What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-31 compared with 2026-05-01 · 157 added, 156 removed, 341 unchanged (48% of the section changed)

12 unchanged sentences

Tetra Tech, Inc.

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

is a leading global provider of high-end technical and engineering services that focuses on water, environment and sustainable infrastructure.

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

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 60 years.

Our reputation for high-end technical 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.

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

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

We are working on over 100,000 projects, in more than 100 countries on all seven continents, with more than 25,000 associates.

12 unchanged sentences

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

Three Months Ended Six Months Ended

2026 March 30,

2025 March 29,

2026 March 30,

Three Months Ended Nine Months Ended

2026 June 29,

2025 June 28,

2026 June 29,

Client Sector

13 unchanged sentences

Government Services Group ( “ GSG ” ).

GSG provides high-end consulting and engineering services primarily to U.S.

GSG provides high-end technical and engineering services primarily to U.S.

government clients (federal, state and local).

4 unchanged sentences

Commercial/International Services Group ( “ CIG ” ).

CIG primarily provides high-end consulting and engineering services to U.S.

CIG primarily provides high-en d technical and engineering services to U.S.

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

2 unchanged sentences

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

Three Months Ended Six Months Ended

2026 March 30,

2025 March 29,

2026 March 30,

Three Months Ended Nine Months Ended

2026 June 29,

2025 June 28,

2026 June 29,

Reportable Segment

6 unchanged sentences

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

Three Months Ended Six Months Ended

2026 March 30,

2025 March 29,

2026 March 30,

Three Months Ended Nine Months Ended

2026 June 29,

2025 June 28,

2026 June 29,

Contract Type

8 unchanged sentences

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.

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.

7 unchanged sentences

We experience seasonal trends in our business.

Our revenue and operating income are typically lower in the first half of our fiscal year, primarily due to the Thanksgiving (in the U.S.

Our revenue and operating income are typically lower in the first nine months of our fiscal year, primarily due to the Thanksgiving (in the U.S.

and Canada), Christmas and New Year’s holidays.

Many of our clients’ employees, as well as our own employees, take vacations during these holiday periods.

Further, seasonal inclement weather conditions occasionally cause some of our offices to close temporarily or may hamper our project field work in the northern hemisphere's temperate and arctic regions.

Furthe r, seasonal inclement weather conditions occasionally cause some of our offices to close temporarily or may hamper our project

field work in the northern hemisphere's temperate and arctic regions.

These occurrences result in fewer billable hours worked on projects and, correspondingly, less revenue recognized.

15 unchanged sentences

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.

In the third quarter of fiscal 2026, we acquired Providence Consulting Group Pty Ltd ("Providence"), an advisory and project management consultancy based in Australia.

Providence is included in our CIG segment.

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

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.

In 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 CIG segment.

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 segment.

Divestitures.

2 unchanged sentences

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

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.

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

All of these divestitures were no t considered material, individually or in aggregate, to our consolidated financial statements.

For detailed information regarding acquisitions, see Note 4, “Acquisition s and Divestitures ” of the “Notes to Consolidated Financial Statements”.

OVERVIEW OF RESULTS AND BUSINESS TRENDS

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.

For the first nine months of fiscal 2026, our revenue declined 9.1% compared to the prior-year period primarily due to fewer international development projects in our U.S.

federal government client sector.

8 unchanged sentences

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):

Six Months Ended

March 29, 2026 March 30, 2025 Change

Our revenue in the first nine months of fiscal 2026 includes approximately $180 million from our

recent acquisitions (net of the aforementioned Norway disposition), that did not have comparable revenue for the same period last year.

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

Nine Months Ended

June 28, 2026 June 29, 2025 Change

Client Sector

11 unchanged sentences

Federal Government.

Six Months Ended

March 29, 2026 March 30, 2025 Change

Nine Months Ended

June 28, 2026 June 29, 2025 Change

($ in thousands)

Revenue $ 923,573 $ 1,367,899 $ (444,326) (32.5)%

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.

federal government revenue declined 32.5% primarily due to the aforementioned decreased international development and disaster response activity in the first nine months of fiscal 2026 compared to the same period last year.

In the first nine months of fiscal 2026, our U.S.

federal government revenue included approximately $190 million from USAID/DOS programs compared to approximately $550 million in the fiscal 2025 period.

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

Our revenue in th e first nine months of fiscal 202 6 includes approximately $85 million from a recent acquisition, that did not have comparable revenue for the prior-year period.

We expect our U.S.

1 unchanged sentence

State and Local Government.

Six Months Ended

March 29, 2026 March 30, 2025 Change

Nine Months Ended

June 28, 2026 June 29, 2025 Change

($ in thousands)

Revenue $ 522,349 $ 599,606 $ (77,257) (12.9)%

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.

state and local government revenue declined 12.9% compared to the fiscal 2025 period due to decreased disaster response activity primarily related to Hurricanes Helene and Milton.

Excluding this disaster response work, our U.S.

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.

state and local government, revenue increased approximately 6% in the first nine months of fiscal 2026 compared to the same period last year.

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 for the remainder of fiscal 2026.

Six Months Ended

March 29, 2026 March 30, 2025 Change

Nine Months Ended

June 28, 2026 June 29, 2025 Change

($ in thousands)

Revenue $ 667,450 $ 666,027 $ 1,423 0.2%

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.

commercial revenue was stable in the first nine months of fiscal 2026 compared to the same period last year primarily due to increased power transmission services, partially offset by lower activity related to renewable energy.

We expect our U.S.

commercial revenue, excluding renewable energy, to begin showing growth in the second half of fiscal 2026.

commercial revenue, excluding renewable energy, to grow in the fourth quarter of fiscal 2026.

International.

Six Months Ended

March 29, 2026 March 30, 2025 Change

Nine Months Ended

June 28, 2026 June 29, 2025 Change

($ in thousands)

Revenue $ 1,626,002 $ 1,478,958 $ 147,044 9.9%

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.

For the first nine months of fiscal 2026, our international revenue growth of 9.9% reflects increased activities for water utilities including digital water projects.

Excluding the revenue from our fiscal 2025 acquisition and the aforementioned Norway disposition, our international revenue increased approximately 4% in the first nine months 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 Six Months Ended

2026 March 30,

2025 Change March 29, 2026 March 30, 2025 Change

Three Months Ended Nine Months Ended

2026 June 29,

2025 Change June 28, 2026 June 29, 2025 Change

($ in thousands, except per share data)

6 unchanged sentences

Selling, general and administrative expenses (85,203) (86,611) 1,408 1.6 (254,653) (255,022) 369 0.1

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

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

Contingent consideration - fair value adjustments (77) 58 (135) (232.8) 7,429 2,355 5,074 215.5

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

Income from operations 157,925 164,986 (7,061) (4.3) 430,442 227,114 203,328 89.5

Interest expense (7,158) (8,288) 1,130 13.6 (23,124) (23,996) 872 3.6

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

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

Income before income tax expense 150,767 156,698 (5,931) (3.8) 419,679 203,118 216,561 106.6

Income tax expense (40,966) (42,815) 1,849 4.3 (110,858) (83,045) (27,813) (33.5)

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

Net income 109,801 113,883 (4,082) (3.6) 308,821 120,073 188,748 157.2

Net income attributable to noncontrolling interests (217) (39) (178) (456.4) (586) (94) (492) NM

Net income attributable to Tetra Tech $ 109,584 $ 113,844 $ (4,260) (3.7) $ 308,235 $ 119,979 $ 188,256 156.9

Diluted earnings per share $ 0.42 $ 0.43 $ (0.01) (2.3) $ 1.18 $ 0.45 $ 0.73 162.2

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

6 unchanged sentences

NM = not meaningful

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.

Our revenue in the third quarter and first nine months of fiscal 2026, compared to the same periods last year, primarily reflects decreased revenue in our GSG reportable segment due to the aforementioned reductions in USAID/DOS and disaster response activities.

For the third quarter of fiscal 2026, our GSG segment's revenue and revenue, net of subcontractor costs, declined $111.0 million, or 15.6%, and $98.3 million, or 17.2%, respectively, compared to the same quarter last year.

Our CIG segment's revenue increased $51.8 million, or 7.7%, and revenue, net of subcontractor costs, increased $53.9 million, or 9.3% in the third quarter of fiscal 2026 compared to the fiscal 2025 third quarter.

For the first nine months of fiscal 2026, our GSG segment's revenue and revenue, net of subcontractor costs, declined $516.4 million, or 23.5%, and $419.4 million, or 23.5%, respectively, compared to the year-ago period.

Our CIG segment's revenue increased $149.5 million, or 7.6%, and revenue, net of subcontractor costs, increased $160.8 million, or 9.6% in the first nine months of fiscal 2026 compared to the fiscal 2025 period.

The third quarter and first nine month 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 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.

For the first nine months of fiscal 2026 and 2025, our adjusted results exclude adjustments to contingent consideration liabilities.

Additionally, the first nine months 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 first nine months 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 nine months of fiscal 2025 also excludes 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 Statements”.

We determined that there was no income tax expense for the non-operating gain in fiscal 2026, and no tax benefit recognized for $31.3 million of the legal contingency charge or $58.3 million of the goodwill impairment charge in 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 nine months 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 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

Three Months Ended Nine Months Ended

2026 June 29,

2025 Change June 28, 2026 June 29, 2025 Change

($ in thousands, except per share data)

1 unchanged sentence

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

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

Earn-out adjustments 77 (58) 135 232.8 (7,429) (2,355) (5,074) (215.5)

Adjusted income from operations (1)

$ 158,002 $ 164,928 $ (6,926) (4.2) $ 423,013 $ 432,175 $ (9,162) (2.1)

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

EPS $ 0.42 $ 0.43 $ (0.01) (2.3) $ 1.18 $ 0.45 $ 0.73 162.2

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

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

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

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

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

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

Adjusted EPS (1)

2 unchanged sentences

(1) Non-GAAP financial measure

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.

Excluding the non-recurring charges and the earn-out gains, our operating income decreased $6.9 million, or 4.2%, in the third quarter of fiscal 2026 and declined $9.2 million, or 2.1%, in the first nine months 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,

Three Months Ended Nine Months Ended

2026 June 29,

2025 Change June 28,

2026 June 29,

($ in thousands)

Net interest expense $ 7,158 $ 8,288 $ (1,130) (13.6)% $ 23,124 $ 23,996 $ (872) (3.6)%

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,

Net interest expense decreased in the third quarter and first nine months of fiscal 2026 compared to the fiscal 2025 periods primarily due to lower borrowings and average debt interest rates.

Three Months Ended Nine Months Ended

2026 June 29,

2025 Change June 28,

2026 June 29,

($ in thousands)

Income tax expense $ 40,966 $ 42,815 $ (1,849) (4.3)% $ 110,858 $ 83,045 $ 27,813 33.5%

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 effective tax rates for the first nine months of fiscal 2026 and 2025 were 26.4% and 40.9%, 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 nine months of fiscal 2026 and 2025, respectively.

In addition, in the first nine months 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 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”.

In the first nine months 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 nine months 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 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.

Excluding the impact of the excess tax benefits on share-based payments, the gain from sale in the first nine months of fiscal 2026 and the goodwill impairment and legal contingency charge in the first nine months of fiscal 2025, our effective tax rates in the first nine months of fiscal 2026 and 2025 were 27.4% and 27.6%, 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 Six Months Ended

2026 March 30,

2025 Change March 29, 2026 March 30,

Three Months Ended Nine Months Ended

2026 June 29,

2025 Change June 28, 2026 June 29,

($ in thousands)

5 unchanged sentences

(1) Non-GAAP financial measure

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.

For the third quarter and first nine months of fiscal 2026, revenue decreased 15.6% and 23.5%, respectively, compared to the prior-year periods primarily due to 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 approximately 6% in the first nine months of fiscal 2026 compared to the same period last year.

GSG revenue in the first nine months of fiscal 2026 includes approximately $85 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 16.4% in the first half of fiscal 2026 compared to 14.2% in the prior-year period.

However, GSG operating margin, based on revenue, net of subcontractor costs, increased to 16.8% in the first nine months of fiscal 2026 compared to 15.2% 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 Six Months Ended

2026 March 30,

2025 Change March 29, 2026 March 30,

Three Months Ended Nine Months Ended

2026 June 29,

2025 Change June 28, 2026 June 29,

($ in thousands)

5 unchanged sentences

(1) Non-GAAP financial measure

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, was substantially the same in the first half of fiscal 2026 compared to same period last year.

The revenue growth in the third quarter and first nine months 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.

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

Excluding revenue from the acquisition, net of the aforementioned Norway disposition, CIG revenue increased approximately 3% in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025.

Operating income increased due to the aforementioned revenue growth.

CIG operating margin, based on revenue, net of subcontractor costs, was substantially the same in the first nine months 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.

2 unchanged sentences

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

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

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

2026 September 28,

2 unchanged sentences

Backlog 4,490 4,140

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.

At June 28, 2026, our backlog wa s $4.5 billion.

GSG and CIG reported $2.1 billion and $2.4 billion of backlog, respectively, at June 28, 2026.

Financial Condition, Liquidity and Capital Resources

Capital Requirements.

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.

At June 28, 2026, we had $230.8 million of cash and cash equivalents and access to an additional $964.3 million of borrowings available under our credit facility.

During the first nine months of fiscal 2026, we generated $466.6 million of cash from operations.

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

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Cash and cash equivalents $ 230,835 $ 167,459 $ 63,376 37.8 %

Six Months Ended

2026 March 30,

Nine Months Ended

2026 June 29,

Net cash provided by (used in):

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

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

Operating activities $ 466,553 $ 356,838 $ 109,715 30.7 %

Investing activities (165,562) (108,273) (57,289) (52.9)

Financing activities (240,033) (234,987) (5,046) (2.1)

Effect of exchange rate changes 1,505 (3,434) 4,939 143.8

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

Net increase in cash $ 62,463 $ 10,144 $ 52,319 515.8 %

Operating Activities .

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.

For the first nine months of fiscal 2026, cash from operating activities increased $109.7 million compared to the first nine months of fiscal 2025, 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 fiscal 2025.

Investing Activities .

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.

Our cash used in investing activities for the first nine months of fiscal 2026 includes initial cash payments of $192 million for acquisitions, partially offset by the net proceeds of $40.3 million from the sale of our operations in Norway.

Financing Activities .

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.

Our cash used in financing activities primarily reflects share repurchases of approximately $200 million in the first nine months of both fiscal 2026 and fiscal 2025.

In addition, we paid dividends of $52.5 million and $48.0 million in the first nine months of fiscal 2026 and fiscal 2025, respectively.

Debt Financing.

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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”).

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.

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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 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%.

At June 28, 2026, we had $235 million in outstanding borrowings under the Amended Credit Agreement, which consisted of $200 million under the 5Y Term Loan Facility and $35 million borrowings under the Amended Revolving Credit Facility.

For the first nine months of fiscal 2026, the weighted-average interest rate of the outstanding borrowings under the credit facilities was 5.01%.

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.

At June 28, 2026, we had $564.3 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 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.

At June 28, 2026, we were in compliance with these covenants with a consolidated leverage ratio of 1.24x and a consolidated interest coverage ratio of 18.98x.

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 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.

At June 28, 2026, there were no borrowings under these facilities, and the aggregate amount of standby letters of credit outstanding was $48.2 million.

At June 28, 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 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.

In the first nine months of fiscal 2026, we repurchased and settled 6,391,799 shares with an average price of $31.29 per share for a total cost of $200.0 million in the open market.

We repurchased and settled 5,933,085 shares with an average price of $33.71 per share for a total cost of $200.0 million in the open market in the first nine months of fiscal 2025.

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

At June 28, 2026, our $400 million stock repurchase program was fully executed and we had a remaining balance of $397.8 million under our $500 million stock repurchase program.

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

Per Share Record Date Total Maximum

(in thousands) Payment Date

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

April 27, 2026 0.072 May 14, 2026 June 2, 2026 18,621

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.

On July 27, 2026, our Board of Directors declared a quarterly cash dividend of $0.072 per share payable on August 27, 2026 to stockholders of record as of the close of business on August 13, 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 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.

At June 28, 2026 and September 28, 2025, the liabilities for income taxes associated with uncertain tax positions were $55.8 million and $52.8 million, respectively.

These liabilities represent our current estimates of the additional tax liabilities that 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.

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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 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.

At June 28, 2026, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $48.2 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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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 half of fiscal 2026, the weighted-average interest rate of the outstanding borrowings under the Amended Credit Agreement was 5.05%.

For the first nine months of fiscal 2026, the weighted-average interest rate of the outstanding borrowings under the Amended Credit Agreement was 5.01%.

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 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.

For the first nine months of fiscal 2026, we reported $1.5 million of foreign currency loss compared to a loss of $2.3 million in the same period last fiscal year.

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 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.

For the first nine months of fiscal 2026 and 2025, 43.5% and 36.0% of our consolidated revenue, respectively, was generated by our international business.

For the first nine months of fiscal 2026, the effect of foreign exchange rate translation on our consolidated balance sheet was a decrease in equity of $9.2 million compared to an increase of $13.8 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