What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-06 compared with 2022-02-04 · 163 added, 132 removed, 270 unchanged (52% of the section changed)

12 unchanged sentences

Tetra Tech, Inc.

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

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

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

2 unchanged sentences

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

We worked on over 70,000 projects, in more than 100 countries on seven continents, with a talent force of 21,000 associates.

We work on over 70,000 projects annually, in more than 100 countries on all 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.

3 unchanged sentences

In supporting our clients, we seek to add value and provide long-term sustainable consulting, engineering and technology solutions.

By combining ingenuity and practical experience, we have helped to advance sustainability by managing water, protecting the environment, providing renewable energy, and engineering green solutions for our cities and communities.

By combining ingenuity and practical experience, we have helped to advance sustainability by managing water, protecting the environment, providing clean energy, and engineering green solutions for our cities and communities.

We derive income from fees for professional, technical, program management, and construction management services.

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

Three Months Ended

2022 December 27,

Three Months Ended Six Months Ended

2022 March 28,

2021 April 3,

2022 March 28,

Client Sector

1 unchanged sentence

federal government (1)

29.7 35.5 30.4 35.1

commercial 20.1 19.0 20.4 19.8

International (2)

31.9 28.3 30.8 28.3

Total 100.0 % 100.0 % 100.0 % 100.0 %

9 unchanged sentences

RCM's projects were complete at the end of fiscal 20 18;

however, there are a few outstanding claims currently in dispute resolution.

There were no significant operating activities in RCM in the first quarters of fiscal 2022 and 2021.

however, there was an outstanding $11 million claim receivable in dispute resolution as of April 3, 2022.

In May 2022, we received a cash settlement for this claim, which will result in an immaterial gain in the third quarter of fiscal 2022.

There were no significant operating activities in RCM for the second quarters and first halves of fiscal 2022 and 2021.

Government Services Group ( “ GSG ” ).

9 unchanged sentences

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

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

CIG supports commercial clients across the Fortun e 500, clean energy, industrial, high performance buildings, 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.

Beginning in fiscal 2022, we aligned our operations to better serve our clients and markets, and created a new High Performance Buildings division in our CIG reportable segment.

At the beginning of fiscal 2022, we aligned our operations to better serve our clients and markets, and created a new High Performance Buildings division in our CIG reportable segment.

As a result, we transferred some related operations in our GSG reportable segment to our CIG reportable segment.

1 unchanged sentence

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

Three Months Ended

2022 December 27,

Three Months Ended Six Months Ended

2022 March 28,

2021 April 3,

2022 March 28,

Reportable Segment

6 unchanged sentences

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

Three Months Ended

2022 December 27,

Three Months Ended Six Months Ended

2022 March 28,

2021 April 3,

2022 March 28,

Contract Type

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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 21,000 associates 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.

Much of our commercial business has continued due to regulatory drivers, but we have seen project delays in the industrial sectors.

Our diversified end-markets have allowed us to redeploy staff to areas of uninterrupted or increased demand, and we have made decisions to align our cost structures with our clients' projects.

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

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 quarter of fiscal 2022, revenue increased 12.2% compared to the prior-year quarter .

This year-over-year growth primarily reflects increased activity with U.S.

state and local government clients and commercial clients, both in the U.S.

and international.

Our revenue also includes contributions from acquisitions that did not contribute to our revenue in the first quarter of fiscal 2021.

In the first half of fiscal 2022, revenue increased 12.6% compared to the prior-year period.

This year-over-year growth reflects increased activity with U.S.

state and local government clients and commercial clients.

Our international activities with both commercial and government clients have also contributed to our revenue growth.

Our revenue also includes contributions from acquisitions that did not contribute to our revenue in the first half of fiscal 2021.

In the second half of fiscal 2022, we expect our revenue to continue to grow year-over-year at a rate similar to the first half of fiscal 2022 after normalizing for the extra week of operations in the fourth quarter of fiscal 2021.

We report results of operations based on 52/53 week periods ending on the Sunday nearest September 30.

As a result, our fiscal 2021 had 53 weeks compared to 52 weeks this year with the extra week occurring in the fourth quarter of fiscal 2021.

State and Local Government.

state and local government revenue increased 27.2% i n the first quarter of fiscal 2022 compared to the same quarter last yea r.

state and local government revenue increased 23.7% in the first half of fiscal 2022 compared to the same period last year.

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 disaster response activities also increased compared to the first quarter of fiscal 2021.

Our disaster response activities also increased compared to the first half of fiscal 2021.

Most of our work for the U.S.

1 unchanged sentence

Federal Government.

federal government revenue increased 0.3% in the first quarter of fiscal 2022 compared to the prior-year quarter .

These stable results reflect increased year-over-year revenue for both Department of Defense and civilian agencies, which were substantially offset by reduced international development activity in Afghanistan.

federal government revenue decreased 2.5% in the first half of fiscal 2022 compared to the prior-year period.

The decrease was due to reduced international development activity, especially in Afghanistan.

This decline was partially offset by increased year-over-year revenue for both Department of Defense and civilian agencies.

During periods of economic volatility, including during the COVID-19 pandemic, our U.S.

federal government business has historically been the most stable and predictable.

Our revenue also includes contributions from acquisitions that did not contribute to our revenue in the first half of fiscal 2021.

We expect our U.S.

federal government revenue to grow in the remainder of fiscal 2022 primarily due to increased advanced analytics activity and the current administration's focus on long-term infrastructure, climate change, and international development.

commercial revenue increased 12.1% in the first quarter of fiscal 2022 compared to the same quarter last year.

federal government revenue to grow for the remainder of fiscal 2022 primarily due to increased advanced analytics activity and the current administration's focus on long-term infrastructure and climate change.

commercial revenue increased 15.6% in the first half of fiscal 2022 compared to the same period last year.

This increase was primarily due to more activity on environmental programs, including meeting net zero carbon goals and high performance buildings.

2 unchanged sentences

International.

Our international revenue increased 18.2% i n the first quarter of fiscal 2022 compared to the prior-year quarter.

The revenue growth primarily reflects government stimulus spending on infrastructure and increased commercial activity related to new regulatory requirements for sustainability .

Our revenue also includes contributions from acquisitions that did not contribute to our revenue in the first quarter of fiscal 2021.

Our international revenue increased 22.7% in the first half of fiscal 2022 compared to the prior-year period.

The revenue growth primarily reflects government stimulus spending on infrastructure and commercial activity related to an increased focus on sustainability .

Our revenue also includes contributions from acquisitions that did not contribute to our revenue in the first half of fiscal 2021.

We expect these trends and the related growth in our international work to continue for the remainder of fiscal 2022.

1 unchanged sentence

Consolidated Results of Operations

Three Months Ended

2022 December 27,

Three Months Ended Six Months Ended

2022 March 28,

2021 Change April 3, 2022 March 28, 2021 Change

($ in thousands, except per share data)

23 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 first quarter of fiscal 2022, revenue and revenue, net of subcontractor costs, increased $93.4 million, or 12.2%, and $74.2 million, or 12.3%, respectively, compared to year-ago quarter.

Excluding the contributions from acquisitions that did not have activity in the first quarter of last year, our revenue increased approximately 7% in the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021.

Our GSG segment's revenue and revenue, net of subcontractor costs, increased $31.4 million, or 7.4%, and $22.5 million, or 7.4%, respectively, in the first quarter of fiscal 2022 compared to last year's first quarter.

Our CIG segment's revenue increased $59.8 million, or 16.8%, and revenue, net of subcontractor costs, increased $51.7 million, or 17.2% in the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021.

Our first quarter of fiscal 2022 results for our GSG and CIG segments are described below under "Government Services Group" and "Commercial/International Services Group", respectively.

In the second quarter of fiscal 2022, revenue and revenue, net of subcontractor costs, increased $98.0 million, or 13.0%, and $99.8 million, or 16.6%, respectively, compared to the year-ago quarter.

Excluding the contributions from acquisitions that did not have activity in the second quarter of last year, our revenue increased approximately 7% in the second quarter of fiscal 2022 compared to the second quarter of fiscal 2021.

Our GSG segment's revenue and revenue, net of subcontractor costs, increased $16.4 million, or 3.8%, and $27.4 million, or 8.8%, respectively, in the second quarter of fiscal 2022 compared to last year's second quarter.

Our CIG segment's revenue increased $81.5 million, or 24.3%, and revenue, net of subcontractor costs, increased $72.9 million, or 25.2% in the second quarter of fiscal 2022 compared to the second quarter of fiscal 2021.

In the first half of fiscal 2022, revenue and revenue, net of subcontractor costs, increased $191.4 million, or 12.6%, and $174.0 million, or 14.4%, respectively, compared to the prior-year period.

Excluding the contributions from acquisitions that did not have activity in the first half of fiscal 2021, our revenue increased approximately 7% in the first half of fiscal 2022 compared to the first half of fiscal 2021.

Our GSG segment's revenue and revenue, net of subcontractor costs, increased $47.8 million, or 5.6%, and $49.9 million, or 8.1%, respectively, in the first half of fiscal 2022 compared to the prior-year period.

Our CIG segment's revenue increased $141.3 million, or 20.4%, and revenue, net of subcontractor costs, increased $124.6 million, or 21.1% in the first half of fiscal 2022 compared to the first half of fiscal 2021.

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 a non-operating benefit of Employee Retention Credits ("ERC's") related to COVID-19.

The effective tax rate applied to the adjustment to earnings per share ("EPS") to arrive at adjusted EPS was 26% for fiscal 2022.

GAAP adjusted results, which exclude a non-operating benefit of Employee Retention Credits ("ERC's") related to COVID-19 in the first quarter of fiscal 2022.

The effective tax rate applied to the adjustment to earnings per share ("EPS") to arrive at adjusted EPS was 26%.

We applied the relevant marginal statutory tax rate based on the nature of the adjustment and tax jurisdiction in which it occurred.

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

Three Months Ended

2022 December 27,

Three Months Ended Six Months Ended

2022 March 28,

2021 Change April 3,

2022 March 28,

($ in thousands, except per share data)

Income from operations $ 74,520 $ 60,807 $ 13,713 22.6% $ 161,740 $ 127,059 $ 34,681 27.3%

COVID-19 Credits (4,451) — (4,451) NM

COVID-19 Credits — — — NM (4,451) — (4,451) NM

Adjusted income from operations (1)

1 unchanged sentence

EPS $ 0.98 $ 0.83 $ 0.15 18.1% $ 2.23 $ 1.79 $ 0.44 24.6%

COVID-19 Credits (0.06) — (0.06) NM

COVID-19 Credits — — — NM (0.06) — (0.06) NM

Adjusted EPS (1)

2 unchanged sentences

(1) Non-GAAP financial measure

Operating income increased $21.0 million, or 31.6%, in the first quarter of fiscal 2022 compared to the year-ago quarter.

In the first quarter of fiscal 2022, we recognized the benefit of ERC's totaling $4.5 million, which represent reimbursement from the U.S.

federal government under the Coronavirus Aid, Relief and Economic Security Act for the costs incurred during the second quarter of fiscal 2020 to address the COVID-19 pandemic.

Operating income increased $13.7 million, or 22.6%, in the second quarter of fiscal 2022 compared to the second quarter last year.

In the first half of fiscal 2022, operating income increased $34.7 million, or 27.3%, compared to the first half of fiscal 2021.

The first half of fiscal 2022 results include the benefit of ERC's totaling $4.5 million, which represents reimbursement from the U.S.

federal government under the Coronavirus Aid, Relief and Economic Security Act for the costs we incurred during the second quarter of fiscal 2020 to address the COVID-19 pandemic.

These amounts were recognized in the first quarter of fiscal 2022 when the funds were received due to the uncertainty related to the computation of qualifying amounts and delayed processing times for our application.

These amounts were primarily reflected as a reduction to "Other Costs of Revenue" in our Consolidated Statement of Income and an increase to "Cash Provided by Operations" in our Consolidated Statement of Cash Flows for the first quarter of fiscal 2022, consistent with the presentation of the related costs in the second quarter of fiscal 2020.

The ERC's increased operating income in our GSG and CIG segments $3.1 million and $1.4 million, respectively.

Excluding the ERC's, our adjusted operating income increased $16.5 million, or 24.9%, in the first quarter of fiscal 2022 compared to the same quarter last year.

The increase reflects improved results in our GSG and CIG segments, which are described below under "Government Services Group" and "Commercial/International Services Group", respectively.

Our net interest expense was $2.9 million in the first quarter of fiscal 2022 compared to $3.0 million in the prior-year quarter.

The benefit of lower average year-over-year borrowings was substantially offset by the increased interest expense related to our contingent earn-out liabilities.

The effective tax rates for the first quarters of fiscal 2022 and 2021 were 18.8% and 17.0%, respectively.

Income tax expense was reduced b y $4.5 million and $6.1 million of excess tax benefits on share-based payments in the first quarters of fiscal 2022 and 2021, respectively.

Excluding the impact of these tax benefits, our effective tax rates for the first quarters of fiscal 2022 and 2021 were 24.1% an d 26.8%, r espectively.

Our EPS was $1.25 in the first quarter of fiscal 2022, compared to $0.96 in the year-ago quarter.

On the same basis as our adjusted operating income, EPS was $1.19 in the first quarter of fiscal 2022 compared to $0.96 in the first quarter of fiscal 2021.

These amounts were primarily reflected as a reduction to "Other Costs of Revenue" in our Consolidated Statement of Income and an increase to "Cash Provided by Operations" in our Consolidated Statement of Cash Flows for the first half of fiscal 2022, consistent with the presentation of the related costs in the second quarter of fiscal 2020.

The ERC's increased operating income in our GSG and CIG segments by $3.1 million and $1.4 million, respectively.

Excluding the ERC's, our adjusted operating income increased $30.2 million, or 23.8%, in the first half of fiscal 2022 compared to year-ago period.

These increases reflect improved results in both GSG and CIG segments, which are described below under "Government Services Group" and "Commercial/International Services Group", respectively.

Net interest expense increased $0.3 million and $0.2 million in the second quarter and first half of fiscal 2022, respectively, compared to the prior-year periods.

The increased interest expense related to our contingent earn-out liabilities was substantially offset by the benefit of lower average year-over-year borrowings.

The effective tax rates for the first halves of fiscal 2022 and 2021 were 21.9% and 19.2%, respectively.

Income tax expense was reduced by $4.8 million and $8.0 million of excess tax benefits on share-based payments in the first halves of fiscal 2022 and 2021, respectively.

Excluding the impact of these tax benefits, our effective tax rates for the first halves of fiscal 2022 and 2021 were 25.0% and 25.8%, respectively.

Our EPS was $0.98 and $2.23 in the second quarter and first half of fiscal 2022, compared to $0.83 and $1.79 in the prior-year periods.

On the same basis as our adjusted operating income, adjusted EPS was $2.17 in the first half of fiscal 2022.

Segment Results of Operations

Government Services Group

Three Months Ended

2022 December 27,

Three Months Ended Six Months Ended

2022 March 28,

2021 Change April 3, 2022 March 28, 2021 Change

($ in thousands)

3 unchanged sentences

Income from operations $ 50,344 $ 41,473 $ 8,871 21.4% $ 101,524 $ 84,169 $ 17,355 20.6%

Revenue increased $31.4 million and revenue, net of subcontractor costs, increased $22.5 million in the first quarter of fiscal 2022 compared to the year-ago quarter;

both reflecting increases of 7.4%.

Revenue increased $16.4 million, or 3.8%, and revenue, net of subcontractor costs, increased $27.4 million, or 8.8%, in the second quarter of fiscal 2022 compared to the year-ago quarter.

For the first half of fiscal 2022, revenue increased $47.8 million, or 5.6%, and revenue, net of subcontractor costs, increased $49.9 million, or 8.1%, compared to the first half of last year.

These increases primarily reflect higher U.S.

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

The increases also reflect contributions from acquisitions, which did not have comparable revenue in the first quarter of last year.

Operating income increased $8.5 million, or 19.9%, in the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021.

Operating income in the first quarter of fiscal 2022 included $3.1 million of the aforementioned ERC's.

Excluding this benefit, operating income increased 12.8% in the first quarter of fiscal 2022 compared to the same period last year.

Our operating margin, based on revenue, net of subcontractor costs, improved to 15.6% in the first quarter of fiscal 2022 compared to 14.0% in last year's first quarter.

Excluding the ERC's, our operating margin was 14.7% in the first quarter of fiscal 2022.

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

Operating income increased $8.9 million and $17.4 million in the second quarter and first half of fiscal 2022, respectively, compared to the prior-year periods.

Operating income in the first half of fiscal 2022 included $3.1 million of the aforementioned ERC's.

Excluding this benefit, operating income increased 17.0% in the first half of fiscal 2022 compared to the same period last year.

Our operating margin, based on revenue, net of subcontractor costs, improved to 15.3% for the first half of fiscal 2022 compared to 13.7% for fiscal 2021 period.

Excluding the ERC's, our operating margin was 14.8% in the first half of fiscal 2022.

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

2022 December 27,

Three Months Ended Six Months Ended

2022 March 28,

2021 Change April 3, 2022 March 28, 2021 Change

($ in thousands)

3 unchanged sentences

Income from operations $ 40,485 $ 30,946 $ 9,539 30.8% $ 85,792 $ 65,509 $ 20,283 31.0 %

Revenue and revenue, net of subcontractor costs, increased $59.8 million, or 16.8%, and $51.7 million, or 17.2%, respectively, in the first quarter of fiscal 2022 compared to the prior-year quarter.

The revenue growth in the first quarter of fiscal 2022 primarily reflects more activity on commercial environmental programs, including meeting net zero carbon goals and high performance buildings.

These increases were also due to international government stimulus spending on infrastructure.

Additionally, revenue in the first quarter of fiscal 2022, includes contributions from acquisitions, which did not have comparable revenue in the first quarter last year.

Operating income increased $10.7 million, or 31.1 %, in the first quarter of fiscal 2022, compared to the first quarter of fiscal 2021 primarily due to revenue growth.

Additionally, operating income in the first quarter of fiscal 2022 included $1.4 million of the aforementioned ERC's.

Excluding this benefit, operating income increased 27.2% in the first quarter of fiscal 2022 compared to the year-ago quarter.

Our operating margin, based on revenue, net of subcontractor costs, improved to 12.9% in the first quarter of fiscal 2022 compared to 11.5% in the prior-year quarter.

Excluding the ERC's, our operating margin was 12.5% in the first quarter of fiscal 2022.

Revenue increased $81.5 million, or 24.3%, and revenue, net of subcontractor costs, increased $72.9 million, or 25.2%, in the second quarter of fiscal 2022 compared to last year's second quarter.

For the first half of fiscal 2022, revenue increased $141.3 million, or 20.4%, and revenue, net of subcontractor costs, increased $124.6 million, or 21.1%, compared to the first half of fiscal 2021.

The revenue growth in the first half of fiscal 2022 primarily reflects more activity on commercial environmental programs, including meeting net zero carbon goals and high performance buildings.

These increases were also

due to international government stimulus spending on infrastructure.

Additionally, revenue in the first half of fiscal 2022, includes contributions from acquisitions, which did not have comparable revenue in the first half of last year.

Operating income increased $9.5 million and $20.3 million, in the second quarter and first half of fiscal 2022, respectively, compared to the same periods last year.

Operating income in the first half of fiscal 2022 included $1.4 million of the aforementioned ERC's.

Excluding this benefit, operating income increased 28.9% in the first half of fiscal 2022 compared to fiscal 2021 period.

Our operating margin, based on revenue, net of subcontractor costs, improved to 12.0% for the first half of fiscal 2022 compared to 11.1% for the prior-year period.

Excluding the ERC's, our operating margin was 11.8% for the first half of fiscal 2022.

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

3 unchanged sentences

The contract term and thus remaining performance obligation on certain of our operations and maintenance contracts, are limited to the notice period required for contract termination (usually 30, 60, or 90 days).

At January 2, 2022 and October 3, 2021, the differences between our backlog and RUPO of $3.4 billion were immaterial.

At April 3, 2022 and October 3, 2021, the differences between our backlog and RUPO o f $3.6 billion were immaterial.

Financial Condition, Liquidity and Capital Resources

Capital Requirements.

As of January 2, 2022, we h ad $205.5 million of cash and cash equivalents and access to an additional $699 million of borrowings available under our credit facility.

During the first quarter of fiscal 2022, we generated $82.4 million of cash from operations.

As of April 3, 2022, we h ad $194.4 million of cash and cash equivalents and access to an additional $799.3 million of borrowings available under our credit facility.

During the first half of fiscal 2022, we generated $177.5 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.

Our primary sources of liquidity are cash flows from operations and borrowings under our credit facilities.

Our primary uses of cash are to fund working capital, capital expenditures, stock repurchases, cash dividends and repayment of debt, as well as to fund acquisitions and earn-out obligations from prior acquisitions.

We believe that our existing cash and cash equivalents, operating cash flows and borrowing capacity under our credit agreement, as described below, will be sufficient to meet our capital requirements for at least the next 12 months including any additional resources needed to address the COVID-19 pandemic.

Our primary uses of cash are to fund working capital, stock repurchases, cash dividends, capital expenditures and repayment of debt, as well as to fund acquisitions and earn-out obligations from prior acquisitions.

We use a variety of tax planning and financing strategies to manage our worldwide cash and deploy funds to locations where they are needed.

2 unchanged sentences

On October 5, 2021, the Board of Directors authorized a new stock repurchase program under which we could repurchase up to $400 million of our common stock in addition to the $147.8 million remaining under the previous stock repurchase program at October 3, 2021.

In the first quarter of fiscal 2022, we repurchased and settled 290,196 shares with an average price of $172.30 per share for a total cost of $50.0 million in the open market.

At January 2, 2022, we had a remaining balance of $497.8 million under our stock repurchase program.

In the first half of fiscal 2022, we repurchased and settled 618,236 shares with an average price of $161.75 per share for a total cost of $100.0 million in the open market.

At April 3, 2022, we had a remaining balance of $447.8 million under our stock repurchase program.

On November 15, 2021, the Board of Directors declared a quarterly cash dividend of $0.20 per share payable on December 20, 2021 to stockholders of record as of the close of business on December 2, 2021.

On January 31, 2022, the Board of Directors declared a quarterly cash dividend of $0.20 per share payable on February 25, 2022 to stockholders of record as of the close of business on February 11, 2022.

Subsequent Event.

On January 31, 2022, the Board of Directors declared a quarterly cash dividend of $0.20 pe r share payable on February 25, 2022 to stockholders of record as of the close of business on February 11, 2022.

On May 2, 2022 the Board of Directors declared a quarterly cash dividend of $0.23 per share payable on May 27, 2022 to stockholders of record as of the close of business on May 13, 2022.

Cash and Cash Equivalents.

As of January 2, 2022, our cash and cash equivalents w ere $205.5 million, an increase of $39.0 million compared to the fiscal 2021 year-end.

The increase was due to net cash provided by operating activities and net borrowings of long-term debt, partially offset by stock repurchases, dividends, as well as payments for taxes on vested restricted stock, business acquisitions and contingent earn-outs.

As of April 3, 2022, our cash and cash equivalents w ere $194.4 million, an increase of $27.8 million compared to the fiscal 2021 year-end.

The increase was primarily due to net cash provided by operating activities, partially offset by stock repurchases, dividends, as well as payments for taxes on vested restricted stock.

Operating Activities .

For the first quarter of fiscal 2022, ne t cash provided by operating activities was $82.4 million, an increase of $49.2 million compared to the prior-year quarter.

The increase primarily reflects an increase in earnings adjusted for non-cash items and improved working capital from faster collections of our receivables in the first quarter of fiscal 2022 compared to the same quarter last year.

For the first half of fiscal 2022, net cash provided by operating activities was $177.5 million, an increase of $20.1 million compared to the prior-year period.

The increase primarily reflects an increase in earnings adjusted for non-cash items and improved working capital from faster collections of our receivables in the first half of fiscal 2022 compared to the fiscal 2021 period.

Investing Activities .

For the first quarter of fis cal 2022, net cash used in investing activities was $6.9 million, an increase of $5.1 million compared to the year-ago quarter.

The increase was due to a payment related to an acquisition in the first quarter of fiscal 2022, partially offset by the proceeds from sales of assets in the first quarter of fiscal 2021.

For the first half of fiscal 2022, net cash used in investing activities was $35.6 million, an increase of $28.3 million compared to the prior-year period.

The increase was primarily due to payments related to the acquisitions completed in the first half of fiscal 2022.

Financing Activities .

For the first quarter of fiscal 2022, net cash used in financing activities was $36.4 million, an increase of $3.6 million compared to the same quarter last year.

The increase was due to higher stock repurchases, taxes paid on vested restricted stock and stock options exercised, partially offset by a net increase of borrowings of long-term debt and lower contingent earn-out payments compared to the year-ago quarter.

For the first half of fiscal 2022, net cash used in financing activities was $115.8 million, an increase of $24.7 million compared to the same period last year.

The increase was due to higher stock repurchases, taxes paid on vested restricted stock and stock options exercised.

The increased uses of cash were partially offset by higher net borrowings in the first half of fiscal 2022, which was primarily used to fund acquisitions.

Debt Financing.

On July 30, 2018, we entered into a Second Ame nded and Restated Credit Agreement (“Amended Credit Agreement”) with a total borrowing capacity of $1 billion that will mature in July 2023.

The Amended Credit Agreement

is a $700 million senior secured, five-year facility that provides for a $250 million term loan facility (the “Amended Term Loan Facility”), a $450 million revolving credit facility (the “Amended Revolving Credit Facility”), and a $300 million accordion feature that allows us to increase the Amended Credit Agreement to $1 billion subject to lender approval.

The Amended Credit Agreement allows us to, among other things, (i) refinance indebtedness under our Credit Agreement dated as of May 7, 2013;

(ii) finance certain permitted open market repurchases of our common stock, permitted acquisitions, and cash dividends and distributions;

On February 18, 2022, we entered into Amendment No.

2 to Second Amended and Restated Credit Agreement (“Amended Credit Agreement”) with a total borrowing capacity of $1.05 billion that will mature in February 2027.

The Amended Credit Agreement is a $750 million senior secured, five-year facility that provides for a $250 million term loan facility (the “Amended Term Loan Facility”) and a $500 million revolving credit facility (the “Amended Revolving Credit Facility”).

In addition, the Amended Credit Agreement includes a $300 million accordion feature that allows us to increase the Amended Credit Agreement to $1.05 billion subject to lender approval.

The Amended Credit Agreement provides for, among other things, (i) refinance indebtedness under our Credit Agreement dated as of July 30, 2018;

(ii) finance open market repurchases of common stock, acquisitions, and cash dividends and distributions;

and (iii) utilize the proceeds for working capital, capital expenditures and other general corporate purposes.

The Amended Credit Agreement provides for a reduction in the interest grid for meeting certain sustainability targets related to the (i) reduction of greenhouse gas emissions through the Company’s projects and operational sustainability initiatives and (ii) improvement of peoples’ lives as a result of the Company’s projects that provide environmental, social and governance benefits.

The Amended Revolving Credit Facility includes a $100 million sublimit for the issuance of standby letters of credit, a $20 million sublimit for swingline loans, and a $300 million sublimit for multicurrency borrowings and letters of credit.

The entire Amended Term Loan Facility was drawn on July 30, 2018.

The Amended Term Loan Facility is subject to quarterly amortization of principal at 5% annually beginning December 31, 2018.

We may borrow on the Amended Revolving Credit Facility, at our option, at either (a) a Eurocurrency rate plus a margin that ranges from 1.00% to 1.75% per annum, or (b) a base rate for loans in U.S.

The entire Amended Term Loan Facility was drawn on February 18, 2022.

The Amended Term Loan Facility is subject to quarterly amortization of principal at 5% annually commencing June 30, 2022.

We may borrow on the Amended Revolving Credit Facility, at our option, at either (a) a benchmark rate plus a margin that ranges from 1.000% to 1.875% per annum, or (b) a base rate for loans in U.S.

dollars (the highest of the U.S.

federal funds rate plus 0.50% per annum, the bank’s prime rate or the Eurocurrency rate plus 1.00%) plus a margin that ranges from 0% to 0.75% per annum.

federal funds rate plus 0.50% per annum, the bank’s prime rate or the Secured Overnight Financing Rate ("SOFR") rate plus 1.00%, plus a margin that ranges from 0% to 0.875% per annum.

In each case, the applicable margin is based on our Consolidated Leverage Ratio, calculated quarterly.

The Amended Term Loan Facility is subject to the same interest rate provisions.

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 January 2, 2022, we had $259.4 million.

in outstanding borrowings under the Amended Credit Agreement, which was comprised of $209.4 million under the Amended Term Loan Facility and $50.0 million outstanding under the Amended Revolving Credit Facility.

The weighted-average interest rate of the outstanding borrowings during January 2, 2022 is 1.21%.

The Amended Credit Agreement expires on February 18, 2027, or earlier at our discretion upon payment in full of loans and other obligations.

As of April 3, 2022, we had $250.0 million.

in outstanding borrowings under the Amended Credit Agreement, which was comprised of $250.0 million under the Amended Term Loan Facility and no outstanding borrowings under the Amended Revolving Credit Facility.

The year-to-date weighted-average interest rate of the outstanding borrowings during April 3, 2022 is 1.27%.

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

Our weighted-average interest rate on borrowings outstanding during the three months ended January 2, 2022 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 3.73%.

At January 2, 2022, we had $399.3 million of available credit under the Amended Revolving Credit Facility, all of which could be borrowed without a violation of our debt cov enants.

Our year-to-date weighted-average interest rate on borrowings outstanding under the Amended Credit Agreement, including the effects of interest rate swap agreements described in Note 15, “Derivative Financial Instruments” of the “Notes to Consolidated Financial Statements”, was 3.50%.

At April 3, 2022, we had $499.3 million of available credit under the Amended Revolving Credit Facility, all of which could be borrowed without a violation of our debt covenants.

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

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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 January 2, 2022, we were in compliance with these covenants with a consolidated leverage ratio of 1.01x and a consolidated interest coverage ratio of 27.52x.

At April 3, 2022, we were in compliance with these covenants with a consolidated leverage ratio of 0.82x and a consolidated interest coverage ratio of 28.09x.

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

At January 2, 2022, there were no outstanding borrowings under these facilities, and the aggregate amount of standby letters of credit outstanding was $53.1 million.

As of January 2, 2022, we had $4.2 million of bank overdrafts related to our disbursement bank accounts.

At April 3, 2022, there were no outstanding borrowings under these facilities, and the aggregate amount of standby letters of credit outstanding was $51.7 million.

As of April 3, 2022, we had no bank overdrafts related to our disbursement bank accounts.

We believe our operations have not been, and, in the foreseeable future, are not expected to be, materially adversely affected by inflation or changing prices due to the average duration of our projects and our ability to negotiate prices as contracts end and new contracts begin.

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November 15, 2021 $ 0.20 December 2, 2021 $ 10,793 December 20, 2021

January 31, 2022 $ 0.20 February 11, 2022 N/A February 25, 2022

January 31, 2022 $ 0.20 February 11, 2022 $ 10,769 February 25, 2022

May 2, 2022 $ 0.23 May 13, 2022 N/A May 27, 2022

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

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Based on projected future operating results in certain jurisdictions, it is unlikely that the current valuation allowance positions of those jurisdictions could be adjusted in the next 12 months.

As of January 2, 2022 and October 3, 2021, the liability for income taxes associated with uncertain tax positions was $13.4 million and $14.1 million, respectively.

As of April 3, 2022 and October 3, 2021, the liability for income taxes associated with uncertain tax positions was $13.9 million and $14.1 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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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 January 2, 2022, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $53.1 million in standby letters of credit outstanding under our additional letter of credit facilities.

At April 3, 2022, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $51.7 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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We enter into these agreements primarily to support the project execution commitments of these entities.

The potential payment amount of an outstanding performance guarantee is typically the remaining cost of work to be performed by or on behalf of third parties under engineering and construction contracts.

The potential payment amount of an outstanding performance guarantee is typically the remaining cost of work to be

performed by or on behalf of third parties under engineering and construction contracts.

However, we are not able to estimate other amounts that may be required to be paid in excess of estimated costs to complete contracts and, accordingly, the total potential payment amount under our outstanding performance guarantees cannot be estimated.

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We can borrow, at our option, under both the Amended Term Loan Facility and Amended Revolving Credit Facility.

We may borrow on the Amended Revolving Credit Facility, at our option, at either (a) a Eurocurrency rate plus a margin that ranges from 1.00% to 1.75% per annum, or (b) a base rate for loans in U.S.

We may borrow on the Amended Revolving Credit Facility, at our option, at either (a) a benchmark rate plus a margin that ranges from 1.000% to 1.875% per annum, or (b) a base rate for loans in U.S.

dollars (the highest of the U.S.

federal funds rate plus 0.50% per annum, the bank’s prime rate or the Eurocurrency rate plus 1.00%) plus a margin that ranges from 0% to 0.75% per annum.

federal funds rate plus 0.50% per annum, the bank’s prime rate or the SOFR rate plus 1.00%) plus a margin that ranges from 0% to 0.875% per annum.

In each case, the applicable margin is based on our Consolidated Leverage Ratio, calculated quarterly.

The Amended Term Loan Facility is subject to the same interest rate provisions.

Borrowings at the base rate have no designated term and may be repaid without penalty any time prior to the Facility’s maturity date.

Borrowings at a Eurodollar rate have a term no less than 30 days and no greater than 180 days and may be prepaid without penalty.

Typically, at the end of such term, such borrowings may be rolled over at our discretion into either a borrowing at the base rate or a borrowing at a Eurodollar rate with similar terms, not to exceed the maturity date of the Facility.

The Facility matures on July 30, 2023.

At January 2, 2022, we had $259.4 million in outstanding borrowings under the Amended Credit Agreement, which was comprised of $209.4 million under the Amended Term Loan Facility and $50.0 million outstanding under the Amended Revolving Credit Facility.

The weighted-average interest rate of the outstanding borrowings during first quarter of fiscal 2022 was 1.21%.

Borrowings at a SOFR rate have a term no less than 30 days and no greater than 180 days and may be prepaid without penalty.

Typically, at the end of such term, such borrowings may be rolled over at our discretion into either a borrowing at the base rate or a borrowing at a SOFR rate with similar terms, not to exceed the maturity date of the Facility.

The Facility matures on February 18, 2027.

At April 3, 2022, we had $250.0 million in outstanding borrowings under the Amended Credit Agreement, which was comprised of $250.0 million under the Amended Term Loan Facility and no outstanding borrowings under the Amended Revolving Credit Facility.

The year-to-date weighted-average interest rate of the outstanding borrowings during fiscal 2022 was 1.27%.

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 January 2, 2022, the notional principal of our outstanding interest swap agreements was $209.4 million ($41.9 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 January 2, 2022, was 3.73%.

The objec tive 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 April 3, 2022, the notional principal of our outstanding interest swap agreements was $206.3 million ($41.3 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 April 3, 2022, was 3.50%.

For more information, see Note 15, “Derivative Financial Instruments” of the “Notes to Consolidated Financial Statements”.

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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 quarter of fiscal 2021, we reported $1.3 million of foreign currency losses in “Selling, general and administrative expenses” on our consolidated statements of income.

The foreign currency impact for the first quarter of fiscal 2022 was immaterial.

For the first half of fiscal 2021, we reported $1.3 million of foreign currency losses in

“Selling, general and administrative expenses” on our consolidated statements of income.

The foreign currency impact for the first half of fiscal 2022 was immaterial.

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 strengthens against foreign currencies, the translation of these foreign currency denominated transactions will result in reduced revenue, operating expenses, assets and liabilities.

Similarly, our revenue, operating expenses, assets and liabilities will increase if the U.S.

Similarly, our revenue, operati ng expenses, assets and liabilities will increase if the U.S.

dollar weakens against foreign currencies.

For the first quarters of fiscal 2022 and 2021, 29.8% and 28.3% of our consolidated revenue, respectively, was generated by our international business.

For the first quarter of fiscal 2022, the effect of foreign exchange rate translation on the consolidated balance sheets was a decrease in our equity by $0.7 million compared to an increase in equity of $32.4 million in the first quarter of fiscal 2021.

For the first halves of fiscal 2022 and 2021, 30.8% and 28.3% of our consolidated revenue, respectively, was generated by our international business.

For the first half of fiscal 2022, the effect of foreign exchange rate translation on the consolidated balance sheets was an increase in our equity by $2.1 million compared to an increase in equity of $43.4 million in the first half of fiscal 2021.

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

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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