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Management Discussion

• Revenues for the year ended October 2, 2020 were $13.57 billion, an increase of $829.1 million, or 6.5%, from $12.74 billion for the prior year. The increase in revenues was due primarily to the a full year of revenues in fiscal 2020 from the KeyW acquisition completed in June 2019, impacts from the March 2020 John Wood Group nuclear business acquisition and growth in our legacy People & Places Solutions businesses, offset in part by impacts from the COVID 19 pandemic. Also, our revenues were impacted by an extra week of activity in fiscal 2020, see Note 1- Description of Business and Basis of Presentation in the notes to the consolidated financial statements.
• Pass-through costs included in revenues for the year ended October 2, 2020 were $2.61 billion in comparison to $2.54 billion in the prior year. In general, pass-through costs are more significant on projects that have a higher content of field services activities. Pass-through costs are generally incurred at specific points during the life cycle of a project and are highly dependent on the needs of our individual clients and the nature of the clients’ projects. However, because we have hundreds of projects which start at various times within a fiscal year, the effect of pass-through costs on the level of direct costs of contracts can vary between fiscal years without there being a fundamental or significant change to the underlying business.
• Gross profit for the year ended October 2, 2020 was $2.59 billion, up $109.6 million, or 4.4%, from $2.48 billion for the prior year. Our gross profit margins were 19.1% and 19.4% for the years ended October 2, 2020 and September 27, 2019, respectively. The increase in our gross profit was attributable to favorable impacts from the KeyW and John Wood Group nuclear business acquisitions, also impacted by the extra week of activity in fiscal 2020. The slight differences in year over year gross margin trends were attributable mainly to legacy portfolio mix and lower overhead rate impacts on revenue, with partial offsets from favorable margin trends from our recent KeyW and John Wood Group nuclear business acquisitions and as well as year over year impacts from lower overhead reimbursement rates resulting from our ongoing cost reduction programs partially offset by COVID-19 cost mitigation efforts.