TETRA TECH INC

Previous wording

Tetra Tech, Inc. is a leading global provider of high-end consulting 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.

Current wording

Tetra Tech, Inc. is a leading global provider of high-end technical 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.

Previous wording

Our reputation for high-end consulting 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, engineering and technology 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.

Current wording

Our reputation for high-end technical 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 technical and engineering 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.

Previous wording

Government Services Group (“GSG”). GSG provides high-end consulting 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.

Current wording

Government Services Group (“GSG”). GSG provides high-end technical 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.

Previous wording

Commercial/International Services Group (“CIG”). CIG primarily provides high-end consulting 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.

Current wording

Commercial/International Services Group (“CIG”). CIG primarily provides high-end technical 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.

Previous wording

We experience seasonal trends in our business. Our revenue and operating income are typically lower in the first half 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.

Current wording

We experience seasonal trends in our business. Our revenue and operating income are typically lower in the first nine 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.

Previous wording

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.

Current wording

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.

Previous wording

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 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.

Current wording

In 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 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.

Previous wording

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, both of which were immaterial.

Current wording

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. All of these divestitures were not considered material, individually or in aggregate, to our consolidated financial statements.

Previous wording

General. For the first half of fiscal 2026, our revenue declined 11.4% 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").

Current wording

General. For the first nine months of fiscal 2026, our revenue declined 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").

Previous wording

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 half of fiscal 2026 includes approximately $105 million from our recent acquisitions (net of the aforementioned Norway disposition), that did not have comparable revenue for the same period last year.

Current wording

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 nine months of fiscal 2026 includes approximately $180 million from our recent acquisitions (net of the aforementioned Norway disposition), that did not have comparable revenue for the same period last year.

Previous wording

Our U.S. federal government revenue declined 36.1% primarily due to the aforementioned decreased international development and disaster response activity in the first half of fiscal 2026 compared to the same period last year. In the first half of fiscal 2026, our U.S. federal government revenue included $122.2 million from USAID/DOS programs compared to $446.5 million in the fiscal 2025 period. Additionally, the first half 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 half of fiscal 2026 includes approximately $35 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.

Current wording

Our U.S. federal government revenue declined 32.5%primarily due to the aforementioned decreased international development and disaster response activity in the first nine months of fiscal 2026 compared to the same period last year. In the first nine months of fiscal 2026, our U.S. federal government revenue included approximately $190 million from USAID/DOS programs compared to approximately $550 million in the fiscal 2025 period. Additionally, the first nine 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 nine months of fiscal 2026 includes approximately $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.

Previous wording

Our U.S. state and local government revenue declined 15.2% 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. Excluding this disaster response work, our U.S. state and local government, revenue increased approximately 10% in the first half of fiscal 2026 compared to the fiscal 2025 first half. 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.

Current wording

Our U.S. state and local government revenue declined 12.9%compared to the fiscal 2025 period due to decreased disaster response activity primarily related to Hurricanes Helene and Milton. Excluding this disaster response work, our U.S. state and local government, revenue increased approximately 6% in the first nine months of fiscal 2026 compared to the same period last 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.

Previous wording

Our U.S. commercial revenue declined 2.8% in the first half 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. We expect our U.S. commercial revenue, excluding renewable energy, to begin showing growth in the second half of fiscal 2026.

Current wording

Our U.S. commercial revenue was stable in the first nine months of fiscal 2026 compared to the same period last 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 grow in the fourth quarter of fiscal 2026.

Previous wording

For the first half of fiscal 2026, our international revenue growth of 9.6% reflects increased activities for water utilities including digital water projects, partially offset by decreased infrastructure activities in Australia. Excluding the revenue from our fiscal 2025 acquisition and the aforementioned Norway disposition, our international revenue increased approximately 3% in the first half 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.

Current wording

For the first nine months of fiscal 2026, our international revenue growth of 9.9%reflects increased activities for water utilities including digital water projects. Excluding the revenue from our fiscal 2025 acquisition and the aforementioned Norway disposition, our international revenue increased approximately 4% in the first nine 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.

Previous wording

The revenue in the second quarter and first half of fiscal 2026 compared to the same periods last year primarily reflect decreased revenue in our GSG reportable segment due to the aforementioned reductions in USAID/DOS and disaster response activities. For the second quarter of fiscal 2026, our GSG segment's revenue and revenue, net of subcontractor costs, declined $139.5 million, or 20.0%, and $105.8 million, or 18.8%, respectively, compared to the same quarter last year. Our CIG segment's revenue increased $38.4 million, or 6.0%, and revenue, net of subcontractor costs, increased $51.8 million, or 9.6% in the second quarter of fiscal 2026 compared to the fiscal 2025 second quarter.

Current wording

Our revenue in the third quarter and first nine months of fiscal 2026, compared to the same periods last year, primarily reflects decreased revenue in our GSG reportable segment due to the aforementioned reductions in USAID/DOS and disaster response activities. For the third quarter of fiscal 2026, our GSG segment's revenue and revenue, net of subcontractor costs, declined $111.0 million, or 15.6%, and $98.3 million, or 17.2%, respectively, compared to the same quarter last year. Our CIG segment's revenue increased $51.8 million, or 7.7%, and revenue, net of subcontractor costs, increased $53.9 million, or 9.3% in the third quarter of fiscal 2026 compared to the fiscal 2025 third quarter.

Previous wording

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

Current wording

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

Previous wording

The following table reconciles our reported results to non-GAAP adjusted results. For the second quarter and first half of fiscal 2026 and 2025, our adjusted results exclude adjustments to contingent consideration liabilities. Additionally, the second quarter and first half 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 half 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 half 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 legal contingency charge or the $58.3 million 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 halves 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.

Current wording

The following table reconciles our reported results to non-GAAP adjusted results. For the first nine months of fiscal 2026 and 2025, our adjusted results exclude adjustments to contingent consideration liabilities. Additionally, the first nine 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 first nine 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 nine 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 $31.3 million of the legal contingency charge or $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 nine 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.

Previous wording

Excluding the non-recurring charges and the earn-out gains, our operating income increased $1.4 million, or 1.1%, in the second quarter of fiscal 2026 and declined $2.2 million, or 0.8%, in the first half 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.

Current wording

Excluding the non-recurring charges and the earn-out gains, our operating income decreased $6.9 million, or 4.2%, in the third quarter of fiscal 2026 and declined $9.2 million, or 2.1%, in the first nine 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.

Previous wording

Net interest expense increased in the second quarter and first half 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.

Current wording

Net interest expense decreased in the third quarter and first nine months of fiscal 2026 compared to the fiscal 2025 periods primarily due to lower borrowings and average debt interest rates.

Previous wording

The effective tax rates for the first halves of fiscal 2026 and 2025 were 26.0% and 86.7%, 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 halves of fiscal 2026 and 2025, respectively. In addition, in the first half 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 half 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 half 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 half of fiscal 2026 and the goodwill impairment and legal contingency charge in the first half of fiscal 2025, our effective tax rates in the first halves of fiscal 2026 and 2025 were 27.5% and 27.8%, respectively.

Current wording

The effective tax rates for the first nine months of fiscal 2026 and 2025 were 26.4% and 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 nine months of fiscal 2026 and 2025, respectively. In addition, in the first nine 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 nine 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 nine 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 nine months of fiscal 2026 and the goodwill impairment and legal contingency charge in the first nine months of fiscal 2025, our effective tax rates in the first nine months of fiscal 2026 and 2025 were 27.4% and 27.6%, respectively.

Previous wording

For the second quarter and first half of fiscal 2026, the revenue decreases of 20.0% and 27.2%, respectively, compared to the prior-year periods primarily reflect 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% in the first half of fiscal 2026 compared to the same period last year. GSG revenue in the first half of fiscal 2026 includes approximately$35 million from a recent acquisition, that did not have comparable revenue for the same period last year.

Current wording

For the third quarter and first nine months of fiscal 2026, revenue decreased 15.6% and 23.5%, respectively, compared to the prior-year periods primarily due 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 6% in the first nine months of fiscal 2026 compared to the same period last year. GSG revenue in the first nine months of fiscal 2026 includes approximately $85 million from a recent acquisition, that did not have comparable revenue for the same period last year.

Previous wording

Operating income decreased primarily due to the aforementioned revenue decline. However, our operating margin, based on revenue, net of subcontractor costs, increased to 16.4% in the first half of fiscal 2026 compared to 14.2% 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.

Current wording

Operating income decreased primarily due to the aforementioned revenue decline. However, GSG operating margin, based on revenue, net of subcontractor costs, increased to 16.8% in the first nine months of fiscal 2026 compared to 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.

Previous wording

The revenue growth in second quarter and first half of fiscal 2026 compared to the same periods last year reflects increased activities for water utilities including digital water projects, primarily in the United Kingdom, partially offset by decreased infrastructure activities in Australia. The increases also include the aforementioned international revenue in the first half 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, our revenue increased approximately 2% in the first half of fiscal 2026 compared to fiscal 2025 first half.

Current wording

The revenue growth in the third quarter and first nine months of fiscal 2026, compared to the same periods last year, reflects increased activities for water utilities including digital water projects, primarily in the United Kingdom. The increases also include the aforementioned international revenue in the first nine months of fiscal 2026 from our fiscal 2025 acquisition, that did not have comparable revenue for the fiscal 2025 period. Excluding revenue from the acquisition, net of the aforementioned Norway disposition, CIG revenue increased approximately 3% in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Capital Requirements. At March 29, 2026, we had $223.6 million of cash and cash equivalents and access to an additional $884.3 million of borrowings available under our credit facility. During the first half of fiscal 2026, we generated $237.6 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.

Current wording

Capital Requirements. At June 28, 2026, we had$230.8 million of cash and cash equivalents and access to an additional $964.3 million of borrowings available under our credit facility. During the first nine months of fiscal 2026, we generated $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.

Previous wording

Operating Activities. For thefirst half of fiscal 2026, cash from operating activities increased $230.4 million compared to fiscal 2025 first half, 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.

Current wording

Operating Activities. For thefirst nine months of fiscal 2026, cash from operating activities increased $109.7 million compared to the first 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 fiscal 2025.

Previous wording

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

Current wording

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

Previous wording

On May 5, 2025, we entered into a Fourth Amended and Restated Credit Agreement (“Amended Credit Agreement”) with a total borrowing capacity of $1.5 billion that will mature in May 2030. The Amended Credit Agreement is a $1.1 billion senior secured, five-year facility that provides for a $250 million 3-year term loan facility (the “3Y Term Loan Facility”), a $250 million 5-year term loan facility (“the 5Y Term Loan Facility”), and a $600 million revolving credit facility (the “Amended Revolving Credit Facility”). In addition, the Amended Credit Agreement includes a $400 million accordion feature that allows us to increase the Amended Credit Agreement to $1.5 billion subject to lender approval. The 5Y Term Loan Facility will be subject to quarterly amortization of principal, based upon the annual percentages of the original stated amount thereof (Year 1: 0.0%, Year 2: 0.0%, Year 3: 5.0%, Year 4: 10.0%, Year 5: 10.0%), with the first payment being due at the end of the first full fiscal quarter following the second anniversary of the Amendment Effective Date. The Amended Credit Agreement provides for, among other things, (i) refinance indebtedness under our Third Amended Credit Agreement; (ii) finance open market repurchases of common stock, acquisitions, and cash dividends and distributions; and (iii) utilize the proceeds for working capital, capital expenditures and other general corporate purposes. The Amended Credit Agreement provides for a reduction in the pricing levels of the Consolidated Leverage Ratio and the removal of the Secured Overnight Financing Rate ("SOFR") credit spread adjustment. The Amended Revolving Credit Facility includes a $100 million sublimit for the issuance of standby letters of credit, a $20 million sublimit for swingline loans, and a $400 million sublimit for multi-currency borrowings and letters of credit.

Current wording

$250 million 5-year term loan facility (“the 5Y Term Loan Facility”), and a $600 million revolving credit facility (the “Amended Revolving Credit Facility”). In addition, the Amended Credit Agreement includes a $400 million accordion feature that allows us to increase the Amended Credit Agreement to $1.5 billion subject to lender approval. The 5Y Term Loan Facility will be subject to quarterly amortization of principal, based upon the annual percentages of the original stated amount thereof (Year 1: 0.0%, Year 2: 0.0%, Year 3: 5.0%, Year 4: 10.0%, Year 5: 10.0%), with the first payment being due at the end of the first full fiscal quarter following the second anniversary of the Amendment Effective Date. The Amended Credit Agreement provides for, among other things, (i) refinance indebtedness under our Third Amended Credit Agreement; (ii) finance open market repurchases of common stock, acquisitions, and cash dividends and distributions; and (iii) utilize the proceeds for working capital, capital expenditures and other general corporate purposes. The Amended Credit Agreement provides for a reduction in the pricing levels of the Consolidated Leverage Ratio and the removal of the Secured Overnight Financing Rate ("SOFR") credit spread adjustment. The Amended Revolving Credit Facility includes a $100 million sublimit for the issuance of standby letters of credit, a $20 million sublimit for swingline loans, and a $400 million sublimit for multi-currency borrowings and letters of credit.

Previous wording

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

Current wording

At June 28, 2026, we had $235 million in outstanding borrowings under the Amended Credit Agreement, which consisted of $200 million under the 5Y Term Loan Facility and $35 million borrowings under the Amended Revolving Credit Facility. For the first nine months of fiscal 2026, the weighted-average interest rate of the outstanding borrowings under the credit facilities was 5.01%. In addition, we had $0.7 million in standby letters of credit under the Amended Credit Agreement. At June 28, 2026, we had $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.

Previous wording

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 March 29, 2026, we were in compliance with these covenants with a consolidated leverage ratio of 1.32x and a consolidated interest coverage ratio of 18.08x.

Current wording

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 June 28, 2026, we were in compliance with these covenants with a consolidated leverage ratio of 1.24x and a consolidated interest coverage ratio of 18.98x.

Previous wording

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 March 29, 2026, there were no borrowings under these facilities, and the aggregate amount of standby letters of credit outstanding was $51.1 million. At March 29, 2026, we had no bank overdrafts related to our disbursement bank accounts.

Current wording

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 June 28, 2026, there were no borrowings under these facilities, and the aggregate amount of standby letters of credit outstanding was $48.2 million. At June 28, 2026, we had no bank overdrafts related to our disbursement bank accounts.

Previous wording

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 half of fiscal 2026, we repurchased and settled 2,894,539 shares with an average price of $34.55 per share for a total cost of $100.0 million in the open market. We repurchased and settled 5,165,715 shares with an average price of $33.87 per share for a total cost of $175.0 million in the open market in the first half of fiscal 2025. In the first half of fiscal 2026, we also paid $2.0 million of excise tax on stock repurchases imposed by the Inflation Reduction Act of 2022. At March 29, 2026, we had a remaining balance of $497.8 million under our stock repurchase programs.

Current wording

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 nine months of fiscal 2026, we repurchased and settled 6,391,799 shares with an average price of $31.29 per share for a total cost of $200.0 million in the open market. We repurchased and settled 5,933,085 shares with an average price of $33.71 per share for a total cost of $200.0 million in the open market in the first nine months of fiscal 2025. In the first nine 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 June 28, 2026, our $400 million stock repurchase program was fully executed and we had a remaining balance of $397.8 million under our $500 million stock repurchase program.

Previous wording

At March 29, 2026 and September 28, 2025, the liability for income taxes associated with uncertain tax positions was $54.9 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.

Current wording

At June 28, 2026 and September 28, 2025, the liabilities for income taxes associated with uncertain tax positions were $55.8 million and $52.8 million, respectively. These liabilities represent our current estimates of the additional tax liabilities that 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.

Previous wording

•Letters of credit and bank guarantees are used prim arily 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 March 29, 2026, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $51.1 million in standby letters of credit outstanding under our additional letter of credit facilities.

Current wording

•Letters of credit and bank guarantees are used prim arily 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 June 28, 2026, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $48.2 million in standby letters of credit outstanding under our additional letter of credit facilities.

Previous wording

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 March 29, 2026, we had $315 million in outstanding borrowings under the Amended Credit Agreement, which consisted of $200 million under the 5Y Term Loan Facility and $115 million borrowings under the Amended Revolving Credit Facility. For the first half of fiscal 2026, the weighted-average interest rate of the outstanding borrowings under the Amended Credit Agreement was 5.05%.

Current wording

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 June 28, 2026, we had $235 million in outstanding borrowings under the Amended Credit Agreement, which consisted of $200 million under the 5Y Term Loan Facility and $35 million borrowings under the Amended Revolving Credit Facility. For the first nine months of fiscal 2026, the weighted-average interest rate of the outstanding borrowings under the Amended Credit Agreement was 5.01%.

Previous wording

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 half of fiscal 2026, we reported $1.2 million of foreign currency loss compared to a loss of $0.7 million in the prior year period.

Current wording

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 nine months of fiscal 2026, we reported $1.5 million of foreign currency loss compared to a loss of $2.3 million in the same period last fiscal year.

Previous wording

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 halves of fiscal 2026 and 2025, 43.9% and 35.4% of our consolidated revenue, respectively, was generated by our international business. For the first half of fiscal 2026, the effect of foreign exchange rate translation on our consolidated balance sheet was an increase in equity of $1.4 million compared to a decrease of $74.3 million in the prior-year period. These amounts were recognized as adjustments to equity through other comprehensive income.

Current wording

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 nine months of fiscal 2026 and 2025, 43.5% and 36.0% of our consolidated revenue, respectively, was generated by our international business. For the first nine months of fiscal 2026, the effect of foreign exchange rate translation on our consolidated balance sheet was a decrease in equity of $9.2 million compared to an increase of $13.8 million in the prior-year period. These amounts were recognized as adjustments to equity through other comprehensive income.