What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-07-30 compared with 2021-04-30 · 134 added, 131 removed, 315 unchanged (46% of the section changed)

12 unchanged sentences

Tetra Tech, Inc.

is a leading global provider of consulting and engineering services that focuses on water, environment, sustainable infrastructure, resource management, energy, and international development.

is a leading global provider of consulting and engineering services that focuses on water, environment, sustainable infrastructure, renewable energy, and international development.

We are a global company that is Leading with Science® to provide innovative solutions for our public and private clients.

1 unchanged sentence

Our reputation for high-end consulting and engineering services and our ability to develop solutions for water and environmental management has supported our growth for more than 55 years.

Today, we are proud to be making a difference in people’s lives worldwide through broad consulting, engineering, and technology servic e offerings.

In fiscal 2020, we worked on over 65,000 projects, in more than 100 countries on seven continents, with a talent force of 20,000 associates.

Today, we are proud to be making a difference in people’s lives worldwide through broad consulting, engineering, and technology service offerings.

We work on over 65,000 projects, in more than 100 countries on seven continents, with a talent force of 21,000 associates.

We are Leading with Science® throughout our operations, with domain experts across multiple disciplines supported by our advanced analytics, artificial intelligence, machine learning, and digital technology solutions.

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The following table presents the percentage of our revenue by client sector:

Three Months Ended Six Months Ended

2021 March 29,

2020 March 28,

2021 March 29,

Three Months Ended Nine Months Ended

2021 June 28,

2020 June 27,

2021 June 28,

Client Sector

27 unchanged sentences

commercial clients, and international clients that include both commercial and government sectors.

CIG supports commercial clients across the Fortune 500, energy utilities, industrial, manufacturing, aerospace, and resource management markets.

CIG also provides infrastructure and related environmental, engineering and project management services to commercial and local government clients across Canada, in Asia Pacific (primarily Australia and New Zealand), the United Kingdom, as well as Brazil and Chile.

CIG supports commercial clients across the Fortun e 500, renewable energy, industrial, manufacturing, and aerospace markets.

CIG also provides sustainable infrastructure and related environmental, engineering and project management services to commercial and local government clients across Canada, in Asia Pacific (primarily Australia and New Zealand), the United Kingdom, as well as Brazil and Chile.

The following table presents the percentage of our revenue by reportable segment:

Three Months Ended Six Months Ended

2021 March 29,

2020 March 28,

2021 March 29,

Three Months Ended Nine Months Ended

2021 June 28,

2020 June 27,

2021 June 28,

Reportable Segment

6 unchanged sentences

The following table presents the percentage of our revenue by contract type:

Three Months Ended Six Months Ended

2021 March 29,

2020 March 28,

2021 March 29,

Three Months Ended Nine Months Ended

2021 June 28,

2020 June 27,

2021 June 28,

Contract Type

5 unchanged sentences

Under time-and-materials contracts, we are paid for labor at negotiated hourly billing rates and paid for other expenses.

Under cost-plus contracts, some of which are subject to a contract ceiling amount, we are reimbursed for allowable costs and fees, which may be fixed or performance-based.

Under cost-plus contracts, some of which are subject to a contract ceiling amount, we are reimbursed for allowable cost s plus fees, which may be fixed or performance-based.

Profitability on these contracts is driven by billable headcount and our cost control.

33 unchanged sentences

We remain focused on providing clients with the highest level of service and our 450 global offices are operational, supporting our programs and projects.

By Leading with Science® , we are responding to the challenges of COVID-19, with the commitment of our 20,000 staff supported by technological innovation.

By Leading with Science® , we are responding to the challenges of COVID-19, with the commitment of our 21,000 s taff supported by technological innovation.

Our government business, which represents approximately 60% of our revenue, has been stable, while our commercial business experienced relatively more impact.

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The actions we have taken to navigate through this worldwide pandemic, the strength of our balance sheet, and our technical leadership position us well to address the global challenges of providing clean water, environmental restoration, and the impacts of climate change.

In the first half of fiscal 2021, revenue declined 0.8% compared to the prior-year period.

Our revenue includes contributions from acquisitions that did not contribute to our revenue in the first half of fiscal 2020.

In the first nine months of fiscal 2021, revenue increase d 3.6% compared to the prior-year per iod.

Our revenue includes contributions from acquisitions that did not contribute to our revenue in the first nine months of fiscal 2020.

Our year-over-year revenue comparisons were also impacted by the decision to dispose of our Canadian turn-key pipeline activities in the fourth quarter of fiscal 2019 and the subsequent wind-down of those activities in fiscal 2020, which included the disposal of related equipment.

State and Local Government.

state and local government revenue increased 12.0% in the first half of fiscal 2021 compared to the same period last year.

state and local government revenue increased 20.3% i n the first nine months of fiscal 2021 compared to the same period last yea r.

The increase reflects continued broad-based growth in our U.S.

state and local government project-related infrastructure business, particularly with increased revenue from municipal water infrastructure work in the metropolitan areas of California, Texas, and Florida.

Our episodic disaster response activities also increased compared to the first half of last year.

Our disaster response activities also increased compared to the first nine months of fiscal 2020.

Most of our work for U.S.

state and local governments relates to critical water and environmental programs, which we expect to continue to grow at a rate similar to the first half of this fiscal year.

state and local governments relates to critical water and environmental programs, which we expect to continue to grow for the remainder of this fiscal year.

The risk of further budgetary constraints to our clients is mitigated with the passage of the American Rescue Plan Act of 2021, signed into law on March 11, 2021, which provides financial support for state and local governments.

Federal Government.

federal government revenue increased 9.2% in the first half of fiscal 2021 compared to the prior-year period .

This increase includes the contributions from acquisitions, w hich did not have comparable revenue in the first half of fiscal 2020.

These contributions were partially offset by reduced international development activities as COVID-19 travel restrictions have caused some project delays.

federal government revenue increased 9.2% in the first nine months of fiscal 2021 compared to the prior-year period .

This increase includes the contributions from acquisitions, which did not have comparable revenue in the first nine months of fiscal 2020.

During periods of economic volatility, our U.S.

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We expect our U.S.

federal government revenue to grow modestly in fiscal 2021 due to continued increased federal advanced analytics activity.

federal government revenue to grow for the remainder of fiscal 2021 due to continued increased federal advanced analytics activity.

However, U.S.

federal spending amounts and priorities could change significantly from our current expectations, which could have a significant positive or negative impact on our fiscal 2021 revenue.

commercial revenue decreased 11.9% in the first half of fiscal 2021 compared to the same period last year.

commercial revenue decreased 11.0% in the first nine months of fiscal 2021 compared to the same period last year.

The decline was primarily due to reduced industrial activity as a result of the COVID-19 pandemic.

We currently expect our U.S.

commercial revenue to grow in the second half of the fiscal year with higher revenue from renewable energy and environmental programs, and more favorable year-over-year comparisons than first half of the fiscal year;

however, if adverse conditions due to the COVID-19 pandemic are prolonged, it could have a negative impact on our revenue for the second half of the fiscal year.

commercial revenue to grow for the remainder of fiscal 2021 with higher revenue from renewable energy and environmental programs;

however, if conditions due to the COVID-19 pandemic worsen or are prolonged, it could have a negative impact on our revenue for the remainder of the fiscal year.

International.

Our international revenue decreased 9.2% in the first half of fiscal 2021 compared to the prior-year period.

Excluding the impact of the aforementioned prior-year disposal of our Canadian turn-key pipeline activities, our international revenue decreased 7.5% in the first half of fiscal 2021 compared to the same period last year.

The revenue decline primarily reflects the adverse impact of the COVID-19 pandemic, partially offset by increased renewable energy activity in Canada.

We currently expect our overall international government work to grow in the second half of this fiscal year with improving economic conditions and more favorable year-over-year comparisons;

however, our international commercial activities could have a significant adverse impact if the current economic conditions due to COVID-19 are prolonged.

Our international revenue increased 0.4% i n the first nine months of fiscal 2021 compared to the prior-year period.

Excluding the contribution from a fiscal 2021 acquisition and the impact of the aforementioned prior-year disposal of our Canadian turn-key pipeline activities, our international revenue increased 1.1% in the first nine months of fiscal 2021 compared to the same period last year.

The revenue growth primarily reflects increased infrastructure activity in Canada and fewer restrictions related to the COVID-19 pandemic in the third quarter of fiscal 2021 .

We currently expect our overall international government work to grow for the remainder of fiscal 2021.

RESULTS OF OPERATIONS

Consolidated Results of Operations

Three Months Ended Six Months Ended

2021 March 29,

2020 Change March 28, 2021 March 29, 2020 Change

Three Months Ended Nine Months Ended

2021 June 28,

2020 Change June 27, 2021 June 28, 2020 Change

($ in thousands)

24 unchanged sentences

Accordingly, we segregate subcontractor costs from revenue to promote a better understanding of our business by evaluating revenue exclusive of costs associated with external service providers.

In the second quarter of fiscal 2021, revenue and revenue, net of subcontractor costs, increased $20.6 million, or 2.8%, and $15.4 million, or 2.6%, respectively, compared to the year-ago quarter.

Excluding the net contributions from the aforementioned acquisitions/disposal, our revenue was comparable to the second quarter of fiscal 2020.

In the first half of fiscal 2021, revenue and revenue, net of subcontractor costs, decreased $11.9 million, or 0.8%, and increased $6.5 million, or 0.5%, respectively, compared to the prior-year period.

Excluding the net contributions from the aforementioned acquisitions/disposal, our revenue decreased 3.8% in the first half of fiscal 2021 compared to the prior-year period.

The decline was primarily due to the adverse impact of the COVID-19 pandemic, particularly on our U.S.

and international commercial revenue.

In the third quarter of fiscal 2021, revenue and revenue, net of subcontractor costs, increased $91.9 million, or 12.9%, and $77.8 million, or 13.9%, respectively, compared to the year-ago quarter.

Excluding the net contributions from the aforementioned acquisitions/disposal, our revenue grew $67.2 million, or 9.5%, respectively, compared to the third quarter of fiscal 2020.

Our GSG segment's revenue and revenue, net of subcontractor costs, increased $56.5 million, or 13.1%, and $36.7 million, or 11.5%, respectively, in the third quarter of fiscal 2021 compared to last year's third quarter.

Our CIG segment's revenue and revenue, net of subcontractor costs, increased $36.4 million, or 12.5%, and $41.0 million, or 17.0%, respectively, in the third quarter of fiscal 2021 compared to the third quarter of fiscal 2020.

In the first nine months of fiscal 2021, revenue and revenue, net of subcontractor costs, increased $80.0 million, or 3.6%, and increased $84.3 million, or 4.8%, respectively, compared to the prior-year period.

Excluding the net contributions from the aforementioned acquisitions/disposal, our revenue for the first nine months of fiscal 2021 was comparable to the prior-year period.

Our GSG segment's revenue and revenue, net of subcontractor costs, increased $104.7 million, or 7.9%, and $78.0 million, or 8.0%, respectively, in the first nine months of fiscal 2021 compared to the same period last year.

Our CIG segment's revenue decreased $19.0 million, or 2.0%, and revenue, net of subcontractor costs, increased $5.7 million, or 0.7% in the first nine months of fiscal 2021 compared to the first nine months of fiscal 2020.

Our quarterly and year-to-date results for our GSG and CIG segments are described below under "Government Services Group" and "Commercial/International Services Group", respectively.

The following table reconciles our reported results to non-U.S.

GAAP adjusted results, which exclude gains on non-core equipment disposals, earn-out adjustments, COVID-19 impact and RCM results.

The gains on non-core equipment disposals relate to the disposal of our Canadian turn-key pipeline activities that commenced in the fourth quarter of fiscal 2019.

The effective tax rate applied to the adjustments to earnings per share ("EPS") to arrive at adjusted EPS averaged 23.3% in the first half of fiscal 2020.

GAAP adjusted results, which exclude gains on non-core dispositions, earn-out adjustments, COVID-19 impact and RCM results.

The gains on non-core dispositions in the third quarter and first nine months of fiscal 2020 relate to the disposal of our Canadian turn-key pipeline activities that commenced in the fourth quarter of fiscal 2019.

The effective tax rate applied to the adjustments to earnings per share ("EPS") to arrive at adjusted EPS averaged 24.3% in the first nine months of fiscal 2020.

We applied the relevant marginal statutory tax rate based on the nature of the adjustments and tax jurisdiction in which they occur.

There were no adjustments in the first half of fiscal 2021.

Both EPS and adjusted EPS were calculated using diluted weighted-average common shares outstanding for the respective periods as reflected in our consolidated statements of income.

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These incremental costs totaled $8.2 million in the second quarter of fiscal 2020.

Although the charges were recognized in the second quarter, substantially all of these costs were paid in cash in the third quarter of fiscal 2020.

Three Months Ended Six Months Ended

2021 March 29,

2020 Change March 28,

2021 March 29,

Although the charges were recognized in the second quarter of fiscal 2020, substantially all of these costs were paid in cash in the third quarter of fiscal 2020.

Three Months Ended Nine Months Ended

2021 June 28,

2020 Change June 27,

2021 June 28,

($ in thousands)

1 unchanged sentence

RCM — 1 (1) NM (1) — (1) NM

Non-core equipment disposal — (2,184) 2,184 NM — (2,984) 2,984 NM

Non-core dispositions — (4,494) 4,494 NM — (7,478) 7,478 NM

Earn-out adjustments — 550 (550) NM — (421) 421 NM

3 unchanged sentences

EPS $ 0.95 $ 0.83 $ 0.12 14.5% $ 2.74 $ 2.34 $ 0.40 17.1%

RCM — — — NM — — — NM

Non-core equipment disposal — (0.03) 0.03 NM — (0.04) 0.04 NM

Non-core dispositions — (0.06) 0.06 NM — (0.10) 0.10 NM

Earn-out adjustments — 0.01 (0.01) NM — (0.01) 0.01 NM

4 unchanged sentences

(1) Non-GAAP financial measure

Our operating income increased $13.3 million and $16.2 million in the second quarter and first half of fiscal 2021, respectively, compared to fiscal 2020 periods.

Our GSG segment's operating income increased $10.8 million and $16.4 million in the second quarter and first half of fiscal 2021, respectively, compared to the prior-year periods.

These results are described below under "Government Services Group." Our CIG segment's operating income increased $4.6 million and $2.6 million in the second quarter and first half of fiscal 2021, respectively, compared to the year-ago periods.

Our operating income increased $6.3 million and $22.5 million in the third quarter and first nine months of fiscal 2021, respectively, compared to fiscal 2020 periods.

Our GSG segment's operating income increased $6.2 million and $22.6 million in the third quarter and first nine months of fiscal 2021, respectively, compared to the prior-year periods.

These results are described below under "Government Services Group." Our CIG segment's operating income increased $5.2 million and $7.7 million in the third quarter and first nine months of fiscal 2021, respectively, compared to the year-ago periods.

These results are described below under "Commercial/International Services Group."

Our net interest expense decreased $0.7 million and $1.0 million in the second quarter and first half of fiscal 2021, respectively, compared to the prior-year periods.

Our net interest expense decreased $0.8 million and $1.8 million in the third quarter and first nine months of fiscal 2021, respectively, compared to the prior-year periods.

The decreases primarily reflect reduced borrowings.

Our income tax expense increased $4.8 million and $3.0 million in the second quarter and first half of fiscal 2021, respectively, compared to the same periods last year due to increased pre-tax income.

Our effective tax rates for the first half of fiscal 2021 and 2020 were 19.2% and 19.5%, respectively.

Income tax expense was reduced by $8.0 million and $6.7 million of excess tax benefits on share-based payments in the first half of fiscal 2021 and 2020, respectively.

Excluding the impact of the excess tax benefits on share-based payments, our effective tax rates in the first half of fiscal 2021 and 2020 were 25.8% and 25.9%, respectively.

Our EPS was $0.83 and $1.79 in the second quarter and first half of fiscal 2021, compared to $0.66 and $1.51 in the prior-year periods, respectively.

On the same basis as our adjusted operating income, EPS was $0.83 and $1.79 in the second quarter and first half of fiscal 2021, compared to $0.73 and $1.57 in fiscal 2020 periods, respectively.

Our income tax expense increased $0.7 million and $3.7 million in the third quarter and first nine months of fiscal 2021, respectively, compared to the same periods last year due to increased pre-tax income.

Our effective tax rates for the first nine months of fiscal 2021 and 2020 were 20.4% and 21.2%, respectively.

Income tax expense was reduced by $8.7 million and $7.0 million of excess tax benefits on share-based payments in the nine months of fiscal 2021 and 2020, respectively.

Excluding the impact of the excess tax benefits on share-based payments, our effective tax rates in the first nine months of fiscal 2021 and 2020 were 25.0% and 25.4%, respectively.

Our EPS was $0.95 and $2.74 in the third quarter and first nine months of fiscal 2021, compared to $0.83 and $2.34 in the prior-year periods, respectively.

On the same basis as our adjusted operating income, EPS was $0.95 and $2.74 in the third quarter and first nine months of fiscal 2021, compared to $0.78 and $2.34 in fiscal 2020 periods, respectively.

Segment Results of Operations

Government Services Group

Three Months Ended Six Months Ended

2021 March 29,

2020 Change March 28, 2021 March 29, 2020 Change

Three Months Ended Nine Months Ended

2021 June 28,

2020 Change June 27, 2021 June 28, 2020 Change

($ in thousands)

3 unchanged sentences

Income from operations $ 49,297 $ 43,100 $ 6,197 14.4% $ 143,106 $ 120,495 $ 22,611 18.8%

Revenue and revenue, net of subcontractor costs, increased $36.9 million, or 8.5%, and $26.0 million, or 8.1%, respectively, in the second quarter of fiscal 2021 compared to the year-ago quarter.

For the first half of fiscal 2021, revenue and revenue, net of subcontractor costs, increased $48.1 million, or 5.4%, and $41.3 million, or 6.3%, respectively, compared to the prior-year period.

Revenue and revenue, net of subcontractor costs, increased $56.5 million, or 13.1%, and $36.7 million, or 11.5%, respectively, in the third quarter of fiscal 2021 compared to the year-ago quarter.

For the first nine months of fiscal 2021, revenue and revenue, net of subcontractor costs, increased $104.7 million, or 7.9%, and $78.0 million, or 8.0%, respectively, compared to the prior-year period.

These increases reflect higher U.S.

state and local government activity for water and environmental programs and disaster response activities.

state and local government activities related to water and environmental programs, and disaster response.

Additionally, the increases also reflect contributions from the aforementioned acquisitions.

These increases were partially offset by lower international development revenue due to project delays caused by COVID-19.

Operating income increased $10.8 million and $16.4 million in the second quarter and first half of fiscal 2021, respectively, compared to the prior-year periods, reflecting the higher revenue.

Operating income increased $6.2 million and $22.6 million in the third quarter and first nine months of fiscal 2021, respectively, compared to the prior-year periods, reflecting the higher revenue.

In addition, we incurred $1.6 million of incremental costs for actions to respond to the COVID-19 pandemic in the second quarter of fiscal 2020.

Our operating margin, based on revenue, net of subcontractor costs, improved to 13.6% in the first half of fiscal 2021 compared to 11.9% in the same period last year.

Excluding the COVID-19 charges, our operating margin was 12.1% in the first half of fiscal 2020.

The improved operating margin was primarily due to improved labor utilization.

Our operating margin, based on revenue, net of subcontractor costs, improved to 13.7% in the first nine months of fiscal 2021 compared to 12.4% in the same period last year.

Excluding the COVID-19 charges, our operating margin was 12.6% in the first nine months of fiscal 2020.

The improved operating margin was primarily due to our increased focus on high-end consulting services and improved labor utilization.

Commercial/International Services Group

Three Months Ended Six Months Ended

2021 March 29,

2020 Change March 28, 2021 March 29, 2020 Change

Three Months Ended Nine Months Ended

2021 June 28,

2020 Change June 27, 2021 June 28, 2020 Change

($ in thousands)

3 unchanged sentences

Income from operations $ 34,017 $ 28,848 $ 5,169 17.9% $ 89,886 $ 82,156 $ 7,730 9.4 %

Revenue and revenue, net of subcontractor costs, decreased $15.3 million, or 5.0%, and $11.3 million, or 4.3%, respectively, in the second quarter of fiscal 2021 compared to the prior-year quarter.

For the first half of fiscal 2021, revenue and revenue, net of subcontractor costs, decreased $55.4 million, or 8.4%, and $35.3 million, or 6.4%, respectively, compared to the year-ago period.

Excluding the impact of the disposal of our Canadian turn-key pipeline activities, revenue decreased 4.2% and 7.2% in the second quarter and first half of fiscal 2021, respectively, compared to fiscal 2020 periods.

The declines primarily reflect the adverse impact of the COVID-19 pandemic.

Operating income increased $4.6 million and $2.6 million in the second quarter and first half of fiscal 2021, respectively, compared to fiscal 2020 periods.

Revenue and revenue, net of subcontractor costs, increased $36.4 million, or 12.5%, and $41.0 million, or 17.0%, respectively, in the third quarter of fiscal 2021 compared to the prior-year quarter.

For the first nine months of fiscal 2021, revenue and revenue, net of subcontractor costs, decreased $19.0 million, or 2.0%, and increased $5.7 million, or 0.7%, respectively, compared to the year-ago period.

Excluding the impact of the disposal of our Canadian turn-key pipeline activities, revenue increased 11.8% and decreased 1.5% in the third quarter and first nine months of fiscal 2021, respectively, compared to fiscal 2020 periods.

Revenue growth in the third quarter of fiscal 2021 reflects increased infrastructure activity in Canada and fewer restrictions related to the COVID-19 pandemic in the third quarter of fiscal 2021 .

The decline in the first nine months of fiscal 2021 was primarily due to the adverse impact of the COVID-19 pandemic during the first half of fiscal 2021 compared to the first half of fiscal 2020.

Operating income increased $5.2 million and $7.7 million in the third quarter and first nine months of fiscal 2021, respectively, compared to fiscal 2020 periods.

In the second quarter of fiscal 2020, we incurred $6.6 million of incremental costs for actions to respond to the COVID-19 pandemic.

Additionally, operating income in the second quarter and first half of fiscal 2020 included gains of $2.2 million and $3.0 million, respectively, from the disposition of non-core equipment.

Excluding the fiscal 2020 COVID-19 charges and disposition gains, operating income increased $0.2 million and decreased $1.0 million in the second quarter and first half of fiscal 2021, respectively, compared to fiscal 2020 periods.

Our operating margin, based on revenue, net of subcontractor costs, improved to 10.9% in the first half of fiscal 2021 compared to 9.7% in the same period last year.

Excluding the COVID-19 charges and disposition gains, our operating margin was 10.4% in the first half of fiscal 2020.

The improved operating margin was primarily due to our increased focus on high-end consulting services.

Additionally, operating income in the third quarter and first nine months of fiscal 2021 included gains of $2.0 million compared to gains in the same periods of fiscal 2020 of $4.5 million and $7.5 million, respectively, related to the disposition of our Canadian pipeline activities.

Excluding these COVID-19 charges and disposition gains, operating income increased $7.7 million and $6.6 million in the third quarter and first nine months of fiscal 2021, respectively, compared to fiscal 2020 periods.

Our operating margin, based on revenue, net of subcontractor costs, improved to 11.3% in the first nine months of fiscal 2021 compared to 10.4% in the same period last year.

Excluding the COVID-19 charges and disposition gains, our operating margin was 11.1% in the first nine months of fiscal 2021 compared to 10.3% in the same period last year.

The improved operating margin was primarily due to our increased focus on high-end consulting services and improved labor utilization.

Remediation and Construction Management

Three Months Ended Six Months Ended

2021 March 29,

2020 Change March 28, 2021 March 29, 2020 Change

Three Months Ended Nine Months Ended

2021 June 28,

2020 Change June 27, 2021 June 28, 2020 Change

($ in thousands)

4 unchanged sentences

RCM's projects were substantially complete at the end of fiscal 2018.

There were no significant activities in RCM for the second quarter and first half of fiscal 2021 and 2020.

There were no significant operating activities in RCM for the third quarter and first nine months of fiscal 2021 and 2020.

The following table provides a reconciliation between remaining unsatisfied performance obligations ("RUPOs") and backlog:

11 unchanged sentences

Capital Requirements.

As of March 28, 2021, we h ad $225.3 million of cash and cash equivalents and access to an additional $720 million of borrowings available under our credit facility.

During the first half of fiscal 2021, we generated $157.4 million of cash from operations.

As of June 27, 2021, we h ad $234.3 million of cash and cash equivalents and access to an additional $721 million of borrowings available under our credit facility.

During the first nine months of fiscal 2021, we generated $226.5 million of cash from operations.

To date, we have not experienced any significant deterioration in our financial condition or liquidity due to the COVID-19 pandemic and our credit facilities remain available.

5 unchanged sentences

On January 27, 2020, the Board of Directors authorized a new $200 million stock repurchase program, which was included in our remaining balance of $207.8 million as of fiscal 2020 year-end.

In the first half of fiscal 2021, we repurchased and settled 249,714 shares with an average price of $120.14 per share for a total cost of $30 million in the open market.

At March 28, 2021, we had a remaining balance of $177.8 million under our stock repurchase program.

In the first nine months of fiscal 2021, we repurchased and settled 368,177 shares with an average price of $122.22 per share for a total cost of $45.0 million in the open market.

At June 27, 2021, we had a remaining balance of $162.8 million under our stock repurchase program.

On November 9, 2020, the Board of Directors declared a quarterly cash dividend of $0.17 per share payable on December 11, 2020 to stockholders of record as of the close of business on November 30, 2020.

On January 25, 2021, the Board of Directors declared a quarterly cash dividend of $0.17 per share payable on February 26, 2021 to stockholders of record as of the close of business on February 10, 2021.

Subsequent Event.

On April 26, 2021, the Board of Directors declared a quarterly cash dividend of $0.20 pe r share payable on May 28, 2021 to stockholders of record as of the close of business on May 12, 2021.

Subsequent Event.

On July 26, 2021, the Board of Directors declared a quarterly cash dividend of $0.20 pe r share payable on September 3, 2021 to stockholders of record as of the close of business on August 20, 2021.

Cash Equivalents and Restricted Cash.

As of March 28, 2021, cash equivalents and restricted cash w ere $225.3 million, an increase of $67.8 million compared to the fiscal 2020 year-end.

The increase was due to net cash provided by operating activities, stock options exercised and the effect of exchange rate changes on cash, partially offset by net repayments of long-term debt, stock repurchases, taxes paid on vested restricted stock, dividends and contingent earn-out payments.

As of June 27, 2021, cash equivalents and restricted cash w ere $234.3 million, an increase of $76.8 million compared to the fiscal 2020 year-end.

The increase was due to net cash provided by operating activities, partially offset by net repayments of long-term debt, stock repurchases, as well as payments for business acquisitions and contingent earn-out payments.

Operating Activities .

For the first half of fiscal 2021, ne t cash provided by operating activities was $157.4 million, an increase of $74.2 million compared to the prior-year period.

The increase primarily resulted from the timing on payments to our vendors and employees.

For the first nine months of fiscal 2021, ne t cash provided by operating activities was $226.5 million, an increase of $32.0 million compared to the prior-year period.

The increase primarily reflects an increase in earnings

adjusted for non-cash items of $23.8 million and improved working capital in the first nine months of fiscal 2021 compared to the same period last year.

Investing Activities .

For the first half of fiscal 2021, net c ash used in investing activities was $7.3 million, a decrease of $20.0 million compared to the year-ago period, due to SEG acquisition in the second quarter of fiscal 2020.

For the first nine months of fiscal 2021, net c ash used in investing activities was $23.1 million, an increase of $2.4 million compared to the year-ago period.

The increase was due to the proceeds from sales of equipment related to the disposal of our Canadian turn-key pipeline activities in the fiscal 2020 period, partially offset by lower payments for business acquisitions in the current year period compared to the prior-year period.

Financing Activities .

For the first half of fiscal 2021, net cash used in financing activities was $91.1 million, an increase of $51.9 million compared to the same period last year.

The change was due to a net repayment on long-term debt of $25.7 million in the first half of fiscal 2021 compared to a net borrowing of $71.4 million in the prior-year period.

This change was partially offset by decreased stock repurchases compared to the year-ago period.

For the first nine months of fiscal 2021, net cash used in financing activities was $137.5 million, a decrease of $15.1 million compared to the fiscal 2020 period.

The decrease was due to decreased stock repurchases and payments of contingent earn-outs compared to the prior-year period.

This change was partially offset by a net increase of repayments of debt compared to the year-ago period.

Debt Financing.

13 unchanged sentences

The Amended Credit Agreement expires on July 30, 2023, or earlier at our discretion upon payment in full of loans and other obligations.

As of March 28, 2021, we had $250.8 million in outstanding borrowings under the Amended Credit Agreement, which was comprised of $221.9 million under the Term Loan Facility and $28.9 million outstanding under the Amended Revolving Credit Facility at a year-to-date weighted-average interest rate of 1.30% per annum.

As of June 27, 2021, we had $246.5 million.

in outstanding borrowings under the Amended Credit Agreement, which was comprised of $218.8 million under the Term Loan Facility and $27.7 million outstanding under the Amended Revolving Credit Facility at a year-to-date weighted-average interest rate of 1.28% per annum.

In addition, we had $0.7 million in standby letters of credit under the Amended Credit Agreement.

Our average effective weighted-average interest rate on borrowings outstanding during the three months ended March 28, 2021 under the Amended Credit Agreement, including the effects of interest rate swap agreements described in Note 14, “Derivative Financial Instruments” of the “Notes to Consolidated Financial Statements”, was 3.27%.

At March 28, 2021, we had $419.6 million of available credit under the Amended Revolving Credit Facility, all of which could be borrowed without a violation of our debt covenants.

Our average effective weighted-average interest rate on borrowings outstanding during the nine months ended June 27, 2021 under the Amended Credit Agreement, including the effects of interest rate swap agreements described in Note 14, “Derivative Financial Instruments” of the “Notes to Consolidated Financial Statements”, was 3.28%.

At June 27, 2021, we had $421.0 million of available credit under the Amended Revolving Credit Facility, all of which could be borrowed without a violation of our debt cov enants.

The Amended Credit Agreement contains certain affirmative and restrictive covenants, and customary events of default.

The financial covenants provide for a maximum Consolidated Leverage Ratio of 3.00 to 1.00 (total funded debt/EBITDA, as defined in the Amended Credit Agreement) and a minimum Consolidated Interest Coverage Ratio of 3.00 to 1.00 (EBITDA/Consolidated Interest Charges, as defined in the Amended Credit Agreement).

Our obligations under the Amended Credit Agreement are guarant eed by certain of our domestic subsidiaries and are secured by first priority liens on (i) the equity interests of certain of our subsidiaries, including those subsidiaries that are guarantors or borrowers under the Amended Credit Agreement, and (ii) the accounts receivable, general intangibles and intercompany loans, and those of our subsidiaries that are guarantors or borrowers.

At March 28, 2021, we were in compliance with these covenants with a consolidated leverage ratio of 1.03x and a consolidated interest coverage ratio of 23.06x.

Our obligations under the Amended Credit Agreement are guaranteed by certain of our domestic subsidiaries and are secured by first priority liens on (i) the equity interests of certain of our subsidiaries, including those subsidiaries that are guarantors or borrowers under the Amended Credit Agreement, and (ii) the accounts receivable, general intangibles and intercompany loans, and those of our subsidiaries that are guarantors or borrowers.

At June 27, 2021, we were in compliance with these covenants with a consolidated leverage ratio of 0.98x and a consolidated interest coverage ratio of 25.08x.

In addition to the Amended Credit Agreement, we maintain other credit facilities, which may be used for bank overdrafts, short-term cash advances and bank guarantees.

At March 28, 2021, there was $1.6 million outstanding under these facilities and the aggregate amount of standby letters of credit outstanding was $63.3 million.

As of March 28, 2021, we had bank overdrafts of $15.4 million related to our U.S.

At June 27, 2021, there was $2.5 million outstanding under these facilities and the aggregate amount of standby letters of credit outstanding was $55.3 million.

As of June 27, 2021, we had bank overdrafts of $3.6 million related to our U.S.

disbursement bank accounts.

This balance is reported in the "Current portion of long-term debt and other short-term borrowings" on our consolidated balance sheet as of March 28, 2021.

This balance is reported in the "Current portion of long-term debt and other short-term borrowings" on our consolidated balance sheet as of June 27, 2021 .

The change in bank overdraft balance is classified as cash flows from financing activities on our consolidated statements of cash flows as we believe these overdrafts to be a form of short-term financing from the bank due to our ability to fund the overdraft with the overdraft protection on the bank accounts or our other credit facilities if needed.

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January 25, 2021 $ 0.17 February 10, 2021 $ 9,212 February 26, 2021

April 26, 2021 $ 0.20 May 12, 2021 N/A May 28, 2021

April 26, 2021 $ 0.20 May 12, 2021 $ 10,831 May 28, 2021

July 26, 2021 $ 0.20 August 20, 2021 N/A September 3, 2021

We evaluate the realizability of our deferred tax assets by assessing the valuation allowance and adjust the allowance, if necessary.

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The ability or failure to achieve the forecasted taxable income in the applicable taxing jurisdictions could affect the ultimate realization of deferred tax assets.

Based on future operating results in certain jurisdictions, it is possible that the current valuation allowance positions of those jurisdictions could be adjusted in the next 12 months, particularly in the United Kingdom where we have a valuation allowance of approximately $12.5 million primarily related to the realizability of net operating loss carry-forwards.

As of March 28, 2021 and September 27, 2020, the liability for income taxes associated with uncertain tax positions was $10.0 million and $9.7 million, respectively.

Based on future operating results in certain jurisdictions, it is likely that the current valuation allowance positions of those jurisdictions could be adjusted in the next 12 months (including as soon as the fourth quarter of fiscal 2021), particularly in the United Kingdom where we have a valuation allowance of approximately $12.5 million primarily related to the realizability of net operating loss carry-forwards.

As of June 27, 2021 and September 27, 2020, the liability for income taxes associated with uncertain tax positions was $12.8 million and $9.7 million, respectively.

It is reasonably possible that the amount of the unrecognized benefit with respect to certain of our unrecognized tax positions may significantly decrease within the next 12 months.

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We are required to reimburse the issuers of letters of credit and bank guarantees for any payments they make under the outstanding letters of credit or bank guarantees.

Our Amended Credit Agreement and additional letter of credit facilities cover the issuance of our standby letters of credit and bank guarantees and are critical for our normal operations.

Our Amended Credit Agreement and additional letter of credit facilities cover the issu ance of our standby letters of credit and bank guarantees and are critical for our normal operations.

If we default on the Amended Credit Agreement or additional credit facilities, our inability to issue or renew standby letters of credit and bank guarantees would impair our ability to maintain normal operations.

At March 28, 2021, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $63.3 million in standby lett ers of credit outstanding under our additional letter of credit facilities.

At June 27, 2021, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $55.3 million in standby letters of credit outstanding under our additional letter of credit facilities.

• From time to time, we provide guarantees and indemnifications related to our services.

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For cost-plus contracts, amounts that may become payable pursuant to guarantee provisions are normally recoverable from the client for work performed under the contract.

For lump sum or fixed-price

contracts, this amount is the cost to complete the contracted work less amounts remaining to be billed to the client under the contract.

For lump sum or fixed-price contracts, this amount is the cost to complete the contracted work less amounts remaining to be billed to the client under the contract.

Remaining billable amounts could be greater or less than the cost to complete.

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The Facility matures on July 30, 2023.

At March 28, 2021, we had borrowings outstanding under the Credit Agreement of $250.8 million at a year-to-date weighted-average interest rate of 1.30% per annum.

At June 27, 2021, we had borrowings outstanding under the Credit Agreement of $246.5 million at a year-to-date weighted-average interest rate of 1.28% per annum.

In August 2018, we entered into five interest rate swap agreements with five banks to fix the variable interest rate on $250 million of our Amended Term Loan Facility.

The objective of these interest rate swaps was to eliminate the variability of our cash flows on the amount of interest expense we pay under our Credit Agreement.

As of March 28, 2021, the notional principal of our outstanding interest swap agreements was $221.9 million ($44.4 million each.) Our year-to-date average effective interest rate on borrowings outstanding under the Credit Agreement, including the effec ts of interest rate swap agreements, at March 28, 2021, was 3.27%.

As of June 27, 2021, the notional principal of our outstanding interest swap agreements was $218.8 million ($43.8 million each.) Our year-to-date average effective interest rate on borrowings outstanding under the Credit Agreement, including the effects of interest rate swap agreements, at June 27, 2021, was 3.28%.

For more information, see Note 14, “Derivative Financial Instruments” of the “Notes to Consolidated Financial Statements”.

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Therefore, we are subject to currency exposure and volatility because of currency fluctuations.

We attempt to minimize our exposure to these fluctuati ons by matching revenue and expenses in the same currency for our contracts.

For the first half of fiscal 2021 and 2020, we reported $1.3 million of foreign currency loss and $0.2 million of foreign currency gain, respectively, in “Selling, general and administrative expenses” on our consolidated statements of income.

We attempt to minimize our exposure to these fluctuati ons by matching revenue and expenses

in the same currency for our contracts.

For the first nine months of fiscal 2021 and 2020, we reported $1.8 million of foreign currency loss and $0.2 million of foreign currency gain, respectively, in “Selling, general and administrative expenses” on our consolidated statements of income.

We have foreign currency exchange rate exposure in our results of operations and equity primarily because of the currency translation related to our foreign subsidiaries where the local currency is the functional currency.

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dollar weakens against foreign currencies.

For the first half of fiscal 2021 and 2020, 28.3% and 30.9%

of our consolidated revenue, respectively, was generated by our international business.

For the first half of fiscal 2021, the effect of foreign exchange rate translation on the consolidated balance sheets was an increase in our equity by $43.4 million compared to a decrease in equity of $33.1 million in the first half of fiscal 2020.

These amounts were recognized as adjustment s to equity through other comprehensive income.

For the first nine months of fiscal 2021 and 2020, 29.2% and 30.1% of our consolidated revenue, respectively, was generated by our international business.

For the first nine months of fiscal 2021, the effect of foreign exchange rate translation on the consolidated balance sheets was an increase in our equity by $54.5 million compared to a decrease in equity of $11.4 million in the first nine months of fiscal 2020.

These amounts were recognized as adjustments to equity through other comprehensive income.

Quantitative and Qualitative Disclosures about Market Risk

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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-Q

Item 2. Management’s Discussion and Analysis