What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-01 compared with 2026-01-30 · 164 added, 135 removed, 333 unchanged (47% of the section changed)

15 unchanged sentences

We typically begin at the earliest stage of a project by identifying technical solutions and developing execution plans tailored to our clients' needs and resources.

Our reputation for high-end consulting and engineering services and our ability to develop solutions for water and environmental management has supported our growth for nearly 60 years.

Our reputation for high-end consulting and engineering services and our ability to develop solutions for water and environmental management has supported our growth for 60 years.

Our market leading climate mitigation and adaptation services are solving our clients' most complex challenges related to coastal flooding, water security, energy transition and biodiversity protection.

14 unchanged sentences

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

Three Months Ended

2025 December 29,

Three Months Ended Six Months Ended

2026 March 30,

2025 March 29,

2026 March 30,

Client Sector

4 unchanged sentences

International (2)

43.0 37.1 43.9 35.4

Total 100.0 % 100.0 % 100.0 % 100.0 %

18 unchanged sentences

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

Three Months Ended

2025 December 29,

Three Months Ended Six Months Ended

2026 March 30,

2025 March 29,

2026 March 30,

Reportable Segment

6 unchanged sentences

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

Three Months Ended

2025 December 29,

Three Months Ended Six Months Ended

2026 March 30,

2025 March 29,

2026 March 30,

Contract Type

36 unchanged sentences

All acquisitions require the approval of our Board of Directors.

In the second quarter of fiscal 2026, we acquired Halvik Corp (“Halvik”) headquartered in Vienna, Virginia.

Halvik provides high-end advisory consulting services focused on advanced data analytics, systems modernization and cybersecurity for U.S.

federal defense and civilian agencies.

Halvik is included in our GSG segment.

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.

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

In the third quarter of fiscal 2025, we acquired SAGE Group Holdings ("SAGE"), an Australian consulting firm that provides innovative technology and high-quality automation services that optimize operational efficiency and drive digital transformation for commercial and government clients across the municipal water, energy, transportation, defense and manufacturing sectors.

1 unchanged sentence

Subsequent Event.

O n January 16, 2026, we acquired Halvik Corp (“Halvik”) headquartered in Vienna, Virginia.

With 600 employees, Halvik provides high-end advisory consulting services focused on advanced data analytics, systems modernization and cybersecurity for U.S.

federal defense and civilian agencies.

Halvik will be included in our GSG segmen t.

On April 17, 2026, we acquired Providence Consulting Group Pty Ltd ("Providence"), an advisory and project management consultancy based in Australia.

Providence will be included in our CIG segment.

Divestitures.

We regularly review and evaluate our existing operations to determine whether our business model should change through the divestiture of certain businesses.

Accordingly, from time to time, we may divest or wind down certain non-core businesses and reallocate our resources to businesses that better align with our long-term strategic direction.

Accordingly, from time to time, we may divest or wind down certain non-core businesses and reallocate our resources to businesses that be tter align with our long-term strategic direction.

In the first quarter of fiscal 2026, we divested our operations in Norway, which were in our CIG segment.

We received proceeds of $41.6 million and recognized a non-operating gain of $7.7 million in our consolidated statements of income.

In the first quarter of fiscal 2025, we divested a subsidiary in South America and a line of business in Australia, both of which were immaterial.

1 unchanged sentence

OVERVIEW OF RESULTS AND BUSINESS TRENDS

For the first quarter of fiscal 2026, our revenue declined 14.8% compared to the prior-year quarter primarily due to fewer international development projects in our U.S.

federal government client sector and lower disaster response activity in our U.S.

state and local government client sector.

Our revenue in the first quarter of fiscal 2026 includes approximately $40 million from our recent acquisitions, that did not have comparable revenue for the same quarter last year.

For the first half of fiscal 2026, our revenue declined 11.4% compared to the prior-year period primarily due to fewer international development projects in our U.S.

federal government client sector.

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 United States Agency for International Development ("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 and that any remaining international development activity would be administered by the U.S.

Department of State ("DOS").

In addition, our year-over-year revenue comparisons include lower disaster response activity in both of our U.S.

government client sectors.

Our revenue in the first half of fiscal 2026 includes approximately $105 million from our recent acquisitions (net of the aforementioned Norway disposition), that did not have comparable revenue for the same period last year.

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

Three Months Ended

December 28, 2025 December 29, 2024 Change

Six Months Ended

March 29, 2026 March 30, 2025 Change

Client Sector

11 unchanged sentences

Federal Government.

Three Months Ended

December 28, 2025 December 29, 2024 Change

Six Months Ended

March 29, 2026 March 30, 2025 Change

($ in thousands)

Revenue $ 584,718 $ 915,270 $ (330,552) (36.1)%

federal government revenue decline of 45.7% was primarily due to decreased international development activity in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025.

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 United States Agency for International Development ("USAID") programs, totaling approximately 5,200 contracts.

Department of State ("DOS").

In the first quarter of fiscal 2026, our U.S.

federal government revenue included $56.4 million from USAID/DOS programs compared to $283.9 million in the first quarter of last year.

We currently expect no significant USAID/DOS revenue in the remainder of fiscal 2026.

However, we do expect our U.S.

federal revenue to grow for the remainder of this fiscal year, excluding USAID/DOS activities.

federal government revenue declined 36.1% primarily due to the aforementioned decreased international development and disaster response activity in the first half of fiscal 2026 compared to the same period last year.

In the first half of fiscal 2026, our U.S.

federal government revenue included $122.2 million from USAID/DOS programs compared to $446.5 million in the fiscal 2025 period.

Additionally, the first half of fiscal 2025 included revenue related to our disaster response programs for the Palisades and Eaton fires in Southern California.

Our revenue in the first half of fiscal 2026 includes approximately $35 million from a recent acquisition, that did not have comparable revenue for the prior-year period.

We expect our U.S.

federal revenue to grow for the remainder of this fiscal year, excluding USAID/DOS and disaster response activities.

State and Local Government.

Three Months Ended

December 28, 2025 December 29, 2024 Change

Six Months Ended

March 29, 2026 March 30, 2025 Change

($ in thousands)

Revenue $ 347,968 $ 410,425 $ (62,457) (15.2)%

state and local government revenue declined 15.5 % compared to the fiscal 2025 quarter due to decreased disaster response activity primarily related to Hurricanes Helene and Milton, which occurred in September and October of 2024, respectively.

state and local government revenue declined 15.2% compared to the fiscal 2025 period due to decreased disaster response activity primarily related to Hurricanes Helene and Milton, which occurred in September and October of 2024, respectively.

Excluding this disaster response work, our U.S.

state and local government revenue increased 10.3% in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025.

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

state and local government, revenue increased approximately 10% in the first half of fiscal 2026 compared to the fiscal 2025 first half.

This growth was due to continued

investment by our clients in municipal 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 the remainder of fiscal 2026.

Three Months Ended

December 28, 2025 December 29, 2024 Change

state and local governments relates to critical water and environmental programs, which we expect to continue to grow for the remainder of fiscal 2026.

Six Months Ended

March 29, 2026 March 30, 2025 Change

($ in thousands)

Revenue $ 432,195 $ 444,676 $ (12,481) (2.8)%

commercial revenue declined 3.5% in the first quarter of fiscal 2026 primarily due to lower activity related to renewable energy, partially offset by increased power transmission services compared to the first quarter of fiscal 2025.

commercial revenue declined 2.8% in the first half of fiscal 2026 primarily due to lower activity related to renewable energy, partially offset by increased power transmission services compared to the same period last year.

We expect our U.S.

1 unchanged sentence

International.

Three Months Ended

December 28, 2025 December 29, 2024 Change

Six Months Ended

March 29, 2026 March 30, 2025 Change

($ in thousands)

Revenue $ 1,065,939 $ 972,303 $ 93,636 9.6%

For the first quarter of fiscal 2026, our international revenue growth of 12.3% reflects increased activities for water utilities including digital water projects, partially offset by decreased infrastructure activities in Australia.

Excluding the revenue from fiscal 2025 acquisitions, our international revenue increased 3.5% in the first quarter of fiscal 2026 compared to the fiscal 2025 quarter.

For the first half of fiscal 2026, our international revenue growth of 9.6% reflects increased activities for water utilities including digital water projects, partially offset by decreased infrastructure activities in Australia.

Excluding the revenue from our fiscal 2025 acquisition and the aforementioned Norway disposition, our international revenue increased approximately 3% in the first half of fiscal 2026 compared to the fiscal 2025 period.

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

1 unchanged sentence

Consolidated Results of Operations

Three Months Ended

2025 December 29,

Three Months Ended Six Months Ended

2026 March 30,

2025 Change March 29, 2026 March 30, 2025 Change

($ in thousands, except per share data)

6 unchanged sentences

Selling, general and administrative expenses (82,626) (84,094) 1,468 1.7 (169,451) (168,411) (1,040) (0.6)

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

Contingent consideration - fair value adjustments 7,447 366 7,081 NM

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

Contingent consideration - fair value adjustments 58 1,931 (1,873) NM 7,506 2,297 5,209 NM

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

Income from operations 131,523 39,603 91,920 232.1 272,517 62,129 210,388 338.6

Interest expense (8,838) (8,491) (347) (4.1) (15,966) (15,709) (257) (1.6)

Other non-operating income 7,710 — 7,710 NM

Other non-operating income 4,651 — 4,651 NM 12,361 — 12,361 NM

Income before income tax expense 127,336 31,112 96,224 309.3 268,912 46,420 222,492 479.3

Income tax expense (33,538) (25,700) (7,838) (30.5) (69,892) (40,230) (29,662) (73.7)

Net income 105,222 778 104,444 NM

Net income attributable to noncontrolling interests (194) (31) (163) (525.8)

Net income attributable to Tetra Tech $ 105,028 $ 747 $ 104,281 NM

Diluted earnings per share $ 0.40 $ — $ 0.40 NM

Net income 93,798 5,412 88,386 NM 199,020 6,190 192,830 NM

Net income attributable to noncontrolling interests (175) (24) (151) NM (369) (55) (314) NM

Net income attributable to Tetra Tech $ 93,623 $ 5,388 $ 88,235 NM $ 198,651 $ 6,135 $ 192,516 NM

Diluted earnings per share $ 0.36 $ 0.02 $ 0.34 NM $ 0.76 $ 0.02 $ 0.74 NM

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

6 unchanged sentences

NM = not meaningful

Our revenue decline in the first quarter of fiscal 2026 primarily reflects decreased revenue in our GSG reportable segment due to the aforementioned reduction in USAID/DOS international development activities.

Our GSG segment's revenue and revenue, net of subcontractor costs, declined $265.8 million, or 33.6%, and $215.3 million, or 33.3%, respectively, compared to last year.

Our CIG segment's revenue increased $59.3 million, or 9.2%, and revenue, net of subcontractor costs, increased $55.1 million, or 10.0% in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025.

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

The revenue in the second quarter and first half of fiscal 2026 compared to the same periods last year primarily reflect decreased revenue in our GSG reportable segment due to the aforementioned reductions in USAID/DOS and disaster response activities.

For the second quarter of fiscal 2026, our GSG segment's revenue and revenue, net of subcontractor costs, declined $139.5 million, or 20.0%, and $105.8 million, or 18.8%, respectively, compared to the same quarter last year.

Our CIG segment's revenue increased $38.4 million, or 6.0%, and revenue, net of subcontractor costs, increased $51.8 million, or 9.6% in the second quarter of fiscal 2026 compared to the fiscal 2025 second quarter.

For the first half of fiscal 2026, our GSG segment's revenue and revenue, net of subcontractor costs, declined $405.4 million, or 27.2%, and $321.1 million, or 26.5%, respectively, compared to the year-ago period.

Our CIG segment's revenue increased $97.7 million, or 7.6%, and revenue, net of subcontractor costs, increased $106.9 million, or 9.8% in the first half of fiscal 2026 compared to the fiscal 2025 period.

The second quarter and first half 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-GAAP adjusted results.

For the first quarter of fiscal 2026, our adjusted results exclude adjustments to contingent consideration liabilities and the earnings per share ("EPS") contribution from the aforementioned non-operating gain from the sale of our operations in Norway.

Additionally, for the first quarter of fiscal 2025, our adjusted results exclude a non-recurring charge of $115.0 million related to legal contingencies as described in Note 16, "Commitments and Contingencies" of the “Notes to Consolidated Financial Statem ents”.

We determined that there were no income tax expense for the non-operating gain in the first quarter of fiscal 2026 and no tax benefit for $31.3 million of the legal contingency charge in the first quarter of fiscal 2025.

The effective tax rates applied to the remaining adjustments to arrive at the adjusted EPS were 27.5% and 25.0% for the first quarters of fiscal 2026 and 2025, respectively.

For the second quarter and first half of fiscal 2026 and 2025, our adjusted results exclude adjustments to contingent consideration liabilities.

Additionally, the second quarter and first half of fiscal 2026 exclude the earnings per share ("EPS") contribution from the aforementioned non-operating gain from the sale of our operations in Norway.

For the second quarter and first half of fiscal 2025, our adjusted results exclude a non-cash goodwill impairment charge of $92.4 million that resulted from the aforementioned cancellation of USAID programs.

The first half of fiscal 2025 also excludes a non-recurring charg e of $115.0 million related to legal contingencies as described in Note 16, "Commitments and Contingencies" of the “Notes to Consolidated Financial Statements”.

We determined that there was no income tax expense for the non-operating gain in fiscal 2026, an d no tax benefit recognized for the $31.3 million legal contingency charge or the $58.3 million goodwill impairment charge in fiscal 2025.

The effectiv e tax rates applied to the remaining adjustments to arrive at the adjusted EPS were 27.5% and 25.0% for the first halves of fiscal 2026 and 2025, respectively.

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 respe ctive periods as reflected in our Consolidated Statements of Income.

Three Months Ended

2025 December 29,

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.

Three Months Ended Six Months Ended

2026 March 30,

2025 Change March 29, 2026 March 30, 2025 Change

($ in thousands, except per share data)

1 unchanged sentence

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

Earn-out adjustments (7,447) (366) (7,081) NM

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

Earn-out adjustments (58) (1,931) 1,873 NM (7,506) (2,297) (5,209) NM

Adjusted income from operations (1)

$ 131,465 $ 130,088 $ 1,377 1.1% $ 265,011 $ 267,248 $ (2,237) (0.8)%

EPS $ 0.40 $ — $ 0.40 NM

EPS $ 0.36 $ 0.02 $ 0.34 NM $ 0.76 $ 0.02 $ 0.74 NM

Legal contingency costs — — — — — 0.35 (0.35) NM

Impairment of goodwill — 0.31 (0.31) NM — 0.31 (0.31) NM

Earn-out adjustments — — — — (0.02) — (0.02) NM

Other non-operating income (0.03) — (0.03) NM

Other non-operating income (0.02) — (0.02) NM (0.05) — (0.05) NM

Adjusted EPS (1)

$ 0.35 $ 0.35 $ — NM

$ 0.34 $ 0.33 $ 0.01 3.0% $ 0.69 $ 0.68 $ 0.01 1.5%

NM = not meaningful

(1) Non-GAAP financial measure

Excluding the non-recurring charges and the earn-out gains, our operating income declined $3.6 million, or 2.6% in the first quarter of fiscal 2026 compared to last year's quarter.

The decrease reflects lower results in our GSG reportable segment, partially offset by improved results in our CIG reportable segment, which are described below under "Government Services Group" and "Commercial/International Group", respectively.

Three Months Ended

2025 December 29,

Excluding the non-recurring charges and the earn-out gains, our operating income increased $1.4 million, or 1.1%, in the second quarter of fiscal 2026 and declined $2.2 million, or 0.8%, in the first half of fiscal 2026 compared to the same periods last year.

The changes reflect lower results in our GSG reportable segment and improved results in our CIG reportable segment, which are described below under "Government Services Group" and "Commercial/International Group", respectively.

Three Months Ended Six Months Ended

2026 March 30,

2025 Change March 29,

2026 March 30,

($ in thousands)

Net interest expense $ 8,838 $ 8,491 $ 347 4.1% $ 15,966 $ 15,709 $ 257 1.6%

Net interest expense decreased in the first quarter of fiscal 2026 primarily due to lower average interest rates compared to the prior-year quarter.

Three Months Ended

2025 December 29,

Net interest expense increased in the second quarter and first half of fiscal 2026 compared to the fiscal 2025 periods primarily due to higher interest expense related to contingent earn-out liabilities for Halvik and SAGE acquisitions, partially offset by lower borrowings and average debt interest rates.

Three Months Ended Six Months Ended

2026 March 30,

2025 Change March 29,

2026 March 30,

($ in thousands)

Income tax expense $ 33,538 $ 25,700 $ 7,838 30.5% $ 69,892 $ 40,230 $ 29,662 73.7%

The effective tax rates for the first quarters of fiscal 2026 and 2025 were 25.7% and 94.9%, respectively.

Income tax expense was increased by $0.1 million of excess tax expenses and reduced by $1.0 million of excess tax benefits on share-based payments in the first three months of fiscal 2026 and 2025, respectively.

In addition, in the first quarter of fiscal 2026, we recognized a $7.7 million gain from the sale of our operations in Norway as described in Note 4, “Acquisitions and Divestitures” of the “Notes to Consolidated Financial Statements”.

The effective tax rates for the first halves of fiscal 2026 and 2025 were 26.0% and 86.7%, respectively.

Income tax expense was reduced by $0.6 million and $1.0 million of excess tax benefits on share-based payments in the first halves of fiscal 2026 and 2025, respectively.

In addition, in the first half of fiscal 2026, we recognized a $12.4 million gain from the sale of our operations in Norway as described in Note 4, “Acquisitions and Divestitures” of the “Notes to Consolidated Financial Statements”.

The gain is not taxable for income tax purposes.

In the first quarter of fiscal 2025, we also recognized a $115.0 million non-recurring charge related to legal contingencies as described in Note 16, "Commitments and Contingencies" of the “Notes to Consolidated Financial Statements”.

In the first half of fiscal 2025, we recognized a $92.4 million goodwill impairment charge as described in Note 5, Goodwill and Intangible Assets and determined that $58.3 million of the impairment is not deductible for tax purposes.

We also recognized a $115.0 million non-recurring charge in the first half of fiscal 2025 related to legal contingencies as described in Note 16, "Commitments and Contingencies" of the “Notes to Consolidated Financial Statements”.

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

Excluding the impact of the excess tax expenses on share-based payments, the gain from sale in the first quarter of fiscal 2026 and the legal contingency charge in the first quarter of fiscal 2025, our effective tax rates in the first three months of fiscal 2026 and 2025 were 27.1% and 27.8%, respectively.

Excluding the impact of the excess tax benefits on share-based payments, the gain from sale in the first half of fiscal 2026 and the goodwill impairment and legal contingency charge in the first half of fiscal 2025, our effective tax rates in the first halves of fiscal 2026 and 2025 were 27.5% and 27.8%, respectively.

On January 5, 2026, the Organisation for Economic Cooperation and Development released additional Pillar Two administrative guidance on the Global Anti-Base Erosion “GloBE” Model Rules.

8 unchanged sentences

Government Services Group

Three Months Ended

2025 December 29,

Three Months Ended Six Months Ended

2026 March 30,

2025 Change March 29, 2026 March 30,

($ in thousands)

5 unchanged sentences

(1) Non-GAAP financial measure

For the first quarter of fiscal 2026, the revenue decrease of 33.6% compared to the prior-year quarter primarily reflects a revenue decline of approximately $222 million related to the aforementioned cancellation of contracts with USAID.

For the second quarter and first half of fiscal 2026, the revenue decreases of 20.0% and 27.2%, respectively, compared to the prior-year periods primarily reflect the aforementioned cancellation of contracts with USAID and lower disaster response activities.

Excluding revenue from USAID/DOS and the disaster response revenue, GSG segment revenue increased approximate ly 2% in the first half of fiscal 2026 compared to the same period last year.

GSG revenue in the first half of fiscal 2026 includes approximately $35 million from a recent acquisition, that did not have comparable revenue for the same period last year.

Operating income decreased primarily due to the aforementioned revenue decline.

However, our operating margin, based on revenue, net of subcontractor costs, increased to 16.5% in the first quarter of fiscal 2026 compared to 14.2% in the prior-year quarter.

However, our operating margin, based on revenue, net of subcontractor costs, increased to 16.4% in the first half of fiscal 2026 compared to 14.2% in the prior-year period.

The increased operating margin reflects improved project execution and the elimination of the lower margin cost-reimbursable revenue with USAID.

Commercial/International Group

Three Months Ended

2025 December 29,

Three Months Ended Six Months Ended

2026 March 30,

2025 Change March 29, 2026 March 30,

($ in thousands)

5 unchanged sentences

(1) Non-GAAP financial measure

The revenue growth of 9.2% in first quarter of fiscal 2026 compared to last year's first quarter reflects increased activities for water utilities including digital water projects, primarily in the United Kingdom, partially offset by decreased infrastructure activities in Australia.

The increase also includes the aforementioned revenue in the first quarter of fiscal 2026 from our fiscal 2025 acquisitions, that did not have comparable revenue for the same quarter last year.

Excluding the revenue from acquisitions, our revenue increased to approximately 3% in the first quarter of fiscal 2026.

The revenue growth in second quarter and first half of fiscal 2026 compared to the same periods last year reflects increased activities for water utilities including digital water projects, primarily in the United Kingdom, partially offset by decreased infrastructure activities in Australia.

The increases also include the aforementioned international revenue in the first half of fiscal 2026 from our fiscal 2025 acquisition, that did not have comparable revenue for the fiscal 2025 period.

Excluding the revenue from the acquisition, net of the aforementioned Norway disposition, our revenue increased approximately 2% in the first half of fiscal 2026 compared to fiscal 2025 first half.

Our operating income increased due to the aforementioned revenue growth.

Our operating margin, based on revenue, net of subcontractor costs, improved approximately 40 basis points to 13.0% in the first quarter of 2026 compared to 12.6% for the fiscal 2025 quarter.

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

Our operating margin, based on revenue, net of subcontractor costs, was substantially the same in the first half of fiscal 2026 compared to same period last year.

Backlog generally represents the dollar amount of revenue we expect to realize in the future when we perform the work.

1 unchanged sentence

Specifically, our backlog does not consider the potential impact of termination for convenience clauses within the contracts.

The contract term and thus remaining performance obligation on certain of our operations and maintenance contracts,

are limited to the notice period required for contract termination (usually 30, 60, or 90 day s).

The differences between our backlog and RUPO at December 28, 2025 and September 28, 2025 were immaterial (see the table below):

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

The differences between our backlog and RUPO at March 29, 2026 and September 28, 2025 were immaterial (see the table below):

2026 September 28,

2 unchanged sentences

Backlog 4,282 4,140

At December 28, 2025, our backlog was $4.0 billion.

GSG and CIG reported $1.86 billion and $2.13 billion of backlog, respectively, at December 28, 2025.

At March 29, 2026, our backlog was $4.3 billion.

GSG and CIG reported $2.1 billion and $2.2 billion of backlog, respectively, at March 29, 2026.

Financial Condition, Liquidity and Capital Resources

Capital Requirements.

At December 28, 2025, we h a d $269.4 million of cash and cash equivalents and access to an additional $929.3 million of borrowings available under our credit facility.

During the first quarter of fiscal 2026, we generated $72.3 million of cash from operations.

At March 29, 2026, we had $223.6 million of cash and cash equivalents and access to an additional $884.3 million of borrowings available under our credit facility.

During the first half of fiscal 2026, we generated $237.6 million of cash from operations.

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

5 unchanged sentences

Cash and cash equivalents $ 223,612 $ 167,459 $ 56,153 33.5 %

Three Months Ended

2025 December 29,

Six Months Ended

2026 March 30,

Net cash provided by (used in):

Operating activities $ 72,267 $ 13,063 $ 59,204 453.2 %

Operating activities $ 237,611 $ 7,240 $ 230,371 NM

Investing activities (144,881) (12,768) (132,113) NM

1 unchanged sentence

Effect of exchange rate changes 2,027 (10,291) 12,318 (119.7)

Net increase in cash $ 101,076 $ 15,415 $ 85,661 555.7 %

Net increase (decrease) in cash $ 55,240 $ (53,256) $ 108,496 203.7 %

Operating Activities .

The $59.2 million increase in cash from operating activities in the first quarter of fiscal 2026 compared to last year's quarter was primarily due to cash collections for work on disaster response activities that were completed in the fourth quarter of fiscal 2025 and on terminated USAID programs.

For the first half of fiscal 2026, cash from operating activities increased $230.4 million compared to fiscal 2025 first half, primarily due to cash collections related to disaster response activities completed in the fourth quarter of fiscal 2025 and on terminated USAID programs.

The increase also reflects a $57 million payment for the aforementioned legal contingency in the second quarter of fiscal 2025.

Investing Activities .

Our cash provided by investing activities for the first quarter of fiscal 2026 includes the aforementioned proceeds from the sale of our operations in Norway of $41.6 million.

Our cash used in investing activities for the first half of fiscal 2026 includes initial cash payments of $17 5.0 mi llion for the Halvik acquisition, partially offset by the net proceeds of $40.3 million from the sale of our operations in Norway.

Financing Activities .

The $30.3 million change in financing activities primarily reflects share repurchases of $50 million in the first quarter of fiscal 2026 compared to $25 million in the first quarter of fiscal 2025.

Our cash used in financing activities includes share repurchases of $100 million in the first half of fiscal 2026 compared to $175 million in the year-ago period.

In both periods, these repurchases were partially funded by our net borrowings, which decreased $85 million in the first half of fiscal 2026 compared to the same period last year.

Debt Financing.

3 unchanged sentences

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 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.

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(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.

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 Secured Overnight Financing Rate ("SOFR") credit spread adjustment.

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

At December 28, 2025, we had $270 million in outstanding borrowings under the Amended Credit Agreement, which consisted of $200 million under the 5Y Term Loan Facility and $70 million borrowings under the Amended Revolving Credit Facility.

For the first quarter of fiscal 2026, the weighted-average interest rate of the outstanding borrowings under the credit facilities was 5.25%.

At March 29, 2026, we had $315 million in outstanding borrowings under the Amended Credit Agreement, which consisted of $200 million under the 5Y Term Loan Facility and $115 million borrowings under the Amended Revolving Credit Facility.

For the first half of fiscal 2026, the weighted-average interest rate of the outstanding borrowings under the credit facilities was 5.05%.

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

At December 28, 2025, we had $529.3 million of available credit under the Amended Revolving Credit Facility, all of which could be borrowed without a violation of our debt covenants.

At March 29, 2026, we had $484.3 million of available credit under the Amended Revolving Credit Facility, all of which could be borrowed without a violation of our debt covenants.

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

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

At December 28, 2025, we were in compliance with these covenants with a consolidated leverage ratio of 1.24x and a consolidated interest coverage ratio of 17.31x.

At March 29, 2026, we were in compliance with these covenants with a consolidated leverage ratio of 1.32x and a consolidated interest coverage ratio of 18.08x.

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 28, 2025, there were no borrowings under these facilities, and the aggregate amount of standby letters of credit outstanding was $55.0 million.

At December 28, 2025, we had no bank overdrafts related to our disbursement bank accounts.

At March 29, 2026, there were no borrowings under these facilities, and the aggregate amount of standby letters of credit outstanding was $51.1 million.

At March 29, 2026, 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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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 the first quarter

of fiscal 2026, we repurchased and settled 1,482,116 shares with an average price of $33.74 per share for a total cost of $50.0 million in the open market.

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 in the first quarter of fiscal 2025.

At December 28, 2025, we had a remaining balance of $547.8 million under our stock repurchase programs.

In the first half of fiscal 2026, we repurchased and settled 2,894,539 shares with an average price of $34.55 per share for a total cost of $100.0 million in the open market.

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 in the first half of fiscal 2025.

In the first half of fiscal 2026, we also paid $2.0 million of excise tax on stock repurchases imposed by the Inflation Reduction Act of 2022.

At March 29, 2026, we had a remaining balance of $497.8 million under our stock repurchase programs.

Our Board of Directors has authorized the following dividends in fiscal 2026:

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November 10, 2025 $ 0.065 December 1, 2025 $ 16,937 December 12, 2025

Subsequent E vents.

On January 26, 2026, our Board of Directors declared a quarterly cash dividend of $0.065 per share payable on February 27, 2026 to stockholders of record as of the close of business on February 12, 2026.

January 26, 2026 0.065 February 12, 2026 16,915 February 27, 2026

Subsequent E vent.

On April 27, 2026, our Board of Directors declared a quarterly cash dividend of $0.072 per share payable on June 2, 2026 to stockholders of record as of the close of business on May 14, 2026.

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

The factors used to assess the likelihood of realization are our forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets.

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

The ability or failure to

achieve the forecasted taxable income in the applicable taxing jurisdictions could affect the ultimate realization of deferred tax assets.

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

At December 28, 2025 and September 28, 2025, the liability for income taxes associated with uncertain tax positions was $53.8 million and $52.8 million, respectively.

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

At March 29, 2026 and September 28, 2025, the liability for income taxes associated with uncertain tax positions was $54.9 million and $52.8 million, respectively.

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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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 December 28, 2025, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $55.0 million in standby letters of credit outstanding under our additional letter of credit facilities.

At March 29, 2026, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $51.1 million in standby letters of credit outstanding under our additional letter of credit facilities.

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

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

For lump sum or fixed-price

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

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

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

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

For the first quarter of fiscal 2026, the weighted-average interest rate of the outstanding borrowings under the Amended Credit Agreement was 5.25%.

For the first half of fiscal 2026, the weighted-average interest rate of the outstanding borrowings under the Amended Credit Agreement was 5.05%.

The majority of our transactions are in U.S.

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We report our foreign currency gains and losses in “Selling, general and administrative expenses” on our consolidated statements of income.

For the first quarter of fiscal 2026, we reported $1.2 million of foreign currency loss compared to an immaterial amount in the prior year period.

For the first half of fiscal 2026, we reported $1.2 million of foreign currency loss compared to a loss of $0.7 million in the prior year period.

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

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dollar weakens against foreign currencies.

For the first quarters of fiscal 2026 and 2025, 44.7% and 33.9% of our consolidated revenue, respectively, was generated by our international business.

For the first quarter of fiscal 2026, the effect of foreign exchange rate translation on our consolidated balance sheet was an increase in equity of $19.7 million compared to a decrease of $108.8 million in the prior-year period.

For the first halves of fiscal 2026 and 2025, 43.9% and 35.4% of our consolidated revenue, respectively, was generated by our international business.

For the first half of fiscal 2026, the effect of foreign exchange rate translation on our consolidated balance sheet was an increase in equity of $1.4 million compared to a decrease of $74.3 million in the prior-year period.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis