TETRA TECH INC 10-Q

Item 1. Financial Statements Tetra Tech, Inc. Consolidated Balance Sheets (unaudited - in thousands, except par value) As of ASSETS March 29, 2026 September 28, 2025 Current assets: Cash and cash equivalents $ 223,612 $ 167,459 Accounts receivable, net 1,047,330 1,158,928 Contract assets 146,455 138,232 Prepaid expenses and other current assets 124,622 98,768 Assets held-for-sale — 57,502 Total current assets 1,542,019 1,620,889 Property and equipment, net 65,367 66,148 Right-of-use assets, operating leases 206,527 197,618 Goodwill 2,209,588 2,049,874 Intangible assets, net 129,285 121,160 Deferred tax assets 78,763 106,238 Other non-current assets 130,682 120,247 Total assets $ 4,362,231 $ 4,282,174 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 204,792 $ 204,725 Accrued compensation 245,645 346,912 Contract liabilities 410,858 420,254 Short-term lease liabilities, operating leases 73,743 69,099 Current contingent earn-out liabilities 44,449 24,826 Liabilities held-for-sale — 25,115 Other current liabilities 249,244 288,113 Total current liabilities 1,228,731 1,379,044 Deferred tax liabilities 20,022 21,333 Long-term debt 880,162 763,363 Long-term lease liabilities, operating leases 155,825 154,695 Non-current contingent earn-out liabilities 63,882 32,135 Other non-current liabilities 149,860 151,440 Commitments and contingencies (Note 16) Equity: Preferred stock - authorized, 2,000 shares of $ 0.01 par value; no shares issued and outstanding at March 29, 2026 and September 28, 2025 — — Common stock - authorized, 750,000 shares of $ 0.01 par value; issued and outstanding, 259,525 and 261,418 shares at March 29, 2026 and September 28, 2025, respectively 2,595 2,614 Accumulated other comprehensive loss ( 94,684 ) ( 95,777 ) Retained earnings 1,955,468 1,872,948 Tetra Tech stockholders’ equity 1,863,379 1,779,785 Noncontrolling interests 370 379 Total stockholders' equity 1,863,749 1,780,164 Total liabilities and stockholders' equity $ 4,362,231 $ 4,282,174 See Notes to Consolidated Financial Statements. 3 Tetra Tech, Inc. Consolidated Statements of Income (unaudited – in thousands, except per share data) Three Months Ended Six Months Ended March 29, 2026 March 30, 2025 March 29, 2026 March 30, 2025 Revenue $ 1,220,157 $ 1,322,113 $ 2,430,820 $ 2,742,674 Subcontractor costs ( 170,524 ) ( 218,408 ) ( 344,011 ) ( 441,639 ) Other costs of revenue ( 835,542 ) ( 889,523 ) ( 1,652,347 ) ( 1,865,376 ) Gross profit 214,091 214,182 434,462 435,659 Selling, general and administrative expenses ( 82,626 ) ( 84,094 ) ( 169,451 ) ( 168,411 ) Legal contingency costs — — — ( 115,000 ) Contingent consideration – fair value adjustments 58 1,931 7,506 2,297 Impairment of goodwill — ( 92,416 ) — ( 92,416 ) Income from operations 131,523 39,603 272,517 62,129 Interest expense, net ( 8,838 ) ( 8,491 ) ( 15,966 ) ( 15,709 ) Other non-operating income 4,651 — 12,361 — Income before income tax expense 127,336 31,112 268,912 46,420 Income tax expense ( 33,538 ) ( 25,700 ) ( 69,892 ) ( 40,230 ) Net income 93,798 5,412 199,020 6,190 Net income attributable to noncontrolling interests ( 175 ) ( 24 ) ( 369 ) ( 55 ) Net income attributable to Tetra Tech $ 93,623 $ 5,388 $ 198,651 $ 6,135 Earnings per share attributable to Tetra Tech: Basic $ 0.36 $ 0.02 $ 0.76 $ 0.02 Diluted $ 0.36 $ 0.02 $ 0.76 $ 0.02 Weighted-average common shares outstanding: Basic 260,144 265,728 260,635 266,819 Diluted 261,919 267,439 262,483 269,691 See Notes to Consolidated Financial Statements. 4 Tetra Tech, Inc. Consolidated Statements of Comprehensive Income (Loss) (unaudited – in thousands) Three Months Ended Six Months Ended March 29, 2026 March 30, 2025 March 29, 2026 March 30, 2025 Net income $ 93,798 $ 5,412 $ 199,020 $ 6,190 Other comprehensive income (loss), net of tax Foreign currency translation adjustment, net of tax ( 18,328 ) 34,574 1,398 ( 74,272 ) Net pension adjustments — — ( 305 ) ( 33 ) Other comprehensive income (loss), net of tax ( 18,328 ) 34,574 1,093 ( 74,305 ) Comprehensive income (loss), net of tax 75,470 39,986 200,113 ( 68,115 ) Less: Comprehensive income attributable to noncontrolling interests, net of tax 175 24 369 55 Comprehensive income (loss) attributable to Tetra Tech, net of tax $ 75,295 $ 39,962 $ 199,744 $ ( 68,170 ) See Notes to Consolidated Financial Statements. 5 Tetra Tech, Inc. Consolidated Statements of Cash Flows (unaudited – in thousands) Six Months Ended March 29, 2026 March 30, 2025 Cash flows from operating activities: Net income $ 199,020 $ 6,190 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 28,337 29,939 Amortization of stock-based awards 17,670 17,027 Deferred income taxes 27,069 ( 6,164 ) Provision for losses on accounts receivables — 3,331 Gain on sale of divested business ( 12,361 ) — Impairment of goodwill — 92,416 Fair value adjustments to contingent consideration ( 7,506 ) ( 2,297 ) Gain on cash surrender value of life insurance policies — ( 1,599 ) Other non-cash items 2,387 4,267 Changes in operating assets and liabilities, net of effects of business acquisitions and divestiture: Accounts receivable and contract assets 143,255 ( 203,055 ) Prepaid expenses and other assets 1,371 ( 28,322 ) Accounts payable ( 8,236 ) 66,917 Accrued compensation ( 106,848 ) ( 83,088 ) Contract liabilities ( 9,539 ) 37,354 Income taxes receivable/payable ( 14,047 ) ( 3,253 ) Cash settled on contingent earn-out liabilities — ( 7,420 ) Other liabilities ( 22,961 ) 84,997 Net cash provided by operating activities 237,611 7,240 Cash flows from investing activities: Payments for business acquisitions, net of cash acquired ( 175,000 ) ( 5,680 ) Capital expenditures ( 10,144 ) ( 9,022 ) Proceeds from divested business, net 40,263 — Proceeds from company-owned life insurance policies — 1,934 Net cash used in investing activities ( 144,881 ) ( 12,768 ) Cash flows from financing activities: Proceeds from borrowings 240,000 215,000 Repayments on long-term debt ( 125,000 ) ( 15,000 ) Repurchases of common stock ( 102,010 ) ( 174,984 ) Shares repurchased for tax withholdings on share-based awards ( 12,430 ) ( 13,848 ) Payments of contingent earn-out liabilities ( 2,842 ) ( 14,445 ) Stock options exercised 458 171 Dividends paid ( 33,852 ) ( 30,900 ) Principal payments on finance leases ( 3,841 ) ( 3,431 ) Net cash used in financing activities ( 39,517 ) ( 37,437 ) Effect of exchange rate changes on cash and cash equivalents 2,027 ( 10,291 ) Net increase (decrease) in cash and cash equivalents 55,240 ( 53,256 ) Cash and cash equivalents at beginning of period 168,372 232,689 Cash and cash equivalents at end of period $ 223,612 $ 179,433 Supplemental information: Cash paid during the period for: Interest $ 15,355 $ 16,180 Income taxes, net of refunds received of $ 4.0 million and $ 4.6 million $ 54,883 $ 47,987 Non-cash financing activities: Excise taxes accrued but not paid $ 566 $ 1,267 Reconciliation of cash and cash equivalents at beginning of period: Cash and cash equivalents $ 167,459 $ 232,689 Cash and cash equivalents included in assets held-for-sale 913 — Total $ 168,372 $ 232,689 See Notes to Consolidated Financial Statements. 6 Tetra Tech, Inc. Consolidated Statements of Stockholders' Equity Three Months Ended March 30, 2025 and March 29, 2026 (unaudited – in thousands) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Tetra Tech Equity Non-Controlling Interests Total Equity Shares Amount BALANCE AT DECEMBER 29, 2024 268,028 $ 2,680 $ 21,153 $ ( 187,754 ) $ 1,855,818 $ 1,691,897 $ 122 $ 1,692,019 Net income — — — — 5,388 5,388 24 5,412 Foreign currency translation adjustments — — — 34,574 — 34,574 — 34,574 Distributions paid in noncontrolling interests — — — — — — ( 23 ) ( 23 ) Cash dividends of $ 0.058 per common share — — — — ( 15,351 ) ( 15,351 ) — ( 15,351 ) Stock-based compensation — — 8,885 — — 8,885 — 8,885 Restricted & performance shares released 35 — ( 541 ) — — ( 541 ) — ( 541 ) Stock options exercised 6 — 57 — — 57 — 57 Stock repurchases ( 4,566 ) ( 45 ) ( 29,554 ) — ( 121,652 ) ( 151,251 ) — ( 151,251 ) BALANCE AT MARCH 30, 2025 263,503 $ 2,635 $ — $ ( 153,180 ) $ 1,724,203 $ 1,573,658 $ 123 $ 1,573,781 BALANCE AT DECEMBER 28, 2025 260,799 $ 2,608 $ — $ ( 76,356 ) $ 1,919,840 $ 1,846,092 $ 546 $ 1,846,638 Net income — — — — 93,623 93,623 175 93,798 Foreign currency translation adjustments — — — ( 18,328 ) — ( 18,328 ) — ( 18,328 ) Distributions paid in noncontrolling interests — — — — — — ( 351 ) ( 351 ) Cash dividends of $ 0.065 per common share — — — — ( 16,915 ) ( 16,915 ) — ( 16,915 ) Stock-based compensation — — 9,488 — — 9,488 — 9,488 Restricted & performance shares released 84 1 ( 567 ) — — ( 566 ) — ( 566 ) Stock options exercised 55 1 447 — — 448 — 448 Stock repurchases ( 1,413 ) ( 15 ) ( 9,368 ) — ( 41,080 ) ( 50,463 ) — ( 50,463 ) BALANCE AT MARCH 29, 2026 259,525 $ 2,595 $ — $ ( 94,684 ) $ 1,955,468 $ 1,863,379 $ 370 $ 1,863,749 7 Tetra Tech, Inc. Consolidated Statements of Stockholders' Equity Six Months Ended March 30, 2025 and March 29, 2026 (unaudited – in thousands) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Tetra Tech Equity Non-Controlling Interests Total Equity Shares Amount BALANCE AT SEPTEMBER 29, 2024 267,717 $ 2,677 $ 35,900 $ ( 78,875 ) $ 1,870,620 $ 1,830,322 $ 91 $ 1,830,413 Net income — — — — 6,135 6,135 55 6,190 Foreign currency translation adjustments — — — ( 74,272 ) — ( 74,272 ) — ( 74,272 ) Net pension adjustments — — — ( 33 ) — ( 33 ) — ( 33 ) Distributions paid in noncontrolling interests — — — — — — ( 23 ) ( 23 ) Cash dividends of $ 0.116 per common share — — — — ( 30,900 ) ( 30,900 ) — ( 30,900 ) Stock-based compensation — — 17,027 — — 17,027 — 17,027 Restricted & performance shares released 467 5 ( 13,853 ) — — ( 13,848 ) — ( 13,848 ) Stock options exercised 27 — 171 — — 171 — 171 Shares issued for Employee Stock Purchase Plan 458 4 15,303 — — 15,307 — 15,307 Stock repurchases ( 5,166 ) ( 51 ) ( 54,548 ) — ( 121,652 ) ( 176,251 ) — ( 176,251 ) BALANCE AT MARCH 30, 2025 263,503 $ 2,635 $ — $ ( 153,180 ) $ 1,724,203 $ 1,573,658 $ 123 $ 1,573,781 BALANCE AT SEPTEMBER 28, 2025 261,418 $ 2,614 $ — $ ( 95,777 ) $ 1,872,948 $ 1,779,785 $ 379 $ 1,780,164 Net income — — — — 198,651 198,651 369 199,020 Foreign currency translation adjustments — — — 1,398 — 1,398 — 1,398 Net pension adjustments — — — ( 305 ) — ( 305 ) — ( 305 ) Distributions paid in noncontrolling interests — — — — — — ( 378 ) ( 378 ) Cash dividends of $ 0.130 per common share — — — — ( 33,852 ) ( 33,852 ) — ( 33,852 ) Stock-based compensation — — 17,670 — — 17,670 — 17,670 Restricted & performance shares released 517 5 ( 12,435 ) — — ( 12,430 ) — ( 12,430 ) Stock options exercised 56 1 457 — — 458 — 458 Shares issued for Employee Stock Purchase Plan 429 4 12,566 — — 12,570 — 12,570 Stock repurchases ( 2,895 ) ( 29 ) ( 18,258 ) — ( 82,279 ) ( 100,566 ) — ( 100,566 ) BALANCE AT MARCH 29, 2026 259,525 $ 2,595 $ — $ ( 94,684 ) $ 1,955,468 $ 1,863,379 $ 370 $ 1,863,749 See Notes to Consolidated Financial Statements. 8 TETRA TECH, INC. Notes to Consolidated Financial Statements 1. Basis of Presentation The accompanying unaudited consolidated financial statements and related notes of Tetra Tech, Inc. (“we,” “us,” “our” or "Tetra Tech") have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and, therefore, should be read in conjunction with the audited consolidated financial statements and the notes contained in our Annual Report on Form 10-K for the fiscal year ended September 28, 2025. These financial statements reflect all normal recurring adjustments that are considered necessary for a fair statement of our financial position, results of operations and cash flows for the interim periods presented. The results of operations and cash flows for any interim period are not necessarily indicative of results for the full fiscal year or for future fiscal yea rs. Certain prior year amounts have been reclassified to conform to the current year presentation in the accompanying notes. Beginning in fiscal 2026, we transferred certain operating units between our two reportable segments and redefined our reporting units to better align our operations with the clients, markets and geographies that they serve. Prior year amounts for reportable segments have been revised to conform to the current year presentation. 2. Recent Accounting Pronouncements In September 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which clarifies and modernizes the accounting for costs related to internal-use software guidance in subtopic 350-40. The guidance removes all references to project stages throughout Accounting Standards Codification ("ASC") 350-40 and clarifies the threshold entities apply to begin capitalizing costs. The amendments in this ASU are effective for annual periods beginning after December 15, 2027 (fiscal 2029 for us). Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements; however, we do not plan to adopt it before fiscal 2029. In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Loss for Accounts Receivable and Contract Assets, which provides a practical expedient (for all entities) and an accounting policy election (for all entities, other than public business entities, that elect the practical expedient) related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC Topic 606, "Revenue from Contracts with Customers". The amendments in this ASU are effective for annual periods beginning after December 15, 2025 (fiscal 2027 for us). Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements; however, we do not plan to adopt it before fiscal 2027. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires entities to disclose additional income tax information on an annual basis, primarily related to the rate reconciliation and income taxes paid. The amendments in the ASU are intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this ASU are effective for annual periods beginning after December 15, 2024 (fiscal 2026 for us). The adoption of this ASU will not have a material impact on our consolidated financial statements. In November 2024, the FASB issued ASU No. 2024-03, Income Statement (Topic 220): Reporting Comprehensive Income. ASU 2024-03 does not change or remove current expense presentation requirements within the consolidated statements of income. However, the amendments require disclosure, on an annual and interim basis, of disaggregated information about certain income statement expense line items within the notes to the consolidated financial statements. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026 (fiscal 2028 for us), and interim reporting periods beginning after December 15, 2027 (first quarter of fiscal 2029 for us). Early adoption is permitted. The adoption of t his ASU will not have a material impact on our consolidated financial statements. In November 2024, the FASB issued ASU No. 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements related to accounting for the settlement of a debt instrument as an induced conversion. The amendments in this update are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years (first quarter of fiscal 2027 for us). Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements; however, we do not plan to adopt this ASU before fiscal 2027. 9 3. Revenue and Contract Balances We disaggregate revenue by client sector and contract type, as we believe it best depicts how the nature, timing and uncertainty of our revenue and cash flows are affected by economic factors. The following tables present our revenue disaggregated by client sector and contract type (in thousands): Three Months Ended Six Months Ended March 29, 2026 March 30, 2025 March 29, 2026 March 30, 2025 Client Sector: U.S. federal government (1) $ 312,120 $ 413,422 $ 584,718 $ 915,270 U.S. state and local government 176,495 207,438 347,968 410,425 U.S. commercial 206,843 211,085 432,195 444,676 International (2) 524,699 490,168 1,065,939 972,303 Total $ 1,220,157 $ 1,322,113 $ 2,430,820 $ 2,742,674 Contract Type: Fixed-price $ 587,074 $ 524,950 $ 1,159,516 $ 1,044,772 Time-and-materials 522,158 605,258 1,065,256 1,204,206 Cost-plus 110,925 191,905 206,048 493,696 Total $ 1,220,157 $ 1,322,113 $ 2,430,820 $ 2,742,674 (1) Includes revenue generated under U.S. federal government contracts performed outside the United States. (2) Includes revenue generated from non-U.S. clien ts, primarily in Australia, Canada and the United Kingdom. Other than the U.S. federal government, no single client accounted for more than 10% of our revenue for the three and six months ended March 29, 2026 and March 30, 2025. Contract Assets and Contract Liabilities We invoice customers based on the contractual terms of each contract. However, the timing of revenue recognition may differ from the timing of invoice issuance. Contract assets represent revenue recognized in excess of the amounts for which we have the contractual right to bill our customers. Such amounts are recoverable from customers based upon various measures of performance, including achievement of certain milestones or completion of a contract. In addition, many of our time-and-materials arrangements are billed in arrears pursuant to contract terms that are standard within the industry, resulting in contract assets and/or unbilled receivables being recorded, as revenue is recognized in advance of billings. Contract retentions, included in contract assets, represent amounts withheld by clients until certain conditions are met or the project is completed, which may extend beyond one year. Contract liabilities consist of billings in excess of revenue recognized. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation and increase as billings in advance of revenue recognition occur. Contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. There were no substantial non-current contract assets for the periods presented. Net contract assets/liabilities consisted of the following (in thousands): As of March 29, 2026 September 28, 2025 Contract assets (1) $ 146,455 $ 138,232 Contract liabilities - current ( 410,858 ) ( 420,254 ) Contract liabilities - non-current (2) ( 2,917 ) ( 2,628 ) Net contract liabilities $ ( 267,320 ) $ ( 284,650 ) (1) Incl udes $ 10.7 million and $ 12.8 million of contract retentions at March 29, 2026 and September 28, 2025, respectively. (2) Reported under "Other non-current liabilities" on our consolidated balance sheet as of March 29, 2026 and September 28, 2025. For the first halves of fiscal 2026 and 2025, we recognized revenue of approximately $ 230 million and $ 175 million, respectively, from the amounts included in the contract liability balances at the end of fiscal 2025 and 2024, respectively. 10 Revenue is recognized by measuring progress over time under Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers". We estimate and measure progress on our contracts over time whereby we compare our total costs incurred on each contract as a percentage of the total expected contract costs. Changes in those estimates could result in the recognition of cumulative catch-up adjustments to the contract’s inception-to-date revenue, costs and profit in the period in which such changes are made. As a result, for the second quarters and first halves of fiscal 2026 and 2025, we recognized net favorable revenue and operating income adjustments of approximately $ 14 million and $ 4 million, respectively, and $ 32 million and $ 7 million respectively. Accounts Receivable, Net Net accounts receivable consisted of the following (in thousands): As of March 29, 2026 September 28, 2025 Billed $ 720,165 $ 855,026 Unbilled 331,274 310,818 Total accounts receivable 1,051,439 1,165,844 Allowance for doubtful accounts ( 4,109 ) ( 6,916 ) Total accounts receivable, net $ 1,047,330 $ 1,158,928 Billed accounts receivable represent amounts billed to clients that have not yet been collected. Unbilled accounts receivable, which represent an unconditional right to payment subject only to the passage of time, include unbilled amounts typically resulting from revenue recognized but not yet billed pursuant to contract terms or billed after the period end date. Substantially all of our unbilled receivables at March 29, 2026 are expected to be billed and collecte d within 12 months. The allowance for doubtful accounts represents amounts that are expected to become uncollectible or unrealizable in the future. We estimate the allowance for uncollectible accounts based on management's consideration of trends in the actual and forecasted credit quality of our clients, including client delinquency and payment history; type of client, such as a government agency or a commerci al sector client; and general economic and industry conditions that may affect our clients' ability to pay. Other than the U.S. federal government, no single client accounted for more than 10% of our accounts receivable at March 29, 2026 and September 28, 2025. Remaining Unsatisfied Performance Obligation (“ RUPO”) Our RUPO represents a measure of the total dollar value of work to be performed on contracts awarded and in progress. We had $ 4.2 billion of RUPO at March 29, 2026. Our RUPO increases with awards from new contracts or additions on existing contracts and decreases as work is performed and revenue is recognized on existing contracts. Our RUPO may also decrease when projects are canceled or modified in scope. We include a contract within our RUPO when the contract is awarded and an agreement on contract terms has been reached. We expect to satisfy our RUPO at March 29, 2026 over the following periods (in thousands): Amount Within 12 months $ 3,048,220 Beyond (1) 1,176,533 Total $ 4,224,753 (1) The majority of this amount is expected to be recognized over the subsequent two-year period. Although RUPO reflects business that is considered to be firm, cancellations, deferrals or scope adjustments may occur. Our RUPO is adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals, as appropriate. Our operations and maintenance contracts can generally be terminated by the clients without a substantive financial penalty; therefore, the remaining performance obligations on such contracts are limited to the notice period required for the termination (usually 30 , 60 , or 90 days). 11 4. Acquisition s and Divestitures Acquisitions In the second quarter of fiscal 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 is included in our Government Services Group (“GSG”) se gment. The fair value of the purchase price was approximately $ 210 million. This amount consisted of $ 150 million in initial cash payments made to the sellers, as well as $ 25 million of cash held in escrow and $ 35 million of the estimated fair value of contingent earn-out obligations, with a total maximum of $ 97 million based on the achievement of specified operating income targets in each of the three years following the acquisition date. The purchase price allocation consists of $ 24 million to net tangible assets, $ 26 million to identifiable intangible assets and $ 160 million to goodwill. The purchase price allocation is preliminary and subject to adjustment as the estimates, assumptions, valuations and other analyses have not yet been finalized in order to make a definitive allocation. 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. In the third quarter of fiscal 2025, we also 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. Both CAW and SAGE are included in our Commercial/International Services Group ("CIG") segment. The aggregate fair value of the purchase price of these two acquisitions was $ 147 million. This amount consisted of $ 104 million in initial cash payments and $ 43 million of the estimated fair value of contingent earn-out obligations, with a maximum of approximately $ 60 million, based on the achievement of specified operating income targets in each of the three years following their respective acquisition dates. The allocation of the $ 147 million purchase price consists of $ 13 million to net tangible assets, $ 14 million to identifiable intangible assets, $ 4 million to deferred income tax liability and $ 124 million to goodwill. The purchase price allocations for these acquisitions are preliminary and subject to adjustment as the estimates, assumptions, valuations and other analyses have not yet been finalized in order to make a definitive allocation. The aforementioned acquisitio ns in fiscal 2026 and 2025 were no t considered material, individually or in aggregate, to our consolidated financial statements. As a result, no pro forma information has been provided. The fiscal 2026 goodwill addition from the Halvik acquisition reflects the extensive technical knowledge of the acquired workforce and the anticipated synergies in data analytics, system modernization and cybersecurity services. The fiscal 2025 goodwill additions from the CAW and SAGE acquisitions reflect the anticipated synergies related to proven systems and technology in project management, cost management, project controls and automation services which will provide superior project outcomes and drive digital transformation for defense, government and commercial customers, as delivered by a workforce with extensive technical expertise. The fiscal 2026 goodwill addition is deductible for tax purposes, and the fiscal 2025 goodwill additions are not. Intangible assets with finite lives arise from business acquisitions and are amortized based on the period over which the contractual or economic benefit of the intangible assets are expected to be realized on a straight-line basis over the useful lives of the underlying assets, ranging from one to 12 years. These consist of client relations, backlog and trade names. For detailed information regarding our intangible assets, see Note 5, “Goodwill and Intangible Assets”. Most of our acquisition agreements include contingent earn-out agreements, which are generally based on the achievement of future operating income thresholds. The contingent earn-out arrangements are based on our valuations of the acquired companies and reduce the risk of overpaying for acquisitions if the projected financial results are not achieved. The fair values of any earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, we estimate the fair value of contingent earn-out payments as part of the initial purchase price and record the estimated fair value of contingent consideration as a liability in “Current contingent earn-out liabilities” and “Non-current contingent earn-out liabilities” on the consolidated balance sheets. We consider several factors when determining that contingent earn-out liabilities are part of the purchase price, including the following: (1) the valuation of our acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (2) the former owners of acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of our other key employees. The contingent earn-out payments are not affected by employment termination. We measure our contingent earn-out liabilities at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy. We use a probability-weighted discounted income approach as a valuation technique to convert future estimated cash flows to a single present value amount. The significant unobservable inputs used in the fair value measurements are operating income projections over the earn-out period (generally three to five years ) and the probability outcome percentages we assign to each scenario. Significant increases or decreases to either of these inputs in isolation would result in a significantly higher or lower liability, with a higher liability capped by the contractual maximum of 12 the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and amount paid will be recorded in earnings. The amount paid that is less than or equal to the contingent earn-out liability on the acquisition date is reflected as cash used in financing activities in our consolidated statements of cash flows. Any amount paid in excess of the contingent earn-out liability on the acquisition date is reflected as cash used in operating activities in our consolidated statements of cash flows. We review and reassess the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could differ materially from the initial estimates. Changes in the estimated fair value of our contingent earn-out liabilities related to the time component of the present value calculation are reported in interest expen se. Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income . In the first half of fiscal 2026, we evaluated our estimates for contingent consideration liabilities for the remaining earn-out periods for each individual acquisition, which included a review of their financial results to-date, the status of ongoing projects in their RUPO and the inventory of prospective new contract awards. The following table summarizes the changes in the fair value of estimated contingent consideration (in thousands): Three Months Ended Six Months Ended March 29, 2026 March 30, 2025 March 29, 2026 March 30, 2025 Beginning balance $ 51,392 $ 46,160 $ 56,961 $ 48,746 Estimated earn-out liabilities for acquisitions (1) 57,744 5,516 57,744 5,516 Payments of contingent consideration ( 2,842 ) ( 19,000 ) ( 2,842 ) ( 21,865 ) Adjustments to fair value recorded in earnings ( 58 ) ( 1,931 ) ( 7,506 ) ( 2,297 ) Interest accretion expense 1,291 519 2,155 1,164 Effect of foreign currency exchange rate changes 804 6 1,819 6 Ending balance $ 108,331 $ 31,270 $ 108,331 $ 31,270 Total potential maximum outstanding (1) $ 205,000 (1) For the second quarter and first six months of fiscal 2026, the estimated earn-out liabilities and the potential maximum outstanding amounts include the fair values of the holdback amounts held in escrow related to the acquisition of Halvik. Subsequent Event. 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 segmen t. This acquisition is not material to our consolidated financial statements. Divestiture In the first quarter of fiscal 2026, we divested our operations in Norway, which were in our CIG segment. We received proceeds of $ 40.3 million and recognized non-operating gains of $ 4.7 million and $ 12.4 million in our consolidated statements of income in the second quarter and first half of fiscal 2026, respectively. We concluded that the planned divestiture in fiscal 2025 met all the requisite held-for-sale criteria; therefore, the related assets and liabilities were reclassified as held-for-sale on our consolidated balance sheet as of September 28, 2025. 5. Goodwill and Intangible Assets At the beginning of fiscal 2026, we transferred certain operating units between our two reportable segments and redefined our reporting units to better align our operations with the clients and markets that they serve. As a result, we reallocated goodwill between our GSG and CIG reportable segments on a relative fair value basis. The followin g table summarizes the changes in the carrying value of goodwill by reportable segment (in thousands): GSG CIG Total Balance at September 28, 2025 $ 658,511 $ 1,391,363 $ 2,049,874 Goodwill reallocation 83,179 ( 83,179 ) — Acquisition activity 160,126 — 160,126 Translation adjustments 580 ( 992 ) ( 412 ) Balance at March 29, 2026 $ 902,396 $ 1,307,192 $ 2,209,588 Translation adjustments resulted from our goodwill amounts in foreign subsidiaries with functional currencies that are different than our reporting currency. Th e goodwill amoun t s presented in the table above are net of reductions from historical impairment adjustments. 13 The followin g table summarizes the gross and accumulated impairment amounts of goodwill by reportable segment (in thousands): GSG CIG Total Balance at September 28, 2025 $ 658,511 $ 1,391,363 $ 2,049,874 Accumulated impairment 110,130 121,473 231,603 Gross amount at September 28, 2025 $ 768,641 $ 1,512,836 $ 2,281,477 Balance at March 29, 2026 $ 902,396 $ 1,307,192 $ 2,209,588 Accumulated impairment 110,130 121,473 231,603 Gross amount at March 29, 2026 $ 1,012,526 $ 1,428,665 $ 2,441,191 We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter. Our most recent annual 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. At June 30, 2025, 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 ("GDS") as described below. We also regularly evaluate whether events and circumstances have occurred that may indicate a potential change in the recoverability of goodwill. We perform interim goodwill impairment reviews between our annual reviews if certain events and circumstances have occurred, such as a deterioration in general economic conditions; an increase in the 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. During the second quarter of fiscal 2025, events and circumstances occurred that indicated a potential change in the recoverability of goodwill in GDS. GDS provided consulting and engineering services for international development agencies supporting humanitarian programs worldwide. Although several agencies were supported by this work (primarily for the U.S., Australia and United Kingdom governments), over eighty percent of the activity was historically for the United States Agency for International Development ("USAID"). On January 20, 2025, President Trump signed Executive Order 14169, titled "Reevaluating and Realigning United States Foreign Aid", which initiated a 90-day pause on all U.S. foreign development assistance programs to assess their alignment with U.S. foreign policy objectives with few exemptions. Following a six-week review, on February 27, 2025, U.S. Secretary of State Rubio announced the cancellation of 83 % of USAID programs, totaling approximately 5,200 contracts. Subsequently, we were notified that virtually all of our contracts with USAID were terminated for convenience. As a result of these events and circumstances, we performed an interim impairment review of the goodwill in GDS in the second quarter of 2025. We considered two methods to determine the fair value of the GDS reporting unit: (i) the Income Approach and (ii) the Market Approach. While each of these approaches were initially considered in the valuation of the business enterprise, the nature and characteristic of the reporting unit indicated which approach was most applicable. The Income Approach utilizes the discounted cash flow method, which focuses on the expected cash flow of the reporting unit. In applying this approach, the cash flow available for distribution is calculated for a finite period of years. Cash flow available for distribution is defined, for purposes of this analysis, as the amount of cash that could be distributed as a dividend without impairing the future profitability or operations of the reporting unit. The cash flow available for distribution and the terminal value (the value of the reporting unit at the end of the estimation period) are then discounted to present value to derive an indication of the value of the business enterprise. The Market Approach is comprised of the guideline public company method and guideline transactions method. The guideline company method focuses on comparing the reporting unit to select reasonably similar (or “guideline”) publicly traded companies. Under this method, valuation multiples are (i) derived from the operating data of selected guideline companies; (ii) evaluated and adjusted based on the strengths and weaknesses of the reporting units relative to the selected guideline companies; and (iii) applied to the operating data of the reporting unit to arrive at an indication of value. In the similar transactions method, consideration is given to prices paid in recent transactions that have occurred in the reporting unit’s industry or in related industries. For the interim impairment analysis of GDS, we utilized the Income Approach as it had the most direct correlation to the specific economics of the reporting unit. The estimated fair value of equity of GDS was made using Level 3 inputs including the estimated discount rate that reflected the level of risk associated with receiving future cash flows and the forecasted long-term growth rates of GDS's revenue and operating income. Based on our analysis, an impairment of $ 92.4 million was calculated as the deficit between the fair value of equity of the GDS reporting unit as compared to its carrying value, including goodwill of $ 130.5 million at our fiscal period end for February 2025. As a result, we recorded a non-cash goodwill impairment charge of $ 92.4 million included in operating income in the second quarter of fiscal 2025. The 14 remaining $ 38.1 million of goodwill in GDS was primarily supported by our work for the Australia and United Kingdom foreign aid government agencies. As of the annual impairment review date, the estimated fair value of the GDS reporting unit continued to approximate its carrying value. Effective the first day of fiscal 2026, we eliminated GDS and realigned its remaining operations with other existing reporting units based on their common geographic markets. The following table presents the gross amount and accumulated amortization of our acquired identifiable intangible assets with finite useful lives included in “Intangible assets, net” on the consolidated balance sheets ($ in thousands): As of March 29, 2026 September 28, 2025 Weighted- Average Remaining Life (in Years) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Client relations 6.8 $ 188,191 $ ( 65,993 ) $ 122,198 $ 169,807 $ ( 56,241 ) $ 113,566 Backlog 0.7 50,190 ( 43,619 ) 6,571 43,919 ( 40,397 ) 3,522 Trade names 0.3 34,436 ( 33,920 ) 516 34,805 ( 30,733 ) 4,072 Total $ 272,817 $ ( 143,532 ) $ 129,285 $ 248,531 $ ( 127,371 ) $ 121,160 Amortization expense for the identifiable intangible assets for the second quarter and first half of fi scal 2026 was $ 8.8 million and $ 17.2 million, compared to $ 8.6 million and $ 19.3 million, respectively, for the prior-year periods. Estimated amortization expense for the remainder of fiscal 2026 and succeeding years is as follows (in thousands): Amount 2026 (remaining) $ 15,839 2027 22,537 2028 19,809 2029 18,904 2030 14,780 Beyond 37,416 Total $ 129,285 6. Property and Equipment Property and equipment consisted of the following (in thousands): As of March 29, 2026 September 28, 2025 Equipment, furniture and fixtures $ 148,657 $ 140,695 Leasehold improvements 48,444 46,883 Total property and equipment 197,101 187,578 Accumulated depreciation ( 131,734 ) ( 121,430 ) Property and equipment, net $ 65,367 $ 66,148 For the second quart er and first half of fiscal 2026 , o ur depreciation expense related to property and e quipment was $ 5.6 million and $ 11.2 million, compared to $ 5.2 million and $ 10.6 million, respectively, for the fiscal 2025 periods. 7. Stock Repurchase and Dividends 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 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 15 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. The following table presents dividends declared and paid in the first halves of fisc al 2026 and 2025 : Declare Date Dividend Paid Per Share Record Date Payment Date Dividend Paid (in thousands) November 10, 2025 $ 0.065 December 1, 2025 December 12, 2025 $ 16,937 January 26, 2026 0.065 February 12, 2026 February 27, 2026 16,915 Total dividend paid as of March 29, 2026 $ 33,852 November 11, 2024 $ 0.058 November 27, 2024 December 13, 2024 $ 15,549 January 27, 2025 0.058 February 12, 2025 February 26, 2025 15,351 Total dividend paid as of March 30, 2025 $ 30,900 Subsequent Event. 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. 8. Leases Our operating leases are primarily for corporate and project office spaces. To a much lesser extent, we have operating leases for vehicles and equipment. Our operating leases have remaining lease terms of one month to ten years , some of which may include options to extend the leases for up to seven years . We determine if an arrangement is a lease at inception. Operating leases are included in "Right-of-use assets, operating leases", "Short-term lease liabilities, operating leases" and "Long-term lease liabilities, operating leases" in the consolidated balance sheets. Our finance leases are primarily for certain IT equipment and are immaterial. Right-of-use ("ROU") assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, incremental borrowing rates are used based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset at the commencement date also includes any lease payments made to the lessor at or before the commencement date and initial direct costs less lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. The components of lease costs are as follows (in thousands): Three Months Ended Six Months Ended March 29, 2026 March 30, 2025 March 29, 2026 March 30, 2025 Operating lease cost $ 25,207 $ 24,824 $ 51,986 $ 50,742 Sublease income ( 466 ) ( 263 ) ( 707 ) ( 482 ) Total lease cost $ 24,741 $ 24,561 $ 51,279 $ 50,260 16 Supplemental cash flow information related to leases is as follows (in thousands): Six Months Ended March 29, 2026 March 30, 2025 Operating cash flows for operating leases $ 41,182 $ 36,278 Right-of-use assets obtained in exchange for new operating lease liabilities 44,113 39,401 Supplemental balance sheet and other information related to leases are as follows ($ in thousands): As of March 29, 2026 September 28, 2025 Operating leases: Right-of-use assets $ 206,527 $ 197,618 Lease liabilities: Current 73,743 69,099 Non-current 155,825 154,695 Total operating lease liabilities $ 229,568 $ 223,794 Weighted-average remaining lease term: Operating leases 4.0 years 4.4 years Weighted-average discount rate: Operating leases 4.2 % 4.2 % At March 29, 2026, we h a d $ 5.9 million of operating leases that have not yet commenced. A maturity analysis of the future undiscounted cas h flows associated with our lease liabilities at March 29, 2026 is as follows (in thousands): Operating Leases 2026 (remaining) $ 41,923 2027 76,212 2028 52,481 2029 32,821 2030 24,849 Beyond 21,884 Total lease payments 250,170 Less: imputed interest ( 20,602 ) Total present value of lease liabilities $ 229,568 9. Stockholders’ Equity and Stock Compensation Plans We recogniz e the fair value of our stock-based awards as compensation expense on a straight-line basis over the requisite service period in which the award vests. Stock-based compensation expense for the three and six months ended March 29, 2026 was $ 9.5 million and $ 17.7 million, compared to $ 8.9 million and $ 17.0 million for the same periods last year. Most of these amounts were included in our selling, general and administrative expenses on our consolidated statements of income. In the first half of fiscal 2026, we awarded 358,548 performance share units (“PSUs”) to our non-employee directors and executive officers at an estimated fair value of $ 43.72 per share on the award date. All PSUs are performance-based and vest, if at all, after the conclusion of the three-year performance period. The number of PSUs that ultimately vest is based 50 % on growth in our diluted earnings per share and 50 % on our relative total shareholder return over the vesting period. Additionally, we awarded 600,835 restricted stock units (“RSUs”) to our non-employee directors, executive officers and 17 employees at a fair value of $ 35.42 per share on the award date. All executive officer and employee RSUs have time-based vesting over a four-year period, and the non-employee director RSUs vest after one year . 10. Earnings per Share (“EPS”) Basic EPS is computed by dividing net income available to common stockholders by the weighted-average common shares outstanding for the period. Diluted EPS is computed by dividing net income by the weighted-average number of common shares outstanding and dilutive potential common shares for the period. Potential common shares include the weighted-average dilutive effects of stock-based awards and shares underlying our Convertible Senior Notes (the "Convertible Notes"). For the first half of fiscal 2026, our Convertible Notes, described in Note 13, "Long-Term Debt", had no impact on the calculation of dilutive potential common shares, as the price of our common stock did not exceed the conversion price. For the first half of fiscal 2025, the Convertible Notes had a dilution impact on the dilutive potential common shares, which was calculated using the if-converted method. The dilution impact was due to the price of our common stock exceeding the conversion price. The related capped call transactions (the "Capped Call Transactions") for all of these periods were excluded from the calculation of dilutive potential common shares as their effect is anti-dilutive. For the second quarters and first halves of fiscal 2026 and 2025, no options were excluded from the calculation of dilutive potential common shares. The following table presents the number of weighted-average shares used to compute ba sic and diluted EPS (in thousands, except per share data): Three Months Ended Six Months Ended March 29, 2026 March 30, 2025 March 29, 2026 March 30, 2025 Net income attributable to Tetra Tech $ 93,623 $ 5,388 $ 198,651 $ 6,135 Weighted-average common shares outstanding – basic 260,144 265,728 260,635 266,819 Effect of dilutive stock options and unvested restricted stock 1,775 1,711 1,848 1,936 Shares issuable assuming conversion of convertible notes — — — 936 Weighted-average common shares outstanding – diluted 261,919 267,439 262,483 269,691 Earnings per share attributable to Tetra Tech: Basic $ 0.36 $ 0.02 $ 0.76 $ 0.02 Diluted $ 0.36 $ 0.02 $ 0.76 $ 0.02 11. Income Taxes The effective tax rates for the first halves of fis cal 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”. The gain is not taxable for income tax purposes. 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". We determined that $ 31.3 million of this charge is not tax deductible. 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. 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. If these audits are resolved in a manner more unfavorable than our current expectations, our additional tax liabilities could be materially higher than the amounts currently recorded resulting in additional tax expense. 12. Reportable Segments We manage our operations under two reportable segments, GSG and CIG. 18 At the beginning of fiscal 2026, we transferred certain operating units between our two reportable segments and redefined our reporting units to better align our operations with the clients, markets and geographies that they serve. Prior year amounts for reportable segments have been revised to conform to the current year presentation. GSG provides high-end consulting and engineering services primarily to U.S. government clients (federal, state and local). GSG supports U.S. government defense and civilian agencies with services in water, environment, sustainable infrastructure, information technology and disaster management. GSG also provides engineering design services for U.S. based federal and municipal clients, especially in water infrastructure, flood protection and solid waste. CIG primarily provides high-end consulting and engineering services to U.S. commercial clients, and international clients inclusive of the commercial and government sectors. CIG supports commercial clients worldwide in energy, industrial and high performance buildings markets. CIG also provides sustainable infrastructure and related environmental, engineering and project management services to commercial and local government clients across Canada, in Asia Pacific (primarily Australia and New Zealand), Europe, the United Kingdom and Brazil. Our Chief Executive Officer serves as the chief operating decision maker (“CODM”) and is responsible for evaluating segment performance and allocating resources to our segments. The CODM assesses segment revenue and segment operating income on a monthly basis by comparing actual results against the annual plan. This evaluation supports strategic decisions related to segment profitability, resource allocation, pricing strategies, and cost optimization. The segment operating income is presented before amortization expense associated with acquisitions and other unallocated corporate costs. It is calculated as revenue less subcontractor costs, and other segment items including other costs of revenue and segment selling, general, and administrative expenses. Certain expenses are not allocated to GSG and CIG segments for purposes of making operating decisions or evaluating financial performance and are reported under corporate expenses. These expenses include amortization of intangibles, goodwill impairment charges, contingent consideration gains and losses, acquisition and integration expenses, certain legal contingency costs, as well as other costs and benefits that our CODM deems to be enterprise in nature. Corporate expenses also include stock-based compensation expense related to corporate employees. We account for inter-segment revenue and transfers as if they were to third parties; that is, by applying a negotiated fee onto the costs of the services performed. All significant intercompany balances and transactions are eliminated in consolidation. Our CODM does not use assets by segment to evaluate performance or allocate resources; therefore, we do not provide disclosure of assets by segment. The accounting policies for segment reporting are the same as for our consolidated financial statements. The tables below present financial information of our reportable segments (in thousands): 19 Three Months Ended Three Months Ended March 29, 2026 March 30, 2025 GSG CIG Total GSG CIG Total Revenue from external customers $ 551,364 $ 668,793 $ 1,220,157 $ 693,645 $ 628,468 $ 1,322,113 Inter-segment revenue 7,987 7,330 15,317 5,228 9,218 14,446 Segment revenue 559,351 676,123 1,235,474 698,873 637,686 1,336,559 Elimination of inter-segment revenue ( 15,317 ) ( 14,446 ) Total consolidated revenue 1,220,157 1,322,113 Subcontractor costs - external ( 93,558 ) ( 76,966 ) ( 170,524 ) ( 125,350 ) ( 93,058 ) ( 218,408 ) Subcontractor costs - inter-segment ( 7,330 ) ( 7,987 ) ( 15,317 ) ( 9,218 ) ( 5,228 ) ( 14,446 ) Segment subcontractor costs ( 100,888 ) ( 84,953 ) ( 185,841 ) ( 134,568 ) ( 98,286 ) ( 232,854 ) Elimination of inter-segment subcontractor costs 15,317 14,446 Total consolidated subcontractor costs ( 170,524 ) ( 218,408 ) Other segment items (1) ( 383,610 ) ( 519,117 ) ( 902,727 ) ( 484,529 ) ( 470,302 ) ( 954,831 ) Segment operating income 74,853 72,053 146,906 79,776 69,098 148,874 Reconciliation of profit (segment operating income): Other non-operating income 4,651 — Impairment of goodwill — ( 92,416 ) Contingent consideration - fair value adjustments 58 1,931 Interest expense, net ( 8,838 ) ( 8,491 ) Other corporate expenses (2) ( 15,441 ) ( 18,786 ) Income before income tax expense $ 127,336 $ 31,112 (1) These amounts includ e $ 0.8 million and $ 0.9 million of GSG depreciation expense for the second quarters of fiscal 2026 and 2025, respectively, and $ 4.7 million and $ 4.3 million of CIG depreciation expense for the second quarters of fiscal 2026 and 2025, respectively. Additionally, our GSG other segment items include the equity in the net income of investees accounted for by the equity method of $( 0.1 ) million and $ 0.3 million for the second quarters of fiscal 2026 and 2025, respectively. Our CIG other segment items also reflect the equity in the net income of investees accounted for by the equity method of $ 0.6 million and $ 0.9 million for the second quarters of fiscal 2026 and 2025, respectively. (2) Other corporate expenses include the amortization expense of intangible assets of $ 8.8 million and $ 8.6 million for the second quarters of fiscal 2026 and 2025, respectively. These amounts also include $ 5.8 million and $ 5.0 million of stock-based compensation expense for the second quarters of fiscal 2026 and 2025, respectively. 20 Six Months Ended Six Months Ended March 29, 2026 March 30, 2025 GSG CIG Total GSG CIG Total Revenue from external customers $ 1,064,842 $ 1,365,978 $ 2,430,820 $ 1,477,626 $ 1,265,048 $ 2,742,674 Inter-segment revenue 20,017 14,322 34,339 12,599 17,540 30,139 Segment revenue 1,084,859 1,380,300 2,465,159 1,490,225 1,282,588 2,772,813 Elimination of inter-segment revenue ( 34,339 ) ( 30,139 ) Total consolidated revenue 2,430,820 2,742,674 Subcontractor costs - external ( 179,971 ) ( 164,040 ) ( 344,011 ) ( 261,006 ) ( 180,633 ) ( 441,639 ) Subcontractor costs - inter-segment ( 14,322 ) ( 20,017 ) ( 34,339 ) ( 17,540 ) ( 12,599 ) ( 30,139 ) Segment subcontractor costs ( 194,293 ) ( 184,057 ) ( 378,350 ) ( 278,546 ) ( 193,232 ) ( 471,778 ) Elimination of inter-segment subcontractor costs 34,339 30,139 Total consolidated subcontractor costs ( 344,011 ) ( 441,639 ) Other segment items (1) ( 744,296 ) ( 1,045,272 ) ( 1,789,568 ) ( 1,039,983 ) ( 951,219 ) ( 1,991,202 ) Segment operating income 146,270 150,971 297,241 171,696 138,137 309,833 Reconciliation of profit (segment operating income): Other non-operating income 12,361 — Legal contingency costs — ( 115,000 ) Impairment of goodwill — ( 92,416 ) Contingent consideration - fair value adjustments 7,506 2,297 Interest expense, net ( 15,966 ) ( 15,709 ) Other corporate expenses (2) ( 32,230 ) ( 42,585 ) Income before income tax expense $ 268,912 $ 46,420 (1) For the first six months of fiscal 2026 and 2025 these amounts in clude $ 1.6 million and $ 1.8 million of GSG depreciation expense, respectively, and $ 9.4 million and $ 8.7 million of CIG depreciation expense for the first six months of fiscal 2026 and 2025, respectively. Additionally, our GSG other segment items include the equity in the net income of investees accounted for by the equity method of $ 0.1 million and $ 0.7 million for the first halves of fiscal 2026 and 2025, respectively. Our CIG other segment items also reflect the equity in the net income of investees accounted for by the equity method of $ 1.0 million and $ 1.3 million for the first halves of fiscal 2026 and 2025, respectively. (2) For the first halves of fiscal 2026 and 2025 other corporate expenses include the amortization expense of intangible assets of $ 17.2 million and $ 19.3 million, respectively. These amounts also include $ 10.8 million and $ 9.8 million of stock-based compensation expense for the first halves of fiscal 2026 and 2025, respectively. 13. Long-Term Debt Long-term debt consisted of the following (in thousands): As of March 29, 2026 September 28, 2025 Credit facilities $ 315,000 $ 200,000 Convertible notes 575,000 575,000 Debt issuance costs and discount ( 9,838 ) ( 11,637 ) Long-term debt $ 880,162 $ 763,363 21 On August 22, 2023, we issued $ 575.0 million in Convertible Notes that bear interest at a rate of 2.25 % per annum payable in arrears on February 15 and August 15 of each year, beginning on February 15, 2024, and mature on August 15, 2028, unless converted, redeemed or repurchased. Prior to May 15, 2028, the Convertible Notes will be convertible at the option of the holders only upon the occurrence of certain events and during certain periods. Thereafter, the Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The initial conversion rate applicable to the Convertible Notes was 25.4275 shares (5.0855 pre-stock split) of our common stock per $1,000 principal amount of the Convertible Notes, which was equivalent to an initial price of approximately $ 39.33 per share ($ 196.64 pre-stock split) of our common stock. The conversion rate is subject to adjustment for certain events, including stock splits and issuance of certain stock dividends on our common stock. At March 29, 2026, the applicable conversion rate was 25.4791 shares of common stock per $1,000 principal amount of the Convertible Notes (equivalent to an adjusted conversion price of approximately $ 39.25 per share of common stock). Upon conversion, we will pay cash up to the aggregate principal amount of the Convertible Notes to be converted and pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted. In addition, upon the occurrence of a "fundamental change" as defined in the indenture governing the Convertible Notes, holders may require us to repurchase for cash all or any portion of their Convertible Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the Convertible Notes to be repurchased plus any accrued and unpaid interest. If certain corporate events occur prior to the maturity date of the Convertible Notes or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such event or notice of redemption. We will not be able to redeem the Convertible Notes prior to August 20, 2026. On or after August 20, 2026, we have the option to redeem for cash all or any portion of the Convertible Notes if the last reported sale price of our common stock is equal to or greater than 130 % of the conversion price for a specified period of time at a redemption price equal to 100 % of the principal amount of the Convertible Notes to be redeemed, plus any accrued but unpaid interest. In addition, as described in the indenture governing the Convertible Notes, certain events of default including, but not limited to, bankruptcy, insolvency or reorganization, may result in the Convertible Notes becoming due and payable immediately. Our net proceeds from the offering were approximately $ 560.5 million after deducting the initial purchasers’ discounts and commissions and offering expenses. We used approximately $ 51.8 million of the net proceeds to pay the cost of the Capped Call Transactions described below. We used the remaining net proceeds to repay all $ 185.0 million principal amount outstanding under our revolving credit facility and the remaining $ 234.4 million principal amount outstanding under our senior secured term loan due 2027 under the Second Amended and Restated Credit Agreement, as well as approximately $ 89.4 million principal amount outstanding under our senior secured term loan due 2026 under the Third Amended and Restated Credit Agreement. The Convertible Notes were recorded as a single unit within "Long-term debt" in our consolidated balance sheets as the conversion option within the Convertible Notes was not a derivative that would require bifurcation, and the Convertible Notes did not involve a substantial premium. Transaction costs to issue the Convertible Notes were recorded as direct deductions from the related debt liabilities and are amortized to interest expense using the effective interest method over the terms of the Convertible Notes resulting in an effective annual interest rate of 2.79 %. The net carrying amount of the Convertible Notes was as follows (in thousands) : As of March 29, 2026 September 28, 2025 Principal $ 575,000 $ 575,000 Unamortized discount and issuance costs ( 7,180 ) ( 8,625 ) Net carrying amount $ 567,820 $ 566,375 The following table sets forth the interest expense recognized related to the Convertible Notes (in thousands) : Three Months Ended Six Months Ended March 29, 2026 March 30, 2025 March 29, 2026 March 30, 2025 Interest expense $ 3,234 $ 3,235 $ 6,469 $ 6,469 Amortization of discount and issuance costs 729 709 1,446 1,406 Total interest expense $ 3,963 $ 3,944 $ 7,915 $ 7,875 22 Concurrent with the offering of the Convertible Notes, in August 2023, we entered into the Capped Call Transactions. The Capped Call Transactions are expected generally to reduce the potential dilution of our common stock upon conversion of the Convertible Notes and/or offset any cash payments we elect to make in excess of the principal amount of converted Convertible Notes, as the case may be. If, however, the market price per share of our common stock, as measured under the terms of the Capped Call Transactions, exceeds the cap price of the Capped Call Transactions, there would nevertheless be dilution and/or there would not be an offset of such cash payments, in each case, to the extent that such market price exceeds the cap price of the Capped Call Transactions. The cap price of the Capped Call Transactions was initially $ 51.91 per share ($ 259.56 pre-stock split), which represented a premium of 65 % over the last reported sale price of our common stock of $ 31.46 per share ($ 157.31 pre-stock split) on the NASDAQ Global Select Market on August 17, 2023. The cap price is subject to adjustment for certain events, including stock splits and issuance of certain stock dividends on our common stock. At March 29, 2026, the adjusted cap price was approximately $ 51.81 per share. We recorded the Capped Call Transactions as separate transactions from the issuance of the Convertible Notes. The cost of $ 51.8 million incurred to purchase the Capped Call Transactions was recorded as a reduction to additional paid-in capital (net of $ 12.9 million in deferred taxes) on our consolidated balance sheet as of fiscal 2023 year-end. On February 18, 2022, we entered into Amendment No. 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 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 5Y Term Loan Facility will be subject to quarterly amortization of principal, based upon the annual percentages of the original stated amount thereof (Year 1: 0.0%, Year 2: 0.0%, Year 3: 5.0 %, Year 4: 10.0 %, Year 5: 10.0 %), with the first payment being due at the end of the first full fiscal quarter following the second anniversary of the Amendment Effective Date. The Amended Credit Agreement provides for, among other things, (i) refinance indebtedness under our Third Amended Credit Agreement; (ii) finance open market repurchases of common stock, acquisitions, and cash dividends and distributions; and (iii) utilize the proceeds for working capital, capital expenditures and other general corporate purposes. The Amended Credit Agreement provides for a reduction in the pricing levels of the Consolidated Leverage Ratio and the removal of the 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 multicurrency borrowings and letters of credit. The entire 3Y Term Loan Facility and 5Y Term Loan Facility were drawn on May 5, 2025. The proceeds from these term loans were used to pay down our Third Term Loan Facility and the Second Revolving Credit Facility in full on May 5, 2025. 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 SOFR rate plus 1.00 %, plus a margin that ranges from 0% to 0.75 % per annum). In each case, the applicable margin is based on our Consolidated Leverage Ratio, calculated quarterly. The 5Y Term Loan Facility is subject to the same interest rate provisions. The 3Y Term Loan Facility was repaid on September 26, 2025. The Amended Credit Agreement expires on May 5, 2030, or earlier at our discretion upon payment in full of loans and other obligations. 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. During the six months ended March 29, 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 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. The financial covenants provide for a maximum Consolidated Leverage Ratio of 3.50 to 1.00 (total funded debt/EBITDA, as defined in the Amended Credit Agreement) and a minimum Consolidated Interest Coverage Ratio of 3.00 to 1.00 (EBITDA/Consolidated Interest Charges, as defined in the Amended Credit Agreement). Our obligations under the Amended Credit Agreement are guaranteed by certain of our domestic subsidiaries and are secured by first priority liens on (i) the equity interests of certain of our subsidiaries, including those subsidiaries that are guarantors or borrowers under the Amended Credit 23 Agreement, and (ii) the accounts receivable, general intangibles and intercompany loans and those of our subsidiaries that are guarantors or borrowers. At March 29, 2026, we were in compliance with these covenants with a consolidated leverage ratio of 1.32 x and a consolidated interest coverage ratio of 18.08 x. In addition to the Amended Credit Agreement, we maintain other credit facilities, which may be used for short-term cash advances and bank guarantees. At March 29, 2026, there were no outstanding borrowings under these facilities and the aggregate amount of standby letters of credit outstanding was $ 51.1 million. As of March 29, 2026, we had no bank overdrafts related to our disbursement bank accounts. 14. Fair Value Measurements We classified our assets and liabilities that were carried at fair value in one of the following categories: • Level 1: Quoted market prices in active markets for identical assets or liabilities. • Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. • Level 3: Unobservable inputs that are not corroborated by market data. Contingent Consideration. We measure our contingent earn-out liabilities at fair value on a recurring basis usin g significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 4 , " Acquisition s and Divestitures" for further information). Debt. The fair value of long-term debt under our credit facility was determined using the present value of future cash flows based on the borrowing rates currently available for debt with similar terms and maturities (Level 2 measurement, as described in “Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended September 28, 2025). The carrying value of our long-term debt under our credit facility approximated fair value at March 29, 2026 and September 28, 2025. At March 29, 2026, we had $ 315 million in outstanding borrowings under the Amended Credit Agreement, which consisted of $ 200 million under our 5Y Term Loan Facility and $ 115 million borrowings under our revolving credit facility. The estimated fair value of our $ 575 million Convertible Notes was determined based on the trading price of the Convertible Notes as of the last trading day of our second quarter of fiscal 2026. We consider the fair value of the Convertible Notes to be a Level 2 measurement as they are not actively traded in markets. The carrying values and estimated fair values of our financial instruments that are not recorded at fair value in our consolidated balance sheets, were as follows (in thousands): As of March 29, 2026 As of September 28, 2025 Carrying Value Fair Value Carrying Value Fair Value Liabilities: Credit facilities $ 315,000 $ 315,000 $ 200,000 $ 200,000 Convertible notes 567,820 598,920 566,375 619,735 Total $ 882,820 $ 913,920 $ 766,375 $ 819,735 24 15. Reclassifications Out of Accumulated Other Comprehensive Income The accumulated balances and activities for the three and six months ended March 29, 2026 and March 30, 2025 related to reclassifications out of accumulated other comprehensive income are summarized as follows (in thousands): Three Months Ended Foreign Currency Translation Adjustments Net Pension Adjustments Accumulated Other Comprehensive Income (Loss) Balance at December 29, 2024 $ ( 191,659 ) $ 3,905 $ ( 187,754 ) Other comprehensive income 34,574 — 34,574 Net current-period other comprehensive income 34,574 — 34,574 Balance at March 30, 2025 $ ( 157,085 ) $ 3,905 $ ( 153,180 ) Balance at December 28, 2025 $ ( 80,252 ) $ 3,896 $ ( 76,356 ) Other comprehensive loss ( 18,328 ) — ( 18,328 ) Net current-period other comprehensive loss ( 18,328 ) — ( 18,328 ) Balance at March 29, 2026 $ ( 98,580 ) $ 3,896 $ ( 94,684 ) Six Months Ended Foreign Currency Translation Adjustments Net Pension Adjustments Accumulated Other Comprehensive Income (Loss) Balance at September 29, 2024 $ ( 82,813 ) $ 3,938 $ ( 78,875 ) Other comprehensive loss ( 74,272 ) ( 33 ) ( 74,305 ) Net current-period other comprehensive loss ( 74,272 ) ( 33 ) ( 74,305 ) Balance at March 30, 2025 $ ( 157,085 ) $ 3,905 $ ( 153,180 ) Balance at September 28, 2025 $ ( 99,978 ) $ 4,201 $ ( 95,777 ) Other comprehensive income (loss) before reclassifications 1,940 ( 14 ) 1,926 Reclassification to earnings from sale of divested business ( 542 ) ( 291 ) ( 833 ) Net current-period other comprehensive income (loss) 1,398 ( 305 ) 1,093 Balance at March 29, 2026 $ ( 98,580 ) $ 3,896 $ ( 94,684 ) 16. Commitments and Contingencies We are subject to certain claims and lawsuits typically filed against the consulting and engineering profession, alleging primarily professional errors or omissions. We carry professional liability insurance, subject to certain deductibles and policy limits, against such claims. However, in some actions, parties are seeking damages that exceed our insurance coverage or for which we are not insured. While management does not believe that the resolution of these claims will have a material adverse effect, individually or in aggregate, on our financial position, results of operations or cash flows, management acknowledges the uncertainty surrounding the ultimate resolution of these matters. On July 15, 2019, following an initial January 14, 2019 filing, the Civil Division of the United States Attorney's Office of the United States Department of Justice ("the USAO") filed an amended complaint in the intervention of three qui tam actions filed against our wholly-owned subsidiary, Tetra Tech EC, Inc. ("TtEC"), in the U.S. District Court for the Northern District of California ("the Court"). The complaint alleges False Claims Act ("FCA") violations and breach of contract related to TtEC's contracts to perform environmental remediation services at the former Hunters Point Naval Shipyard in San Francisco, California (the "Covered Conduct"). On March 5, 2024, the Court granted the USAO's motion to amend the filing to 25 include additional claims against TtEC under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") and common law. To explore whether a negotiated resolution was possible, TtEC began engaging in discussions with the USAO during the first quarter of fiscal 2025 regarding a potential resolution of all claims. On January 17, 2025, TtEC entered into a settlement agreement with the United States of America, acting through the USAO and on behalf of the Department of the Navy (collectively, the "United States") an d also fil ed a proposed consent decree with the Court, to resolve this litigation. TtEC entered into the settlement agreement and consent decree to avoid delay, uncertainty and expense of protracted litigation. The settlement agreement and consent decree contain no admission of liability by TtEC. Under the terms of the settlement agreement and consent decree, TtEC agreed to pay the United States $ 57 million and $ 40 million for FCA and CERCLA claims, respectively (the "Settlement Amounts") . In the second quarter of fiscal 2025, we paid the $ 57 million settlement related to the FCA claim. The $ 40 million CERCLA settlement payment was made in the fourth quarter of fiscal 2025. U pon entry of the consent decree by the Court and the United States' receipt of the Settlement Amounts, the United States released TtEC from any, and all civil or administrative monetary claims for the Covered Conduct under the civil FCA, the CERCLA, and other specified civil statutes and common law theories of liability. Several ancillary claims brought by third-party private plaintiffs arising from the same services provided by TtEC at Hunters Point are also ongoing. The settlement agreement and consent decree do not resolve these ancillary claims. TtEC has initiated litigation with the insurance carrier with which TtEC maintained liability policies regarding the reasonably possible payment or reimbursement of a significant portion of the Settlement Amounts. TtEC can give no assurances as to what portion, if any, of the Settlement Amounts will be recovered from the insurance carrier. As a result of the settlement agreement and consent decree with the United States and in connection with discussions regarding the ancillary claims, we recorded a $ 115.0 million charge to operating income ($ 97.0 million for the settlement and $ 18.0 million estimated for the ancillary claims, respectively) in the first quarter of fiscal 2025. 17. Related Party Transactions We often provide services to unconsolidated joint ventures. The table below presents revenue and reimbursable costs related t o services we provided to our unconsolidated joint ventures (in thousands): Three Months Ended Six Months Ended March 29, 2026 March 30, 2025 March 29, 2026 March 30, 2025 Revenue $ 15,112 $ 16,017 $ 30,869 $ 32,497 Related reimbursable costs 13,501 14,575 27,593 29,356 Our consolidated balance sheets also included the following amounts related to these services (in thousands): As of March 29, 2026 September 28, 2025 Accounts receivable, net $ 11,018 $ 14,848 Contract assets 1,281 1,154 Contract liabilities ( 6,056 ) ( 6,583 ) 26