Cover
Cover - shares | 6 Months Ended | |
Mar. 29, 2020 | Apr. 22, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 29, 2020 | |
Document Transition Report | false | |
Entity File Number | 0-19655 | |
Entity Registrant Name | TETRA TECH, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 95-4148514 | |
Entity Address, Address Line One | 3475 East Foothill Boulevard | |
Entity Address, City or Town | Pasadena | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 91107 | |
City Area Code | 626 | |
Local Phone Number | 351-4664 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | TTEK | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 54,026,070 | |
Entity Central Index Key | 0000831641 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-27 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 29, 2020 | Sep. 29, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 134,981 | $ 120,732 |
Accounts receivable, net | 660,579 | 768,720 |
Contract assets | 109,166 | 114,324 |
Prepaid expenses and other current assets | 76,602 | 62,196 |
Income taxes receivable | 20,612 | 13,820 |
Total current assets | 1,001,940 | 1,079,792 |
Property and equipment, net | 35,486 | 39,441 |
Right-of-use assets, operating leases | 262,678 | |
Investments in unconsolidated joint ventures | 7,345 | 6,873 |
Goodwill | 944,718 | 924,820 |
Intangible assets, net | 14,859 | 16,440 |
Deferred tax assets | 24,073 | 28,385 |
Other long-term assets | 52,051 | 51,657 |
Total assets | 2,343,150 | 2,147,408 |
Current liabilities: | ||
Accounts payable | 120,587 | 206,609 |
Accrued compensation | 161,494 | 203,384 |
Contract liabilities | 189,741 | 165,611 |
Short-term lease liabilities, operating leases | 70,594 | |
Current portion of long-term debt | 12,525 | 12,572 |
Current contingent earn-out liabilities | 29,605 | 24,977 |
Other current liabilities | 151,209 | 156,801 |
Total current liabilities | 735,755 | 769,954 |
Deferred tax liabilities | 12,908 | 12,971 |
Long-term debt | 333,041 | 263,949 |
Long-term lease liabilities, operating leases | 212,229 | |
Long-term contingent earn-out liabilities | 23,323 | 28,015 |
Other long-term liabilities | 75,656 | 83,055 |
Commitments and contingencies (Note 16) | ||
Equity: | ||
Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding at March 29, 2020 and September 29, 2019 | 0 | 0 |
Common stock - authorized, 150,000 shares of $0.01 par value; issued and outstanding, 54,142 and 54,565 shares at March 29, 2020 and September 29, 2019, respectively | 541 | 546 |
Additional paid-in capital | 10,473 | 78,132 |
Accumulated other comprehensive loss | (199,391) | (160,584) |
Retained earnings | 1,138,485 | 1,071,192 |
Tetra Tech stockholders’ equity | 950,108 | 989,286 |
Noncontrolling interests | 130 | 178 |
Total stockholders' equity | 950,238 | 989,464 |
Total liabilities and stockholders' equity | $ 2,343,150 | $ 2,147,408 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 29, 2020 | Sep. 29, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, authorized shares (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, authorized shares (in shares) | 150,000,000 | 150,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued (in shares) | 54,142,000 | 54,565,000 |
Common stock, shares outstanding (in shares) | 54,142,000 | 54,565,000 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 29, 2020 | Mar. 31, 2019 | Mar. 29, 2020 | Mar. 31, 2019 | |
Revenue | $ 734,133 | $ 722,621 | $ 1,531,756 | $ 1,440,052 |
Gross profit | 97,000 | 96,471 | 206,737 | 195,155 |
Selling, general and administrative expenses | (51,041) | (48,898) | (97,476) | (91,871) |
Contingent consideration – fair value adjustments | 1,571 | (28) | 1,571 | (28) |
Income from operations | 47,530 | 47,545 | 110,832 | 103,256 |
Interest expense | (3,501) | (3,164) | (6,849) | (6,061) |
Income before income tax (expense) benefit | 44,029 | 44,381 | 103,983 | 97,195 |
Income tax (expense) benefit | (7,616) | 11,563 | (20,253) | 781 |
Net income | 36,413 | 55,944 | 83,730 | 97,976 |
Net income attributable to noncontrolling interests | (16) | (33) | (23) | (69) |
Net income attributable to Tetra Tech | $ 36,397 | $ 55,911 | $ 83,707 | $ 97,907 |
Earnings per share attributable to Tetra Tech: | ||||
Basic (in dollars per share) | $ 0.67 | $ 1.01 | $ 1.53 | $ 1.77 |
Diluted (in dollars per share) | $ 0.66 | $ 1 | $ 1.51 | $ 1.74 |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 54,699 | 55,143 | 54,541 | 55,237 |
Diluted (in shares) | 55,463 | 55,985 | 55,380 | 56,161 |
Subcontractor costs | ||||
Cost of revenue | $ (149,673) | $ (137,237) | $ (333,274) | $ (301,305) |
Other costs of revenue | ||||
Cost of revenue | $ (487,460) | $ (488,913) | $ (991,745) | $ (943,592) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 29, 2020 | Mar. 31, 2019 | Mar. 29, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 36,413 | $ 55,944 | $ 83,730 | $ 97,976 |
Other comprehensive income, net of tax | ||||
Foreign currency translation adjustment, net of tax | (47,011) | 9,245 | (33,112) | (14,089) |
Loss on cash flow hedge valuations | (7,365) | (5,695) | ||
Loss on cash flow hedge valuations | (2,769) | (6,778) | ||
Other comprehensive (loss) income attributable to Tetra Tech, net of tax | (54,376) | 6,476 | (38,807) | (20,867) |
Other comprehensive (loss) income attributable to noncontrolling interests, net of tax | (4) | 1 | (2) | 238 |
Comprehensive (loss) income attributable to Tetra Tech, net of tax | (17,979) | 62,387 | 44,900 | 77,040 |
Comprehensive income attributable to noncontrolling interests, net of tax | 12 | 34 | 21 | 307 |
Comprehensive (loss) income, net of tax | $ (17,967) | $ 62,421 | $ 44,921 | $ 77,347 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total Tetra Tech Equity | Non-Controlling Interests |
Beginning balance (in shares) at Sep. 30, 2018 | 55,349,000 | ||||||
Beginning balance at Sep. 30, 2018 | $ 967,100 | $ 553 | $ 148,803 | $ (127,350) | $ 944,965 | $ 966,971 | $ 129 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 97,976 | 97,907 | 97,907 | 69 | |||
Other comprehensive income (loss) | (20,629) | (20,867) | (20,867) | 238 | |||
Distributions paid to noncontrolling interests | (276) | (276) | |||||
Cash dividends per common share | (13,270) | (13,270) | (13,270) | ||||
Stock-based compensation | 8,595 | 8,595 | 8,595 | ||||
Restricted & performance shares released (in shares) | 179,000 | ||||||
Restricted & performance shares released | (6,802) | $ 2 | (6,804) | (6,802) | |||
Stock options exercised (in shares) | 151,000 | ||||||
Stock options exercised | 3,834 | $ 2 | 3,832 | 3,834 | |||
Shares issued for Employee Stock Purchase Plan (in shares) | 148,000 | ||||||
Shares issued for Employee Stock Purchase Plan | 6,843 | $ 1 | 6,842 | 6,843 | |||
Stock repurchases (in shares) | (880,000) | ||||||
Stock repurchases | (50,000) | $ (9) | (49,991) | (50,000) | |||
Ending balance (in shares) at Mar. 31, 2019 | 54,947,000 | ||||||
Ending balance at Mar. 31, 2019 | 990,605 | $ 549 | 111,277 | (148,217) | 1,026,836 | 990,445 | 160 |
Beginning balance (in shares) at Dec. 30, 2018 | 55,326,000 | ||||||
Beginning balance at Dec. 30, 2018 | 954,301 | $ 553 | 130,753 | (154,693) | 977,541 | 954,154 | 147 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 55,944 | 55,911 | 55,911 | 33 | |||
Other comprehensive income (loss) | 6,477 | 6,476 | 6,476 | 1 | |||
Distributions paid to noncontrolling interests | (21) | (21) | |||||
Cash dividends per common share | (6,616) | (6,616) | (6,616) | ||||
Stock-based compensation | 4,066 | 4,066 | 4,066 | ||||
Restricted & performance shares released (in shares) | 5,000 | ||||||
Restricted & performance shares released | (66) | $ 0 | (66) | (66) | |||
Stock options exercised (in shares) | 65,000 | ||||||
Stock options exercised | 1,520 | $ 1 | 1,519 | 1,520 | |||
Stock repurchases (in shares) | (449,000) | ||||||
Stock repurchases | (25,000) | $ (5) | (24,995) | (25,000) | |||
Ending balance (in shares) at Mar. 31, 2019 | 54,947,000 | ||||||
Ending balance at Mar. 31, 2019 | 990,605 | $ 549 | 111,277 | (148,217) | 1,026,836 | 990,445 | 160 |
Beginning balance (in shares) at Sep. 29, 2019 | 54,565,000 | ||||||
Beginning balance at Sep. 29, 2019 | 989,464 | $ 546 | 78,132 | (160,584) | 1,071,192 | 989,286 | 178 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 83,730 | 83,707 | 83,707 | 23 | |||
Other comprehensive income (loss) | (38,809) | (38,807) | (38,807) | (2) | |||
Distributions paid to noncontrolling interests | (69) | (69) | |||||
Cash dividends per common share | (16,414) | (16,414) | (16,414) | ||||
Stock-based compensation | 9,437 | 9,437 | 9,437 | ||||
Restricted & performance shares released (in shares) | 215,000 | ||||||
Restricted & performance shares released | (11,098) | $ 2 | (11,100) | (11,098) | |||
Stock options exercised (in shares) | 269,000 | ||||||
Stock options exercised | 7,927 | $ 3 | 7,924 | 7,927 | |||
Shares issued for Employee Stock Purchase Plan (in shares) | 168,000 | ||||||
Shares issued for Employee Stock Purchase Plan | 8,715 | $ 1 | 8,714 | 8,715 | |||
Stock repurchases (in shares) | (1,075,000) | ||||||
Stock repurchases | (82,645) | $ (11) | (82,634) | (82,645) | |||
Ending balance (in shares) at Mar. 29, 2020 | 54,142,000 | ||||||
Ending balance at Mar. 29, 2020 | 950,238 | $ 541 | 10,473 | (199,391) | 1,138,485 | 950,108 | 130 |
Beginning balance (in shares) at Dec. 29, 2019 | 54,728,000 | ||||||
Beginning balance at Dec. 29, 2019 | 1,026,765 | $ 547 | 60,747 | (145,015) | 1,110,312 | 1,026,591 | 174 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 36,413 | 36,397 | 36,397 | 16 | |||
Other comprehensive income (loss) | (54,380) | (54,376) | (54,376) | (4) | |||
Distributions paid to noncontrolling interests | (56) | (56) | |||||
Cash dividends per common share | (8,224) | (8,224) | (8,224) | ||||
Stock-based compensation | 4,955 | 4,955 | 4,955 | ||||
Restricted & performance shares released (in shares) | 30,000 | ||||||
Restricted & performance shares released | (280) | $ 1 | (281) | (280) | |||
Stock options exercised (in shares) | 215,000 | ||||||
Stock options exercised | 6,513 | $ 2 | 6,511 | 6,513 | |||
Stock repurchases (in shares) | (831,000) | ||||||
Stock repurchases | (61,468) | $ (9) | (61,459) | (61,468) | |||
Ending balance (in shares) at Mar. 29, 2020 | 54,142,000 | ||||||
Ending balance at Mar. 29, 2020 | $ 950,238 | $ 541 | $ 10,473 | $ (199,391) | $ 1,138,485 | $ 950,108 | $ 130 |
Consolidated Statements of Eq_2
Consolidated Statements of Equity (Parenthetical) - $ / shares | Jan. 27, 2020 | Nov. 11, 2019 | Jan. 28, 2019 | Nov. 05, 2018 | Mar. 29, 2020 | Mar. 31, 2019 | Mar. 29, 2020 | Mar. 31, 2019 |
Statement of Stockholders' Equity [Abstract] | ||||||||
Dividend paid per share (in dollars per share) | $ 0.15 | $ 0.15 | $ 0.12 | $ 0.12 | $ 0.15 | $ 0.12 | $ 0.30 | $ 0.24 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 83,730 | $ 97,976 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 12,809 | 14,731 |
Equity in income of unconsolidated joint ventures | (3,333) | (1,386) |
Distributions of earnings from unconsolidated joint ventures | 2,467 | 1,193 |
Amortization of stock-based awards | 9,437 | 8,595 |
Deferred income taxes | 3,153 | (26,092) |
Provision for doubtful accounts | 5,560 | 9,878 |
Fair value adjustments to contingent consideration | (1,571) | 28 |
Gain on sale of property and equipment | (3,523) | (223) |
Changes in operating assets and liabilities, net of effects of business acquisitions: | ||
Accounts receivable and contract assets | 99,367 | 48,041 |
Prepaid expenses and other assets | 5,317 | (16,007) |
Accounts payable | (89,630) | (26,908) |
Accrued compensation | (44,690) | (29,604) |
Contract liabilities | 24,130 | 5,114 |
Other liabilities | (14,129) | 17,863 |
Income taxes receivable/payable | (5,895) | (3,951) |
Net cash provided by operating activities | 83,199 | 99,248 |
Cash flows from investing activities: | ||
Payments for business acquisitions, net of cash acquired | (27,739) | 3,545 |
Capital expenditures | (5,876) | (7,178) |
Proceeds from sale of property and equipment | 6,316 | 250 |
Net cash used in investing activities | (27,299) | (3,383) |
Cash flows from financing activities: | ||
Proceeds from borrowings | 243,364 | 128,717 |
Repayments on long-term debt | (174,730) | (162,092) |
Repurchases of common stock | (81,660) | (50,000) |
Taxes paid on vested restricted stock | (10,857) | (6,802) |
Stock options exercised | 7,927 | 3,834 |
Net change in overdrafts | 2,737 | 0 |
Dividends paid | (16,414) | (13,270) |
Payments of contingent earn-out liabilities | (9,624) | (11,067) |
Net cash used in financing activities | (39,257) | (110,680) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (2,409) | (645) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 14,234 | (15,460) |
Cash, cash equivalents and restricted cash at beginning of period | 120,901 | 148,884 |
Cash, cash equivalents and restricted cash at end of period | 135,135 | 133,424 |
Cash paid during the period for: | ||
Interest | 6,510 | 6,057 |
Income taxes, net of refunds received of $0.5 million and $0.9 million | 23,437 | 30,707 |
Supplemental disclosures of non-cash investing activities: | ||
Issuance of promissory note for business acquisition | 0 | 24,688 |
Reconciliation of cash, cash equivalents and restricted cash: | ||
Total cash, cash equivalents and restricted cash | $ 135,135 | $ 133,424 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | 6 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Statement of Cash Flows [Abstract] | ||
Income tax refunds | $ 0.5 | $ 0.9 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Mar. 29, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim 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 related notes contained in our Annual Report on Form 10-K for the fiscal year ended September 29, 2019. 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 year or for future years. In the first quarter of fiscal 2020, we adopted Accounting Standards Update ("ASU") 2016-02 "Leases (Topic 842)", using the modified retrospective method. The new guidance was applied to leases that existed or were entered into on or after September 30, 2019. Our current year financial statements have been presented under Leases (Topic 842). However, the prior-year financial statements have not been adjusted and continue to be reported in accordance with previous guidance. See Note 8, "Leases" for further discussion of the adoption and the impact on our financial statements. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Mar. 29, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2017, the Financial Accounting Standards Board ("FASB") issued accounting guidance on hedging activities. The amendment better aligns an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018 (first quarter of fiscal 2020 for us). The adoption of this guidance had no impact on our consolidated financial statements. In February 2018, the FASB issued guidance on reclassification of certain tax effects from accumulated comprehensive income, which allows for a reclassification of stranded tax effects from the Tax Cuts and Jobs Act ("TCJA") from accumulated other comprehensive income to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018 (first quarter of fiscal 2020 for us). The adoption of this guidance had no material impact on our consolidated financial statements. In June 2016, the FASB issued updated guidance which requires entities to estimate all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The updated guidance also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. Subsequently, the FASB issued guidance clarifying and amending certain aspects of the credit losses standard in November 2019 and February 2020. The guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019 (first quarter of fiscal 2021 for us). Early adoption is permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In August 2018, the FASB issued updated guidance modifying certain fair value measurement disclosures. The updated guidance contains additional disclosures to enable users of the financial statements to better understand the entity’s assumption used to develop significant unobservable inputs for Level 3 fair value measurements, but also eliminates the requirement for entities to disclose the amount of and reasons for transfers between Level 1 and Level 2 investments within the fair value hierarchy. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019 (first quarter of fiscal 2021 for us). Early adoption is permitted. We do not expect the adoption of this guidance to have a significant impact on our consolidated financial statements. In December 2019, the FASB issued guidance simplifying the accounting for income taxes by removing certain exceptions to general principles in Topic 740 and amending certain existing guidance for clarity. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020 (first quarter of fiscal 2022 for us). Early adoption is permitted. We do not expect the adoption of this guidance to have an impact on our consolidated financial statements. |
Revenue and Contract Balances
Revenue and Contract Balances | 6 Months Ended |
Mar. 29, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue and Contract Balances | Revenue and Contract Balances Disaggregation of Revenue 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 provide information about disaggregated revenue: Three Months Ended Six Months Ended March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019 (in thousands) Client Sector: U.S. state and local government $ 102,260 $ 129,868 $ 224,616 $ 253,147 U.S. federal government (1) 243,261 216,498 488,564 441,256 U.S. commercial 162,198 165,970 345,169 338,758 International (2) 226,414 210,285 473,407 406,891 Total $ 734,133 $ 722,621 $ 1,531,756 $ 1,440,052 Contract Type: Fixed-price $ 255,613 $ 247,831 $ 526,668 $ 488,764 Time-and-materials 350,618 345,626 738,776 682,163 Cost-plus 127,902 129,164 266,312 269,125 Total $ 734,133 $ 722,621 $ 1,531,756 $ 1,440,052 (1) Includes revenue generated under U.S. federal government contracts performed outside the United States. (2) Includes revenue generated from foreign operations, primarily in Canada, Australia and the United Kingdom, and revenue generated from non-U.S. clients. Other than the U.S. federal government, no single client accounted for more than 10% of our revenue for the three and six months ended March 29, 2020 and March 31, 2019. 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 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: Balance at March 29, 2020 September 29, 2019 (in thousands) Contract assets (1) $ 109,166 $ 114,324 Contract liabilities (189,741) (165,611) Net contract liabilities $ (80,575) $ (51,287) (1) Includes $25.5 million and $26.5 million of contract retentions as of March 29, 2020 and September 29, 2019, respectively. Revenue recognized in the first half of fiscal 2020 from amounts included in contract liabilities at the beginning of the period was approximately $105 million ( approximately $74 million in the first half of fiscal 2019.) We recognize revenue primarily using the cost-to-cost measure of progress method, which involves the estimates of progress towards completion. 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, we recognized net unfavorable operating income adjustments of $2.8 million in the second quarter and first half of fiscal 2020. These adjustments to our operating income in the first half of fiscal 2019 were immaterial. 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. As of March 29, 2020 and September 29, 2019, our consolidated balance sheets included liabilities for anticipated losses of $14.6 million and $11.5 million, respectively. The estimated cost to complete the related contracts as of March 29, 2020 was approximately $57 million. Accounts Receivable, Net Net accounts receivable consisted of the following: Balance at March 29, 2020 September 29, (in thousands) Billed $ 438,029 $ 522,256 Unbilled 279,440 300,035 Total accounts receivable 717,469 822,291 Allowance for doubtful accounts (56,890) (53,571) Total accounts receivable, net $ 660,579 $ 768,720 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. Most of our unbilled receivables at March 29, 2020 are expected to be billed and collecte d within 12 months. The allowance for doubtful accounts represents amounts that are expected to become uncollectible or unrealizable in the future. We 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, including the potential impacts of the coronavirus disease 2019 ("COVID-19") pandemic, that may affect our clients' ability to pay. Total accounts receivable at March 29, 2020 and September 29, 2019 included approximately $14 million and $15 million, respectively, related to claims, including requests for equitable adjustment, on contracts that provide for price redeterminat ion. We regularly evaluate all unsettled claim amounts and record appropriate adjustments to operating earnings when it is probable that the claim will result in a different contract value than the amount previously estimated. We recorded no material gains or losses related to claims in the first half of fiscal 2020. In the first half of fiscal 2019 (all in the second quarter), we recognized reductions of revenue of $4.8 million and $3.6 million and related losses in operating income of $5.9 million and $3.6 million in our Remediation and Construction Management ("RCM") and Commercial/International Services Group ("CIG") segments, respectively. No single client accounted for more than 10% of our accounts receivable at March 29, 2020 and September 29, 2019. Remaining Unsatisfied Performance Obligations (“RUPOs”) Our RUPOs represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. We had $3.0 billion of RUPOs as of March 29, 2020. RUPOs increase with awards from new contracts or additions on existing contracts and decrease as work is performed and revenue is recognized on existing contracts. RUPOs may also decrease when projects are canceled or modified in scope. We include a contract within our RUPOs when the contract is awarded and an agreement on contract terms has been reached. We expect to satisfy our RUPOs as of March 29, 2020 over the following periods: Amount (in thousands) Within 12 months $ 1,716,973 Beyond 1,255,124 Total $ 2,972,097 Although RUPOs reflect business that is considered to be firm, cancellations, deferrals or scope adjustments may occur. RUPOs are 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). |
Acquisitions
Acquisitions | 6 Months Ended |
Mar. 29, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions In the second quarter of fiscal 2020, we acquired Segue Technologies, Inc. ("SEG"), a leading information technology management consulting firm based in Arlington, Virginia. SEG is part of our Government Services Group ("GSG") segment. The fair value of the purchase price was $41.8 million. This amount was comprised of $30.0 million in initial cash payments made to the sellers, $0.5 million of payables related to estimated post-closing adjustments for net assets acquired, and $11.3 million for the estimated fair value of contingent earn-out obligations, with a maximum of $20.0 million, based upon the achievement of specified operating income targets in each of the three years following the acquisition. In the second quarter of fiscal 2019, we acquired eGlobalTech ("EGT"), a high-end information technology solutions, cloud migration, cybersecurity, and management consulting firm based in Arlington, Virginia. EGT is part of our GSG segment. The fair value of the purchase price was $49.1 million. This amount was comprised of a $24.7 million promissory note issued to the sellers (which was subsequently paid in full in the third quarter of fiscal 2019), $3.3 million of payables related to estimated post-closing adjustments for net assets acquired, and $21.1 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. In the fourth quarter of fiscal 2019, we acquired WYG plc (“WYG”), which employs approximately 1,600 staff primarily in the United Kingdom and Europe, delivering consulting and engineering solutions for complex projects across key service areas including planning, water and environment, transport, infrastructure, the built environment, architecture, urban design, surveying, asset management, program management, and international development. WYG’s United Kingdom based consulting and engineering business is part of our CIG segment, while its international development business is part of our GSG segment. The fair value of the purchase price was $54.2 million, entirely paid in cash. In addition, we assumed a net debt of $11.5 million, which was subsequently paid in full in the fourth quarter of fiscal 2019. We also incurred $10.4 million in acquisition and transaction costs related to the WYG acquisition in the fourth quarter of fiscal 2019. Goodwill additions resulting from the above business combinations are primarily attributable to the existing workforce of the acquired companies and the synergies expected to arise after the acquisitions. The goodwill additions related to our fiscal 2019 acquisitions represent the value of a workforce with emerging technology and new techniques that incorporate artificial intelligence, data analytics and advanced cybersecurity solutions for government and commercial clients, and expanding our geographic presence in the United Kingdom with a strong platform for growth in the United Kingdom and Europe. The fiscal 2020 goodwill addition represents the value of a workforce with distinct expertise in the high-end information technology field, in the areas of data analytics, modeling and simulation, cloud, and agile software development. In addition, 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. The results of these acquisitions were included in our consolidated financial statements from their respective closing dates. These acquisitions were not considered material to our consolidated financial statements. As a result, no pro forma information has been provided. Backlog, client relations and trade name intangible assets include the fair value of existing contracts and the underlying customer relationships with lives ranging from one three 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 “Long-term 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 two We review and re-assess 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. In the second quarter of fiscal 2020, 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 RUPOs, and the inventory of prospective new contract awards. In addition, we considered the potential impact of the global economic disruption due to the COVID-19 pandemic on our operating income projections over the various earn-out periods. As a result, we had a net reduction of $1.6 million in our contingent earn-out liabilities as of March 29, 2020 and a net gain of $1.6 million in our operating income for the first half of fiscal 2020 (all in the second quarter). These adjustments were immaterial for the first half of fiscal 2019. At March 29, 2020, there was a total potential maximum of $81.8 million of outstanding contingent consideration related to acquisitions. Of this amount, $52.9 million was estimated as the fair value and accrued on our consolidated balance sheet. If the global economic disruption due to the COVID-19 pandemic is prolonged, we could have more significant reductions in our contingent earn-out liabilities and related gains in operating income in future periods. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Mar. 29, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The following table summarizes the changes in the carrying value of goodwill: GSG CIG Total (in thousands) Balance at September 29, 2019 $ 441,802 $ 483,018 $ 924,820 Acquisition activity 35,560 5,508 41,068 Translation (4,059) (17,111) (21,170) Balance at March 29, 2020 $ 473,303 $ 471,415 $ 944,718 The goodwill addition in GSG relates to the SEG acquisition completed in the second quarter of fiscal 2020. The purchase price allocation for this acquisition is preliminary and subject to adjustment based upon the final determination of the net assets acquired and information to perform the final valuation. Our goodwill was impacted by foreign currency translation related to our foreign subsidiaries with functional currencies that are different than our reporting currency. The goodwill amounts above are presented net of any reductions from historical impairment adjustments. The gross amounts of goodwill for GSG were $491.0 million and $459.5 million at March 29, 2020 and September 29, 2019, respectively, excluding $17.7 million of accumulated impairment. The gross amounts of goodwill for CIG were $577.1 million and $588.7 million at March 29, 2020 and September 29, 2019, respectively, excluding $105.7 million of accumulated impairment. We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter. Our most recent annual review at July 1, 2019 (i.e. the first day of our fourth quarter in fiscal 2019) 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. All of our reporting units had estimated fair values that exceeded their carrying values by more than 25%. 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. We estimate the fair value of all reporting units with a goodwill balance based on a comparison and weighting of the income approach (weighted 70%), specifically the discounted cash flow method, and the market approach (weighted 30%), which estimates the fair value of our reporting units based upon comparable market prices and recent transactions, and also validates the reasonableness of the multiples from the income approach. The resulting fair value is most sensitive to the assumptions we use in our discounted cash flow analysis. The assumptions that have the most significant impact on the fair value calculation are the reporting unit’s revenue growth rate and operating profit margin, and the discount rate used to convert future estimated cash flows to a single present value amount. During the second quarter of fiscal 2020, we considered whether the global economic disruption due to the COVID-19 pandemic had caused the fair value of any of our reporting units to fall below their carrying value resulting in goodwill impairment. Although our forecasted revenue and operating income for the second half of fiscal 2020 are now lower than our expectations during our last annual and interim impairment tests, we concluded that none of our reporting units' fair value had fallen below their carrying value. However, our Asia Pacific ("ASP") and Remediation and Field Services ("RFS") reporting units had fair values that exceeded their carrying values by less than 20% as of March 29, 2020. The carrying values for our ASP and RFS reporting units include approximately $102 million and $48 million of goodwill, respectively. If the financial performance of the operations in the ASP and RFS reporting units were to deteriorate further and fall below our current revenue and operating profit margin forecasts, or we are required to increase the discount rate used in our cash flow analysis, the related goodwill may become impaired. During the fourth quarter of fiscal 2019, we performed an interim goodwill impairment review of our RFS reporting unit and recorded a $7.8 million goodwill impairment charge. As a result of the impairment charge, the estimated fair value of the RFS reporting unit equaled its carrying value of $61 million at September 29, 2019, including the remaining $48.8 million of goodwill. The gross amount and accumulated amortization of our acquired identifiable intangible assets with finite useful lives included in “Intangible assets, net” on our consolidated balance sheets, were as follows: March 29, 2020 September 29, 2019 Weighted- Gross Accumulated Gross Accumulated ($ in thousands) Client relations 3.0 $ 58,708 $ (51,596) $ 56,779 $ (50,455) Backlog 0.9 33,618 (27,889) 32,229 (24,968) Trade names 1.8 7,143 (5,125) 7,714 (4,859) Total $ 99,469 $ (84,610) $ 96,722 $ (80,282) Amortization expense for the three and six months ended March 29, 2020 was $3.4 million and $6.4 million, respectively, compared to $2.2 million and $6.2 million for the prior-year periods. Estimated amortization expense for the remainder of fiscal 2020 and succeeding years is as follows: Amount (in thousands) 2020 $ 5,096 2021 5,898 2022 2,173 2023 1,491 2024 201 Total $ 14,859 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Mar. 29, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consisted of the following: Balance at March 29, 2020 September 29, (in thousands) Equipment, furniture and fixtures $ 112,803 $ 114,652 Leasehold improvements 33,495 34,881 Land and buildings 378 371 Total property and equipment 146,676 149,904 Accumulated depreciation (111,190) (110,463) Property and equipment, net $ 35,486 $ 39,441 The depreciation expense related to property and equipment was $3.1 million and $6.4 million for the three and six months ended March 29, 2020, respectively, compared to $4.2 million and $8.5 million |
Stock Repurchase and Dividends
Stock Repurchase and Dividends | 6 Months Ended |
Mar. 29, 2020 | |
Stock Repurchase And Dividends [Abstract] | |
Stock Repurchase and Dividends | Stock Repurchase and Dividends On November 5, 2018, the Board of Directors authorized a stock repurchase program ("2019 Program") under which we could repurchase up to $200 million of our common stock. This was in addition to the $25 million remaining as of fiscal 2018 year-end under the previous stock repurchase program ("2018 Program"). On January 27, 2020, the Board of Directors authorized a new $200 million stock repurchase program ("2020 Program"). As of March 29, 2020, we had a remaining balance of $243.3 million available under the 2019 and 2020 programs. The following table summarizes stock repurchases in the open market and settled in fiscal 2019 and the first half of fiscal 2020: Fiscal-Year Stock Repurchase Program Shares Repurchased Average Price Paid per Share Total Cost 2019 2018 Program 430,559 $ 58.06 $ 25,000 2019 2019 Program 1,131,962 66.26 75,000 2019 Total 1,562,521 $ 64.00 $ 100,000 2020 (1) 2019 Program 1,060,850 $ 76.98 $ 81,660 (1) These amounts excluded 13,869 shares at the average price per share of $71.03 ($1.0 million of repurchases) that were traded but not yet settled as of March 29, 2020 . The following table presents dividend declared and paid in the first half of fiscal 2020 and 2019: Declare Date Dividend Paid Per Share Record Date Payment Date Dividend Paid November 11, 2019 $ 0.15 December 2, 2019 December 13, 2019 $ 8,190 January 27, 2020 $ 0.15 February 12, 2020 February 28, 2020 8,224 Total dividend paid as of March 29, 2020 $ 16,414 November 5, 2018 $ 0.12 November 30, 2018 December 14, 2018 $ 6,654 January 28, 2019 $ 0.12 February 13, 2019 February 28, 2019 6,616 Total dividend paid as of March 31, 2019 $ 13,270 Subsequent Event. On April 27, 2020, the Board of Directors declared a quarterly cash dividend of $0.17 per share payable on May 29, 2020 to stockholders of record as of the close of business on May 13, 2020. |
Leases
Leases | 6 Months Ended |
Mar. 29, 2020 | |
Leases [Abstract] | |
Leases | Leases In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)”, which is a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets obtained in exchange for lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. We elected to adopt the standard, and available practical expedients, effective September 30, 2019 (the first day of our fiscal 2020). These practical expedients allowed us to keep the lease classification assessed under the previous lease accounting standard (ASC 840) without reassessment under the new standard, and allowed all separate lease components, including non-lease components, to be accounted for as a single lease component for all existing leases prior to adoption of the new standard. We adopted this new standard under the modified retrospective transition approach without adjusting comparative periods in the financial statements, as allowed under Leases (Topic 842), and implemented internal controls and key system functionality to enable the preparation of financial information on adoption. The standard had a material impact on our consolidated balance sheets but did not have an impact on the consolidated income statements. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while accounting for finance leases remained substantially unchanged. Our finance leases are primarily for certain information technology ("IT") equipment and the related ROU and lease liabilities were immaterial at March 29, 2020. We determine if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets and current and long-term operating lease liabilities in the consolidated balance sheets. 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 also includes any lease payments made and excludes lease incentives. 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. Our operating leases are primarily for corporate and project office spaces. To a much lesser extent, we have operating leases for IT equipment, vehicles, and equipment. Our operating leases have remaining lease terms of one month to eight years, some of which may include options to extend the leases for up to five years. The components of lease costs for the three and six months ended March 29, 2020 are as follows: Three Months Ended Six Months Ended (in thousands) Operating lease cost $ 21,595 $ 42,767 Sublease income (541) (1,115) Other 18 36 Total lease cost $ 21,072 $ 41,688 Supplemental cash flow information related to leases for the six months ended March 29, 2020 is as follows: Amount (in thousands) Operating cash flows for operating leases $ 41,504 Right-of-use assets obtained in exchange for new operating lease liabilities $ 321,919 Supplemental balance sheet and other information related to leases as of March 29, 2020 are as follows: Amount (in thousands) Operating leases: Right-of-use assets $ 262,678 Lease liabilities: Current $ 70,594 Long-term 212,229 Total operating lease liabilities $ 282,823 Weighted-average remaining lease term: Operating leases 5 years Weighted-average discount rate: Operating leases 2.4 % As of March 29, 2020, we have additional operating leases, primarily for office space, that have not yet commenced of $1.7 million. These operating leases will commence in fiscal 2020 and 2021 with lease terms of five years. A maturity analysis of the future undiscounted cash flows associated with our operating lease liabilities as of March 29, 2020 is as follows: Amount (in thousands) 2020 $ 40,195 2021 69,193 2022 60,307 2023 41,736 2024 30,055 Beyond 63,136 Total lease payments 304,622 Less: imputed interest (21,799) Total present value of lease liabilities $ 282,823 As of September 29, 2019, $343.5 million of minimum rental commitments on operating leases was payable as follows: $108.8 million in fiscal 2020, $66.4 million in fiscal 2021, $51.4 million in fiscal 2022, $36.5 million in fiscal 2023, $25.8 million in fiscal 2024, and $54.6 million thereafter. Rental expense for the three and six months ended March 31, 2019 was $19.2 million and $38.6 million, respectively. |
Leases | Leases In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)”, which is a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets obtained in exchange for lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. We elected to adopt the standard, and available practical expedients, effective September 30, 2019 (the first day of our fiscal 2020). These practical expedients allowed us to keep the lease classification assessed under the previous lease accounting standard (ASC 840) without reassessment under the new standard, and allowed all separate lease components, including non-lease components, to be accounted for as a single lease component for all existing leases prior to adoption of the new standard. We adopted this new standard under the modified retrospective transition approach without adjusting comparative periods in the financial statements, as allowed under Leases (Topic 842), and implemented internal controls and key system functionality to enable the preparation of financial information on adoption. The standard had a material impact on our consolidated balance sheets but did not have an impact on the consolidated income statements. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while accounting for finance leases remained substantially unchanged. Our finance leases are primarily for certain information technology ("IT") equipment and the related ROU and lease liabilities were immaterial at March 29, 2020. We determine if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets and current and long-term operating lease liabilities in the consolidated balance sheets. 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 also includes any lease payments made and excludes lease incentives. 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. Our operating leases are primarily for corporate and project office spaces. To a much lesser extent, we have operating leases for IT equipment, vehicles, and equipment. Our operating leases have remaining lease terms of one month to eight years, some of which may include options to extend the leases for up to five years. The components of lease costs for the three and six months ended March 29, 2020 are as follows: Three Months Ended Six Months Ended (in thousands) Operating lease cost $ 21,595 $ 42,767 Sublease income (541) (1,115) Other 18 36 Total lease cost $ 21,072 $ 41,688 Supplemental cash flow information related to leases for the six months ended March 29, 2020 is as follows: Amount (in thousands) Operating cash flows for operating leases $ 41,504 Right-of-use assets obtained in exchange for new operating lease liabilities $ 321,919 Supplemental balance sheet and other information related to leases as of March 29, 2020 are as follows: Amount (in thousands) Operating leases: Right-of-use assets $ 262,678 Lease liabilities: Current $ 70,594 Long-term 212,229 Total operating lease liabilities $ 282,823 Weighted-average remaining lease term: Operating leases 5 years Weighted-average discount rate: Operating leases 2.4 % As of March 29, 2020, we have additional operating leases, primarily for office space, that have not yet commenced of $1.7 million. These operating leases will commence in fiscal 2020 and 2021 with lease terms of five years. A maturity analysis of the future undiscounted cash flows associated with our operating lease liabilities as of March 29, 2020 is as follows: Amount (in thousands) 2020 $ 40,195 2021 69,193 2022 60,307 2023 41,736 2024 30,055 Beyond 63,136 Total lease payments 304,622 Less: imputed interest (21,799) Total present value of lease liabilities $ 282,823 As of September 29, 2019, $343.5 million of minimum rental commitments on operating leases was payable as follows: $108.8 million in fiscal 2020, $66.4 million in fiscal 2021, $51.4 million in fiscal 2022, $36.5 million in fiscal 2023, $25.8 million in fiscal 2024, and $54.6 million thereafter. Rental expense for the three and six months ended March 31, 2019 was $19.2 million and $38.6 million, respectively. |
Stockholders' Equity and Stock
Stockholders' Equity and Stock Compensation Plans | 6 Months Ended |
Mar. 29, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity and Stock Compensation Plans | 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 six months ended March 29, 2020 was $5.0 million and $9.4 million, respectively, compared to $4.1 million and $8.6 million for the same periods last year. Most of these amounts were included in SG&A in our consolidated statements of income. In the first half of fiscal 2020 (all in the first quarter), we awarded 74,011 performance share units (“PSUs”) to our non-employee directors and executive officers at a fair value of $99.85 per share on the award date. All of the PSUs are performance-based and vest, if at all, after the conclusion of the three four |
Earnings per Share ("EPS")
Earnings per Share ("EPS") | 6 Months Ended |
Mar. 29, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per Share (EPS) | 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. The following table presents the number of weighted-average shares used to compute basic and diluted EPS: Three Months Ended Six Months Ended March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019 (in thousands, except per share data) Net income attributable to Tetra Tech $ 36,397 $ 55,911 $ 83,707 $ 97,907 Weighted-average common shares outstanding – basic 54,699 55,143 54,541 55,237 Effect of dilutive stock options and unvested restricted stock 764 842 839 924 Weighted-average common shares outstanding – diluted 55,463 55,985 55,380 56,161 Earnings per share attributable to Tetra Tech: Basic $ 0.67 $ 1.01 $ 1.53 $ 1.77 Diluted $ 0.66 $ 1.00 $ 1.51 $ 1.74 |
Income Taxes
Income Taxes | 6 Months Ended |
Mar. 29, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective tax rates for the first half of fiscal 2020 and 2019 were 19.5% and (0.8)%, respectively. The tax rates for fiscal 2020 and 2019 reflect the impact of the comprehensive tax legislation enacted by the U.S. government on December 22, 2017, which is commonly referred to as the Tax Cuts and Jobs Act ("TCJA"). The TCJA significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018, while also repealing the deduction for domestic production activities, limiting the deductibility of certain executive compensation, and implementing a modified territorial tax system with the introduction of the Global Intangible Low-Taxed Income tax rules. The TCJA also imposed a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries. U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the tax law was enacted. We finalized the analysis of our deferred tax liabilities for the TCJA's lower tax rates in the first quarter of fiscal 2019 and recorded a deferred tax benefit of $2.6 million. Additionally, valuation allowances of $22.3 million in Australia were released due to sufficient positive evidence obtained during the second quarter of fiscal 2019. The valuation allowances were primarily related to net operating loss and R&D credit carryforwards and other temporary differences. We evaluated the positive evidence against any negative evidence and determined that it is more likely than not that the deferred tax assets will be realized. The factors used to assess the likelihood of realization were the past performance of the related entities, our forecast of future taxable income, and available tax planning strategies that could be implemented to realize the deferred tax assets. Excluding the net deferred tax benefits from the TCJA and valuation allowance releases, our effective tax rate in the first half of fiscal 2019 was 24.8%. |
Reportable Segments
Reportable Segments | 6 Months Ended |
Mar. 29, 2020 | |
Segment Reporting [Abstract] | |
Reportable Segments | 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. This alignment allows us to capitalize on our growing market opportunities and enhance the development of high-end consulting and technical solutions to meet our growing client demand. We continue to report the results of the wind-down of our non-core construction activities in the RCM reportable segment. GSG provides consulting and engineering services primarily to U.S. government clients (federal, state and local) and development agencies worldwide. GSG supports U.S. government civilian and defense agencies with services in water, environment, infrastructure, information technology, and disaster management. GSG also provides engineering design services for U.S. municipal and commercial clients, especially in water infrastructure, solid waste, and high-end sustainable infrastructure designs. GSG also leads our support for development agencies worldwide, especially in the United States, United Kingdom, and Australia. CIG primarily provides consulting and engineering services to U.S. commercial clients, and international clients that include both commercial and government sectors. CIG supports commercial clients across the Fortune 500, energy, utilities, industrial, manufacturing, aerospace, and resource management markets. CIG also provides 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), the United Kingdom, as well as Brazil and Chile. 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. Reportable Segments The following tables summarize financial information regarding our reportable segments: Three Months Ended Six Months Ended March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019 (in thousands) Revenue GSG $ 436,903 $ 417,526 $ 894,307 $ 829,497 CIG 308,412 322,458 659,576 640,252 RCM 5 (4,645) 150 (3,192) Elimination of inter-segment revenue (11,187) (12,718) (22,277) (26,505) Total $ 734,133 $ 722,621 $ 1,531,756 $ 1,440,052 Income from operations GSG $ 35,347 $ 44,803 $ 77,395 $ 82,217 CIG 21,676 20,869 53,309 47,968 RCM (1) (5,938) 1 (5,934) Corporate (1) (9,492) (12,189) (19,873) (20,995) Total $ 47,530 $ 47,545 $ 110,832 $ 103,256 (1) Includes amortization of intangibles, other costs and other income not allocable to our reportable segments. Balance at March 29, 2020 September 29, (in thousands) Total Assets GSG $ 546,090 $ 587,040 CIG 362,446 450,276 RCM 14,285 15,608 Corporate (1) 1,420,329 1,094,484 Total $ 2,343,150 $ 2,147,408 (1) Corporate assets consist of intercompany eliminations and assets not allocated to our reportable segments including goodwill, intangible assets, leases, deferred income taxes and certain other assets . |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Mar. 29, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value MeasurementsThe 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 September 29, 2019). The carrying value of our long-term debt approximated fair value at March 29, 2020 and September 29, 2019. At March 29, 2020, we had borrowings of $345.5 million outstanding under our Amended Credit Agreement, which were used to fund business acquisitions, working capital needs, stock repurchases, dividends, capital expenditures and contingent earn-outs. |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Mar. 29, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments We often use certain interest rate derivative contracts to hedge interest rate exposures on our variable rate debt. Also, we may 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. In fiscal 2018, we entered 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. As of March 29, 2020, the notional principal of our outstanding interest swap agreements was $234.4 million ($46.9 million each.) The interest rate swaps have a fixed interest rate of 2.79% and expire in July 2023 for all five agreements. At March 29, 2020 and September 29, 2019, the fair value of the effective portion of our interest rate swap agreements designated as cash flow hedges before tax effect was $(16.6) million and $(10.9) million, respectively, of which we expect to reclassify $5.5 million from accumulated other comprehensive income to interest expense within the next twelve months. The fair values of our outstanding derivatives designated as hedging instruments were as follows: Fair Value of Derivative Balance Sheet Location March 29, 2020 September 29, 2019 (in thousands) Interest rate swap agreements Other current liabilities $ (16,568) $ (10,873) Changes in the fair value of the interest rate swap agreements are presented on the consolidated statements of comprehensive income as follows: Six Months Ended March 29, 2020 March 31, 2019 (in thousands) Loss recognized in other comprehensive income, net of tax: Interest rate swap agreements $ (5,695) $ (6,778) We had no other derivative instruments that were not designated as hedging instruments for the first half of fiscal 2020 and fiscal year ended September 29, 2019. |
Reclassifications Out of Accumu
Reclassifications Out of Accumulated Other Comprehensive Loss | 6 Months Ended |
Mar. 29, 2020 | |
Equity [Abstract] | |
Reclassifications Out of Accumulated Other Comprehensive Loss | Reclassifications Out of Accumulated Other Comprehensive Loss The accumulated balances and reporting period activities for the three and six months ended March 29, 2020 and March 31, 2019 related to reclassifications out of accumulated other comprehensive income (loss) are summarized as follows: Three Months Ended Foreign Loss Accumulated Other Comprehensive Loss (in thousands) Balances at December 30, 2018 $ (151,936) $ (2,757) $ (154,693) Other comprehensive income (loss) before reclassifications 9,245 (2,504) 6,741 Amounts reclassified from accumulated other comprehensive loss: Interest rate contracts, net of tax (1) — (265) (265) Net current-period other comprehensive income (loss) 9,245 (2,769) 6,476 Balances at March 31, 2019 $ (142,691) $ (5,526) $ (148,217) Balances at December 29, 2019 $ (135,812) $ (9,203) $ (145,015) Other comprehensive loss before reclassifications (47,011) (6,727) (53,738) Amounts reclassified from accumulated other comprehensive loss: Interest rate contracts, net of tax (1) — (638) (638) Net current-period other comprehensive loss (47,011) (7,365) (54,376) Balances at March 29, 2020 $ (182,823) $ (16,568) $ (199,391) Six Months Ended Foreign Gain (Loss) Accumulated (in thousands) Balances at September 30, 2018 $ (128,602) $ 1,252 $ (127,350) Other comprehensive loss before reclassifications (14,089) (6,287) (20,376) Amounts reclassified from accumulated other comprehensive loss: Interest rate contracts, net of tax (1) — (491) (491) Net current-period other comprehensive loss (14,089) (6,778) (20,867) Balances at March 31, 2019 $ (142,691) $ (5,526) $ (148,217) Balances at September 29, 2019 $ (149,711) $ (10,873) $ (160,584) Other comprehensive loss before reclassifications (33,112) (4,574) (37,686) Amounts reclassified from accumulated other comprehensive loss: Interest rate contracts, net of tax (1) — (1,121) (1,121) Net current-period other comprehensive loss (33,112) (5,695) (38,807) Balances at March 29, 2020 $ (182,823) $ (16,568) $ (199,391) (1) This accumulated other comprehensive component is reclassified to “Interest expense” in our consolidated statements of income. See Note 14 , “Derivative Financial Instruments”, for more information. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Mar. 29, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Mar. 29, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transaction We often provide services to unconsolidated joint ventures. Our revenue related to services we provided to unconsolidated joint ventures for the three and six months of fiscal 2020 was $19.1 million and $48.0 million, respectively, compared to $21.8 million and $45.7 million for the same periods last year. Our related reimbursable costs for the three and six months of fiscal 2020 were approximately $18.8 million and $47.6 million, respectively, compared to $21.6 million and $45.1 million for the prior-year periods. Our consolidated balance sheets also included the following amounts related to these services: Balance at March 29, 2020 September 29, 2019 (in thousands) Accounts receivable, net $ 14,847 $ 19,351 Contract assets 8,985 9,681 Contract liabilities (489) (111) |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Policies) | 6 Months Ended |
Mar. 29, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | In August 2017, the Financial Accounting Standards Board ("FASB") issued accounting guidance on hedging activities. The amendment better aligns an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018 (first quarter of fiscal 2020 for us). The adoption of this guidance had no impact on our consolidated financial statements. In February 2018, the FASB issued guidance on reclassification of certain tax effects from accumulated comprehensive income, which allows for a reclassification of stranded tax effects from the Tax Cuts and Jobs Act ("TCJA") from accumulated other comprehensive income to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018 (first quarter of fiscal 2020 for us). The adoption of this guidance had no material impact on our consolidated financial statements. In June 2016, the FASB issued updated guidance which requires entities to estimate all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The updated guidance also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. Subsequently, the FASB issued guidance clarifying and amending certain aspects of the credit losses standard in November 2019 and February 2020. The guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019 (first quarter of fiscal 2021 for us). Early adoption is permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In August 2018, the FASB issued updated guidance modifying certain fair value measurement disclosures. The updated guidance contains additional disclosures to enable users of the financial statements to better understand the entity’s assumption used to develop significant unobservable inputs for Level 3 fair value measurements, but also eliminates the requirement for entities to disclose the amount of and reasons for transfers between Level 1 and Level 2 investments within the fair value hierarchy. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019 (first quarter of fiscal 2021 for us). Early adoption is permitted. We do not expect the adoption of this guidance to have a significant impact on our consolidated financial statements. In December 2019, the FASB issued guidance simplifying the accounting for income taxes by removing certain exceptions to general principles in Topic 740 and amending certain existing guidance for clarity. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020 (first quarter of fiscal 2022 for us). Early adoption is permitted. We do not expect the adoption of this guidance to have an impact on our consolidated financial statements. |
Contract Assets and Contract Liabilities | Our RUPOs represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. We had $3.0 billion of RUPOs as of March 29, 2020. RUPOs increase with awards from new contracts or additions on existing contracts and decrease as work is performed and revenue is recognized on existing contracts. RUPOs may also decrease when projects are canceled or modified in scope. We include a contract within our RUPOs when the contract is awarded and an agreement on contract terms has been reached. Although RUPOs reflect business that is considered to be firm, cancellations, deferrals or scope adjustments may occur. RUPOs are 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). |
Revenue and Contract Balances (
Revenue and Contract Balances (Tables) | 6 Months Ended |
Mar. 29, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Reconciliation of Disaggregation of Revenue to Reportable Segments | The following tables provide information about disaggregated revenue: Three Months Ended Six Months Ended March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019 (in thousands) Client Sector: U.S. state and local government $ 102,260 $ 129,868 $ 224,616 $ 253,147 U.S. federal government (1) 243,261 216,498 488,564 441,256 U.S. commercial 162,198 165,970 345,169 338,758 International (2) 226,414 210,285 473,407 406,891 Total $ 734,133 $ 722,621 $ 1,531,756 $ 1,440,052 Contract Type: Fixed-price $ 255,613 $ 247,831 $ 526,668 $ 488,764 Time-and-materials 350,618 345,626 738,776 682,163 Cost-plus 127,902 129,164 266,312 269,125 Total $ 734,133 $ 722,621 $ 1,531,756 $ 1,440,052 (1) Includes revenue generated under U.S. federal government contracts performed outside the United States. (2) Includes revenue generated from foreign operations, primarily in Canada, Australia and the United Kingdom, and revenue generated from non-U.S. clients. |
Summary of Net Contract Liabilities/Assets | There were no substantial non-current contract assets or liabilities for the periods presented. Net contract assets/liabilities consisted of the following: Balance at March 29, 2020 September 29, 2019 (in thousands) Contract assets (1) $ 109,166 $ 114,324 Contract liabilities (189,741) (165,611) Net contract liabilities $ (80,575) $ (51,287) |
Net Accounts Receivable Components | Net accounts receivable consisted of the following: Balance at March 29, 2020 September 29, (in thousands) Billed $ 438,029 $ 522,256 Unbilled 279,440 300,035 Total accounts receivable 717,469 822,291 Allowance for doubtful accounts (56,890) (53,571) Total accounts receivable, net $ 660,579 $ 768,720 |
Remaining Performance Obligation, Expected Timing | We expect to satisfy our RUPOs as of March 29, 2020 over the following periods: Amount (in thousands) Within 12 months $ 1,716,973 Beyond 1,255,124 Total $ 2,972,097 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Mar. 29, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Changes in the Carrying Value of Goodwill | The following table summarizes the changes in the carrying value of goodwill: GSG CIG Total (in thousands) Balance at September 29, 2019 $ 441,802 $ 483,018 $ 924,820 Acquisition activity 35,560 5,508 41,068 Translation (4,059) (17,111) (21,170) Balance at March 29, 2020 $ 473,303 $ 471,415 $ 944,718 |
Summary of Gross Amount and Accumulated Amortization of Acquired Identifiable Intangible Assets With Finite Useful Lives | The gross amount and accumulated amortization of our acquired identifiable intangible assets with finite useful lives included in “Intangible assets, net” on our consolidated balance sheets, were as follows: March 29, 2020 September 29, 2019 Weighted- Gross Accumulated Gross Accumulated ($ in thousands) Client relations 3.0 $ 58,708 $ (51,596) $ 56,779 $ (50,455) Backlog 0.9 33,618 (27,889) 32,229 (24,968) Trade names 1.8 7,143 (5,125) 7,714 (4,859) Total $ 99,469 $ (84,610) $ 96,722 $ (80,282) |
Schedule of Estimated Amortization Expense for Remainder of Fiscal and Succeeding Years | Estimated amortization expense for the remainder of fiscal 2020 and succeeding years is as follows: Amount (in thousands) 2020 $ 5,096 2021 5,898 2022 2,173 2023 1,491 2024 201 Total $ 14,859 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Mar. 29, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following: Balance at March 29, 2020 September 29, (in thousands) Equipment, furniture and fixtures $ 112,803 $ 114,652 Leasehold improvements 33,495 34,881 Land and buildings 378 371 Total property and equipment 146,676 149,904 Accumulated depreciation (111,190) (110,463) Property and equipment, net $ 35,486 $ 39,441 |
Stock Repurchase and Dividends
Stock Repurchase and Dividends (Tables) | 6 Months Ended |
Mar. 29, 2020 | |
Stock Repurchase And Dividends [Abstract] | |
Summary of Shares Repurchased | The following table summarizes stock repurchases in the open market and settled in fiscal 2019 and the first half of fiscal 2020: Fiscal-Year Stock Repurchase Program Shares Repurchased Average Price Paid per Share Total Cost 2019 2018 Program 430,559 $ 58.06 $ 25,000 2019 2019 Program 1,131,962 66.26 75,000 2019 Total 1,562,521 $ 64.00 $ 100,000 2020 (1) 2019 Program 1,060,850 $ 76.98 $ 81,660 (1) These amounts excluded 13,869 shares at the average price per share of $71.03 ($1.0 million of repurchases) that were traded but not yet settled as of March 29, 2020 . |
Dividends Declared and Paid | The following table presents dividend declared and paid in the first half of fiscal 2020 and 2019: Declare Date Dividend Paid Per Share Record Date Payment Date Dividend Paid November 11, 2019 $ 0.15 December 2, 2019 December 13, 2019 $ 8,190 January 27, 2020 $ 0.15 February 12, 2020 February 28, 2020 8,224 Total dividend paid as of March 29, 2020 $ 16,414 November 5, 2018 $ 0.12 November 30, 2018 December 14, 2018 $ 6,654 January 28, 2019 $ 0.12 February 13, 2019 February 28, 2019 6,616 Total dividend paid as of March 31, 2019 $ 13,270 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Mar. 29, 2020 | |
Leases [Abstract] | |
Summary of Components of Lease Cost | The components of lease costs for the three and six months ended March 29, 2020 are as follows: Three Months Ended Six Months Ended (in thousands) Operating lease cost $ 21,595 $ 42,767 Sublease income (541) (1,115) Other 18 36 Total lease cost $ 21,072 $ 41,688 Supplemental cash flow information related to leases for the six months ended March 29, 2020 is as follows: Amount (in thousands) Operating cash flows for operating leases $ 41,504 Right-of-use assets obtained in exchange for new operating lease liabilities $ 321,919 |
Summary of Supplemental Balance Sheet and Other Information | Supplemental balance sheet and other information related to leases as of March 29, 2020 are as follows: Amount (in thousands) Operating leases: Right-of-use assets $ 262,678 Lease liabilities: Current $ 70,594 Long-term 212,229 Total operating lease liabilities $ 282,823 Weighted-average remaining lease term: Operating leases 5 years Weighted-average discount rate: Operating leases 2.4 % |
Summary of Maturity Operating Lease Liability | A maturity analysis of the future undiscounted cash flows associated with our operating lease liabilities as of March 29, 2020 is as follows: Amount (in thousands) 2020 $ 40,195 2021 69,193 2022 60,307 2023 41,736 2024 30,055 Beyond 63,136 Total lease payments 304,622 Less: imputed interest (21,799) Total present value of lease liabilities $ 282,823 |
Earnings per Share ("EPS") (Tab
Earnings per Share ("EPS") (Tables) | 6 Months Ended |
Mar. 29, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Number of Weighted-average Shares Used to Compute Basic and Diluted EPS | The following table presents the number of weighted-average shares used to compute basic and diluted EPS: Three Months Ended Six Months Ended March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019 (in thousands, except per share data) Net income attributable to Tetra Tech $ 36,397 $ 55,911 $ 83,707 $ 97,907 Weighted-average common shares outstanding – basic 54,699 55,143 54,541 55,237 Effect of dilutive stock options and unvested restricted stock 764 842 839 924 Weighted-average common shares outstanding – diluted 55,463 55,985 55,380 56,161 Earnings per share attributable to Tetra Tech: Basic $ 0.67 $ 1.01 $ 1.53 $ 1.77 Diluted $ 0.66 $ 1.00 $ 1.51 $ 1.74 |
Reportable Segments (Tables)
Reportable Segments (Tables) | 6 Months Ended |
Mar. 29, 2020 | |
Segment Reporting [Abstract] | |
Summarized Financial Information of Reportable Segments | The following tables summarize financial information regarding our reportable segments: Three Months Ended Six Months Ended March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019 (in thousands) Revenue GSG $ 436,903 $ 417,526 $ 894,307 $ 829,497 CIG 308,412 322,458 659,576 640,252 RCM 5 (4,645) 150 (3,192) Elimination of inter-segment revenue (11,187) (12,718) (22,277) (26,505) Total $ 734,133 $ 722,621 $ 1,531,756 $ 1,440,052 Income from operations GSG $ 35,347 $ 44,803 $ 77,395 $ 82,217 CIG 21,676 20,869 53,309 47,968 RCM (1) (5,938) 1 (5,934) Corporate (1) (9,492) (12,189) (19,873) (20,995) Total $ 47,530 $ 47,545 $ 110,832 $ 103,256 (1) Includes amortization of intangibles, other costs and other income not allocable to our reportable segments. Balance at March 29, 2020 September 29, (in thousands) Total Assets GSG $ 546,090 $ 587,040 CIG 362,446 450,276 RCM 14,285 15,608 Corporate (1) 1,420,329 1,094,484 Total $ 2,343,150 $ 2,147,408 (1) Corporate assets consist of intercompany eliminations and assets not allocated to our reportable segments including goodwill, intangible assets, leases, deferred income taxes and certain other assets . |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 6 Months Ended |
Mar. 29, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Value of Derivatives Designated as Hedging Instruments | The fair values of our outstanding derivatives designated as hedging instruments were as follows: Fair Value of Derivative Balance Sheet Location March 29, 2020 September 29, 2019 (in thousands) Interest rate swap agreements Other current liabilities $ (16,568) $ (10,873) |
Schedule of Notional Principal, Fixed Rates and Related Expiration Dates of Outstanding Interest Rate Swap Agreements | Changes in the fair value of the interest rate swap agreements are presented on the consolidated statements of comprehensive income as follows: Six Months Ended March 29, 2020 March 31, 2019 (in thousands) Loss recognized in other comprehensive income, net of tax: Interest rate swap agreements $ (5,695) $ (6,778) |
Reclassifications Out of Accu_2
Reclassifications Out of Accumulated Other Comprehensive Loss (Tables) | 6 Months Ended |
Mar. 29, 2020 | |
Equity [Abstract] | |
Summary of Reclassifications Out of Accumulated Other Comprehensive Loss | The accumulated balances and reporting period activities for the three and six months ended March 29, 2020 and March 31, 2019 related to reclassifications out of accumulated other comprehensive income (loss) are summarized as follows: Three Months Ended Foreign Loss Accumulated Other Comprehensive Loss (in thousands) Balances at December 30, 2018 $ (151,936) $ (2,757) $ (154,693) Other comprehensive income (loss) before reclassifications 9,245 (2,504) 6,741 Amounts reclassified from accumulated other comprehensive loss: Interest rate contracts, net of tax (1) — (265) (265) Net current-period other comprehensive income (loss) 9,245 (2,769) 6,476 Balances at March 31, 2019 $ (142,691) $ (5,526) $ (148,217) Balances at December 29, 2019 $ (135,812) $ (9,203) $ (145,015) Other comprehensive loss before reclassifications (47,011) (6,727) (53,738) Amounts reclassified from accumulated other comprehensive loss: Interest rate contracts, net of tax (1) — (638) (638) Net current-period other comprehensive loss (47,011) (7,365) (54,376) Balances at March 29, 2020 $ (182,823) $ (16,568) $ (199,391) Six Months Ended Foreign Gain (Loss) Accumulated (in thousands) Balances at September 30, 2018 $ (128,602) $ 1,252 $ (127,350) Other comprehensive loss before reclassifications (14,089) (6,287) (20,376) Amounts reclassified from accumulated other comprehensive loss: Interest rate contracts, net of tax (1) — (491) (491) Net current-period other comprehensive loss (14,089) (6,778) (20,867) Balances at March 31, 2019 $ (142,691) $ (5,526) $ (148,217) Balances at September 29, 2019 $ (149,711) $ (10,873) $ (160,584) Other comprehensive loss before reclassifications (33,112) (4,574) (37,686) Amounts reclassified from accumulated other comprehensive loss: Interest rate contracts, net of tax (1) — (1,121) (1,121) Net current-period other comprehensive loss (33,112) (5,695) (38,807) Balances at March 29, 2020 $ (182,823) $ (16,568) $ (199,391) (1) This accumulated other comprehensive component is reclassified to “Interest expense” in our consolidated statements of income. See Note 14 , “Derivative Financial Instruments”, for more information. |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Mar. 29, 2020 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | Our consolidated balance sheets also included the following amounts related to these services: Balance at March 29, 2020 September 29, 2019 (in thousands) Accounts receivable, net $ 14,847 $ 19,351 Contract assets 8,985 9,681 Contract liabilities (489) (111) |
Revenue and Contract Balances -
Revenue and Contract Balances - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 29, 2020 | Mar. 31, 2019 | Mar. 29, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 734,133 | $ 722,621 | $ 1,531,756 | $ 1,440,052 |
Fixed-price | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 255,613 | 247,831 | 526,668 | 488,764 |
Time-and-materials | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 350,618 | 345,626 | 738,776 | 682,163 |
Cost-plus | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 127,902 | 129,164 | 266,312 | 269,125 |
U.S. state and local government | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 102,260 | 129,868 | 224,616 | 253,147 |
U.S. federal government | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 243,261 | 216,498 | 488,564 | 441,256 |
U.S. commercial | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 162,198 | 165,970 | 345,169 | 338,758 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 226,414 | $ 210,285 | $ 473,407 | $ 406,891 |
Revenue and Contract Balances_2
Revenue and Contract Balances - Summary of Contract Liabilities/Assets (Details) - USD ($) $ in Thousands | Mar. 29, 2020 | Sep. 29, 2019 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 109,166 | $ 114,324 |
Contract liabilities | (189,741) | (165,611) |
Net contract liabilities | (80,575) | (51,287) |
Disaggregation of Revenue [Line Items] | ||
Contract assets | 109,166 | 114,324 |
Contract Retentions | ||
Revenue from Contract with Customer [Abstract] | ||
Contract assets | 25,500 | 26,500 |
Disaggregation of Revenue [Line Items] | ||
Contract assets | $ 25,500 | $ 26,500 |
Revenue and Contract Balances_3
Revenue and Contract Balances - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 29, 2020 | Mar. 31, 2019 | Mar. 29, 2020 | Mar. 31, 2019 | Sep. 29, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Contract liability revenue recognized during the period | $ 105,000 | $ 74,000 | |||
Revenue recognition net unfavorable operating income adjustments | $ 2,800 | 2,800 | |||
Liabilities for anticipated losses | 14,600 | 14,600 | $ 11,500 | ||
Estimated cost to complete the related contracts | 57,000 | $ 57,000 | |||
Period for billing and collecting unbilled receivables | 12 months | ||||
Unbilled accounts receivable related to claims and requests for equitable adjustment on contracts | 14,000 | $ 14,000 | $ 15,000 | ||
Remaining unsatisfied performance obligation | $ 2,972,097 | $ 2,972,097 | |||
Remaining performance obligation, termination notice period one | 30 days | ||||
Remaining performance obligation, termination notice period two | 60 days | ||||
Remaining performance obligation, termination notice period three | 90 days | ||||
RCM | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Recognized reduction of revenue | $ 4,800 | ||||
Losses from claim settlement | 5,900 | ||||
CIG | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Recognized reduction of revenue | 3,600 | ||||
Losses from claim settlement | $ 3,600 |
Revenue and Contract Balances_4
Revenue and Contract Balances - Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Mar. 29, 2020 | Sep. 29, 2019 |
Revenue from Contract with Customer [Abstract] | ||
Billed | $ 438,029 | $ 522,256 |
Unbilled | 279,440 | 300,035 |
Total accounts receivable | 717,469 | 822,291 |
Allowance for doubtful accounts | (56,890) | (53,571) |
Total accounts receivable, net | $ 660,579 | $ 768,720 |
Revenue and Contract Balances_5
Revenue and Contract Balances - Remaining Unsatisfied Performance Obligations (Details) $ in Thousands | Mar. 29, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining unsatisfied performance obligation | $ 2,972,097 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-03-30 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining unsatisfied performance obligation | $ 1,716,973 |
Remaining unsatisfied performance obligation, expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-03-29 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining unsatisfied performance obligation | $ 1,255,124 |
Remaining unsatisfied performance obligation, expected timing of satisfaction |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 29, 2020USD ($) | Sep. 29, 2019USD ($)employee | Mar. 31, 2019USD ($) | Mar. 29, 2020USD ($) | Mar. 31, 2019USD ($) | |
Mergers and Acquisitions | |||||
Aggregate maximum of contingent consideration | $ 81,800 | $ 81,800 | |||
Issuance of promissory note for business acquisition | 0 | $ 24,688 | |||
Reduction in contingent earn-out liabilities | 1,600 | ||||
Contingent consideration – fair value adjustments | 1,571 | $ (28) | 1,571 | (28) | |
Contingent earn-out liability | 52,900 | $ 52,900 | |||
Minimum | |||||
Mergers and Acquisitions | |||||
Significant unobservable input, earn-out period | 2 years | ||||
Minimum | Existing customer contracts | |||||
Mergers and Acquisitions | |||||
Useful life of intangible assets | 1 year | ||||
Minimum | Trade names | |||||
Mergers and Acquisitions | |||||
Useful life of intangible assets | 3 years | ||||
Maximum | |||||
Mergers and Acquisitions | |||||
Significant unobservable input, earn-out period | 3 years | ||||
Maximum | Existing customer contracts | |||||
Mergers and Acquisitions | |||||
Useful life of intangible assets | 10 years | ||||
Maximum | Trade names | |||||
Mergers and Acquisitions | |||||
Useful life of intangible assets | 5 years | ||||
Segue Technologies, Inc. | |||||
Mergers and Acquisitions | |||||
Fair value of acquisition purchase price | 41,800 | ||||
Initial cash payments | 30,000 | ||||
Payables | 500 | $ 500 | |||
Estimated fair value of contingent earn-out obligation | 11,300 | 11,300 | |||
Aggregate maximum of contingent consideration | $ 20,000 | $ 20,000 | |||
Contingent consideration achievement period | 3 years | ||||
eGlobalTech | |||||
Mergers and Acquisitions | |||||
Fair value of acquisition purchase price | 49,100 | ||||
Payables | 3,300 | 3,300 | |||
Estimated fair value of contingent earn-out obligation | 21,100 | 21,100 | |||
Aggregate maximum of contingent consideration | $ 25,000 | $ 25,000 | |||
Contingent consideration achievement period | 3 years | ||||
Issuance of promissory note for business acquisition | $ 24,700 | ||||
WYG plc | |||||
Mergers and Acquisitions | |||||
Fair value of acquisition purchase price | $ 54,200 | ||||
Issuance of promissory note for business acquisition | $ 11,500 | ||||
Number of employees | employee | 1,600 | ||||
Acquisition related costs | $ 10,400 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands | 6 Months Ended |
Mar. 29, 2020USD ($) | |
Goodwill | |
Balance at beginning of the period | $ 924,820 |
Acquisition activity | 41,068 |
Translation | (21,170) |
Balance at end of the period | 944,718 |
GSG | |
Goodwill | |
Balance at beginning of the period | 441,802 |
Acquisition activity | 35,560 |
Translation | (4,059) |
Balance at end of the period | 473,303 |
CIG | |
Goodwill | |
Balance at beginning of the period | 483,018 |
Acquisition activity | 5,508 |
Translation | (17,111) |
Balance at end of the period | $ 471,415 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Narrative (Details) - USD ($) | Jul. 01, 2019 | Mar. 29, 2020 | Sep. 29, 2019 | Mar. 31, 2019 | Mar. 29, 2020 | Mar. 31, 2019 |
Goodwill [Line Items] | ||||||
Impairment of goodwill | $ 0 | |||||
Estimated fair values that exceeded their carrying values, percent | 25.00% | |||||
Goodwill | $ 944,718,000 | $ 924,820,000 | $ 944,718,000 | |||
Assets | 2,343,150,000 | 2,147,408,000 | 2,343,150,000 | |||
Amortization expense | $ 3,400,000 | $ 2,200,000 | $ 6,400,000 | $ 6,200,000 | ||
Income approach, discounted cash flow method | ||||||
Goodwill [Line Items] | ||||||
Weighted rate used in fair value of goodwill (as a percent) | 70.00% | |||||
Market approach | ||||||
Goodwill [Line Items] | ||||||
Weighted rate used in fair value of goodwill (as a percent) | 30.00% | |||||
RFS | ||||||
Goodwill [Line Items] | ||||||
Impairment of goodwill | 7,800,000 | |||||
Estimated fair values that exceeded their carrying values, percent | 20.00% | 20.00% | ||||
Goodwill | $ 48,000,000 | 48,800,000 | $ 48,000,000 | |||
Assets | 61,000,000 | |||||
ASP | ||||||
Goodwill [Line Items] | ||||||
Estimated fair values that exceeded their carrying values, percent | 20.00% | 20.00% | ||||
Goodwill | $ 102,000,000 | $ 102,000,000 | ||||
GSG | ||||||
Goodwill [Line Items] | ||||||
Gross amounts of goodwill | 491,000,000 | 459,500,000 | 491,000,000 | |||
Accumulated impairment | 17,700,000 | 17,700,000 | 17,700,000 | |||
Goodwill | 473,303,000 | 441,802,000 | 473,303,000 | |||
CIG | ||||||
Goodwill [Line Items] | ||||||
Gross amounts of goodwill | 577,100,000 | 588,700,000 | 577,100,000 | |||
Accumulated impairment | 105,700,000 | 105,700,000 | 105,700,000 | |||
Goodwill | $ 471,415,000 | $ 483,018,000 | $ 471,415,000 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Finite Lived Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 29, 2020 | Sep. 29, 2019 | |
Finite-lived intangible assets | ||
Gross Amount | $ 99,469 | $ 96,722 |
Accumulated Amortization | (84,610) | (80,282) |
Estimated amortization expense | ||
2020 | 5,096 | |
2021 | 5,898 | |
2022 | 2,173 | |
2023 | 1,491 | |
2024 | 201 | |
Total | $ 14,859 | |
Client relations | ||
Finite-lived intangible assets | ||
Weighted- Average Remaining Life (in Years) | 3 years | |
Gross Amount | $ 58,708 | 56,779 |
Accumulated Amortization | $ (51,596) | (50,455) |
Backlog | ||
Finite-lived intangible assets | ||
Weighted- Average Remaining Life (in Years) | 10 months 24 days | |
Gross Amount | $ 33,618 | 32,229 |
Accumulated Amortization | $ (27,889) | (24,968) |
Trade names | ||
Finite-lived intangible assets | ||
Weighted- Average Remaining Life (in Years) | 1 year 9 months 18 days | |
Gross Amount | $ 7,143 | 7,714 |
Accumulated Amortization | $ (5,125) | $ (4,859) |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 29, 2020 | Mar. 31, 2019 | Mar. 29, 2020 | Mar. 31, 2019 | Sep. 29, 2019 | |
Property and Equipment | |||||
Property and equipment, gross | $ 146,676 | $ 146,676 | $ 149,904 | ||
Accumulated depreciation | (111,190) | (111,190) | (110,463) | ||
Property and equipment, net | 35,486 | 35,486 | 39,441 | ||
Depreciation expense related to property and equipment | 3,100 | $ 4,200 | 6,400 | $ 8,500 | |
Assets held-for-sale, current | 4,100 | 4,100 | 5,400 | ||
Decline in assets held-for-sale | 1,300 | ||||
Gain on sale of property, plant and equipment | 3,000 | ||||
Equipment, furniture and fixtures | |||||
Property and Equipment | |||||
Property and equipment, gross | 112,803 | 112,803 | 114,652 | ||
Leasehold improvements | |||||
Property and Equipment | |||||
Property and equipment, gross | 33,495 | 33,495 | 34,881 | ||
Land and buildings | |||||
Property and Equipment | |||||
Property and equipment, gross | $ 378 | $ 378 | $ 371 |
Stock Repurchase and Dividend_2
Stock Repurchase and Dividends - Narrative (Details) - USD ($) | Mar. 29, 2020 | Jan. 27, 2020 | Nov. 05, 2018 | Sep. 30, 2018 |
Stock Repurchase And Dividends [Abstract] | ||||
Maximum repurchase amount under stock repurchase program | $ 200,000,000 | $ 200,000,000 | ||
Remaining authorized amount under share repurchase program | $ 243,300,000 | $ 25,000,000 |
Stock Repurchase and Dividend_3
Stock Repurchase and Dividends - Schedule of Stock Repurchase (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended |
Dec. 29, 2019 | Mar. 29, 2020 | |
Equity, Class of Treasury Stock [Line Items] | ||
Shares Repurchased (in shares) | 1,562,521 | |
Average Price Paid per Share (in dollars per share) | $ 64 | |
Total Cost | $ 100,000 | |
2018 Program | ||
Equity, Class of Treasury Stock [Line Items] | ||
Shares Repurchased (in shares) | 430,559 | |
Average Price Paid per Share (in dollars per share) | $ 58.06 | |
Total Cost | $ 25,000 | |
2019 Program | ||
Equity, Class of Treasury Stock [Line Items] | ||
Shares Repurchased (in shares) | 1,131,962 | 1,060,850 |
Average Price Paid per Share (in dollars per share) | $ 66.26 | $ 76.98 |
Total Cost | $ 75,000 | $ 81,660 |
Shares traded but not settled (in shares) | 13,869 | |
Shares traded but not settled, average price per share (in dollars per share) | $ 71.03 | |
Shares traded but not settled, value | $ 1,000 |
Stock Repurchase and Dividend_4
Stock Repurchase and Dividends - Schedule of Dividends Declared and Paid and Subsequent Event (Details) - USD ($) $ / shares in Units, $ in Thousands | May 29, 2020 | Apr. 27, 2020 | Feb. 28, 2020 | Jan. 27, 2020 | Dec. 13, 2019 | Nov. 11, 2019 | Feb. 28, 2019 | Jan. 28, 2019 | Dec. 14, 2018 | Nov. 05, 2018 | Mar. 29, 2020 | Mar. 31, 2019 | Mar. 29, 2020 | Mar. 31, 2019 |
Stock Repurchase And Dividends [Abstract] | ||||||||||||||
Dividend paid per share (in dollars per share) | $ 0.15 | $ 0.15 | $ 0.12 | $ 0.12 | $ 0.15 | $ 0.12 | $ 0.30 | $ 0.24 | ||||||
Dividend Paid (in thousands) | $ 8,224 | $ 8,190 | $ 6,616 | $ 6,654 | $ 16,414 | $ 13,270 | ||||||||
Subsequent Event [Line Items] | ||||||||||||||
Dividend paid per share (in dollars per share) | $ 0.15 | $ 0.15 | $ 0.12 | $ 0.12 | $ 0.15 | $ 0.12 | $ 0.30 | $ 0.24 | ||||||
Subsequent Event | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Quarterly cash dividend declared (in dollars per share) | $ 0.17 | |||||||||||||
Forecast | Subsequent Event | ||||||||||||||
Stock Repurchase And Dividends [Abstract] | ||||||||||||||
Dividend paid per share (in dollars per share) | $ 0.17 | |||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Dividend paid per share (in dollars per share) | $ 0.17 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Millions | 6 Months Ended |
Mar. 29, 2020USD ($) | |
Lessee, Lease, Description [Line Items] | |
Renewal term (up to) | 5 years |
Operating leases not yet commenced | $ 1.7 |
Lease term | 5 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 1 month |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 8 years |
Leases - Components of Lease Co
Leases - Components of Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Mar. 29, 2020 | Mar. 29, 2020 | |
Leases [Abstract] | ||
Operating lease cost | $ 21,595 | $ 42,767 |
Sublease income | (541) | (1,115) |
Other | 18 | 36 |
Total lease cost | $ 21,072 | $ 41,688 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flows (Details) $ in Thousands | 6 Months Ended |
Mar. 29, 2020USD ($) | |
Leases [Abstract] | |
Operating cash flows for operating leases | $ 41,504 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 321,919 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet (Details) $ in Thousands | Mar. 29, 2020USD ($) |
Operating leases: | |
Right-of-use assets | $ 262,678 |
Lease liabilities: | |
Current | 70,594 |
Long-term | 212,229 |
Total operating lease liabilities | $ 282,823 |
Weighted-average remaining lease term: | |
Operating leases | 5 years |
Weighted-average discount rate: | |
Operating leases | 2.40% |
Leases - Maturity Analysis of t
Leases - Maturity Analysis of the Future Undiscounted Cash Flows of Operating and Finance Lease Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Mar. 29, 2020 | Mar. 29, 2020 | Sep. 29, 2019 | |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |||
2020 | $ 40,195 | $ 40,195 | |
2021 | 69,193 | 69,193 | |
2022 | 60,307 | 60,307 | |
2023 | 41,736 | 41,736 | |
2024 | 30,055 | 30,055 | |
Beyond | 63,136 | 63,136 | |
Total lease payments | 304,622 | 304,622 | |
Less: imputed interest | (21,799) | (21,799) | |
Total present value of lease liabilities | 282,823 | 282,823 | |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |||
Total liability | $ 343,500 | ||
2020 | 108,800 | ||
2021 | 66,400 | ||
2022 | 51,400 | ||
2023 | 36,500 | ||
2024 | 25,800 | ||
Due after year 2024 | $ 54,600 | ||
Rent expense | $ 19,200 | $ 38,600 |
Stockholders' Equity and Stoc_2
Stockholders' Equity and Stock Compensation Plans (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 29, 2020 | Mar. 31, 2019 | Mar. 29, 2020 | Mar. 31, 2019 | |
Stockholders' Equity and Stock Compensation Plans | ||||
Stock-based compensation expense | $ 5,000 | $ 4,100 | $ 9,400 | $ 8,600 |
Performance-based restricted stock | ||||
Stockholders' Equity and Stock Compensation Plans | ||||
Percentage of shares that ultimately vest depending on growth in diluted earnings per share | 50.00% | |||
Percentage of shares that ultimately vest depending on the shareholder return relative to peer group of companies over vesting period | 50.00% | |||
Performance-based restricted stock | Non-employee directors and executive officers | ||||
Stockholders' Equity and Stock Compensation Plans | ||||
Granted (in shares) | 74,011 | |||
Granted, fair value (in dollars per share) | $ 99.85 | |||
Vesting period | 3 years | |||
Restricted stock units | Non-employee directors, executive officers and employees | ||||
Stockholders' Equity and Stock Compensation Plans | ||||
Granted (in shares) | 163,525 | |||
Granted, fair value (in dollars per share) | $ 84.01 | |||
Restricted stock units | Non-employee director | ||||
Stockholders' Equity and Stock Compensation Plans | ||||
Vesting period | 1 year | |||
Restricted stock units | Executive officers and employees | ||||
Stockholders' Equity and Stock Compensation Plans | ||||
Vesting period | 4 years |
Earnings per Share ("EPS") - Ca
Earnings per Share ("EPS") - Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 29, 2020 | Mar. 31, 2019 | Mar. 29, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||||
Net income attributable to Tetra Tech | $ 36,397 | $ 55,911 | $ 83,707 | $ 97,907 |
Weighted-average common shares outstanding – basic (in shares) | 54,699 | 55,143 | 54,541 | 55,237 |
Effect of dilutive stock options and unvested restricted stock (in shares) | 764 | 842 | 839 | 924 |
Weighted-average common stock outstanding – diluted (in shares) | 55,463 | 55,985 | 55,380 | 56,161 |
Earnings per share attributable to Tetra Tech: | ||||
Basic (in dollars per share) | $ 0.67 | $ 1.01 | $ 1.53 | $ 1.77 |
Diluted (in dollars per share) | $ 0.66 | $ 1 | $ 1.51 | $ 1.74 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2019 | Dec. 30, 2018 | Mar. 29, 2020 | Mar. 31, 2019 | Sep. 29, 2019 | |
Valuation Allowance [Line Items] | |||||
Effective tax rate | 19.50% | (0.80%) | |||
Tax Cuts and Jobs Act, change in tax rate, income tax benefit | $ 2.6 | ||||
Effective income tax rate reconciliation, tax cuts and jobs act and valuation allowance impacts, percent | 24.80% | ||||
Liability for uncertain tax positions | $ 9.8 | $ 9.2 | |||
AUSTRALIA | |||||
Valuation Allowance [Line Items] | |||||
Valuation allowance release | $ 22.3 |
Reportable Segments - Financial
Reportable Segments - Financial Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 29, 2020USD ($) | Mar. 31, 2019USD ($) | Mar. 29, 2020USD ($)segment | Mar. 31, 2019USD ($) | Sep. 29, 2019USD ($) | |
Financial information regarding reportable segments | |||||
Number of reportable segments | segment | 2 | ||||
Revenue | $ 734,133 | $ 722,621 | $ 1,531,756 | $ 1,440,052 | |
Income from operations | 47,530 | 47,545 | 110,832 | 103,256 | |
Total Assets | 2,343,150 | 2,343,150 | $ 2,147,408 | ||
Operating segment | GSG | |||||
Financial information regarding reportable segments | |||||
Revenue | 436,903 | 417,526 | 894,307 | 829,497 | |
Income from operations | 35,347 | 44,803 | 77,395 | 82,217 | |
Total Assets | 546,090 | 546,090 | 587,040 | ||
Operating segment | CIG | |||||
Financial information regarding reportable segments | |||||
Revenue | 308,412 | 322,458 | 659,576 | 640,252 | |
Income from operations | 21,676 | 20,869 | 53,309 | 47,968 | |
Total Assets | 362,446 | 362,446 | 450,276 | ||
Operating segment | RCM | |||||
Financial information regarding reportable segments | |||||
Revenue | 5 | (4,645) | 150 | (3,192) | |
Income from operations | (1) | (5,938) | 1 | (5,934) | |
Total Assets | 14,285 | 14,285 | 15,608 | ||
Elimination of inter-segment revenue | |||||
Financial information regarding reportable segments | |||||
Revenue | (11,187) | (12,718) | (22,277) | (26,505) | |
Corporate | |||||
Financial information regarding reportable segments | |||||
Income from operations | (9,492) | $ (12,189) | (19,873) | $ (20,995) | |
Total Assets | $ 1,420,329 | $ 1,420,329 | $ 1,094,484 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Millions | Mar. 29, 2020USD ($) |
Fair Value Disclosures [Abstract] | |
Borrowing under credit agreement | $ 345.5 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Narrative (Details) $ in Thousands | 3 Months Ended | ||
Dec. 30, 2018agreement | Mar. 29, 2020USD ($)instrument | Sep. 29, 2019USD ($)instrument | |
Derivatives not designated as hedging instruments | |||
Derivative Financial Instruments | |||
Number of instruments held | instrument | 0 | 0 | |
Interest rate swap agreements | Designated as cash flow hedges | Derivatives designated as hedging instruments | |||
Derivative Financial Instruments | |||
Number of derivative agreements | agreement | 5 | ||
Notional amount | $ 234,400 | ||
Fixed rate | 2.79% | ||
Gain (loss) to be reclassified during next twelve months | $ 5,500 | ||
Interest rate swap agreements | Designated as cash flow hedges | Derivatives designated as hedging instruments | Other current liabilities | |||
Derivative Financial Instruments | |||
Fair value of interest rate swap agreements | (16,568) | $ (10,873) | |
Interest Rate Swap 1 | Designated as cash flow hedges | Derivatives designated as hedging instruments | |||
Derivative Financial Instruments | |||
Notional amount | 46,900 | ||
Interest Rate Swap 2 | Designated as cash flow hedges | Derivatives designated as hedging instruments | |||
Derivative Financial Instruments | |||
Notional amount | 46,900 | ||
Interest Rate Swap 3 | Designated as cash flow hedges | Derivatives designated as hedging instruments | |||
Derivative Financial Instruments | |||
Notional amount | 46,900 | ||
Interest Rate Swap 4 | Designated as cash flow hedges | Derivatives designated as hedging instruments | |||
Derivative Financial Instruments | |||
Notional amount | 46,900 | ||
Interest Rate Swap 5 | Designated as cash flow hedges | Derivatives designated as hedging instruments | |||
Derivative Financial Instruments | |||
Notional amount | $ 46,900 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Fair Value (Details) - USD ($) $ in Thousands | Mar. 29, 2020 | Sep. 29, 2019 |
Interest rate swap agreements | Other current liabilities | Derivatives designated as hedging instruments | Designated as cash flow hedges | ||
Derivative Financial Instruments | ||
Derivative liabilities | $ (16,568) | $ (10,873) |
Derivative Financial Instrume_5
Derivative Financial Instruments - Schedule of Changed in FV of Cash Flow Hedges (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 29, 2020 | Mar. 31, 2019 | Mar. 29, 2020 | Mar. 31, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Loss recognized in other comprehensive income, net of tax: | $ (7,365) | $ (5,695) | ||
Loss recognized in other comprehensive income, net of tax: | $ (2,769) | $ (6,778) | ||
Interest rate swap agreements | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Loss recognized in other comprehensive income, net of tax: | $ (5,695) | |||
Loss recognized in other comprehensive income, net of tax: | $ (6,778) |
Reclassifications Out of Accu_3
Reclassifications Out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 29, 2020 | Mar. 31, 2019 | Mar. 29, 2020 | Mar. 31, 2019 | |
Reclassifications out of accumulated other comprehensive loss | ||||
Beginning balance | $ 1,026,765 | $ 954,301 | $ 989,464 | $ 967,100 |
Amounts reclassified from accumulated other comprehensive loss: | ||||
Net current-period other comprehensive loss | (54,380) | 6,477 | (38,809) | (20,629) |
Ending balance | 950,238 | 990,605 | 950,238 | 990,605 |
Foreign Currency Translation Adjustments | ||||
Reclassifications out of accumulated other comprehensive loss | ||||
Beginning balance | (135,812) | (151,936) | (149,711) | (128,602) |
Other comprehensive income (loss) before reclassifications | (47,011) | 9,245 | (33,112) | (14,089) |
Amounts reclassified from accumulated other comprehensive loss: | ||||
Interest rate contracts, net of tax | 0 | 0 | 0 | 0 |
Net current-period other comprehensive loss | (47,011) | 9,245 | (33,112) | (14,089) |
Ending balance | (182,823) | (142,691) | (182,823) | (142,691) |
Loss on Derivative Instruments | ||||
Reclassifications out of accumulated other comprehensive loss | ||||
Beginning balance | (9,203) | (2,757) | (10,873) | 1,252 |
Other comprehensive income (loss) before reclassifications | (2,504) | (6,287) | ||
Amounts reclassified from accumulated other comprehensive loss: | ||||
Net current-period other comprehensive loss | (2,769) | (6,778) | ||
Ending balance | (5,526) | (5,526) | ||
Loss on Derivative Instruments | Interest rate swap agreements | ||||
Amounts reclassified from accumulated other comprehensive loss: | ||||
Interest rate contracts, net of tax | (265) | (491) | ||
Loss on Derivative Instruments | ||||
Reclassifications out of accumulated other comprehensive loss | ||||
Other comprehensive income (loss) before reclassifications | (6,727) | (4,574) | ||
Amounts reclassified from accumulated other comprehensive loss: | ||||
Net current-period other comprehensive loss | (7,365) | (5,695) | ||
Ending balance | (16,568) | (16,568) | ||
Loss on Derivative Instruments | Interest rate swap agreements | ||||
Amounts reclassified from accumulated other comprehensive loss: | ||||
Interest rate contracts, net of tax | (638) | (1,121) | ||
Accumulated Other Comprehensive Loss | ||||
Reclassifications out of accumulated other comprehensive loss | ||||
Beginning balance | (145,015) | (154,693) | (160,584) | (127,350) |
Other comprehensive income (loss) before reclassifications | (53,738) | 6,741 | (37,686) | (20,376) |
Amounts reclassified from accumulated other comprehensive loss: | ||||
Interest rate contracts, net of tax | (638) | (265) | (1,121) | (491) |
Net current-period other comprehensive loss | (54,376) | 6,476 | (38,807) | (20,867) |
Ending balance | $ (199,391) | $ (148,217) | $ (199,391) | $ (148,217) |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Jul. 15, 2019action |
Commitments and Contingencies Disclosure [Abstract] | |
Loss contingency, actions taken by plaintiff | 3 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 29, 2020 | Mar. 31, 2019 | Mar. 29, 2020 | Mar. 31, 2019 | Sep. 29, 2019 | |
Related Party Transactions [Abstract] | |||||
Related party revenues | $ 19,100 | $ 21,800 | $ 48,000 | $ 45,700 | |
Related party expenses | 18,800 | $ 21,600 | 47,600 | $ 45,100 | |
Accounts receivable, net | 14,847 | 14,847 | $ 19,351 | ||
Contract assets | 8,985 | 8,985 | 9,681 | ||
Contract liabilities | $ (489) | $ (489) | $ (111) |
Uncategorized Items - ttek-2020
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (2,766,000) |
Restricted Cash | us-gaap_RestrictedCash | 154,000 |
Restricted Cash | us-gaap_RestrictedCash | 2,696,000 |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (2,766,000) |