes to Consolidated Financial Statements”. Our adjusted results also exclude adjustments to contingent consideration liabilities in fiscal 2025. Our fiscal 2024 adjusted results exclude acquisition and integration costs and adjustments to contingent consideration liabilitiesliabilities. We determined that there is no tax benefit in fiscal 2024.2025 Ourfor fiscal$31.3 2023million adjustedof resultsthe excludelegal acquisitioncontingency charge and integrations$58.3 costsmillion relatedof the goodwill impairment charge. The effective tax rate applied to the RPS acquisition and related lease impairment charge andremaining adjustments in fiscal 2025 to contingentarrive considerationat liabilities. Ourthe adjusted earnings per share ("EPS") forwas fiscal 2023 also excludes non-operating gains on a foreign exchange contract of $89.4 million and non-recurring tax expense items. The foreign exchange gain is reported as "Other non-operating income" in our consolidated statements of income.24.6%. The effective tax rate applied to the adjustments to EPS to arrive at adjusted EPS was 17% and 26% forin fiscal 2024 andwas 2023,17%, respectively. The fiscal 2024 ratewhich reflects certain integration costs/losses that were not tax deductible. We applied the relevant marginal statutory tax rate based on the nature of the adjustmentsadjustment and the tax jurisdiction in which it occurred. Both EPS and adjusted EPS were calculated using the diluted weighted-average common shares outstanding for the respective periods as reflected in our consolidatedConsolidated statementsStatements of income.Income.

NM = not meaningful (1) Non-U.S. GAAP financial measure

The effective tax rates for fiscal 20242025 and 20232024 were 28.1%34.3% and 31.8%,28.1%, respectively. Income tax expense was reduced by $4.5$1.6 million and $4.6$4.5 million of excess tax benefits on share-based payments in fiscal 20242025 and 2023,2024, respectively. In addition, in fiscal 2025, we recognized a $92.4 million goodwill impairment as described in Note 6, “Goodwill and Intangible Assets” of the “Notes to Consolidated Financial Statements”. We determined that $58.3 million of goodwill impairment is not deductible for income tax purposes. We also recognized a $115.0 million non-recurring charge related to legal contingencies as described in Note 18, "Commitments and Contingencies" of the “Notes to Consolidated Financial Statements”. We determined that $31.3 million of this charge is not tax deductible. Furthermore, income tax expense in fiscal 2024 included $4.2 million of expense for the settlement of various tax positions that were under audit for fiscal years 2011 through 2021. Furthermore, income tax expense in fiscal 2023 included non-operating income tax expenses totaling $20.6 million to (i) increase the tax liability for uncertain tax positions related to certain U.S. tax credits and an intercompany financing transaction, (ii) recognize the tax liability for foreign earnings, primarily in the United Kingdom and Australia, that are no longer indefinitely reinvested. Excluding the impact of the excess tax benefits on share-based paymentspayments, the goodwill impairment and the legal contingency charge in bothfiscal years,2025 and the settlement amountamounts in fiscal 2024 and the non-operating tax expenses in fiscal 2023,2024, our effective tax rates in fiscal 20242025 and 20232024 were 28.1%27.4% and 27.8%,28.1%, respectively.

In December 2021, the Organisation for Economic Cooperation and Development ("OECD") released Pillar Two Model Rules (also referred to as the global minimum tax or Global Anti-Base Erosion "GloBE" rules), which were designed to ensure large multinational enterprises pay a minimum 15 percent15% level of tax on the income arising in each jurisdiction in which they operate. Several jurisdictions in which we operate have enacted these rules, which are effective forfrom the first quarter of fiscal 2025. We are continually monitoring developments and evaluating the potential impacts. AtWe this time, we dodid not anticipatehave a material tax charge as a result of implementation of these rules.rules in fiscal 2025.

Operating income increased in fiscal 2025 primarily due to the aforementioned revenue growth. Additionally, our fiscal 2023 operating income was reduced by $6.8 million of the aforementioned lease impairment charge. Excluding last year's lease impairment charge, ourOur operating margin, based on revenue, net of subcontractor costs, increasedfor fiscal 2025 was 16.0% compared to 14.7% in fiscal 20242024. comparedThe toimproved 14.6%operating inmargin fiscalreflects 2023.improved project execution including higher labor utilization.

For fiscal 2024, ourOur operating income increased due to the aforementioned revenue growth. Additionally, our operating income in fiscal 20232024 was reduced by $8.3$3.6 million of theintegration aforementionedcosts lease impairment charge. Our operating margin also improved in fiscal 2024 comparedrelated to last year resulting in enhanced operating income.RPS. Excluding the leaseintegration impairment chargecosts last year, our operating margin, based on revenue, net of subcontractor costs, improved approximately 17050 basis points fromto 11.9%14.3% in fiscal 20232025 compared to 13.6%13.8% in this fiscal year.2024. The improved operating margin was primarily due to our increasedcontinued focus on high-end consulting services,services and improved project execution, particularly in the RPS operations.execution.

Capital Requirements. At September 29,28, 2024,2025, we had $232.7$167.5 million of cash and cash equivalents and access to an additional $800$999.3 million of borrowing available under our credit facility. We generated $358.7$457.7 million of cash from operations in fiscal 2024.2025. Our primary sources of liquidity are cash flows from operations and borrowings under our credit facilities. Our primary uses of cash are to fund working capital, cash dividends, share repurchases, capital expenditures and repayment of debt, as well as to fund acquisitions and earn-out obligations from prior acquisitions. We believe that our existing cash and cash equivalents, operating cash flows and borrowing capacity under our credit agreement as described below, will be sufficient to meet our capital requirements for at least the next 12 months.

On OctoberMay 5, 2021,2025, our Board of Directors authorized aan newadditional $500 million stock repurchase program underin which we could repurchase upaddition to the previous $400 million stock repurchase program authorized on October 5, 2021. In fiscal 2025, we repurchased and settled 7,304,697 shares with an average price of our$34.22 commonper stock.share for a total cost of $250.0 million in the open market. In fiscal 2024 and 2023, we did not repurchase any shares of our common stock. At fiscal 20242025 year-end, we had a remaining balance of $347.8$597.8 million under our stock repurchase program. We declared and paid common stock dividends totaling $65.0 million, or $0.246 per share, in fiscal 2025 compared to $58.8 million, or $0.220 per share, in fiscal 2024 compared to $52.1 million, or $0.196 per share, in fiscal 2023.2024.

Subsequent Events. On November 11,10, 2024,2025, our Board of Directors declared a quarterly cash dividend of $0.058$0.065 per share payable on December 13,12, 20242025 to stockholders of record as of the close of business on NovemberDecember 27,1, 2024.2025.

Tetra Tech, Inc. is a leading global provider of high-end consultingtechnical and engineering services that focuses on water, environment and sustainable infrastructure. We are a global company that is Leading with Science® to provide innovative solutions for our public and private clients. We typically begin at the earliest stage of a project by identifying technical solutions and developing execution plans tailored to our clients' needs and resources.

Our reputation for high-end consultingtechnical and engineering services and our ability to develop solutions for water and environmental management has supported our growth for 60 years. Our market leading climate mitigation and adaptation services are solving our clients' most complex challenges related to coastal flooding, water security, energy transition and biodiversity protection. Today, we are proud to be making a difference in people’s lives worldwide through our high-end consulting, engineeringtechnical and technologyengineering service offerings. We are working on over 100,000 projects, in more than 100 countries on all seven continents, with more than 25,000 associates. We are Leading with Science® throughout our operations, with domain experts across multiple disciplines supported by our advanced analytics, artificial intelligence, machine learning and digital technology solutions. Our ability to provide innovative and first-of-kind solutions is enhanced by partnerships with our forward-thinking clients. We embrace the breadth of experience across our talented workforce worldwide with a culture of innovation and entrepreneurship. We are disciplined in our business, and focused on delivering value to customers and high performance for our shareholders. In supporting our clients, we seek to add value and provide long-term sustainable consulting, engineering and technology solutions.

Government Services Group (“GSG”). GSG provides high-end consultingtechnical and engineering services primarily to U.S. government clients (federal, state and local). GSG supports U.S. government defense and civilian agencies with services in water, environment, sustainable infrastructure, information technology and disaster management. GSG also provides engineering design services for U.S. based federal and municipal clients, especially in water infrastructure, flood protection and solid waste.

Commercial/International Services Group (“CIG”). CIG primarily provides high-end consultingtechnical and engineering services to U.S. commercial clients, and international clients inclusive of the commercial and government sectors. CIG supports commercial clients worldwide in energy, industrial and high performance buildings markets. CIG also provides sustainable infrastructure and related environmental, engineering and project management services to commercial and local government clients across Canada, in Asia Pacific (primarily Australia and New Zealand), Europe, the United Kingdom and Brazil.

We experience seasonal trends in our business. Our revenue and operating income are typically lower in the first halfnine months of our fiscal year, primarily due to the Thanksgiving (in the U.S. and Canada), Christmas and New Year’s holidays. Many of our clients’ employees, as well as our own employees, take vacations during these holiday periods. Further, seasonal inclement weather conditions occasionally cause some of our offices to close temporarily or may hamper our project field work in the northern hemisphere's temperate and arctic regions. These occurrences result in fewer billable hours worked on projects and, correspondingly, less revenue recognized.

In the second quarter of fiscal 2026, we acquired Halvik Corp (“Halvik”) headquartered in Vienna, Virginia. Halvik provides high-end advisory consulting services focused on advanced data analytics, systems modernization and cybersecurity for U.S. federal defense and civilian agencies. Halvik is included in our GSG segment. In the third quarter of fiscal 2026, we acquired Providence Consulting Group Pty Ltd ("Providence"), an advisory and project management consultancy based in Australia. Providence is included in our CIG segment.

In the second quarter of fiscal 2025, we acquired Carron + Walsh ("CAW"), based in the Republic of Ireland. CAW delivers project and cost management solutions for large-scale commercial, life science, residential and infrastructure programs across Europe. In the third quarter of fiscal 2025, we also acquired SAGE Group Holdings ("SAGE"), an Australian consulting firm that provides innovative technology and high-quality automation services that optimize operational efficiency and drive digital transformation for commercial and government clients across the municipal water, energy, transportation, defense and manufacturing sectors. Both CAW and SAGE are included in our CIG segment.

Divestitures. We regularly review and evaluate our existing operations to determine whether our business model should change through the divestiture of certain businesses. Accordingly, from time to time, we may divest or wind down certain non-core businesses and reallocate our resources to businesses that better align with our long-term strategic direction. In the first quarter of fiscal 2026, we divested our operations in Norway, which were in our CIG segment. In the first quarter of fiscal 2025, we divested a subsidiary in South America and a line of business in Australia,Australia. bothAll of whichthese divestitures were immaterial.not considered material, individually or in aggregate, to our consolidated financial statements.

General. For the first halfnine months of fiscal 2026, our revenue declined 11.4%9.1% compared to the prior-year period primarily due to fewer international development projects in our U.S. federal government client sector. On January 20, 2025, President Trump signed Executive Order 14169, titled "Reevaluating and Realigning United States Foreign Aid", which initiated a 90-day pause on all U.S. foreign development assistance programs to assess their alignment with U.S. foreign policy objectives with few exemptions. Following a six-week review, on February 27, 2025, U.S. Secretary of State Rubio announced the cancellation of 83% of United States Agency for International Development ("USAID") programs, totaling approximately 5,200 contracts. Subsequently, we were notified that virtually all of our contracts with USAID were terminated for convenience with immediate effect and that any remaining international development activity would be administered by the U.S. Department of State ("DOS").

In addition, our year-over-year revenue comparisons include lower disaster response activity in both of our U.S. government client sectors. Our revenue in the first halfnine months of fiscal 2026 includes approximately $105$180 million from our recent acquisitions (net of the aforementioned Norway disposition), that did not have comparable revenue for the same period last year.

Our U.S. federal government revenue declined 36.1%32.5% primarily due to the aforementioned decreased international development and disaster response activity in the first halfnine months of fiscal 2026 compared to the same period last year. In the first halfnine months of fiscal 2026, our U.S. federal government revenue included $122.2approximately $190 million from USAID/DOS programs compared to $446.5approximately $550 million in the fiscal 2025 period. Additionally, the first halfnine months of fiscal 2025 included revenue related to our disaster response programs for the Palisades and Eaton fires in Southern California. Our revenue in the first halfnine months of fiscal 2026 includes approximately $35$85 million from a recent acquisition, that did not have comparable revenue for the prior-year period. We expect our U.S. federal revenue to grow for the remainder of this fiscal year, excluding USAID/DOS and disaster response activities.

Our U.S. state and local government revenue declined 15.2%12.9% compared to the fiscal 2025 period due to decreased disaster response activity primarily related to Hurricanes Helene and Milton, which occurred in September and October of 2024, respectively.Milton. Excluding this disaster response work, our U.S. state and local government, revenue increased approximately 10%6% in the first halfnine months of fiscal 2026 compared to the fiscalsame 2025period firstlast half.year. This growth was due to continued investment by our clients in municipal water infrastructure, including digital water automation. Most of our work for the U.S. state and local governments relates to critical water and environmental programs, which we expect to continue to grow for the remainder of fiscal 2026.

Our U.S. commercial revenue declinedwas 2.8%stable in the first halfnine months of fiscal 2026 primarily due to lower activity related to renewable energy, partially offset by increased power transmission services compared to the same period last year.year primarily due to increased power transmission services, partially offset by lower activity related to renewable energy. We expect our U.S. commercial revenue, excluding renewable energy, to begin showing growthgrow in the secondfourth halfquarter of fiscal 2026.

For the first halfnine months of fiscal 2026, our international revenue growth of 9.6%9.9% reflects increased activities for water utilities including digital water projects, partially offset by decreased infrastructure activities in Australia.projects. Excluding the revenue from our fiscal 2025 acquisition and the aforementioned Norway disposition, our international revenue increased approximately 3%4% in the first halfnine months of fiscal 2026 compared to the fiscal 2025 period. We expect the growth in our international work to continue for the remainder of fiscal 2026.

TheOur revenue in the secondthird quarter and first halfnine months of fiscal 20262026, compared to the same periods last yearyear, primarily reflectreflects decreased revenue in our GSG reportable segment due to the aforementioned reductions in USAID/DOS and disaster response activities. For the secondthird quarter of fiscal 2026, our GSG segment's revenue and revenue, net of subcontractor costs, declined $139.5$111.0 million, or 20.0%,15.6%, and $105.8$98.3 million, or 18.8%,17.2%, respectively, compared to the same quarter last year. Our CIG segment's revenue increased $38.4$51.8 million, or 6.0%,7.7%, and revenue, net of subcontractor costs, increased $51.8$53.9 million, or 9.6%9.3% in the secondthird quarter of fiscal 2026 compared to the fiscal 2025 secondthird quarter.

For the first halfnine months of fiscal 2026, our GSG segment's revenue and revenue, net of subcontractor costs, declined $405.4$516.4 million, or 27.2%,23.5%, and $321.1$419.4 million, or 26.5%,23.5%, respectively, compared to the year-ago period. Our CIG segment's revenue increased $97.7$149.5 million, or 7.6%, and revenue, net of subcontractor costs, increased $106.9$160.8 million, or 9.8%9.6% in the first halfnine months of fiscal 2026 compared to the fiscal 2025 period. The secondthird quarter and first halfnine month results for GSG and CIG segments are described below under "Government Services Group" and "Commercial/International Group", respectively.

The following table reconciles our reported results to non-GAAP adjusted results. For the second quarter and first halfnine months of fiscal 2026 and 2025, our adjusted results exclude adjustments to contingent consideration liabilities. Additionally, the second quarter and first halfnine months of fiscal 2026 exclude the earnings per share ("EPS") contribution from the aforementioned non-operating gain from the sale of our operations in Norway. For the second quarter and first halfnine months of fiscal 2025, our adjusted results exclude a non-cash goodwill impairment charge of $92.4 million that resulted from the aforementioned cancellation of USAID programs. The first halfnine months of fiscal 2025 also excludes a non-recurring charge of $115.0 million related to legal contingencies as described in Note 16, "Commitments and Contingencies" of the “Notes to Consolidated Financial Statements”. We determined that there was no income tax expense for the non-operating gain in fiscal 2026, and no tax benefit recognized for the $31.3 million of the legal contingency charge or the $58.3 million of the goodwill impairment charge in fiscal 2025. The effective tax rates applied to the remaining adjustments to arrive at the adjusted EPS were 27.5% and 25.0% for the first halvesnine months of fiscal 2026 and 2025, respectively. We applied the relevant marginal statutory tax rate based on the nature of the adjustment and the tax jurisdiction in which it occurred. Both EPS and adjusted EPS were calculated using the diluted weighted-average common shares outstanding for the respective periods as reflected in our Consolidated Statements of Income.

Excluding the non-recurring charges and the earn-out gains, our operating income increaseddecreased $1.4$6.9 million, or 1.1%,4.2%, in the secondthird quarter of fiscal 2026 and declined $2.2$9.2 million, or 0.8%,2.1%, in the first halfnine months of fiscal 2026 compared to the same periods last year. The changes reflect lower results in our GSG reportable segment and improved results in our CIG reportable segment, which are described below under "Government Services Group" and "Commercial/International Group", respectively.

Net interest expense increaseddecreased in the secondthird quarter and first halfnine months of fiscal 2026 compared to the fiscal 2025 periods primarily due to higher interest expense related to contingent earn-out liabilities for Halvik and SAGE acquisitions, partially offset by lower borrowings and average debt interest rates.

The effective tax rates for the first halvesnine months of fiscal 2026 and 2025 were 26.0%26.4% and 86.7%,40.9%, respectively. Income tax expense was reduced by $0.6 million and $1.0 million of excess tax benefits on share-based payments in the first halvesnine months of fiscal 2026 and 2025, respectively. In addition, in the first halfnine months of fiscal 2026, we recognized a $12.4 million gain from the sale of our operations in Norway as described in Note 4, “Acquisitions and Divestitures” of the “Notes to Consolidated Financial Statements”. The gain is not taxable for income tax purposes. In the first halfnine months of fiscal 2025, we recognized a $92.4 million goodwill impairment charge as described in Note 5, Goodwill and Intangible Assets and determined that $58.3 million of the impairment is not deductible for tax purposes. We also recognized a $115.0 million non-recurring charge in the first halfnine months of fiscal 2025 related to legal contingencies as described in Note 16, "Commitments and Contingencies" of the “Notes to Consolidated Financial Statements”. We determined that $31.3 million of this charge is not tax deductible. Excluding the impact of the excess tax benefits on share-based payments, the gain from sale in the first halfnine months of fiscal 2026 and the goodwill impairment and legal contingency charge in the first halfnine months of fiscal 2025, our effective tax rates in the first halvesnine months of fiscal 2026 and 2025 were 27.5%27.4% and 27.8%,27.6%, respectively.

For the secondthird quarter and first halfnine months of fiscal 2026, the revenue decreasesdecreased of 20.0%15.6% and 27.2%,23.5%, respectively, compared to the prior-year periods primarily reflectdue to the aforementioned cancellation of contracts with USAID and lower disaster response activities. Excluding revenue from USAID/DOS and the disaster response revenue, GSG segment revenue increased approximately 2%6% in the first halfnine months of fiscal 2026 compared to the same period last year. GSG revenue in the first halfnine months of fiscal 2026 includes approximately $35$85 million from a recent acquisition, that did not have comparable revenue for the same period last year.

Operating income decreased primarily due to the aforementioned revenue decline. However, ourGSG operating margin, based on revenue, net of subcontractor costs, increased to 16.4%16.8% in the first halfnine months of fiscal 2026 compared to 14.2%15.2% in the prior-year period. The increased operating margin reflects improved project execution and the elimination of the lower margin cost-reimbursable revenue with USAID.

The revenue growth in secondthe third quarter and first halfnine months of fiscal 20262026, compared to the same periods last yearyear, reflects increased activities for water utilities including digital water projects, primarily in the United Kingdom, partially offset by decreased infrastructure activities in Australia.Kingdom. The increases also include the aforementioned international revenue in the first halfnine months of fiscal 2026 from our fiscal 2025 acquisition, that did not have comparable revenue for the fiscal 2025 period. Excluding the revenue from the acquisition, net of the aforementioned Norway disposition, ourCIG revenue increased approximately 2%3% in the first halfnine months of fiscal 2026 compared to fiscal 2025the first half.nine months of fiscal 2025.

Our operatingOperating income increased due to the aforementioned revenue growth. OurCIG operating margin, based on revenue, net of subcontractor costs, was substantially the same in the first halfnine months of fiscal 2026 compared to same period last year.

Backlog generally represents the dollar amount of revenue we expect to realize in the future when we perform the work. The difference between our remaining unsatisfied performance obligation ("RUPO") and backlog relates to contract terms. Specifically, our backlog does not consider the potential impact of termination for convenience clauses within the contracts. The contract term and thus remaining performance obligation on certain of our operations and maintenance contracts, are limited to the notice period required for contract termination (usually 30, 60, or 90 days). The differences between our backlog and RUPO at MarchJune 29,28, 2026 and September 28, 2025 were immaterial (see the table below):

At MarchJune 29,28, 2026, our backlog was $4.3$4.5 billion. GSG and CIG reported $2.1 billion and $2.2$2.4 billion of backlog, respectively, at MarchJune 29,28, 2026.

Capital Requirements. At MarchJune 29,28, 2026, we had $223.6$230.8 million of cash and cash equivalents and access to an additional $884.3$964.3 million of borrowings available under our credit facility. During the first halfnine months of fiscal 2026, we generated $237.6$466.6 million of cash from operations. Our primary sources of liquidity are cash flows from operations and borrowings under our credit facilities. Our primary uses of cash are to fund working capital, cash dividends, share repurchases, capital expenditures and repayment of debt, as well as to fund acquisitions and earn-out obligations from prior acquisitions. We believe that our existing cash and cash equivalents, operating cash flows and borrowing capacity under our credit agreement, as described below, will be sufficient to meet our capital requirements for at least the next 12 months.

Operating Activities. For the first halfnine months of fiscal 2026, cash from operating activities increased $230.4$109.7 million compared to fiscal 2025the first half,nine months of fiscal 2025, primarily due to cash collections related to disaster response activities completed in the fourth quarter of fiscal 2025 and on terminated USAID programs. The increase also reflects a $57 million payment for the aforementioned legal contingency in the second quarter of fiscal 2025.

Investing Activities. Our cash used in investing activities for the first halfnine months of fiscal 2026 includes initial cash payments of $175.0$192 million for the Halvik acquisition,acquisitions, partially offset by the net proceeds of $40.3 million from the sale of our operations in Norway.

Financing Activities. Our cash used in financing activities includesprimarily reflects share repurchases of $100approximately $200 million in the first halfnine months of both fiscal 2026 comparedand tofiscal $1752025. In addition, we paid dividends of $52.5 million inand the year-ago period. In both periods, these repurchases were partially funded by our net borrowings, which decreased $85$48.0 million in the first halfnine months of fiscal 2026 comparedand tofiscal the2025, same period last year.respectively.

At MarchJune 29,28, 2026, we had $315$235 million in outstanding borrowings under the Amended Credit Agreement, which consisted of $200 million under the 5Y Term Loan Facility and $115$35 million borrowings under the Amended Revolving Credit Facility. For the first halfnine months of fiscal 2026, the weighted-average interest rate of the outstanding borrowings under the credit facilities was 5.05%.5.01%. In addition, we had $0.7 million in standby letters of credit under the Amended Credit Agreement. At MarchJune 29,28, 2026, we had $484.3$564.3 million of available credit under the Amended Revolving Credit Facility, all of which could be borrowed without a violation of our debt covenants.

The Amended Credit Agreement contains certain affirmative and restrictive covenants, and customary events of default. The financial covenants provide for a maximum Consolidated Leverage Ratio of 3.50 to 1.00 (total funded debt/EBITDA, as defined in the Amended Credit Agreement) and a minimum Consolidated Interest Coverage Ratio of 3.00 to 1.00 (EBITDA/Consolidated Interest Charges, as defined in the Amended Credit Agreement). Our obligations under the Amended Credit Agreement are guaranteed by certain of our domestic subsidiaries and are secured by first priority liens on (i) the equity interests of certain of our subsidiaries, including those subsidiaries that are guarantors or borrowers under the Amended Credit Agreement, and (ii) the accounts receivable, general intangibles and intercompany loans, and those of our subsidiaries that are guarantors or borrowers. At MarchJune 29,28, 2026, we were in compliance with these covenants with a consolidated leverage ratio of 1.32x1.24x and a consolidated interest coverage ratio of 18.08x.18.98x.

In addition to the Amended Credit Agreement, we maintain other credit facilities, which may be used for short-term cash advances and bank guarantees. At MarchJune 29,28, 2026, there were no borrowings under these facilities, and the aggregate amount of standby letters of credit outstanding was $51.1$48.2 million. At MarchJune 29,28, 2026, we had no bank overdrafts related to our disbursement bank accounts.

Stock repurchases. On May 5, 2025, our Board of Directors authorized an additional $500 million stock repurchase program in addition to the previous $400 million stock repurchase program authorized on October 5, 2021. In the first halfnine months of fiscal 2026, we repurchased and settled 2,894,5396,391,799 shares with an average price of $34.55$31.29 per share for a total cost of $100.0$200.0 million in the open market. We repurchased and settled 5,165,7155,933,085 shares with an average price of $33.87$33.71 per share for a total cost of $175.0$200.0 million in the open market in the first halfnine months of fiscal 2025. In the first halfnine months of fiscal 2026, we also paid $2.0 million of excise tax on stock repurchases imposed by the Inflation Reduction Act of 2022. At MarchJune 29,28, 2026, our $400 million stock repurchase program was fully executed and we had a remaining balance of $497.8$397.8 million under our $500 million stock repurchase programs.program.

Subsequent Event. On AprilJuly 27, 2026, our Board of Directors declared a quarterly cash dividend of $0.072 per share payable on JuneAugust 2,27, 2026 to stockholders of record as of the close of business on MayAugust 14,13, 2026.

At MarchJune 29,28, 2026 and September 28, 2025, the liabilityliabilities for income taxes associated with uncertain tax positions waswere $54.9$55.8 million and $52.8 million, respectively. These liabilities represent our current estimates of the additional tax liabilities that we may be assessed when the related audits are concluded. If these audits are resolved in a manner more unfavorable than our current expectations, our additional tax liabilities could be materially higher than the amounts currently recorded resulting in additional tax expense.

•Letters of credit and bank guarantees are used primarily to support project performance and insurance programs. We are required to reimburse the issuers of letters of credit and bank guarantees for any payments they make under the outstanding letters of credit or bank guarantees. Our Amended Credit Agreement and additional letter of credit facilities cover the issuance of our standby letters of credit and bank guarantees and are critical for our normal operations. If we default on the Amended Credit Agreement or additional credit facilities, our inability to issue or renew standby letters of credit and bank guarantees would impair our ability to maintain normal operations. At MarchJune 29,28, 2026, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $51.1$48.2 million in standby letters of credit outstanding under our additional letter of credit facilities.

We are exposed to interest rate risk under our Amended Credit Agreement. We can borrow, at our option, under the 5Y Term Loan Facility and Amended Revolving Credit Facility. We may borrow on the Amended Revolving Credit Facility, at our option, at either (a) a benchmark rate plus a margin that ranges from 1.000% to 1.750% per annum, or (b) a base rate for loans in U.S. dollars (the highest of the U.S. federal funds rate plus 0.50% per annum, the bank’s prime rate or the SOFR rate plus 1.00%, plus a margin that ranges from 0% to 0.75% per annum). In each case, the applicable margin is based on our Consolidated Leverage Ratio, calculated quarterly. The 5Y Term Loan Facility is subject to the same interest rate provisions. The Amended Credit Agreement expires on May 5, 2030, or earlier at our discretion upon payment in full of loans and other obligations. At MarchJune 29,28, 2026, we had $315$235 million in outstanding borrowings under the Amended Credit Agreement, which consisted of $200 million under the 5Y Term Loan Facility and $115$35 million borrowings under the Amended Revolving Credit Facility. For the first halfnine months of fiscal 2026, the weighted-average interest rate of the outstanding borrowings under the Amended Credit Agreement was 5.05%.5.01%.

The majority of our transactions are in U.S. dollars; however, some of our subsidiaries conduct business in foreign currencies, primarily the Canadian and Australian dollars, the Euro, and British Pound. Therefore, we are subject to currency exposure and volatility because of currency fluctuations. We attempt to minimize our exposure to these fluctuations by matching revenue and expenses in the same currency for our contracts. We report our foreign currency gains and losses in “Selling, general and administrative expenses” on our consolidated statements of income. For the first halfnine months of fiscal 2026, we reported $1.2$1.5 million of foreign currency loss compared to a loss of $0.7$2.3 million in the priorsame yearperiod period.last fiscal year.

We have foreign currency exchange rate exposure in our results of operations and equity primarily because of the currency translation related to our foreign subsidiaries where the local currency is the functional currency. To the extent the U.S. dollar strengthens against foreign currencies, the translation of these foreign currency denominated transactions will result in reduced revenue, operating expenses, assets and liabilities. Similarly, our revenue, operating expenses, assets and liabilities will increase if the U.S. dollar weakens against foreign currencies. For the first halvesnine months of fiscal 2026 and 2025, 43.9%43.5% and 35.4%36.0% of our consolidated revenue, respectively, was generated by our international business. For the first halfnine months of fiscal 2026, the effect of foreign exchange rate translation on our consolidated balance sheet was ana increasedecrease in equity of $1.4$9.2 million compared to aan decreaseincrease of $74.3$13.8 million in the prior-year period. These amounts were recognized as adjustments to equity through other comprehensive income.