What changed in this filing

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Item 9A. Controls and Procedures

2025-02-28 compared with 2024-02-28 · 356 added, 315 removed, 894 unchanged (43% of the section changed)

6 unchanged sentences

Based on the assessment, management has concluded that its internal control over financial reporting was effective as of December 31, 2024.

As permitted by the SEC rules, management’s assessment and conclusion on the effectiveness of the Company’s internal controls over financial reporting as of December 31, 2024, excludes an assessment of the internal control over financial reporting of AEG, acquired on December 31, 2024.

AEG represents total assets, excluding goodwill and intangibles related to the acquisitions, of 0.7% of the Company’s consolidated total assets as of December 31, 2024.

AEG did not contribute any revenue for the year ended December 31, 2024.

The Company’s independent registered public accounting firm, Grant Thornton LLP , has issued an audit report on the Company’s internal control over financial reporting, which appears herein.

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OTHE R INFORMATION

On December 7, 2024 , James Morgan , our Chief Operating Officer , adopted a trading plan intended to satisfy the affirmative defense conditions under Rule 10b5-1(c) of the Exchange Act.

The plan is for the sale of up to 10,000 shares and terminates on the earlier of the date all shares covered by the plan have been sold and April 1, 2026.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OF FICERS AND CORPORATE GOVERNANCE

The information required by this item will be included in our Proxy Statement for the 2024 Annual Meeting of Stockholders (the “2024 Proxy Statement”) and is incorporated herein by reference.

Insider Information and Securities Trading

We have adopted an Insider Information and Securities Trading Policy and procedures governing the purchase, sale and/or other disposition of our securities by directors, officers, and employees, or by us, that we believe are reasonably designed to promote compliance with insider trading laws, rules, and regulations, and listing standards applicable to us.

A copy of our policy is filed with this Annual Report on Form 10-K as Exhibit 19.0.

Other information required by this item will be included in our Proxy Statement for the 2025 Annual Meeting of Stockholders (the “2025 Proxy Statement”) and is incorporated herein by reference.

EXECUTI VE COMPENSATION

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(2) Financial Statement Schedules

The financial statement schedules have been omitted since the required information is not applicable or included in the consolidated financial statements and accompanying notes included in this Form 10-K.

The financial statement schedule of the Registrant and its subsidiaries for fiscal years 2024, 2023, and 2022 required by Item 15(a) (Schedule II, Valuation and Qualifying Accounts) is included in Item 8 of this Annual Report on Form 10-K:

Schedule II - Valuation and Qualifying Accounts

Schedules not filed have been omitted because they are not applicable, are not required or the information required to be set forth therein is included in the financial statements or notes thereto.

The following exhibits are included with this report or incorporated herein by reference:

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Form of Restricted Stock Unit Award under the 2018 Omnibus Incentive Plan.

(Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K, filed June 1, 2018).

(Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, filed March 13, 2024).

Form of Non-Employee Restricted Stock Unit Award under the 2018 Omnibus Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, filed June 27, 2018).

Form of CEO Performance Share Award Agreement (Incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K, filed June 1, 2018).

Form of COO Performance Share Award Agreement (Incorporated by reference to Exhibit 10.5 to the Company’s Form 8-K, filed June 1, 2018).

Form of CEO Performance Share Award Agreement (Incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K, filed March 13, 2024).

Form of General Performance Share Award Agreement under the 2018 Omnibus Incentive Plan.

(Incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K, filed June 1, 2018).

(Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K, filed March 13, 2024).

Form of Cash-Settled Restricted Stock Unit Award under the 2018 Omnibus Incentive Plan.

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First Amendment to Amended and Restated Credit Agreement, dated May 17, 2023 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, filed May 19, 2023).

Second Amendment to Amended and Restated Credit Agreement, dated November 6, 2023.

Second Amendment to Amended and Restated Credit Agreement, dated November 6, 2023 (Incorporated by reference to Exhibit 10.17 to the Company's Form 10-K dated February 28, 2024).

Lease Agreement between ICF Consulting Group, Inc.

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and the Company (Incorporated by reference to Exhibit 10.1 to the Company's Form 8-K, filed December 4, 2023).

Insider Trading Policy.

Subsidiaries of the Registrant.*

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Certifications of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

Compensation Recovery Policy.*

Compensation Recovery Policy (Incorporated by reference to Exhibit 97.0 to the Company's Form 10-K, filed February 28, 2024).

The following materials from the ICF International, Inc.

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February 28, 2025

/s/ CHERYL W.

February 28, 2024

/s/ MICHAEL J.

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February 28, 2025

REPORT OF INDEPENDENT REGIST ERED PUBLIC ACCOUNTING FIRM

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

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We have audited the accompanying consolidated balance sheets of ICF International, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule included under Item 15(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 28, 2025 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition – estimates-at-completion

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Under the cost input method, revenue is recognized based on the proportion of total costs incurred to total estimated costs-at-completion (“EAC”).

A performance obligation’s EAC includes all direct costs such as level of effort from internal staff and/or subcontractors and costs of materials needed to complete the tasks.

The accounting for these contracts involves judgement, particularly as it relates to the process of estimating total costs to satisfy the performance obligation.

We identified the estimate of total costs to satisfy the performance obligations for contracts with revenue recognized using the cost input method as a critical audit matter.

The principal considerations for our determination that the use of estimates-at-completion in recognizing revenue is a critical audit matter are the significant management judgments involved in the initial creation and subsequent updates to the Company’s EAC and related profit recognized, which required challenging and subjective auditor judgment in the execution of our procedures.

Our audit procedures in response to this matter included the following, among others:

A performance obligation’s EAC includes all direct costs such as level of effort from internal staff and/or subcontractors and costs of materials, if any, needed to complete the tasks.

The accounting for these contracts involves judgment, particularly as it relates to the process of estimating total costs to satisfy performance obligations.

We identified the estimate of total costs to satisfy the performance obligation for contracts with revenue recognized using the cost-input method as a critical audit matter.

The principal considerations for our determination that the total estimated costs to complete for such contracts is a critical audit matter are the significant management judgments involved in the initial creation and subsequent updates to the Company’s EAC and related estimated profit to be recognized, if any, which required challenging and subjective auditor judgment in the execution of our procedures.

Our audit procedures in response to the matter included the following, among others:

• Testing the design and operating effectiveness of controls related to management’s review of estimate-at-completion analyses and the significant assumptions underlying the estimated total costs to complete.

• Testing management’s process for developing, revising and applying EAC, evaluating key inputs and assumptions by comparing them to underlying support, including contract documents, rate of cost incurred to date, subcontractor agreements, customer correspondence, documentation related to contractual milestones or other documentation, as applicable, that supports estimated costs

• Performing a lookback analysis of certain contracts completed during the year ended December 31, 2023 and compared the final estimated costs-at-completion to the estimate of costs throughout the contract life cycle to assess the Company’s ability to develop reasonable estimates

• Testing management’s process for developing, revising, and calculating EAC, evaluating key inputs and assumptions by comparing them to relevant evidence, including contract documents, rate of cost incurred to date, subcontractor agreements, customer correspondence, documentation related to contractual milestones or other documentation, relevant to estimated costs to be incurred.

• Performing a lookback analysis of certain contracts completed during the year ended December 31, 2024 and comparing the EAC to the estimate of costs throughout the contract life cycle to assess the Company’s ability to develop reasonable estimates.

/s/ GRANT THORNTON LLP

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We believe that our audit provides a reasonable basis for our opinion.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Applied Energy Group, Inc., a wholly-owned subsidiary, whose financial statements reflect total assets constituting 0.7 percent, of the related consolidated financial statement amounts as of and for the year ended December 31, 2024.

As indicated in Management’s Report, Applied Energy Group, Inc.

was acquired during 2024.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Applied Energy Group, Inc.

Definition and limitations of internal control over financial reporting

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/s/ GRANT THORNTON LLP

Arlington, VA

Arlington, Virginia

February 28, 2025

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CONSOLIDATED B ALANCE SHEETS

(in thousands, except share and per share amounts)

(in thousands, except share amounts)

December 31, 2024

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Operating lease - right-of-use assets

Deferred tax assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Depreciation and amortization

Facilities consolidation reserve

Amortization of debt issuance costs

Impairment of long-lived assets

Gain on divestiture of a business

Other adjustments, net

Other operating, net

Changes in operating assets and liabilities, net of the effect of acquisitions:

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Cash Flows from Investing Activities

Capital expenditures for property and equipment and capitalized software

Payments for purchase of property and equipment and capitalized software

Payments for business acquisitions, net of cash acquired

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Proceeds from divestiture of a business

Other investing, net

Net Cash Used in Investing Activities

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Payment of restricted contract funds

Debt issuance costs

Payments of principal portion of finance leases

Proceeds from exercise of options

Dividends paid

Net payments for stockholder issuances and buybacks

Payments on business acquisition liabilities

Net payments for stockholder issuances and share repurchases

Other financing, net

Net Cash (Used in) Provided by Financing Activities

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash

Decrease in Cash, Cash Equivalents, and Restricted Cash

Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash

Cash, Cash Equivalents, and Restricted Cash, Beginning of Period

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Non-cash investing and financing transactions:

Share repurchases transacted but not settled and paid

Tenant improvements funded by lessor

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Intercompany transactions and balances have been eliminated.

Certain amounts reported in the previous year's consolidated statements of cash flows have been combined to conform to the current year presentation.

Nature of Operations

The Company provides professional services and technology-based solutions, including management, technology, and policy consulting and implementation services, in the areas of energy, environment, infrastructure, and disaster recovery;

The Company primarily provides professional services and technology-based solutions, including management, technology, and policy consulting and implementation services, in the areas of energy, environment, infrastructure, and disaster recovery;

health and social programs;

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The Company, incorporated in Delaware, is headquartered in Reston, Virginia.

It maintains additional offices throughout the world, including 55 offices in the U.S.

territories and 15 offices in key markets outside the U.S., including offices in the United Kingdom (“U.K.”), Belgium, India, and Canada.

It maintains additional offices throughout the world, including more than 55 offices in the U.S.

territories and 15 offices in key markets outside the U.S., including offices in the United Kingdom (“U.K.”), Belgium, Spain, India, and Canada.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.

Areas of the consolidated financial statements where estimates may have the most significant effect include contractual and regulatory reserves, valuation and lives of tangible and intangible assets, contingent consideration related to business acquisitions and divestitures, impairment of goodwill and long-lived assets, accrued liabilities, revenue recognition (including estimates of variable considerations in determining the total contract price and allocation of performance obligations), the remaining costs to complete fixed-price contracts, bonus and other incentive compensation, stock-based compensation, reserves for tax benefits and valuation allowances on deferred tax assets, provisions for income taxes, collectability of receivables, and loss accruals for litigation.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.

Areas of the consolidated financial statements where estimates may have the most significant effect include contractual and regulatory reserves, valuation and lives of tangible and intangible assets, contingent consideration related to business acquisitions and divestitures, impairment of long-lived assets, accrued liabilities, revenue recognition (including estimates of variable considerations in determining the total contract price and allocation of performance obligations), the remaining costs to complete fixed-price contracts, bonus and other incentive compensation, stock-based compensation, reserves for tax benefits and valuation allowances on deferred tax assets, provisions for income taxes, collectability of receivables, and loss accruals for litigation.

Actual results experienced by the Company may differ from management’s estimates.

Revenue Recognition

The Company primarily provides services and technology-based solutions for clients that operate in a variety of markets and the solutions may span the entire program life cycle, from initial research and analysis to the design and implementation of solutions.

The Company enters into agreements with clients that create enforceable rights and obligations and for which it is probable that the Company will collect the consideration to which it will be entitled as services and solutions are transferred to the client.

Except in certain narrowly defined situations, the Company’s agreements with its clients are written and revenue is generally not recognized on oral or implied arrangements.

The Company recognizes revenue based on the consideration specified in the applicable agreement and excludes from revenue amounts collected on behalf of third parties.

The Company recognizes revenue based on the consideration specified in the applicable agreement and excludes payments to customers and amounts collected on behalf of third parties.

Accordingly, sales and similar taxes which are collected on behalf of third parties are excluded from the transaction price.

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For these contracts, the Company determines the revenue earned using contract hours worked at negotiated bill rates as the Company delivers the contractually required workforce.

For cost-based contracts, the Company uses the right-to-invoice practical expedient to recognize revenue based on the amount to which the Company has a contractual right to invoice.

For certain cost-based contracts that meet the criteria for the right-to-invoice practical expedient to be used, the Company recognizes revenue based on the amount to which the Company has a contractual right to invoice which is typically costs incurred plus contractually-stipulated fixed fees.

Cost-based contracts may include variable consideration which is allocated to the distinct periods in which they relate to and recognized in that period.

For series-services performance obligations, the Company measures progress using either a cost input measure, a time-elapsed output measure, or the right to invoice practical expedient.

Award or incentive fees are allocated to the distinct periods in which they relate to and recognized in that period.

For certain fixed-price contracts, the Company uses the percentage-of-completion method to estimate the amount of revenue, based on the ratio of actual costs incurred to total estimated costs, provided that costs incurred (an input method) represents a reasonable measure of progress towards the satisfaction of a performance obligation and transfer of control to the customer.

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The Company expenses these costs when incurred if the amortization period is one year or less.

Unfulfilled performance obligations represent amounts expected to be earned on non-cancellable contracts or those that the are cancellable but the Company has determined to have substantive termination penalties, and do not include the value of negotiated, unexercised contract options, which are classified as marketing offers.

Unfulfilled performance obligations represent amounts expected to be earned on non-cancellable contracts or those that are cancellable, but the Company has determined to have substantive termination penalties, and do not include the value of negotiated, unexercised contract options, which are classified as marketing offers.

Indefinite delivery/indefinite quantity and similar arrangements provide a framework for the client to issue specific tasks, delivery or purchase orders in the future and these arrangements are considered marketing offers until a specific order is executed.

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Restricted Cash

The Company has restricted cash representing amounts held in escrow accounts and/or not readily available due to contractual restrictions.

Restricted cash represents cash that is restricted as to usage due to contractual restrictions.

Contract Receivables, Net

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The amounts due are stated at their net realizable value.

The Company estimates an allowance for estimated credit loss to reflect the amount of receivables that will not be collected.

The Company estimates an allowance for expected credit loss to reflect the amount of receivables that will not be collected.

The Company considers a number of factors in estimating the amount of the allowance, including knowledge of a client’s financial condition, its historical collection experience, and other factors relevant to assessing the collectability of the receivables.

The Company writes off specific contract receivables when such amounts are determined to be uncollectible.

The Company writes off contract receivables when such amounts are determined to be uncollectible.

Property and Equipment

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Goodwill and any intangible assets acquired in a business combination that are deemed to have an indefinite useful life are not amortized, but instead are reviewed for impairment annually, or more frequently if impairment indicators arise.

Intangible assets with estimable useful lives are amortized over such lives and reviewed for impairment if impairment indicators arise.

The Company performs its annual goodwill impairment test as of October 1 of each year.

As its business is highly integrated and all of its components have similar economic characteristics, the Company has concluded it has one aggregated reporting unit at the consolidated entity level which it perform the assessment at.

The Company have the option to perform a qualitative assessment that determines if it is more likely than not that the estimated fair value of goodwill is greater than its carrying value and, if so, the Company may conclude that no impairment exists.

If the Company concludes that an impairment exist, a quantitative test is performed by comparing the reporting unit’s fair value to the carrying amount and recognizing the difference as an impairment loss.

Long-Lived Assets

The Company has the option to perform a qualitative assessment that determines if it is more likely than not that the estimated fair value of goodwill is greater than its carrying value and, if so, the Company may conclude that there are no indicators of impairment.

If the Company concludes that an indicator exists, a quantitative test is performed by comparing the reporting unit’s fair value to the carrying amount and recognizing the difference as an impairment loss.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets, including property and equipment, operating lease right-of-use (“ROU”) assets, and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the long-lived asset group may not be fully recoverable.

If the total of the expected undiscounted future net cash flows is less than the carrying amount of the long-lived asset group being evaluated, a loss is recognized for any excess of the carrying amount over the fair value of the asset group.

During the years ended December 31, 2023, 2022, and 2021 , the Company recognized impairment losses of $ 6.8 million, $ 8.4 million, and $ 7.9 million, respectively, related to operating facility lease right-of-use assets and leasehold improvements.

During the year ended December 31, 2023, the Company recognized an impairment loss of $ 0.9 million related to an amortizable customer-related intangible asset from a prior acquisition.

During the years ended December 31, 2024, 2023, and 2022 , the Company recognized impairment losses of $ 3.6 million, $ 6.8 million, and $ 8.4 million, respectively, related to operating facility lease right-of-use assets and leasehold improvements that it no longer used in ongoing operations.

The impairment losses were included in indirect and selling expenses on the Company’s consolidated statements of comprehensive income.

The Company leases facilities and property and equipment.

The Company determines if an arrangement is a lease at its inception and recognizes a right-of-use asset and lease obligation for all leases greater than twelve months based on the present value of the future minimum lease payments as of the commencement date, excluding any lease incentives and initial costs incurred to obtain the lease.

The Company determines if an arrangement is a lease at its inception and recognizes a right-of-use asset and obligation for all leases greater than twelve months based on the present value of the future minimum lease payments as of the commencement date, excluding any lease incentives and initial costs incurred to obtain the lease.

Since most lease agreements do not provide an implicit rate, the Company uses its incremental borrowing rate as of the commencement date, based on publicly available yields adjusted for company-specific considerations and terms, in estimating the present value of future payments.

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Operating leases are included in operating lease right-of-use assets and operating lease liabilities (current and non-current) and finance leases are included in property and equipment, net and finance lease liabilities (current and non-current) on the consolidated balance sheets.

Capitalized Software

The Company capitalizes certain costs to develop enhancements and upgrades to internal-use software that are incurred subsequent to the preliminary project stage.

Amortization expense is recorded on a straight-line basis over the expected economic life of the software, typically lasting three to five years .

As of December 31, 2023, and 2022, capitalized software, net of accumulated amortization, totaled $ 12.8 million and $ 19.0 million , respectively, and is included as part of “other assets” on the consolidated balance sheets.

Capitalized Software and Costs of Cloud Computing Arrangements

The Company capitalizes certain costs to develop, enhance, and upgrade internal-use software.

Capitalized costs include external direct costs and payroll costs for employees directly associated with such activities.

These costs are amortization on a straight-line basis over the expected economic life of the software, typically lasting three to five years .

As of December 31, 2024, and 2023, capitalized software, net of accumulated amortization, totaled $ 21.8 million and $ 12.8 million , respectively.

The Company capitalizes costs related to the implementation costs of cloud computing arrangements that are service contracts.

These costs are amortized over the term of the hosting arrangement.

As of December 31, 2024 and 2023, capitalized costs, net of accumulated amortization, totaled $ 2.8 million and $ 2.6 million , respectively.

The amounts are included as part of other assets on the consolidated balance sheets.

Stock-Based Compensation

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The Company recognizes expense for performance-based share awards (“PSAs”), which have both performance and service conditions, on a straight-line basis over the three-year performance period.

Non-employee director awards are granted annually for Board-related services and therefore expensed over the service period.

Non-employee director awards are granted annually for Board-related services and therefore expensed over the service period of one year .

Stock-based compensation expense is based on the estimated fair value of the instruments on the grant date and the estimated number of shares the Company ultimately expects will vest.

The Company estimates the rate of future forfeitures based on factors which include the historical forfeiture experience for each applicable employee class.

The Company estimates the rate of future forfeitures based on factors which include the historical forfeiture experience from the previous 10 years for each applicable employee class.

In addition, the estimation of PSAs that will ultimately vest requires judgment based on the performance and market conditions that will be achieved over the performance period.

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The fair value of PSAs is estimated using a Monte Carlo simulation model.

CSRSUs are settled only in cash payments.

The cash payment is based on the fair value of the Company’s stock price at the vesting date, calculated by multiplying the number of CSRSUs vested by the Company’s closing stock price on the vesting date, subject to a maximum payment cap and a minimum payment floor.

The Company treats these awards as liability-classified awards, and, therefore, accounts for them at fair value estimated based on the closing price of the Company’s stock at the reporting date.

CSRSUs are settled only in cash payments based on the fair value of the Company’s stock price at the vesting date, calculated by multiplying the number of CSRSUs vested by the Company’s closing stock price on the vesting date, subject to a maximum payment cap and a minimum payment floor.

The Company treats these awards as liability-classified awards, and, therefore, accounts for them based on the closing price of the Company’s stock at the reporting date.

Derivative Instruments

Derivative instruments include interest rate swaps, foreign currency hedges, and forward contracts.

Derivative instruments designated as cash flow hedges are recorded on the consolidated balance sheets at fair value as of the reporting date and reclassified to earnings in the period that the hedged instruments affect earnings, and the effective portion of the hedge is recorded in other comprehensive income (loss) (“AOCI”), net of tax, on the consolidated statements of comprehensive income.

Derivative instruments designated as cash flow hedges are recorded on the consolidated balance sheets at fair value as of the reporting date and reclassified to earnings (to the same category as the item being hedged) in the period that the hedged instruments affect earnings, and the effective portion of the hedge is recorded in other comprehensive income (loss) (“AOCI”), net of tax, on the consolidated statements of comprehensive income.

Management reviews the effectiveness of the hedges on a quarterly basis.

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Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

The Company evaluates its ability to benefit from all deferred tax assets and establishes valuation allowances for amounts it believes will more likely than not be unrealizable.

The Company evaluates its ability to benefit from all deferred tax assets and establishes valuation allowances for amounts it believes will more likely than not be realizable.

For uncertain tax positions, the Company uses a more-likely-than-not recognition threshold based on the technical merits of the income tax position taken.

Income tax positions that meet the more-likely-than-not recognition threshold are measured in order to determine the tax benefit recognized in the financial statements.

Income tax positions that do not meet the more-likely-than-not recognition threshold are measured in order to determine the tax benefit recognized in the financial statements.

Penalties, if probable and reasonably estimable, and interest expense related to uncertain tax positions are not recognized as a component of income tax expense but recorded separately in indirect expenses and interest expense, respectively.

Treasury Shares

Treasury shares are accounted for under the cost method.

Other Comprehensive Income (Loss)

Other comprehensive income (loss) includes foreign currency translation adjustments due to fluctuation in foreign currency exchange rates, the gain on the sale of an interest rate hedge agreement designated as a cash flow hedge, and the changes in fair value of interest rate agreements designated as cash flow hedges, net of taxes.

The financial positions and results of operations of the Company’s foreign subsidiaries are based on the local currency as the functional currency and are translated to U.S.

Repurchased shares are accounted for as treasury stock under the cost method.

Foreign Currency

The financial positions and results of operations of the Company’s foreign subsidiaries, for which the functional currency is not the U.S.

dollar, are translated into U.S.

dollars for financial reporting purposes.

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Translation adjustments are reported in accumulated other comprehensive loss included in stockholders’ equity in the Company’s consolidated balance sheets.

Other Comprehensive Income (Loss)

Other comprehensive income (loss) includes foreign currency translation adjustments, the changes in fair value of interest rate agreements designated as cash flow hedges, net of taxes, and the gain on the sale of an interest rate hedge agreement designated as a cash flow hedge.

Acquisition-Related Costs

Costs related to acquisitions include professional fees for legal, financial, and other advisory services and are expensed in the period that they are incurred.

Segment, Customer, and Geographic Information

The Company operates in one segment based on the consolidated information used by its chief operating decision-maker, currently the Chief Executive Officer, in evaluating the financial performance of its business and allocating resources.

This single segment represents the Company’s core business, which is providing professional services.

Although the Company disaggregates its revenue by client markets and client types, the Company does not manage its business or allocate resources based on client market or type.

No customer accounted for 10% or more of the Company’s revenue during the years ended 2023, 2022, and 2021.

The Company provides services to U.S.

and international clients, and revenue is attributed to a particular geographic area based on the administrative location of the client that awarded the contract.

The Company’s revenue generated from international clients as a percentage of total revenue was approximately 7 % , 8 % , and 11 % for the years 2023, 2022, and 2021, respectively.

At December 31, 2023 and 2022, long-lived assets held internationally were 6 % and 7 % of total long-lived assets, respectively.

Foreign currency expense, net of impact of hedges, was $ 1.2 million, $ 0.2 million, and $ 0.6 million, for the years ended December 31, 2023 , 2022 and 2021, respectively.

The Company measures and reports certain financial assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures.

Business Combinations

Acquisitions that meet the definition of a business in accordance with ASC 805, Business Combinations, are recorded using the acquisition method of accounting.

Except for contract assets and contract liabilities, the Company recognizes and measures identifiable assets acquired, liabilities assumed, and any non-controlling interest as of the acquisition date at fair value.

Contract assets and contract liabilities from acquired contracts are measured as if the Company had originated the contracts.

The valuation of intangible assets is determined by using an approach:

market, income, or cost approach.

The excess, if any, of total consideration transferred in a business combination over the fair value of identifiable assets acquired, liabilities assumed and any non-controlling interest is recognized as goodwill.

Direct costs exclude depreciation and amortization and amortization of intangible assets, which are presented separately on the consolidated statements of comprehensive income.

Indirect and Selling Expense

Indirect and selling expenses exclude depreciation and amortization, and amortization of intangible assets, which are presented separately on the consolidated statements of comprehensive income.

The Company measures and reports certain financial assets and liabilities at fair value in accordance with the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 280”).

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.

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The carrying value of the Company’s long-term debt approximates the estimated fair value for debt with similar terms, interest rates, and remaining maturities currently available to companies with similar credit ratings (Level 2).

Risks and Uncertainties

Concentration of Credit Risks

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, derivative financial instruments, and contract receivables.

The Company’s domestic bank accounts are insured up to $ 250,000 by the Federal Deposit Insurance Corporation.

As of December 31, 2023, the Company had $ 0.3 million in its accounts that exceeded the insured limit.

As of December 31, 2024 and 2023, the Company had $ 9.3 million and $ 0.3 million , respectively, of cash in its accounts that exceeded the insured limit.

The majority of the Company’s cash transactions are processed through one U.S.

commercial bank.

Cash held domestically in excess of daily requirements is primarily used to reduce any amounts outstanding under the Company’s Credit Facility.

As of December 31, 2024 and 2023, the Company held approximately $ 4.6 million and $ 8.5 million , respectively, of cash and restricted cash in foreign bank accounts.

The Company enters into derivative financial instruments with financial institutions that meet certain credit guidelines and limits its risks by continuously monitoring the credit rating of the institutions.

The Company enters into derivative financial instruments with financial institutions that meet certain credit guidelines and limit its risks by continuously monitoring the credit rating of the institutions.

The Company’s receivables consist principally of amounts due from agencies and departments of the federal government, state and local governments, and international governments, as well as from commercial organizations.

The credit risk, with respect to federal and other government clients, is limited due to the creditworthiness of the respective governmental entity.

Amounts due for work performed as a subcontractor also represent limited credit risk when the client is performing as the prime contractor on a government contract due to the ultimate creditworthiness of the end client.

Receivables from commercial clients generally pose a greater credit risk, and, as a result, are subject to ongoing monitoring.

The Company extends credit in the normal course of operations and does not require collateral from its clients.

The Company’s contracts with the federal government are subject to audit by agencies and departments of the federal government.

Such audits determine, among other things, whether adjustments to invoices previously rendered are required under regulations as well as the underlying terms of each respective contract.

Recent Accounting Pronouncements

Accounting Pronouncements Adopted

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

The standard is intended to provide temporary optional expedients and exceptions to the U.S.

GAAP guidance on contract modifications and hedge accounting to ease accounting and financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates.

The provisions of this ASU are elective and apply to all entities, subject to meeting certain criteria, that have debt or hedging contracts, among other contracts, that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

Entities can elect to not apply certain modification accounting requirements to contracts affected by reference rate reform if certain criteria are met.

Also, entities can elect various optional expedients that would allow them to continue to apply hedge accounting for hedging relationships affected by reference rate reform if certain criteria are met.

This guidance was effective beginning on March 12, 2020 and entities may elect to apply the amendments prospectively through December 31, 2022, the sunset date.

In December 2022, the FASB issued ASU 2022-06 Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 which extended the sunset date from December 31, 2022 to December 31, 2024.

The Company completed its adoption of the provisions of ASU 2020-04 during the second quarter of 2023 upon amendment of its last interest rate swap from LIBOR-based to SOFR-based pricing.

The adoption did not have a material impact on the Company's consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

Segment Reporting

In November 2023, the FASB issued ASU 2023-07:

Improvements to Reportable Segment Disclosures, that required additional segment disclosures for public entities currently required under the Segment Reporting (Topic 280) of the Accounting Standards Codification (“ASC”).

ASU 2023-07 enhances the current segment reporting disclosures of Topic 280 by requiring significant segment expenses that are regularly provided to the Chief Operating Decision Maker (the “CODM”), the amount and description of other segment items, and interim disclosures of reportable segment's profit or loss and assets.

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07:

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), that required additional disclosures for public entities currently required under the ASC.

While it does not change how a public entity identifies its operating segments, ASU 2023-07 enhances the current segment reporting disclosures of Topic 280 by requiring significant segment expenses that are regularly provided to the Chief Operating Decision Maker (the “CODM”), the amount and description of other segment items, and interim disclosures of reportable segment’s profit or loss and assets.

ASU 2023-07 also requires public entities that have a single reportable segment to provide all the disclosures required in Topic 280, as amended.

The ASU is effective for the Company for the 2024 fiscal year and interim periods within the 2025 fiscal year on a retrospective basis, with early adoption permitted.

The Company is currently evaluating the impact of the adoption of ASU 2023-07 but does not expect the adoption to have a material impact, if any, on the consolidated financial statements.

The Company completed its adoption of the provisions of ASU 2023-07 during the fourth quarter of 2024, see Note 22 – Segment Information and Geographic Data.

Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes:

Improvements to Income Tax Disclosures, that require greater disaggregation of income tax rate and amounts paid by entities.

Improvements to Income Tax Disclosures (“ASU 2023-09”), that require greater disaggregation of income tax rate and amounts paid by entities.

ASU 2023-09 specifically requires all entities to disclose, on an annual basis, disaggregated domestic and foreign pre-tax income or loss from continuing operations and the disaggregated income tax expense or benefit by federal, state, and foreign components, and a tabular rate reconciliation, using both percentages and reporting currency amounts, of eight specific categories as well as any individual reconciling items that are equal to or greater than 5% of a threshold computed by multiplying pretax income or loss from continuing operations by the applicable federal rate.

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The Company is currently evaluating the impact of the adoption of ASU 2023-09 but does not expect the adoption to have a material impact, if any, on the consolidated financial statements.

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures

In November 2024, the FASB issued ASU 2024-03:

Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires additional disaggregation of certain costs and expenses.

ASU 2024-03 specifically requires all public entities to disclose within a tabular format the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities in each relevant expense caption as well as certain amounts that are already required to be disclosed under current U.S.

ASU 2024-03 also requires public entities to disclose a qualitative description of the composition of any amounts in relevant expense captions that are not separately disaggregated and the amount and definition of the entity’s selling expenses.

ASU 2024-03 is effective for the Company for the 2027 fiscal year and interim periods within the 2028 fiscal year, with early adoption permitted.

The amendments may be adopted on a prospective or retrospective basis.

The Company is currently evaluating the impact of the adoption of ASU 2024-03 but does not expect the adoption to have a material impact, if any, on the consolidated financial statements.

NOTE 3 - RESTRICTED CASH

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Restricted cash

Total cash, cash equivalents, and restricted cash shown in the consolidated statement of cash flows

(1) Under a contract with a customer that commenced in the fourth quarter of fiscal year 2020, the Company received advance payments to be used to pay providers of services to the customer, a separate third party.

The advanced payments are treated as restricted cash - current as the Company is required under the contract to distribute the advanced funds to the third-party providers of services or return the advanced funds to the customer.

Because the Company receives the advance payments from the customer, which must be refunded to the customer or remitted to a third party, the cash receipts are treated as liabilities rather than receipts for the provision of goods or services.

Therefore, these cash receipts are presented in the consolidated statements of cash flows as financing cash inflows, “Receipt of restricted contract funds,” with the subsequent payments classified as financing cash outflows, “Payment of restricted contract funds.”

Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows

NOTE 4 - CONTRACT RECEIVABLES, NET

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Contract receivables, net

On December 23, 2022, the Company entered into a Master Receivables Purchase Agreement (the “MRPA”) with MUFG Bank, Ltd.

(“MUFG”) for the sale from time to time of certain eligible billed receivables.

The receivables are sold without recourse and the Company does not retain any ongoing financial interest in the transferred receivables other than providing servicing activities.

The Company accounts for the transfers as sales under ASC 860, Transfers and Servicing, derecognizes the receivables from its consolidated balance sheets at the date of the sale, and includes the cash received from MUFG as part of cash flows from operating activities on its consolidated statement of cash flows.

During the years ended December 31, 2023 and 2022, the Company received $ 309.4 million and $ 10.0 million under the MRPA, of which $ 28.7 million and $ 6.2 million , respectively, was collected but not remitted to MUFG.

For the years ended December 31, 2023 and 2022, the discount on the sale of receivables under the MRPA totaled $ 1.1 million and less than $ 0.1 million, respectively, and is included as part of “indirect and selling expenses” on the consolidated statements of comprehensive income.

The Company sells certain billed contract receivables in accordance with its Master Receivables Purchase Agreement (the “MRPA”) with MUFG Bank, Ltd.

The contract receivables that are sold without recourse and where the Company does not retain any ongoing financial interest in the transferred receivables, other than providing servicing activities, are accounted for as sales under ASC 860, Transfers and Servicing (“ASC 860”).

Consequently, these contract receivables are derecognized from the Company’s consolidated balance sheets at the date of the sale, and the cash received from MUFG is presented as part of cash flows from operating activities.

The following is a reconciliation of billed contract receivables sold to MUFG that were eligible and accounted for as sales under ASC 860, including billed contract receivables sold to MUFG and collected from customers on behalf of MUFG during the twelve months ended December 31, 2024 and 2023, and the balance of billed contract receivables not yet collected from customers as of December 31, 2024 and 2023, respectively:

As of and for the Year Ended

December 31, 2024

December 31, 2023

Beginning balance, billed contract receivables sold and not yet collected (1)

Billed contract receivables sold during the period (2)

Collections from customers during the period (2)

Ending balance, billed contract receivables sold and not yet collected (3)

(1) The beginning balances represent billed contract receivables that were previously sold and derecognized by the Company but have not yet been collected from customers as of January 1, 2024 and 2023 , respectively.

(2) For the twelve months ended December 31, 2024 and 2023, the Company recorded net inflows of $ 4.7 million and $ 17.5 million , respectively, in its cash flows from operating activities from the sale of billed contract receivables.

(3) The ending balances represent billed contract receivables that were sold and derecognized by the Company but have not yet been collected from customers as of December 31, 2024 and 2023 , respectively.

The following is a reconciliation of cash collections from customers of billed contract receivables previously sold to MUFG that were eligible and accounted for as sales under ASC 860, including collections from customers on behalf of MUFG of previously sold billed contract receivables and remittances of cash collections to MUFG during the twelve months ended December 31, 2024 and 2023, and the balance of cash collected but not yet remitted to MUFG as of December 31, 2024 and 2023, respectively:

As of and for the Year Ended

December 31, 2024

December 31, 2023

Beginning balance, cash collected but not yet remitted to MUFG (1)

Collections from customers during the period (2)

Remittances to MUFG during the period (2)

Ending balance, cash collected but not yet remitted to MUFG (3)

(1) The beginning balances represent cash collected from customers on behalf of MUFG for billed contract receivables that were previously sold and derecognized by the Company but have not yet been remitted to MUFG as of January 1, 2024 and 2023 , respectively.

(2) For the twelve months ended December 31, 2024 and 2023, the Company recorded net inflows of $ 1.5 million and $ 15.6 million , respectively, in its cash flows from operating activities from the collection of billed contract receivables that were sold but not yet remitted to MUFG.

(3) The ending balances are included as part of “Accrued expenses and other current liabilities” on the Company’s consolidated balance sheets.

The Company services the receivables sold by collecting cash and remitting it to MUFG.

The related servicing fee received from MUFG was immaterial.

The aggregate impact of the sale of billed contract receivables on the Company’s operating cash flows was $ 6.2 million and $ 33.1 million for the twelve months ended December 31, 2024 and 2023, respectively.

The Company also sold certain billed contract receivables to MUFG that did not qualify as sales under ASC 860.

Consequently, the cash received from and remitted back to MUFG is presented as cash from financing activities within “Proceeds from other short-term borrowings” and “Repayments of other short-term borrowings” on the Company’s consolidated statements of cash flows.

At December 31, 2024 and 2023, the amounts due to MUFG for cash collected and not yet remitted for billed contract receivables sold that did not qualify as sales under ASC 860 totaled $ 7.9 million and $ 6.9 million , respectively.

These amounts are included as part of “Accrued expenses and other current liabilities” on the Company’s consolidated balance sheets.

NOTE 5 - PROPERTY AND EQUIPMENT

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Leasehold improvements

Purchased software

Furniture and office equipment

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The weighted-average period of amortization of the customer-related intangibles calculated as of December 31, 2024 is 5.7 years.

Intangible assets related to developed technology are being amortized on an accelerated basis over a weighted-average period, calculated as of December 31, 2023, of 9.6 years.

Intangible assets related to developed technology are being amortized over a weighted-average period, calculated as of December 31, 2024, of 7.6 years.

Intangible assets with an indefinite life consist of a domain name.

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Total future minimum lease payments

Total lease liabilities

Lease liabilities - current

Lease liabilities - non-current

Total lease liabilities

Other information related to operating and finance leases is as follows:

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Operating cash flows from operating leases

Financing cash flows from finance leases

Operating cash flows from finance leases

Right-of-use assets obtained in exchange for new operating lease liabilities

Property and equipment obtained in exchange for finance lease liabilities

Weighted-average remaining lease term - operating leases

Weighted-average remaining lease term

Operating leases

Finance leases

Weighted-average discount rate - operating leases

Weighted-average discount rate

Operating leases

Finance leases

The change in operating lease right-of-use assets and lease liabilities are presented within cash flows from operating activities on the consolidated statements of cash flows.

During the years ended December 31, 2023 and 2022 , the Company ceased use of office facilities and recorded impairment of $ 6.8 million and $ 8.4 million, respectively, related to operating lease right-of-use asset and leasehold improvement, and accrued other future lease-related expenses of $ 3.2 million and $ 4.9 million, respectively.

The amounts are included as part of indirect and selling expenses on the Company's consolidated statements of comprehensive income.

NOTE 8 - ACCRUED SALARIES AND BENEFITS

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Restricted contract funds

IT and software licensing costs

Taxes and insurance premiums

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The Credit Facility is collateralized by substantially all the assets of the Company and its material domestic subsidiaries and requires that the Company remain in compliance with certain financial and non-financial covenants including, but not limited to the Consolidated Leverage Ratio and the Consolidated Interest Coverage Ratio.

As of December 31, 2023, the Company was in compliance with its covenants.

The Credit Facility also includes other terms and conditions, covenants, and other provisions of the Restated Credit Agreement that are materially consistent with the Existing Credit Agreement.

As of December 31, 2023, the Company had $ 430.4 million (net of unamortized debt issuance costs) of long-term debt outstanding from the Credit Facility, unused delayed draw term loan facility of $ 180.0 million (available through January 5, 2024), and unused borrowing capacity of $ 591.9 million from the available $ 600.0 million revolving line of credit under the Credit Facility.

The unused borrowing capacity is inclusive of five outstanding letters of credit totaling $ 1.8 million .

Considering the financial, performance-based limitations, available borrowing capacity was $ 575.5 million as of December 31, 2023.

As of December 31, 2024, the Company was in compliance with all covenants.

As of December 31, 2024, the Company had $ 411.7 million (net of unamortized debt issuance costs) of long-term debt outstanding from the Credit Facility and unused borrowing capacity of $ 541.1 million , from the available $ 600.0 million revolving line of credit under the Credit Facility.

The unused borrowing capacity is inclusive of four outstanding letters of credit totaling $ 1.6 million .

As of December 31, 2024 and 2023, long-term debt consisted of the following:

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December 31, 2027

Debt Issuance Cost

The Company’s debt issuance costs are amortized over the term of indebtedness.

The balance of net debt issuance costs at December 31, 2023 and 2022 were $ 3.7 million and $ 5.0 million , respectively.

Amortization of debt issuance costs totaling $ 2.0 million , $ 1.3 million , and $ 0.6 million was recorded for each of the years ended December 31, 2023, 2022, and 2021 , respectively, and was included as part of interest expense.

Amortization of debt issuance costs totaling $ 1.2 million , $ 2.0 million , and $ 1.3 million was recorded for each of the years ended December 31, 2024, 2023, and 2022 , respectively, and was included as part of interest, net, on the Company’s consolidated statements of comprehensive income.

NOTE 11 – REVENUE RECOGNITION

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Net contract assets (liabilities)

The net contract assets (liabilities) as of December 31, 2023 increased by $ 36.5 million as compared to December 31, 2022, primarily due to the timing difference between the performance of services and billings to and payments from customers.

The net contract assets (liabilities) as of December 31, 2024 decreased by $ 15.5 million as compared to December 31, 2023, primarily due to the timing difference between the performance of services and billings to and payments from customers.

There were no material changes to contract balances due to impairments or credit losses during the period.

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Unfulfilled Performance Obligations:

The Company had $ 1.4 billion in remaining unfulfilled performance obligations (“UPO”) as of December 31, 2023.

The Company expects to recognize the remaining UPO as revenue of approximately 57 % by December 31, 2024, 77 % by December 31, 2025, and the remaining thereafter .

The Company had $ 1.3 billion in remaining unfulfilled performance obligations (“UPO”) as of December 31, 2024 which the Company expects to recognize as revenue approximately 61 % by December 31, 2025, 73 % by December 31, 2026, and the remaining thereafter.

Subsequent to December 31, 2024, and through February 25, 2025, pursuant to the recent executive orders issued by the Administration or actions by DOGE, the Company received notices for termination-for-convenience and for stop-work orders.

Had these termination-for-convenience occurred prior to December 31, 2024, the total UPO would be reduced by approximately $ 245 million.

It is unknown if the stop-work orders notices will be lifted and the Company will resume work on these programs, or if the stop-work orders will result in a termination-for-convenience.

NOTE 12 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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At December 31, 2024, the Company had floating-to-fixed interest rate swaps for an aggregate notional amount of $ 275.0 million, of which $ 100.0 million will mature on February 28, 2025 , $ 75.0 million will mature on February 28, 2028 , and $ 100.0 million will mature on June 27, 2028 .

The Company has designated the Swaps as cash flow hedges.

The C ompany has designated the Swaps as cash flow hedges.

For the years ended December 31, 2024 and 2023, the effect of the Swaps on the Company’s financial statements are as follows:

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Interest Rate Swaps

As of December 31, 2023 , the net amount of realized losses from the hedge agreements expected to be reclassified from AOCI into earnings within the next twelve months is $ 4.8 million .

As of December 31, 2024, $ 0.8 million in unrealized gains from the Swaps are expected to be reclassified from AOCI into earnings within the next twelve months .

NOTE 13 - FAIR VALUE

Financial instruments measured at fair value on a recurring basis and their location within the accompanying consolidated financial statements are as follows:

December 31, 2024

Location on Balance Sheet

Interest rate swaps - current portion

Prepaid expenses and other assets

Interest rate swaps - long-term portion

Company-owned life insurance policies

Interest swaps - current portion

Accrued expenses and other current liabilities

Interest swaps - long-term portion

Other long-term liabilities

December 31, 2023

Location on Balance Sheet

Interest rate swaps - current portion

Prepaid expenses and other assets

Foreign currency forward and swap contracts

Prepaid expenses and other assets

Interest rate swaps - long-term portion

Company-owned life insurance policies

Financial and non-financial instruments measured or remeasured at fair value on a non-recurring basis include certain impaired right-of-use assets from operating leases and assets acquired and liabilities assumed from acquisitions, using the discounted cash flows method with Level 3 inputs as of the impairment and acquisition dates.

NOTE 14 - STOCKHOLDERS ’ EQUITY

Accumulated Other Comprehensive Loss

Accumulated other comprehensive (loss) income included the following:

Agreements (1)(2)

Accumulated other comprehensive (loss) income at January 1, 2022

Current period other comprehensive income (loss):

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive (loss) income

Effect of taxes (3)

Total current period other comprehensive income (loss)

Accumulated other comprehensive (loss) income at December 31, 2022

Current period other comprehensive income (loss):

Other comprehensive (loss) income before reclassifications

Amounts reclassified from accumulated other comprehensive (loss) income

Effect of taxes (3)

Total current period other comprehensive income (loss)

Accumulated other comprehensive (loss) income at December 31, 2023

Current period other comprehensive income (loss):

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive (loss) income (4)

Effect of taxes (3)

Total current period other comprehensive income (loss)

Accumulated other comprehensive (loss) income at December 31, 2024

(1) Represents the change in fair value of interest rate hedge agreements designated as a cash flow hedges.

The fair value of the interest rate hedge agreements was recorded in other comprehensive income, net of tax, and will be reclassified to earnings when earnings are impacted by the hedged items, as interest payments are made on the Credit Facility from through June 27, 2028.

See additional details of the hedge agreements in Note 12 - Derivative Instruments and Hedging Activities.

(2) The Company expects to reclassify $ 0.8 million in unrealized gains related to the Change in Fair Value of Interest Rate Hedge Agreement from accumulated other comprehensive loss into earnings during the next 12 months.

(3) The Company’s effective tax rate for the years ended December 31, 2024, 2023, and 2022 was 20.2 % , 14.4 % , and 23.5 % , respectively.

Share Repurchases

The Company’s current approved share repurchase program allows for share repurchases in the aggregate up to $ 300.0 million under approved share repurchase plans pursuant to Rules 10b5-1 and 10b-18 under the Exchange Act.

The repurchase program and the authorized amount have no expiration date.

On an annual basis, the Credit Facility (see Note 10 – Long-Term Debt) permits share repurchases of at least $ 25.0 million provided that the Company is not in default of its covenants, and higher amounts provided that the Company’s Consolidated Leverage Ratio, prior to and after giving effect to such repurchases, is 0.50 to 1.00 less than the then-applicable maximum Consolidated Leverage Ratio and subject to the Company having net liquidity of at least $ 100.0 million after giving effect to such repurchases.

Purchases under this program may be made from time to time at prevailing market prices in open market purchases or in privately negotiated transactions pursuant to Rule 10b-18 under the Exchange Act and in accordance with applicable insider trading and other securities laws and regulations.

The purchases are funded from existing cash balances and/or borrowings, and the repurchased shares are held in treasury.

The timing and extent to which the Company repurchases its shares will depend on market conditions and other corporate considerations in the Company’s sole discretion.

For the years ended December 31, 2024 and 2023, the Company used $ 44.4 million to repurchase 327,321 shares at an average price of $ 135.77 per share and $ 18.1 million to repurchase 180,000 shares at an average price of $ 100.70 per share, respectively, under this program.

As of December 31, 2024, approximately $ 149.3 million of authority remained available under the share repurchase plan.

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan (“ESPP”) under which one million shares have been authorized for issuance.

The ESPP allows eligible employees to purchase shares of the Company’s common stock through payroll deductions up to $ 25,000 per calendar year, per Internal Revenue Services rules, over six-month offering periods at a discount not to exceed 5 % of the market value on the date of each purchase period, and therefore the Company does not have any compensation expense related to the ESPP.

For the years ended December 31, 2024 and 2023, employees purchased a total of 40,987 and 36,140 shares at an average purchase price of $ 125.20 and $ 121.96 , respectively.

At December 31, 2024 and 2023, there were 507,845 and 548,832 shares remaining available for future issuance under this plan.

NOTE 15 - INCOME TAXES

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Accrued paid time off

Foreign net operating loss carryforward

State net operating loss carryforward

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Foreign tax credits

Federal and state tax credits

State tax credits

Foreign exchange

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Deferred Tax Liabilities

Prepaid expenses

Payroll taxes

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Total Deferred Tax Liabilities

Total Net Deferred Tax Liability

Total Net Deferred Tax Assets (Liabilities)

The Company measures certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is 27.0 %.

On December 20, 2017, the U.S.

Congress passed the Tax Cuts and Job Act of 2017 (the “TCJA”) which was signed into law on December 22, 2017, and was generally effective beginning January 1, 2018.

The TCJA changed the provision for deduction of allowable research and development costs under the Internal Revenue Code (the “IRC”).

Effective for tax years beginning after January 1, 2022, research and development costs are required to be capitalized and amortized over a period of five years for domestic and fifteen years for foreign research and development for income tax purposes.

As a result of the capitalization, the Company recognized an increase of $ 28.1 million in deferred tax asset for the year ended December 31, 2023.

As a result of the capitalization, the Company rec ognized increases of $ 23.6 million and $ 28.1 million in deferre d tax asset for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, the cumulative foreign tax credit carryforward balance increased by approximately $ 0.1 million and the valuation allowance required increased by approximately $ 0.1 million.

No additional income taxes have been provided for on any remaining undistributed foreign earnings not subject to the transition tax.

No additional deferred income taxes have been provided for the $ 4.9 million of additional unfavorable outside basis differences inherent in these foreign entities as of December 31, 2023 because these amounts continue to be permanently reinvested in foreign operations.

As of December 31, 2023 , the Company has net operating loss (“NOL”) carryforwards for state income tax purposes of approximately $ 6.5 million, which expire in 2034 .

No additional income taxes have been provided for any undistributed foreign earnings not subject to the transition tax.

No additional deferred income taxes have been provided for the $ 5.0 million of additional favorable outside basis differences inherent in these foreign entities as of December 31, 2024 because these amounts continue to be permanently reinvested in foreign operations.

As of December 31, 2024 , the Company has net operating loss (“NOL”) carryforwards for state income tax purposes of approximately $ 5.9 million, which expire between 2029 and 2034 .

The Company acquired these NOLs as a result of its purchase of a business in November 2014.

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Any unused portion of the annual limitation is available for use in future years until such NOLs are scheduled to expire (in general, NOLs may be carried forward 15 to 20 years).

The Company established a valuation allowance of approximately $ 0.5 million against the portion of the deferred tax asset which it is more-likely-than-not that it will not be recoverable (e.g.

The Company established a full valuation allowance of approximately $ 0.5 million against the portion of the deferred tax asset which it is more-likely-than-not that it will not be recoverable (e.g.

expiration of the statute of limitations, etc.)

As of December 31, 2023 , the Company had gross federal and state income tax credit carryforwards of approximately $ 0.7 million, which expire between 2024 and 2034 .

As of December 31, 2024, the C ompany had gross state income tax credit carryforwards of approximately $ 2.4 million, which expire between 2025 and 2035 .

A deferred tax asset of approximately $ 1.9 million, net of federal benefit, has been established related to these state income tax credit carryforwards as of December 31, 2024.

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Appropriate consideration has been given to all available evidence, including historical operating results, projections of taxable income, and tax planning alternatives.

The Company concluded that a valuation allowance of $ 0.5 million was required for tax attributes related to specified state jurisdictions and an additional $ 8.0 million valuation allowance is required against our U.S.

The Company concluded that a $ 0.4 million valuation allowance was required for tax attributes related to specified state jurisdictions, a $ 1.0 million valuation allowance was required for tax attributes related to capital loss carryforwards, and an additional $ 8.1 million valuation allowance is required against our U.S.

foreign tax credit carryforwards.

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Unrecognized tax benefits at December 31, 2022

Decrease attributable to tax positions taken during the current period

Unrecognized tax benefits at December 31, 2022

Increase attributable to tax positions taken during a prior period

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Unrecognized tax benefits at December 31, 2023

The Company’s 2020 through 2022 tax years remain subject to examination by the Internal Revenue Service for federal tax purposes.

Certain significant state and foreign tax jurisdictions are also either currently under examination or remain open under the statutes of limitation and subject to examination for the tax years from 2019 to 2022 .

Decrease attributable to tax positions taken during a prior period

Increase attributable to tax positions taken during the current period

Unrecognized tax benefits at December 31, 2024

The Company’s 2021, 2022, and 2023 tax years remain subject to examination by the Internal Revenue Service for federal tax purposes.

Although the Company believes it has adequately provided for all uncertain tax positions, amounts asserted by taxing authorities could be greater than the Company’s accrued position.

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subsidiaries as part of the wind-down of its commercial marketing business resulting in a reduction in the Company’s effective income tax rate of 5.1 % for the year ended December 31, 2023.

During 2023, the Company completed its annual true-up of the prior year income tax provision in connection with the filing of its U.S.

During 2024 and 2023, the Company completed its annual true-up of the prior year income tax provision in connection with the filing of its U.S.

federal & state income tax returns.

As a result of that process, the Company recorded a change in the estimate of certain tax credits it is eligible to claim with its income tax return filings that resulted in a 7.0 % decrease in the Company’s effective income tax rate for the year ended December 31, 2023 .

NOTE 14 - ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

Accumulated other comprehensive (loss) income included the following:

Gain on Sale of

Interest Rate

Agreement (1)

Agreements (2)(5)

Accumulated other comprehensive (loss) income at January 1, 2021

Current period other comprehensive income (loss):

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive (loss) income

Effect of taxes (3)

Total current period other comprehensive income (loss)

Accumulated other comprehensive (loss) income at December 31, 2021

Current period other comprehensive income (loss):

Other comprehensive (loss) income before reclassifications

Amounts reclassified from accumulated other comprehensive (loss) income

Effect of taxes (3)

Total current period other comprehensive income (loss)

Accumulated other comprehensive (loss) income at December 31, 2022

Current period other comprehensive income (loss):

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive (loss) income (4)

Effect of taxes (3)

Total current period other comprehensive income (loss)

Accumulated other comprehensive (loss) income at December 31, 2023

(1) Represents the fair value of an interest rate hedge agreement, designated as a cash flow hedge, which was sold on December 1, 2016.

The fair value of the interest rate hedge agreement was recorded in other comprehensive income, net of tax, and will be reclassified to earnings when earnings are impacted by the hedged items, as interest payments are made on the Credit Facility from January 31, 2018 to January 31, 2023.

(2) Represents the change in fair value of interest rate hedge agreements designated as a cash flow hedges.

See additional details of the hedge agreements in Note 12 - Derivative Instruments and Hedging Activities.

(3) The Company’s effective tax rate for the years ended December 31, 2023, 2022, and 2021 was 14.4 % , 23.5 % , and 28.9 % , respectively.

(4) The Company expects to reclassify $ 4.8 million in unrealized gains related to the Change in Fair Value of Interest Rate Hedge Agreement from accumulated other comprehensive loss into earnings during the next 12 months.

(5) The fair value of the interest rate hedge agreements is included in other current and other long-term assets and liabilities on the consolidated balance sheets.

See “Note 19 - Fair Value” for additional details.

NOTE 15 - ACCOUNTING FOR STOCK-BASED COMPENSATION

As a result of that process, the Company recorded changes in the estimate of certain tax credits it is eligible to claim with its income tax return filings tha t resulted in decreases of 2.0 % and 6.4 %, respectively, in the Company’s effective income tax rates for the years ended D ecember 31, 2024 and 2023.

NOTE 16 - STOCK-BASED COMPENSATION

Stock Incentive Plans

On April 4, 2018, the Board approved the 2018 Omnibus Incentive Plan (the “2018 Omnibus Plan”), which was subsequently approved by the stockholders and became effective on May 31, 2018 (the “Effective Date”).

The 2018 Omnibus Plan replaced the previous 2010 Omnibus Incentive Plan (the “Prior Plan”).

The 2018 Omnibus Plan was amended on May 28, 2020 to increase the number of shares available for issuance.

On June 1, 2023, the Company’s stockholders approved an amendment and restatement of the 2018 Omnibus Plan (the “2018 A&R Omnibus Plan”) which further increased the number of shares available for issuance, incorporated compensation recovery provisions consistent with new SEC and NASDAQ requirements and made certain other clarifying changes.

The A&R 2018 Omnibus Plan, as amended, allows the Company to grant up to 2,050,000 shares using stock options, stock appreciation rights, restricted stock, RSUs, performance units and PSAs, cash-based awards, and other stock-based awards to all key officers, key employees, and non-employee directors of the Company.

Outstanding shares granted under the Prior Plan, totaling 2,631 , as of December 31, 2023, remain subject to its terms and conditions, and additional awards from the Prior Plan are prohibited after the Effective Date.

On June 1, 2023, the Company’s stockholders approved an amendment and restatement of the 2018 Omnibus Plan (the “2018 A&R Omnibus Plan”) which increased the number of shares available for issuance to 2,050,000 shares using stock options, stock appreciation rights, restricted stock, RSUs, performance units and PSAs, cash-based awards, and other stock-based awards to all key officers, key employees, and non-employee directors of the Company.

As of December 31, 2024, the Company had approximately 1,016,040 shares available for grant under the A&R 2018 Omnibus Plan.

CSRSUs have no impact on the shares available for grant under the A&R 2018 Omnibus Plan, nor on the calculated shares used in earnings per share (“EPS”) calculations.

Stock-based compensation expense is included as part of direct costs and indirect and selling expenses on the consolidated statements of comprehensive income.

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Performance Shares

The assumptions of employment termination forfeiture rates used in the determination of fair value of stock awards during the 2023 calendar year were based on the Company’s historical average of actual forfeitures from the previous 10 years preceding the reporting period.

The expected annualized forfeiture rates used during the 2023 calendar year varied from 0 % to 21.59 % .

Stock Options

Stock options are granted with an exercise price equal to the market value of the Company’s common stock on the date of grant.

There were no stock options granted during 2023, 2022, and 2021.

The following table summarizes the changes in outstanding stock options:

Exercise Price

Outstanding at January 1, 2021

Forfeited/Expired

Outstanding at December 31, 2021

Forfeited/Expired

Outstanding at December 31, 2022

Forfeited/Expired

Outstanding at December 31, 2023

Vested plus expected to vest at December 31, 2023

Exercisable at December 31, 2023

The aggregate intrinsic value is based on the Company’s closing stock price of $ 134.09 as of December 31, 2023.

The total intrinsic value of options exercised was $ 0.9 million , $ 1.9 million , and $ 0.8 million for the years ended December 31, 2023, 2022, and 2021, respectively.

All options have vested as of December 31, 2023, and the weighted-average remaining contractual term for options vested and exercisable was 0.2 years.

Information regarding stock options outstanding as of December 31, 2023 is summarized below:

OPTIONS OUTSTANDING

OPTIONS EXERCISABLE

Exercise Prices

December 31, 2023

$ 40.68 to $ 40.68

The stock-based compensation expense is deductible for income tax purposes.

For the years ended December 31, 2024, 2023, and 2022, the Company recognized excess income tax benefits of $ 2.4 million , $ 1.1 million , and $ 1.1 million , respectively, related to stock-based compensation.

Restricted Stock Units

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The actual shares vested will be subject to both continued employment by the Company (barring certain exceptions allowing for partial performance periods) and actual financial measures achieved.

The final number of shares of common stock that will be issued to each participant at the end of the applicable performance period will be determined by multiplying the award by the product of two percentages:

The final number of shares of common stock that will be issued to each participant at the end of t he applicable performance period will be determined by multiplying the award by the product of two percentages:

the first based on the Company’s EPS performance and the second based on the Company’s rTSR performance, subject to a minimum and maximum performance level.

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NOTE 17 – ACQUISITIONS AND DIVESTITURES

Applied Energy Group, Inc.

On December 31, 2024 , the Company completed the acquisition of Applied Energy Group, Inc.

( “AEG”), an energy technology and advisory services company , for $ 60.7 million in cash consideration.

The purchase price is subjected to net working capital adjustments expected to be completed within ninety days.

AEG provides a suite of integrated technology and advisory solutions to electric and gas utilities, state and local governments, and state energy offices nationwide which will further enhance the Company’s service offering and client footprint.

As part of the preliminary allocation of the purchase consideration, the Company recorded the following:

Net working capital

Property and equipment

Customer-related intangibles

Developed technology

Trade names and trademarks

Purchase considerations

Net working capital includes restricted cash of $ 5.6 million, accounts receivable of $ 4.5 million, and accrued expenses of $ 5.7 million.

The finalization of allocation is expected to be completed by the second quarter of 2025, and is currently open primarily for final net working capital adjustments, valuation of acquired intangibles, and computation of deferred revenue.

The estimated useful lives of acquired intangible assets are as follows:

Customer-related intangibles

Developed technology

Trade names and trademarks

The goodwill is attributable to the workforce of AEG and expected synergies with the Company.

Goodwill has an indefinite life, and is deductible for income tax purposes.

The pro-forma impact of the acquisition is not material to the Company’s results of operations.

CMY Solutions, LLC

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The acquisition enhances the Company’s offerings in the field of power and energy advisory services.

As part of the allocation of purchase consideration, the Company recorded $ 10.3 million of intangible assets, $ 1.2 million in net working capital, and $ 21.1 million of goodwill.

The goodwill is deductible for income tax purposes.

Intangible assets consist of $ 10.2 million related to existing customer relationships and $ 0.1 million related to trade names and trademarks.

As part of the allocation of purchase consideration, the Company recorded the following:

Net working capital

Customer-related intangibles

Trade names and trademarks

Purchase considerations

The estimated useful lives of acquired intangible assets are as follows:

Customer-related intangibles

Trade names and trademarks

Goodwill has an indefinite life and is deductible for income tax purposes.

The pro-forma impact of the acquisition is not material to the Company’s results of operations.

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On September 1, 2022, the Company completed the acquisition of Blanton & Associates (“Blanton”), an environmental consulting, planning, and project management firm headquartered in Austin, Texas, for $ 22.9 million.

Blanton brings domain expertise in environmental regulatory compliance and permitting for the transportation, renewable energy, water, and resource management sectors and adds technically specialized staff in all aspects of environmental services to the Company.

As part of the allocation of the purchase consideration, the Company recorded net working capital of $ 4.6 million, property and equipment of $ 0.2 million , deferred income tax liabilities of $ 3.0 million, $ 11.4 million to intangible assets, and $ 9.7 million to goodwill.

The goodwill is not deductible for income tax purposes.

Intangible assets consisted of $ 10.9 million related to existing customer relationships, $ 0.5 million related to contract backlog, and $ 0.1 million related to trade names and trademarks.

Blanton brought domain expertise in environmental regulatory compliance and permitting for the transportation, renewable energy, water, and resource management sectors and added technically specialized staff in all aspects of environmental services to the Company.

As part of the allocation of the purchase consideration, the Company recorded the following:

Net working capital

Property and equipment

Customer-related intangibles

Contract backlog

Trade names and trademarks

Deferred income tax liabilities

Purchase consideration

The estimated useful lives of acquired intangible assets are as follows:

Customer-related intangibles

Contract backlog

Trade names and trademarks

Goodwill has an indefinite life and is not deductible for income tax purposes.

The pro-forma impact of the acquisition is not material to the Company’s results of operations.

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SemanticBits is a partner to U.S.

federal health agencies for mission-critical digital modernization solutions and provides a suite of scalable digital modernization services using open-source frameworks, including end-to-end agile scale development capabilities, cloud-native solutions, data analytics and human-centered designs.

development capabilities, cloud-native solutions, data analytics and human-centered designs.

The acquisition provides synergies and scalabilities to support federal agencies with advanced IT solutions, digital modernization, and health expertise to solve complex customer challenges.

The purchase price was $ 216.0 million in cash and was funded by the existing Credit Facility.

T he final purchase price allocation is summarized as follows:

The final purchase price allocation is summarized as follows:

Contract receivables

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Purchase consideration

The estimated useful lives of acquired intangible assets are as follows:

Customer-related intangibles

Trade names and trademarks

Goodwill is reflective of the existing workforce of SemanticBits and the expected synergies created with the Company as part of the acquisition.

The useful lives associated with the customer-related intangible asset and trade names and trademarks are 4.0 years and 0.7 years, respectively.

The goodwill and intangible assets are not deductible for income tax purposes.

Goodwill and intangible assets are not deductible for income tax purposes.

Acquisition-related costs and integration costs totaled $ 4.3 million and are included as part of indirect and selling expenses in the Company’s consolidated statements of comprehensive income.

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Computation of an earnings measure other than gross profit is impracticable due to SemanticBits’ operations and financial systems being integrated with those of the Company.

As a result, fiscal year 2022 represents the pro forma results for year two of the acquisition.

The following unaudited condensed pro forma information presents combined financial information as if the acquisition of SemanticBits had been effective at January 1, 2021, the beginning of the 2021 fiscal year, and as a result, fiscal year 2022 represents the pro forma results for year two of the acquisition.

The pro forma information includes alignment of SemanticBits’ revenue recognition policy, corrections of employee-related expenses, and adjustments reflecting changes in the amortization of intangibles, acquisition-related costs, interest expense, and records income tax effects as if SemanticBits had been included in the Company’s results of operations.

The pro forma information is not intended to reflect the actual combined results of operations that would have occurred if the acquisition was completed on January 1, 2021, nor is it indicative of future operating results after the acquisition date of July 13, 2022.

(in thousands)

Creative Systems and Consulting

On December 31, 2021 , the Company acquired Creative Systems, a provider of IT modernization and digital transformation solutions to federal agencies, for cash purchase price of $ 156.6 million.

The Company recognized fair value of the assets acquired and liabilities assumed, and allocated $ 128.1 million and $ 28.9 million of the purchase price to intangible assets and goodwill.

The goodwill is deductible for income tax purposes.

Intangible assets consisted of $ 24.5 million in customer relationships, $ 3.7 million related to developed technology, $ 0.6 million related to trade names and trademarks, and $ 0.1 million related to non-compete agreements.

The customer-related and technology-related intangibles are being amortized on a straight-line basis over 4 years and 10 years , respectively, while trade names and trademarks and non-compete agreements will be amortized in less than one year from the acquisition date.

Goodwill is reflective of the existing workforce at Creative Systems and the expected synergies created with the Company as a result of the acquisition.

The pro-forma impact of the acquisition is not material to the Company’s results of operations.

On November 1, 2021, the Company completed the acquisition of ESAC, which specializes in providing advanced health analytics, research data management and bioinformatics solutions to U.S.

federal health agencies, for a cash purchase price of $ 17.3 million.

In addition to working capital acquired of $ 2.6 million, the Company recognized fair value of the assets acquired and liabilities assumed and allocated $ 11.3 million to goodwill and $ 3.4 million to intangible assets.

The goodwill is deductible for income tax purposes.

Intangible assets included $ 3.1 million related to customer relationships and $ 0.3 million related to technology and other intangibles, which are amortized over 3 years and less than 1 year , respectively.

The pro-forma impact of the acquisition is not material to the Company’s results of operations.

Commercial Marketing

On July 21, 2023, the Company entered into an Asset Purchase Agreement to sell its U.S.

commercial marketing business, including certain assets of the business, for initial cash considerations of $ 49.5 million before final net working capital adjustments.

On September 12, 2023 , the Company completed the divesture and received $ 47.1 million in cash, net of working capital adjustments and certain amounts held in escrow.

On September 12, 2023 , the Company completed the divesture of its U.S.

commercial marketing business for $ 47.1 million in cash.

The disposal of the commercial marketing business was not a major strategic shift that was, or will be significant to the Company’s operations and financial results.

In connection with the sale, the Company recorded a gross gain of $ 4.4 million and transactions fees of $ 1.9 million, for a total pre-tax gain of $ 2.5 million, that is included as part of other income on the Company’s consolidated statements of comprehensive income.

For the years ended December 31, 2024 and 2023 , the Company recorded pre-tax gain of $ 2.0 million and $ 2.5 million, that is included as part of other income on the Company’s consolidated statements of comprehensive income.

Mobile and SMS Messaging Aggregator Business

On July 24, 2023, the Company entered into an Asset Purchase Agreement to sell its mobile and Short Message Service (“SMS”) messaging aggregator business, including certain assets of the business, for the equivalent of $ 5.4 million in cash.

The sale was completed on November 1, 2023 .

The disposal of the mobile aggregation and SMS messaging aggregator business was not a major strategic shift that was, or will be, significant to the Company’s operations and financial results.

On November 1, 2023, the Company completed the divesture of its Canadian mobile and Short Message Service (“SMS”) messaging aggregator business for $ 5.4 million in cash.

The disposal of the mobile aggregation and SMS messaging aggregator

business was not a major strategic shift that was, or will be, significant to the Company’s operations and financial results.

In connection with the sale, the Company recorded a pre-tax gain of $ 3.2 million that is included as part of other income on the Company’s consolidated statements of comprehensive income.

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Diluted earnings per share

NOTE 18 - SHARE REPURCHASE PROGRAM

In September 2017, the Board approved a share repurchase program that allows for share repurchases in the aggregate up to $ 100.0 million under approved share repurchase plans pursuant to Rules 10b5-1 and 10b-18 under the Exchange Act.

In November 2021, the Board amended and increased the previously authorized aggregate repurchase limit from $ 100.0 million to $ 200.0 million.

The Credit Facility (see Note 10 – Long-Term Debt) permits annual share repurchases of at least $ 25.0 million provided that the Company is not in default of its covenants, and higher amounts provided that the Company’s Consolidated Leverage Ratio, prior to and after giving effect to such repurchases, is 0.50 to 1.00 less than the then-applicable maximum Consolidated Leverage Ratio and subject to the Company having net liquidity of at least $ 100.0 million after giving effect to such repurchases.

The purchases are funded from existing cash balances and/or borrowings, and the repurchased shares are held in treasury.

The timing and extent to which the Company repurchases its shares will depend on market conditions and other corporate considerations in the Company’s sole discretion.

For the years ended December 31, 2023 and 2022, the Company used $ 18.1 million to repurchase 180,000 shares at an average price of $ 100.70 per share and $ 17.0 million to repurchase 176,375 shares at an average price of $ 96.18 per share, respectively, under this program.

As of December 31, 2023, approximately $ 93.7 million of authority remained available under the share repurchase plan.

NOTE 19 - FAIR VALUE

Financial instruments measured at fair value on a recurring basis and their location within the accompanying consolidated financial statements are as follows:

December 31, 2023

(in thousands)

Location on Balance Sheet

Interest rate swaps - current portion

Prepaid expenses and other assets

Foreign currency forward and swap contracts

Prepaid expenses and other assets

Interest rate swaps - long-term portion

Company-owned life insurance policies

Interest swaps - long-term portion

Other long-term liabilities

December 31, 2022

(in thousands)

Location on Balance Sheet

Interest rate swaps - current portion

Prepaid expenses and other

Interest rate swaps - long-term portion

Company-owned life insurance policies

NOTE 19 - COMMITMENTS AND CONTINGENCIES

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Eligible employees may elect to defer up to 80 % of their base salary and up to 100 % of performance bonuses, reduced by any amounts withheld for the payment of taxes or other deductions required by law.

Participants are at all times 100 % vested in their account balances.

The Company funds its deferred compensation liabilities by making cash contributions to a Rabbi Trust at the time the salary or bonus being deferred would otherwise be payable to the employee.

The liability to plan participants is materially funded at all times and the plan does not have a material net impact on the Company’s results of operations.

Employee Stock Purchase Plan

The Company has a Employee Stock Purchase Plan (“ESPP”) under which one million shares have been authorized for issuance.

The ESPP allows eligible employees to purchase shares of the Company’s common stock through payroll deductions up to $ 25,000 per calendar year over six-month offering periods at a discount not to exceed 5 % of the market value on the date of each purchase period, and therefore the Company does not recognize compensation expense related to the ESPP.

For the years ended December 31, 2023 and 2022, employees purchased a total of 36,140 and 34,844 shares at an average purchase price of $ 121.96 and $ 91.84 , respectively.

At December 31, 2023 and 2022, there were 548,832 and 584,972 shares remaining available for future issuance under this plan.

Participants are always 100 % vested in their account balances.

The Company funds its deferred compensation liabilities by making cash contributions to a Rabbi Trust (the “Trust”) at the time the salary or bonus being deferred would otherwise be payable to the employee.

As of December 31, 2024 , the liability to plan participants was $ 24.3 million which was materially funded by assets in the Trust.

The deferred compensation plan does not have a material net impact on the Company’s results of operations.

NOTE 21 - EXIT ACTIVITIES

During the year ended December 31, 2022, the Company incurred charges related to:

(i) the reduction and wind-down of certain non-core commercial marketing businesses, and (ii) the reduction of facilities utilized by the remaining elements of the commercial marketing group.

Specifically, these charges included the impairment of certain right-of-use operating leases and related assets associated with exited facilities of $ 8.2 million, $ 4.8 million in other facility costs recorded within indirect and selling expenses, and retention and severance of $ 2.3 million primarily recorded within direct costs.

Of the $ 2.3 million in retention and severance, $ 1.3 million was paid during the 2022 fiscal year and the remaining liability was paid during the 2023 fiscal year.

During the year ended December 31, 2023, the Company incurred and paid $ 2.5 million in retention and severance related to the wind-down of its non-core commercial marketing and communication businesses in the U.K.

During the year ended December 31, 2023, the Company incurred and paid $ 2.5 million in retention and severance benefits related to the wind-down of its non-core commercial marketing and communication businesses in the U.K.

The exit activity was completed as of December 31, 2023 .

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commercial marketing and Canadian mobile and SMS messaging aggregator businesses .

As a result of the divestitures, the Company incurred retention and severance of $ 1.9 million and $ 1.7 million for the years ended December 31, 2023 and 2022, respectively, which was primarily recorded within direct costs.

As a result of the divestitures, the Company incurred and paid retention and severance benefits of $ 1.9 million and $ 1.7 million for the years ended December 31, 2023 and 2022, respectively, which was primarily recorded within direct costs.

As part of the sale of the businesses, the Company incurred $ 0.6 million in related compensation expense which was recorded within indirect and selling expenses.

The retention and severance and compensation expenses were paid during the 2023 fiscal year.

As a result of these wind-down and divestitures that were completed during the year ended December 31, 2023, the Company recognized impairment losses of $ 0.9 million related to a prior acquisition, $ 3.0 million related to right-of-use operating leases, and $ 2.4 million in other facility costs.

As a result of these wind-down and divestitures that were completed, the Company recorded impairment of $ 0.9 million related to a customer-related intangible from a prior acquisition, $ 3.0 million related to right-of-use operating leases, and accrued $ 2.4 million for other facility-related exit costs.

During the year ended December 31, 2022, the Company incurred charges related to:

(i) the reduction and wind-down of certain non-core U.S.

commercial marketing businesses, and (ii) the reduction of facilities utilized by the remaining elements of the commercial marketing group.

Specifically, these charges included the impairment of certain right-of-use operating leases and related assets associated with exited facilities of $ 8.2 million, $ 4.8 million in other facility-related exit costs recorded within indirect and selling expenses, and retention and severance of $ 2.3 million primarily recorded within direct costs.

Of the $ 2.3 million in retention and severance benefits, $ 1.3 million was paid during the 2022 fiscal year and the remaining liability was paid during the 2023 fiscal year.

NOTE 22 - SEGMENT INFORMATION AND GEOGRAPHIC DATA

The Company provides a broad array of professional services to its clients across several markets, primarily within the U.S.

The Company operates as a single reportable and operating segment because the CODM, which is the Chief Executive Officer , manages the business activities on a consolidated basis.

Although the Company disaggregates its revenue by client market and client type, it does not manage its business or allocate resources based on client market or type.

The CODM assesses performance of the segment based on consolidated net income that is reported on the Company’s consolidated statements of comprehensive income.

The CODM uses consolidated net income to evaluate the Company’s performance against budgets and decide whether to use the profits to invest in the business, paydown debt, repurchase stock, pay dividends, or fund acquisitions.

Asset information provided to the CODM is not used for the purposes of making decisions and assessing performance of the Company.

The segment revenue, significant segment expenses, and segment profit are as follows:

Year ended December 31,

Significant segment expenses:

Direct labor & related fringe costs

Subcontractors & other direct costs

Indirect and selling expenses

Depreciation and amortization

Amortization of intangible assets

Interest expense

Provision for income taxes

Other segment (income) expense (1)

(1) Other segment income (expenses) includes interest income, foreign currency expense, and gains/losses on disposition of assets.

Other Segment Information and Geographic Data

Revenue is attributed to the country where the contract is awarded by the client.

There was no single foreign country that individually accounted for 10% or more of total revenue for the years ended December 31, 2024, 2023, and 2022 .

The following table provide net revenue for the Company ’s home country and foreign countries:

Year ended December 31,

Other countries

Total revenue

At December 31, 2024 and 2023, long-lived assets were primarily held in the U.S.

There was no single foreign country that individually held more than 10% of the total long-lived assets.

The following table provide long-lived assets held in the Company’s home country and in foreign countries:

Long-lived assets:

Other countries

Total long-lived assets

NOTE 23 - SUBSEQUENT EVENTS

Share Buyback Program

On November 14, 2023, the Board of directors authorized and approved a plan to repurchase up to 191,000 shares of the Company’s common stock pursuant to Rule 10b5-1 (the “Plan”) of the current repurchase program.

The Plan is effective January 2, 2024 through June 30, 2024 .

As of February 23, 2024, the Company repurchased 159,681 shares at a total cost of $ 21.9 million, or $ 136.94 per share under the plan.

NOTE 24 - SUPPLEMENTAL INFORMATION

Valuation and Qualifying Accounts

As of February 25, 2025, the Company repurchased 258,218 shares at a total cost of $ 30.5 million , or $ 118.14 per share pursuant to the Plan authorized by the Company's board of directors (see Note 14 - Stockholders’ Equity - Share Repurchases).

Schedule II - Valuation and Qualifying Accounts

Allowance for Credit Losses

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures