UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~July 2,~~December 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-19655

TETRA TECH, INC.

(Exact name of registrant as specified in its charter)


Delaware						95-4148514
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

3475 East Foothill Boulevard, Pasadena, California 91107

(Address of principal executive offices) (Zip Code)

(626) 351-4664

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

TTEK

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

At ~~July 31, 2023~~January 22, 2024, ~~53,245,603~~53,466,381 shares of thethe registrant’s common stock were outstanding.

TETRA TECH, INC.

INDEX


PART I.	FINANCIAL INFORMATION	PAGE NO.

Item 1.	Financial Statements (Unaudited)	3

	Consolidated Balance Sheets as of ~~July~~De cember 2,31 , 2023 and October ~~2, 2022~~1 , 202 3	3

	Consolidated Statements of Income for the Three ~~and~~ ~~Nine~~Months Ended ~~July~~December 2,31 , 2023 and J ~~July~~anuary 1 , 202 3 ~~2022~~	4

	Consolidated Statements of Comprehensive Income for the Three ~~and~~ ~~Nine~~Months Ended ~~July~~December 2,31 , 2023 and J ~~July~~anuary 1 , 202 3 ~~2022~~	5

	Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~July~~December 31 2,, 2023 and J ~~July~~anuary 1 , 202 3 ~~2022~~	6

	Consolidated Statements of Equity for the Three ~~and~~ ~~Nine~~Months Ended ~~July~~December 31 2,, 2023 and J ~~July~~anuary 1 , 202 3 ~~2022~~	6

	Notes to Unaudited Consolidated Financial Statements	98

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2625

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3835

Item 4.	Controls and Procedures	3836

PART II.	OTHER INFORMATION	3836

Item 1.	Legal Proceedings	3836

Item 1A.	Risk Factors	3937

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3937

Item 4.	Mine Safety Disclosures	3937

Item 5 .5.	Other Information	3937
Item 6.	Exhibits	3937

SIGNATURES		4038

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Tetra Tech, Inc.

Consolidated Balance Sheets

(unaudited - in thousands, except par value)


ASSETS	ASSETS	July 2, 2023		October 2, 2022		ASSETS	December 31, 2023	October 1, 2023
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	176,056	$	185,094
Accounts receivable, net	Accounts receivable, net	1,002,087		755,112
Contract assets	Contract assets	125,360		92,405
Prepaid expenses and other current assets	Prepaid expenses and other current assets	114,440		125,605

Total current assets	Total current assets	1,417,943		1,158,216

Property and equipment, net	Property and equipment, net	81,321		32,316
Property and equipment, net
Property and equipment, net
Right-of-use assets, operating leases	Right-of-use assets, operating leases	207,218		182,319

Goodwill	Goodwill	1,886,854		1,110,412
Intangible assets, net	Intangible assets, net	225,032		29,163
Deferred tax assets	Deferred tax assets	81,732		47,804
Other non-current assets	Other non-current assets	73,478		62,546
Total assets	Total assets	$	3,973,578	$	2,622,776

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	188,807	$	147,436
Accrued compensation	Accrued compensation	270,924		237,669
Contract liabilities	Contract liabilities	351,048		241,340
Short-term lease liabilities, operating leases	Short-term lease liabilities, operating leases	68,555		57,865

Current portion of long-term debt		12,505		12,504
Current contingent earn-out liabilities	Current contingent earn-out liabilities	35,902		28,797
Other current liabilities	Other current liabilities	284,418		190,406
Total current liabilities	Total current liabilities	1,212,159		916,017

Deferred tax liabilities
Deferred tax liabilities
Deferred tax liabilities	Deferred tax liabilities	71,425		15,161
Long-term debt	Long-term debt	906,875		246,250
Long-term lease liabilities, operating leases	Long-term lease liabilities, operating leases	163,919		146,285
Non-current contingent earn-out liabilities	Non-current contingent earn-out liabilities	40,697		36,769
Other non-current liabilities	Other non-current liabilities	125,714		79,157

Commitments and contingencies (Note 17)	Commitments and contingencies (Note 17)
Commitments and contingencies (Note 17)
Commitments and contingencies (Note 17)

Equity:	Equity:
Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding at July 2, 2023 and October 2, 2022		—		—
Common stock - authorized, 150,000 shares of $0.01 par value; issued and outstanding, 53,243 and 52,981 shares at July 2, 2023 and October 2, 2022, respectively		532		530
Equity:
Equity:
Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding at December 31, 2023 and October 1, 2023
Common stock - authorized, 150,000 shares of $0.01 par value; issued and outstanding, 53,466 and 53,248 shares at December 31, 2023 and October 1, 2023, respectively
Additional paid-in capital	Additional paid-in capital	17,906		—
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(137,926)		(208,144)
Retained earnings	Retained earnings	1,572,204		1,390,701
Tetra Tech stockholders’ equity	Tetra Tech stockholders’ equity	1,452,716		1,183,087
Noncontrolling interests	Noncontrolling interests	73		50
Total stockholders' equity	Total stockholders' equity	1,452,789		1,183,137
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	3,973,578	$	2,622,776

See Notes to Consolidated Financial Statements.

Tetra Tech, Inc.

Consolidated Statements of Income

(unaudited – in thousands, except per share data)






		Three Months Ended				Nine Months Ended
		July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
Revenue	Revenue	$	1,208,947	$	890,231	$	3,261,938	$	2,601,485
Revenue
Revenue
Subcontractor costs
Subcontractor costs
Subcontractor costs	Subcontractor costs	(221,387)		(169,745)		(568,252)		(502,024)
Other costs of revenue	Other costs of revenue	(798,714)		(575,902)		(2,180,749)		(1,679,937)
Other costs of revenue
Other costs of revenue
Gross profit
Gross profit
Gross profit	Gross profit	188,846		144,584		512,937		419,524
Selling, general and administrative expenses	Selling, general and administrative expenses	(89,064)		(60,942)		(227,912)		(173,943)
Selling, general and administrative expenses
Selling, general and administrative expenses
Acquisition and integration expenses
Acquisition and integration expenses
Acquisition and integration expenses	Acquisition and integration expenses	(2,107)		—		(25,812)		—
Contingent consideration – fair value adjustments	Contingent consideration – fair value adjustments	—		263		(8,477)		64
Contingent consideration – fair value adjustments
Contingent consideration – fair value adjustments
Income from operations
Income from operations
Income from operations	Income from operations	97,675		83,905		250,736		245,645
Interest expense, net	Interest expense, net	(14,869)		(2,919)		(33,563)		(8,967)
Interest expense, net
Interest expense, net
Other non-operating income
Other non-operating income
Other non-operating income	Other non-operating income	—		—		89,402		—
Income before income tax expense	Income before income tax expense	82,806		80,986		306,575		236,678
Income before income tax expense
Income before income tax expense
Income tax expense
Income tax expense
Income tax expense	Income tax expense	(22,568)		(22,329)		(86,781)		(56,473)
Net income	Net income	60,238		58,657		219,794		180,205
Net income
Net income
Net income attributable to noncontrolling interests
Net income attributable to noncontrolling interests
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(3)		(7)		(23)		(26)
Net income attributable to Tetra Tech	Net income attributable to Tetra Tech	$	60,235	$	58,650	$	219,771	$	180,179
Net income attributable to Tetra Tech
Net income attributable to Tetra Tech
Earnings per share attributable to Tetra Tech:
Earnings per share attributable to Tetra Tech:
Earnings per share attributable to Tetra Tech:	Earnings per share attributable to Tetra Tech:
Basic	Basic	$	1.13	$	1.10	$	4.13	$	3.35
Basic
Basic
Diluted
Diluted
Diluted	Diluted	$	1.12	$	1.09	$	4.10	$	3.32
Weighted-average common shares outstanding:	Weighted-average common shares outstanding:
Weighted-average common shares outstanding:
Weighted-average common shares outstanding:
Basic
Basic
Basic	Basic	53,231		53,507		53,188		53,777
Diluted	Diluted	53,653		54,006		53,615		54,328
Diluted
Diluted

See Notes to Consolidated Financial Statements.

Tetra Tech, Inc.

Consolidated Statements of Comprehensive Income

(unaudited – in thousands)






		Three Months Ended				Nine Months Ended
		July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
Net income	Net income	$	60,238	$	58,657	$	219,794	$	180,205
Net income
Net income

Other comprehensive income, net of tax

Other comprehensive income, net of tax

Other comprehensive income, net of tax	Other comprehensive income, net of tax
Foreign currency translation adjustment, net of tax	Foreign currency translation adjustment, net of tax	44,500		(44,884)		69,453		(42,763)
Foreign currency translation adjustment, net of tax
Foreign currency translation adjustment, net of tax
Gain (loss) on cash flow hedge valuations, net of tax
Gain (loss) on cash flow hedge valuations, net of tax
Gain (loss) on cash flow hedge valuations, net of tax	Gain (loss) on cash flow hedge valuations, net of tax	(1,044)		2,380		(2,029)		9,984
Net pension adjustments	Net pension adjustments	—		—		2,794		—
Other comprehensive income (loss), net of tax		43,456		(42,504)		70,218		(32,779)
Net pension adjustments
Net pension adjustments
Other comprehensive income, net of tax
Other comprehensive income, net of tax
Other comprehensive income, net of tax

Comprehensive income, net of tax

Comprehensive income, net of tax

Comprehensive income, net of tax	Comprehensive income, net of tax	$	103,694	$	16,153	$	290,012	$	147,426
Comprehensive income attributable to noncontrolling interests, net of tax	Comprehensive income attributable to noncontrolling interests, net of tax	4		6		23		25
Comprehensive income attributable to noncontrolling interests, net of tax
Comprehensive income attributable to noncontrolling interests, net of tax
Comprehensive income attributable to Tetra Tech, net of tax	Comprehensive income attributable to Tetra Tech, net of tax	$	103,690	$	16,147	$	289,989	$	147,401
Comprehensive income attributable to Tetra Tech, net of tax
Comprehensive income attributable to Tetra Tech, net of tax

See Notes to Consolidated Financial Statements.

Tetra Tech, Inc.

Consolidated Statements of Cash Flows

(unaudited – in thousands)


		Nine Months Ended					Three Months Ended
		July 2, 2023		July 3, 2022			December 31, 2023	January 1, 2023
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	219,794	$	180,205
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	43,221		19,545
Equity in income of unconsolidated joint ventures		(4,831)		(5,233)
Distributions of earnings from unconsolidated joint ventures		4,345		4,532
Amortization of stock-based awards	Amortization of stock-based awards	21,640		19,104

Deferred income taxes	Deferred income taxes	21,475		750

Fair value adjustments to contingent consideration		8,477		(64)
(Gain) loss on sale of assets		(310)		93
Fair value adjustments to foreign currency forward contract	Fair value adjustments to foreign currency forward contract	(89,402)		—
Other non-cash items
Changes in operating assets and liabilities, net of effects of business acquisitions:	Changes in operating assets and liabilities, net of effects of business acquisitions:					Changes in operating assets and liabilities, net of effects of business acquisitions:
Accounts receivable and contract assets	Accounts receivable and contract assets	(41,824)		(54,874)
Prepaid expenses and other assets	Prepaid expenses and other assets	1,970		33,254
Accounts payable	Accounts payable	(3,678)		8,845
Accrued compensation	Accrued compensation	5,263		15,349
Contract liabilities	Contract liabilities	56,189		59,025
Income taxes receivable/payable
Other liabilities	Other liabilities	(6,921)		(12,702)

Income taxes receivable/payable		10,645		8,147
Net cash provided by operating activities	Net cash provided by operating activities	246,053		275,976
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Payments for business acquisitions, net of cash acquired		(854,319)		(33,624)
Capital expenditures	Capital expenditures	(17,322)		(8,401)
Proceeds from sale of assets	Proceeds from sale of assets	439		3,754

Settlement of foreign currency forward contract		109,306		—

Net cash used in investing activities	Net cash used in investing activities	(761,896)		(38,271)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from borrowings	Proceeds from borrowings	979,859		141,456

Repayments on long-term debt	Repayments on long-term debt	(411,676)		(108,949)

Repurchases of common stock		—		(150,000)
Taxes paid on vested restricted stock	Taxes paid on vested restricted stock	(16,785)		(25,193)
Payments of contingent earn-out liabilities
Stock options exercised	Stock options exercised	425		1,205
Dividends paid	Dividends paid	(38,268)		(33,873)
Payments of contingent earn-out liabilities		(15,078)		(4,035)
Principal payments on finance leases	Principal payments on finance leases	(4,082)		(3,097)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	494,395		(182,486)

Effect of exchange rate changes on cash and cash equivalents		12,410		(4,403)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net (decrease) increase in cash and cash equivalents		(9,038)		50,816
Cash and cash equivalents at beginning of period		185,094		166,568
Cash and cash equivalents at end of period		$	176,056	$	217,384
Net increase (decrease) in cash, cash equivalents and restricted cash
Net increase (decrease) in cash, cash equivalents and restricted cash
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
Supplemental information:	Supplemental information:					Supplemental information:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	34,839	$	7,556
Income taxes, net of refunds received of $1.5 million and $4.2 million		$	54,967	$	49,131
Supplemental disclosures on non-cash investing activities:
Issuance of promissory note for business acquisition		$	—	$	14,578
Income taxes, net of refunds received of $0.9 million and $0.1 million
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Restricted cash
Total cash, cash equivalents and restricted cash

See Notes to Consolidated Financial Statements.

Tetra Tech, Inc.

Consolidated Statements of Stockholders' Equity

Three Months Ended ~~July 3, 2022~~January 1, 2023 and ~~July 02,~~December 31, 2023

(unaudited – in thousands)

Common Stock Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Loss Retained
Earnings Total
Tetra Tech
Equity Non-Controlling
Interests Total
Equity
Shares Amount
BALANCE AT APRIL 3, 2022 53,683 $ 537 $ — $ (115,303) $ 1,359,367 $ 1,244,601 $ 41 $ 1,244,642
Net income 58,650 58,650 7 58,657
Other comprehensive loss (42,503) (42,503) (1) (42,504)
Cash dividends of $0.23 per common share (12,311) (12,311) (12,311)
Stock-based compensation 12,747 (6,035) 6,712 6,712
Restricted & performance shares released 4 — (6,172) 6,034 (138) (138)
Stock repurchases (368) (4) (6,575) (43,421) (50,000) (50,000)
BALANCE AT JULY 3, 2022 53,319 $ 533 $ — $ (157,806) $ 1,362,284 $ 1,205,011 $ 47 $ 1,205,058
BALANCE AT APRIL 2, 2023 53,228 $ 532 $ 10,639 $ (181,381) $ 1,525,809 $ 1,355,599 $ 69 $ 1,355,668
Net income 60,235 60,235 3 60,238
Other comprehensive income 43,455 43,455 1 43,456
Cash dividends of $0.26 per common share (13,840) (13,840) (13,840)
Stock-based compensation 7,038 7,038 7,038
Restricted & performance shares released 3 — (105) (105) (105)
Stock options exercised 12 — 334 334 334
BALANCE AT JULY 2, 2023 53,243 $ 532 $ 17,906 $ (137,926) $ 1,572,204 $ 1,452,716 $ 73 $ 1,452,789

~~Tetra Tech, Inc.~~

~~Consolidated Statements of Stockholders' Equity~~

~~Nine Months Ended July 3, 2022 and July 02, 2023~~

~~(unaudited – in thousands)~~


		Common Stock			Additional Paid-in Capital				Accumulated Other Comprehensive Loss		Retained Earnings				Total Tetra Tech Equity				Non-Controlling Interests				Total Equity
		Shares	Amount
BALANCE AT OCTOBER 3, 2021		53,981	$	540			$	—					$	(125,028)			$	1,358,726			$	1,234,238			$	53	$	1,234,291
	Common Stock																												Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Retained Earnings	Total Tetra Tech Equity	Non-Controlling Interests	Total Equity
	Shares
BALANCE AT OCTOBER 2, 2022
BALANCE AT OCTOBER 2, 2022
BALANCE AT OCTOBER 2, 2022
Net income	Net income										180,179				180,179				26				180,205
Other comprehensive loss									(32,778)						(32,778)				(1)				(32,779)
Distributions paid to noncontrolling interests															—				(31)				(31)
Cash dividends of $0.63 per common share											(33,873)				(33,873)								(33,873)
Other comprehensive income
Cash dividends of $0.23 per common share
Stock-based compensation	Stock-based compensation				19,104						—				19,104								19,104
Restricted & performance shares released	Restricted & performance shares released	189	2		(25,195)						—				(25,193)								(25,193)
Stock options exercised	Stock options exercised	29	—		1,205										1,205								1,205
Shares issued for Employee Stock Purchase Plan	Shares issued for Employee Stock Purchase Plan	106	1		12,128										12,129								12,129
Stock repurchases		(986)	(10)		(7,242)						(142,748)				(150,000)								(150,000)
BALANCE AT JULY 3, 2022		53,319	$	533	$	—			$	(157,806)	$	1,362,284			$	1,205,011			$	47			$	1,205,058
BALANCE AT JANUARY 1, 2023

BALANCE AT OCTOBER 2, 2022		52,981	$	530	$	—			$	(208,144)	$	1,390,701			$	1,183,087			$	50			$	1,183,137
BALANCE AT OCTOBER 1, 2023
BALANCE AT OCTOBER 1, 2023
BALANCE AT OCTOBER 1, 2023
Net income	Net income										219,771				219,771				23				219,794
Other comprehensive income	Other comprehensive income								70,218						70,218				—				70,218

Cash dividends of $0.72 per common share											(38,268)				(38,268)								(38,268)
Cash dividends of $0.26 per common share
Stock-based compensation	Stock-based compensation				21,640										21,640								21,640
Restricted & performance shares released	Restricted & performance shares released	149	1		(16,786)										(16,785)								(16,785)
Stock options exercised	Stock options exercised	15	—		425										425								425
Shares issued for Employee Stock Purchase Plan	Shares issued for Employee Stock Purchase Plan	98	1		12,627										12,628								12,628
BALANCE AT DECEMBER 31, 2023

BALANCE AT JULY 2, 2023		53,243	$	532	$	17,906			$	(137,926)	$	1,572,204			$	1,452,716			$	73			$	1,452,789

See Notes to Consolidated Financial Statements.

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 October ~~2, 2022.~~1, 2023.

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 years. Certain prior year amounts have been reclassified to conform to the current year presentation in the accompanying notes.

2. Recent Accounting Pronouncements

In November 2021, the Financial Accounting Standards Board ("FASB") issued ~~ASU~~Accounting Standards Update (“ASU”) No. 2021-10, Government Assistance (Topic 832), which requires annual disclosures for transactions with a government authority that are accounted for by applying a grant or contribution model by analogy, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity's financial statements. ASU 2021-10 was effective for us beginning in the first quarter of fiscal 2023.

In fiscal 2020, the Canadian federal government implemented the Canadian Emergency Wage Subsidy ("CEWS") program in response to the negative impact of the coronavirus disease 2019 pandemic on businesses operating in Canada. ~~Our~~Some of our Canadian legal entities qualified for and applied for these CEWS cash benefits to partially offset the impacts of revenue reductions and on-going staffing costs. The ~~$26.0~~$21 million total received was initially recorded in "~~Other current liabilities~~""Other long-term liabilities" until all potential amendments to the qualification criteria, including some that were proposed with retroactive application, were finalized in fiscal 2022. ~~As there are no further contingencies, beginning in~~In the first quarter of fiscal ~~2023, the amounts received will be~~2024, we distributed approximately $10 million to ~~all~~our Canadian employees. We expect to distribute approximately $9 million in the next twelve months. Accordingly, this amount was reclassified from "Other current liabilities" to "Accrued compensation" on our consolidated balance sheet at October 2, 2022. The remaining ~~$17.0~~$11 million, which we expect to distribute ~~beyond~~within one year, ~~was reclassified to "Other non-current liabilities~~"is reported in "Accrued compensation". We do not expect there will be any related impact toon our operating income, and we have no outstanding applications for further government assistance.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires that an entity report segment information in accordance with Topic 280, Segment Reporting. The amendments in the ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 (fiscal 2025 for us). Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires that an entity, on an annual basis, disclose additional income tax information, 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). 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 Topic 740 before fiscal 2026.

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 revenue and cash flows are affected by economic factors. The following tables present revenue disaggregated by client sector and contract type (in thousands):






		Three Months Ended				Nine Months Ended
		July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022

Client Sector:	Client Sector:

Client Sector:

Client Sector:
U.S. federal government (1)
U.S. federal government (1)
U.S. federal government (1)	U.S. federal government (1)	$	338,022	$	261,434	$	996,471	$	781,503
U.S. state and local government	U.S. state and local government	151,462		150,731		$	452,447	$	465,770
U.S. state and local government
U.S. state and local government
U.S. commercial
U.S. commercial
U.S. commercial	U.S. commercial	225,907		188,255		633,401		536,901
International (2)	International (2)	493,556		289,811		1,179,619		817,311
International (2)
International (2)
Total
Total
Total	Total	$	1,208,947	$	890,231	$	3,261,938	$	2,601,485

Contract Type:	Contract Type:

Contract Type:

Contract Type:
Fixed-price
Fixed-price
Fixed-price	Fixed-price	$	452,605	$	335,014	$	1,194,266	$	982,565
Time-and-materials	Time-and-materials	596,904		417,898		1,550,970		1,221,598
Time-and-materials
Time-and-materials
Cost-plus	Cost-plus	159,438		137,319		516,702		397,322
Cost-plus
Cost-plus
Total
Total
Total	Total	$	1,208,947	$	890,231	$	3,261,938	$	2,601,485

(1) Includes revenue generated under U.S. federal government contracts performed outside the United States.

(2) Includes revenue generated from non-U.S. clients, primarily in Canada, Australia, Europe 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~~first quarters of fiscal 2024 and ~~nine months ended July 2, 2023 and July 3, 2022.~~2023.

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 or liabilities for the periods presented. Net contract assets/liabilities consisted of the following (in thousands):

Balance at

December 31,
2023

October 1, 2023

Balance at

July 2,
2023

October 2, 2022

Contract assets (1)

125,360

92,405

Contract liabilities

351,048

241,340

Net contract liabilities

(225,688)

(148,935)

(1) Includes ~~$8.1~~$6.0 million and ~~$23.3~~$6.8 million of contract retentions at ~~July 2,~~December 31, 2023 and October ~~2, 2022,~~1, 2023, respectively.

In the first ~~nine months~~quarters of fiscal ~~2023~~2024 and ~~2022,~~2023, we recognized revenue of approximately ~~$143~~$130 million and ~~$111~~$81 million, respectively, from the amounts included in the contract liability balances at the end of fiscal ~~2022~~2023 and ~~2021,~~2022, respectively.

Revenue is recognized by measuring progress over time under Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers". We ~~recognize revenue primarily using~~estimate and measure progress on our contracts over time whereby we compare our total costs incurred on each contract as a percentage of the ~~cost-to-cost measure of progress method to estimate progress towards completion.~~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,~~result, in the first ~~nine months~~quarters of fiscal 2024 and 2023, we recognized net favorable revenue and operating income adjustments of ~~$4.0 million (substantially all in the first quarter). In the third quarter and first nine months of fiscal 2022, we recognized net unfavorable revenue and operating income adjustments of $2.8~~$5.7 million and ~~net favorable revenue and operating income adjustments of $2.2~~$3.5 million,, respectively.

Changes in revenue and cost estimates could also result in a projected loss, determined at the contract level, which would be recorded immediately in earnings. At ~~July 2,~~December 31, 2023 and October ~~2, 2022,~~1, 2023, our consolidated balance sheets included liabilities for anticipated losses of ~~$9.7~~$9.2 million and ~~$10.0~~$8.5 million, respectively. The estimated cost to complete these related contracts was approximately $68 million at ~~July 2,~~December 31, 2023 and October ~~2, 2022 was approximately $69 million and $80 million, respectively.~~1, 2023.

Accounts Receivable, Net

Net accounts receivable consisted of the following (in thousands):


	Balance at							Balance at
						December 31, 2023	October 1, 2023
		Balance at
		July 2, 2023		October 2, 2022

Billed
Billed
Billed	Billed	$	677,915	$	491,700
Unbilled	Unbilled	331,381		267,161
Total accounts receivable	Total accounts receivable	1,009,296		758,861
Allowance for doubtful accounts	Allowance for doubtful accounts	(7,209)		(3,749)
Total accounts receivable, net	Total accounts receivable, net	$	1,002,087	$	755,112

Billed accounts receivable represent amounts billed to clients that have not 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 ~~July 2,~~December 31, 2023 are expected to be billed and collected within 12 months. The allowance for doubtful accounts represents amounts that are expected to become uncollectible or unrealizable in the future. We determine an estimated allowance for uncollectible accounts based on management's consideration of trends in the actual and forecasted credit quality of our clients, including delinquency and payment history; type of client, such as a government agency or a commercial sector client; and general economic and industry ~~conditions.~~conditions, which 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 ~~July 2,~~December 31, 2023 and October ~~2, 2022.~~1, 2023.

Remaining Unsatisfied Performance Obligations (“RUPO”)

Our RUPO represents a measure of the total dollar value of work to be performed on contracts awarded and in progress. We had ~~$4.4~~$4.7 billion of RUPO at ~~July 2,~~December 31, 2023. 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. 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 ~~July 2,~~December 31, 2023 over the following periods (in thousands):


	Amount

Within 12 months	$	~~2,815,736~~3,149,015
Beyond	~~1,537,602~~1,558,073
Total	$	~~4,353,338~~4,707,088

Although RUPO reflects business that is considered to be firm, cancellations, deferrals or scope adjustments may occur. 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).

4. Acquisitions

On September 23, 2022, we made an all cash offer to acquire all of the outstanding shares of RPS Group plc ("RPS"), a publicly traded company on the London Stock Exchange for 222 pence per share, through a scheme of arrangement, which was unanimously recommended by RPS' Board of Directors. On November 3, 2022, RPS' shareholders approved the scheme of arrangement. On January 19, 2023, the court-sanctioned scheme of arrangement to purchase RPS was approved, and we completed the acquisition on January 23, 2023. RPS employs approximately 5,000 associates in the United Kingdom, Europe, Asia Pacific and North America, delivering high-end solutions, especially in energy transformation, water and program management for government and commercial clients. Substantially all of RPS is included in our Commercial/International Services Group ("CIG") segment.

The total purchase price of RPS was approximately £633 million ($784 million). In connection with the ~~third quarter and first nine months of fiscal 2023,~~transaction, we incurred acquisition and integration costs of ~~$2.1~~$33.2 million, ~~and $25.8 million, respectively,~~ primarily for professional fees, substantially all of which were paid as of ~~the end of the third quarter of~~ fiscal ~~2023.~~2023 year-end. On January 23, 2023, we also settled a foreign exchange forward contract that was integral to our plan to finance the RPS acquisition. The cash gain of $109.3 million did not qualify for hedge accounting. As a result, the gain was recognized as non-operating income over the life of the contract and not included in the purchase price allocation below. However, the cash proceeds of $109.3 million economically reduced the purchase price for the shares of RPS to approximately $675 million. This forward contract is explained further in Note 15, "Derivative Financial Instruments".

The table below represents the ~~preliminary~~ purchase price allocation for RPS based on estimates, assumptions, valuations and other analyses as of January 23, ~~2023, that has not been finalized in order to make a definitive allocation.~~2023. The purchase consideration, excluding the aforementioned forward contract gain, iswas allocated to the tangible and intangible assets, and liabilities of RPS based on their estimated fair values, with any excess purchase consideration allocated to goodwill as follows (in thousands):


	Amount

Cash and cash equivalents	$	32,093
Accounts receivable and contract assets	~~202,634~~202,303
Prepaid expenses and other current assets	~~49,216~~45,999
Income taxes receivables	1,999
Property and equipment	~~43,276~~38,435
Right-of-use assets, operating leases	40,179
Intangible assets	~~206,186~~174,094
Deferred income taxes	~~29,347~~35,084
Other long-term assets	1,061
Total assets acquired	~~605,991~~571,247

Accounts payable	$	(44,376)
Accrued compensation	~~(22,290)~~(19,073)
Contract liabilities	(46,287)
Income tax payable	(7,083)
Short-term lease liabilities, operating leases	(13,477)
Other current liabilities	~~(126,023)~~(135,474)
~~Long-term~~Current portion of long-term debt	(91,973)
Long-term lease liabilities, operating leases	(26,702)
Other long-term liabilities	~~(7,423)~~(13,742)
Deferred tax liabilities	~~(55,965)~~(41,613)
Total liabilities assumed	~~(441,599)~~(439,800)

Fair value of net assets acquired	~~164,392~~131,447

Goodwill	~~619,817~~652,762
Total purchase consideration	$	784,209

The following table summarizes the estimated fair values that were assigned to intangible assets at the acquisition date:


	Fair Value										Fair Value			Weighted-Average Estimated Useful Life
	(in thousands)										(in thousands)			(in years)
		Fair Value		Weighted-Average Estimated Useful Life
		(in thousands)		(in years)

Backlog
Backlog
Backlog	Backlog	$	19,702	1.5	$	27,880			1.6			1.6
Trade names	Trade names	17,843		3.0	Trade names		27,260			3.0			3.0
Client relations	Client relations	168,641		8.0	Client relations		118,954			11.1			11.1
Total intangible assets acquired	Total intangible assets acquired	$	206,186	6.9	Total intangible assets acquired		$	174,094		8.3			8.3

Estimated fair value measurements for the intangible assets related to the RPS acquisition were made using Level 3 inputs including discounted cash flow techniques. Fair value was estimated using a multi-period excess earnings method for backlog and client relations and a relief from royalty method for trade names. The significant assumptions used in estimating fair value of backlog and client relations include (i) the estimated life the asset will contribute to cash flows, such as remaining contractual terms, (ii) revenue growth rates and EBITDA margins, (iii) attrition rate of customers, and (iv) the estimated discount rates that reflect the level of risk associated with receiving future cash flows. The significant assumptions used in estimating fair value of trade names include the royalty rates and discount rates.

Supplemental Pro Forma Information (Unaudited)

Following are the supplemental consolidated financial results of Tetra Tech and RPS for the first quarter of fiscal 2023 on an unaudited pro forma basis, as if the RPS acquisition had been consummated as of the beginning of fiscal 2022 (in thousands):

Three Months Ended Nine Months Ended
July 2,
2023 July 3,
2022 July 2,
2023 July 3,
2022
Revenue $ 1,208,947 $ 1,085,799 $ 3,519,792 $ 3,160,341
Net Income including noncontrolling interests $ 61,770 $ 45,456 $ 104,564 $ 101,519

RPS contributed revenue of $220.4 million and $389.9 million for the third quarter and first nine months of fiscal 2023, respectively, to our consolidated results. For the third quarter of fiscal 2023, RPS' net income, including interest expense, was $0.7 million, or $0.01 per share, before the related intangible amortization of $10.4 million. For the first nine months of fiscal 2023, RPS' net loss, including interest expense, was $1.0 million, or $0.02 per share, before the related intangible amortization of $18.1 million.


	Three Months Ended
	January 1, 2023

Revenue	$	1,107,301
Net Income including noncontrolling interests	$	63,701

In ~~the second quarter of~~ fiscal 2023, we also acquired Amyx, Inc. (“Amyx”), an enterprise technology services, cybersecurity and management consulting ~~firm. Based~~firm based in Reston, ~~Virginia, Amyx, with~~Virginia. With over 500 employees, Amyx provides application modernization, cybersecurity, systems engineering, financial management and program management support on over 30 Federal Government programs. Amyx is included in our Government Services Group ("GSG") segment. The total fair value of the purchase price of Amyx was $120.9 million, comprised of a $100.0 million payable in a promissory note issued to the sellers (paid subsequent to closing), $8.7 million of payables related to estimated post-closing adjustments, and $12.2 million for the estimated fair value of contingent earn-out obligations, with a maximum of $25.0 million, based upon the achievement of specified operating income targets in each of the three years following the acquisition date. Amyx was not considered significant to our consolidated financial statements. As a result, no pro forma information has been provided.

~~In fiscal 2022, we acquired The Integration Group of America ("TIGA"), Piteau Associates (“PAE”) and two other financially immaterial acquisitions.~~TIGA is based in Spring, Texas and is an industry leader in process automation and system integration solutions, including customized software and platform (SaaS/PaaS) applications, advanced data analytics, cloud data integration and platform virtualization. PAE is based in Vancouver, British Columbia and is a global leader in sustainable natural resource analytics including hydrologic numerical modeling and dewatering system design. PAE is part of our CIG segment, and TIGA and the other financially immaterial acquisitions are part of our GSG segment. The total fair value of the purchase price for all four acquisitions was $88.3 million. This amount is comprised of $44.0 million in initial cash payments made to the sellers, $2.5 million of receivables (net) related to estimated post-closing adjustments for the net assets acquired, $15.5 million payable in a promissory note issued to the sellers along with related transaction expenses of the sellers (which were subsequently paid in July 2022), and $31.3 million for the estimated fair value of contingent earn-out obligations, with a maximum of $47.0 million, based upon the achievement of specified operating income targets in each of the ~~three~~ ~~to five years following the acquisitions.~~ ~~These acquisitions were not considered significant, individually or in the aggregate, to our consolidated financial statements. As a result, no pro forma information has been provided.~~

The majority of the goodwill from the fiscal 2023 acquisitions is not deductible for tax ~~purposes, while the majority of the goodwill from the fiscal 2022 acquisitions is deductible for tax~~ purposes. The results of fiscal ~~2022 and~~ 2023 acquisitions were included in our consolidated financial statements beginning on the respective closing dates.

Goodwill additions resulting from the fiscal 2023 business combinations are primarily attributable to the significant technical expertise residing in embedded workforces that are sought out by clients, synergies expected to arise after the acquisitions in the areas of enterprise technology services, data management, energy transformation, water, program management, and data analytics and the long-standing reputations of RPS and Amyx. These acquisitions further expand and complement our market-leading positions in water, renewable energy and sustainable infrastructure; enhanced by a combined suite of differentiated data analytics and digital technologies, and expansion into existing and new geographies. Our fiscal 2022 goodwill additions are primarily attributable to the significant technical expertise residing in embedded workforces that are sought out by clients, long-term management experience, the industry reputations and the synergies expected to arise after the acquisitions in the areas of data management, digitization, modeling, water and natural resources. These acquired capabilities, when combined with our existing global consulting and engineering business, result in opportunities that allow us to provide services under contracts that could not have been pursued individually by either us or the acquired companies.

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 or on a straight-line basis over the useful

lives of the underlying assets, ranging from one to ~~eight~~twelve 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 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 ~~re-assess~~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 expense. Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income. ~~For~~In the first ~~nine months~~quarter of fiscal ~~2023,~~2024, 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.

~~During~~ For the first ~~nine months~~quarters of fiscal ~~2023, we recorded adjustments to our contingent earn-out liabilities~~2024 and reported a related net charge to operating income of $8.5 million (all the in first half of fiscal 2023). The net charge primarily resulted from increased valuations of the contingent consideration liabilities for our prior acquisitions of Segue Technologies, Inc., Hoare Lea, LLP and TIGA reflecting financial performance that exceeded our previous expectations.

~~For the third quarter and first nine months of fiscal 2022,~~2023, we had no material adjustments to our contingent earn-out liabilities in operating income.

~~At July 2, 2023, there was a total potential maximum of $120.3 million of outstanding contingent consideration related to acquisitions. Of this amount, $76.6 million was estimated as~~The following table summarizes the changes in the fair value of estimated contingent consideration for the first quarters of fiscal 2024 and ~~accrued on our consolidated balance sheet at July 2, 2023.~~2023 (in thousands):


	Three Months Ended
	December 31, 2023		January 1, 2023

Beginning balance	$	73,422	$	65,566
Payments of contingent consideration	(18,862)		—
Adjustments to fair value recorded in earnings	(37)		933
Interest accretion expense	471		513
Effect of foreign currency exchange rate changes	610		2,017
Ending balance	$	55,604	$	69,029

Maximum potential payout at end of period	$	92,253	$	120,882

5. Goodwill and Intangible Assets

The following table summarizes the changes in the carrying value of goodwill by reportable segment (in thousands):

GSG CIG Total
Balance at October 2, 2022 $ 519,102 $ 591,310 $ 1,110,412
Acquisition activity 104,100 619,832 723,932
Translation adjustments 5,459 47,051 52,510
Balance at July 2, 2023 $ 628,661 $ 1,258,193 $ 1,886,854


	GSG		CIG		Total

Balance at October 1, 2023	$	659,942	$	1,220,302	$	1,880,244


Translation adjustments	2,731		40,171		42,902
Balance at December 31, 2023	$	662,673	$	1,260,473	$	1,923,146

The foreign currency translation adjustments resulted from our foreign subsidiaries with functional currencies that are different than our reporting currency. These goodwill amounts are presented net of reductions from historical impairment adjustments. The gross amounts for GSG were ~~$646.4~~$680.4 million and ~~$536.8~~$677.6 million at ~~July 2,~~December 31, 2023 and October ~~2, 2022,~~1, 2023, respectively, excluding accumulated impairment of $17.7 million at each date. The gross amounts of goodwill for CIG were ~~$1,379.7~~$1,381.9 million and ~~$712.8~~$1,341.8 million at ~~July 2,~~December 31, 2023 and October ~~2, 2022,~~1, 2023, respectively, excluding accumulated impairment of $121.5 million at each date.

We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter. Our most recent annual review at July ~~4, 2022~~3, 2023 (i.e. the first day of our fourth quarter in fiscal ~~2022)~~2023) 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 July ~~4, 2022,~~3, 2023, and after the reallocation of goodwill on the first day of fiscal ~~2022,~~2023, we had no reporting units that had estimated fair values that exceeded their carrying values by less than ~~165%~~45%.

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. Although we believe that our estimates of fair value for these reporting units are reasonable, if financial performance for these reporting units falls significantly below our expectations or market prices for similar business decline, the goodwill for these reporting units could become impaired.

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):

Period Ended

July 2, 2023

October 2, 2022

December 31, 2023

October 1, 2023

Weighted-
Average
Remaining Life
(in Years)

Gross
Amount

Accumulated
Amortization

Net Amount

Gross
Amount

Accumulated
Amortization

Net Amount

Weighted-
Average
Remaining Life
(in Years)

Gross
Amount

Accumulated
Amortization

Net Amount

Gross
Amount

Accumulated
Amortization

Net Amount

Client relations

7.2

226,024

(36,952)

189,072

41,676

(21,092)

20,584

Client relations

Backlog

0.9

57,342

(41,616)

15,726

33,286

(29,990)

3,296

Trade names

2.7

29,262

(9,028)

20,234

12,711

(7,428)

5,283

Total

312,628

(87,596)

225,032

87,673

(58,510)

29,163

Amortization expense for the three ~~and nine~~ months ended ~~July 2,~~December 31, 2023 was ~~$14.1 million and $29.6~~$12.5 million, compared to ~~$3.7 million and $9.6~~$3.4 million for the prior-year periods. Estimated amortization expense for the remainder of fiscal ~~2023~~2024 and succeeding years is as follows (in

thousands):


		Amount		Amount

2023 (remaining)		$	13,541
2024		46,669
2024 (remaining)
2024 (remaining)
2024 (remaining)
2025	2025	34,702
2026	2026	29,585
2027	2027	24,577
2028
Beyond	Beyond	75,958
Total	Total	$	225,032

6. Property and Equipment

Property and equipment consisted of the following (in thousands):

Balance at

December 31,
2023

October 1,
2023

Balance at

July 2,
2023

October 2,
2022

Equipment, furniture and fixtures

141,619

96,710

Leasehold improvements

47,949

32,428

Total property and equipment

189,568

129,138

Accumulated depreciation

(108,247)

(96,822)

Property and equipment, net

81,321

32,316

The depreciation expense related to property and equipment was ~~$5.6~~$7.0 million and ~~$13.7~~$3.2 million for the ~~three~~first quarters of fiscal 2024 and ~~nine months ended July 2,~~ 2023, ~~compared to $3.2 million and $9.9 million for the prior-year periods. The increases in property equipment from October 2, 2022 to July 2, 2023 are primarily due to the RPS acquisition.~~respectively.

7. Stock Repurchase and Dividends

On October 5, 2021, our Board of Directors authorized a new stock repurchase program under which we could repurchase up to $400 million of our common stock. We did not repurchase any shares of our common stock in the first ~~nine months~~quarters of fiscal 2024 and 2023. At ~~July 2,~~December 31, 2023, we had a remaining balance of $347.8 million under our stock repurchase program.

The following table presents dividends declared and paid in the first ~~nine months~~quarters of ~~fiscal 2023~~fiscal 2024 and ~~2022:~~2023:

Declare Date Dividend Paid Per Share Record Date Payment Date Dividend Paid
(in thousands)
November 7, 2022 $ 0.23 November 21, 2022 December 9, 2022 $ 12,186
January 30, 2023 $ 0.23 February 13, 2023 February 24, 2023 12,242
May 8, 2023 $ 0.26 May 24, 2023 June 6, 2023 13,840
Total dividend paid as of July 2, 2023 $ 38,268
November 15, 2021 $ 0.20 December 2, 2021 December 20, 2021 $ 10,793
January 31, 2022 $ 0.20 February 11, 2022 February 25, 2022 10,769
May 2, 2022 $ 0.23 May 13, 2022 May 27, 2022 12,311
Total dividend paid as of July 3, 2022 $ 33,873


Declare Date	Dividend Paid Per Share		Record Date	Payment Date	Dividend Paid (in thousands)
November 13, 2023	$	0.26	November 30, 2023	December 13, 2023	$	13,873

November 7, 2022	$	0.23	November 21, 2022	December 9, 2022	$	12,186

Subsequent Event. On ~~August 7, 2023,~~January 29, 2024, our Board of Directors declared a quarterly cash dividend of $0.26 per share payable on ~~September 6, 2023~~February 27, 2024 to stockholders of record as of the close of business on ~~August 23, 2023.~~February 14, 2024.

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 five 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. Our finance leases 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
		Three Months Ended
		Three Months Ended
		December 31, 2023
		December 31, 2023
		December 31, 2023
		Three Months Ended				Nine Months Ended
Operating lease cost
		July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
Operating lease cost

Operating lease cost	Operating lease cost	$	24,775	$	21,004	$	70,155	$	64,015
Sublease (income) cost	Sublease (income) cost	(46)		140		(125)		(116)
Sublease (income) cost
Sublease (income) cost

Total lease cost	Total lease cost	$	24,729	$	21,144	$	70,030	$	63,899

Total lease cost

Total lease cost

Supplemental cash flow information related to leases is as follows (in thousands):

Nine Months Ended

July 2,
2023

July 3,
2022

Three Months Ended

December 31,
2023

January 1,
2023

Operating cash flows for operating leases

57,871

50,965

Operating cash flows for operating leases

Right-of-use assets obtained in exchange for new operating lease liabilities

72,294

32,175

Supplemental balance sheet and other information related to leases are as follows (in thousands):

Balance at

July 2,
2023

October 2, 2022

Balance at

December 31,
2023

October 1, 2023

Operating leases:

Right-of-use assets

207,218

182,319

Lease liabilities:

Current

68,555

57,865

Non-current

163,919

146,285

Total operating lease liabilities

232,474

204,150

Weighted-average remaining lease term:

Operating leases

5 years

Weighted-average discount rate:

Operating leases

3.0

2.2

Operating leases

3.1

3.0

At ~~July 2,~~December 31, 2023, we ~~have no material~~had $8.5 million of operating leases that have not yet commenced.

1816

A maturity analysis of the future undiscounted cash flows associated with our lease liabilities at ~~July 2,~~December 31, 2023 is as follows (in thousands):


	Operating Leases			Operating Leases
		Operating Leases

2023 (remaining)		$	20,727
2024		69,302
2024 (remaining)
2024 (remaining)
2024 (remaining)
2025	2025	53,634
2026	2026	36,291
2027	2027	25,689
2028
Beyond	Beyond	45,624
Total lease payments	Total lease payments	251,267
Less: imputed interest	Less: imputed interest	(18,793)
Total present value of lease liabilities	Total present value of lease liabilities	$	232,474

9. Stockholders’ Equity and Stock Compensation Plans

We recognize 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 nine~~ months ended ~~July 2,~~December 31, 2023 was ~~$7.0~~$7.6 million, ~~and $21.6 million, respectively,~~ compared to ~~$6.7 million and $19.1~~$7.2 million for the same periods last year. Most of these amounts were included in selling, general and administrative expenses on our consolidated statements of income. In the first ~~nine months~~quarter of fiscal ~~2023,~~2024, we awarded ~~56,214~~55,836 performance share units (“PSUs”) to our non-employee directors and executive officers at aan estimated fair value of ~~$195.50~~$205.39 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 the growth in our diluted earnings per share and 50% on our relative total shareholder return over the vesting period. Additionally, we awarded ~~103,016~~107,860 restricted stock units (“RSUs”) to our non-employee directors, executive officers and employees at a fair value of ~~$156.10~~$164.27 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 number of common shares outstanding, less unvested restricted stock 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 outstanding stock options and unvested restricted stock using the treasury stock method.

1917

The following table presents the number of weighted-average shares used to compute basic and diluted EPS (in thousands, except per share data):








		Three Months Ended				Nine Months Ended
		July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022

Net income attributable to Tetra Tech	Net income attributable to Tetra Tech	$	60,235	$	58,650	$	219,771	$	180,179
Net income attributable to Tetra Tech
Net income attributable to Tetra Tech
Net income attributable to Tetra Tech
Net income attributable to Tetra Tech
Net income attributable to Tetra Tech
Net income attributable to Tetra Tech
Net income attributable to Tetra Tech
Net income attributable to Tetra Tech

Weighted-average common shares outstanding – basic

Weighted-average common shares outstanding – basic

Weighted-average common shares outstanding – basic	Weighted-average common shares outstanding – basic	53,231		53,507		53,188		53,777
Effect of dilutive stock options and unvested restricted stock	Effect of dilutive stock options and unvested restricted stock	422		499		427		551
Effect of dilutive stock options and unvested restricted stock
Effect of dilutive stock options and unvested restricted stock
Weighted-average common shares outstanding – diluted
Weighted-average common shares outstanding – diluted
Weighted-average common shares outstanding – diluted	Weighted-average common shares outstanding – diluted	53,653		54,006		53,615		54,328

Earnings per share attributable to Tetra Tech:	Earnings per share attributable to Tetra Tech:

Earnings per share attributable to Tetra Tech:

Earnings per share attributable to Tetra Tech:
Basic
Basic
Basic	Basic	$	1.13	$	1.10	$	4.13	$	3.35
Diluted	Diluted	$	1.12	$	1.09	$	4.10	$	3.32
Diluted
Diluted

For the first quarters of fiscal 2024 and 2023, no options were excluded from the calculation of dilutive potential common shares. The Convertible Notes described in Note 14 "Long-Term Debt", had no impact on the calculation of dilutive potential common shares in the first quarter of fiscal 2024, as the price of our common stock did not exceed the conversion price. The Capped Call Transactions were excluded from the calculation of dilutive potential common shares as their effect is anti-dilutive.

11. Income Taxes

The effective tax rates for the first ~~nine~~three months of fiscal 2024 and 2023 were 26.1% and ~~2022 were 28.3% and 23.9%~~24.5%, respectively. Income tax expense was reduced by ~~$2.2~~$1.0 million and ~~$4.9~~$1.7 million of excess tax benefits on share-based payments in the first ~~nine months~~quarters of fiscal 2024 and 2023, ~~and 2022,~~ respectively. In addition, income tax expense in the first nine months of fiscal 2023 included non-operating income tax expenses of $7.2 million ($6.9 million in the second quarter) to recognize the tax liability for foreign earnings, primarily in the U.K. and Australia, that are no longer indefinitely reinvested and to increase the liability for an uncertain tax position. Excluding the impact of the excess tax benefits on share-based payments, ~~and the non-operating tax expenses in the second and third quarter of fiscal 2023,~~ our effective tax rates in the first ~~nine months~~quarters of fiscal 2024 and 2023 were 27.1% and ~~2022 were 26.7% and 25.9%~~25.7%, respectively.

At ~~July 2,~~December 31, 2023 and October ~~2, 2022,~~1, 2023, the liability for income taxes associated with uncertain tax positions was ~~$48.8~~$61.7 million and ~~$10.6~~$62.0 million, respectively. ~~These liabilities could materially decrease within the next 12 months as some related examinations have commenced.~~ 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. Our GSG reportable segment primarily includes activities with U.S. government clients (federal, state and local) and all activities with development agencies worldwide. Our CIG reportable segment primarily includes activities with U.S. commercial clients and international clients other than development agencies.

GSG provides high-end consulting and engineering services primarily to U.S. government clients (federal, state and local) and international development agencies worldwide. GSG supports U.S. government civilian and defense 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. GSG also leads our support for development agencies worldwide, especially in the United States, United Kingdom and Australia.

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 ~~across the Fortun~~worldwide in ~~e 500,~~ renewable energy, industrial, high performance buildings and aerospace 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 ~~as well as~~and South America (primarily Brazil and ~~Chile.~~Chile).

2018

Management evaluates the performance of these reportable segments based upon their respective segment operating income before the effect of amortization expense related to acquisitions, and other unallocated corporate expenses. We account for inter-segment revenues 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. ~~In the third quarter and first nine months of fiscal~~ ~~2023, our Corporate segment operating losses included $2.1 million and $25.8 million of~~ ~~acquisition and integration expenses, respectively, as described in Note 4, “Acquisitions”.~~

The following tables summarize financial information regarding our reportable segments (in thousands):








		Three Months Ended				Nine Months Ended
		July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022

Revenue	Revenue
Revenue
Revenue
Revenue
Revenue
Revenue
Revenue
Revenue
Revenue
GSG
GSG
GSG	GSG	$	531,050	$	459,987	$	1,565,371	$	1,365,041
CIG	CIG	691,386		444,238		1,741,300		1,277,469
CIG
CIG
Elimination of inter-segment revenue	Elimination of inter-segment revenue	(13,489)		(13,994)		(44,733)		(41,025)
Elimination of inter-segment revenue
Elimination of inter-segment revenue
Total revenue
Total revenue
Total revenue	Total revenue	$	1,208,947	$	890,231	$	3,261,938	$	2,601,485

Income from operations	Income from operations

Income from operations

Income from operations
GSG
GSG
GSG	GSG	$	54,496	$	45,580	$	167,053	$	147,104
CIG	CIG	69,572		53,535		172,199		139,328
CIG
CIG
Corporate (1)	Corporate (1)	(26,393)		(15,210)		(88,516)		(40,787)
Corporate (1)
Corporate (1)
Total income from operations
Total income from operations
Total income from operations	Total income from operations	$	97,675	$	83,905	$	250,736	$	245,645

(1) Includes amortization of intangibles, acquisition and integration expenses, as well as other costs and other income not allocable to our reportable segments.

Balance at

December 31,
2023

October 1,
2023

Balance at

July 2,
2023

October 2,
2022

Total Assets

GSG

588,469

558,764

CIG

1,058,974

688,640

Corporate (1)

2,326,135

1,375,372

Total assets

3,973,578

2,622,776

(1) Corporate assets consist of intercompany eliminations and assets not allocated to our reportable segments including goodwill, intangible assets, deferred income taxes and certain other assets.

13. 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.

Derivative Instruments.Our derivative instruments are categorized within Level 2 of the fair value hierarchy. For additional information about our derivative financial instruments (see Note 15, "Derivative Financial Instruments").

Contingent Consideration. 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. (see Note 4, "Acquisitions" for further information).

Debt.The fair value of long-term debt 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 October ~~2, 2022~~)1, 2023). The carrying value of our long-term debt under our Credit Facility approximated fair value at ~~July 2,~~December 31, 2023 and October ~~2, 2022.~~1, 2023. At ~~July 2,~~December 31, 2023, we had ~~borrowings of $919.4~~$385 million in outstanding borrowings under ~~our~~the Amended Credit Agreement, which was comprised of $320 million under the New Term Loan Facility and $65 million under the Amended Revolving Credit Facility.

The estimated fair value of our $575 million Convertible Senior Notes (the "Convertible Notes") was determined based on the trading price of the Convertible Notes as of the last trading day of our first quarter of fiscal 2024. 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 amounts and estimated fair values of the Convertible notes were ~~primarily~~approximately $562 million and $603 million, respectively, at December 31, 2023, and $561 million and $566 million, respectively, at October 1, 2023.

The Credit Facility and Convertible Notes were used to fund our business acquisitions, working capital needs, dividends, capital expenditures and ~~capital expenditures.~~contingent earn-outs.

14. Long-Term Debt

Long-term debt consisted of the following (in thousands):


	Balance at
	December 31, 2023		October 1, 2023

Credit facilities	$	385,000	$	320,000
Convertible notes	575,000		575,000
Debt issuance costs and discount	(14,681)		(15,471)
Long-term debt	$	945,319	$	879,529

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 is 5.0855 shares of our common stock per $1,000 principal amount of the Convertible Notes, which is equivalent to an initial price of approximately $196.64 per share of our common stock, subject to adjustment if certain events occur. 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, the remaining $234.4 million principal amount outstanding under our senior secured term loan due 2027 and approximately $89.4 million principal amount outstanding under our senior secured term loan due 2026.

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 amortized to interest expense using the effective interest method over the terms of the Convertible Notes. Debt issuance costs for the Convertible Notes have been amortized to interest expense over the terms of the Convertible Notes at an effective annual interest rate of 2.79%.

The net carrying amount of the Convertible Notes was as follows ~~Credit Facility~~(in thousands):


	Balance at
	December 31, 2023		October 1, 2023

Principal	$	575,000	$	575,000
Unamortized discount and issuance costs	(13,481)		(14,158)
Net carrying amount	$	561,519	$	560,842

The following table sets forth the interest expense recognized related to the Convertible Notes for the first quarter of fiscal 2024 (in thousands):


	Amount

Interest expense	3,270
Amortization of discount and issuance costs	678
Total interest expense	$	3,948

Concurrent with the offering of the Convertible Notes, in August 2023, we entered into capped call transactions (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 is initially $259.56 per share, which represents a premium of 65% over the last reported sale price of our common stock of $157.31 per share on the NASDAQ Global Select Market on August 17, 2023, and is subject to certain adjustments under the terms of the Capped Call Transactions. 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 October 26, 2022, we entered into a Third Amended and Restated Credit Agreement that provides for an additional $500 million senior secured term loan facility (the "New Term Loan Facility") increasing our total borrowing capacity to $1.55 billion.

On January 23, 2023, we drew the entire amount of the New Term Loan Facility to partially finance the RPS acquisition. ~~The remaining purchase price was financed with existing cash on hand and borrowings under the existing Amended Revolving Credit Facility.~~ The New Term Loan Facility is not subject to any amortization payments of principal and matures on the third anniversary of the RPS acquisition closing ~~date.~~date in January 2026.

On February 18, 2022, we entered into Amendment No. 2 to Second Amended and Restated Credit Agreement (“Amended Credit Agreement”) with a total borrowing capacity of $1.05 billion that will mature in February 2027. The Amended Credit Agreement is a $750 million senior secured, five-year facility that provides for a $250 million term loan facility (the “Amended Term Loan Facility”) and a $500 million revolving credit facility (the “Amended Revolving Credit

Facility”). In addition, the Amended Credit Agreement includes a $300 million accordion feature that allows us to increase the Amended Credit Agreement to $1.05 billion subject to lender approval. The Amended Credit Agreement provides for, among other things, (i) refinance indebtedness under our Credit Agreement dated at July 30, 2018; (ii) finance open market repurchases of common stock, acquisitions, and cash dividends and distributions; and (iii) utilize the proceeds for working capital, capital expenditures and other general corporate purposes. The Amended Credit Agreement provides for a reduction in the interest grid for meeting certain sustainability targets related to the (i) reduction of greenhouse gas emissions through the Company’s projects and operational sustainability initiatives and (ii) improvement of peoples’ lives as a result of the Company’s projects that provide environmental, social and governance benefits. The Amended Revolving Credit Facility includes a $100 million sublimit for the issuance of standby letters of credit, a $20 million sublimit for swingline loans and a $300 million sublimit for multicurrency borrowings and letters of credit.

The entire Amended Term Loan Facility was drawn on February 18, 2022. ~~The Amended Term Loan Facility is subject to quarterly amortization of principal at 5% annually commencing June 30, 2022.~~ 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 1.875% per annum, or (b) a base rate for loans in U.S. dollars (the highest of the U.S. federal funds rate plus 0.50% per annum, the bank’s prime rate or the Secured Overnight Financing Rate ("SOFR") rate plus 1.00%, plus a margin that ranges from 0% to 0.875% per annum. In each case, the applicable margin is based on our Consolidated Leverage Ratio, calculated quarterly. The Amended Term Loan Facility is subject to the same interest rate provisions. The Amended Credit Agreement expires on February 18, 2027, or earlier at our discretion upon payment in full of loans and other obligations.

At December 31, 2023, we had $385 million in outstanding borrowings under the Amended Credit Agreement, which was comprised of $320 million under the New Term Loan Facility and $65 million under the Amended Revolving Credit Facility. For the first quarter of fiscal 2024, the weighted-average interest rate of the outstanding borrowings under the Amended Credit Agreement was 6.75%. In addition, we had $0.7 million in standby letters of credit under the Amended Credit Agreement. At December 31, 2023, we had $434.3 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 3.25 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 Agreement, and (ii) the accounts receivable, general intangibles and intercompany loans and those of our subsidiaries that are guarantors or borrowers. At December 31, 2023, we were in compliance with these covenants with a consolidated leverage ratio of 1.84x and a consolidated interest coverage ratio of 9.49x.

In addition to the Amended Credit Agreement, we maintain other credit facilities, which may be used for short-term cash advances and bank guarantees. At December 31, 2023, there were no outstanding borrowings under these facilities and the aggregate amount of standby letters of credit outstanding was $57.4 million. As of December 31, 2023, we had no bank overdrafts related to our disbursement bank accounts.

15. Derivative Financial Instruments

We use certain interest rate derivative contracts to hedge interest rate exposures on our variable rate debt. We also enter into foreign currency derivative contracts with financial institutions to reduce the risk that cash flows and earnings could adversely be affected by foreign currency exchange rate fluctuations. Our hedging program is not designated for trading or speculative purposes.

We recognize derivative instruments as either assets or liabilities on the accompanying consolidated balance sheets at fair value. We record changes in the fair value (i.e., gains or losses) of the derivatives that have been designated as cash flow hedges in our consolidated balance sheets as accumulated other comprehensive income, and in our consolidated statements of income for those derivatives designated as fair value hedges. Our derivative contracts are categorized within Level 2 of the fair value hierarchy.

In the fourth quarter of fiscal 2022, we entered into a forward contract to acquire GBP 714.0 million at a rate of 1.0852 for a total of USD 774.8 million that was integrated with our plan to acquire RPS. This contract matured on December 30, 2022. On December 28, 2022, we entered into an extension of the integrated forward ~~contract~~contract to acquire GBP 714.0 million at a rate of 1.086 for a total of USD 775.4 million, extending the maturity date to January 23, 2023, the closing date of the RPS acquisition. Although an effective economic hedge of our foreign exchange risk related to this transaction, the forward contract did not qualify for hedge accounting. As a result, the forward contract was marked-to-market with changes in fair value ~~recogni~~

~~zed~~

recognized in earnings each period. The intrinsic value of the forward contract was immaterial at inception as the GBP/USD spot and forward exchange rates were essentially the same. The fair value of the forward contract at October 2, 2022 was

~~$19.9~~ $19.9 million, and an unrealized gain of the same amount was recognized in our fourth quarter of fiscal 2022 results. On January 23, 2023, the forward contract was settled at the fair value of $109.3 million. We recognized additional gains of $68.0 million and $21.4 million in the first and second quarters of fiscal 2023, respectively. All gains related to this transaction were reported in “Other non-operating income" on our consolidated income statements for the respective periods.

In fiscal 2018, we ~~enter~~edentered into five interest rate swap agreements that we designated as cash flow hedges to fix the interest rate on the borrowings under our term loan facility. AtThe five swaps expired on July ~~2, 2023, the notional principal of our outstanding interest swap agreements was $190.6 million ($38.1 million each.)~~31, 2023. The interest rate swaps have a fixed interest rate of 2.79% and expire in July 2023 for all five agreements. At July 2, 2023 and October 2, 2022, the fair values of the effective portion of our interest rate swap agreements designated as cash flow hedges before tax effect were unrealized gains of $0.4 million and $2.4 million, respectively, which were reported in "Other non-current assets" on our consolidated balance sheets. Additionally, the related loss of ~~$1.0~~$0.1 million ~~and $2.0 million for the three and nine months ended July 2, 2023, compared to the related gain of $2.4 million and $10.0 million for the prior-year periods, were~~was recognized and reported on our consolidated ~~statements~~statement of comprehensive ~~income. We expect to reclassify a credit of $0.4 million from accumulated other comprehensive loss to interest expense during~~income for the ~~fourth~~first quarter of fiscal ~~2023, up to the expiration date in July~~ 2023. There were no ~~other~~ derivative instruments that were not designated as hedging instruments for the first ~~nine months~~quarters of fiscal 2024 and 2023.

16. Reclassifications Out of Accumulated Other Comprehensive Income

The accumulated balances and activities for the three ~~and nine~~ months ended ~~July 2,~~December 31, 2023 and ~~July 3, 2022~~January 1, 2023 related to reclassifications out of accumulated other comprehensive income are summarized as follows (in thousands):


		Three Months Ended								Three Months Ended
		Foreign Currency Translation Adjustments		Gain (Loss) on Derivative Instruments		Net Pension Adjustments		Accumulated Other Comprehensive Income (Loss)		Foreign Currency Translation Adjustments	Gain (Loss) on Derivative Instruments	Net Pension Adjustments	Accumulated Other Comprehensive Income (Loss)

Balance at April 3, 2022		$	(113,513)	$	(1,790)	—		$	(115,303)
Other comprehensive (loss) income before reclassifications		(44,883)		3,413		—		(41,470)
Amounts reclassified from accumulated other comprehensive loss:
Interest rate contracts, net of tax (1)		—		(1,033)		—		(1,033)
Net current-period other comprehensive (loss) income		(44,883)		2,380		—		(42,503)

Balance at July 3, 2022		$	(158,396)	$	590	$	—	$	(157,806)

Balance at April 2, 2023		$	(185,602)	$	1,427	2,794		$	(181,381)
Other comprehensive income (loss) before reclassifications		44,499		(2,137)		—		42,362
Amounts reclassified from accumulated other comprehensive loss:
Interest rate contracts, net of tax (1)		—		1,093		—		1,093
Net current-period other comprehensive income (loss)		44,499		(1,044)		—		43,455

Balance at July 2, 2023		$	(141,103)	$	383	$	2,794	$	(137,926)

		Nine Months Ended
		Foreign Currency Translation Adjustments		Gain (Loss) on Derivative Instruments		Net Pension Adjustments		Accumulated Other Comprehensive Income (Loss)

Balance at October 3, 2021		$	(115,634)	$	(9,394)	—		$	(125,028)
Other comprehensive (loss) income before reclassifications		(42,762)		13,833		—		(28,929)
Amounts reclassified from accumulated other comprehensive loss:
Interest rate contracts, net of tax (1)		—		(3,849)				(3,849)
Net current-period other comprehensive (loss) income		(42,762)		9,984		—		(32,778)

Balance at July 3, 2022		$	(158,396)	$	590	$	—	$	(157,806)

Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022
Balance at October 2, 2022	Balance at October 2, 2022	$	(210,556)	$	2,412	—		$	(208,144)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	69,453		(4,439)		2,794		67,808
Amounts reclassified from accumulated other comprehensive loss:	Amounts reclassified from accumulated other comprehensive loss:
Interest rate contracts, net of tax (1)	Interest rate contracts, net of tax (1)	—		2,410		—		2,410
Interest rate contracts, net of tax (1)
Interest rate contracts, net of tax (1)
Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)	69,453		(2,029)		2,794		70,218

Balance at July 2, 2023		$	(141,103)	$	383	$	2,794	$	(137,926)

Balance at January 1, 2023

Balance at January 1, 2023

Balance at January 1, 2023

Balance at October 1, 2023
Balance at October 1, 2023
Balance at October 1, 2023
Other comprehensive income (loss) before reclassifications
Net current-period other comprehensive income (loss)

Balance at December 31, 2023
Balance at December 31, 2023
Balance at December 31, 2023

(1) This accumulated other comprehensive component is reclassified to “Interest expense” in our consolidated statements of income. See Note 15 “Derivative Financial Instruments”, for more information.

17. 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 filed an amended complaint in intervention in three qui tam actions filed against our subsidiary, Tetra Tech EC, Inc. ("TtEC"), in the U.S. District Court for the Northern District of California. The complaint alleges False Claims Act 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. TtEC disputes the claims and will defend this matter vigorously. We are currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any.

18. Related Party Transactions

We often provide services to unconsolidated joint ventures. Our revenue related to services we provided to unconsolidated joint ventures for the ~~third quarter and~~ first ~~nine months~~quarters of fiscal 2024 and 2023 was ~~approximately $22~~approximately $19 million and $65 million, respectively, compared to $24 million and $74 million for the same periods last year. Our related reimbursable costs for the third quarter and nine months of fiscal 2023 were approximately $21 million and $61$23 million, respectively. Our related reimbursable costs for the ~~third quarter and nine months~~first quarters of fiscal ~~2022~~2024 and 2023 were approximately ~~$23~~$18 million ~~and $70~~and $22 million, respectively. Our consolidated balance sheets also included the following amounts related to these services (in thousands):

Balance at

December 31,
2023

October 1, 2023

Balance at

July 2,
2023

October 2, 2022

Accounts receivable, net

22,234

16,818

Contract assets

1,800

2,935

Contract liabilities

2,768

3,464

2524

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements regarding future events and our future results that are subject to the safe harbor provisions created under the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements other than statements of historical facts are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “estimates,” “seeks,” “continues,” “may,” variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict, including those identified below under “Part II, Item 1A. Risk Factors,” and elsewhere herein. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

GENERAL OVERVIEW

Tetra Tech, Inc. is a leading global provider of high-end consulting and engineering services that focuses on water, environment, sustainable infrastructure, renewable energy and international development. 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 more than 50 years. Today, we are proud to be making a difference in people’s lives worldwide through our high-end consulting, engineering and technology service offerings. In fiscal ~~2022,~~2023, we worked on over ~~80,000~~100,000 projects, in more than 100 countries on all seven ~~continents.~~continents, with a talent force of 27,000 associates. We are Leading with Science® throughout our operations, with domain experts across multiple disciplines supported by our advanced analytics, artificial intelligence, machine learning and digital technology solutions. Our ability to provide innovative and first-of-kind solutions is enhanced by partnerships with our forward-thinking clients. We are diverse, equitable and inclusive, embracing the breadth of experience across our talented workforce worldwide with a culture of innovation and entrepreneurship. We are disciplined in our business, and focused on delivering value to customers and high performance for our shareholders. In supporting our clients, we seek to add value and provide long-term sustainable consulting, engineering and technology solutions.

By combining ingenuity and practical experience, we have helped to advance sustainability by managing water, protecting the environment, providing ~~clean~~renewable energy, restoring ecosystems and ~~engineering~~creating green solutions for our cities and communities.

We derive income from fees for professional, technical, program management, and construction management services. As primarily a professional services company, we are labor-intensive rather than capital-intensive. Our revenue is driven by our ability to attract and retain qualified and productive employees, identify business opportunities, secure new and renew existing client contracts, provide outstanding services to our clients and execute projects successfully. We provide services to a diverse base of U.S. federal government, U.S. state and local government, U.S. commercial and international clients.

2625

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


		Three Months Ended				Nine Months Ended
		July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022


December 31, 2023
December 31, 2023
Client Sector
Client Sector
Client Sector	Client Sector
U.S. federal government (1)	U.S. federal government (1)	28.0	%	29.4	%	30.5	%	30.0	%
U.S. federal government (1)
U.S. federal government (1)
U.S. state and local government
U.S. state and local government
U.S. state and local government	U.S. state and local government	12.5		16.9		13.9		17.9
U.S. commercial	U.S. commercial	18.7		21.1		19.4		20.7
U.S. commercial
U.S. commercial
International (2)
International (2)
International (2)	International (2)	40.8		32.6		36.2		31.4
Total	Total	100.0	%	100.0	%	100.0	%	100.0	%
Total
Total

(1) Includes revenue generated under U.S. federal government contracts performed outside the United States.

(2) Includes revenue generated from non-U.S. clients, primarily in Canada, Australia, Europe and the United Kingdom.

We manage our operations under two reportable segments. Our Government Services Group ("GSG") reportable segment primarily includes activities with U.S. government clients (federal, state and local) and all activities with development agencies worldwide. Our Commercial/International Group ("CIG") reportable segment primarily includes activities with U.S. commercial clients and international clients other than development agencies.

Government Services Group (“GSG”). GSG provides high-end consulting and engineering services primarily to U.S. government clients (federal, state and local) and international development agencies worldwide. GSG supports U.S. government civilian and defense 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. GSG also leads our support for development agencies worldwide, especially in the United States, United Kingdom and Australia.

Commercial/International Group (“CIG”). 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 ~~across the Fortun~~worldwide in ~~e 500,~~ renewable energy, industrial, high performance buildings and aerospace 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 ~~as well as~~and South America (primarily Brazil and ~~Chile.~~Chile).

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






		Three Months Ended				Nine Months Ended
		July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
Reportable Segment	Reportable Segment
Reportable Segment
Reportable Segment
GSG
GSG
GSG	GSG	43.9	%	51.7	%	48.0	%	52.5	%
CIG	CIG	57.2		49.9		53.4		49.1

CIG
CIG
Inter-segment elimination
Inter-segment elimination
Inter-segment elimination	Inter-segment elimination	(1.1)		(1.6)		(1.4)		(1.6)
Total	Total	100.0	%	100.0	%	100.0	%	100.0	%
Total
Total

Our services are performed under three principal types of contracts with our clients: fixed-price, time-and-materials and cost-plus. The following table presents the percentage of our revenue by contract type:

Three Months Ended Nine Months Ended
July 2,
2023 July 3,
2022 July 2,
2023 July 3,
2022
Contract Type
Fixed-price 37.4 % 37.6 % 36.6 % 37.7 %
Time-and-materials 49.4 47.0 47.6 47.0
Cost-plus 13.2 15.4 15.8 15.3
Total 100.0 % 100.0 % 100.0 % 100.0 %


	Three Months Ended
	December 31, 2023		January 1, 2023
Contract Type
Fixed-price	38.4	%	36.6	%
Time-and-materials	44.7		47.0
Cost-plus	16.9		16.4
Total	100.0	%	100.0	%

Under fixed-price contracts, clients agree to pay a specified price for our performance of the entire contract or a specified portion of the contract. Under time-and-materials contracts, we are paid for labor at negotiated hourly billing rates and paid for other expenses. Under cost-plus contracts, some of which are subject to a contract ceiling amount, we are reimbursed for allowable costs plus fees, which may be fixed or performance-based. Profitability on these contracts is driven by billable headcount and our cost control. Revenue is recognized by measuring progress over time under Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers". We ~~recognize revenue from~~estimate and measure progress on our contracts ~~using~~over time whereby we compare our total costs incurred on each contract as a percentage of the ~~cost-to-cost measure of progress method to estimate the progress towards completion to determine the amount of revenue and profit to recognize.~~ 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. On a quarterly basis, we review and assess our revenue and cost estimates for each significant contract. Changes in revenue and cost estimates could also result in a projected loss that would be recorded immediately in earnings.

Other contract costs include professional compensation and related benefits, together with certain direct and indirect overhead costs such as rents, utilities and travel. Professional compensation represents a large portion of these costs. Our "Selling, general and administrative expenses" ("SG&A") are comprised primarily of marketing and bid and proposal costs, and our corporate headquarters’ costs related to the executive offices, finance, accounting, administration and information technology. Our SG&A expenses also include a portion of stock-based compensation and depreciation of property and equipment related to our corporate headquarters, and the amortization of identifiable intangible assets. Most of these costs are unrelated to specific clients or projects, and can vary as expenses are incurred to support company-wide activities and initiatives.

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

ACQUISITIONS AND DIVESTITURES

Acquisitions. We continuously evaluate the marketplace for acquisition opportunities to further our strategic growth plans. Due to our reputation, size, financial resources, geographic presence and range of services, we have numerous opportunities to acquire privately and publicly held companies or selected portions of such companies. We evaluate an acquisition opportunity based on its ability to strengthen our leadership in the markets we serve, the technologies and solutions they provide and the additional new geographies and clients they bring. Also, during our evaluation, we examine an acquisition's ability to drive organic growth, its accretive effect on long-term earnings and its ability to generate return on investment. Generally, we proceed with an acquisition if we believe that it will strategically expand our service offerings, improve our long-term financial performance and increase shareholder returns.

We view acquisitions as a key component in the execution of our growth strategy, and we intend to use cash, debt or equity, as we deem appropriate, to fund acquisitions. We may acquire other businesses that we believe are synergistic and will ultimately increase our revenue and net income, strengthen our ability to achieve our strategic goals, provide critical mass with existing clients and further expand our lines of service. We typically pay a purchase price that results in the recognition of goodwill, generally representing the intangible value of a successful business with an assembled workforce specialized in our areas of interest. Acquisitions are inherently risky, and no assurance can be given that our previous or future acquisitions will be successful or will not have a material adverse effect on our financial position, results of operations or cash flows. All acquisitions require the approval of our Board of Directors.

On January 23, 2023, we completed the acquisition of RPS Group plc ("RPS"), a publicly traded company on the London Stock Exchange in an all cash transaction totaling $784 million. We funded the RPS acquisition with debt, net of $109 million in proceeds from a foreign exchange forward contract that we entered into at the same time we made the formal offer to acquire RPS on September 23, 2022.

RPS employs approximately 5,000 associates in the United Kingdom, Europe, Asia Pacific and North America, delivering high-end solutions, especially in energy transformation, water and program management for government and commercial clients. In the third quarter and first nine months of fiscal 2023, RPS contributed revenue of $220.4 million and $389.9 million, respectively, to our consolidated results. RPS contributed $2.5 million and $2.1 million to our consolidated operating income in the third quarter and first nine months of fiscal 2023, respectively, which reflect $10.4 million and $18.1 million of intangible amortization, respectively. Substantially all of RPS is included in our CIG segment.

In ~~the second quarter of~~ fiscal 2023, we also acquired Amyx, Inc. (“Amyx”), an enterprise technology services, cybersecurity and management consulting firm. Based in Reston, ~~Virginia, Amyx, with~~Virginia. With over 500 employees, Amyx provides application modernization, cybersecurity, systems engineering, financial management and program management support on over 30 Federal Government programs. Amyx is included in our GSG segment.

For detailed information regarding acquisitions, see Note 4, “Acquisitions” of the “Notes to Consolidated Financial Statements”.

Divestitures. We regularly review and evaluate our existing operations to determine whether our business model should change through the divestiture of certain businesses. Accordingly, from time to time, we may divest or wind-down certain non-core businesses and reallocate our resources to businesses that better align with our long-term strategic direction.

OVERVIEW OF RESULTS AND BUSINESS TRENDS

General. In the first ~~nine months~~quarter of fiscal ~~2023,~~2024, our revenue increased ~~25.4%~~37.3% compared to the prior-year ~~period. This~~quarter. The growth includes revenue from the acquisition of RPS, which was completed in the second quarter of fiscal 2023, that did not have comparable revenue in the last year's first quarter. Excluding RPS, our revenue increased over 13% in the first quarter of fiscal 2024 compared to the year-ago quarter. The year-over-year growth, excluding RPS, primarily reflects increased activity in our U.S. Federal ~~U.S. Commercial~~ and International client ~~sectors including the aforementioned RPS acquisition. Excluding RPS, our revenue increased 10.4% in the first nine months of fiscal 2023 compared to the year-ago period.~~sectors.

U.S. Federal Government. Our U.S. federal government revenue increased ~~27.5%~~38.4% in the first ~~nine months~~quarter of fiscal ~~2023~~2024 compared to the same period last year. ~~This increase~~The growth was primarily due to ~~more~~increased international development activity, primarily in Ukraine, and broad-based increases across civilian agencies. ~~During periods~~Our international development revenue in Ukraine was approximately $65 million higher in the first quarter of ~~economic volatility, our U.S. federal government business has historically been~~fiscal 2024 compared to the ~~most stable and predictable.~~same quarter last year. We expect our U.S. federal government revenue to continue to grow in ~~the remainder of~~ fiscal ~~2023.~~2024. Approximately $1 trillion in new U.S. federal funding passed in 2021 through the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and the CHIPS and Science Act. Each of these programs ~~include~~includes substantial planned investments in our key end markets including water, environment and sustainable infrastructure over the next five to ten years.

U.S. State and Local Government. Our U.S. state and local government revenue decreased ~~2.9%~~1.5% in the first ~~nine months~~quarter of fiscal ~~2023~~2024 compared to ~~the prior-year period due to~~fiscal 2023 quarter, which includes lower disaster response activity. Excluding disaster response, our state and local government revenue increased ~~21.5% for~~23.6% in the first ~~nine months~~quarter of fiscal ~~2023~~2024 compared to ~~the same period~~ last ~~year.~~year's quarter. The increase reflects continued broad-based growth in our U.S. state and local government infrastructure business, particularly with increased revenue from municipal water infrastructure work, including digital water projects. Most of our work for the U.S. state and local governments relates to critical water and environmental programs, which we expect to continue to grow in ~~the remainder of~~ fiscal ~~2023.~~2024.

U.S. Commercial. Our U.S. commercial revenue increased ~~18.0%~~11.8% in the first ~~nine months~~quarter of fiscal ~~2023~~2024 compared to the year-ago ~~period. Excluding the contribution from RPS, our U.S. commercial revenue increased 11.4% in the first nine months of fiscal 2023 compared to the first nine months of fiscal 2022. This increase~~quarter. The growth was primarily due to ~~more~~increased activity onfor environmental services and clean energy ~~and environmental programs, including meeting net zero carbon goals and designing high performance buildings.~~permitting. We expect growth in our U.S. commercial work ~~to continue~~ in ~~the remainder of~~ fiscal ~~2023.~~2024.

International. Our international revenue increased ~~44.3%~~77.4% in the first ~~nine months~~quarter of fiscal ~~2023~~2024 compared to the same quarter last year. Excluding the contribution from RPS, our international revenue increased 2.6% despite a stronger U.S. dollar and the adverse impact on our foreign currency translation year-over-year. On a constant currency basis, our international revenue, excluding RPS, increased approximately 10% for the first nine months of9.3% compared to fiscal 2023 ~~compared to the same period last year. This~~quarter. The revenue growth reflects ~~government stimulus spending on infrastructure~~higher clean energy revenue and commercial activities related to an increased focus on sustainability. We expect growth in our international work to continue in ~~the remainder of~~ fiscal ~~2023.~~2024.

2928

RESULTS OF OPERATIONS

Consolidated Results of Operations


		Three Months Ended												Nine Months Ended
		July 2, 2023		July 3, 2022				Change						July 2, 2023			July 3, 2022		Change
						$				%						$			%
		($ in thousands, except per share data)





		($ in thousands, except per share data)
		($ in thousands, except per share data)
		($ in thousands, except per share data)
Revenue	Revenue	$	1,208,947			$	890,231			$	318,716		35.8%				$	3,261,938	$	2,601,485	$	660,453	25.4%
Subcontractor costs	Subcontractor costs	(221,387)		(169,745)				(51,642)				(30.4)		(568,252)			(502,024)		(66,228)		(13.2)
Subcontractor costs
Subcontractor costs
Revenue, net of subcontractor costs (1)
Revenue, net of subcontractor costs (1)
Revenue, net of subcontractor costs (1)	Revenue, net of subcontractor costs (1)	987,560		720,486				267,074				37.1		2,693,686			2,099,461		594,225		28.3
Other costs of revenue	Other costs of revenue	(798,714)		(575,902)				(222,812)				(38.7)		(2,180,749)			(1,679,937)		(500,812)		(29.8)
Other costs of revenue
Other costs of revenue
Gross profit
Gross profit
Gross profit	Gross profit	188,846		144,584				44,262				30.6		512,937			419,524		93,413		22.3
Selling, general and administrative expenses	Selling, general and administrative expenses	(89,064)		(60,942)				(28,122)				(46.1)		(227,912)			(173,943)		(53,969)		(31.0)
Selling, general and administrative expenses
Selling, general and administrative expenses
Acquisition and integration expenses
Acquisition and integration expenses
Acquisition and integration expenses	Acquisition and integration expenses	(2,107)		—				(2,107)				NM		(25,812)			—		(25,812)		NM
Contingent consideration - fair value adjustments	Contingent consideration - fair value adjustments	—		263				(263)				NM		(8,477)			64		(8,541)		NM
Contingent consideration - fair value adjustments
Contingent consideration - fair value adjustments
Income from operations
Income from operations
Income from operations	Income from operations	97,675		83,905				13,770				16.4		250,736			245,645		5,091		2.1
Interest expense	Interest expense	(14,869)		(2,919)				(11,950)				(409.4)		(33,563)			(8,967)		(24,596)		(274.3)
Interest expense
Interest expense
Other non-operating income
Other non-operating income
Other non-operating income	Other non-operating income	—		—				—				NM		89,402			—		89,402		NM
Income before income tax expense	Income before income tax expense	82,806		80,986				1,820				2.2		306,575			236,678		69,897		29.5
Income before income tax expense
Income before income tax expense
Income tax expense
Income tax expense
Income tax expense	Income tax expense	(22,568)		(22,329)				(239)				(1.1)		(86,781)			(56,473)		(30,308)		(53.7)
Net income	Net income	60,238		58,657				1,581				2.7		219,794			180,205		39,589		22.0
Net income
Net income
Net income attributable to noncontrolling interests
Net income attributable to noncontrolling interests
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(3)		(7)				4				57.1		(23)			(26)		3		11.5
Net income attributable to Tetra Tech	Net income attributable to Tetra Tech	$	60,235	$	58,650			$	1,585			2.7		$	219,771		$	180,179	$	39,592	22.0
Net income attributable to Tetra Tech
Net income attributable to Tetra Tech
Diluted earnings per share
Diluted earnings per share
Diluted earnings per share	Diluted earnings per share	$	1.12	$	1.09			$	0.03			2.8%		$	4.10		$	3.32	$	0.78	23.5%

(1) We believe that the presentation of “Revenue, net of subcontractor costs”, which is a non-U.S. GAAP financial measure, enhances investors’ ability to analyze our business trends and performance because it substantially measures the work performed by our employees. While providing services, we routinely subcontract various services and, under certain ~~U.S. Agency for International Development~~international development programs, issue grants. Generally, these subcontractor costs and grants are passed through to our clients and, in accordance with U.S. GAAP and industry practice, are included in our revenue when it is our contractual responsibility to procure or manage these activities. ~~The grants are included as part of our subcontractor costs.~~ Because subcontractor services can vary significantly from project to project and period to period, changes in revenue may not necessarily be indicative of our business trends. Accordingly, we segregate subcontractor costs from revenue to promote a better understanding of our business by evaluating revenue exclusive of costs associated with external service providers.

NM = not meaningful

In the ~~third~~first quarter of fiscal ~~2023,~~2024, revenue and revenue, net of subcontractor costs, increased ~~$318.8~~$333.5 million, or ~~35.8%~~37.3%, and ~~$267.1~~$278.6 million, or ~~37.1%~~37.8%, respectively, compared to the ~~third quarter of~~ fiscal ~~2022. Excluding the contribution from RPS, our revenue increased 11.0% in the third quarter of fiscal~~ 2023 ~~compared to the year-ago~~ quarter. Our GSG segment's revenue and revenue, net of subcontractor costs, increased ~~$71.1~~$104.0 million, or ~~15.4%~~22.1%, and ~~$54.7~~$89.7 million, or ~~16.3%~~25.4%, respectively, in the ~~third~~first quarter of fiscal ~~2023~~2024 compared to the ~~same quarter last year.~~prior-year quarter. Our CIG segment's revenue increased ~~$247.1~~$229.6 million, or ~~55.6%~~52.2%, and revenue, net of subcontractor costs, increased ~~$212.4~~$189.0 million, or ~~55.2%~~49.3% in the ~~third~~first quarter of fiscal ~~2023~~2024 compared to ~~the year-ago~~fiscal 2023 quarter. ~~Excluding the contribution from RPS, our CIG segment's revenue increased approximately 8% in the third~~The first quarter of fiscal ~~2023 compared to the same period in fiscal 2022 (10% on a constant currency basis).~~

In the first nine months of fiscal 2023, revenue and revenue, net of subcontractor costs, increased $660.5 million, or 25.4%, and $594.2 million, or 28.3%, respectively, compared to the same period in fiscal 2022. Excluding the contribution from RPS, our revenue increased 10.4% in the first nine months of fiscal 2023 compared to the same period in fiscal 2022. Our GSG segment's revenue and revenue, net of subcontractor costs, increased $200.3 million, or 14.7%, and $178.7 million, or 17.9%, respectively, in the first nine months of fiscal 2023 compared to the same period last year. Our CIG segment's revenue increased $463.8 million, or 36.3%, and revenue, net of subcontractor costs, increased $415.5 million, or 37.8% in the first nine months of fiscal 2023 compared to the same period last year. Excluding the contribution from RPS, our CIG segment's revenue increased approximately 7% in the first nine months of this fiscal year compared to the same period last year (11% on a constant currency basis). Our quarterly and first nine months2024 results for ~~our~~ GSG and CIG segments are described below under "Government Services Group" and "Commercial/International Services Group", respectively.

The following table reconciles our reported results to non-U.S. GAAP adjusted results, which exclude acquisition ~~and integration costs~~expenses related to the RPS acquisition ~~in the third quarter~~ and ~~first nine months of fiscal 2023,~~ losses from adjustments to contingent consideration liabilities in the first ~~half~~quarter of fiscal ~~2023, and a non-operating benefit from Employee Retention Credits ("ERC's") received in fiscal 2022.~~2023. Our adjusted earnings per share ("EPS") for the ~~first nine months of fiscal 2023~~prior-year quarter also excludes a non-operating ~~gains~~$68.0 million unrealized gain on a foreign exchange contract and the write-off of ~~$89.4 million (all in the first half~~previously deferred debt origination fees, both related to our acquisition of ~~fiscal 2023). The~~RPS. This gain is reported as "Other non-operating income" in our ~~consolidated statements~~Consolidated Statement of ~~income. Further, our adjusted EPS~~Income for the third quarter and first nine months of fiscal 2023 excludes acquisition and integration costs, and the write-off of previously deferred debt origination fees reflected as additional interest expense, of $2.1 million and $29.6 million, respectively, related to the RPS acquisition.last year's quarter. The effective tax ~~rates~~rate applied to the adjustments to EPS to arrive at adjusted EPS average 26% for ~~both fiscal 2023 and 2022.~~the year-ago quarter. We applied the relevant marginal statutory tax rate based on the nature of the adjustments and the tax jurisdiction in which it occurred. Both EPS and adjusted EPS were calculated using diluted weighted-average common shares outstanding for the ~~respective periods~~fiscal 2023 quarter as reflected in our consolidated ~~statements~~statement of income.

Three Months Ended Nine Months Ended
July 2,
2023 July 3,
2022 Change July 2,
2023 July 3,
2022 Change
$ % $ %
($ in thousands, except per share data)
Income from operations $ 97,675 $ 83,905 $ 13,770 16.4% $ 250,736 $ 245,645 $ 5,091 2.1%
COVID-19 credits — (1,040) 1,040 NM — (5,491) 5,491 NM
Acquisition & integration expenses 2,107 — 2,107 NM 25,812 — 25,812 NM
Earn-Out adjustments — — — NM 8,477 — 8,477 NM
Adjusted income from operations (1)
$ 99,782 $ 82,865 $ 16,917 20.4% $ 285,025 $ 240,154 $ 44,871 18.7%
EPS $ 1.12 $ 1.09 $ 0.03 2.8% $ 4.10 $ 3.32 $ 0.78 23.5%
COVID-19 credits — (0.01) 0.01 NM — (0.07) 0.07 NM
Acquisition & integration expenses 0.03 — 0.03 NM 0.55 — 0.55 NM
Earn-out adjustments — — — NM 0.13 — 0.13 NM
Foreign exchange forward contract gain — — — NM (1.23) — (1.23) NM
Adjusted EPS (1)
$ 1.15 $ 1.08 $ 0.07 6.5% $ 3.55 $ 3.25 $ 0.30 9.2%


	Three Months Ended
	December 31, 2023		January 1, 2023		Change
					$		%
	($ in thousands, except per share data)
Income from operations	$	111,081	$	92,050	$	19,031	20.7%
Acquisition & integration expenses	—		3,761		(3,761)		NM
Earn-Out adjustments	—		933		(933)		NM
Adjusted income from operations (1)	$	111,081	$	96,744	$	14,337	14.8%

EPS	$	1.40	$	2.18	$	(0.78)	(35.8)%
Acquisition & integration expenses	—		0.05		(0.05)		NM
Earn-out adjustments	—		0.01		(0.01)		NM
Debt origination cost	—		0.04		(0.04)		NM
Foreign exchange forward contract gain	—		(0.94)		0.94		NM
Adjusted EPS (1)	$	1.40	$	1.34	$	0.06	4.5%

NM = not meaningful

(1) Non-GAAP financial measure

Operating income increased ~~$13.8~~$19.0 million, or ~~16.4%~~20.7%, in the ~~third~~first quarter of fiscal ~~2023~~ 2024 compared to ~~the third quarter of last year. In the first nine months of~~ fiscal 2023 ~~operating income increased $5.1 million, or 2.1%, compared to the same period of fiscal 2022.~~ quarter. The ~~third~~first quarter ~~and first nine months of~~ fiscal 2023 results include ~~$2.1 million and $25.8~~$3.8 million of acquisition ~~and integration~~ expenses (primarily ~~legal and other professional fees), respectively,~~legal-related) for the RPS ~~acquisition. The first nine months of fiscal 2023 results also include~~acquisition and losses of ~~$8.5~~$0.9 million ~~(all in the first half of fiscal 2023),~~ related to changes in the estimated fair value of contingent earn-out liabilities. The third quarter and first nine months of fiscal 2022 results include the benefit of ERC's totaling $1.0 million and $5.5 million, respectively, which represents reimbursement from the U.S. federal government under the Coronavirus Aid, Relief and Economic Security Act for the costs that we incurred during the second

~~quarter of fiscal 2020 to address the~~ ~~coronavirus disease 2019 ("COVID-19")~~ pandemic. These amounts were recognized in fiscal 2022 when the funds were received due to the uncertainty related to the computation of qualifying amounts and delayed processing times for our application. These amounts were primarily reflected as a reduction to "Other costs of revenue" in our consolidated statement of income and an increase to "Net cash provided by operating activities" in our consolidated statement of cash flows for fiscal 2022, consistent with the presentation of the related costs recognized in the second quarter of fiscal 2020.

We expect to incur additional integration expenses related to the RPS acquisition, primarily for information technology systems integration and real estate consolidation, in the fourth quarter of fiscal 2023. These costs may be material to our consolidated financial results.

Excluding the acquisition expenses and ~~integration expenses,~~ earn-out losses, ~~and the ERC's,~~ our adjusted operating income increased ~~$16.9~~$14.3 million, or ~~20.4% in the third quarter and $44.9 million, or 18.7%,~~14.8% in the first ~~nine months~~quarter of fiscal ~~2023~~2024 compared to ~~the same periods~~ last ~~year. These increases reflect~~year's quarter. The increase reflects improved results in both GSG and CIG segments, which are described below under "Government Services Group" and "Commercial/International Group", respectively.

Our net interest expense was ~~$14.9~~$9.6 million ~~in the third quarter~~ and ~~$33.6~~$5.4 million in the first ~~nine months~~quarters of fiscal 2024 and 2023, ~~compared~~respectively, and increased from last year primarily due to ~~$2.9 million and $9.0 million, respectively, in~~ the ~~same periods of last year.~~additional borrowings to fund the RPS acquisition. Net interest expense in the ~~first~~prior-year quarter ~~of fiscal 2023 included~~includes $2.7 million of additional expense for the write-off of previously deferred debt origination fees due to the cancellation of the bridge loan facility that we entered to support our offer to acquire RPS, which was replaced with an amendment to our existing debt facility. Net interest expense in the second quarter of fiscal 2023 included $1.1 million of additional expense for the write-off of previously deferred debt origination fees due to the repayment and cancellation of RPS' debt facilities. Excluding these write-offs, our interest expense increased $12.0 million in the third quarter and $20.8 million in the first nine months of fiscal 2023 compared to the same periods last year primarily due to the additional borrowings to fund the RPS acquisition.

Other non-operating income of ~~$89.4~~$68.0 million in the first ~~nine months~~quarter of fiscal 2023 ~~reflect gains~~reflects an unrealized gain on a foreign exchange forward contract integrated with the ~~RPS acquisition.~~acquisition of RPS. Although an effective economic hedge of our foreign exchange risk related to this transaction, the forward contract did not qualify for hedge accounting. As a result, the forward contract was marked-to-market with changes in fair value recognized in earnings each period. The forward contract was settled on January 23, 2023, together with the closing of the RPS acquisition, with a cumulative gain of approximately $109 million.

The effective tax rates for the first ~~nine months~~quarters of fiscal 2024 and 2023 were 26.1% and ~~2022 were 28.3% and 23.9%~~24.5%, respectively. Income tax expense was reduced by ~~$2.2~~$1.0 million and ~~$4.9~~$1.7 million of excess tax benefits on share-based payments in the first ~~nine months~~quarters of fiscal 2024 and 2023, ~~and 2022,~~ respectively. In addition, income tax expense in the first nine months of fiscal 2023 included non-operating income tax expenses of $7.2 million ($6.9 million in the second quarter) to recognize the tax liability for foreign earnings, primarily in the U.K. and Australia, that are no longer indefinitely reinvested and to increase the liability for an uncertain tax position. Excluding the impact of the excess tax benefits on share-based payments ~~and the non-operating tax expenses~~ in ~~the second and third quarter of fiscal 2023,~~both quarters, our effective tax rates in the first ~~nine months~~quarters of fiscal 2024 and 2023 were 27.1% and ~~2022 were 26.7% and 25.9%~~25.7%, respectively.

Our EPS was ~~$1.12 and $4.10~~$1.40 in the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2023~~2024, compared to ~~$1.09 and $3.32~~$2.18 in the prior-year ~~periods.~~quarter. Excluding the aforementioned non-operating and non-recurring items, our adjusted EPS was ~~$1.15~~$1.34 in the ~~third~~fiscal 2023 quarter. There were no non-operating or non-recurring items impacting EPS in the first quarter of fiscal 2023 compared to $1.08 in the year-ago quarter, an increase of 6.5%. On the same basis, our adjusted EPS for the first nine months of fiscal 2023, was $3.55 compared to $3.25 for the same period last year, an increase of 9.2%. For the third quarter, we estimated that RPS contributed $0.01 to our adjusted EPS before intangible amortization, which reduced our EPS by $0.14. For the first nine months of fiscal 2023, we estimated that RPS reduced our adjusted EPS by $0.02 before intangible amortization, which reduced our EPS by an additional $0.24. Excluding RPS, our adjusted EPS was $1.28 in the third quarter and $3.81 in the first nine months of fiscal 2023 representing increases of 18.5% and 17.2%, respectively, compared to the same periods in fiscal 2022.2024.

3230

Segment Results of Operations

Government Services Group










		Three Months Ended												Nine Months Ended
		July 2, 2023		July 3, 2022				Change						July 2, 2023			July 3, 2022		Change
						$				%						$			%
		($ in thousands)																					($ in thousands)
Revenue	Revenue	$	531,050			$	459,987			$	71,063		15.4%				$	1,565,371	$	1,365,041	$	200,330		14.7%
Subcontractor costs	Subcontractor costs	(140,834)		(124,487)				(16,347)				(13.1)		(386,559)			(364,970)		(21,589)		(5.9)
Subcontractor costs
Subcontractor costs
Revenue, net of subcontractor costs
Revenue, net of subcontractor costs
Revenue, net of subcontractor costs	Revenue, net of subcontractor costs	$	390,216	$	335,500			$	54,716			16.3		$	1,178,812		$	1,000,071	$	178,741	17.9

Income from operations	Income from operations	$	54,496	$	45,580			$	8,916			19.6%		$	167,053		$	147,104	$	19,949	13.6%

Income from operations

Income from operations

Revenue ~~increased $71.1 million, or 15.4%,~~ and revenue, net of subcontractor costs, increased ~~$54.7~~$104.0 million, or ~~16.3%~~22.1%, and increased $89.7 million, or 25.4%, respectively, in the ~~third~~first quarter of fiscal ~~2023~~2024 compared to ~~the year-ago~~last year's quarter. ~~For the first nine months~~The revenue growth includes an increase of ~~fiscal 2023, revenue increased $200.3 million. or 14.7%, and revenue, net of subcontractor costs, increased $178.7 million, or 17.9%, compared to the first nine months of last year.~~ ~~These increases include~~ approximately ~~$70~~$65 million in revenue in the ~~second~~first quarter of fiscal ~~2023~~2024 related to a distinct international development funded energy ~~programs~~program in ~~Ukraine.~~Ukraine, compared to fiscal 2023 quarter. In addition, the ~~increases reflect~~growth reflects higher U.S. state and local government activities related to digital water and other U.S. federal programs, ~~for civilian agencies,~~ partially offset by lower disaster response revenue.

Operating income increased ~~$8.9 million and $19.9~~$2.8 million in the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2023, respectively,~~2024 compared to the prior-year ~~periods. Operating~~quarter. The increase in operating income ~~for~~was due to the ~~third quarter and first nine months of fiscal 2022 included $0.7 million and $3.7 million~~ ~~of the aforementioned ERC's.~~revenue increase noted above. Our operating margin, based on revenue, net of subcontractor costs, ~~declined to 14.2% in the first nine months of fiscal 2023 compared to 14.7% in the same period last year primarily due to the ERC's. Excluding last year's ERC's, our operating margin~~ was 14.3% in the first ~~nine months~~quarter of fiscal ~~2022.~~2024, compared to 17.1% in the year-ago quarter. The decrease was due to a change in contract mix, specifically the aforementioned Ukraine energy program. The decrease was also due to lower favorable operating income adjustments for several projects upon their completion in the first quarter of fiscal 2024 compared to fiscal 2023 quarter.

Commercial/International Group










		Three Months Ended												Nine Months Ended
		July 2, 2023		July 3, 2022				Change						July 2, 2023			July 3, 2022		Change
						$				%						$			%
		($ in thousands)																						($ in thousands)
Revenue	Revenue	$	691,386			$	444,238			$	247,148		55.6%				$	1,741,300	$	1,277,469	$	463,831			36.3	%
Subcontractor costs	Subcontractor costs	(94,042)		(59,252)				(34,790)				(58.7)		(226,426)			(178,079)		(48,347)		(27.1)
Subcontractor costs
Subcontractor costs
Revenue, net of subcontractor costs
Revenue, net of subcontractor costs
Revenue, net of subcontractor costs	Revenue, net of subcontractor costs	$	597,344	$	384,986			$	212,358			55.2		$	1,514,874		$	1,099,390	$	415,484	37.8

Income from operations	Income from operations	$	69,572	$	53,535			$	16,037			30.0%		$	172,199		$	139,328	$	32,871	23.6		%

Income from operations

Income from operations

Revenue ~~increased $247.1 million, or 55.6%,~~ and revenue, net of subcontractor costs, increased ~~$212.4~~$229.6 million, or ~~55.2%~~52.2%, and increased $189.0 million, or 49.3%, respectively, in the ~~third~~first quarter of fiscal 2023 compared to last year's second quarter. For the first nine months of fiscal 2023, revenue increased $463.8 million, or 36.3%, and revenue, net of subcontractor costs, increased $415.5 million, or 37.8%,2024 compared to the ~~first nine months of fiscal 2022.~~year-ago quarter. The revenue from RPS ~~acquisition contributed approximately $370 million to revenue growth~~was substantially all in the ~~first nine months of fiscal 2023.~~CIG segment. The remaining revenue growth in fiscal 2023 primarily reflects increased activity on high performance buildings, clean energy and international infrastructure.

Operating income increased ~~$16.0~~$21.3 million, ~~and $32.9 million, in the third quarter and first nine months of fiscal 2023, respectively, compared to the same periods last year.~~ ~~The RPS acquisition contributed approximately $18 million to operating income~~or 42.5%, in the first ~~nine months~~quarter of fiscal ~~2023. Operating income in the third quarter and first nine months of~~2024 compared to fiscal ~~2022 included $0.3 million and $1.6 million of the aforementioned ERC's, respectively.~~2023 quarter. Our operating margin, based on revenue, net of subcontractor costs, was ~~11.4%~~12.5% in the first ~~nine months~~quarter of fiscal ~~2023~~2024 compared to ~~12.7%~~13.1% in the prior-year ~~period.~~quarter. Excluding the RPS ~~and~~acquisition, which currently has a lower margin compared to the ~~ERC's,~~rest of the CIG segment, our operating margin was ~~12.8%~~13.4% in the first ~~nine months~~quarter of fiscal 2024 compared to 13.1% in fiscal 2023 ~~compared to 12.5% in the same period of fiscal 2022.~~quarter. The improved operating margin was primarily due to our increased focus on high-end consulting services, project execution and higher labor utilization.

Backlog

Backlog generally represents the dollar amount of revenues we expect to realize in the future when we perform the work. The difference between remaining unsatisfied performance obligations ("RUPO") and backlog relates to contract terms. Specifically, our backlog does not consider the potential impact of termination for convenience clauses within the contracts. The contract term and thus remaining performance obligation on certain of our operations and maintenance contracts, are limited to the notice period required for contract termination (usually 30, 60, or 90 days). ~~At July 2, 2023 and October 2, 2022, the~~The differences between our backlog and RUPO ~~of $4.4 billion for each period~~at December 31, 2023 and October 1, 2023 were ~~immaterial.~~immaterial (see the table below):


	Balance at
	December 31, 2023		October 1, 2023
	($ in millions)

RUPO	$	4,707	$	4,755
Backlog	4,737		4,790

Financial Condition, Liquidity and Capital Resources

Capital Requirements. At ~~July 2,~~December 31, 2023, we h~~ad $176.1~~had $198.7 million of cash and cash equivalents and access to an additional ~~$614.3~~$734.3 million of borrowings available under our ~~amended~~ credit ~~facility described below.~~facility. During the first ~~nine months~~quarter of fiscal ~~2023,~~2024, we generated ~~$246.1~~$9.2 million of cash from operations. Our primary sources of liquidity are cash flows from operations and borrowings under our credit facilities. Our primary uses of cash are to fund working capital, cash dividends, capital expenditures and repayment of debt, as well as to fund acquisitions and earn-out obligations from prior acquisitions. We believe that our existing cash and cash equivalents, operating cash flows and borrowing capacity under our credit agreement as amended for the RPS acquisition in the second quarter of fiscal 2023, as described below, will be sufficient to meet our capital requirements for at least the next 12 months.

We use a variety of tax planning and financing strategies to manage our worldwide cash and deploy funds to locations where they are needed. We plan to repatriate undistributed foreign earnings as they become available to supplement our liquidity in the United States including to pay down the borrowings used to fund the RPS acquisition.

On October 5, 2021, our Board of Directors authorized a new stock repurchase program under which we could repurchase up to $400 million of our common stock. In the first ~~nine months~~quarters of fiscal 2024 and 2023, we did not repurchase any shares of our common stock. At ~~July 2,~~December 31, 2023, we had a remaining balance of $347.8 million under our stock repurchase program.

On November 7, 2022, our Board of Directors declared a quarterly cash dividend of $0.23 per share payable on December 9, 2022 to stockholders of record as of the close of business on November 21, 2022. On January 30, 2023, our Board of Directors declared a quarterly cash dividend of $0.23 per share payable on February 24, 2023 to stockholders of record as of the close of business on February 13, ~~2023. On May 8,~~ 2023, our Board of Directors declared a quarterly cash dividend of $0.26 per share payable on ~~June 6,~~December 13, 2023 to stockholders of record as of the close of business on ~~May 24,~~November 30, 2023.

Cash and Cash Equivalents. At ~~July 2,~~December 31, 2023, our cash and cash equivalents were ~~$176.1~~$198.7 million, ~~a decrease~~an increase of ~~$9.0~~$29.9 million compared to the fiscal ~~2022~~2023 year-end. ~~The decrease was primarily due to payments for the RPS acquisition, partially offset by net borrowings and cash provided by operating activities.~~

Operating Activities. For the first ~~nine months~~quarter of fiscal ~~2023,~~2024, net cash provided by operating activities was ~~$246.1~~$9.2 million, a decrease of ~~$29.9~~$15.9 million compared to ~~the prior-year period.~~ last year's quarter. The decrease was primarily due to ~~acquisition~~the timing of payments to our vendors and ~~integration expenses of $25.8 million for the RPS acquisition paid in fiscal 2023.~~employees.

Investing Activities. For the first ~~nine months~~quarter of fiscal ~~2023,~~2024, net cash used in investing activities was ~~$761.9~~$3.4 million, ~~an increase~~a decrease of ~~$723.6~~$1.5 million compared to the year-ago ~~period. The increase was primarily~~quarter due to ~~the RPS acquisition in the second quarter of fiscal 2023.~~lower capital expenditures.

Financing Activities. For the first ~~nine months~~quarter of fiscal ~~2023,~~2024, net cash provided by financing activities was ~~$494.4~~$18.4 million, compared to net cash used in financing activities of ~~$182.5~~$42.3 million in t~~he prior-year period. The financing activities in the first nine months of~~ fiscal 2023 ~~primarily consisted of additional borrowings~~quarter due to ~~fund the RPS acquisition.~~an increase in net debt borrowing.

Debt Financing. On October 26, 2022, we entered into a Third Amended and Restated Credit Agreement that provides for an additional $500 million senior secured term loan facility (the "New Term Loan Facility") increasing our total borrowing capacity to $1.55 billion. On January 23, 2023, we drew the entire amount of the New Term Loan Facility to partially finance the RPS acquisition. The New Term Loan Facility is not subject to any amortization payments of principal and matures on the third anniversary of the RPS acquisition closing date.

On February 18, 2022, we entered into Amendment No. 2 to our Second Amended and Restated Credit Agreement (“Amended Credit Agreement”) with a total borrowing capacity of $1.05 billion that will mature in February 2027. The

Amended Credit Agreement is a $750 million senior secured, five-year facility that provides for a $250 million term loan facility (the “Amended Term Loan Facility”) and a $500 million revolving credit facility (the “Amended Revolving Credit Facility”). In addition, the Amended Credit Agreement includes a $300 million accordion feature that allows us to increase the Amended Credit Agreement to $1.05 billion subject to lender approval. The Amended Credit Agreement provides for, among other things, (i) refinance indebtedness under our Credit Agreement dated as of July 30, 2018; (ii) finance open market repurchases of common stock, acquisitions and cash dividends and distributions; and (iii) utilize the proceeds for working capital, capital expenditures and other general corporate purposes. The Amended Credit Agreement provides for a reduction in the interest grid for meeting certain sustainability targets related to the (i) reduction of greenhouse gas emissions through the Company’s projects and operational sustainability initiatives and (ii) improvement of peoples’ lives as a result of the Company’s projects that provide environmental, social and governance benefits. The Amended Revolving Credit Facility includes a $100 million sublimit for the issuance of standby letters of credit, a $20 million sublimit for swingline loans and a $300 million sublimit for multicurrency borrowings and letters of credit.

On August 22, 2023, we issued $575.0 million in convertible notes that bear interest at 2.25% per annum payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2024 with a maturity date of August 15, 2028 (the "Convertible Notes"). As of October 1, 2023, $560.8 million of the Convertible Notes was included in long-term debt in our consolidated balance sheets, which is net of $14.2 million of unamortized debt issuance costs. The net proceeds from the Convertible Notes were $560.5 million, $51.8 million of which were used to purchase related capped call transactions on the issue date. The remaining proceeds were used to prepay and terminate the $234.4 million outstanding under the Amended Term Loan Facility, to prepay $89.4 million outstanding under the New Term Loan Facility and to pay down borrowings of $185.0 million under the Amended Revolving Credit Facility. See Note 14, "Long-term debt" of the "Notes to Consolidated Financial Statements" for further discussion.

At ~~July 2,~~December 31, 2023, we had ~~$919.4~~$385 million in outstanding borrowings under the Amended Credit Agreement, which was comprised of ~~$234.4 million under the Amended Term Loan Facility, $500~~$320 million under the New Term Loan Facility and ~~$185~~$65 million under the Amended Revolving Credit Facility. ~~The~~For the first quarter of fiscal 2024, the weighted-average interest rate of the outstanding borrowings ~~for~~under the ~~first nine months of fiscal 2023 is 5.88%~~Amended Credit Agreement was 6.75%. In addition, we had $0.7 million in standby letters of credit under the Amended Credit Agreement. Our year-to-date weighted-average interest rate on borrowings outstanding under the Amended Credit Agreement, including the effects of interest rate swap agreements described in Note 15, “Derivative Financial Instruments” of the “Notes to Consolidated Financial Statements”, was 5.46%. At ~~July 2,~~December 31, 2023, we had ~~$314.3~~$434.3 million of available ~~credit~~credit under the Amended Revolving Credit Facility, all of which could be borrowed without a violation of our ~~debt~~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 3.25 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 Agreement, and (ii) the accounts receivable, general intangibles and intercompany loans, and those of our subsidiaries that are guarantors or borrowers. At ~~July 2,~~December 31, 2023, we were in compliance with these covenants with a consolidated leverage ratio of ~~2.01x~~1.84x and a consolidated interest coverage ratio of ~~10.95x.~~

~~We are currently evaluating various capital structure and interest rate hedging strategies to lower our future borrowing costs that could be executed as early as the fourth quarter of fiscal 2023.~~9.49x.

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 ~~July 2,~~December 31, 2023, there were no borrowings under these facilities, and the aggregate amount of standby letters of credit outstanding was ~~$56.6~~$57.4 million. At ~~July 2,~~December 31, 2023, we had no bank overdrafts related to our disbursement bank accounts.

Inflation. 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.

Dividends. Our Board of Directors has authorized the following dividends in fiscal ~~2023:~~2024:

Dividend
Per Share Record Date Total Maximum
Payment
(in thousands) Payment Date
November 7, 2022 $ 0.23 November 21, 2022 $ 12,186 December 9, 2022
January 30, 2023 $ 0.23 February 13, 2023 $ 12,242 February 24, 2023
May 8, 2023 $ 0.26 May 24, 2023 $ 13,840 June 6, 2023
August 7, 2023 $ 0.26 August 23, 2023 N/A September 6, 2023

Dividend
Per Share

Record Date

Total Maximum
Payment
(in thousands)

Payment Date

November 13, 2023

0.26

November 30, 2023

13,873

December 13, 2023

January 29, 2024

0.26

February 14, 2024

N/A

February 27, 2024

Income Taxes

We evaluate the realizability of our deferred tax assets by assessing the valuation allowance and adjust 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. Based on ~~projected~~ 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.

It is reasonably possible that the amount of the unrecognized benefit with respect to certain of our unrecognized tax positions may not significantly decrease within the next 12 months.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.

Off-Balance Sheet Arrangements

In the ordinary course of business, we may use off-balance sheet arrangements if we believe that such arrangements would be an efficient way to lower our cost of capital or help us manage the overall risks of our business operations. We do not believe that such arrangements have had a material adverse effect on our financial position or our results of operations.

The following is a summary of our off-balance sheet arrangements:

•Letters of credit and bank guarantees are used primarily to support project performance and insurance programs. We are required to reimburse the issuers of letters of credit and bank guarantees for any payments they make under the outstanding letters of credit or bank guarantees. Our Amended Credit Agreement and additional letter of credit facilities cover the issuance of our standby letters of credit and bank guarantees and are critical for our normal operations. If we default on the Amended Credit Agreement or additional credit facilities, our inability to issue or renew standby letters of credit and bank guarantees would impair our ability to maintain normal operations. At ~~July 2,~~December 31, 2023, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and ~~$56.6~~$57.4 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. If our services under a guaranteed or indemnified project are later determined to have resulted in a material defect or other material deficiency, then we may be responsible for monetary damages or other legal remedies. When sufficient information about claims on guaranteed or indemnified projects is available and monetary damages or other costs or losses are determined to be probable, we recognize such guaranteed losses.

•In the ordinary course of business, we enter into various agreements as part of certain unconsolidated subsidiaries, joint ventures and other jointly executed contracts where we are jointly and severally liable. We

enter into these agreements primarily to support the project execution commitments of these entities. The potential payment amount of an outstanding performance guarantee is typically the remaining cost of work to be performed by or on behalf of third parties under engineering and construction contracts. However, we are not able to estimate other amounts that may be required to be paid in excess of estimated costs to complete contracts and, accordingly, the total potential payment amount under our outstanding performance guarantees cannot be estimated. For cost-plus contracts, amounts that may become payable pursuant to guarantee provisions are normally recoverable from the client for work performed under the contract. For lump sum or fixed-price

contracts, this amount is the cost to complete the contracted work less amounts remaining to be billed to the client under the contract. Remaining billable amounts could be greater or less than the cost to complete. In those cases where costs exceed the remaining amounts payable under the contract, we may have recourse to third parties, such as owners, co-venturers, subcontractors or vendors, for claims.

•In the ordinary course of business, our clients may request that we obtain surety bonds in connection with contract performance obligations that are not required to be recorded in our consolidated balance sheets. We are obligated to reimburse the issuer of our surety bonds for any payments made thereunder. Each of our commitments under performance bonds generally ends concurrently with the expiration of our related contractual obligation.

Critical Accounting Policies

Our critical accounting policies are disclosed in our Annual Report on Form 10-K for the fiscal year ended October ~~2, 2022.~~1, 2023. To date, there have been no material changes in our critical accounting policies as reported in our ~~2022~~2023 Annual Report on Form 10-K.

New Accounting Pronouncements

For information regarding recent accounting pronouncements, see “Notes to Consolidated Financial Statements” included in Part I, Item 1 of this Quarterly Report.

Financial Market Risks

We do not enter into derivative financial instruments for trading or speculation purposes. In the normal course of business, we have exposure to both interest rate risk and foreign currency transaction and translation risk, primarily related to the Canadian and Australian ~~dollar,~~dollars, the Euro, and the British Pound.

We are exposed to interest rate risk under our Amended Credit Agreement. We can borrow, at our option, under both the Amended Term Loan Facility and Amended Revolving Credit Facility. We may borrow on the Amended Revolving Credit Facility, at our option, at either (a) a Eurocurrency rate plus a margin that ranges from 1.000% to 1.875% 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 0.875% per annum. In each case, the applicable margin is based on our Consolidated Leverage Ratio, calculated quarterly. The Amended Term Loan Facility is subject to the same interest rate provisions. Borrowings at the base rate have no designated term and may be repaid without penalty any time prior to the Facility’s maturity date. Borrowings at a SOFR rate have a term no less than 30 days and no greater than 180 days and may be prepaid without penalty. Typically, at the end of such term, such borrowings may be rolled over at our discretion into either a borrowing at the base rate or a borrowing at a SOFR rate with similar terms, not to exceed the maturity date of the Facility. The Facility matures on February 18, 2027. At ~~July 2,~~December 31, 2023, we had ~~$919.4~~$385 million in outstanding borrowings under the Amended Credit Agreement, which was comprised of ~~$234.4 million under the Amended Term Loan Facility, $500~~$320 million under the New Term Loan Facility and ~~$185~~$65 million under the Amended Revolving Credit Facility. ~~The year-to-date~~For the first quarter of fiscal 2024, the weighted-average interest rate of the outstanding borrowings ~~during fiscal 2023 was 5.88%.~~

In August 2018, we entered into five interest rate swap agreements with five banks to fix the variable interest rate on $250 million of our Amended Term Loan Facility. The objective of these interest rate swaps was to eliminate the variability of our cash flows on the amount of interest expense we pay under our Credit Agreement. At July 2, 2023, the notional principal of our outstanding interest swap agreements was $190.6 million ($38.1 million each.) Our year-to-date average effective interest rate on borrowings outstanding under the Amended Credit Agreement ~~including the effects of interest rate swap agreements, at July 2, 2023,~~ was ~~5.46%. For more information, see Note 15, “Derivative Financial Instruments” of the “Notes to Consolidated Financial Statements”~~6.75%.

The majority of our transactions are in U.S. dollars; however, some of our subsidiaries conduct business in foreign currencies, primarily the Canadian and Australian ~~dollar,~~dollars, the Euro, and the British Pound. Therefore, we are subject to currency exposure and volatility because of currency fluctuations. We attempt to minimize our exposure to these fluctuations by matching revenue and

expenses in the same currency for our contracts. We report our foreign currency gains and losses in “Selling, general and administrative expenses” on our consolidated statements of income. The impact of the foreign currency gains and losses was immaterial for the first ~~nine months~~quarters of fiscal ~~2023~~2024 and ~~2022.~~2023.

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. To the extent the U.S. dollar strengthens against foreign currencies, the translation of these foreign currency denominated transactions will result in reduced revenue, operating expenses, assets and liabilities. Similarly, our revenue, operating expenses, assets and liabilities will increase if the U.S. dollar weakens against foreign currencies. For the first ~~nine months~~quarters of fiscal 2024 and 2023, 38.5% and ~~2022, 36.2% and 31.4%~~29.8% of our consolidated revenue, respectively, was generated by our international business. For the first ~~nine months~~quarter of fiscal ~~2023,~~2024, the effect of foreign exchange rate translation on ~~the~~our consolidated balance ~~sheets~~sheet was an increase in ~~our~~ equity by ~~$69.5~~$63.1 million compared to ~~a decrease in equity~~an increase of ~~$42.8~~$33.1 million in the ~~first nine months of fiscal 2022.~~prior-year quarter. These amounts were recognized as adjustments to equity through other comprehensive income.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Please refer to the information we have included under the heading “Financial Market Risks” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 2 of this Form 10-Q which is incorporated herein by reference.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures and changes in internal control over financial reporting. At ~~July 2,~~December 31, 2023, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. ~~Consistent with the guidance issued by the Securities and Exchange Commission Staff, the evaluation excluded Amyx, which we acquired on January 3, 2023, and RPS, which we acquired on January 23, 2023.~~ Based on our management’s evaluation (with the participation of our principal executive officer and principal financial officer), our principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), were effective.

Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting that occurred during the quarter ended ~~July 2,~~December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For information regarding legal proceedings, see Note 17, "Commitments and Contingencies" included in the "Notes to Consolidated Financial Statements" included in Part I, Item 1 of this Form 10-Q which is incorporated herein by reference.

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Item 1A. Risk Factors

There have been no material changes in our risk factors disclosed in Part I, Item 1A in our ~~2022~~2023 Annual Report on Form 10-K. For updated disclosures related to interest and exchange rate risks, see “Financial Market Risks” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 2 of this Form 10-Q which is incorporated herein by reference.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Item 4. Mine Safety Disclosures

Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") requires domestic mine operators to disclose violations and orders issued under the Mine Act by Mine Safety and Health Administration. We do not act as the owner of any mines, but we may act as a mining operator as defined under the Mine Act where we may be an independent contractor performing services or construction at such mine. Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K is included in Exhibit 95.

Item 5. Other Information

Rule 10b5-1 Trading Plans

During the ~~third~~first quarter of fiscal ~~2023,~~2024, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any "non-Rule 10b5-1 trading arrangement" as defined in Item 408(c) of Regulation S-K.

Item 6. Exhibits

The following documents are filed as Exhibits to this Report:



31.1			Chief Executive Officer Certification pursuant to Rule 13a-14(a)/15d-14(a).

31.2			Chief Financial Officer Certification pursuant to Rule 13a-14(a)/15d-14(a).

32.1			Certification of Chief Executive Officer pursuant to Section 1350.

32.2			Certification of Chief Financial Officer pursuant to Section 1350.

95			Mine Safety Disclosure.

101			The following financial information from our Company’s Quarterly Report on Form 10-Q, for the period ended ~~July 2,~~December 31, 2023, formatted in Inline eXtensible Business Reporting Language: (i) Consolidated Balance Sheets (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Equity, (vi) Notes to Consolidated Financial Statements.

104			Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Dated: ~~August 10, 2023~~February 2, 2024	TETRA TECH, INC.



	By:	/s/ DAN L. BATRACK
		Dan L. Batrack
		Chairman and Chief Executive Officer
		(Principal Executive Officer)


	By:	/s/ STEVEN M. BURDICK
		Steven M. Burdick
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)


	By:	/s/ BRIAN N. CARTER
		Brian N. Carter
		Senior Vice President, Corporate Controller
		(Principal Accounting Officer)

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	GSG		CIG		Total

Balance at October 2, 2022	$	519,102	$	591,310	$	1,110,412
Acquisition activity	104,100		619,832		723,932

Translation adjustments	5,459		47,051		52,510
Balance at July 2, 2023	$	628,661	$	1,258,193	$	1,886,854