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Item 7. Management’s Discussion and Analysis

2025-11-20 compared with 2024-11-19 · 158 added, 278 removed, 298 unchanged (59% of the section changed)

4 unchanged sentences

See Part 1, Item 1A, "Risk Factors" for a discussion of the risks, assumptions and uncertainties affecting these statements.

The discussion and analysis for fiscal 2024 compared to fiscal 2023 can be found under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended September 29, 2024.

OVERVIEW OF RESULTS AND BUSINESS TRENDS

In fiscal 2024, our revenue increased 15.0% compared to fiscal 2023 primarily reflecting increased activity in our U.S.

federal and international client sectors.

This revenue growth includes $332 million from our recent acquisitions, that did not have comparable revenue for all of fiscal 2023.

Excluding the impact of these acquisitions, our revenue increased 7.6% compared to the prior-year period.

Our revenue growth of 4.7% i n fiscal 2025 was primarily due to increased activity in the U.S.

state and local and U.S.

federal government client sectors.

The overall growth includes $80 million from our recent acquisitions, that did not have comparable revenue for fiscal 2024.

Excluding the impact of these acquisitions, our revenue increased 3.2% compared to last fiscal year.

The table below presents our revenue by client sector (amounts in thousands):

1 unchanged sentence

September 28,

2024 October 1,

2025 September 29,

Client sector

9 unchanged sentences

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

clients, primarily in the United Kingdom, Australia and Canada.

clients, primarily in Australia, Canada and the United Kingdom.

Federal Government

1 unchanged sentence

September 28,

2024 October 1,

2025 September 29,

($ in thousands)

Revenue $ 1,718,831 $ 1,675,996 $ 42,835 2.6%

Our 20.8% growth in U.S.

federal revenue in fiscal 2024 compared to fiscal 2023 primarily reflects increased international development activity and increased environmental activity for both civilian and defense agencies.

The growth in our international development activity primarily relates to activity in Ukraine to support energy security and other humanitarian needs.

In fiscal 2024, our international development revenue increased approximat ely $122 million compa red to fiscal 2023.

The overall revenue growth also includes approximately $115 million of revenue from our recent acquisitions, that did not have comparable revenue for all la st year.

We expect our U.S.

federal government revenue to continue to grow in fiscal 2025.

Approximately $1 trillion in new U.S.

federal funding passed in 2021 through the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and the CHIPS and Science Act.

Each of these programs includes substantial planned investments in our key end markets including water, environment and sustainable infrastructure over the next five to ten years.

federal government sector grew 2.6% in fiscal 2025 primarily due to increased disaster response work related to the Palisades and Eaton fires in Southern California, which occurred in early January 2025.

The revenue growth also includes approximately $35 million of revenue from recent acquisitions that did not have comparable revenue in fiscal 2024.

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 with immediate effect.

In fiscal 2025, our U.S.

federal government revenue included $576.4 million from USAID programs compared to $677.2 million last fiscal year.

We currently expect no significant USAID revenue in fiscal 2026.

However, we do expect our U.S.

federal revenue to grow next fiscal year, excluding USAID and disaster response activities.

State and Local Government

1 unchanged sentence

September 28,

2024 October 1,

2025 September 29,

($ in thousands)

1 unchanged sentence

In fiscal 2025, our U.S.

state and local government revenue increased compared to last fiscal year due to continued investment by our clients in clean drinking water;

this growth was offset by lower disaster response revenue of approximately $46 million primarily due to the wind-down of hurricane related projects in the southeastern U.S.

Excluding our disaster response activities, our U.S.

state and local government revenue increased 12.4% in fiscal 2024 compared to fiscal 2023, primarily reflecting continued increased revenue from advanced water treatment projects.

Most of our work for U.S.

state and local government revenue grew 28.8% compared to fiscal 2024 partially due to increased disaster response activity related to Hurricanes Helene and Milton.

Excluding the disaster response work, our U.S.

state and local government revenue increased 13.3% in fiscal 2025 compared to last fiscal year.

This growth was due to continued investment by our clients in water infrastructure, including digital water automation.

Most of our work for the U.S.

state and local governments relates to critical water and environmental programs, which we expect to continue to grow in fiscal 2026.

1 unchanged sentence

September 28,

2024 October 1,

2025 September 29,

($ in thousands)

Revenue $ 899,298 $ 909,642 $ (10,344) (1.1)%

commercial revenue growth of 4.6% this fiscal year was primarily due to increased planning and permitting projects related to renewable energy generation and transmission.

We expect revenue growth to continue in our U.S.

commercial business in fiscal 2025.

commercial revenue declined 1.1% in fiscal 2025 primarily due to lower activity related t o renewable ener gy, partially offset by increased environmental services compared to fiscal 2024.

We expect our U.S.

commercial revenue, excluding renewable energy, to grow in fiscal 2026.

International

1 unchanged sentence

September 28,

2024 October 1,

2025 September 29,

($ in thousands)

Revenue 2,034,493 $ 1,999,856 $ 34,637 1.7%

For fiscal 2024, our international revenue increased 20.6% compared to last year primarily due to higher renewable energy revenue and commercial activities related to an increased focus on sustainability in addition to contributions from acquisitions.

This revenue growth includes approximately $182 million of revenue from our recent acquisitions, that did not have comparable revenue for all of last year.

Excluding the impact of these acquisitions, our revenue increased 9.6% compared to fiscal 2023.

We expect growth in our international work to continue in fiscal 2025.

For fiscal 2025, our international revenue increased 1.7% primarily due to growth on water planning and design activities in the United Kingdom, partially offset by lower infrastructure work in Australia.

We expect the growth in our international work to continue in fiscal 2026.

RESULTS OF OPERATIONS

3 unchanged sentences

September 28,

2024 October 1,

2025 September 29,

($ in thousands, except per share data)

6 unchanged sentences

Selling, general and administrative expenses (357,737) (356,024) (1,713) (0.5)

Acquisition and integration expenses (7,138) (33,169) 26,031 78.5

Right-of-use operating lease asset impairment — (16,385) 16,385 NM

Legal contingency costs (115,000) — (115,000) NM

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

Acquisition and integration expenses — (7,138) 7,138 NM

Contingent consideration – fair value adjustments 12,228 (2,541) 14,769 581.2

1 unchanged sentence

Interest expense – net (30,802) (37,271) 6,469 17.4

Other non-operating income — 89,402 (89,402) NM

Income before income tax expense 377,617 463,466 (85,849) (18.5)

12 unchanged sentences

NM = not meaningful

Our revenue growth in fiscal 2024 reflects increases in both of our reportable segments.

Our GSG segment's revenue and revenue, net of subcontractor costs, increased $324.5 million, or 15.0%, and $274.5 million, or 16.8%, respectively, in fiscal 2024 compar ed to last y ear.

Our CIG segment's revenue increased $362.1 million, or 14.9%, and revenue, net of subcontractor costs, increased $296.2 million, or 14.0% in fiscal 2024 compared to fiscal 2023.

Our revenue growth in fiscal 2025 reflects increases in both our GSG and CIG reportable segments.

For fiscal 2025, our GSG segment's revenue and revenue, net of subcontractor costs, increased $190.6 million, or 7.7%, and $219.8 million, or 11.5%, respectively, compared to last year.

Our CIG segment's revenue increased $57.9 million, or 2.1%, and revenue, net of subcontractor costs, increased $75.7 million, or 3.1% in fiscal 2025 compared fiscal 2024.

The fiscal 2025 results for GSG and CIG segments are described below under "Government Services Group" and "Commercial/International Group", respectively.

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

GAAP adjusted results, which exclude acquisition and integration costs and adjustments to contingent consideration liabilities in fiscal 2024.

Our fiscal 2023 adjusted results exclude acquisition and integrations costs related to the RPS acquisition and related lease impairment charge and adjustments to contingent consideration liabilities.

Our adjusted earnings per share ("EPS") for fiscal 2023 also excludes non-operating gains on a foreign exchange contract of $89.4 million and non-recurring tax expense items.

The foreign exchange gain is reported as "Other non-operating income" in our consolidated statements of income.

The effective tax rate applied to the adjustments to EPS to arrive at adjusted EPS was 17% and 26% for fisc al 2024 and 2023, r espectively.

The fiscal 2024 rate reflects certain integration costs/losses that were not tax deductible.

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

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

GAAP adjusted results.

For fiscal 2025, our adjusted results exclude a non-cash goodwill impairment charge of $92.4 million related to our GDS reporting unit, which resulted from the aforementioned cancellation of USAID programs in the second quarter of fiscal 2025.

This charge is further described in Note 6, "Goodwill and Intangible Assets" of the “Notes to Consolidated Financial Statements”.

Additionally, for fiscal 2025, our adjusted results exclude a non-recurring charge of $115.0 million related to legal contingencies as described in Note 18, "Commitments and Contingencies" of the “Notes to Consolidated Financial Statements”.

Our adjusted results also exclude adjustments to contingent consideration liabilities in fiscal 2025.

Our fiscal 2024 adjusted results exclude acquisition and integration costs and adjustments to contingent consideration liabilities.

We determined that there is no tax benefit in fiscal 2025 for $31.3 million of the legal contingency charge and $58.3 million of the goodwill impairment charge.

The effective tax rate applied to the remaining adjustments in fiscal 2025 to arrive at the adjusted earnings per share ("EPS") w as 24.6%.

Th e effective tax rate applied to the adjustments to EPS to arrive at adjusted EPS in fiscal 2024 was 17%, which reflects certain integration costs/losses that were not tax deductible.

We applied the relevant marginal statutory tax rate based on the nature of

the adjustment and the tax jurisdiction in which it occurred.

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

Fiscal Year Ended

September 28,

2024 October 1,

2025 September 29,

($ in thousands, except per share data)

Income from operations $ 408,419 $ 500,737 $ (92,318) (18.4)%

Acquisition and integration expenses 7,138 33,169 (26,031) (78.5)

Right-of-use operating lease asset impairment — 16,385 (16,385) NM

Legal contingency costs 115,000 — 115,000 NM

Impairment of goodwill 92,416 — 92,416 NM

Acquisition and integration expenses — 7,138 (7,138) NM

Earn-out adjustments (12,228) 2,541 (14,769) (581.2)

2 unchanged sentences

EPS $ 0.93 $ 1.23 $ (0.30) (24.4)%

Acquisition and integration expenses 0.02 0.11 (0.09) (81.8)

Right-of-use operating lease asset impairment — 0.04 (0.04) NM

Legal contingency costs 0.35 — 0.35 NM

Impairment of goodwill 0.31 — 0.31 NM

Acquisition and integration expenses — 0.02 (0.02) NM

Earn-out adjustments (0.03) 0.01 (0.04) (400.0)

Foreign exchange forward contract gain — (0.25) 0.25 NM

Non-recurring tax items — 0.08 (0.08) NM

Adjusted EPS (1)

2 unchanged sentences

GAAP financial measure

Operating income in fiscal 2024 includes $7.1 million of acquisition and integration expenses (non-cash divestiture and asset impairment charges).

The fiscal 2023 results include $33.2 million of acquisition and integration expenses (primarily investment banking, legal and other professional fees) for the RPS acquisition and a related $16.4 million lease right-of-use asset ("ROU") impairment expense.

The fiscal 2024 and 2023 results also include charges of $2.5 million and $12.3 million, respectively, related to changes in the estimated fair value of contingent earn-out liabilities.

Excluding the acquisition and integration expenses and earn-out charges, our adjusted operating income increased $90.5 million, or 21.6% in fiscal 2024 compared to fiscal 2023.

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

Excluding the non-recurring charges and the earn-out gains, our operating income increased $93.2 million, or 18.3% in fiscal 2025 compared to last year.

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

Fiscal Year Ended

September 28,

2024 October 1,

2025 September 29,

($ in thousands)

Interest expense – net $ 30,802 $ 37,271 $ (6,469) (17.4)%

Net interest expense decreased in fiscal 2024 compared to last fiscal year primarily due to the lower borrowing costs from our convertible notes (the "Convertible Notes") issued in the fourth quarter of fiscal 2023, which we used to refinance the existing higher-cost debt.

In fiscal 2023, net interest expense included $2.7 million of additional expense for the write-off of previously deferred debt origination fees due to the cancellation of the bridge loan facility that we entered to support our offer to acquire RPS, which was replaced with an amendment to our existing debt facility and $1.1 million of additional expense for the write-off of previously deferred debt origination fees due to the repayment of RPS' debt facilities.

Excluding these write-offs, our interest expense decreased $5.5 million in fiscal 2024 compared to last year.

Net interest expense decreased in fiscal 2025 primarily due to lower average interest rates and higher interest income compared to fiscal 2024.

Fiscal Year Ended

September 28,

2024 October 1,

($ in thousands)

Other non-operating income $ — $ 89,402 $ (89,402) NM

Other non-operating income in fiscal 2023 reflects gains on a foreign exchange forward contract integrated with the acquisition of RPS.

Although an effective economic hedge of our foreign exchange risk related to this transaction, the forward contract did not qualify for hedge accounting.

As a result, the forward contract was marked-to-market with changes in fair value

recognized in earnings each period.

The forward contract was settled on January 23, 2023, together with the closing of the RPS acquisition, with a cumulative cash gain of approximately $109 million.

Fiscal Year Ended

2025 September 29,

2024 October 1,

($ in thousands)

1 unchanged sentence

The effective tax rates for fiscal 2025 and 2024 were 34.3% and 28.1%, respectively.

Income tax expense was reduced by $4.5 millio n and $4.6 million of excess tax benefits on share-based payments in fiscal 2024 and 2023, respectively.

In addition, income tax expense in fiscal 2024 included $4.2 million of expense for the settlement of various tax positions that were under audit for fiscal years 2011 through 2021.

Furthermore, income tax expense in fiscal 2023 included non-operating income tax expenses totaling $20.6 million to (i) increase the tax liability for uncertain tax positions related to certain U.S.

tax credits and an intercompany financing transaction, (ii) recognize the tax liability for foreign earnings, primarily in the United Kingdom and Australia, that are no longer indefinitely reinvested.

Excluding the impact of the excess tax benefits on share-based payments in both years, the settlement amount in fiscal 2024 and the non-operating tax expenses in fiscal 2023, our effective tax rates in fiscal 2024 and 2023 were 28.1% and 27.8%, respectively.

In December 2021, the Organisation for Economic Cooperation and Development ("OECD") released Pillar Two Model Rules (also referred to as the global minimum tax or Global Anti-Base Erosion "GloBE" rules), which were designed to ensure large multinational enterprises pay a minimum 15 percent level of tax on the income arising in each jurisdiction in which they operate.

Several jurisdictions in which we operate have enacted these rules, which are effective for the first quarter of fiscal 2025.

Income tax expense was reduced by $1.6 million and $4.5 million of excess tax benefits on share-based payments in fiscal 2025 and 2024, respectively.

In addition, in fiscal 2025, we recognized a $92.4 million goodwill impairment as described in Note 6, “Goodwill and Intangible Assets” of the “Notes to Consolidated Financial Statements”.

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 18, "Commitments and Contingencies" of the “Notes to Consolidated Financial Statements”.

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

Furthermore, income tax expense in fiscal 2024 included $4.2 million of expense for the settlement of various tax positions that were under audit for fiscal ye ars 2011 throug h 2021.

Excluding the impact of the excess tax benefits on share-based payments, the goodwill impairment and the legal contingency charge in fiscal 2025 and the settlement amounts in fiscal 2024, our effective tax rates in fiscal 2025 and 2024 were 27.4% and 28.1%, respectively.

In December 2021, the OECD released Pillar Two Model Rules (also referred to as the global minimum tax or Global Anti-Base Erosion "GloBE" rules), which were designed to ensure large multinational enterprises pay a minimum 15% level of tax on the income arising in each jurisdiction in which they operate.

Several jurisdictions in which we operate have enacted these rules, which are effective from the first quarter of fiscal 2025.

We are continually monitoring developments and evaluating the potential impacts.

At this time, we do not anticipate a material tax charge as a result of implementation of these rules.

We did not have a material tax charge as a result of implementation of these rules in fiscal 2025.

On June 28, 2025, the G7 released a statement confirming that agreement has been reached concerning the operation of a side-by-side solution to the application of Pillar Two to US parented groups.

The statement notes that this side-by-side system will fully exclude US parented groups from the under taxed profits rule (UTPR) and the income inclusion rule (IIR) in respect of both their domestic and foreign profits.

On July 4, 2025, the U.S.

government enacted a comprehensive tax and spending bill which includes, among other provisions, changes to the U.S.

corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses, restoring 100% bonus depreciation, and permanent extensions of certain provisions within the Tax Cuts and Jobs Act.

Certain provisions that apply to Tetra Tech are effective beginning in fiscal 2025 and through fiscal 2027.

We did not have any material change to our total income tax expense;

howeve r, $0.4 million in t ax expense is deferred rather than current in fiscal 2025 due to the accelerated current deductions as a result of these tax law changes.

Segment Results of Operations

2 unchanged sentences

September 28,

2024 October 1,

($ in thousands)

Revenue $ 2,483,355 $ 2,158,889 $ 324,466 15.0%

Subcontractor costs (573,377) (523,449) (49,928) (9.5)

Revenue, net of subcontractor costs $ 1,909,978 $ 1,635,440 $ 274,538 16.8

Income from operations $ 281,026 $ 231,762 $ 49,264 21.3%

For fiscal 2024, the revenue growth of 15.0% compared to fiscal 2023 primarily reflects higher U.S.

federal government activities related to international development, U.S.

state and local government activities related to advanced water treatment and contributions from our recent acquisitions.

This growth was partially offset by lower disaster response activity.

The revenue growth in fiscal 2024 include s a $122 million increase from the aforementioned international development activities in Ukraine compared to last year.

For fiscal 2024, our revenue growth also includes approximately $128 million of revenue from our recent acquisitions, that did not have comparable revenue for all of fiscal 2023.

Conversely, our revenue growth also includes decreased revenue from disaster response activities, which was approximately $46 million lower in fiscal 2024 compared to fiscal 2023.

Excluding the acquisitions, increased activity in Ukraine and the partially offsetting lower disaster response revenue, our revenue increased 6.7% in fiscal 2024 compared to last year.

Operating income increased primarily due to the aforementioned revenue growth.

Additionally, our fiscal 2023 operating income was reduced by $6.8 million of the aforementioned lease impairment charge.

Excluding last year's lease impairment charge, our operating margin, based on revenue, net of subcontractor costs, increased to 14.7% in fiscal 2024 compared to 14.6% in fiscal 2023.

Commercial/International Services Group ("CIG")

Fiscal Year Ended

2025 September 29,

2024 October 1,

($ in thousands)

3 unchanged sentences

Income from operations $ 340,551 $ 281,026 $ 59,525 21.2%

For fiscal 2024, the revenue growth of 14.9% compared to fiscal 2023 primarily reflects increased activities related to renewable energy and international sustainable infrastructure in addition to contributions from acquisitions.

The revenue growth in fiscal 2024 includes approximately $205 million from the RPS acquisition that did not have comparable revenue in fiscal 2023.

Excluding the impact of the RPS acquisition, our revenue increased 6.5% in fiscal 2024 compared to last year.

For fiscal 2024, our operating income increased due to the aforementioned revenue growth.

Additionally, our operating income in fiscal 2023 was reduced by $8.3 million of the aforementioned lease impairment charge.

Our operating margin also improved in fiscal 2024 compared to last year resulting in enhanced operating income.

Excluding the lease impairment charge last year, our operating margin, based on revenue, net of subcontractor costs, improved approximately 170 basis points from 11.9% in fiscal 2023 to 13.6% in this fiscal year.

The improved operating margin was primarily due to our increased focus on high-end consulting services, and improved project execution, particularly in the RPS operations.

Fiscal 2023 Compared to Fiscal 2022

Consolidated Results of Operations

Fiscal Year Ended

2023 October 2, 2022 Change

($ in thousands, except per share data)

Revenue $ 4,522,550 $ 3,504,048 $ 1,018,502 29.1%

Subcontractor costs (771,461) (668,468) (102,993) (15.4)

Revenue, net of subcontractor costs (1)

3,751,089 2,835,580 915,509 32.3

Other costs of revenue (3,026,060) (2,260,021) (766,039) (33.9)

Gross profit 725,029 575,559 149,470 26.0

Selling, general and administrative expenses (305,107) (234,784) (70,323) (30.0)

Acquisition and integration expenses (33,169) — (33,169) NM

Right-of-use operating lease asset impairment (16,385) — (16,385) NM

Contingent consideration – fair value adjustments (12,255) (329) (11,926) NM

Income from operations 358,113 340,446 17,667 5.2

Interest expense – net (46,537) (11,584) (34,953) (301.7)

Other non-operating income 89,402 19,904 69,498 349.2

Income before income tax expense 400,978 348,766 52,212 15.0

Income tax expense (127,526) (85,602) (41,924) (49.0)

Net income 273,452 263,164 10,288 3.9

Net income attributable to noncontrolling interests (32) (39) 7 17.9

Net income attributable to Tetra Tech $ 273,420 $ 263,125 $ 10,295 3.9

Diluted earnings per share $ 1.02 $ 0.97 $ 0.05 5.2%

(1) We believe that the presentation of "Revenue, net of subcontractor costs", which is a non-U.S.

GAAP financial measure, enhances investors' ability to analyze our business trends and performance because it substantially measures the work performed by our employees.

In the course of providing services, we routinely subcontract various services and, under certain international development programs, issue grants.

Generally, these subcontractor costs and grants are passed through to our clients and, in accordance with U.S.

GAAP and industry practice, are included in our revenue when it is our contractual responsibility to procure or manage these activities.

Because subcontractor services can vary significantly from project to project and period to period, changes in revenue may not necessarily be indicative of our business trends.

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.

NM = not meaningful

In fiscal 2023, revenue and revenue, net of subcontractor costs, increased $1.02 billion, or 29.1%, and $915.5 million, or 32.3%, respectively, compared to fiscal 2022.

Excluding the contribution from RPS, our revenue increased 12.0% in fiscal 2023 compared to the previous year.

Our GSG segment's revenue and revenue, net of subcontractor costs, increased $338.0 million, or 18.6%, and $299.0 million, or 22.4%, respectively, in fiscal 2023 compared to fiscal 2022.

Our CIG segment's revenue increased $686.2 million, or 39.5%, and revenue, net of subcontractor costs, increased $616.5 million, or 41.1% in fiscal 2023 compared to the previous year.

Excluding the contribution from RPS, our CIG segment's revenue increased approximately 6.7% in fiscal 2023 compared to fiscal 2022 (9.5% on a constant currency basis).

The fiscal 2023 results for 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 our acquisition and integration costs related to the RPS acquisition, a related lease impairment charge and adjustments to contingent consideration liabilities in fiscal 2023, and a non-operating benefit from Employee Retention Credits ("ERC's") received in fiscal 2022.

Our adjusted EPS also excludes non-operating gains on a foreign exchange contract of $89.4 million for fiscal 2023 and $19.9 million for fiscal 2022, as well as non-recurring tax expense items for fiscal 2023.

The foreign exchange gain is reported as "Other non-operating income" in our consolidated statements of income.

The effective tax rates applied to the adjustments to EPS to arrive at adjusted EPS average 26% for both fiscal 2023 and 2022.

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

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

Fiscal Year Ended

2023 October 2, 2022 Change

($ in thousands, except per share data)

Income from operations $ 358,113 $ 340,446 $ 17,667 5.2%

Employee retention credits — (6,486) 6,486 NM

Acquisition and integration expenses 33,169 — 33,169 NM

Right-of-use operating lease asset impairment 16,385 — 16,385 NM

Earn-out adjustments 12,255 — 12,255 NM

Adjusted income from operations (1)

$ 419,922 $ 333,960 $ 85,962 25.7%

EPS $ 1.02 $ 0.97 $ 0.05 5.2%

Employee retention credits — (0.02) 0.02 NM

Acquisition and integration expenses 0.11 — 0.11 NM

Right-of-use operating lease asset impairment 0.04 — 0.04 NM

Earn-out adjustments 0.04 — 0.04 NM

Foreign exchange forward contract gain (0.25) (0.06) (0.19) NM

Non-recurring tax items 0.08 — 0.08 NM

Adjusted EPS (1)

$ 1.04 $ 0.89 $ 0.15 16.9%

NM = not meaningful

GAAP financial measure

Operating income increased $17.7 million, or 5.2%, in fiscal 2023 compared to fiscal 2022.

The fiscal 2023 results also include losses of $12.3 million, related to changes in the estimated fair value of contingent earn-out liabilities.

The fiscal 2022 results include the benefit of Employee Retention Credits ("ERC's") totaling $6.5 million, which represents reimbursement from the U.S.

federal government under the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") for the costs that

we incurred during fiscal 2020 to address the coronavirus disease 2019 pandemic.

These amounts were recognized in 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 "Net cash provided by operating activities" in our consolidated statement of cash flows for fiscal 2022, consistent with the presentation of the related costs recognized in fiscal 2020.

Excluding the acquisition and integration expenses, ROU asset impairment, earn-out losses and the ERC's, our adjusted operating income increased $86.0 million, or 25.7% in fiscal 2023 compared to fiscal 2022.

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

Our net interest expense was $46.5 million and $11.6 million in fiscal 2023 and 2022, respectively.

Net interest expense in fiscal 2023 included $2.7 million of additional expense for the write-off of previously deferred debt origination fees due to the cancellation of the bridge loan facility that we entered to support our offer to acquire RPS, which was replaced with an amendment to our existing debt facility and $1.1 million of additional expense for the write-off of previously deferred debt origination fees due to the repayment and cancellation of RPS' debt facilities.

Excluding these write-offs, our interest expense increased $31.2 million in fiscal 2023 compared to fiscal 2022 primarily due to the additional borrowings to fund the RPS acquisition.

Other non-operating income of $89.4 million in fiscal 2023 and $19.9 million in fiscal 2022, reflect the previously described gain on a foreign exchange forward contract integrated with the RPS acquisition.

The effective tax rates for fiscal 2023 and 2022 were 31.8% and 24.5%, respectively.

Income tax expense in fiscal 2023 included non-operating income tax expenses totaling $20.6 million to (i) increase the tax liability for uncertain tax positions related to certain U.S.

In addition, income tax expense was reduced by $4.6 million and $10.3 million of excess tax benefits on share-based payments in fiscal 2023 and 2022, respectively.

Excluding the impact of the non-operating tax expenses in fiscal 2023 and the excess tax benefits on share-based payments in both years, our effective tax rates in fiscal 2023 and 2022 were 27.8% and 27.5%.

Segment Results of Operations

Government Services Group ("GSG")

Fiscal Year Ended

2023 October 2, 2022 Change

($ in thousands)

Revenue $ 2,158,889 $ 1,820,868 $ 338,021 18.6%

Subcontractor costs (523,449) (484,412) (39,037) (8.1)

Revenue, net of subcontractor costs $ 1,635,440 $ 1,336,456 $ 298,984 22.4

Income from operations $ 231,762 $ 198,448 $ 33,314 16.8%

Revenue and revenue, net of subcontractor costs, increased $338.0 million, or 18.6%, and increased $299.0 million, or 22.4%, respectively, in fiscal 2023 compared to fiscal 2022.

This increase includes approximately $70 million in revenue in the second quarter of fiscal 2023 related to a distinct international development funded energy program in Ukraine.

In addition, the increases reflect higher U.S.

state and local government activities related to digital water and U.S.

federal programs, partially offset by lower disaster response revenue.

Operating income increased $33.3 million in fiscal 2023 compared to fiscal 2022.

The increase in operating income is consistent with the revenue increase noted above.

The fiscal 2023 results were reduced by $6.8 million of the aforementioned lease impairment charge and the fiscal 2022 results included $4.4 million of the aforementioned ERC's.

Our operating margin, based on revenue, net of subcontractor costs, was 14.2% in fiscal 2023 compared to 14.8% the previous year.

Excluding the lease impairment charge in fiscal 2023 and the ERC's in fiscal 2022, our operating margin increased to 14.6% in fiscal 2023 from 14.5% in fiscal 2022.

The revenue growth in fiscal 2025 of 7.7% compared to last fiscal year primarily reflects increases in the previously described U.S.

government activities related to disaster response.

This increase was partially offset by a revenue decline of approximately $100 million related to the aforementioned cancellation of contracts with USAID.

Operating income increased in fiscal 2025 primarily due to the aforementioned revenue growth.

Our operating margin, based on revenue, net of subcontractor costs, for fiscal 2025 was 16.0% compared to 14.7% in fiscal 2024.

The improved operating margin reflects improved project execution including higher labor utilization.

Commercial/International Services Group ("CIG")

Fiscal Year Ended

2023 October 2, 2022 Change

September 28,

2025 September 29,

($ in thousands)

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Income from operations $ 356,865 $ 328,510 $ 28,355 8.6%

Revenue and revenue, net of subcontractor costs, increased $686.2 million, or 39.5%, and increased $616.5 million, or 41.1%, respectively, in fiscal 2023 compared to fiscal 2022.

The RPS acquisition contributed approximately $570 million to revenue growth in fiscal 2023.

The remaining revenue growth in fiscal 2023 primarily reflects increased activity on high-performance buildings, clean energy and international infrastructure.

Operating income increased $49.6 million in fiscal 2023 compared to fiscal 2022.

The RPS acquisition contributed approximately $34 million to operating income in fiscal 2023.

Conversely, the fiscal 2023 results were reduced by $8.3 million of the aforementioned lease impairment charge.

The fiscal 2022 operating income included $1.9 million of the aforementioned ERC's.

Our operating margin, based on revenue, net of subcontractor costs, was 11.5% in fiscal 2023 compared to 13.0% in fiscal 2022.

Excluding the lease impairment and RPS in fiscal 2023 and the ERC's in fiscal 2022, our operating margin was 13.3% in fiscal 2023 compared to 12.8% in fiscal 2022.

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

The revenue growth in fiscal 2025 of 2.1% compared to fiscal 2024, includes a 12.3% increase in our operations in the United Kingdom reflecting higher demand for our water planning and design services.

The growth in the United Kingdom was partially offset by lower infrastructure activities in Australia.

Our operating income increased due to the aforementioned revenue growth.

Additionally, our operating income in fiscal 2024 was reduced by $3.6 million of integration costs related to RPS.

Excluding the integration costs last year, our operating margin, based on revenue, net of subcontractor costs, improved approximately 50 basis points to 14.3% in fiscal 2025

compared to 13.8% in fiscal 2024.

The improved operating margin was primarily due to our continued focus on high-end consulting services and improved project execution.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Capital Requirements.

At September 29, 2024, we had $232.7 million of cash and cash equivalents and access to an additional $800 million of borrowing available under our credit facility.

At September 28, 2025, we h ad $167.5 million of cash and cash equivalents and access to an additional $999.3 million of borrowing available under our credit facility.

We generated $457.7 million of cash from operations in fiscal 2025.

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, cash dividends, capital expenditures and repayment of debt, as well as to fund acquisitions and earn-out obligations from prior acquisitions.

Our primary uses of cash are to fund working capital, cash dividends, share repurchases, capital expenditures 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.

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

On May 5, 2025, our Board of Directors authorized an additional $500 million stock repurchase program in addition to the previous $400 million stock repurchase program authorized on October 5, 2021.

In fiscal 2025, we repurchased and settled 7,304,697 shares with an average price of $34.22 per share for a total cost of $250.0 million in the open market.

In fiscal 2024 and 2023, we did not repurchase any shares of our common stock.

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Subsequent Events.

On November 11, 2024, our Board of Directors declared a quarterly cash dividend of $0.058 per share payable on December 13, 2024 to stockholders of record as of the close of business on November 27, 2024.

On November 10, 2025, our Board of Directors declared a quarterly cash dividend of $0.065 p er share payable on December 12, 2025 to stockholders of record as of the close of business on December 1, 2025.

Cash and Cash Equivalents.

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September 28,

2024 October 1, 2023 Change

2025 September 29, 2024 Change

Cash and cash equivalents $ 167,459 $ 232,689 $ (65,230) (28.0)%

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September 28,

2024 October 1,

2025 September 29,

Net cash provided by (used in):

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Operating Activities.

Cash from operations in fiscal 2024 decreased 2.6% compared to fiscal 2023.

Our cash flow from operations in fiscal 2023 benefited from improved management of working capital through faster collection of accounts receivable compared to previous years.

This trend was stable in fiscal 2024.

For fiscal 2024, we paid $10.5 million less in interest compared to last year, primarily due the lower borrowing costs from our convertible notes issued in the fourth quarter of fiscal 2023, which we used to refinance the existing higher-cost debt incurred to fund the RPS acquisition in the second quarter of fiscal 2023.

This improvement and the benefit of higher earnings in fiscal 2024 were substantially offset by higher income tax payments.

We paid $27 million in U.S.

federal income tax in the first quarter of fiscal 2024 that typically would have been made in fiscal 2023, but the IRS permitted, and we elected, 2023 federal tax payment deferrals for entities in disaster zones.

The 27.6% increase in cash from operating activities in fiscal 2025 compared to last year was primarily due to higher operating earnings, timely cash collections for work on the aforementioned disaster response in fiscal 2025 and cash collections on terminated USAID programs.

The overall increase was partially offset by payments of $97 million for the aforementioned legal contingency in fiscal 2025.

Investing Activities.

For fiscal 2024, the cash used in investing activities includes net payments of $94 million for the acquisitions completed during the year.

The fiscal 2023 period reflects $854 million of net payments for the acquisitions completed last year (primarily RPS), net of the $109 million of related foreign exchange hedge proceeds received in the second quarter of fiscal 2023.

Our cash used in investing activities for fiscal 2025 includes net payments of $97.3 million for the CAW and SAGE acquisitions, compared to $93.7 million for the LST and CCE acquisitions completed in fiscal 2024.

Financing Activities.

For fiscal 2024, net cash provided by financing activities declined.

The decrease was due to a net borrowing of $544 million in fiscal 2023 versus net debt repayments of $70 million in fiscal 2024.

The fiscal 2023 borrowings were used primarily to fund our fiscal 2023 acquisitions.

To a lesser extent, the decline in our net cash provided by financing activities was due to $25 million more cash used for contingent earn-out payments in fiscal 2024 compared to last year.

In fiscal 2025, our cash used in financing activities reflects the share repurchases of $250 million as our share repurchase program was reactivated this fiscal year.

These share repurchases were funded by our cash generated from operating activities.

We did not repurchase any shares in fiscal 2024.

The overall increase in cash used in financing activities was partially offset by a $31 million decrease in payments for contingent consideration in fiscal 2025 compared to fiscal 2024.

Debt Financing.

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 our 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”).

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

The Second Amended Credit Agreement consisted of a $750 million senior secured, five-year facility that provided for a $250 million term loan facility ("Second Term Loan Facility") and a $500 million revolving credit facility ("Second Revolving Credit Facility").

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 ("Third Term Loan Facility") increasing our total borrowing capacity to $1.55 billion.

On January 23, 2023, we drew the entire amount of the $500 million term loan facility which was scheduled to mature in January 2026.

On May 5, 2025 we repaid all facilities in full as detailed below.

On August 22, 2023, we issued $575.0 million in Convertible Notes that bear interest at 2.25% per annum payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2024 with a maturity date of August 15, 2028.

The net proceeds from the Convertible Notes were $560.5 million, $51.8 million of which were used to purchase related capped call transactions on the issue date.

The remaining proceeds were used to prepay and terminate the $234.4 million outstanding under the Second Term Loan Facility, to prepay $89.4 million outstanding under the Third Term Loan Facility and to pay down borrowings of $185.0 million under the Second Revolving Credit Facility.

See Note 9, "Long-Term Debt" of the "Notes to Consolidated Financial Statements" for further discussion.

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 “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 approval.

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

The 5Y Term Loan Facility is 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 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 February 18, 2022.

The Amended Credit Agreement provides for a reduction in the pricing levels of the Consolidated Leverage Ratio and the removal of the Secured Overnight Financing Rate ("SOFR") credit spread adjustment.

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 $400 million sublimit for multi-currency 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 Third Term Loan Facility and the Second Revolving Credit Facility in full on May 5, 2025.

On September 26, 2025, the 3Y Term Loan Facility was repaid in full.

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 1.750% 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 Secured Overnight Financing Rate ("SOFR") rate plus 1.00%, plus a margin that ranges from 0% to 0.875% 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 0.75% 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 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 with the Convertible Notes proceeds.

On August 22, 2023, we issued $575.0 million in convertible notes that bear interest at 2.25% per annum payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2024 with a maturity date of August 15, 2028 (the "Convertible Notes").

As of October 1, 2023, $560.8 million of the Convertible Notes was included in long-term debt in our consolidated balance sheets, which is net of $14.2 million of unamortized debt issuance costs.

The net proceeds from the Convertible Notes were $560.5 million, $51.8 million of which were used to purchase related capped call transactions on the issue date.

The remaining proceeds were used to prepay and terminate the $234.4 million outstanding under the Amended Term Loan Facility, to prepay $89.4 million outstanding under the New Term Loan Facility and to pay down borrowings of $185.0 million under the Amended Revolving Credit Facility.

See Note 9, "Long-Term Debt" of the "Notes to Consolidated Financial Statements" in Item 8 for further discussion.

At fiscal 2024 year-end, we had $250 million in outstanding borrowings under the Amended Credit Agreement, which consisted of $250 million under the New Term Loan Facility and no borrowings under the Amended Revolving Credit Facility.

The weighted-average interest rate of the outstanding borrowings under the Amended Credit Agreement during fiscal 2024 was 6.70%.

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

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

At fiscal 2025 year-end, we had $200 million in outstanding borrowings under the Amended Credit Agreement, which consisted of $200 million under the 5Y Term Loan Facility and no borrowings under the Amended Revolving Credit Facility.

The weighted-average interest rate of the outstanding borrowings under the credit facilities during fiscal 2025 was 5.63%.

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

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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 September 29, 2024, there were no outstanding borrowings under these facilities, and the aggregate amount of standby letters of credit outstanding was $43.3 million.

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

At September 28, 2025, there were no outstanding borrowings under these facilities, and the aggregate amount of standby letters of credit outstanding wa s $53.8 million.

At September 28, 2025 , 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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January 27, 2025 $ 0.058 February 12, 2025 $ 15,351 February 26, 2025

April 29, 2024 $ 0.058 May 20, 2024 $ 15,522 May 31, 2024

May 5, 2025 $ 0.065 May 23, 2025 $ 17,092 June 5, 2025

July 28, 2025 $ 0.065 August 15, 2025 $ 17,047 August 29, 2025

November 11, 2024 $ 0.058 November 27, 2024 N/A December 13, 2024

November 10, 2025 $ 0.065 December 1, 2025 N/A December 12, 2025

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

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At the end of fiscal 2025 and 2024, the liability for income taxes associated with uncertain tax positions was $52.8 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.

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.

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

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

At fiscal 2024 year-end, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $43.3 million in standby letters of credit outstanding under our additional letter of credit facilities.

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

At fiscal 2025 year-end, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $53.8 million in standby l etters 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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Remaining billable amounts could be greater or less than the cost to complete.

In those cases where costs exceed the remaining amounts payable under the contract, we may have recourse to third parties, such as owners, co-venturers, subcontractors or vendors, for claims.

In those cases where costs exceed the

remaining amounts payable under the contract, we may have recourse to third parties, such as owners, co-venturers, subcontractors or vendors, for claims.

• In the ordinary course of business, our clients may request that we obtain surety bonds in connection with contract performance obligations that are not required to be recorded in our consolidated balance sheets.

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The standalone selling price is typically determined using the estimated cost of the contract plus a margin approach.

For contracts containing variable consideration, we allocate the variability to a specific performance obligation within the contract if such variability relates specifically to our efforts to satisfy the performance obligation or transfer the distinct good or service, and the allocation depicts the amount of consideration to which we expect to be entitled.

For contracts containing variable consideration, we allocate the variability to a specific performance obligation within the contract if such variability relates

specifically to our efforts to satisfy the performance obligation or transfer the distinct good or service, and the allocation depicts the amount of consideration to which we expect to be entitled.

We recognize revenue over time as the related performance obligation is satisfied by transferring control of a promised good or service to our customers.

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fixed-price, time-and-materials and cost-plus.

Customer payments on contracts are typically due within 60 days of billing, depending on the contract.

Customer payments on contracts are typically due within 30 to 45 days of billing, depending on the contract.

Fixed-Price .

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In addition, we regularly evaluate whether events and circumstances have occurred that may indicate a potential change in recoverability of goodwill.

We perform interim goodwill impairment reviews between our annual reviews if certain events and circumstances have occurred, including a deterioration in general economic conditions, an increased competitive environment, a change in management, key personnel, strategy or customers, negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods (se e Note 6, "Goodwill and Intangible Assets" of the "Notes to Consolidated Financial Statements" in Item 8 for further discussion).

earnings compared with actual and projected results of relevant prior periods (se e Note 6, "Goodwill and Intangible Assets" of the "Notes to Consolidated Financial Statements" in Item 8 for further discussion).

We believe the methodology that we use to review impairment of goodwill, which includes a significant amount of judgment and estimates, provides us with a reasonable basis to determine whether impairment has occurred.

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Such changes in assumptions could be caused by a loss of one or more significant contracts, reductions in government or commercial client spending or a decline in the demand for our services due to changing economic conditions.

In the event that we determine that our goodwill is impaired, we would be

required to record a non-cash charge that could result in a material adverse effect on our results of operations or financial position.

In the event that we determine that our goodwill is impaired, we would be required to record a non-cash charge that could result in a material adverse effect on our results of operations or financial position.

We use two methods to determine the fair value of our reporting units:

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The Income Approach was given a higher weight because it has the most direct correlation to the specific economics of the reporting unit, as compared to the Market Approach, which is based on multiples of broad-based (i.e., less comparable) companies .

Our last review at July 1, 2024 (i.e., the first day of our fourth quarter in fiscal 2024), indicated that we had no impairment of goodwill, and all of our reporting units had estimated fair values that were in excess of their carrying values, including goodwill.

We had no reporting units that had estimated fair values that exceeded their carrying values by less than 72%.

Our last review at June 30, 2025 (i.e., the first day of our fourth quarter in fiscal 2025), indicated that we had no impairment of goodwill, and all of our reporting units had estimated fair values that were in excess of their carrying values, including goodwill.

We had no reporting units that had estimated fair values that exceeded their carrying values by less than 38%, except for our Global Development Services reporting unit which was impaired in the second quarter of fiscal 2025 .

Contingent Consideration

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

What changed 10-K

Item 7. Management’s Discussion and Analysis