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Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-02-28 · 93 added, 109 removed, 253 unchanged (44% of the section changed)

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Our actual results could differ materially from those anticipated in the forward-looking statements.

Factors that could cause or contribute to our actual results differing materially from those anticipated include those discussed in “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

This section of the Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.

Discussions of 2023 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 28, 2024, and is incorporated by reference into this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Factors that could cause or contribute to our actual results differing materially from those anticipated include those discussed in Item 1A.

“Risk Factors” and elsewhere in this Annual Report on Form 10-K.

This section of this Annual Report on Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.

Discussions of 2024 items and year-to-year comparisons between 2024 and 2023 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on February 28, 2025, and is incorporated by reference into this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW AND OUTLOOK

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• Engagement Services.

Our clients utilize our services because we combine diverse institutional knowledge and experience with the deep subject matter expertise of our highly educated staff, which we deploy in multi-disciplinary teams.

We have successfully worked with many of our clients for decades, with the result that we have a thorough and nuanced perspective of their objectives and needs.

We serve both governmental and commercial clients.

Our government clients include those from departments and agencies of the federal government, state and local governments, and international governments.

Our government efforts include work performed under subcontract agreements to commercial clients whose ultimate customers are government agencies and departments.

Our clients rely on us because we combine broad institutional knowledge with the deep subject‑matter expertise of our highly trained staff, working together in multidisciplinary teams.

Many of our client relationships span decades, giving us a nuanced understanding of their objectives and needs.

We serve both government and commercial clients.

Our government work includes projects for federal, state, local, and international agencies, as well as subcontracted engagements performed for commercial clients whose end customers are government entities.

Our largest clients are U.S.

federal government departments and agencies.

Our federal government clients include every cabinet-level department, most significantly HHS, EPA, and DoS.

Our federal government clients include every cabinet-level department, most significantly HHS, DoD, DoE, and DoT.

Federal government clients generated approximately 43%, 54%, and 55% of our revenue in 2025, 2024, and 2023, respectively.

The decrease in U.S.

federal government revenue was primarily as a result of terminated contracts in 2025 due to the Administration’s changing priorities and the actions recommended by DOGE, as well as the disruption in the typical U.S.

federal government procurement cycle.

State and local government clients generated approximately 17%, 16%, and 16% of our revenue in each of 2025, 2024, and 2023, respectively.

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Our commercial clients, which include clients outside the U.S., generated approximately 33%, 25%, and 24% of our revenue in 2025, 2024, and 2023, respectively.

We believe that our domain expertise and the program knowledge developed from our research and analytics, and assessment and advisory engagements further position us to provide a full suite of services.

The increase in commercial revenue was primarily due to higher commercial energy business in 2025.

We report operating results and financial data as a single segment based on the consolidated information used by our chief operating decision-maker in evaluating the financial performance of our business and allocating resources.

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We believe our prior and current experience with disaster relief and rebuild efforts, including after hurricanes Katrina and Rita and Superstorm Sandy, and the wildfires in Oregon, put us in a favorable position to continue to provide recovery and housing assistance, and environmental and infrastructure solutions, including disaster mitigation, on behalf of federal departments and agencies, state, territorial, and local jurisdictions, and regional agencies.

We also see significant opportunity to further leverage our digital and client engagement capabilities across our client base.

Our future results will depend on the success of our strategy to enhance our client relationships and seek larger engagements that span the entire program life cycle, and to complete and successfully integrate additional strategic acquisitions.

We will continue to focus on building scale in our vertical and horizontal domain expertise, developing business with our existing clients as well as new customers, and replicating our business model in selective geographies.

In doing so, we will continue to evaluate strategic acquisition opportunities that enhance our subject matter knowledge, broaden our service offerings, gain access to or expand customer relationships, and/or provide scale in specific geographies.

Although we continue to see favorable long-term market opportunities, there are certain business challenges facing all government service providers.

Administrative and legislative actions by the federal government to address changing priorities or in response to the budget deficit could have a negative impact on our business, which may result in a reduction to our revenue and profit and adversely affect cash flow.

Similarly, the very nature of opportunities arising out of disaster recovery means they can involve unusual challenges.

Factors such as the overall stress on communities and people affected by disaster recovery situations, political complexities and challenges among involved government agencies, and a higher-than-normal risk of audits and investigations may result in a reduction to our revenue and profit and adversely affect cash flow;

however, we believe we are well positioned to provide a broad range of services in support of initiatives that will continue to be priorities to the federal government, as well as to state and local and international governments and commercial clients.

We believe that the combination of internally generated funds, available bank borrowings, and cash and cash equivalents on hand will provide the required liquidity and capital resources necessary to fund ongoing operations, potential acquisitions, customary capital expenditures, and other working capital requirements.

Our results of operations and cash flows may vary significantly from quarter to quarter depending on a number of factors, including, but not limited to:

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We generally have been able to price our contracts in a manner that accommodates the rates of inflation experienced in recent years, although we cannot ensure that we will be able to do so in the future.

As with other federal contractors, we have experienced business impacts, of varying degrees, from the changing priorities of the Administration that could have an adverse impact on our results and, as these new priorities are implemented, it may be difficult for us to accurately predict the effect they will have on our results.

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 of approximately $276 million and for stop-work orders of approximately $99 million.

The majority of the termination-for-convenience and stop-work orders notices are associated with our contracts with USAID.

The impact of these contract terminations and stop-work orders is not expected to be material, with such contracts contributing approximately 3.3% of our 2024 fiscal year revenue.

Presently, 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.

BUSINESS COMBINATIONS

A key element of our growth strategy is to pursue acquisitions.

During the previous three fiscal years, we completed four acquisitions summarized as follows:

SemanticBits, LLC – In July 2022, we acquired SemanticBits, a premier partner to U.S.

federal health agencies for mission-critical digital modernization solutions.

Blanton & Associates – In September 2022, we acquired Blanton & Associates, an environmental consulting, planning, and project management firm.

During the previous three fiscal years, we completed the acquisitions summarized as follows:

CMY Solutions, LLC – In May 2023, we acquired CMY, an engineering and automation solutions provider to utilities and organizations.

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We believe that the estimates, assumptions, and judgments involved in the accounting practices described below have the greatest potential impact on our financial statements and, therefore, consider them to be critical accounting policies.

Significant accounting estimates are more fully described and discussed in “Note 2 - Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements”.

Significant accounting estimates are more fully described and discussed in “Note 2 - Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” of this Annual Report on Form 10-K.

Revenue Recognition

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For the years ended December 31, 2025, 2024, and 2023, revenue from cost-based contracts totaled $138.2 million, $231.9 million, and $265.1 million, respectively.

For performance obligations requiring the delivery of a service for a fixed price, we use the ratio of actual costs incurred to total estimated costs at completion (“EAC”) provided that costs incurred (an input method) represents a reasonable measure of progress towards the satisfaction of a performance obligation, in order to estimate the portion of total revenue earned.

For performance obligations requiring the delivery of a service or a product for a fixed price, we use the ratio of actual costs incurred to total estimated costs at completion (“EAC”) provided that costs incurred (an input method) represents a reasonable measure of progress towards the satisfaction of a performance obligation, in order to estimate the portion of total revenue earned.

Contract costs that are not reflective of our progress toward satisfying a performance obligation are not included in the calculation of the measure of progress.

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We routinely review EACs for changes that could materially impact our measurement of progress toward completion of the performance obligations and adjust our revenue in the period that the changes occur.

When a contract EAC exceeds the contract value, we recognize the loss in the same period of determination.

For product-delivery contracts in which their EACs exceed their contract value, we recognize the losses in the same period of determination.

For the years ended December 31, 2025, 2024, and 2023, our revenue from contracts in which we use EACs totaled $453.8 million, $479.7 million, and $310.1 million, respectively.

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The actual amounts are typically determined and awarded at the end of a performance period and the final awarded amount is based on achieving certain performance metrics, program milestones, or cost targets at the customer’s discretion.

We estimate the most likely amount expected to be achieved based on our prior history in providing the services to the customer or, if no history exists, we constrain the variable consideration until the initial determination by the customer.

We estimate variable consideration primarily by using the most likely amount method based on our prior history in providing the services to the customer or, if no history exists, we constrain the variable consideration until the initial determination by the customer.

Fair Value of Acquired Assets from Business Combinations

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International government

Contract mix varies from year to year due to numerous factors, including our business strategies and the procurement activities of our clients.

Unless the context requires otherwise, we use the term “contracts” to refer to contracts and any task orders or delivery orders issued under a contract.

Contract mix, which provides insight into the performance risks that we have assumed and, therefore, the predictability of our contract revenues and margins, varies from year to year due to numerous factors, including our business strategies and the procurement activities of our clients.

Unless the context requires

otherwise, we use the term “contracts” to refer to contracts and any task orders or delivery orders issued under a contract.

There are three main types of contracts:

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Direct Costs:

Direct labor & related fringe costs

Subcontractors & other direct costs

Direct labor & related fringe benefit costs

Subcontractors and other direct costs

Total Direct Costs

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Depreciation and amortization:

Amortization of intangible assets

Depreciation and amortization

Amortization of intangible assets acquired in business combinations

Total Depreciation and Amortization:

Total Operating Costs and Expenses

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Interest, net

Other (expense) income

Income Before Income Taxes

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Year ended December 31, 2025 compared to year ended December 31, 2024

The growth in revenue of $56.5 million was driven by increases of $39.3 million from commercial clients, $7.4 million from international government clients, $6.6 million from U.S.

state and local government clients, and $3.3 million from U.S.

federal government clients, respectively.

Revenue from Energy, Environment & Infrastructure and Disaster Recovery client market increased by $123.8 million, or 15.4%, due to:

• Increases of $88.0 million from commercial, $31.8 million from U.S.

federal government, $3.4 million from international government, and $0.5 million from U.S.

The decrease in revenue was driven by a reduction of $279.5 million from our U.S.

federal government clients, primarily as a result of terminated contracts in 2025 due to the Administration’s changing priorities and the actions recommended by DOGE, as well as the disruption in the typical U.S.

federal government procurement cycle.

This decline was offset by increases of $117.2 million, $8.5 million, and $6.9 million from our commercial, international government, and U.S.

state and local government clients, respectively.

Revenue from Health and Social Programs client market decreased by $50.3 million, or 6.2%, due to:

• Decreases of $48.1 million from U.S.

federal government and $13.8 million from commercial clients, respectively, driven by lower pass-throughs from several U.S.

federal contracts and our exit from the commercial marketing business during 2023, offset by

• Increases of $6.3 million and $5.4 million from U.S.

state and local government and international government clients, respectively.

Revenue from Security and Other Civilian & Commercial client market saw a decrease of $16.9 million, or 4.9%, as a result of:

• Decreases of $34.8 million from commercial clients, driven by the divestiture of the commercial marketing and events business during fiscal year 2023, $1.4 million from international government clients, and $0.3 million from U.S.

state and local government clients, respectively, offset by

• An increase of $19.6 million from U.S.

federal government clients.

The following were changes in revenue from our various client markets:

• Energy, Environment, Infrastructure, and Disaster Recovery client market revenues increased $44.7 million, or 4.8%, driven by increases of $106.8 million, $5.6 million, and $5.0 million from our commercial, international government, and U.S.

state and local government clients, respectively, offset by a decrease of $72.7 million from our U.S.

federal government clients as described above.

• Health and Social Programs client market revenues decreased $144.4 million, or 18.9%, driven by a decrease of $156.6 million from our U.S.

federal government clients as described above, offset by increases of $8.2 million, $3.2 million, and $0.8 million from our commercial, international government, and U.S.

state and local government clients, respectively.

• Security and Other Civilian & Commercial client market revenues decreased by $47.3 million, or 14.8%, driven by decreases of $50.2 million and $0.4 million from our U.S.

federal government, as described above, and international government clients, respectively, offset by increases of $2.2 million and $1.1 million from our commercial and U.S.

state and local government clients, respectively.

Revenue for the year ended December 31, 2025 includes subcontractor and other direct costs, which

decreased $52.8 million, or 10.4%, and totaled $454.0 million and $506.8 million for the years ended December 31, 2025 and 2024, respectively, and the margin on such costs.

Direct costs .

The increase in direct costs was driven by additional direct labor and related fringe benefit costs of $44.9 million which reflected growth in the ongoing business, offset by a decrease of subcontractors and other direct costs of $27.9 million primarily as a result of our exit from the commercial marketing and events business during 2023.

The decrease in direct costs was primarily a result of terminated U.S.

federal government contracts during 2025.

For the years ended December 31, 2025 and 2024, direct labor and related fringe benefit costs were 61.4% and 60.5% of total direct costs, respectively, and subcontractors and other direct costs were 38.6% and 39.5% of total direct costs, respectively.

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Indirect and selling expenses.

The increase in indirect and selling expenses was due to additional $8.9 million in indirect labor and related fringe benefit costs and $4.4 million in general and administrative costs.

The decrease in indirect and selling expenses was due to a reduction of $21.8 million in general and administrative costs and $4.2 million in indirect labor and associated fringe benefit costs.

The reduction in costs was a result of our cost-reduction and operational efficiency initiatives to align our cost structure with current business conditions.

As a percentage of total indirect and selling expenses, indirect labor and associated fringe costs were 73.9% and 71.0%, respectively, and general and administrative costs were 26.1% and 29.0%, respectively, for the years ended December 31, 2025 and 2024.

As a percentage of revenue, indirect and selling expenses was 25.7% for the years ended December 31, 2024 and 2023.

As a percentage of revenue, indirect and selling expenses were 26.3% and 25.7% for the years ended December 31, 2025 and 2024, respectively.

Depreciation and amortization .

The decrease in depreciation and amortization was due to having fewer capital assets primarily as a result of the divestiture of our U.S.

commercial marketing business in 2023.

Amortization of intangible assets .

The decrease in amortization of intangible assets was due to having fewer intangible assets primarily as a result of the divestiture of our U.S.

commercial marketing business in 2023.

The increase in amortization of intangible assets acquired in business combinations was primarily due to the amortization of intangible assets acquired in our acquisition of AEG in the fourth quarter of 2024.

Interest, net .

The decrease in interest, net was primarily due to our lower average debt balance of $474.0 million in 2024 compared to $613.5 million in 2023.

The increase in interest, net was primarily due to our higher average debt balance of $513.3 million in 2025 compared to $474.0 million in 2024.

The average interest rate was 5.6% in 2025 compared to 6.6% in 2024.

We utilize floating-to-fixed interest rate swap agreements to hedge the variable interest portion of our debt.

Our 2024 interest expense from our debt was reduced by $6.2 million from the swap agreements, compared to $6.9 million in 2023.

Our average interest rate inclusive of the impact of the swap agreements was 5.3% for 2024 compared to 5.6% for 2023.

Other income .

The decrease in other income was primarily due to higher pre-tax gains from the divestiture of our U.S.

commercial marketing and Canadian mobile aggregation businesses in 2023.

We recognized $5.7 million of pre-tax gains in 2023 fiscal year compared to $2.0 million in 2024 fiscal year.

Interest from our debt facilities was $29.2 million for the year ended December 31, 2025, compared to $31.8 million for 2024.

We utilize floating-to-fixed interest rate swap agreements to hedge the variable interest portion of our debt, which decreased interest by $1.2 million and $6.2 million for the years ended December 31, 2025 and 2024, respectively.

Inclusive of the impact of the swap agreements, our interest rate was 5.4% and 5.3% for years ended December 31, 2025 and 2024, respectively.

Other (expense) income .

The change in other (expense) income was primarily due to $2.0 million of gains from divestiture of our commercial marketing business recognized during the year ended December 31, 2024, and the net impact of foreign currency losses of $2.5 million for the year ended December 31, 2025 compared to $0.2 million net gains for the same period in 2024, resulting from depreciation of the U.S.

dollar against the Euro and British pound, the principal currencies in which we transact.

Provision for income taxes .

The effective income tax rate for the years ended December 31, 2025 and 2024 was 18.2% and 20.2%, respectively.

The increase in provision for income taxes in 2024 was primarily due to the favorable impact of one-time tax planning strategies implemented in 2023 which were not repeated in 2024.

The decrease in provision for income taxes in 2025 was primarily due to tax benefits related to U.S.

federal tax regulations promulgated under Section 987 of the Internal Revenue of 1986, as amended, which took effect in 2025 and which govern governing pre-transition period foreign exchange gains and losses derived from translation of operations, assets, and liabilities of non-U.S.

qualified subsidiaries partially offset by valuations allowances established on certain equity-based compensation assets and excess foreign tax credits.

NON-GAAP MEASURES

The following tables provide reconciliations of financial measures that are not calculated in accordance with generally accepted accounting principles in the U.S.

to their most comparable U.S.

GAAP measures (“non-GAAP”).

(“non-GAAP”) to their most comparable U.S.

GAAP measures.

While we believe that these non-GAAP financial measures provide additional information to investors and may be useful in evaluating our financial information, they should be considered supplemental in nature and not as a substitute for financial information prepared in accordance with U.S.

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Severance and other costs related to staff realignment (3)

Charges for facility consolidations and office closures (4)

Expenses related to the transfer to our new corporate headquarters (5)

Expenses related to our agreement for the sale of receivables (6)

Charges and adjustments related to facility consolidations and office closures (4)

Pre-tax gain from divestiture of a business (5)

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(1) Represents impairment of operating lease right-of-use and leasehold improvement assets associated with exit from certain facilities, and an intangible asset associated with exit of a business.

(2) These are primarily third-party costs related to acquisitions and potential acquisitions, integration of acquisitions, and separation of discontinued businesses or divestitures.

(3) These costs are mainly due to involuntary employee termination benefits for our officers, and employees who have been notified that they will be terminated as part of a business reorganization or exit.

(4) These are exit costs associated with terminated leases or full office closures that we either (i) will continue to pay until the contractual obligations are satisfied but with no economic benefit to us, or (ii) paid upon termination and cease-use of the leased facilities.

(5) These costs represent incremental non-cash lease expense associated with a straight-line rent accrual during the “free rent” period in the lease for our new corporate headquarters in Reston, Virginia.

We took possession of the new facility during the fourth quarter of 2021, while also maintaining and incurring lease costs for the former headquarters in Fairfax, Virginia.

The transition to the new corporate headquarters was completed in the fourth quarter of 2022.

(6) These costs include legal and structuring fees related to our 2022 Master Receivables Purchase Agreement with MUFG Bank, Ltd.

put in place for the sale of our receivables.

(7) Includes pre-tax gain from the divestitures of our U.S.

commercial marketing and Canadian mobile text aggregation businesses.

(2) These are primarily third-party costs related to acquisitions and integration of acquisitions.

(3) These costs are due to involuntary employee termination benefits for (i) our officers and (ii) a group of employees who have been notified that they will be terminated as part of a business reorganization or exit.

For 2025, severance expense includes employee termination benefits as a direct result of contracts terminated for convenience during the year pursuant to executive orders issued by the Administration or actions recommended by DOGE and for which the Company was not reimbursed, or will not be reimbursed, by our federal government customers for these amounts.

(4) These charges and adjustments are related to a previously exited leased facility which we will continue to pay until the contractual obligations are satisfied but with no economic benefit to us, and the closure of certain international offices.

(5) Pre-tax gain related to the 2023 divestiture of our U.S.

commercial marketing business which includes contingent gains realized in the first and third quarters of 2024.

Non-GAAP Diluted Earnings per Share

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Severance and other costs related to staff realignment

Expenses related to facility consolidations and office closures (1)

Expenses related to the transfer to our new corporate headquarters

Expenses related to our agreement for the sale of receivables

Charges and adjustments related to facility consolidations and office closures (1)

Pre-tax gain from divestiture of a business

Amortization of intangibles

Amortization of intangible assets acquired in business combinations (2)

Income tax effects of the adjustments (3)

Non-GAAP Diluted EPS

(1) These are exit costs related to actual office closures (previously included in Adjusted EBITDA) and accelerated depreciation related to fixed assets for planned office closures.

(1) These are office closure charges and adjustments previously included in Adjusted EBITDA and accelerated depreciation related to fixed assets for planned office closures.

(2) The amortization of intangible assets acquired from business combinations totaled $37.0 million, $33.0 million, and $35.5 million for the years ended December 31, 2025, 2024, and 2023, respectively.

(3) Income tax effects were calculated using the effective tax rate, adjusted for discrete items, if any, of 22.2%, 20.2% and 22.8% for the years ended December 31, 2025, 2024, and 2023, respectively.

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We expect to meet these requirements through a combination of our cash and cash equivalents at hand, cash flow from operations, and borrowings.

Our primary source of borrowings is from our Credit Facility, as described in “Note 10 - Long-Term Debt” in the “Notes to Consolidated Financial Statements” in this Annual Report on Form 10-K.

Our primary source of borrowings is from our Credit Facility, as described in “Note 8 - Debt” in the “Notes to Consolidated Financial Statements” in this Annual Report on Form 10-K.

As of December 31, 2025, we had $550.0 million of unused borrowing capacity available under the Credit Facility to fund our ongoing operations, future acquisitions, dividend payments, and share repurchase program.

Should the need arise, we intend to further increase our borrowing capacity in the future to provide us with adequate working capital to continue our ongoing operations.

There are other conditions, such as the ongoing wars in Ukraine and the instability in the Middle East, that create uncertainty in the global economy, which in turn may impact, among other things, our ability to generate positive cash flows from operations and our ability to successfully execute and fund key initiatives.

However, our current belief is that the combination of internally generated funds, available bank borrowings, and cash and cash equivalents on hand will provide the required liquidity and capital resources necessary to fund ongoing operations, customary capital expenditures, quarterly cash dividends, share repurchases, and organic growth.

We have entered into floating-to-fixed interest rate swap agreements for a total notional value of $175.0 million to hedge a portion of our floating-rate Credit Facility.

The interest rate swaps will expire in 2030, but we may consider entering into additional swap agreements prior to the expiration of these existing hedges.

As of December 31, 2025, the percentage of our fixed-rate debt to total debt from our Credit Facility was 43%.

We provide support services to the U.S.

federal government and a prolonged federal government shutdown of non-essential functions may affect our ability to generate cash from that business to certain degrees.

There are other conditions, such as the ongoing wars in Ukraine, instabilities in the Middle East, and volatility in global trade (including the imposition of tariffs), that create uncertainty in the global economy, which in turn may impact, among other things, our ability to generate positive cash flows from operations and our ability to successfully execute and fund key initiatives.

However, our current belief is that the combination of internally generated funds, available bank borrowing capacity, and cash and cash equivalents on hand will provide the required liquidity and capital resources necessary to fund ongoing operations, customary capital expenditures, quarterly cash dividends, share repurchases, and organic growth.

Additionally, we continuously analyze our capital structure to ensure we have capital to fund future strategic acquisitions.

We continuously monitor the state of the financial markets to assess the availability of borrowing capacity under the Credit Facility and the cost of additional capital from both debt and equity markets.

At present, we believe we will be able to continue to access these markets at commercially reasonable terms and conditions if we need additional capital in the near term.

At present, we believe we will be able to continue to access these markets on commercially reasonable terms and conditions if we need additional capital in the near term.

Material Cash Requirements from Contractual Obligations .

As of December 31, 2025, contractual obligations that require a material use of cash include payments of interest on our Credit Facility and operating lease obligations for facilities and equipment.

At December 31, 2024, our outstanding Credit Facility balance, net of unamortized debt issuance costs, was $411.7 million, which is due in 2027 upon maturity.

We borrow funds under the Credit Facility at interest rates based on both the SOFR (i.e., 1-, 3-, or 6-month rates) and a fluctuating Base Rate (see “Note 10 - Long-Term Debt” in the “Notes to Consolidated Financial Statements” in this Annual Report).

Assuming that our interest rate on the Credit Facility is the same as on December 31, 2024, we anticipate our interest payments on the debt to be approximately $23.6 million in 2025, $23.6 million in 2026, and $6.2 million in 2027 when our Credit Facility expires.

The estimates do not take into account future drawdowns and repayments on the debt or changes in the variable interest rate, and actual interest may be different.

At December 31, 2025, our outstanding Credit Facility balance, net of unamortized debt issuance costs, was $401.4 million, which is expected to be refinanced prior to it becoming due upon maturity in 2027.

We borrow funds under the Credit Facility at interest rates based on both the SOFR (i.e., 1, 3, or 6-month rates) and a fluctuating Base Rate (see “Note 8 - Debt” in the “Notes to Consolidated Financial Statements” in this Annual Report on Form 10-K).

Assuming that our interest rate on the Credit Facility is the same as on December 31, 2025, we anticipate our interest payments on the debt to be approximately $20.7 million annually in 2026 and for each year thereafter.

The estimates do not consider future drawdowns and repayments on the debt or changes in the variable interest rate, and actual interest may be different.

As of December 31, 2025, we have operating leases for facilities and equipment with remaining terms ranging from 1 to 13 years.

Our current and long-term operating lease liabilities of $158.7 million at December 31, 2025 represent the present value of the minimum payments required under the non-cancellable leases, and the actual cash payments total $191.5 million.

The operating lease payment obligations by year are further discussed in “Note 7 - Leases” in the “Notes to Consolidated Financial Statements”.

As of December 31, 2024, we also have finance leases for equipment and furniture with lease payment obligations through 2029 as discussed in “Note 7 - Leases” in the “Notes to Consolidated Financial Statements”.

The operating lease payment obligations by year are further discussed in “Note 7 - Leases” in the “Notes to Consolidated Financial Statements” in this Annual Report on Form 10-K.

As of December 31, 2025, we also have finance leases for equipment and furniture with lease payment obligations through 2029 as discussed in “Note 7 - Leases” in the “Notes to Consolidated Financial Statements” in this Annual Report on Form 10-K.

The current and long-term finance lease liabilities at December 31, 2025 of $11.3 million represent the present value of the minimum payments totaling $12.0 million.

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July 11, 2025

August 1, 2024

July 31, 2025

September 5, 2025

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Net cash used in investing activities

Net cash (used in) provided by financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

Increase (decrease) in cash, cash equivalents, and restricted cash

Cash provided by operating activities for the year ended December 31, 2024 increased by $19.2 million compared to 2023 primarily due to the profitability of our contracts, our ability to invoice our customers and subsequent collection of cash, and the timing of vendor payments.

Cash used in investing activities for the year ended December 31, 2024 increased by $71.1 million compared to 2023 primarily due to our acquisition of AEG during fiscal year 2024.

We used $86.9 million of cash in financing activities during the year ended December 31, 2024 compared to $152.6 million during 2023.

The decrease in cash used in financing activities was primarily due to reduced net borrowings from our Credit Facility, partially offset by an increase in share repurchases during fiscal year 2024.

Net change in cash, cash equivalents, and restricted cash

Net cash provided by operating activities for the year ended December 31, 2025 decreased by $29.7 million compared to 2024 primarily due to profitability of our contracts, our ability to invoice our customers and subsequent collection of cash, and the timing of vendor payments.

Net cash used in investing activities for the year ended December 31, 2025 was lower than 2024 by $53.3 million primarily due to our acquisition of AEG during the 2024 fiscal year.

The change in net cash used in financing activities was primarily due to higher net borrowings from our debt facilities, in part to fund additional share repurchases during the 2025 fiscal year.

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 7. Management’s Discussion and Analysis