What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2025-01-31 · 283 added, 135 removed, 538 unchanged (44% of the section changed)

3 unchanged sentences

(unaudited - in thousands, except par value)

ASSETS December 29,

ASSETS March 30,

2025 September 29,

18 unchanged sentences

Short-term lease liabilities, operating leases 65,870 63,419

Current portion of long-term debt 250,000 —

Current contingent earn-out liabilities 20,497 26,934

8 unchanged sentences

Preferred stock - authorized, 2,000 shares of $ 0.01 par value;

no shares issued and outstanding at December 29, 2024 and September 29, 2024

no shares issued and outstanding at March 30, 2025 and September 29, 2024

Common stock - authorized, 750,000 shares of $ 0.01 par value;

issued and outstanding, 268,028 and 267,717 shares at December 29, 2024 and September 29, 2024, respectively

issued and outstanding, 263,503 and 267,717 shares at March 30, 2025 and September 29, 2024, respectively

Additional paid-in capital — 35,900

9 unchanged sentences

(unaudited – in thousands, except per share data)

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2024 March 30,

2025 March 31,

Revenue $ 1,322,113 $ 1,251,616 $ 2,742,674 $ 2,479,883

4 unchanged sentences

Legal contingency costs — — ( 115,000 ) —

Contingent consideration – fair value adjustments 1,931 ( 14 ) 2,297 22

Impairment of goodwill ( 92,416 ) — ( 92,416 ) —

Income from operations 39,603 117,683 62,129 228,764

15 unchanged sentences

(unaudited – in thousands)

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2024 March 30,

2025 March 31,

Net income $ 5,412 $ 76,459 $ 6,190 $ 151,439

Other comprehensive (loss) income, net of tax

Other comprehensive income (loss), net of tax

Foreign currency translation adjustment, net of tax

1 unchanged sentence

Net pension adjustments — — ( 33 ) ( 13 )

Other comprehensive (loss) income, net of tax ( 108,879 ) 63,093

Comprehensive (loss) income, net of tax ( 108,101 ) 138,073

Other comprehensive income (loss), net of tax 34,574 ( 24,344 ) ( 74,305 ) 38,749

Comprehensive income (loss), net of tax 39,986 52,115 ( 68,115 ) 190,188

Comprehensive income attributable to noncontrolling interests, net of tax 24 13 55 21

Comprehensive (loss) income attributable to Tetra Tech, net of tax $ ( 108,132 ) $ 138,065

Comprehensive income (loss) attributable to Tetra Tech, net of tax $ 39,962 $ 52,102 $ ( 68,170 ) $ 190,167

See Notes to Consolidated Financial Statements.

2 unchanged sentences

(unaudited – in thousands)

Three Months Ended

2024 December 31,

Six Months Ended

2025 March 31,

Cash flows from operating activities:

4 unchanged sentences

Deferred income taxes ( 6,164 ) ( 8,049 )

Provision for losses on accounts receivables 3,331 —

Impairment of goodwill 92,416 —

Fair value adjustments to contingent consideration ( 2,297 ) ( 22 )

Gain on cash surrender value of life insurance policies ( 1,599 ) —

Other non-cash items 4,267 1,054

10 unchanged sentences

Cash flows from investing activities:

Payments for business acquisitions, net of cash acquired ( 5,680 ) ( 71,796 )

Capital expenditures ( 9,372 ) ( 7,463 )

Proceeds from sale of assets 350 98

Proceeds from company-owned life insurance policies 1,934 —

Net cash used in investing activities ( 12,768 ) ( 79,161 )

8 unchanged sentences

Principal payments on finance leases ( 3,431 ) ( 3,155 )

Net cash provided by financing activities 19,394 18,391

Net cash provided by (used in) financing activities ( 37,437 ) 5,633

Effect of exchange rate changes on cash and cash equivalents ( 10,291 ) 2,810

Net increase in cash and cash equivalents 15,415 29,858

Net increase (decrease) in cash and cash equivalents ( 53,256 ) 41,463

Cash and cash equivalents at beginning of period 232,689 168,831

5 unchanged sentences

$ 47,987 $ 84,916

Non-cash financing activities:

Excise taxes accrued but not paid $ 1,267 $ —

See Notes to Consolidated Financial Statements.

1 unchanged sentence

Consolidated Statements of Stockholders' Equity

Three Months Ended December 31, 2023 and December 29, 2024

Three Months Ended March 31, 2024 and March 30, 2025

(unaudited – in thousands)

2 unchanged sentences

Comprehensive

Loss Retained

Income (Loss) Retained

Earnings Total

2 unchanged sentences

Shares Amount

BALANCE AT DECEMBER 31, 2023 267,329 $ 2,672 $ 9,971 $ ( 132,202 ) $ 1,657,165 $ 1,537,606 $ 81 $ 1,537,687

Net income — — — — 76,446 76,446 13 76,459

Other comprehensive loss — — — ( 24,344 ) — ( 24,344 ) — ( 24,344 )

Distributions paid in noncontrolling interests — — — — — — ( 38 ) ( 38 )

Cash dividends of $ 0.052 per common share

— — — — ( 13,908 ) ( 13,908 ) — ( 13,908 )

Stock-based compensation — — 7,976 — — 7,976 — 7,976

Restricted & performance shares released 10 — ( 111 ) — — ( 111 ) — ( 111 )

Stock options exercised 147 2 1,125 — — 1,127 — 1,127

Shares issued for Employee Stock Purchase Plan — — 2 — — 2 — 2

BALANCE AT MARCH 31, 2024 267,486 $ 2,674 $ 18,963 $ ( 156,546 ) $ 1,719,703 $ 1,584,794 $ 56 $ 1,584,850

BALANCE AT DECEMBER 29, 2024 268,028 $ 2,680 $ 21,153 $ ( 187,754 ) $ 1,855,818 $ 1,691,897 $ 122 $ 1,692,019

Net income — — — — 5,388 5,388 24 5,412

Other comprehensive income — — — 34,574 — 34,574 — 34,574

Distributions paid in noncontrolling interests — — — — — — ( 23 ) ( 23 )

Cash dividends of $ 0.058 per common share

— — — — ( 15,351 ) ( 15,351 ) — ( 15,351 )

Stock-based compensation — — 8,885 — — 8,885 — 8,885

Restricted & performance shares released 35 — ( 541 ) — — ( 541 ) — ( 541 )

Stock options exercised 6 — 57 — — 57 — 57

Stock repurchases ( 4,566 ) ( 45 ) ( 29,554 ) — ( 121,652 ) ( 151,251 ) — ( 151,251 )

BALANCE AT MARCH 30, 2025 263,503 $ 2,635 $ — $ ( 153,180 ) $ 1,724,203 $ 1,573,658 $ 123 $ 1,573,781

Tetra Tech, Inc.

Consolidated Statements of Stockholders' Equity

Six Months Ended March 31, 2024 and March 30, 2025

(unaudited – in thousands)

Common Stock Additional

Capital Accumulated

Comprehensive

Income (Loss) Retained

Earnings Total

Equity Non-Controlling

Interests Total

Shares Amount

BALANCE AT OCTOBER 1, 2023 266,238 $ 2,662 $ — $ ( 195,295 ) $ 1,596,066 $ 1,403,433 $ 73 $ 1,403,506

1 unchanged sentence

Other comprehensive income — — — 38,749 — 38,749 — 38,749

Distributions paid in noncontrolling interests — — — — — — ( 38 ) ( 38 )

Cash dividends of $ 0.104 per common share

4 unchanged sentences

Shares issued for Employee Stock Purchase Plan 522 5 14,672 — — 14,677 — 14,677

BALANCE AT DECEMBER 31, 2023 267,329 $ 2,672 $ 9,971 $ ( 132,202 ) $ 1,657,165 $ 1,537,606 $ 81 $ 1,537,687

BALANCE AT MARCH 31, 2024 267,486 $ 2,674 $ 18,963 $ ( 156,546 ) $ 1,719,703 $ 1,584,794 $ 56 $ 1,584,850

BALANCE AT SEPTEMBER 29, 2024 267,717 $ 2,677 $ 35,900 $ ( 78,875 ) $ 1,870,620 $ 1,830,322 $ 91 $ 1,830,413

1 unchanged sentence

Other comprehensive loss — — — ( 74,305 ) — ( 74,305 ) — ( 74,305 )

Distributions paid in noncontrolling interests — — — — — — ( 23 ) ( 23 )

Cash dividends of $ 0.116 per common share

4 unchanged sentences

Shares issued for Employee Stock Purchase Plan 458 4 15,303 — — 15,307 — 15,307

Stock repurchase ( 600 ) ( 6 ) ( 24,994 ) — — ( 25,000 ) — ( 25,000 )

BALANCE AT DECEMBER 29, 2024 268,028 $ 2,680 $ 21,153 $ ( 187,754 ) $ 1,855,818 $ 1,691,897 $ 122 $ 1,692,019

Stock repurchases ( 5,166 ) ( 51 ) ( 54,548 ) — ( 121,652 ) ( 176,251 ) — ( 176,251 )

BALANCE AT MARCH 30, 2025 263,503 $ 2,635 $ — $ ( 153,180 ) $ 1,724,203 $ 1,573,658 $ 123 $ 1,573,781

See Notes to Consolidated Financial Statements.

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The following tables present our revenue disaggregated by client sector and contract type (in thousands):

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2024 March 30,

2025 March 31,

Client Sector:

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(2) Includes revenue generated from non-U.S.

clien ts, primarily in United Kingdom, Australia and Canada

clien ts, primarily in Australia, Canada, and the United Kingdom

Other than the U.S.

federal government, no single client accounted for more than 10% of our revenue for the first quarters of fiscal 2025 and 2024.

federal government, no single client accounted for more than 10% of our revenue for the three and six months ended March 30, 2025 and March 31, 2024.

Contract Assets and Contract Liabilities

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Net contract liabilities $ ( 247,257 ) $ ( 222,060 )

(1) Includes $ 8.4 million and $ 7.9 million of contract retentions at December 29, 2024 and September 29, 2024, respectively.

(2) Reported under "Other non-current liabilities" on our consolidated balance sheet as of December 29,2024.

Our contract assets decreased, and contract liabilities increased in the first quarter of fiscal 2025 compared to fiscal 2024 year-end, due to the timing of our milestone billings on fixed-price contracts which were different from the timing of revenue recognition on those contracts.

For the first three months of fiscal 2025 and 2024, we recognized revenue of approximately $ 116 million and $ 130 million, respect ively, from the amounts included in the contract liability balances at the end of fiscal 2024 and 2023, respectively.

(1) Includes $ 9.5 million and $ 7.9 million of contract retentions at March 30, 2025 and September 29, 2024, respectively.

(2) Reported under "Other non-current liabilities" on our consolidated balance sheet as of March 30, 2025.

Our contract assets and contract liabilities increased in the first half of fiscal 2025 compared to fiscal 2024 year-end, due to the timing of our milestone billings on fixed-price contracts which were different from the timing of revenue recognition on those contracts.

For the first halves of fiscal 2025 and 2024, we recognized revenue of approximately $ 175 million and $ 177 million, respect ively, from the amounts included in the contract liability balances at the end of fiscal 2024 and 2023, respectively.

Revenue is recognized by measuring progress over time under Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers".

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Changes in those estimates could result in the recognition of cumulative catch-up adjustments to the contract’s inception-to-date revenue, costs and profit in the period in which such changes are made.

As a result, in the first quarters of fiscal 2025 and 2024, we recognized net favorable revenue and operating income adjustments of $ 2.7 million and $ 5.7 million, respectively.

As a result, for the second quarters and first halves of fiscal 2025 and 2024, we recognized net favorable revenue and operating income adjustments of $ 3.9 million and $ 4.1 million, respectively, and $ 6.6 million and $ 9.9 million, respectively.

C hanges in revenue and cos t estimates could also result in a projected loss, determined at the contract level, which would be recorded immediately in earnings.

At December 29, 2024 and September 29, 2024, our consolidated balance sheets included liabilities for anticipated losses of $ 13.2 million and $ 15.1 million, respectively.

The estimated cost to complete these related contracts was approximately $ 96 million and $ 101 million at December 29, 2024 and September 29, 2024, respectively.

At March 30, 2025 and September 29, 2024, our consolidated balance sheets included liabilities for anticipated losses of $ 12.6 million and $ 15.1 million, respectively.

The estimated cost to complete these related contracts was approximately $ 82 million and $ 101 million at March 30, 2025 and September 29, 2024, respectively.

Accounts Receivable, Net

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Unbilled accounts receivable, which represent an unconditional right to payment subject only to the passage of time, include unbilled amounts typically resulting from revenue recognized but not yet billed pursuant to contract terms or billed after the period end date.

Substantially all of our unbilled receivables at December 29, 2024 are expected to be billed and collecte d within 12 months.

Substantially all of our unbilled receivables at March 30, 2025 are expected to be billed and collecte d within 12 months.

The allowance for doubtful accounts represents amounts that are expected to become uncollectible or unrealizable in the future.

3 unchanged sentences

Other than the U.S.

federal government, no single client accounted for more than 10% of our accounts receivable at December 29, 2024 and September 29, 2024.

federal government, no single client accounted for more than 10% of our accounts receivable at March 30, 2025 and September 29, 2024.

Remaining Unsatisfied Performance Obligation (“RUPO”)

Our RUPO represents a measure of the total dollar value of work to be performed on contracts awarded and in progress.

We had $ 5.4 billion of RUPO at December 29, 2024 .

We h ad $ 4.3 billion of RUPO at March 30, 2025 .

Our RUPO increases with awards from new contracts or additions on existing contracts, and decreases as work is performed and revenue is recognized on existing contracts.

1 unchanged sentence

We include a contract within our RUPO when the contract is awarded and an agreement on contract terms has been reached.

We expect to satisfy our RUPO at December 29, 2024 over the following periods (in thousands):

We expect to satisfy our RUPO at March 30, 2025 over the following periods (in thousands):

Within 12 months $ 3,141,737

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therefore, the remaining performance obligations on such contracts are limited to the notice period required for the termination (usually 30 , 60 , or 90 days).

In the second quarter of fiscal 2025, we acquired Carron + Walsh ("CAW"), based in the Republic of Ireland.

CAW delivers project and cost management solutions for large-scale commercial, life science, residential and infrastructure programs across Europe.

CAW has valued relationships and framework agreements with life science clients, public sector bodies, housing

authorities, financial lenders and private development companies.

CAW is a financially immaterial acquisition with an initial purchase price of € 5.3 million ($ 5.7 million) and is included in our Commercial/International Services Group ("CIG") segment.

As a result, no additional disclosures have been provided.

In the second quarter of fiscal 20 24, we acquired LS Technologies ("LST"), an innovative U.S.

1 unchanged sentence

LST provides high-end consulting and engineering services including advanced data analytics, cybersecurity and digital transformation solutions to U.S.

government clients.

In the third quarter of fiscal 2024, we also acquired Convergence Controls & Engineering ("CCE"), an industry leader in process automation and systems integration solutions.

CCE’s expertise includes customized digital controls and software solutions, advanced data analytics, cloud data integration, and cybersecurity applications.

Both LST and CCE are included in our Government Services Group ("GSG") segment.

2 unchanged sentences

The $ 120 million purchase price was allocated $ 12 million to net tangible assets, $ 23 million to identifiable intangible assets, and $ 85 million to goodwill .

The purchase price allocation is preliminary and subject to adjustment as the estimates, assumptions, valuations and other analyses have not yet been finalized in order to make a definitive allocation.

The results of LST and CCE have been included in our consolidated financial statements since the beginning of their respective closing dates.

These acquisitions were not considered material, individually or in aggregate, to our consolidated financial statements.

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

As a result, no pro forma information has been provided.

Our fiscal 2024 goodwill additions from the LST and CCE acquisitions reflect the extensive technical knowledge of the acquired workforces, the anticipated synergies in data analytics, cybersecurity and digital transformation services, and collective reputations of these acquisitions in providing mission critical solutions to both commercial and government customers.

These goodwill additions are deductible for tax purposes.

The fiscal 2025 goodwill addition from the CAW acquisition relates to anticipated synergies related to proven systems and technology in program management, cost management and project controls which will provide superior project outcomes to defense, government and commercial customers, as delivered by a workforce with extensive technical exper tise.

Our fiscal 2024 goodwill additions from the LST and CCE acquisitions reflect the extensive technical knowledge of the acquired workforces, the anticipated syne rgies in data analytics, cybersecurity and digital transformation services, and collective reputations of these acquisitions in providing mission critical solutions to both commercial and government customers.

The fiscal 2024 goodwill additions are deductible for tax purposes, and the fiscal 2025 goodwill addition is not.

Intangible assets with finite lives arise from business acquisitions and are amortized based on the period over which the contractual or economic benefit of the intangible assets are expected to be realized on a straight-line basis over the useful lives of the underlying assets, ranging from one to 12 years.

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Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income .

In the first quarter of fis cal 2025, we evaluated our estimates for contingent consideration liabilities for the remaining earn-out periods for each individual acquisition, which included a review of their financial results to-date, the status of ongoing projects in their RUPO and the inventory of prospective new contract awards.

In the first quarters of fiscal 2025 and 2024, we recorded immaterial adjustments, individually and in aggregate, to our contingent earn-out liabilities and included the corresponding amount in our operating income.

In the first half of fiscal 2025, we evaluated our estimates for contingent consideration liabilities for the remaining earn-out periods for each individual acquisition, which included a review of their financial results to-date, the status of ongoing projects in their RUPO and the inventory of prospective new contract awards.

The following table summarizes the changes in the fair value of estimated contingent consideration (in thousands):

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2024 March 30,

2025 March 31,

Beginning balance $ 46,160 $ 55,604 $ 48,746 $ 73,422

Estimated earn-out liabilities for acquisitions 5,516 21,900 5,516 21,900

Payments of contingent consideration ( 19,000 ) ( 3,250 ) ( 21,865 ) ( 22,112 )

3 unchanged sentences

Ending balance $ 31,270 $ 74,579 $ 31,270 $ 74,579

Maximum potential payout at end of period $ 99,006 $ 92,253

At March 30, 2025, there was a total potential maximum of $ 90.6 million of outstanding contingent consideration related to acquisitions.

Goodwill and Intangible Assets

2 unchanged sentences

Balance at September 29, 2024 $ 750,817 $ 1,295,752 $ 2,046,569

Acquisition activity — 10,114 10,114

Goodwill impairment ( 92,416 ) — ( 92,416 )

Translation adjustments ( 2,271 ) ( 48,862 ) ( 51,133 )

Balance at December 29, 2024 $ 746,693 $ 1,221,991 $ 1,968,684

Balance at March 30, 2025 $ 656,130 $ 1,257,004 $ 1,913,134

Translation adjustments resulted from our goodwill amounts in foreign subsidiaries with functional currencies that are different than our reporting currency.

Th e goodwill amoun ts presented in the table above are net of reductions from historical impairment adjustments.

The gross amounts for GSG were $ 764.4 million and $ 768.5 million at December 29, 2024 and September 29, 2024, respectively, excluding accumulated impairment of $ 17.7 million at each date.

The gross amounts of goodwill for Commercial/International Services Group ("CIG") were $ 1,343.5 million and $ 1,417.3 million at December 29, 2024 and September 29, 2024, respectively, excluding accumulated impairment of $ 121.5 million at each period end.

The gross amounts for GSG were $ 766.2 million and $ 768.5 million at March 30, 2025 and September 29, 2024, respectively, excluding accumulated impairment of $ 110.1 million and $ 17.7 million, respectively, at each date.

The gross amounts of goodwill for CIG were $ 1,378.5 million and $ 1,417.3 million at March 30, 2025 and September 29, 2024, respectively, excluding accumulated impairment of $ 121.5 million at each period end.

We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter.

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or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods.

Although we believe that our estimates of fair value for these reporting units are reasonable, if financial performance for these reporting units falls significantly below our expectations or market prices for similar business decline, the goodwill for these reporting units could become impaired.

During the second quarter of fiscal 2025, events and circumstances occurred that indicated a potential change in the recoverability of the goodwill in our Global Development Services reporting unit ("GDS").

GDS provides consulting and engineering services for international development agencies supporting humanitarian programs worldwide.

Although several agencies are supported by this work (primarily for the U.S., Australia and United Kingdom governments), over eighty percent of the activity is for the United States Agency for International Development ("USAID").

On January 20, 2025, President Trump signed Executive Order 14169, titled "Reevaluating and Realigning United States Foreign Aid", which initiated a 90-day pause on all U.S.

foreign development assistance programs to assess their alignment with U.S.

foreign policy objectives with few exemptions.

Following a six-week review, on February 27, 2025, U.S.

Secretary of State Rubio announced the cancellation of 83 % of USAID programs, totaling approximately 5,200 contracts.

Subsequently, we were notified that virtually all of our contracts with USAID were terminated for convenience.

As a result of these events and circumstances, we performed an interim impairment review of the goodwill in GDS at our fiscal period end for February 2025.

We considered two methods to determine the fair value of the GDS reporting unit:

(i) the Income Approach and (ii) the Market Approach.

While each of these approaches is initially considered in the valuation of the business enterprise, the nature and characteristic of the reporting unit indicates which approach is most applicable.

The Income Approach utilizes the discounted cash flow method, which focuses on the expected cash flow of the reporting unit.

In applying this approach, the cash flow available for distribution is calculated for a finite period of years.

Cash flow available for distribution is defined, for purposes of this analysis, as the amount of cash that could be distributed as a dividend without impairing the future profitability or operations of the reporting unit.

The cash flow available for distribution and the terminal value (the value of the reporting unit at the end of the estimation period) are then discounted to present value to derive an indication of the value of the business enterprise.

The Market Approach is comprised of the guideline public company method and guideline transactions method.

The guideline company method focuses on comparing the reporting unit to select reasonably similar (or “guideline”) publicly traded companies.

Under this method, valuation multiples are (i) derived from the operating data of selected guideline companies;

(ii) evaluated and adjusted based on the strengths and weaknesses of the reporting units relative to the selected guideline companies;

and (iii) applied to the operating data of the reporting unit to arrive at an indication of value.

In the similar transactions method, consideration is given to prices paid in recent transactions that have occurred in the reporting unit’s industry or in related industries.

For the interim impairment analysis of GDS, we utilized the Income Approach as it has the most direct correlation to the specific economics of the reporting unit.

The estimated fair value of equity of GDS was made using Level 3 inputs including the estimated discount rate that reflects the level of risk associated with receiving future cash flows and the forecasted long-term growth rates of GDS's revenue and operating income.

Based on our analysis, an impairment of $ 92.4 million was calculated as the deficit between the fair value of equity of the GDS reporting unit as compared to its carrying value, including goodwill of $ 130.5 million at our fiscal period end for February 2025.

As a result, we recorded a non-cash goodwill impairment charge of $ 92.4 million included in operating income in the second quarter of fiscal 2025.

The remaining $ 38.1 million of goodwill in GDS is primarily supported by our work for the United Kingdom and Australia foreign aid government agencies.

A future reduction in these governments’ foreign aid budgets could result in additional impairment to the GDS reporting unit.

Long-term assets other than goodwill in GDS are not material.

The following table presents the gross amount and accumulated amortization of our acquired identifiable intangible assets with finite useful lives included in “Intangible assets, net” on the consolidated balance sheets ($ in thousands):

December 29, 2024 September 29, 2024

March 30, 2025 September 29, 2024

Remaining Life

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Total $ 305,495 $ ( 168,711 ) $ 136,784 $ 314,846 $ ( 154,261 ) $ 160,585

Amortization expense for the identifiable intangible assets for the first quarter of fiscal 2025 w as $ 10.7 million, compared to $ 12.5 million for the prior-year quarter.

Amortization expense for the identifiable intangible assets for the second quarter and first half of fiscal 2025 was $ 8.6 million and $ 19.3 million, compared to $ 12.1 million and $ 24.6 million, respectively, for the prior-year periods.

Estimated amortization expense for the remainder of fiscal 2025 and succeeding years is as follows (in thousands):

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Property and equipment, net $ 66,048 $ 73,065

For the first quart ers of fiscal 2025 and 2024, o ur depreciation expense related to property and equipment was $ 5.4 million and $ 7.0 million, respectively.

For the second quart er and first half of fiscal 2025 , o ur depreciation expense related to property and equipment was $ 5.2 million and $ 10.6 million, respectively, compared to $ 5.6 million and $ 12.6 million, respectively, for the fiscal 2024 periods.

Stock Repurchase and Dividends

On October 5, 2021, our Board of Directors authorized a stock repurchase program under which we could repurchase up to $ 400 million of our common stock.

In the first quarter of fiscal 2025, we repurchased and settled 600,007 shares with an average price of $ 41.67 per share for a total cost of $ 25.0 million in the open market.

We did not repurchase any shares of our common stock in the first quarter of fiscal 2024.

At December 29, 2024, we had a remaining balance of $ 322.8 million under our stock repurchase program.

The following table presents dividends declared and paid in the first quarters of fisc al 2025 and 2024 :

In the first half of fiscal 2025, we repurchased and settled 5,165,715 shares with an average price of $ 33.87 per share for a total cost of $ 175.0 million in the open market.

We did not repurchase any shares of our common stock in the first half of fiscal 2024.

At March 30, 2025, we had a remaining balance of $ 172.8 million under our stock repurchase program.

The following table presents dividends declared and paid in the first halves of fisc al 2025 and 2024 :

Declare Date Dividend Paid Per Share Record Date Payment Date Dividend Paid

1 unchanged sentence

November 11, 2024 $ 0.058 November 27, 2024 December 13, 2024 $ 15,549

January 27, 2025 0.058 February 12, 2025 February 26, 2025 15,351

Total dividend paid as of March 30, 2025 $ 30,900

November 13, 2023 $ 0.052 November 30, 2023 December 13, 2023 $ 13,873

Subsequent Event.

O n January 27, 2025, our Board of Directors declared a quarterly cash dividend of $ 0.058 per share payable on February 26, 2025 to stockholders of record as of the close of business on February 12, 2025.

January 29, 2024 0.052 February 14, 2024 February 27, 2024 13,908

Total dividend paid as of March 31, 2024 $ 27,781

Subsequent Events.

On May 5, 2025, our Board of Directors declared a quarterly cash dividend of $ 0.065 per share payable on June 5, 2025 to stockholders of record as of the close of business on May 23, 2025.

On May 5, 2025, our Board of Directors also authorized an additional $ 500 million stock repurchase program.

Our operating leases are primarily for corporate and project office spaces.

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The components of lease costs are as follows (in thousands):

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2024 March 30,

2025 March 31,

Operating lease cost $ 24,824 $ 24,785 $ 50,742 $ 49,018

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Supplemental cash flow information related to leases is as follows (in thousands):

Three Months Ended

2024 December 31,

Six Months Ended

2025 March 31,

Operating cash flows for operating leases $ 36,278 $ 38,738

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Operating leases 3.8 % 3.6 %

At December 29, 2024, we had $ 12.7 million of operating leases that have not yet commenced.

A maturity analysis of the future undiscounted cash flows associated with our lease liabilities at December 29, 2024 is as follows (in thousands):

At March 30, 2025, we h ad $ 12.7 million of op erating leases that have not yet commenced.

A maturity analysis of the future undiscounted cash flows associated with our lease liabilities at March 30, 2025 is as follows (in thousands):

2025 (remaining) $ 38,183

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In fiscal 2020, the Canadian federal government implemented the Canadian Emergency Wage Subsidy ("CEWS") program in response to the negative impact of the coronavirus disease 2019 pandemic on businesses operating in Canada.

Some of our Canadian legal entities qualified for and applied for these CEWS cash benefits to partially offset the impacts of revenue reductions and on-going staffing costs.

of our Canadian legal entities qualified for and applied for these CEWS cash benefits to partially offset the impacts of revenue reductions and on-going staffing costs.

The $ 21 million total received was initially recorded in "Other long-term liabilities" until all potential ame ndments to the qualification criteria, including some that were proposed with retroactive application, were finalized in fiscal 2022.

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Stockholders’ Equity and Stock Compensation Plans

We recogniz e the fair value of our stock-based awards as compensation expense on a straight-line basis over the requisite service period in which the award vests.

Stock-based compensation expense wa s $ 8.1 million and $ 7.6 million for the first quarters of fiscal 2025 and 2024, respectively.

We recogniz e the fair value of our stock-based awards as compensation expense on a straight-line basis over the requisite service peri od in which the award vests.

Stock-based compensation expense for the three and six months ended March 30, 2025 was $ 8.9 million and $ 17.0 million, compared to $ 8.0 million and $ 15.6 million for the same periods last year.

Most of these amounts were included in our selling, general and administrative expenses on our consolidated statements of income.

In the first quarter of fiscal 2025, we awa rded 236,928 performance share units (“PSUs”) to our non-employee directors and executive officers at an estimated fair value of $ 49.85 per share on the award date.

In the first half of fiscal 2025, we awarded 236,928 performance share units (“PSUs”) to our non-employee directors and executive officers at an estimated fair value of $ 49.85 per share on the award date.

All PSUs are performance-based and vest, if at all, after the conclusion of the three-year performance period.

The number of PSUs that ultimately vest is based 50 % on growth in our diluted earnings per share and 50 % on our relative total shareholder return over the vesting period.

Additionally, we awarded 481,247 restricted stock units (“RSUs”) to our non-employee directors, executive officers and employees at a fair value of $ 40.29 per share on the award da te.

executive officer and employee RSUs have time-based vesting over a four-year period, and the non-employee director RSUs vest after one year .

Additionally, we awarded 486,307 restricted stock units (“RSUs”) to our non-employee directors, executive officers and employees at a fair value of $ 40.27 per share on the award date.

All exe cutive officer and employee RSUs have time-based vesting over a four-year period, and the non-employee director RSUs vest after one year .

Earnings per Share (“EPS”)

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Potential common shares include the weighted-average dilutive effects of stock-based awards and shares underlying our Convertible Senior Notes (the "Convertible Notes").

For the first quarter of fiscal 2025, our Convertible Notes, described in Note 15, "Long-Term Debt", had a dilution impact on the dilutive potential common shares, which was calculated using the if-converted method.

For the first half of fiscal 2025, our Convertible Notes, described in Note 15, "Long-Term Debt", had a dilution impact on the dilutive potential common shares, which was calculated using the if-converted method.

The dilution impact was due to the price of our common stock exceeding the conversion price.

For the first quarter of fiscal 2024, the Convertible Notes had no impact on the calculation of dilutive potential common shares, as the price of our common stock did not exceed the conversion price.

The related capped call transactions (the "Capped Call Transactions") for both periods were excluded from the calculation of dilutive potential common shares as their effect is anti-dilutive.

For the first quarters of fiscal 2025 and 2024, no options were excluded from the calculation of dilutive potential common shares.

For the second quarter and first half of fiscal 2024, and the second quarter of fiscal 2025, the Convertible Notes had no impact on the calculation of dilutive potential common shares, as the price of our common stock did not exceed the conversion price.

The related capped call transactions (the "Capped Call Transactions") for all of these periods were excluded from the calculation of dilutive potential common shares as their effect is anti-dilutive.

For the second quarters and first halves of fiscal 2025 and 2024, no options were excluded from the calculation of dilutive potential common shares.

The following table presents the number of weighted-average shares used to compute basic and diluted EPS (in thousands, except per share data):

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2024 March 30,

2025 March 31,

Net income attributable to Tetra Tech $ 5,388 $ 76,446 $ 6,135 $ 151,418

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Diluted $ 0.02 $ 0.28 $ 0.02 $ 0.56

The effective tax rates for the first quarters of fiscal 2025 and 2024 were 94.9 % and 26.1 %, respectively.

In the first quarter of fiscal 2025, we recognized a $ 115 million non-recurring charge related to legal contingencies as described in Note 17, " Commitments and Contingencies ".

We also determined that $ 31.3 million of this charge is not tax deductible, which increased our effective tax rate this quarter.

Excluding the impact of the legal contingency charge, our effective tax rate was 27.2 % in the first quarter of fiscal 2025.

At December 29, 2024 and September 29, 2024, the liability for income taxes associated with uncertain tax positions was $ 51.1 million and $ 50.1 million, respectively.

I t is reasonably possible that the amount of the unrecognized benefit with respect to certain of our unrecognized tax positions may not significantly decrease within the next 12 months.

The effective tax rates for the first halves of fiscal 2025 and 2024 were 86.7 % and 27.6 %, respectively.

Income tax expense was reduced by $ 1.0 million and $ 1.9 million of excess tax benefits on share-based payments in the first halves of fiscal 2025 and 2024, respectively.

In addition, in the first half of fiscal 2025, we recognized a $ 92.4 million goodwill impairment as described in Note 5, “Goodwill and Intangible Assets”.

We determined that $ 58.3 million of goodwill impairment is not deductible for income tax purposes.

We also recognized a $ 115.0 million non-recurring charge related to legal contingencies as described in Note 17, " Commitments and Contingencies ".

We determined that $ 31.3 million of this charge is not tax deductible.

Furthermore, income tax expense in the first half of fiscal 2024 (all in the second quarter) included $ 2.8 million of expense for the settlement of various tax positions that were under audit for fiscal years 2018 through 2021.

Excluding the impact of the excess tax benefits on share-based payments, the goodwill impairment and the legal contingency charge in the first half of fiscal 2025 and the settlement amounts in the first half of 2024, our effective tax rates in the first halves of fiscal 2025 and 2024 were 27.8 % and 27.1 %, respectively.

At March 30, 2025 and September 29, 2024, the liability for income taxes associated with uncertain tax positions was $ 52.2 million and $ 50.1 million, respectively.

It is reasonably possible that the amount of the unrecognized benefit with respect to certain of our unrecognized tax positions may not significantly decrease within the next 12 months.

These liabilities represent our current estimates of the additional tax liabilities that we may be assessed when the related audits are concluded.

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GSG also provides engineering design services for U.S.

based federal and municipal clients, especially in water infrastructure, flood protection and

based federal and municipal clients, especially in water infrastructure, flood protection and solid waste.

GSG also leads our support for development agencies worldwide, especially in the United States, United Kingdom and Australia.

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commercial clients, and international clients inclusive of the commercial and government sectors.

CIG supports commercial clients worldwide in renewable energy, industrial, high performance buildings and aerospace markets.

CIG supports commercial clients worldwide in 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), Europe, the United Kingdom and South America (primarily Brazil).

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All significant intercompany balances and transactions are eliminated in consolidation.

Our Corporate Segment's operating income in the first quarter of fiscal 2025, includes a non-recurring charge of $ 115.0 million related to legal contingencies as described in Note 17, " Commitments and Contingencies ".

This charge is reported separately as "Legal contingency costs" in our consolidated statement of income for the first quarter of fiscal 2025.

We expect to pay this amount within the next 12 months with our cash on hand and by drawing on our credit facility.

Our Corporate Segment's operating income in the first half of fiscal 2025, includes a non-recurring charge of $ 115.0 million related to legal contingencies as described in Note 17, "Commitments and Contingencies".

This charge is reported separately as "Legal contingency costs" in our consolidated statement of income for the first half of fiscal 2025.

We paid $ 57 million in the second quarter of fiscal 2025, and we expect to pay the remainder within the next 12 months with our cash on hand and by drawing on our credit facilit y.

For the second quarter and first half of fiscal 2025, we recorded a non-cash goodwill impairment charge of $ 92.4 million related to our GDS reporting unit, which resulted from the cancellation of USAID programs in the second quarter of fiscal 2025.

The following tables summarize financial information regarding our reportable segments (in thousands):

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2024 March 30,

2025 March 31,

GSG $ 661,424 $ 597,127 $ 1,413,206 $ 1,172,168

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Total income from operations $ 39,603 $ 117,683 $ 62,129 $ 228,764

(1) Includes amortization of intangibles, acquisition and integration expenses, certain legal contingency costs as well as other costs and other income not allocable to our reportable segments.

(1) Includes amortization of intangibles, goodwill impairment charges, certain legal contingency costs, as well as other costs and other income not allocable to our reportable segments.

2025 September 29,

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We measure our contingent earn-out liabilities at fair value on a recurring basis usin g significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 4 , " Acquisitions " for further information).

The fair value of long-term debt under our Credit Facility was determined using the present value of future cash flows based on the borrowing rates currently available for debt with similar terms and maturities (Level 2 measurement, as described in “Critical Accounting Policies and Estim ates” in our Annual Report on Form 10-K for the fiscal year ended September 29, 2024).

The carrying value of our long-term debt under our Credit Facility approximated fair value at December 29, 2024 and September 29, 2024.

At December 29, 2024, we had $ 325 million in outstanding borrowings under our Amended Credit Agreement, which consisted of $ 250 million under the New Term Loan Facility and $ 75 million und er the Amended Revolving Credit Facility.

The estimated fair value of our $ 575 million Convertible Notes, which were used to fund our business acquisitions, working capital needs, dividends, capital expenditures and contingent earn-outs, was determined based on the trading price of the Convertible Notes as of the last trading day of our first quarter of fiscal 2025.

The fair value of long-term debt under our credit facility was determined using the present value of future cash flows based on the borrowing rates currently available for debt with similar terms and maturities (Level 2 measurement, as described in “Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended September 29, 2024).

The carrying value of our long-term debt under our credit facility approximated fair value at March 30, 2025 and September 29, 2024.

At March 30, 2025, we had $ 450 million in outstanding borrowings under the Third Amended and Restated Credit Agreement, which consiste d of $ 250 million under our term loan facility and $ 200 million under our revolving credit facility .

The estimated fair value of our $ 575 million Co nvertible Notes, which were used to fund our business acquisitions, working capital needs, dividends, capital expenditures and contingent earn-outs, was determined based on the trading price of the Convertible Notes as of the last trading day of our second quarter of fiscal 2025.

We consider the fair value of the Convertible Notes to be a Level 2 measurement as they are not actively traded in markets.

The carrying amounts and estimated fair values of the Convertible Notes were approximate ly $ 564 million and $ 673 million, respectively, at December 29, 2024, and $ 564 million and $ 743 million, respectively, at September 29, 2024 (see Note 15 , " Long-Term Debt " for further information).

The carrying amounts and estimated fair values of the Convertible Notes were approximately $ 565 million and $ 592 million, respectively, at March 30, 2025, and $ 564 million and $ 743 million, respectively, at September 29, 2024 (see Note 15 , " Long-Term Debt " for further information).

Long-Term Debt

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Debt issuance costs and discount ( 10,811 ) ( 12,366 )

Total 1,014,189 812,634

Current portion of long-term debt ( 250,000 ) —

Long-term debt $ 764,189 $ 812,634

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The conversion rate is subject to adjustment for certain events, including stock splits and issuance of certain stock dividends on our common stock.

At December 29, 2024, the applicable conversion rate was 25.4345 shares of common stock per $1,000 principal amount of the Convertible Notes (equivalent to an adjusted conversion price of approximately $ 39.32 per share of common stock) .

At March 30, 2025, the applicable conversion rate was 25.4382 shares of common stock per $1,000 principal amount of the Convertible Notes (equivalent to an adjusted conversion price of approximately $ 39.31 per share of common stock).

Upon conversion, we will pay cash up to the aggregate principal amount of the Convertible Notes to be converted and pay or de liver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted.

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Our net proceeds from the offering were approximately $ 560.5 million after deducting the initial purchasers’ discounts and commissions and offering expenses.

We used approximately $ 51.8 million of the net proceeds to pay the cost of the Capped

Call Transactions described below.

We used approximately $ 51.8 million of the net proceeds to pay the cost of the Capped Call Transactions described below.

We used the remaining net proceeds to repay all $ 185.0 million principal amount outstanding under our revolving credit facility, the remaining $ 234.4 million principal amount outstanding under our senior secured term loan due 2027 and approximately $ 89.4 million principal amount outstanding under our senior secured term loan due 2026.

The Convertible Notes were recorded as a single unit within "Long-term debt" in our consolidated balance sheets as the conversion option within the Convertible Notes was not a derivative that would require bifurcation, and the Convertible Notes did not involve a substantial premium.

Transaction costs to issue the Convertible Notes were recorded as direct deductions from the related debt liabilities and are amortized to interest expense using the effective interest method over the terms of the Convertible Notes resulting in an effective annual interest rate of 2.79 %.

Transaction costs to issue the Convertible Notes were recorded as direct

deductions from the related debt liabilities and are amortized to interest expense using the effective interest method over the terms of the Convertible Notes resulting in an effective annual interest rate of 2.79 %.

The net carrying amount of the Convertible Notes was as follows (in thousands) :

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The following table sets forth the interest expense recognized related to the Convertible Notes (in thousands) :

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2024 March 30,

2025 March 31,

Interest expense $ 3,235 $ 3,127 $ 6,469 $ 6,397

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The cap price is subject to adjustment for certain events, including stock splits and issuance of certain stock dividends on our common stock.

At December 29, 2024, the adjusted cap price was approximately $ 51.90 per share.

At March 30, 2025, the adjusted cap price was approximately $ 51.89 per share.

We recorded the Capped Call Transactions as separate transactions from the issuance of the Convertible Notes.

The cost of $ 51.8 million incurred to purchase the Capped Call Transactions was recorded as a reduction to additional paid-in capital (net of $ 12.9 million in deferred taxes) on our consolidated balance sheet as of fiscal 2023 year-end.

On October 26, 2022, we entered into a Third Amended and Restated Credit Agreement that provides for an additional $ 500 million senior secured term loan facility (the "New Term Loan Facility") increasing our total borrowing capacity to $ 1.55 billion.

On January 23, 2023, we drew the entire amount of the New Term Loan Facility to partially finance the RPS acquisition.

The New Term Loan Facility is not subject to any amortization payments of principal and matures in January 2026.

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 at July 30, 2018;

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

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

The Second Amended Credit Agreement provides for, among other things, (i) refinance indebtedness under our Credit Agreement dated at 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 Second 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.

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

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

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

In fiscal 2023, we repaid the Amended Term Loan Facility in full from the Convertible Notes proceeds.

At December 29, 2024 , we h a d $ 325 million in outstanding borrowings under the Amended Credit Agreement, which was consisted of $ 250 million under the New Term Loan Facility and $ 75 million under the Amended Revolving Credit Facility.

During the three months ended December 29, 2024, the weighted-average interest rate of the outstanding borrowings under the Amended Credit Agreement was 5.98 %.

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

At December 29, 2024, we had $ 424.3 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.

The financial covenants provide for a maximum Consolidated Leverage Ratio of 3.25 to 1.00 (total funded debt/EBITDA, as defined in the Amended Credit Agreement) and a minimum Consolidated Interest Coverage Ratio of 3.00 to 1.00 (EBITDA/Consolidated Interest Charges, as defined in the Amended Credit Agreement).

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

At December 29, 2024, we were in compliance with these covenants with a consolidated leverage ratio of 1.77 x and a consolidated interest coverage ratio of 12.33 x.

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 December 29, 2024, there were no outstanding borrowings under these facilities and the aggregate amount of standby letters of credit outstanding was $ 40.2 million.

As of December 29, 2024, we had no bank overdrafts related to our disbursement bank accounts.

On October 26, 2022, we entered into a Third Amended and Restated Credit Agreement (“Third Amended Credit Agreement”) that provided for an additional $ 500 million senior secured term loan facility (the "New Te rm Loan Facility") increasing our total borrowing capacity to $ 1.55 billion.

On January 23, 2023, we drew the entire amount of the New Term Loan Facility to partially finance the RPS acquisition.

The New Term Loan Facility is not subject to any amortization payments of principal and matures in January 2026.

At March 30, 2025, we had $ 450 million in outstanding borrowings under the Third Amended Credit Agreement, which consiste d of $ 250 million under the New Term Loan Facility and $ 200 million under the Amended Revolving Credit Facility.

During the three months ended March 30, 2025, the weighted-average interest rate of the outstanding borrowings under the Third Amended Credit Agreement was 5.78 %.

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

At March 30, 2025, we had $ 299.3 million of available credit under the Amended Revolving Credit Facility, all of which could be borrowed without a violation of our debt covenants.

The Third 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 3.25 to 1.00 (total funded debt/EBITDA, as defined in the Third Amended Credit Agreement) and a minimum Consolidated Interest Coverage Ratio of 3.00 to 1.00 (EBITDA/Consolidated Interest Charges, as defined in the Third Amended Credit Agreement).

Our obligations under the Third 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 Third 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 30, 2025, we were in compliance with these covenants with a consolidated leverage ratio of 1.63 x and a consolidated interest coverage ratio of 15.81 x.

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

At March 30, 2025, there were no outstanding borrowings under these facilities and the aggregate amount of standby letters of credit outstanding was $ 39.9 million.

As of March 30, 2025, we had no bank overdrafts related to our disbursement bank accounts.

Subsequent Event .

On May 5, 2025, we entered into a Fourth Amended and Restated Credit Agreement (“Amended Credit Agreement”) with a total borrowing capacity of $ 1.5 billion that will mature in May 2030.

The Amended Credit Agreement is a $ 1.1 billion senior secured, five-year facility that provides for a $ 250 million 3-year term loan facility (the “3Y Term Loan Facility”), a $ 250 million 5-year term loan facility (“the 5Y Term Loan Facility”), and a $ 600 million revolving credit facility (the “New Amended Revolving Credit Facility”).

In addition, the Amended Credit Agreement includes a $ 400 million accordion feature that allows us to increase the Amended Credit Agreement to $ 1.5 billion subject to lender approv al.

The 3Y Term Loan Facility will not be subject to any scheduled amortization of principal.

The 5Y Term Loan Facility will be subject to quarterly amortization of principal, based upon the annual percentages of the original stated amount thereof (Year 1:

0.0%, Year 2:

0.0%, Year 3:

5.0 %, Year 4:

10.0 %, Year 5:

10.0 %), with the first payment being due at the end of the first full fiscal quarter following the second anniversary of the Amendment Effective Date.

The Amended Credit Agreement provides for, among other things, (i) refinance indebtedness under our Third Amended Credit Agreement;

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

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

The Amended Credit Agreement provides for a reduction in the pricing levels of the Consolidated Leverage Ratio and the removal of the SOFR credit spread adjustment.

The New Amended Revolving Credit Facility includes a $ 100 million sublimit for the issuance of standby letters of credit, a $ 20 million sublimit for swingline loans, and a $ 400 million sublimit for multicurrency borrowings and letters of credit.

The entire 3Y Term Loan Facility and 5Y Term Loan Facility were drawn on May 5, 2025.

The proceeds from these term loans were used to pay down our New Term Loan Facility and the Amended Revolving Credit Facility in full on May 5, 2025.

We may borrow on the New Amended Revolving Credit Facility, at our option, at either (a) a benchmark rate plus a margin that ranges from 1.000 % to 1.750 % per annum, or (b) a base rate for loans in U.S.

dollars (the highest of the U.S.

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

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

The 5Y Term Loan Facility is subject to the same interest rate provisions.

The 3Y Term Loan Facility is subject to a benchmark rate plus a margin that ranges from 0.875 % to 1.625 % per annum.

The Amended Credit Agreement expires on May 5, 2030, or earlier at our discretion upon payment in full of loans and other obligations.

Reclassifications Out of Accumulated Other Comprehensive Income

The accumulated balances and activities for the three months ended December 29, 2024 and December 31, 2023 related to reclassifications out of accumulated other comprehensive income are summarized as follows (in thousands):

The accumulated balances and activities for the three and six months ended March 30, 2025 and March 31, 2024 related to reclassifications out of accumulated other comprehensive income are summarized as follows (in thousands):

Three Months Ended

Adjustments Net Pension Adjustments Accumulated Other Comprehensive (Loss) Income

Adjustments Net Pension Adjustments Accumulated Other Comprehensive Income (Loss)

Balance at December 31, 2023 $ ( 134,827 ) $ 2,625 $ ( 132,202 )

Other comprehensive loss before reclassifications ( 24,344 ) — ( 24,344 )

Net current-period other comprehensive loss ( 24,344 ) — ( 24,344 )

Balance at March 31, 2024 $ ( 159,171 ) $ 2,625 $ ( 156,546 )

Balance at December 29, 2024 $ ( 191,659 ) $ 3,905 $ ( 187,754 )

Other comprehensive income before reclassifications 34,574 — 34,574

Net current-period other comprehensive income 34,574 — 34,574

Balance at March 30, 2025 $ ( 157,085 ) $ 3,905 $ ( 153,180 )

Six Months Ended

Adjustments Net Pension Adjustments Accumulated Other Comprehensive Income (Loss)

Balance at October 1, 2023 $ ( 197,933 ) 2,638 $ ( 195,295 )

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Net current-period other comprehensive income (loss) 38,762 ( 13 ) 38,749

Balance at December 31, 2023 $ ( 134,827 ) $ 2,625 $ ( 132,202 )

Balance at March 31, 2024 $ ( 159,171 ) $ 2,625 $ ( 156,546 )

Balance at September 29, 2024 $ ( 82,813 ) $ 3,938 $ ( 78,875 )

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Net current-period other comprehensive loss ( 74,272 ) ( 33 ) ( 74,305 )

Balance at December 29, 2024 $ ( 191,659 ) $ 3,905 $ ( 187,754 )

Balance at March 30, 2025 $ ( 157,085 ) $ 3,905 $ ( 153,180 )

Commitments and Contingencies

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However, in some actions, parties are seeking damages that exceed our insurance coverage or for which we are not insured.

While management does not believe that the resolution of these claims will have a material adverse

effect, individually or in aggregate, on our financial position, results of operations or cash flows, management acknowledges the uncertainty surrounding the ultimate resolution of these matters.

While management does not believe that the resolution of these claims will have a material adverse effect, individually or in aggregate, on our financial position, results of operations or cash flows, management acknowledges the uncertainty surrounding the ultimate resolution of these matters.

On July 15, 2019, following an initial January 14, 2019 filing, the Civil Division of the United States Attorney's Office of the United States Department of Justice ("the USAO") filed an amended complaint in the intervention of three qui tam actions filed against our wholly-owned subsidiary, Tetra Tech EC, Inc.

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On March 5, 2024, the Court granted the USAO's motion to amend the filing to include additional claims against TtEC under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") and common law.

As we previously disclosed, to explore whether a negotiated resolution was possible, TtEC began engaging in discussions with the USAO during the first quarter of fiscal 2025 regarding a potential resolution of all claims.

To explore whether a negotiated resolution was possible, TtEC began engaging in discussions with the USAO during the first quarter of fiscal 2025 regarding a potential resolution of all claims.

On January 17, 2025, TtEC entered into a settlement agreement with the United States of America, acting through the USAO and on behalf of the Department of the Navy (collectively, the "United States") an d also fil ed a proposed consent decree with the Court, to resolve this litigation.

Under the terms of the settlement agreement and consent decree, TtEC has agreed to pay the United States $ 57 million and $ 40 million for FCA claims and CERCLA claims, respectively (the "Settlement Amounts"), which we expect to pay with cash on hand and by drawing on our credit facility.

Under the terms of the settlement agreement and consent decree, TtEC agreed to pay the United States $ 57 million and $ 40 million for FCA claims and CERCLA claims, respectively (the "Settlement Amounts").

In the second quarter of fiscal 2025, we paid the $ 57 million settlement, and we expect to pay the remaining $ 40 million with cash on hand and by drawing on our credit facility within the next 12 months.

Upon entry of the consent decree by the Court and the United States' receipt of the Settlement Amounts, the United States will release TtEC from any, and all civil or administrative monetary claims for the Covered Conduct under the civil FCA, the CERCLA, and other specified civil statutes and common law theories of liability.

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TtEC can give no assurances as to what portion, if any, of the Settlement Amounts will be recovered from the insurance carrier.

As also previously disclosed, several ancillary claims brought by third-party private plaintiffs arising from the same services provided by TtEC at Hunters Point are also ongoing.

Several ancillary claims brought by third-party private plaintiffs arising from the same services provided by TtEC at Hunters Point are also ongoing.

The settlement agreement and consent decree do not resolve these ancillary claims.

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The table below presents revenue and reimbursable costs related t o services we provided to our unconsolidated joint ventures (in thousands):

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2024 March 30,

2025 March 31,

Revenue $ 16,017 $ 14,436 $ 32,497 $ 33,404

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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 1. Financial Statements