10q10k10q10k.net

What changed in TETRA TECH INC's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of TETRA TECH INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+465 added−448 removedSource: 10-K (2024-11-19) vs 10-K (2022-11-25)

Top changes in TETRA TECH INC's 2024 10-K

465 paragraphs added · 448 removed · 271 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

90 edited+30 added−32 removed70 unchanged
Biggest changeHe also serves as the Chief Compliance Officer and is responsible for the global Human Resources function. For the prior 10 years, Mr. Hopson served as Vice President, Assistant General Counsel and Assistant Corporate Secretary at AECOM. Prior to this, he was with O’Melveny & Myers LLP and the U.S. Court of Appeals. Mr.
Biggest changeHopson joined us as Senior Vice President, General Counsel and Secretary to the Board of Directors in January 2018, was appointed Executive Vice President, Chief Legal and Human Capital officer in November 2024. He also serves as the Chief Ethics and Compliance Officer. Previously, Mr. Hopson served as Vice President, Assistant General Counsel and Assistant Corporate Secretary at AECOM.
CIG's energy services include support for electric power utilities and independent power producers worldwide, ranging from macro-level planning and management advisory services to project-specific environmental, engineering, project management and operational services, and advising on the design and implementation of smart grids, both domestically and internationally, including increasing utility automation, information and operational technologies and critical infrastructure security.
CIG's energy services include support for electric power utilities and independent power producers worldwide, ranging from macro-level planning and management advisory services to project-specific environmental, engineering, project management and operational services, and advising on energy security and the design and implementation of smart grids, both domestically and internationally, including increasing utility automation, information and operational technologies and critical infrastructure security.
These rules and regulations: • require certification and disclosure of all cost and pricing data in connection with the contract negotiations under certain contract types; • impose accounting rules that define allowable and unallowable costs and otherwise govern our right to reimbursement under certain cost-based government contracts; and 11 • restrict the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.
These rules and regulations: 11 • require certification and disclosure of all cost and pricing data in connection with the contract negotiations under certain contract types; • impose accounting rules that define allowable and unallowable costs and otherwise govern our right to reimbursement under certain cost-based government contracts; and • restrict the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.
These networks also facilitate our ability to provide services throughout the project life cycle from the early studies to operations and maintenance. Networking is further supported by our enterprise-wide knowledge management systems which include skills search tools, business development tracking and collaboration tools. To support our growth plans, we actively attract, recruit and retain key hires.
These networks also facilitate our ability to provide services throughout the project life cycle from the early studies to operations and maintenance. Networking is further supported by our enterprise-wide knowledge management systems which include skills search tools, business development tracking and collaboration tools. To support our growth plans, we actively attract, recruit, engage and retain key hires.
The DCAA reviews all types of U.S. federal government proposals, including those of award, administration, modification and re-pricing. The DCAA considers our cost accounting system, estimating methods and procedures and specific 8 proposal requirements. Operational audits are also performed by the DCAA. A review of our operations at every major organizational level is conducted during the proposal review period.
The DCAA reviews all types of U.S. federal government proposals, including those of award, administration, modification and re-pricing. The DCAA considers our cost accounting system, estimating methods and procedures and specific proposal requirements. Operational audits are also performed by the DCAA. A review of our operations at every major organizational level is conducted during the proposal review period.
For more information on risks related to our business, reportable segments and geographic regions, including risks related to foreign operations, see Item 1A, “Risk Factors” of this report. Government Services Group GSG provides high-end consulting and engineering services primarily to U.S. government clients (federal, state and local) and development agencies worldwide.
For more information on risks related to our business, reportable segments and geographic regions, including risks related to foreign operations, see Item 1A, “Risk Factors” of this report. Government Services Group GSG provides high-end consulting and engineering services primarily to U.S. government clients (federal, state and local) and international development agencies worldwide.
We provide high-end design of sustainable energy, water and GHG decarbonization solutions including civil, electrical, mechanical, structural and hydraulic engineering for buildings and surrounding developments. We provide high-end services in addressing indoor health and associated assessment, consulting and retrofits of buildings to address indoor air quality and safety.
We provide high-end design of sustainable energy, water and GHG decarbonization solutions including civil, electrical, mechanical, structural and hydraulic engineering for buildings, campuses and surrounding developments. We provide high-end services in addressing indoor health and associated assessment, consulting and retrofits of buildings to address indoor air quality and safety.
GSG also leads our support for development agencies worldwide, especially in the United States, the United Kingdom and Australia. GSG provides consulting and engineering services for a broad range of water, environment and infrastructure-related needs primarily for U.S. government clients.
GSG also leads our support for development agencies worldwide, especially in the United States, the United Kingdom and Australia. GSG provides consulting and engineering services for a broad range of water, environment and sustainable infrastructure-related needs primarily for U.S. government clients.
In addition, we maintain preventative audit programs and mitigation measures to ensure that appropriate control systems are in place. We provide services under contracts, purchase orders or retainer letters. Our policy requires that all contracts must be in writing.
In addition, we maintain preventative audit programs and mitigation measures to ensure that appropriate control systems are in place. 8 We provide services under contracts, purchase orders or retainer letters. Our policy requires that all contracts must be in writing.
To support our associates in reaching their full potential, Tetra Tech offers a wide range of internal and external learning and development opportunities. Education assistance is offered to financially support associates who seek to expand their knowledge and skill base.
To support our employees in reaching their full potential, Tetra Tech offers a wide range of internal and external learning and development opportunities. Education assistance is offered to financially support associates who seek to expand their knowledge and skill base.
Our high-end teams connect interdisciplinary experts from across our company's 21,000 staff worldwide. Tetra Tech mobilizes teams that include analysts, statisticians, digital engineers and industry experts who effectively implement value-generating and pragmatic solutions for our clients. These advanced analytical solutions enable us to provide clients with real-time reporting, automated and remote data collection and dashboards for tracking and communicating results.
Our high-end teams connect interdisciplinary experts from across our company's 30,000 staff worldwide. Tetra Tech mobilizes teams that include analysts, statisticians, digital engineers and industry experts who effectively implement value-generating and pragmatic solutions for our clients. These advanced analytical solutions enable us to provide clients with real-time reporting, automated and remote data collection and dashboards for tracking and communicating results.
CIG's international services, especially in Canada, the United Kingdom, and Asia Pacific, include high-end analytical, engineering, architecture, geotechnical and project management services for infrastructure projects, including rail and roadway monitoring and asset management services, collection of condition data, optimization of upgrades and long-term planning for 6 expansion; multi-modal design services for commuter railway stations, airport expansions, bridges and major highways and ports and harbors; and designing resilient solutions to repair, replace and upgrade older transportation infrastructure.
CIG's international services, especially in Canada, Europe, the United Kingdom, and Asia Pacific, include high-end analytical, engineering, architecture, geotechnical, project management and advisory services for infrastructure projects, including early project planning, rail and roadway monitoring and asset management services, collection of condition data, optimization of upgrades and long-term planning for expansion; multi-modal design services for commuter railway stations, 6 airport expansions, bridges and major highways and ports and harbors; and designing resilient solutions to repair, replace and upgrade older transportation infrastructure.
Carter 55 Senior Vice President, Corporate Controller and Chief Accounting Officer Mr. Carter joined us as Vice President, Corporate Controller and Chief Accounting Officer in June 2011 and was appointed Senior Vice President in October 2012. Previously, Mr. Carter served in finance and auditing positions in private industry and with Ernst & Young LLP. Mr.
Carter 57 Senior Vice President, Corporate Controller and Chief Accounting Officer Mr. Carter joined us as Vice President, Corporate Controller and Chief Accounting Officer in June 2011 and was appointed Senior Vice President in October 2012. Previously, Mr. Carter served in finance and auditing positions in private industry and with Ernst & Young LLP. Mr.
Batrack 64 Chairman and Chief Executive Officer Mr. Batrack joined our predecessor in 1980 and was named Chairman in January 2008. He has served as our Chief Executive Officer and a director since November 2005, and as our President from October 2008 to September 2019. Mr.
Batrack 66 Chairman, Chief Executive Officer and President Mr. Batrack joined our predecessor in 1980 and was named Chairman in January 2008. He has served as our Chief Executive Officer and a director since November 2005, and as our President from October 2008 to September 2019. Mr.
We also provide engineering services for a wide range of clients with specialized needs, such as data centers, security systems, training and audiovisual facilities, clean rooms, laboratories, medical facilities and disaster preparedness facilities.
We also provide engineering services for a wide range of clients with specialized needs, such as data centers, advanced manufacturing, security systems, training and audiovisual facilities, clean rooms, laboratories, medical facilities and disaster preparedness facilities.
As part of Tetra Tech's commitment to a culture of inclusion, our Employee Resource Group ("ERG") Program broadens and enhances company-wide interaction opportunities for our employees. Tetra Tech's ERG is open to all associates and involves activities for both employees whose background is the focus of the ERG and those who are supportive of the group (also known as allies).
As part of Tetra Tech's commitment to a culture of inclusion, our Employee Resource Group ("ERG") Program broadens and enhances company-wide interaction opportunities for our employees. Tetra Tech's ERGs are open to all associates and involve activities for both employees whose background is the focus of the ERG and those who are supportive of the group (also known as allies).
Our Tetra Tech Delta program facilitates access and exchange of technology solutions across our company, through the use of internal training, inventories and facilitated virtual networking events. Business development activities are implemented by our technical and professional management staff throughout Tetra Tech with the support of company-wide resources and expertise.
Our Tetra Tech Delta program facilitates access and exchange of technology solutions and AI-enabled software solutions across our company, through the use of internal training, inventories and facilitated virtual networking events. Business development activities are implemented by our technical and professional management staff throughout Tetra Tech with the support of company-wide resources and expertise.
No single client, except for the U.S. federal government clients, accounted for more than 10% of our revenue in fiscal 2022. Contracts Our services are performed under three principal types of contracts with our clients: fixed-price, time-and-materials and cost-plus.
No single client, except for the U.S. federal government clients, accounted for more than 10% of our revenue in fiscal 2024. 7 Contracts Our services are performed under three principal types of contracts with our clients: fixed-price, time-and-materials and cost-plus.
The scope of his technical experience includes planning and directing environmental programs, developing data acquisition, management and analytics solutions, fund research and development support for innovative environmental technologies and waste treatment systems, municipal resiliency and sustainability programs. Mr. Argus holds a B.S. in Chemical Engineering from California State University, Long Beach. 15 Name Age Position Brian N.
The scope of his technical experience includes planning and directing environmental programs, developing data acquisition, management and analytics solutions, fund research and development support for innovative environmental technologies and waste treatment systems, municipal resiliency and sustainability programs. Mr. Argus holds a B.S. in Chemical Engineering from California State University, Long Beach. Brian N.
Key areas of focus include climate change, agriculture and rural development, governance and institutional development, natural resources and the environment, infrastructure, economic growth, energy, rule of law and justice systems, land tenure and property rights and training and consulting for public-private partnerships.
Key areas of focus include agriculture and rural development, governance and institutional development, natural resources and the environment, energy and power, infrastructure, economic growth, rule of law and justice systems, land tenure and property rights and training and consulting for public-private partnerships.
Item 1. Business General Te tra Tech, Inc. ("Tetra Tech") is a leading global provider of high-end consulting and engineering services that focuses on water, environment, sustainable infrastructure, renewable energy and international development. We are a global company that is Leading with Science® to provide innovative solutions for our public and private clients.
Item 1. Business General Te tra Tech, Inc. ("Tetra Tech") is a leading global provider of high-end consulting and engineering services that focuses on water, environment and sustainable infrastructure. We are a global company that is Leading with Science® to provide innovative solutions for our public and private clients.
We provide technical support for the Federal Aviation Administration ("FAA") to optimize the U.S. airspace system and support related aviation systems integration for the U.S. and other countries' metropolitan airports. We provide specialized modeling and data analytics for airspace acoustic analysis.
We provide technical support for the Federal Aviation Administration to optimize the U.S. airspace system and support related aviation systems integration for the U.S. and other countries' metropolitan airports. We provide specialized software products, modeling and data analytics for airspace acoustic analysis.
By Leading with Science® and leveraging our collective technology including advanced data analytics and digital technologies, we create transformational solutions for our clients. Tetra Tech's proprietary technologies and solutions, referred to collectively as the Tetra Tech Delta, differentiate us in the market and provide us with a competitive advantage.
By Leading with Science® and leveraging our collective technology including advanced data analytics, digital technologies and AI, we create transformational solutions and provide subscription software solutions to our clients. Tetra Tech's proprietary technologies and solutions, referred to collectively as the Tetra Tech Delta, differentiate us in the market and provide us with a competitive advantage.
Our international development services include supporting donor agencies to develop safe and reliable water supplies and sanitation services, support the eradication of poverty, improve livelihoods, promote democracy and increase economic growth. Our programs span planning, designing, implementing, researching and monitoring projects and leverage advanced technology to collect, manage and provide analytics for our clients.
Our international development services include supporting donor agencies to develop safe and reliable water supplies and sanitation services, support the eradication of poverty, improve livelihoods, promote democracy and increase economic growth. Our programs span planning, designing, implementing, researching and monitoring projects and leverage advanced technology and AI-enabled analytics to collect, interpret and provide solutions for our clients.
Our combination of high-end science and consulting coupled with practical applications provides challenging and rewarding opportunities for our associates, thereby enhancing our ability to recruit and retain top quality talent. Our internal networking programs, leadership training, entrepreneurial environment, focus on Leading with Science® and global project portfolio help to attract and retain highly qualified individuals.
Our combination of high-end science, technology resources and consulting culture coupled with practical applications provides challenging and rewarding opportunities for our workforce, thereby enhancing our ability to recruit and retain top quality talent. Our internal networking programs, leadership training, entrepreneurial environment, focus on Leading with Science® and global project portfolio help to attract and retain highly qualified individuals.
These global networks build on and coordinate with the many local networks that are already active throughout our operations and include groups focused on the experiences of Black, Latino, Pan-Asian, Women, Veterans, Disabled and LGBTQIA+ employees and emerging professionals. Professional Development. Tetra Tech invests in the professional development of our associates.
These global networks build on and coordinate with the many local networks that are already active throughout our operations and include groups focused on the experiences of Black, Latino, Pan-Asian, Women, Veterans, Disabled and LGBTQIA+ employees and emerging professionals. Professional Development.
We believe that our principal competitors include the following firms, in alphabetical order: AECOM; Arcadis NV; Black & Veatch Corporation; Booz Allen Hamilton; Brown & Caldwell; CDM Smith Inc.; Chemonics International, Inc.; Exponent, Inc.; GHD; ICF International, Inc.; Jacobs Engineering Group Inc.; Leidos, Inc.; SAIC; SNC-Lavalin Group Inc.; Stantec Inc.; TRC Companies, Inc.; Weston Solutions, Inc.; and WSP Global Inc.
We believe that our principal competitors include the following firms, in alphabetical order: AECOM; Arcadis NV; AtkinsRéalis; Black & Veatch Corporation; Booz Allen Hamilton; Brown & Caldwell; CDM Smith Inc.; Chemonics International, Inc.; Exponent, Inc.; GHD; ICF International, Inc.; Jacobs Solutions, Inc.; Leidos, Inc.; SAIC; Stantec Inc.; TRC Companies, Inc.; Weston Solutions, Inc.; and WSP Global Inc.
We combine interdisciplinary capabilities, technical resources and institutional knowledge to implement complex projects that are at the leading edge of policy and technology development. Leading with Science ® At Tetra Tech, we provide value-generating solutions by combining operational expertise, science and technology.
We combine interdisciplinary capabilities, technical resources and institutional knowledge to implement complex projects that are at the leading edge of policy and technology development for our clients around the world. Leading with Science ® At Tetra Tech, we provide value-generating solutions by combining operational expertise, science and technology.
Argus is a chemical engineer with 37 years of experience, including 29 years with us in operational leadership, program and project management and quality assurance for projects encompassing a broad spectrum of environmental, engineering, information technology and disaster management services. Mr.
Argus is a chemical engineer with 39 years of experience, including over 30 years with us in operational leadership, program and project management and quality assurance for projects encompassing a broad spectrum of environmental, engineering, information technology and disaster management services. Mr.
Argus has also been responsible for managing multidisciplinary contracts and projects in support of the U.S. federal government (i.e., U.S. Navy, the U.S. Army Corps of Engineers ("USACE") and the EPA), state and municipal agencies and private clients nationwide.
Argus has also been responsible for managing multidisciplinary contracts and projects in support of the U.S. federal government (i.e., U.S. Navy, the U.S. Army Corps of Engineers and the Environmental Protection Agency), state and municipal agencies and private clients nationwide.
CIG also supports U.S. commercial clients by providing design services to renovate, upgrade and modernize industrial water supplies, and address industrial water treatment and water reuse needs; and provides plant engineering, project execution and program management services for industrial water treatment projects throughout the world. CIG provides planning, architectural and sustainable engineering services for commercial and government facilities.
CIG also supports commercial clients by providing design services to renovate, upgrade and modernize industrial water supplies, and address industrial water treatment and water reuse needs; and provides plant engineering, project execution and program management services for industrial water treatment projects throughout the world. CIG provides planning, architectural and high-performance building engineering services for commercial and government facilities.
Our strategic growth plans are augmented by our selective investment in acquisitions aligned with our business. Acquisitions advance plans to add new technologies, broaden our service offerings, add contract capacity and expand our geographic presence. Our long-established experience in identifying and integrating acquisitions strengthens our ability to integrate and rapidly leverage the resources of the acquired companies post-acquisition.
Our strategic growth plans are augmented by our selective investment in acquisitions aligned with our business. Acquisitions advance our strategy by adding new technologies, broadening our service offerings, adding contract capacity and expanding our geographic presence. Our long-established experience in identifying and integrating acquisitions strengthens our ability to integrate and rapidly leverage the resources of the acquired companies post-acquisition.
We create customized solutions; from smart data collection and advanced analytics that support decision making to AI enabled solutions for asset management. Our Tetra Tech Delta technologies are drawn from our decades of operational experience and a reservoir of technical appli cations that are shared throughout our company.
We create customized solutions; from smart data collection and advanced analytics that support decision making to AI-enabled solutions for asset management. Our Tetra Tech Delta technologies are drawn from our decades of operational experience and a reservoir of technical appli cations that are shared throughout our company as well as scalable solutions that are sold externally as software subscriptions.
We have established company-wide growth initiatives that reinforce internal coordination, track the development of new programs, identify and coordinate collective resources for major bids and help us build interdisciplinary teams and provide innovative solutions for major pursuits. Our growth initiatives provide a forum for cross-sector collaboration, access to technical solutions and the development of interdisciplinary solutions.
We have established company-wide growth initiatives that reinforce internal coordination, track the development of new programs, identify and coordinate collective resources for major bids and bring together high-end interdisciplinary teams that provide innovative solutions for major pursuits. Our growth initiatives provide a forum for cross-sector collaboration, access to technical solutions and the development of interdisciplinary solutions.
We have a full suite of proprietary software tools and procedures that support our disaster response, planning and management support services. These tools and procedures address disaster management and 5 community resilience data management needs, including information technology systems, portals, dashboards, data management, data analytics and statistical analysis.
We have a full suite of Tetra Tech Delta technology and specialized software that support our disaster response, planning and management support services. These tools and procedures address disaster management and community resilience data management needs, including information technology systems, portals, dashboards, data management, data analytics and statistical analysis.
Our international clients are primarily focused in Canada, Australia, and the United Kingdom, and consist of a relatively equal sized mix of government and commercial clients. Our U.S. commercial clients include companies in the chemical, energy, mining, pharmaceutical, retail, aerospace, automotive, petroleum and communications industries.
Our international clients are primarily focused in Canada, Australia, Europe and the United Kingdom, and consist of a relatively equal sized mix of government and commercial clients. Our U.S. commercial clients include companies in the chemical, energy, pharmaceutical, retail, aerospace and automotive industrie s.
Because there are various exclusions and retentions under our policies, or an insurance carrier may become insolvent, there can be no assurance that all potential liabilities will be covered by our insurance policies or paid by our carrier. We evaluate the risk associated with insurance claims.
The broker and our risk manager regularly review the adequacy of our insurance coverage. Because there are various exclusions and retentions under our policies, or an insurance carrier may become insolvent, there can be no assurance that all potential liabilities will be covered by our insurance policies or paid by our carrier. We evaluate the risk associated with insurance claims.
Our professional staff includes archaeologists, architects, biologists, chemical engineers, chemists, civil engineers, data scientists, computer scientists, economists, electrical engineers, environmental engineers, environmental scientists, geologists, hydrogeologists, mechanical engineers, software engineers, oceanographers, project managers and toxicologists. We consider the current relationships with our employees to be favorable.
Our professional staff includes, but is not limited to, analysts, archaeologists, architects, biologists, chemical engineers, chemists, civil engineers, data scientists, computer scientists, digital engineers, economists, electrical engineers, environmental engineers, environmental scientists, geologists, hydrogeologists, mechanical engineers, software engineers, statisticians, oceanographers, project managers and toxicologists. We consider the current relationships with our employees to be favorable.
Backlog We include in our backlog only those contracts for which funding has been provided and work authorization has been received. We estimate that approximately two-thirds of our backlog at the end of fiscal 2022 will be recognized as revenue in fiscal 2023, as work is being performed.
Backlog We include in our backlog only those contracts for which funding has been provided and work authorization has been received. We estimate that approximately 70% of our backlog at the end of fiscal 2024 will be recognized as revenue in fiscal 2025, as work is being performed.
GSG provides a wide range of consulting and engineering services for solid waste management, including landfill design and management, and recycling facility design throughout the United States; providing design, project management and maintenance services to manage solid and hazardous waste, for environmental, wastewater, energy, containment, mining, utilities, aquaculture and other industrial clients; as well as innovative renewable energy projects such as solar energy-generating landfill caps; and providing full-service solutions for gas-to-energy facilities to efficiently use landfill methane gas.
GSG provides a wide range of consulting and engineering services for solid waste management, including landfill design and management, and recycling facility design throughout the United States; providing design, project management and maintenance services to manage solid and hazardous waste; as well as innovative renewable energy projects such as solar 5 energy-generating landfill caps; and providing full-service solutions for gas-to-energy facilities to efficiently use landfill methane gas.
However, partially or completely uninsured claims, if successful and of significant magnitude, could have a material adverse effect on our business. Human Capital Management Employees. At fiscal 2022 year-end, we had approximate ly 21,000 staff worldwide. A large percentage of our employees have technical and professional backgrounds and undergraduate and/or advanced degrees, including the employees of recently acquired companies.
However, 12 partially or completely uninsured claims, if successful and of significant magnitude, could have a material adverse effect on our business. Human Capital Management Employees. At fiscal 2024 year-end, we had approximately 30,000 staff worldwide. A large percentage of our employees have technical and professional backgrounds and undergraduate and/or advanced degrees, including the e mployees of recently acquired companies.
Tetra Tech is committed to providing and maintaining a healthy and safe work environment for our associates. We provide training to all associates to improve their understanding of behaviors that can be perceived as discriminatory, exclusionary and/or harassing, and provide safe avenues for associates to report such behaviors. Diversity, Equity and Inclusion.
Tetra Tech is committed to providing and maintaining a healthy and safe work environment for our associates. We provide training to all associates to support the safe execution of their work to improve their understanding of behaviors that can be perceived as discriminatory, exclusionary and/or harassing, and provide safe avenues for associates to report such behaviors. Ethics and Compliance.
Reportable Segments We manage our operations under two reportable segments. Our Government Services Group ("GSG") reportable segment primarily includes activities with U.S. government clients (federal, state and local) and all activities with development agencies worldwide. Our Commercial/International Services Group ("CIG") reportable segment primarily includes activities with U.S. commercial clients and international clients other than development agencies.
Our Government Services Group ("GSG") reportable segment primarily includes activities with U.S. government clients (federal, state and local) and all activities with development agencies worldwide. Our Commercial/International Services Group ("CIG") reportable segment primarily includes activities with U.S. commercial clients and international clients other than development agencies.
ENR also ranked Tetra Tech in the top 10 in numerous categories, including dams and reservoirs, marine and port facilities, wind power, solar power, solid waste, environmental science, chemical and soil remediation, green building design, hazardous waste and site assessment and compliance.
ENR also ranked Tetra Tech in the Top 10 in numerous categories, including dams and reservoirs, marine and port facilities, power, solar power, solid waste, environmental science, chemical and soil remediation, and hazardous waste.
CIG supports commercial clients across the Fortun e 500, renewable energy, industrial, high-performance buildings and aerospace markets. CIG also provides sustainable infrastructure and related environmental, engineering, and project management services to commercial and local government clients across Canada, in Asia Pacific (primarily Australia and New Zealand), the United Kingdom, as well as Brazil and Chile.
CIG supports commercial clients worldwide in renewable energy, industrial, high-performance buildings and aerospace markets. CIG also provides sustainable infrastructure and related environmental, engineering, and project management services to commercial and local government clients across Canada, in Asia Pacific (primarily Australia and New Zealand), Europe, the United Kingdom, and South America (primarily Brazil).
The Department of Defense ("DoD") accounted for 9.7%, 11.2% and 9.2% of our revenue in fiscal 2022, 2021 and 2020, respectively. We typically support multiple programs within a single U.S. federal government agency, both domestically and internationally. We also assist U.S. state and local government clients in various jurisdictions across the United States.
The Department of Defense ("DoD") accounted for 8.5%, 8.9% and 9.7% of our revenue in fiscal 2024, 2023 and 2022, respectively. We typically support multiple programs within a single U.S. fede ral government agency, both domestically and internationally. We also assist U.S. state and local government clients in various jurisdictions across the United States.
Our aviation airspace services include data management, data processing, communications and outreach and systems development; and providing systems analysis and information management. We support governments in implementing international development programs for developing nations to help them address numerous challenges, including access to potable water and adapting to the threats of climate change.
Our aviation airspace services include data management, data processing, communications and outreach and systems development; and providing systems analysis and information management. We support governments in implementing international development programs for developing nations to help them address numerous challenges, including access to potable water, essential energy needs, economic development and climate adaptation.
As a signatory of the United Nations Global Compact ("UNGC") on human rights, labor, environment and anti-corruption, Tetra Tech embraces the UNGC Ten Principles as part of the strategy, culture and daily operations of our company.
As a signatory of the United Nations ("UN") Global Compact on human rights, labor, environment and anti-corruption, we embrace the UN Global Compact's Ten Principles as part of the strategy, culture and daily operations of our company.
Effective development of business is facilitated by each staff member's access to all of our service offerings through our internal Tetra Tech Delta and geographic networks. Our strong internal networking programs help our professional staff members to pursue new opportunities for both existing and new clients.
Effective development of business is facilitated by each staff member's access to all of our service offerings including our Tetra Tech Delta technology resources and software. Our strong internal networking programs help our professional staff members to pursue new opportunities and build multi-disciplinary teams for both existing and new clients.
Our client-focused project management is supported by strong fiscal management and financial tools. We use a disciplined approach to monitoring, managing and improving our return on investment in each of our business areas through our efforts to negotiate appropriate contract terms, manage our contract performance to minimize schedule delays and cost overruns and promptly bill and collect accounts receivable.
We use a disciplined 3 approach to monitoring, managing and improving our return on investment in each of our business areas through our efforts to negotiate appropriate contract terms, manage our contract performance to minimize schedule delays and cost overruns and promptly bill and collect accounts receivable.
We bring superior technical capability, disciplined project management and excellence in safety and quality to all of our services. • Opportunity. Our people are our number one asset.
We develop and implement sustainable solutions that are innovative, efficient and practical. • Excellence. We bring superior technical capability, disciplined project management and excellence in safety and quality to all of our services. • Opportunity. Our people are our number one asset.
The following table presents the percentage of our revenue by contract type: Fiscal Year Contract Type 2022 2021 2020 Fixed-price 37.6% 37.1% 36.0% Time-and-materials 46.7 46.4 46.5 Cost-plus 15.7 16.5 17.5 100.0% 100.0% 100.0% Under a fixed-price contract, clients agree to pay a specified price for our performance of the entire contract or a specified portion of the contract.
The following table presents the percentage of our revenue by contract type: Fiscal Year Contract Type 2024 2023 2022 Fixed-price 38.8% 36.3% 37.6% Time-and-materials 45.0 48.0 46.7 Cost-plus 16.2 15.7 15.7 100.0% 100.0% 100.0% Under a fixed-price contract, clients agree to pay a specified price for our performance of the entire contract or a specified portion of the contract.
When we perform higher-risk work, we obtain, if available, the necessary types of insurance coverage for such activities, as is typically required by our clients. We obtain insurance coverage through a broker that is experienced in our industry. The broker and our risk manager regularly review the adequacy of our insurance coverage.
We believe that these policies provide adequate coverage for our business. When we perform higher-risk work, we obtain, if available, the necessary types of insurance coverage for such activities, as is typically required by our clients. We obtain insurance coverage through a broker that is experienced in our industry.
Our ability to provide innovation and first-of-kind solutions is enhanced by partnerships with our forward-thinking clients. We are diverse, equitable and inclusive, embracing the breadth of experience across our talented workforce worldwide with a culture of innovation and entrepreneurship. We are disciplined in our business, and focused on delivering value to customers and high performance for our shareholders.
We are diverse, equitable and inclusive, embracing the breadth of experience across our talented workforce worldwide with a culture of innovation and entrepreneurship. We are disciplined in our business, and focused on delivering value to customers and high performance for our shareholders.
Our services advance sustainability and resiliency through the "greening" of infrastructure, design of energy efficiency and resource conservation programs, innovation in the capture and sequestration of carbon, development of disaster preparedness and response plans and improvement in water and land resource management practices.
Our services advance resiliency through the "greening" of infrastructure, design of energy efficiency and resource conservation programs, innovation in the capture and sequestration of carbon, development of disaster preparedness and response plans and improvement in water and land resource management practices. We provide energy management consulting, and greenhouse gas ("GHG") inventory assessment, certification, reduction and management services.
The following table presents the percentage of our revenue by client sector: Fiscal Year Client Sector 2022 2021 2020 U.S. federal government (1) 30.4% 33.6% 33.2% U.S. state and local government 17.2 16.7 14.7 U.S. commercial 21.4 19.9 22.5 International (2) 31.0 29.8 29.6 100.0% 100.0% 100.0% (1) Includes revenue generated under U.S. federal government contracts performed outside the United States.
The following table presents the percentage of our revenue by client sector: Fiscal Year Client Sector 2024 2023 2022 U.S. federal government (1) 32.2% 30.7% 30.4% U.S. state and local government 11.8 13.4 17.2 U.S. commercial 17.5 19.2 21.4 International (2) 38.5 36.7 31.0 100.0% 100.0% 100.0% (1) Includes revenue generated under U.S. federal government contracts performed outside the United States.
Due to our reputation, size, financial resources, geographic presence and range of services, we have numerous opportunities to acquire privately and publicly held companies or selected portions of such companies.
We continuously evaluate the marketplace for acquisition opportunities to further our strategic growth plans. Due to our reputation, size, financial resources, geographic presence and range of services, we have numerous opportunities to acquire privately and publicly held companies or selected portions of such companies.
Our backlog at fiscal 2022 year-end was $3.7 billion, an increase of $264 million, or 7.6%, compared to fiscal 2021 year-end. Of this amount, GSG and CIG reported $2.3 billion and $1.5 billion of backlog, respectively, at fiscal 2022 year-end.
Our backlog at fiscal 2024 year-end was $5.4 billion, an increase of $586 million, or 12.2%, compared to fiscal 2023 year-end. Of this amount, GSG and CIG reported $3.2 billion and $2.2 billion of backlog, respectively, at fiscal 2024 year-end.
Our Sustainability Program is led by our Chief Sustainability Officer, who has been appointed by our Board of Directors and is supported by other key corporate and operations representatives via our Sustainability Council. We continuously implement sustainability-related policies and practices and assess the results of our efforts in order to improve upon them in the future.
Our Sustainability Program is led by our Chief Sustainability Officer, who has been appointed by our Board of Directors and is supported by corporate and operations representatives through our Sustainability Council. We continuously review sustainability-related policies and practices, integrate input from stakeholders, and assess the results of our efforts in order to make future improvements.
These occurrences result in fewer billable hours worked on projects and, correspondingly, less revenue recognized. Potential Liability and Insurance Our business activities could expose us to potential liability under various laws and under workplace health and safety regulations. In addition, we occasionally assume liability by contract under indemnification agreements. We cannot predict the magnitude of such potential liabilities.
Risk Management and Insurance Our business activities could expose us to potential risk and liability under various laws and under workplace health and safety regulations. In addition, we occasionally assume liability by contract under indemnification agreements. We cannot predict the magnitude of such potential liabilities.
We provide climate change and energy management consulting, and greenhouse gas ("GHG") inventory assessment, certification, reduction and management services. GSG also provides planning, architectural and sustainable engineering services for U.S. federal, state and local government facilities. We support government agencies with related sustainable infrastructure needs, asset management for military housing and educational, institutional and research facilities.
GSG also provides planning, architectural and engineering services for U.S. federal, state and local government facilities. We support government agencies with related resilient infrastructure needs, asset management for military housing and educational, institutional and research facilities.
(2) Includes revenue generated from foreign operations, primarily in Canada, Australia, the United Kingdom and revenue generated from non-U.S. clients. 7 U.S. federal government agencies are significant clients. The U.S. Agency for International Development ("USAID") accounted f or 11.0%, 11.7% and 12.2% of our revenue in fiscal 2022, 2021 and 2020, respectively.
(2) Includes revenue generated from non-U.S. clients, primarily in th e United Kingdom, Australia and Canada. U.S. fe deral government agencies are significant clients. The U.S. Agency for International Development accounted for 13.0%, 12.2% and 11.0% of our revenue in fiscal 2024, 2023 and 2022, respectively.
Our current efforts are focused on these primary areas: • Equal employment opportunity. Tetra Tech ensures that our practices and processes attract a diverse range of candidates, and those candidates are recruited, hired, assigned, developed and promoted based on merit and their alignment to our values. 12 • Learning and development opportunities.
Tetra Tech ensures that our practices and processes attract a diverse range of candidates and that candidates are recruited, hired, assigned, developed and promoted based on merit and their alignment with our values. • Enhancing learning and development opportunities.
Opportunity means new technical challenges that provide advancement within our company, encourage an inclusive and diverse workforce and ensure a safe workplace. 3 We have a strong project management culture that enables us to deliver on more than 80,000 projects in a fiscal year. W e maintain a strong emphasis on project management at all levels of the organization.
Opportunity means new technical challenges that provide advancement within our company, encourage an inclusive and diverse workforce and ensure a safe workplace. We have a strong project management culture that enables us to deliver on more than 100,000 projects per fiscal year. Our client-focused project management is supported by strong fiscal management and financial tools.
Engineering News-Record ("ENR"), the engineering industry's leading magazine, has ranked Tetra Tech #1 in Water for 19 years in a row. In 2022, we were also ranked #1 in environmental management, hydro plants, water treatment/desalination and water treatment/supply.
Engineering News-Record ("ENR"), the engineering industry's leading magazine, has ranked Tetra Tech #1 in Water Treatment and Desalination for 11 years in a row. In 2024, we were also ranked #1 in consulting studies; environmental management; wind power; hydro plants; offshore and underwater facilities; site assessment and compliance; and green government offices.
We maintain a comprehensive general liability insurance policy with an umbrella policy that covers losses beyond the general liability limits. We also maintain professional errors and omissions liability and contractor's pollution liability insurance policies. We believe that both policies provide adequate coverage for our business.
Our Office of Risk Management reviews and oversees the risk profile of our operations, and reports to our Board of Directors. We maintain a comprehensive general liability insurance policy with an umbrella policy that covers losses beyond the general liability limits. We also maintain professional errors and omissions liability, contractor's pollution liability, and cyber liability insurance policies.
Burdick holds a B.S. degree in Business Administration from Santa Clara University and is a Certified Public Accountant. 14 Name Age Position Leslie Shoemaker 65 Executive Vice President, Chief Sustainability and Leadership Development Officer Dr. Shoemaker was appointed Executive Vice President, Chief Sustainability and Leadership Development Officer in October 2022 after serving as Tetra Tech's President since September 2019. Dr.
Burdick holds a B.S. degree in Business Administration from Santa Clara University and is a Certified Public Accountant. Leslie Shoemaker 67 Executive Vice President, Chief Innovation and Sustainability Officer Dr.
Long-term relationships provide us with institutional knowledge of our clients' programs, past projects and internal resources. Institutional knowledge is often a significant factor in winning competitive proposals and providing cost-effective solutions tailored to our clients' needs. We are often at the leading edge of new challenges where we are delivering one-of-a-kind solutions.
Throughout our history, we have supported both public and private clients, many for multiple decad es of continuous contracts and repeat business. Long-term relationships provide us with institutional knowledge of our clients' programs, past projects and internal resources. Institutional knowledge is often a significant factor in winning competitive proposals and providing cost-effective solutions tailored to our clients' needs.
The following table presents the percentage of our revenue by reportable segment: Fiscal Year Reportable Segment 2022 2021 2020 GSG 52.0% 55.2% 52.7% CIG 49.6 46.7 49.1 Inter-segment elimination (1.6) (1.9) (1.8) 100.0% 100.0% 100.0% For additional information regarding our reportable segments, see Note 18, "Reportable Segments" of the "Notes to Consolidated Financial Statements" included in Item 8.
These reportable segments allow us to capitalize on our growing market opportunities and enhance the development of high-end consulting and technical solutions to meet our growing client deman d. 4 The following table presents the percentage of our revenue by reportable segment: Fiscal Year Reportable Segment 2024 2023 2022 GSG 47.8% 47.7% 52.0% CIG 53.6 53.6 49.6 Inter-segment elimination (1.4) (1.3) (1.6) 100.0% 100.0% 100.0% For additional information regarding our reportable segments, see Note 19, "Reportable Segments" of the "Notes to Consolidated Financial Statements" included in Item 8.
Our mission is to be the world's leading consulting and engineering firm solving global challenges in water and the environment that make a positive difference in people's lives worldwide. The following core principles form the underpinning of how we work together to serve our clients: • Service. We put our clients first.
In supporting our clients, we seek to add value and provide long-term sustainable consulting, engineering and tec hnology solutions. Our mission is to be the world's leading consulting and engineering firm solving global challenges in water and the environment that make a positive difference in people's lives worldwide.
These might be a new water treatment technology, a unique solution to addressing new regulatory requirements, a new system for automated assessment of infrastructure assets or a digital twin for real time management of water treatment systems.
We are often at the leading edge of new challenges where we are delivering one-of-a-kind solutions. These might be a new water treatment technology, a unique solution to addressing coastal erosion, an AI-enabled system for remote assessment of infrastructure assets or a digital twin for real time management of water treatment systems.
We listen closely to better understand our clients' needs and deliver smart, cost-effective solutions that meet their needs. • Value. We solve our clients' problems as if they were our own. We develop and implement sustainable solutions that are innovative, efficient and practical. • Excellence.
The following core principles form the underpinning of how we work together to serve our clients: • Service. We put our clients first. We listen closely to better understand our clients' needs and deliver smart, cost-effective solutions that meet their needs. • Value. We solve our clients' problems as if they were our own.
Tetra Tech's Board of Directors Strategic Planning and Enterprise Risk Management Committee reviews and approves the Sustainability Program and evaluates our progress in achieving the goals and objectives outlined in our plan. As part of the UNGC, we fulfill the annual Communication on Progress via Tetra Tech's Sustainability Report Card that is published on Earth Day.
Tetra Tech's Board of Directors reviews and approves the Sustainability Program and evaluates our progress in achieving the goals and objectives outlined in our plan. As part of our membership in the UN Global Compact, we annually report on the Communication on Progress using Tetra Tech's Sustainability Report . Acquisitions and Divestitures Acquisitions.
Our Diversity, Equity and Inclusion Council monitors Tetra Tech's diversity, equity and inclusion practices and makes recommendations to the Board of Directors and Chief Executive Officer for any changes or improvements to our program. Tetra Tech values diversity, equity and inclusion and undertakes various efforts throughout its operations to promote these initiatives.
Our Diversity, Equity, Inclusion and Accessibility ("DEIA") Policy guides the Board of Directors, management, associates, subcontractors and partners in developing an inclusive culture. Our DEIA Council monitors Tetra Tech's diversity, equity, inclusion and accessibility practices and makes recommendations to the Board of Directors and Chief Executive Officer for any changes or improvements to our program.
We also proactively share emerging technology and new ideas through our knowledge transfer system, Tetra Tech Technology Transfer ("T4"). T4 facilitates our innovation culture through webcasts, blogs, multi-media and social media across our global operations. Our Project Management Training Program provides comprehensive training in high-end project leadership skills through online training, virtual workshops and in-person events.
We use company-wide virtual events to engage Tetra Tech experts world-wide to solve client challenges and identify the best ideas for further development. We also proactively share emerging technology and new ideas through our knowledge transfer system, Tetra Tech Technology Transfer ("T4"). T4 facilitates our innovation culture through webcasts, blogs, multi-media and social media across our global operations.
Historically, clients have chosen among competing firms by weighing the quality, innovation and timeliness of the firm's service versus its cost to determine which firm offers the best value. When less work becomes available in certain markets, price could become an increasingly important factor.
Historically, clients have chosen among competing firms by weighing the quality, innovation and timeliness of the firm's service versus its cost to determine which firm offers the best value. Our competitors vary depending on end markets and clients, and often we may only compete with a portion of a firm.
Carter holds a B.S. in Business Administration from Miami University and is a Certified Public Accountant. Preston Hopson 46 Senior Vice President, General Counsel and Secretary Mr. Hopson was appointed Senior Vice President, General Counsel and Secretary to the Board of Directors in January 2018.
Carter holds a B.S. in Business Administration from Miami University and is a Certified Public Accountant. Preston Hopson 48 Executive Vice President, Chief Legal and Human Capital Officer Mr.
He has managed complex programs for many small and Fortune 500 clients, both in the United States and internationally. Mr. Batrack holds a B.A. degree in Business Administration from the University of Washington. Jill Hudkins 51 President Ms. Hudkins was appointed President in October 2022. Ms. Hudkins has been with us for over 24 years in increasingly responsible positions.
He has managed complex programs for many small and Fortune 500 clients, both in the United States and internationally. Mr. Batrack holds a B.A. degree in Business Administration from the University of Washington. Steven M. Burdick 60 Executive Vice President, Chief Financial Officer Mr. Burdick has served as our Executive Vice President, Chief Financial Officer since April 2011.
Hopson holds B.A. and J.D. degrees from Yale University. 16 Available Information Our internet website address is www.tetratech.com.
Prior to this, he was a corporate and securities lawyer at O’Melveny & Myers LLP and also worked at the U.S. Court of Appeals. Mr. Hopson holds B.A. and J.D. degrees from Yale University. 15 Available Information Our internet website address is www.tetratech.com.
Shoemaker has facilitated leadership development for Tetra Tech's Leadership Academy program. Dr. Shoemaker holds a B.A. in Mathematics from Hamilton College, a Master of Engineering from Cornell University and a Ph.D. in Agricultural Engineering from the University of Maryland. She was inducted into the United States' National Academy of Engineers in 2022. Derek G.
Since the inception of our sustainability program in 2010, she has served as Chief Sustainability Officer leading the formation and evolution of the program. Dr. Shoemaker holds a B.A. in Mathematics from Hamilton College, a Master of Engineering from Cornell University and a Ph.D. in Agricultural Engineering from the University of Maryland.

… 72 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

87 edited+105 added−56 removed99 unchanged
Biggest changeSuch factors, which include the following, could have a material adverse effect on our revenue or the timing of contract payments from U.S. government agencies: • the failure of the U.S. government to complete its budget and appropriations process before its fiscal year-end; • changes in and delays or cancellations of government programs, procurements, requirements or appropriations; • budget constraints or policy changes resulting in delay or curtailment of expenditures related to the services we provide; • re-competes of government contracts; • the timing and amount of tax revenue received by federal, state and local governments, and the overall level of government expenditures; • curtailment in the use of government contracting firms; • delays associated with insufficient numbers of government staff to oversee contracts; • the increasing preference by government agencies for contracting with small and disadvantaged businesses; • competing political priorities and changes in the political climate regarding the funding or operation of the services we provide; • the adoption of new laws or regulations affecting our contracting relationships with the federal, state or local governments; • unsatisfactory performance on government contracts by us or one of our subcontractors, negative government audits or other events that may impair our relationship with federal, state or local governments; • a dispute with or improper activity by any of our subcontractors; and • general economic or political conditions.
Biggest changeSuch factors, which include the 21 following, could have a material adverse effect on our revenue or the timing of contract payments from U.S. government agencies: the failure of the U.S. government to complete its budget and appropriations process before its fiscal year-end; changes in and delays or cancellations of government programs, procurements, requirements or appropriations; budget constraints or policy changes resulting in delay or curtailment of expenditures related to the services we provide; and re-competes of government contracts.
Our inability to win or renew government contracts during regulated procurement processes could harm our operations and significantly reduce or eliminate our profits. 19 Each year, client funding for some of our U.S. government contracts may rely on government appropriations or public-supported financing. If adequate public funding is delayed or is not available, then our profits and revenue could decline.
Our inability to win or renew government contracts during regulated procurement processes could harm our operations and significantly reduce or eliminate our profits. Each year, client funding for some of our U.S. government contracts may rely on government appropriations or public-supported financing. If adequate public funding is delayed or is not available, then our profits and revenue could decline.
In addition, performance of projects can be affected by a number of factors beyond our control, including unavoidable delays from government inaction, public opposition, inability to obtain financing, weather conditions, unavailability of vendor materials, changes in the project scope of services requested by our clients, industrial accidents, environmental hazards and labor disruptions.
In addition, performance of projects can be affected by a number of factors beyond our control, including unavoidable delays from government inaction, public opposition, inability to obtain financing, weather conditions, unavailability of materials, changes in the project scope of services requested by our clients, industrial accidents, environmental hazards and labor disruptions.
U.S. government contract violations could result in the imposition of civil and criminal penalties or sanctions, contract termination, forfeiture of profit and/or suspension of payment, any of which could make us lose our status as an eligible government contractor. We could also suffer serious harm to our reputation.
U.S. government contract violations could result in the imposition of civil and criminal penalties or sanctions, contract termination, forfeiture of profit and/or suspension of payment, any of which could make us lose our status as 26 an eligible government contractor. We could also suffer serious harm to our reputation.
If we are found to be liable for anti-bribery law violations, we could suffer from criminal or civil penalties or other sanctions that could have a material adverse effect on our business. We could be adversely impacted if we fail to comply with domestic and international export laws.
If we are found to be liable for anti-bribery law violations, we could suffer from criminal or civil penalties or other sanctions that could have a material adverse effect on our business. We could be adversely impacted if we fail to comply with domestic and international export control and sanctions laws.
Our actual business and financial results could differ from those estimates, which may significantly reduce or eliminate our profits. 23 Our profitability could suffer if we are not able to maintain adequate utilization of our workforce. The cost of providing our services, including the extent to which we utilize our workforce, affects our profitability.
Our actual business and financial results could differ from those estimates, which may significantly reduce or eliminate our profits. Our profitability could suffer if we are not able to maintain adequate utilization of our workforce. The cost of providing our services, including the extent to which we utilize our workforce, affects our profitability.
As a result, we risk loss of or injury to our employees and may be subject to costs related to employee death or injury, repatriation or other unforeseen circumstances. We may choose or be forced to leave a country with little or no warning due to physical security risks.
As a 18 result, we risk loss of or injury to our employees and may be subject to costs related to employee death or injury, repatriation or other unforeseen circumstances. We may choose or be forced to leave a country with little or no warning due to physical security risks.
If a client determines not to proceed with the completion of the project or if the client defaults on its payment obligations, we may face difficulties in collecting payment of amounts due to us for the costs previously incurred or for the amounts previously expended to purchase equipment or supplies.
If a client 20 determines not to proceed with the completion of the project or if the client defaults on its payment obligations, we may face difficulties in collecting payment of amounts due to us for the costs previously incurred or for the amounts previously expended to purchase equipment or supplies.
However, our ability to make acquisitions is restricted under our credit agreement. Acquisitions involve certain known and unknown risks that could cause our actual growth or operating results to differ from our expectations or the expectations of securities analysts.
However, our ability to make acquisitions is restricted under our credit 25 agreement. Acquisitions involve certain known and unknown risks that could cause our actual growth or operating results to differ from our expectations or the expectations of securities analysts.
The uncertainty of the timing of a project can present difficulties in planning the amount of personnel needed for the project. If the project is delayed 22 or canceled, we may bear the cost of an underutilized workforce that was dedicated to fulfilling the project.
The uncertainty of the timing of a project can present difficulties in planning the amount of personnel needed for the project. If the project is delayed or canceled, we may bear the cost of an underutilized workforce that was dedicated to fulfilling the project.
Certain of our contracts require us to 24 satisfy specific design, engineering, procurement or construction mile stones in order to receive payment for the work completed or equipment or supplies procured prior to achievement of the applicable milestone.
Certain of our contracts require us to satisfy specific design, engineering, procurement or construction mile stones in order to receive payment for the work completed or equipment or supplies procured prior to achievement of the applicable milestone.
In addition, there can be no assurance that any of our existing insurance coverage will be renewable upon the expiration of the coverage period or that future coverage will be affordable at the required limits. Our inability to obtain adequate bonding could have a material adverse effect on our future revenue and business prospects.
There can be no assurance that any of our existing insurance coverage will be renewable upon the expiration of the coverage period or that future coverage will be affordable at the required limits. Our inability to obtain adequate bonding could have a material adverse effect on our future revenue and business prospects.
To the extent economic conditions that would impact the future operations of our reporting units change, our goodwill may be deemed to be impaired, and we would be required to record a non-cash charge that could result in a material adverse effect on our financial position or results of operations.
To the extent economic conditions that would impact the future operations of our reporting units change, our goodwill may be deemed to be impaired, and we would be required to record a non-cash charge that could result in a material adverse effect on our financial position or results of operation s.
We could experience cost over-runs if these estimates are originally inaccurate as a result of errors or ambiguities in the contract specifications or become inaccurate as a result of a change in circumstances following the submission of the estimate due to, among other things, unanticipated technical problems, difficulties in obtaining permits or approvals, changes in local laws or labor conditions, weather delays, changes in the costs of raw materials or the inability of our vendors or subcontractors to perform.
We could experience cost over-runs if these estimates are originally inaccurate as a result of errors or ambiguities in the contract specifications or become inaccurate as a result of a change in circumstances following the submission of the estimate due to, among other things, unanticipated technical or equipment problems, difficulties in obtaining permits or approvals, changes in local laws or labor conditions, weather delays, changes in the costs of raw materials or the inability of our vendors or subcontractors to perform their obligations.
Our industry is highly competitive, and we may be unable to compete effectively, which could result in reduced revenue, profitability and market share. We are engaged in a highly competitive business. The markets we serve are highly fragmented and we compete with many regional, national and international companies.
Our industry is highly competitive, and we may be unable to compete effectively, which could result in reduced revenue, profitability and market share. 16 We are engaged in a highly competitive business. The markets that we serve are highly fragmented and we compete with many regional, national and international companies.
For example, as discussed elsewhere in this report, on January 14, 2019, the Civil Division of the United States Attorney's Office filed complaints in intervention in three qui tam actions filed against our subsidiary, Tetra Tech EC, Inc., in the U.S. District Court for the Northern District of California.
For example, as discussed elsewhere in this report, on January 14, 2019, the Civil Division of the United States Attorney’s Office ("USAO") filed complaints 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 ("NDCA").
The U.S. federal government has increasingly relied upon multi-year contracts with pre-established terms and conditions, such as indefinite delivery/indefinite quantity (“IDIQ”) contracts, which generally require those contractors who have previously been awarded the IDIQ to engage in an additional competitive bidding process before a task order is issued.
U.S. government contracts are awarded through a regulated procurement process. The U.S. federal government has increasingly relied upon multi-year contracts with pre-established terms and conditions, such as indefinite delivery/indefinite quantity (“IDIQ”) contracts, which generally require those contractors who have previously been awarded the IDIQ to engage in an additional competitive bidding process before a task order is issued.
To the extent we export technical services, data and products outside of the United States, we are subject to U.S. and international laws and regulations governing international trade and exports, including but not limited to the International Traffic in Arms Regulations, the Export Administration Regulations and trade sanctions against embargoed countries.
To the extent we export technical services, data and products outside of the United States, we are subject to U.S. and international laws and regulations governing international trade and exports, including but not limited to the International Traffic in Arms Regulations, the Export Administration Regulations and trade sanctions.
As a U.S. government contractor, we must comply with various procurement laws and regulations and are subject to regular government audits; a violation of any of these laws and regulations or the failure to pass a government audit could result in sanctions, contract termination, forfeiture of profit, harm to our reputation or loss of our status as an eligible government contractor and could reduce our profits and revenue.
Risks Related to Our Legal and Regulatory Environment As a U.S. government contractor, we must comply with various procurement laws and regulations and are subject to regular government audits; a violation of any of these laws and regulations or the failure to pass a government audit could result in sanctions, contract termination, forfeiture of profit, harm to our reputation or loss of our status as an eligible government contractor and could reduce our profits and revenue.
If we fail to complete a project in a timely manner, miss a required performance standard or otherwise fail to adequately perform on a project, then we may incur a loss on that project, which may reduce or eliminate our overall profitability. Our engagements often involve large-scale, complex projects.
Risks Related to Our Business and Operations If we fail to complete a project in a timely manner, miss a required performance standard or otherwise fail to adequately perform on a project, then we may incur a loss on that project, which may reduce or eliminate our overall profitability. Our engagements often involve large-scale, complex projects.
Delaware law and our charter documents may impede or discourage a merger, takeover or other business combination even if the business combination would have been in the short-term best interests of our stockholders.
Delaware law and our organizational documents may impede or discourage a merger, takeover or other business combination with us even if the business combination would have been in the short-term best interests of our stockholders.
There is a risk that we may have disputes with our subcontractors arising from, among other things, the quality and timeliness of work performed by the subcontractor, client concerns about the subcontractor or our failure to extend existing task orders or issue new task orders under a subcontract.
We depend on contractors and subcontractors in conducting our business. There is a risk that we may have disputes with our subcontractors arising from, among other things, the quality and timeliness of work performed by the subcontractor, client concerns about the subcontractor or our failure to extend existing task orders or issue new task orders under a subcontract.
Our policies mandate compliance with anti-bribery laws, and we have established policies and procedures designed to monitor compliance with anti-bribery law requirements; however, we cannot ensure that our policies and procedures will protect us from potential reckless or criminal acts committed by individual employees or agents.
Our policies mandate compliance with anti-bribery laws, and we have established policies and procedures designed to monitor compliance with anti-bribery law requirements; however, we cannot ensure that our policies and procedures will prevent potential reckless or criminal acts committed by individual employees, agents or partners.
Contract proposals and negotiations are complex and frequently involve a lengthy bidding and selection process, which is affected by a number of factors. These factors include market conditions, financing arrangements and required governmental approvals.
Contract proposals and negotiations are complex and frequently involve a lengthy bidding and selection process, which is affected by a number of factors. These factors include market conditions, financing arrangements, required governmental approvals, client relationships and our professional reputation.
A failure to comply with these laws and regulations could result in civil or criminal sanctions, including the imposition of fines, the denial of export privileges and suspension or debarment from participation in U.S. government contracts, which could have a material adverse effect on our business.
A failure to comply with these laws and regulations could result in civil or criminal sanctions, including the imposition of fines, the denial of export privileges and suspension or debarment from participation in U.S. government contracts, which could have a material adverse effect on our business. New legal requirements could adversely affect our operating results .
Our costs generally increase from schedule delays and/or could exceed our projections for a particular project.
Our costs generally increase from schedule delays and/or could exceed our projections and the anticipated revenue for a particular project.
If we or our employees are unable to obtain or retain the necessary eligibility, we may not be able to win new business, and our existing customers could terminate their contracts with us or decide not to renew them.
Depending on the project, eligibility can be difficult and time-consuming to obtain. If we or our employees are unable to obtain or retain the necessary eligibility, we may not be able to win new business, and our existing customers could terminate their contracts with us or decide not to renew them.
Client contracts for the performance of information technology services, as well as various privacy and securities laws, require us to manage and protect sensitive and confidential information, including federal and other government information, from disclosure.
We develop, install and maintain information technology systems for ourselves, as well as for customers. Client contracts for the performance of information technology services, as well as various privacy and securities laws, require us to manage and protect sensitive and confidential information, including federal and other government information, from disclosure.
Our expected future growth presents numerous managerial, administrative, operational and other challenges. Our ability to manage the growth of our operations will require us to continue to improve our management information systems and our other internal systems and controls. In addition, our growth will increase our need to attract, develop, motivate and retain both our management and professional employees.
Our ability to manage the growth of our operations will require us to continue to improve our management information systems and our other internal systems and controls. In addition, our growth will increase our need to attract, develop, motivate and retain both our management and professional employees.
We have a bonding facility but, as is typically the case, the issuance of bonds under that facility is at the surety’s sole discretion. Moreover, bonding may be more difficult to obtain or may only be available at significant additional cost. There can be no assurance that bonds will continue to be available to us on reasonable terms.
We have a bonding facility but, as is typically the case, the issuance of bonds under that facility is at the surety’s sole discretion. There can be no assurance that bonds will continue to be available to us on reasonable terms.
Ongoing instability and current conflicts in global markets, including Eastern Europe, the Middle East and Asia, and the potential for other conflicts and future terrorist activities and other recent geopolitical events throughout the world, including Russia's invasion of Ukraine, have created and may continue to create economic and political uncertainties and impacts.
Ongoing instability and current conflicts in global markets, including Eastern Europe, the Middle East and Asia, and the potential for other conflicts and future terrorist activities and other recent geopolitical events throughout the world, including the ongoing state of war between Israel and Hamas and the related larger regional conflict, have created and may continue to create economic and political uncertainties and impacts.
Our actual business and financial results could differ from the estimates and assumptions that we use to prepare our consolidated financial statements, which may significantly reduce or eliminate our profits. To prepare consolidated financial statements in conformity with generally accepted accounting principles in the U.S. ("U.S.
Our actual business and financial results could differ from the estimates and assumptions that we use to prepare our consolidated financial statements, which may significantly reduce or eliminate our profits.
We have, on occasion, declined to bid on projects due to conflict of interest issues. If our reports and opinions are not in compliance with professional standards and other regulations, we could be subject to monetary damages and penalties. We issue reports and opinions to clients based on our professional engineering expertise, as well as our other professional credentials.
If our reports and opinions are not in compliance with professional standards and other regulations, we could be subject to monetary damages and penalties. 28 We issue reports and opinions to clients based on our professional engineering expertise, as well as our other professional credentials.
If we sustain liabilities that exceed or that are excluded from our insurance coverage, or for which we are not insured, it could have a material adverse impact on our financial condition, results of operations and cash flows.
If we sustain liabilities that exceed or that are excluded from our insurance coverage, or for which we are not insured, it could have a material adverse impact on our financial condition, results of operations and cash flows. We could be adversely affected by violations of the FCPA and similar worldwide anti-bribery laws.
We rely on industry-accepted security measures and technology to securely maintain all confidential and proprietary information on our information systems. In addition, we rely on the security of third-party service providers, vendors and cloud services providers to protect confidential data. In the ordinary course of business, we have been targeted by malicious cyber-attacks.
In addition, we rely on the security of third-party service providers, vendors and cloud services providers to protect confidential data. In the ordinary course of business, we have been targeted by malicious cyber-attacks.
As a result, material performance problems for existing 26 and future contracts could cause actual results of operations to differ from those anticipated by us and could cause us to suffer damage to our reputation within our industry and client base. New legal requirements could adversely affect our operating results .
As a result, material performance problems for existing and future contracts could cause actual results of operations to differ from those anticipated by us and could cause us to suffer damage to our reputation within our industry and client base. Our failure to implement and comply with our safety program could adversely affect our operating results or financial condition.
Under our time-and-materials contracts, we are paid for labor at negotiated hourly billing rates and paid for other expenses. Profitability on these contracts is driven by billable headcount and cost control. Many of our time-and-materials contracts are subject to maximum contract values and, accordingly, revenue relating to these contracts is recognized as if these contracts were fixed-price contracts.
Profitability on these contracts is driven by billable headcount and cost control. Many of our time-and-materials contracts are subject to maximum contract values and, accordingly, revenue relating to these contracts is recognized as if these contracts were fixed-price contracts.
For example, certain of our contracts with the U.S. federal government and other clients are terminable at the discretion of the client, with or without cause. These types of backlog reductions could adversely affect our revenue and margins. As a result of these factors, our backlog as of any particular date is an uncertain indicator of our future earnings.
For example, certain of our contracts with the U.S. federal government and other clients are terminable at the discretion of the client, with or without cause. These types of backlog reductions could adversely affect our revenue and margins.
GAAP"), management is required to make estimates and assumptions as of the date of the consolidated financial statements. These estimates and assumptions affect the reported values of assets, liabilities, revenue and expenses as well as disclosures of contingent assets and liabilities.
To prepare consolidated financial statements in conformity with generally accepted accounting principles in the U.S., management is required to make estimates and assumptions as of the date of the consolidated financial statements. These estimates and assumptions affect the reported values of assets, liabilities, revenue and expenses as well as disclosures of contingent assets and liabilities.
In addition, we must comply with other government regulations related to employment practices, environmental protection, health and safety, tax, accounting, anti-fraud measures as well as many other regulations in order to maintain our government contractor status. These laws and regulations affect how we do business with our clients and, in some instances, impose additional costs on our business operations.
In addition, we must comply with other government regulations related to employment practices, environmental protection, health and safety, tax, accounting, anti-fraud measures as well as many other regulations in order to maintain our government contractor status.
Any decision by a U.S. federal government client to modify, delay, curtail, renegotiate or terminate our contracts at their convenience may result in a decline in our profits and revenue.
Generally, government contracts include the right to modify, delay, curtail, renegotiate or terminate contracts and subcontracts at the government’s convenience any time prior to their completion. Any decision by a client to modify, delay, curtail, renegotiate or terminate our contracts at their convenience may result in a decline in our profits and revenue.
In addition, public-supported financing such as U.S. state and local municipal bonds may be only partially raised to support existing projects. Similarly, an economic downturn may make it more difficult for U.S. state and local governments to fund projects.
Legislatures may appropriate funds for a given project on a year-by-year basis, even though the project may take more than one year to perform. In addition, public-supported financing such as U.S. state and local municipal bonds may be only partially raised to support existing projects. Similarly, an economic downturn may make it more difficult for governments to fund projects.
Our business activities may require our employees to travel to and work in countries where there are high security risks, which may result in employee death or injury, repatriation costs or other unforeseen costs. 28 Certain of our contracts may require our employees travel to and work in high-risk countries that are undergoing political, social and economic upheavals resulting from war, civil unrest, criminal activity, acts of terrorism or public health crises.
Certain of our contracts require our employees travel to and work in high-risk countries that are undergoing political, social and economic upheavals resulting from war, civil unrest, criminal activity, acts of terrorism or public health crises.
Our reports and opinions may need to comply with professional standards, licensing requirements, securities regulations and other laws and rules governing the performance of professional services in the jurisdiction in which the services are performed.
Our reports and opinions may need to comply with professional standards, licensing requirements, securities regulations and other laws and rules governing the performance of professional services in the jurisdiction in which the services are performed. In addition, the reports and other work product we produce for clients sometimes include projections, forecasts and other forward-looking statements.
We derive a substantial amount of our revenue from U.S. federal, state and local government agencies, and any disruption in government funding or in our relationship with those agencies could adversely affect our business. 18 In fiscal 2022, we gener ated 47.6% of our reve nue from contracts with U.S. federal, and state and local government agencies.
Risks Related to Our Clients We derive a substantial amount of our revenue from U.S. federal, state and local government agencies, and any disruption in government funding or in our relationship with those agencies could adversely affect our business. In fiscal 2024, we generated 44.0% of our revenue from contracts with U.S. federal, and state and local government agencies.
We also assess the recoverability of the unamortized balance of our intangible assets when indications of impairmen t are present based on expected future profitability and undiscounted expected cash flows and their contribution to our overall operations.
We are required to perform a goodwill impairment test for potential impairment at least on an annual basis. We also assess the recoverability of the unamortized balance of our intangible assets when indications of impairment are present based on expected future profitability and undiscounted expected cash flows and their contribution to our overall operations.
For example: • we may not be able to identify suitable acquisition candidates or to acquire additional companies on acceptable terms; • we are pursuing international acquisitions, which inherently pose more risk than domestic acquisitions; • we compete with others to acquire companies, which may result in decreased availability of, or increased price for, suitable acquisition candidates; • we may not be able to obtain the necessary financing, on favorable terms or at all, to finance any of our potential acquisitions; • we may ultimately fail to consummate an acquisition even if we announce that we plan to acquire a company; and • acquired companies may not perform as we expect, and we may fail to realize anticipated revenue and profits.
For example: we may not be able to identify suitable acquisition candidates or to acquire additional companies on acceptable terms; we have completed and we will continue to pursue international acquisitions, which inherently pose more risk than domestic acquisitions; we compete with others to acquire companies, which may result in decreased availability of, or increased price for, suitable acquisition candidates; and we may not be able to obtain the necessary financing, on favorable terms or at all, to finance any of our potential acquisitions.
We rely upon a combination of nondisclosure agreements and other contractual arrangements, as well as copyright, trademark, patent and trade secret laws to protect our proprietary information.
We have only a limited ability to protect our intellectual property rights, and our failure to protect our intellectual property rights could adversely affect our competitive position. We rely upon a combination of nondisclosure agreements and other contractual arrangements, as well as copyright, trademark, patent and trade secret laws to protect our proprietary information.
The rate at which we utilize our workforce is affected by a number of factors, including: • our ability to transition employees from completed projects to new assignments and to hire and assimilate new employees; • our ability to forecast demand for our services and thereby maintain an appropriate headcount in each of our geographies and operating units; • our ability to engage employees in assignments during natural disasters or pandemics; • our ability to manage attrition; • our need to devote time and resources to training, business development, professional development and other non-chargeable activities; and • our ability to match the skill sets of our employees to the needs of the marketplace.
The rate at which we utilize our workforce is affected by a number of factors, including: our ability to transition employees from completed projects to new assignments and to hire and assimilate new employees; our ability to forecast demand for our services and thereby maintain an appropriate headcount in each of our geographies and operating units; and our ability to manage attrition.
U.S. federal government projects in which we participate as a contractor or subcontractor may extend for several years. Generally, government contracts include the right to modify, delay, curtail, renegotiate or terminate contracts and subcontracts at the government’s convenience any time prior to their completion.
Certain contracts may give clients the right to modify, delay, curtail, renegotiate or terminate existing contracts at their convenience at any time prior to their completion, which may result in a decline in our profits and revenue. Certain projects in which we participate as a contractor or subcontractor may extend for several years.
Business and Operations Risk Factors Continuing worldwide political, social and economic uncertainties may adversely affect our revenue and profitability. The last several years have been periodically marked by political, social and economic concerns, including decreased consumer confidence, the lingering effects of international conflicts, energy costs and inflation.
The last several years have been periodically marked by political, social and economic concerns, including decreased consumer confidence, the lingering effects of international conflicts, and higher energy costs and inflation.
If our contractors and subcontractors fail to satisfy their obligations to us or other parties, or if we are unable to maintain these relationships, our revenue, profitability and growth prospects could be adversely affected. We depend on contractors and subcontractors in conducting our business.
Our failure to attract and retain key individuals could impair our ability to provide services to our clients and conduct our business effectively. If our contractors and subcontractors fail to satisfy their obligations to us or other parties, or if we are unable to maintain these relationships, our revenue, profitability and growth prospects could be adversely affected.
Legal proceedings, investigations and disputes could result in substantial monetary penalties and damages, especially if such penalties and damages exceed or are excluded from existing insurance coverage. 27 We engage in consulting, engineering, program management and technical services that can result in substantial injury or damages that may expose us to legal proceedings, investigations and disputes.
We engage in consulting, engineering, program management and technical services that can result in substantial injury or damages that may expose us to legal proceedings, investigations and disputes.
These amounts are recorded only when they can be reliably estimated and realization is probable; • provisions for uncollectible receivables, client claims and recoveries of costs from subcontractors, vendors and others; • provisions for income taxes, research and development tax credits, valuation allowances and unrecognized tax benefits; • value of goodwill and recoverability of intangible assets; • valuations of assets acquired and liabilities assumed in connection with business combinations; • valuation of contingent earn-out liabilities recorded in connection with business combinations; • valuation of employee benefit plans; • valuation of stock-based compensation expense; and • accruals for estimated liabilities, including litigation and insurance reserves.
These amounts are recorded only when they can be reliably estimated and realization is probable; provisions for uncollectible receivables, client claims and recoveries of costs from subcontractors, 19 vendors and others; provisions for income taxes, research and development tax credits, valuation allowances and unrecognized tax benefits; and value of goodwill and recoverability of intangible assets.
Local business practices in many countries outside the United States create a greater risk of government corruption than that found in the United States and other more developed countries.
Improper payments are also prohibited under the Canadian Corruption of Foreign Public Officials Act and the Brazilian Clean Companies Act. Local business practices in many countries outside the United States create a greater risk of government corruption than that found in the United States and other more developed countries.
The FCPA and similar anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to foreign government officials for the purpose of obtaining or retaining business. The U.K. Bribery Act of 2010 prohibits both domestic and international bribery, as well as bribery across both private and public sectors.
The FCPA and similar anti-bribery laws generally prohibit companies and their intermediaries from making direct or indirect improper payments to foreign government officials for the purpose of obtaining or retaining business.
If we are not successful in reducing the amount of costs we incur, our profitability on government contracts will be negatively impacted. Moreover, even if we are qualified to work on a government contract, we may not be awarded the contract because of existing government policies designed to protect small businesses and under-represented minority contractors.
As a result, pricing pressure may reduce our profit margins on future federal contracts. Moreover, even if we are qualified to work on a government contract, we may not be awarded the contract because of existing government policies designed to protect small businesses and under-represented minority contractors.
We maintain an enterprise-wide group of health and safety professionals to help ensure that the services we provide are delivered safely and in accordance with standard work processes.
Our project sites often put our employees and others in close proximity with mechanized equipment, moving vehicles, chemical and manufacturing processes and highly regulated materials. We maintain an enterprise-wide group of health and safety professionals to help ensure that the services we provide are delivered safely and in accordance with standard work processes.
If cost overruns occur, we could experience reduced profits or, in some cases, a loss for that project. If a project is significant, or if there are one or more common issues that impact multiple projects, costs overruns could increase the unpredictability of our earnings, as well as have a material adverse impact on our business and earnings.
If cost overruns occur, we could experience reduced profits or, in some cases, a loss for that project and could increase the unpredictability of our earnings, as well as have a material adverse impact on our business and earnings. Under our time-and-materials contracts, we are paid for labor at negotiated hourly billing rates and paid for other expenses.
Further, acquisitions may cause us to: • issue common stock that would dilute our current stockholders’ ownership percentage; • use a substantial portion of our cash resources; • increase our interest expense, leverage and debt service requirements (if we incur additional debt to fund an acquisition); • assume liabilities, including undisclosed, contingent or environmental liabilities, for which we do not have indemnification from the former owners.
Further, acquisitions may cause us to: issue common stock that would dilute our current stockholders’ ownership percentage; use a substantial portion of our cash resources; increase our interest expense, leverage and debt service requirements (if we incur additional debt to fund an acquisition); or record goodwill and non-amortizable intangible assets that are subject to impairment testing and potential impairment charges.
Our backlog at October 2, 2022 w as $3.7 billion, an increase of $263.9 million, or 7.6%, compared t o the end of fiscal 2021. We include in backlog only those contracts for which funding has been provided and work authorizations have been received.
Our backlog at fiscal 2024 year-end was $5.4 billion, an increase of $586 million, or 12.2%, compared to fiscal 2023 year-end. We include in backlog only those contracts for which funding has been provided and work authorizations have been received.
The integration process may disrupt our business and, if implemented ineffectively, may preclude realization of the full benefits expected by us and could harm our results of operations. In addition, the overall integration of the combining companies may result in unanticipated problems, expenses, liabilities and competitive responses, and may cause our stock price to decline.
The integration process may disrupt our business and, if implemented ineffectively, may preclude realization of the full benefits expected by us and could harm our results of operations.
The GDPR and CCPA are just examples of privacy regulations that are emerging in locations where we work. 25 We face the threat to our computer systems of unauthorized access, computer hackers, computer viruses, malicious code, organized cyber-attacks and other security problems and system disruptions, including possible unauthorized access to our and our clients' proprietary or classified information.
We face the threat to our computer systems of unauthorized access, computer hackers, computer viruses, malicious code, organized cyber-attacks and other security problems and system disruptions, including possible unauthorized access to our and our clients' proprietary or classified information. We rely on industry-accepted security measures and technology to securely maintain all confidential and proprietary information on our information systems.
Accordingly, these factors affect our ability to forecast our future revenue and earnings from business areas that may be adversely impacted by market conditions.
Accordingly, these factors affect our ability to forecast our future revenue and earnings from business areas that may be adversely impacted by market conditions. Any of these factors could adversely affect the demand for our services, which could have a material adverse effect on our business, results of operations and financial condition.
Our services are subject to numerous U.S. and international environmental protection laws and regulations that are complex and stringent. For example, we must comply with a number of U.S. federal government laws that strictly regulate the handling, removal, treatment, transportation and disposal of toxic and hazardous substances.
For example, we must comply with a number of U.S. federal government laws that strictly regulate the handling, removal, treatment, transportation and disposal of toxic and hazardous substances. Under CERCLA and comparable state laws, we may be required to investigate and remediate regulated hazardous materials.
If negative market conditions arise, or if we fail to secure adequate financial arrangements or the required government approval, we may not be able to pursue certain projects, which could adversely affect our profitability. If we are not able to successfully manage our growth strategy, our business and results of operations may be adversely affected.
If negative market conditions continue to persist, or if we fail to secure adequate financial arrangements or the required government approval, we may not be able to pursue certain projects, which could adversely affect our profitability. Our inability to win or renew U.S. government contracts during regulated procurement processes could harm our operations and significantly reduce or eliminate our profits.
However, since our internal controls are subject to inherent limitations, including human error, it is possible that these controls could be intentionally circumvented or become inadequate because of changed conditions. As a result, we cannot assure that our controls will protect us from reckless or criminal acts committed by our employees or agents.
Our policies mandate compliance with these regulations and laws, and we take precautions to prevent and detect misconduct. However, since our internal controls are subject to inherent limitations, including human error, it is possible that these controls could be intentionally circumvented or become inadequate because of changed conditions.
The inability to effectively manage our growth or the inability of our employees to achieve anticipated performance could have a material adverse effect on our business. Our backlog is subject to cancellation, unexpected adjustments and changing economic conditions and is an uncertain indicator of future operating results.
The inability to effectively manage our growth or the inability of our employees to achieve anticipated performance could have a material adverse effect on our business. We have made and expect to continue to make acquisitions. Acquisitions could disrupt our operations and adversely impact our business and operating results.
Unavailability or cancellation of third-party insurance coverage would increase our overall risk exposure as well as disrupt the management of our business operations. We maintain insurance coverage from third-party insurers as part of our overall risk management strategy and because some of our contracts require us to maintain specific insurance coverage limits.
We maintain insurance coverage from third-party insurers as part of our overall risk management strategy and because some of our contracts require us to maintain specific insurance coverage limits. From time to time, we assume liabilities as a result of indemnification provisions contained in our service contracts. We cannot predict the magnitude of these potential liabilities.
Our failure to attract and retain key individuals could impair our ability to provide services to our clients and conduct our business effectively. Our revenue and growth prospects may be harmed if we or our employees are unable to obtain government granted eligibility or other qualifications we and they need to perform services for our customers.
Our revenue and growth prospects may be harmed if we or our employees are unable to obtain government granted eligibility or other qualifications we and they need to perform services for our customers. A number of government programs require contractors to have certain kinds of government granted eligibility, such as security clearance credentials.
These policies may prevent us from bidding for or performing government contracts resulting from or relating to certain work we have performed. In addition, services performed for a commercial or government client may create a conflict of interest that precludes or limits our ability to obtain work from other public or private organizations.
Many commercial and government clients have formal policies against continuing or awarding contracts that would create actual or potential conflicts of interest with other activities of a contractor. These policies may prevent us from bidding for or performing contracts resulting from or relating to certain work we have performed.
Many of these proposed and enacted changes to the taxation of our activities could increase our effective tax rate and harm our results of operations. Demand for our services is cyclical and vulnerable to economic downturns. If economic growth slows, government fiscal conditions worsen or client spending declines further, then our revenue, profits and financial condition may deteriorate.
Failure to meet performance standards or complete performance on a timely basis could also adversely affect our reputation and client base. Demand for our services is cyclical and vulnerable to economic downturns. If economic growth slows, government fiscal conditions worsen or client spending declines, then our revenue, profits and financial condition may deteriorate.
Under the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended (“CERCLA”), and comparable state laws, we may be required to investigate and remediate regulated hazardous materials. CERCLA and comparable state laws typically impose strict, joint and several liabilities without regard to whether a company knew of or caused the release of hazardous substances.
CERCLA and comparable state laws typically impose strict, joint and several liabilities without regard to whether a company knew of or caused the release of hazardous substances. The liability for the entire cost of clean-up could be imposed upon any responsible party.
As a result, our international risk exposure may be more or less than the percentage of revenue attributed to our international operations. Our results of operations could be adversely affected by health outbreaks such as the coronavirus disease 2019 ("COVID-19") pandemic.
As a result, our international risk exposure may be more or less than the percentage of revenue attributed to our international operations. Continuing worldwide political, social and economic uncertainties may adversely affect our revenue and profitability.
We cannot guarantee that the revenue projected in our backlog will be realized or, if realized, will result in profits. In addition, project cancellations or scope adjustments may occur, from time to time, with respect to contracts reflected in our backlog.
We canno t guarantee that the revenue projected in our backlog will be realized or, if realized, will result in profits.
Any of these events could damage our reputation and have a material adverse effect on our business, financial condition, results of operations and cash flows. If our business partners fail to perform their contractual obligations on a project, we could be exposed to legal liability, loss of reputation and profit reduction or loss on the project.
Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences. Any of these events could damage our reputation and have a material adverse effect on our business, financial condition, results of operations and cash flows.
In addition, the technical and professional aspects of some of our services generally do not require large upfront capital expenditures and provide limited barriers against new competitors. Our clients make competitive determinations based upon qualifications, experience, performance, reputation, technology, customer relationships and ability to provide the relevant services in a timely, safe and cost-efficient manner.
Our clients make competitive determinations based upon qualifications, experience, performance, reputation, technology, customer relationships and ability to provide the relevant services in a timely, safe and cost-efficient manner. This competitive environment could force us to make price concessions or otherwise reduce prices for our services.
Failure to meet performance standards or complete performance on a timely basis could also adversely affect our reputation. The loss of key personnel or our inability to attract and retain qualified personnel could impair our ability to provide services to our clients and otherwise conduct our business effectively.
As a result of these factors, our backlog as of any particular date is an uncertain indicator of our future earnings. 17 The loss of key personnel or our inability to attract and retain qualified personnel could impair our ability to provide services to our clients and otherwise conduct our business effectively.
Our inability to obtain adequate bonding and, as a result, to bid on new work could have a material adverse effect on our future revenue and business prospects.
Our inability to obtain adequate bonding and, as a result, to bid on new work could have a material adverse effect on our future revenue and business prospects. We may be precluded from providing certain services due to conflict of interest issues. Many of our clients are concerned about potential or actual conflicts of interest in retaining management consultants.
Any interruption or termination of our U.S. government contractor status could reduce our profits and revenue significantly.
Any interruption or termination of our U.S. government contractor status could reduce our profits and revenue significantly. Legal proceedings, investigations and disputes could result in substantial monetary penalties and damages, especially if such penalties and damages exceed or are excluded from existing insurance coverage.

… 168 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeThe following table summarizes our ten most significant leased properties by location based on annual rental expenses (listed alphabetically, except for our corporate headquarters): Location Description Reportable Segment Pasadena, CA Corporate Headquarters Corporate Arlington, VA Office Building GSG Boston, MA Office Building GSG / CIG Irvine, CA Office Building GSG / CIG London, United Kingdom Office Building GSG / CIG New York, NY Office Building GSG /CIG Orlando, FL Office Building GSG / CIG Pittsburgh, PA Office Building GSG / CIG San Diego, CA Office Building GSG / CIG Vancouver, BC, Canada Office Building CIG
Biggest changeThe following table summarizes our ten most significant leased properties by location based on annual rental expenses (listed alphabetically, except for our corporate headquarters): Location Description Reportable Segment Pasadena, CA Corporate Headquarters Corporate Arlington, VA Office Building GSG / CIG Boston, MA Office Building GSG / CIG Irvine, CA Office Building GSG / CIG London, United Kingdom Office Building GSG / CIG Melbourne, Australia Office Building CIG New York, NY Office Building GSG /CIG Orlando, FL Office Building GSG / CIG Pittsburgh, PA Office Building GSG / CIG Portland, OR Office Building GSG / CIG
Item 2. Properties At fiscal 2022 year-end, we leased approximately 450 operating facilities in domestic and foreign locations. Our significant lease agreements expire at various dates through 2032. We believe that our current facilities are adequate for the operation of our business, and that suitable additional space in various local markets is available to accommodate any needs that may arise.
Item 2. Properties At fiscal 2024 year-end, we leased approximately 560 operating facilities in domestic and foreign locations. Our significant lease agreements expire at various dates through 2033. We believe that our current facilities are adequate for the operation of our business, and that suitable additional space in various local markets is available to accommodate any needs that may arise.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed2 unchanged
Biggest changeInformation concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K is included in Exhibit 95. 32 PART II
Biggest changeInformation concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K is included in Exhibit 95. 31 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−1 removed0 unchanged
Biggest changeASSUMES $100 INVESTED ON OCTOBER 1, 2017 ASSUMES DIVIDEND REINVESTED FISCAL YEAR ENDED OCTOBER 2, 2022 2017 2018 2019 2020 2021 2022 Tetra Tech, Inc. $ 100.00 $ 147.92 $ 185.48 $ 200.81 $ 336.07 $ 286.12 NASDAQ Market Index 100.00 125.17 124.88 173.32 232.92 170.37 S&P 1000 Index 100.00 115.70 109.74 103.37 159.12 130.84 The performance graph above and related text are being furnished solely to accompany this annual report on Form 10-K pursuant to Item 201(e) of Regulation S-K, and are not being filed for purposes of Section 18 of the Exchange Act, and are not to be incorporated by reference into any of our filings with the SEC, whether made before or after the date hereof, regardless of any general incorporation language in such filing. 33 Stock Repurchase Program On October 5, 2021, our Board of Directors authorized a new stock repurchase program under which we could repurchase up to $400 million of our common stock in addition to the $147.8 million remaining under the previous stock repurchase program at October 3, 2021.
Biggest changeASSUMES $100 INVESTED ON SEPTEMBER 29, 2019 ASSUMES DIVIDEND REINVESTED FISCAL YEAR ENDED SEPTEMBER 29, 2024 2019 2020 2021 2022 2023 2024 Tetra Tech, Inc. $ 100.00 $ 108.26 $ 181.19 $ 154.26 $ 183.65 $ 281.86 NASDAQ Market Index 100.00 138.78 186.51 136.43 172.05 237.60 S&P 1000 Index 100.00 94.20 145.00 119.23 135.76 171.48 The performance graph above and related text are being furnished solely to accompany this annual report on Form 10-K pursuant to Item 201(e) of Regulation S-K, and are not being filed for purposes of Section 18 of the Exchange Act, and are 32 not to be incorporated by reference into any of our filings with the SEC, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Stock-Based Compensation For information regarding our stock-based compensation, see Note 11, "Stockholders' Equity and Stock Compensation Plans" of the "Notes to Consolidated Financial Statements" included in Item 8. Performance Graph The following graph shows a comparison of our cumulative total returns with those of the NASDAQ Market Index and the Standard & Poor's ("S&P") 1000 Index.
Stock-Based Compensation For information regarding our stock-based compensation, see Note 12, "Stockholders' Equity and Stock Compensation Plans" of the "Notes to Consolidated Financial Statements" included in Item 8. Performance Graph The following graph shows a comparison of our cumulative total returns with those of the NASDAQ Market Index and the Standard & Poor's ("S&P") 1000 Index.
At this time, we do not have a comparable peer group due to the combination of our differentiated high-end consulting services and our end-markets. Thus, we have selected the S&P 1000 Index.
At this time, we do not have a comparable p eer group due to the combination of our differentiated high-end consulting services and our end-markets. Thus, we have selected the S&P 1000 Index.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ Global Select Market under the symbol TTEK. There were approximately 1,114 stockholders of record at October 2, 2022 .
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ Global Select Market under the symbol TTEK. There were approximately 1,046 stockholders of record at September 29, 2024.
The graph assumes that the value of an investment in our common stock and in each such index was $100 on October 1, 2017, and that all dividends have been reinvested . Dividends declared and paid in fiscal 2022 totaled $0.86 per share.
The graph assumes that the value of an investment in our common stock and in each such index was $100 on September 29, 2019, and that all dividends have been reinvested. Dividends declared and paid in fiscal 2024 totaled $0.220 per share.
We declared and paid dividends in the first and second quarters totaling $0.40 per share ($0.20 each quarter) on our common stock and paid dividends in the third and fourth quarters totaling $0.46 per share ($0.23 each quarter) on o ur common stock.
We declared and paid dividends in the first and second quarters totaling $0.104 per share ($0.052 each quarter) on our common stock and paid dividends in the third and fourth quarters totaling $0.116 per share ($0.058 each quarter) on our common stock.
We declared and paid dividends totaling $0.74, $0.64, $0.54 and $0.44 per share in fiscal 2021, 2020, 2019 and 2018, respectively. The comparison in the graph below is based on historical data and is not intended to forecast the possible future performance of our common stock.
We declared and paid dividends totaling $0.196, $0.172, $0.148 and $0.128 per share in fiscal 2023, 2022, 2021 and 2020, respectively. The comparison in the graph below is based on historical data and is not intended to forecast the possible future performa nce of our common stock.
In fiscal 2022, we repurchased and settled 1,341,679 shares with an average price of $149.07 per share for a total cost of $200.0 million in the open market. At October 2, 2022 , we had a remaining balance of $347.8 million under our stock repurchase program.
In fiscal 2022, we repurchased and settled 6,708,395 shares with an average price of $29.81 per share for a total cost of $200.0 million. At fiscal 2024 year-end, we had a remaining balance of $347.8 million under our stock repurchase program.
Removed
Below is a summary of the stock repurchases that were traded and settled during the 12 months ended October 2, 2022: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value that May Yet be Purchased Under the Plans or Programs (in thousands) October 4, 2021 - October 31, 2021 97,020 $ 160.47 97,020 $ 532,244 November 1, 2021 - November 28, 2021 91,216 180.16 91,216 515,811 November 29, 2021 - January 2, 2022 101,960 176.52 101,960 497,813 January 3, 2022 - January 30, 2022 96,908 149.98 96,908 483,279 January 31, 2022 - February 27, 2022 110,858 146.53 110,858 467,036 February 28, 2022 - April 3, 2022 120,274 159.82 120,274 447,813 April 4, 2022 - May 1, 2022 95,121 152.79 95,121 433,279 May 2, 2022 - May 29, 2022 131,962 129.57 131,962 416,181 May 30, 2022 - July 3, 2022 140,961 130.30 140,961 397,813 July 4, 2022 - July 31, 2022 103,723 140.12 103,723 383,280 August 1, 2022 - August 28, 2022 115,677 147.81 115,677 366,182 August 29, 2022 - October 2, 2022 135,999 135.06 135,999 347,813
Added
Stock Repurchase Program On October 5, 2021, our Board of Directors authorized a new stock repurchase program under which we could repurchase up to $400 million of our common stock. In fiscal 2024 and 2023, we did not repurchase any shares of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

73 edited+56 added−83 removed66 unchanged
Biggest changeOn November 3, 2022, RPS's shareholders approved the scheme of arrangement, with the acquisition expected to be closed and effective in January 2023 after regulatory and court approval with an all cash purchase price for 100% of the outstanding shares of approximately GBP 636 million. 35 RESULTS OF OPERATIONS Fiscal 2022 Compared to Fiscal 2021 Consolidated Results of Operations Fiscal Year Ended October 2, 2022 October 3, 2021 Change $ % ($ in thousands) Revenue $ 3,504,048 $ 3,213,513 $ 290,535 9.0% Subcontractor costs (668,468) (661,341) (7,127) (1.1) Revenue, net of subcontractor costs (1) 2,835,580 2,552,172 283,408 11.1 Other costs of revenue (2,260,021) (2,053,772) (206,249) (10.0) Gross profit 575,559 498,400 77,159 15.5 Selling, general and administrative expenses (234,784) (222,972) (11,812) (5.3) Contingent consideration – fair value adjustments (329) 3,273 (3,602) (110.1) Income from operations 340,446 278,701 61,745 22.2 Interest expense – net (11,584) (11,831) 247 2.1 Other income 19,904 — 19,904 NM Income before income tax expense 348,766 266,870 81,896 30.7 Income tax expense (85,602) (34,039) (51,563) (151.5) Net income 263,164 232,831 30,333 13.0 Net income attributable to noncontrolling interests (39) (21) (18) (85.7) Net income attributable to Tetra Tech $ 263,125 $ 232,810 $ 30,315 13.0 Diluted earnings per share $ 4.86 $ 4.26 $ 0.60 14.1 (1) We believe that the presentation of "Revenue, net of subcontractor costs", which is a non-U.S.
Biggest changeFiscal 2023 Compared to Fiscal 2022 Consolidated Results of Operations Fiscal Year Ended October 1, 2023 October 2, 2022 Change $ % ($ in thousands, except per share data) Revenue $ 4,522,550 $ 3,504,048 $ 1,018,502 29.1% Subcontractor costs (771,461) (668,468) (102,993) (15.4) Revenue, net of subcontractor costs (1) 3,751,089 2,835,580 915,509 32.3 Other costs of revenue (3,026,060) (2,260,021) (766,039) (33.9) Gross profit 725,029 575,559 149,470 26.0 Selling, general and administrative expenses (305,107) (234,784) (70,323) (30.0) Acquisition and integration expenses (33,169) — (33,169) NM Right-of-use operating lease asset impairment (16,385) — (16,385) NM Contingent consideration – fair value adjustments (12,255) (329) (11,926) NM Income from operations 358,113 340,446 17,667 5.2 Interest expense – net (46,537) (11,584) (34,953) (301.7) Other non-operating income 89,402 19,904 69,498 349.2 Income before income tax expense 400,978 348,766 52,212 15.0 Income tax expense (127,526) (85,602) (41,924) (49.0) Net income 273,452 263,164 10,288 3.9 Net income attributable to noncontrolling interests (32) (39) 7 17.9 Net income attributable to Tetra Tech $ 273,420 $ 263,125 $ 10,295 3.9 Diluted earnings per share $ 1.02 $ 0.97 $ 0.05 5.2% 39 (1) We believe that the presentation of "Revenue, net of subcontractor costs", which is a non-U.S.
We perform interim goodwill impairment reviews between our annual reviews if certain events and circumstances have occurred, including a deterioration in general economic conditions, an increased competitive environment, a change in 47 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 (se e Note 6, "Goodwill and Intangible Assets" of the "Notes to Consolidated Financial Statements" in Item 8 for further discussion).
We perform interim goodwill impairment reviews between our annual reviews if certain events and circumstances have occurred, including a deterioration in general economic conditions, an increased 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 (se e Note 6, "Goodwill and Intangible Assets" of the "Notes to Consolidated Financial Statements" in Item 8 for further discussion).
In the event that we determine that our goodwill is impaired, we would be required to record a non-cash charge that could result in a material adverse effect on our results of operations or financial position. We use two methods to determine the fair value of our reporting units: (i) the Income Approach and (ii) the Market Approach.
In the event that we determine that our goodwill is impaired, we would be 47 required to record a non-cash charge that could result in a material adverse effect on our results of operations or financial position. We use two methods to determine the fair value of our reporting units: (i) the Income Approach and (ii) the Market Approach.
When the current estimate of total costs indicates a loss, a provision for the entire estimated loss on the contract is made in the period in which the loss becomes evident. Contract Types Our services are performed under three principal types of contracts: fixed-price, time-and-materials and cost-plus.
When the current estimate of total costs indicates a loss, a provision for the entire estimated loss on the contract is made in the period in which the loss becomes evident. 46 Contract Types Our services are performed under three principal types of contracts: fixed-price, time-and-materials and cost-plus.
For those performance obligations for which revenue is recognized using a cost-to- 46 cost measure of progress method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made.
For those performance obligations for which revenue is recognized using a cost-to-cost measure of progress method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made.
The contingent earn-out arrangements are based upon our valuations of the acquired companies and reduce the risk of overpaying for acquisitions if the projected financial results are not achieved. 48 The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates.
The contingent earn-out arrangements are based upon 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 these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates.
The decision to combine a group of contracts or separate a combined or single contract into multiple performance obligations may impact the amount of revenue recorded in a given 45 period. Contracts are considered to have a single performance obligation if the promises are not separately identifiable from other promises in the contracts.
The decision to combine a group of contracts or separate a combined or single contract into multiple performance obligations may impact the amount of revenue recorded in a given period. Contracts are considered to have a single performance obligation if the promises are not separately identifiable from other promises in the contracts.
Off-Balance Sheet Arrangements 44 In the ordinary course of business, we may use off-balance sheet arrangements if we believe that such arrangements would be an efficient way to lower our cost of capital or help us manage the overall risks of our business operations.
Off-Balance Sheet Arrangements In the ordinary course of business, we may use off-balance sheet arrangements if we believe that such arrangements would be an efficient way to lower our cost of capital or help us manage the overall risks of our business operations.
The amounts were recognized in fiscal 2022 when the funds were received due to the uncertainty related to the computation of qualifying amounts and delayed processing times for our application.
These amounts were recognized in fiscal 2022 when the funds were received due to the uncertainty related to the computation of qualifying amounts and delayed processing times for our application.
These amounts were primarily reflected as a reduction to "Other costs of revenue" in our Consolidated Statement of Income and an increase to "Net cash provided by operating activities" in our Consolidated Statement of Cash Flows for fiscal 2022, consistent with the presentation of the related costs recognized in the second quarter of fiscal 2020.
These amounts were primarily reflected as a reduction to "Other costs of revenue" in our consolidated statement of income and an increase to "Net cash provided by operating activities" in our consolidated statement of cash flows for fiscal 2022, consistent with the presentation of the related costs recognized in fiscal 2020.
We are required to reimburse the issuers of letters of credit and bank guarantees for any payments they make under the outstanding letters of credit or bank guarantees. Our Amended Credit Agreement and additional letter of credit facilities cover the issuance of our standby letters of credit and bank guarantees and are critical for our normal operations.
We are required to reimburse the issuers of letters of credit and bank guarantees for any payments they make under the outstanding letters of credit or bank guarantees. Our Amended Credit Agreement and additional letter of credit facilities cover the issu ance of our standby letters of credit and bank guarantees and are critical for our normal operations.
If we default on t he Amended Credit Agreement or additional credit facilities, our inability to issue or renew standby letters of credit and bank guarantees would impair our ability to maintain normal operations.
If we default on the Amended Credit Agreement or additional credit facilities, our inability to issue or renew standby letters of credit and bank guarantees would impair our ability to maintain normal operations.
Our last review at July 4, 2022 (i.e. the first day of our fourth quarter in fiscal 2022), 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.
Our last review at July 1, 2024 (i.e., the first day of our fourth quarter in fiscal 2024), 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.
On October 26, 2022, we entered into a Third Amended and Restated Credit Agreement that provides for an additional $500 million senior secured term loan facility (the "New Term Loan Facility") increasing our total borrowing capacity to $1.55 billion. We expect to draw the entire amount of the New Term Loan Facility to partially finance the planned acquisition of RPS.
On October 26, 2022, we entered into a Third Amended and Restated Credit Agreement that provides for an additional $500 million senior secured term loan facility (the "New Term Loan Facility") increasing our total borrowing capacity to $1.55 billion. On January 23, 2023, we drew the entire amount of the New Term Loan Facility to partially finance the RPS acquisition.
Goodwill typically represents the value paid for the assembled workforce and enhancement of our service offerings. Identifiable intangible assets include backlog, non-compete agreements, client relations, trade names, patents and other assets. The costs of these intangible assets are amortized over their contractual or economic lives, which range from one to ten years.
Goodwill typically represents the value paid for the assembled workforce and enhancement of our service offerings. Identifiable intangible assets primarily include backlog, client relations and trade names. The costs of these intangible assets are amortized over their contractual or economic lives, which range from one to 12 years.
We measure our contingent earn-out liabilities at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy (See Note 2, "Basis of Presentation and Preparation – Fair Value of Financial Instruments" of the "Notes to Consolidated Financial Statements" included in Item 8).
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 (See Note 2, "Basis of Presentation – Fair Value of Financial Instruments" of the "Notes to Consolidated Financial Statements" included in Item 8).
We applied the relevant marginal statutory tax rate based on the nature of the adjustments and tax jurisdiction in which they occur.
We applied the relevant marginal statutory tax rate based on the nature of the adjustments and the tax jurisdiction in which it occurred.
GAAP financial measure, enhances investors' ability to analyze our business trends and performance because it substantially measures the work performed by our employees. In the course of providing services, we routinely subcontract various services and, under certain international development programs, issue grants. Generally, these subcontractor costs and grants are passed through to our clients and, in accordance with U.S.
GAAP financial measure, enhances investors' ability to analyze our business trends and performance because it substantially measures the work performed by our employees. In the course of providing services, we routinely subcontract various services and, under certain international development programs, issue grants.
At October 2, 2022, we were in compliance with these covenants with a consolidated leverage ratio of 0.76x and a consolidated interest coverage ratio of 29.52x. In addition to the Amended Credit Agreement, we maintain other credit facilities, which may be used for short-term cash advances and bank guarantees.
At September 29, 2024, we were in compliance with these covenants with a consolidated leverage ratio of 1.38x and a consolidated interest coverage ratio of 13.94x. In addition to the Amended Credit Agreement, we maintain other credit facilities, which may be used for short-term cash advances and bank guarantees.
Our CIG segment's revenue increased $29.0 million, or 2.0%, and revenue, net of subcontractor costs, increased $54.7 million, or 4.4% in fiscal 2021 compared to fiscal 2020. Our fiscal 2021 results for our GSG and CIG segments are described below under "Government Services Group" and "Commercial/International Services Group", respectively. The following table reconciles our reported results to non-U.S.
Our CIG segment's revenue increased $362.1 million, or 14.9%, and revenue, net of subcontractor costs, increased $296.2 million, or 14.0% in fiscal 2024 compared to fiscal 2023. The fiscal 2024 results for GSG and CIG segments are described below under "Government Services Group" and "Commercial/International Group", respectively. The following table reconciles our reported results to non-U.S.
At October 2, 2022, we had $484.3 million of available credit under the Amended Revolving Credit Facility, all of which could be borrowed without a violation of our debt covenants. Commitment fees related to our revolving credit facilities were $0.7 million each year for fiscal 2022, 2021 and 2020, respectively.
At September 29, 2024, we had $499.3 million of available credit under the Amended Revolving Credit Facility, all of which could be borrowed without a violation of our debt covenants. Commitment fees related to our revolving credit facilities were $0.8 million, $0.6 million, and $0.7 million for fiscal year 2024, 2023 and 2022, respectively.
We believe that our existing cash and cash equivalents, operating cash flows and borrowing capacity under our credit agreement as amended in the anticipation of our planned acquisition of RPS in the second quarter of fiscal 2023, as described below, will be sufficient to meet our capital requirements for at least the next 12 months.
We believe that our existing cash and cash equivalents, operating cash flows and borrowing capacity under our credit agreement as described below, will be sufficient to meet our capital requirements for at least the next 12 months.
The fiscal 2022 results included the benefit of ERC's totaling $6.5 million, which represents reimbursement from the U.S. federal government under the Coronavirus Aid, Relief and Economic Security Act for the costs that we incurred during the second quarter of fiscal 2020 to address the COVID-19 pandemic.
The fiscal 2022 results include the benefit of Employee Retention Credits ("ERC's") totaling $6.5 million, which represents reimbursement from the U.S. federal government under the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") for the costs that 40 we incurred during fiscal 2020 to address the coronavirus disease 2019 pandemic.
Our adjusted EPS for fiscal 2021 also excludes non-recurring tax items. The effective tax rates applied to the adjustments to EPS to arrive at adjusted EPS average 26% and 25% for fiscal 2022 and 2021, respectively. We applied the relevant marginal statutory tax rate based on the nature of the adjustments and the tax jurisdiction in which it occurred.
The effective tax rates applied to the adjustments to EPS to arrive at adjusted EPS average 26% for both fiscal 2023 and 2022. We applied the relevant marginal statutory tax rate based on the nature of the adjustments and the tax jurisdiction in which it occurred.
Accordingly, we segregate subcontractor costs from revenue to promote a better understanding of our business by evaluating revenue exclusive of costs associated with external service providers. NM = not meaningful In fiscal 2022, revenue and revenue, net of subcontractor costs, increased $290.5 million, or 9.0%, and $283.4 million, or 11.1%, respectively, compared to fiscal 2021.
Accordingly, we segregate subcontractor costs from revenue to promote a better understanding of our business by evaluating revenue exclusive of costs associated with external service providers. NM = not meaningful In fiscal 2023, revenue and revenue, net of subcontractor costs, increased $1.02 billion, or 29.1%, and $915.5 million, or 32.3%, respectively, compared to fiscal 2022.
If these audits are resolved in a manner more unfavorable than our current expectations, our additional tax liabilities could be materially higher than the amounts currently recorded resulting in additional tax expense.
These liabilities represent our current estimates of the additional tax liabilities that we may be assessed when the related audits are concluded. If these audits are resolved in a manner more unfavorable than our current expectations, our additional tax liabilities could be materially higher than the amounts currently recorded resulting in additional tax expense.
In addition, our costs are generally subject to review by our clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. Insurance Matters, Litigation and Contingencies In the normal course of business, we are subject to certain contractual guarantees and litigation.
In addition, our costs are generally subject to review by our clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract.
At October 2, 2022, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $44.4 million in standby letters of credit outstanding under our additional letter of credit facilities. • From time to time, we provide guarantees and indemnifications related to our services.
At fiscal 2024 year-end, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $43.3 million in standby letters of credit outstanding under our additional letter of credit facilities. • From time to time, we provide guarantees and indemnifications related to our services.
On November 7, 2022, our Board of Directors declared a quarterly cash dividend of $0.23 per share payable on December 9, 2022 to stockholders of record as of the close of business on November 21, 2022. Cash and Cash Equivalents.
On November 11, 2024, our Board of Directors declared a quarterly cash dividend of $0.058 per share payable on December 13, 2024 to stockholders of record as of the close of business on November 27, 2024. Cash and Cash Equivalents.
Our primary sources of liquidity are cash flows from operations and borrowings under our credit facilities. Our primary uses of cash are to fund working capital, stock repurchases, cash dividends, capital expenditures and repayment of debt, as well as to fund acquisitions and earn-out obligations from prior acquisitions.
Our primary uses of cash are to fund working capital, cash dividends, capital expenditures and repayment of debt, as well as to fund acquisitions and earn-out obligations from prior acquisitions.
On February 18, 2022, we entered into Amendment No. 2 to our Second Amended and Restated Credit Agreement (“Amended Credit Agreement”) with a total borrowing capacity of $1.05 billion that will mature in February 2027.
The New Term Loan Facility is not subject to any amortization payments of principal and matures in January 2026. On February 18, 2022, we entered into Amendment No. 2 to our Second Amended and Restated Credit Agreement (“Amended Credit Agreement”) with a total borrowing capacity of $1.05 billion that will mature in February 2027.
At October 2, 2022, there were no outstanding borrowings under these facilities, and the aggregate amount of standby letters of credit outstanding was $44.4 million. As of October 2, 2022, we had no bank overdrafts related to our disbursement bank accounts. Subsequent Event.
At September 29, 2024, there were no outstanding borrowings under these facilities, and the aggregate amount of standby letters of credit outstanding was $43.3 million. As of September 29, 2024, we had no bank overdrafts related to our disbursement bank accounts. Inflation.
GAAP adjusted results, which exclude a non-operating benefit from Employee Retention Credits ("ERC's") received in fiscal 2022 and gains from adjustments to contingent consideration liabilities in fiscal 2021.
GAAP adjusted results, which exclude our acquisition and integration costs related to the RPS acquisition, a related lease impairment charge and adjustments to contingent consideration liabilities in fiscal 2023, and a non-operating benefit from Employee Retention Credits ("ERC's") received in fiscal 2022.
RECENT ACCOUNTING PRONOUNCEMENTS For a discussion of recent accounting standards and the effect they could have on the consolidated financial statements, see Note 2, "Basis of Presentation and Preparation" of the "Notes to Consolidated Financial Statements" included in Item 8.
Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income. RECENT ACCOUNTING PRONOUNCEMENTS 48 For a discussion of recent accounting standards and the effect they could have on the consolidated financial statements, see Note 2, "Basis of Presentation" of the "Notes to Consolidated Financial Statements" included in Item 8.
Our Board of Directors has authorized the following dividends: Dividend Per Share Record Date Total Maximum Payment (in thousands) Payment Date November 15, 2021 $ 0.20 December 2, 2021 $ 10,793 December 20, 2021 January 31, 2022 $ 0.20 February 11, 2022 $ 10,769 February 25, 2022 May 2, 2022 $ 0.23 May 13, 2022 $ 12,311 May 27, 2022 August 1, 2022 $ 0.23 August 12, 2022 $ 12,226 August 26, 2022 November 7, 2022 $ 0.23 November 21, 2022 N/A December 9, 2022 Income Taxes We evaluate the realizability of our deferred tax assets by assessing the valuation allowance and adjust the allowance, if necessary.
Our Board of Directors has authorized the following dividends: Dividend Per Share Record Date Total Maximum Payment (in thousands) Payment Date November 13, 2023 $ 0.052 November 30, 2023 $ 13,873 December 13, 2023 January 29, 2024 $ 0.052 February 14, 2024 $ 13,908 February 27, 2024 April 29, 2024 $ 0.058 May 20, 2024 $ 15,522 May 31, 2024 July 29, 2024 $ 0.058 August 15, 2024 $ 15,525 August 30, 2024 November 11, 2024 $ 0.058 November 27, 2024 N/A December 13, 2024 Income Taxes We evaluate the realizability of our deferred tax assets by assessing the valuation allowance and adjust the allowance, if necessary.
We declared and paid common stock dividends totaling $46.1 million, or $0.86 per share, in fiscal 2022 compared to $40.0 million, or $0.74 per share, in fiscal 2021. Subsequent Events.
We declared and paid common stock dividends totaling $58.8 million, or $0.220 per share, in fiscal 2024 compared to $52.1 million, or $0.196 per share, in fiscal 2023. Subsequent Events.
On October 5, 2021, our Board of Directors authorized a new stock repurchase program under which we could repurchase up to $400 million of our common stock in addition to the $147.8 million remaining under the previous stock repurchase program at October 3, 2021.
On October 5, 2021, our Board of Directors authorized a new stock repurchase program under which we could repurchase up to $400 million of our common stock. In fiscal 2024 and 2023, we did not repurchase any shares of our common stock. At fiscal 2024 year-end, we had a remaining balance of $347.8 million under our stock repurchase program.
Excluding the ERC's and the contributions from acquisitions, which did not have comparable results in fiscal 2021, our adjusted operating income increased $31.5 million, or 11.5% in fiscal 2022 compared to fiscal 2021. These increases reflect improved results in both GSG and CIG segments, which are described below under "Government Services Group" and "Commercial/International Services Group", respectively.
Excluding the acquisition and integration expenses, ROU asset impairment, earn-out losses and the ERC's, our adjusted operating income increased $86.0 million, or 25.7% in fiscal 2023 compared to fiscal 2022. These increases reflect improved results in both GSG and CIG segments, which are described below under "Government Services Group" and "Commercial/International Group", respectively.
Contingent Consideration Certain of our acquisition agreements include contingent earn-out arrangements, which are generally based on the achievement of future operating income thresholds.
We had no reporting units that had estimated fair values that exceeded their carrying values by less than 72%. Contingent Consideration Certain of our acquisition agreements include contingent earn-out arrangements, which are generally based on the achievement of future operating income thresholds.
Most of our work for the U.S. state and local governments relates to critical water and environmental programs, which we expect to continue to grow in fiscal 2023. U.S. Commercial. Our U.S. commercial revenue increased 17.4% i n fiscal 2022 compared to fiscal 2021.
Excluding our disaster response activities, our U.S. state and local government revenue increased 12.4% in fiscal 2024 compared to fiscal 2023, primarily reflecting continued increased revenue from advanced water treatment projects. Most of our work for U.S. state and local governments relates to critical water and environmental programs, which we expect to continue to grow in fiscal 2025. U.S.
Our operating margin, based on revenue, net of subcontractor costs, improved to 13.0% in fiscal 2022 compared to 11.8% in fiscal 2021. Excluding the ERC's, o ur operating margin was 12.8% for fiscal 2022. The improved operating margin was primarily due to our increased focus on high-end consulting services, project execution and labor utilization.
Excluding the lease impairment and RPS in fiscal 2023 and the ERC's in fiscal 2022, our operating margin was 13.3% in fiscal 2023 compared to 12.8% in fiscal 2022. The improved operating margin was primarily due to our increased focus on high-end consulting services, project execution and higher labor utilization. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Capital Requirements.
Both EPS and adjusted EPS were calculated using diluted weighted-average common shares outstanding for the respective periods as reflected in our consolidated statements of income. 39 During the second quarter of fiscal 2020, we took actions in response to the COVID-19 pandemic to ensure the health and safety of our employees, clients and communities.
Both EPS and adjusted EPS were calculated using diluted weighted-average common shares outstanding for the respective periods as reflected in our consolidated statements of income.
In addition, we had $0.7 million in standby letters of credit under the Amended Credit Agreement.
The weighted-average interest rate of the outstanding borrowings under the Amended Credit Agreement during fiscal 2024 was 6.70%. In addition, we had $0.7 million in standby letters of credit under the Amended Credit Agreement.
Our CIG segment's revenue increased $238.4 million, or 15.9%, and revenue, net of subcontractor costs, increased $213.3 million, or 16.6% in fiscal 2022 compared to fiscal 2021. The fiscal 2022 results for GSG and CIG segments are described below under "Government Services Group" and "Commercial/International Services Group", respectively. The following table reconciles our reported results to non-U.S.
The fiscal 2023 results for GSG and CIG segments are described below under "Government Services Group" and "Commercial/International Services Group", respectively. The following table reconciles our reported results to non-U.S.
Based on future operating results in certain jurisdictions, it is unlikely that the current valuation allowance positions of those jurisdictions could be adjusted in the next 12 months. As of October 2, 2022 and October 3, 2021, the liability for income taxes associated with uncertain tax positions was $10.6 million and $14.1 million, respectively.
Based on future operating results in certain jurisdictions, it is unlikely that the current valuation allowance positions of those jurisdictions could be adjusted in the next 12 months.
For contracts with multiple performance obligations, we allocate the transaction price to each performance obligation using a best estimate of the standalone selling price of each distinct good or service in the contract. The standalone selling price is typically determined using the estimated cost of the contract plus a margin approach.
Project mobilization costs are generally charged to project costs as incurred when they are an integrated part of the performance obligation being transferred to the client. For contracts with multiple performance obligations, we allocate the transaction price to each performance obligation using a best estimate of the standalone selling price of each distinct good or service in the contract.
Revenue Recognition and Contract Costs To determine the proper revenue recognition method for contracts under ASC 606, we evaluate whether multiple contracts should be combined and accounted for as a single contract and whether the combined or single contract should be accounted for as having more than one performance obligation.
Highlighted below are the accounting policies that management considers most critical to investors' understanding of our financial results and condition, and that require complex judgments by management. 45 Revenue Recognition and Contract Costs To determine the proper revenue recognition method for contracts under Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers", we evaluate whether multiple contracts should be combined and accounted for as a single contract and whether the combined or single contract should be accounted for as having more than one performance obligation.
In fiscal 2021, we repatriated approximately $80 million from Canada and recognized a related tax expense of $5.6 million. Also, i ncome tax expense was reduced by $10.3 million and $12.9 million of excess tax benefits on share-based payments in fiscal 2022 and 2021, respectively.
In addition, income tax expense was reduced by $4.6 million and $10.3 million of excess tax benefits on share-based payments in fiscal 2023 and 2022, respectively.
Excluding the impact of the fiscal 2021 valuation allowance benefit, the fiscal 2021 Canadian repatriation and the excess tax benefits on share-based payments in both fiscal years, our effective tax rates for fiscal 2022 and 2021 were 27.5% and 25.7%, respectively. Our EPS was $4.86 in fiscal 2022, compared to $4.26 in fiscal 2021.
Excluding the impact of the non-operating tax expenses in fiscal 2023 and the excess tax benefits on share-based payments in both years, our effective tax rates in fiscal 2023 and 2022 were 27.8% and 27.5%.
Excluding the contributions from acquisitions, which did not have comparable revenue in fiscal 2021, our revenue increased 4.1% in fiscal 2022 compared to last fiscal year. Our GSG segment's revenue and revenue, net of subcontractor costs, increased $48.0 million, or 2.7%, and $70.7 million, or 5.6%, respectively, in fiscal 2022 compared to the prior year.
Excluding the contribution from RPS, our revenue increased 12.0% in fiscal 2023 compared to the previous year. Our GSG segment's revenue and revenue, net of subcontractor costs, increased $338.0 million, or 18.6%, and $299.0 million, or 22.4%, respectively, in fiscal 2023 compared to fiscal 2022.
Our adjusted earnings per share ("EPS") for fiscal 2022 also excludes a non-operating $19.9 million unrealized gain on a foreign exchange contract that serves as an economic hedge related to our planned acquisition of RPS. This gain is reported as "Other income" in our Consolidated Statement of Income for fiscal 2022.
Our adjusted earnings per share ("EPS") for fiscal 2023 also excludes non-operating gains on a foreign exchange contract of $89.4 million and non-recurring tax expense items. The foreign exchange gain is reported as "Other non-operating income" in our consolidated statements of income.
Should the review indicate that the carrying value is not fully recoverable, the excess of the carrying value over the fair value of the intangible assets would be recognized as an impairment loss. We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter.
Should the review indicate that the carrying value is not fully recoverable, the excess of the carrying value over the fair value of the intangible assets would be recognized as an impairment loss. Estimated fair value measurements for intangible assets are made using Level 3 inputs including discounted cash flow techniques.
Each of these programs include substantial planned investments in our key end markets including water, environment and sustainable infrastructure over the next five to ten years. U.S. State and Local Government. Our U.S. state and local government revenue increased 12.5% i n fiscal 2022 compared to fiscal 2021.
Approximately $1 trillion in new U.S. federal funding passed in 2021 through the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and the CHIPS and Science Act. Each of these programs includes substantial planned investments in our key end markets including water, environment and sustainable infrastructure over the next five to ten years. U.S.
Commercial/International Services Group ("CIG") Fiscal Year Ended October 2, 2022 October 3, 2021 Change $ % ($ in thousands) Revenue $ 1,738,436 $ 1,500,074 $ 238,362 15.9% Subcontractor costs (239,312) (214,263) (25,049) (11.7) Revenue, net of subcontractor costs $ 1,499,124 $ 1,285,811 $ 213,313 16.6 Income from operations $ 194,142 $ 152,262 $ 41,880 27.5 Revenue and revenue, net of subcontractor costs, increased $238.4 million, or 15.9%, and increased $213.3 million, or 16.6%, respectively, in fiscal 2022 compared to fiscal 2021.
Excluding the lease impairment charge in fiscal 2023 and the ERC's in fiscal 2022, our operating margin increased to 14.6% in fiscal 2023 from 14.5% in fiscal 2022. 41 Commercial/International Services Group ("CIG") Fiscal Year Ended October 1, 2023 October 2, 2022 Change $ % ($ in thousands) Revenue $ 2,424,649 $ 1,738,436 $ 686,213 39.5% Subcontractor costs (309,000) (239,312) (69,688) (29.1) Revenue, net of subcontractor costs $ 2,115,649 $ 1,499,124 $ 616,525 41.1 Income from operations $ 243,750 $ 194,142 $ 49,608 25.6% Revenue and revenue, net of subcontractor costs, increased $686.2 million, or 39.5%, and increased $616.5 million, or 41.1%, respectively, in fiscal 2023 compared to fiscal 2022.
In addition, we regularly evaluate whether events and circumstances have occurred that may indicate a potential change in recoverability of goodwill.
The significant assumptions used in estimating fair value of trade names include the royalty rates and discount rates. We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter. In addition, we regularly evaluate whether events and circumstances have occurred that may indicate a potential change in recoverability of goodwill.
Accordingly, we segregate subcontractor costs from revenue to promote a better understanding of our business by evaluating revenue exclusive of costs associated with external service providers. NM = not meaningful In fiscal 2021 , revenue and revenue, net of subcontractor costs, increased $218.6 million, or 7.3%, and $203.6 million, or 8.7%, respectively, compared to fiscal 2020.
Because subcontractor services can vary significantly from project to project and period to period, changes in revenue may not necessarily be indicative of our business trends. Accordingly, we segregate subcontractor costs from revenue to promote a better understanding of our business by evaluating revenue exclusive of costs associated with external service providers.
GAAP financial measure Operating income increased $37.6 million in fiscal 2021 compared to fiscal 2020. Our operating income reflects net gains of $3.3 million and $15.0 million related to changes in the estimated fair value of contingent earn-out liabilities in fiscal 2021 and 2020, respectively.
The fiscal 2024 and 2023 results also include charges of $2.5 million and $12.3 million, respectively, related to changes in the estimated fair value of contingent earn-out liabilities. Excluding the acquisition and integration expenses and earn-out charges, our adjusted operating income increased $90.5 million, or 21.6% in fiscal 2024 compared to fiscal 2023.
Our operating margin, based on revenue, net of subcontractor costs, improved to 14.8% in fiscal 2022 compared to 13.8% in fiscal 2021. Excluding the ERC's, our op erating margin was 14.5% in fiscal 2022. The improved operating margin in fiscal 2022 was primarily due to our increased focus on high-end consulting services, including digital water, and improved labor utilization.
Excluding the lease impairment charge last year, our operating margin, based on revenue, net of subcontractor costs, improved approximately 170 basis points from 11.9% in fiscal 2023 to 13.6% in this fiscal year. The improved operating margin was primarily due to our increased focus on high-end consulting services, and improved project execution, particularly in the RPS operations.
Excluding the aforementioned non-operating and non-recurring items, our adjusted EPS was $4.50 in fiscal 2022, compared to $3.79 last fiscal year, an increase of 18.7%. 37 Segment Results of Operations Government Services Group ("GSG") Fiscal Year Ended October 2, 2022 October 3, 2021 Change $ % ($ in thousands) Revenue $ 1,820,868 $ 1,772,905 $ 47,963 2.7% Subcontractor costs (484,412) (507,132) 22,720 4.5 Revenue, net of subcontractor costs $ 1,336,456 $ 1,265,773 $ 70,683 5.6 Income from operations $ 198,448 $ 174,755 $ 23,693 13.6% Revenue and revenue, net of subcontractor costs, increased $48.0 million, or 2.7%, and increased $70.7 million, or 5.6%, respectively, in fiscal 2022 compared to fiscal 2021.
Segment Results of Operations Government Services Group ("GSG") Fiscal Year Ended October 1, 2023 October 2, 2022 Change $ % ($ in thousands) Revenue $ 2,158,889 $ 1,820,868 $ 338,021 18.6% Subcontractor costs (523,449) (484,412) (39,037) (8.1) Revenue, net of subcontractor costs $ 1,635,440 $ 1,336,456 $ 298,984 22.4 Income from operations $ 231,762 $ 198,448 $ 33,314 16.8% Revenue and revenue, net of subcontractor costs, increased $338.0 million, or 18.6%, and increased $299.0 million, or 22.4%, respectively, in fiscal 2023 compared to fiscal 2022.
Excluding Afghanistan, our U.S. federal government revenue grew approximately 3% in fiscal 2022 compared to fiscal 2021, primarily due to increased environmental activities for civilian agencies. Our revenue also includes contributions from acquisitions that did not have comparable revenue in the prior year.
The overall revenue growth also includes approximately $115 million of revenue from our recent acquisitions, that did not have comparable revenue for all la st year. We expect our U.S. federal government revenue to continue to grow in fiscal 2025.
In addition, we incurred $1.6 million of incremental costs for actions to respond to the COVID-19 pandemic in the second quarter of fiscal 2020. Our operating margin, based on revenue, net of subcontractor costs, improved to 13.8% in fiscal 2021 compared to 13.1% fiscal 2020. Excluding the COVID-19 charges, our operating margin was 13.2% in fiscal 2020.
Our operating margin, based on revenue, net of subcontractor costs, was 14.2% in fiscal 2023 compared to 14.8% the previous year.
In fiscal 2022, o ur revenue increased 9.0% comp ared to fiscal 2021. This year-over-year growth reflects increased activity in our U.S. state and local, U.S. commercial and international client sectors. Our revenue also includes contributions from acquisitions that did not have comparable revenue in fiscal 2021.
In fiscal 2024, our revenue increased 15.0% compared to fiscal 2023 primarily reflecting increased activity in our U.S. federal and international client sectors. This revenue growth includes $332 million from our recent acquisitions, that did not have comparable revenue for all of fiscal 2023. Excluding the impact of these acquisitions, our revenue increased 7.6% compared to the prior-year period.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Capital Requirements. As of October 2, 2022 , we h ad $185.1 million of cash and cash equivalents and access to an additional $784.3 million of borrowing available under our credit facility. We generated $336.2 million of cash from operations in fiscal 2022.
At September 29, 2024, we had $232.7 million of cash and cash equivalents and access to an additional $800 million of borrowing available under our credit facility. We generated $358.7 million of cash from operations in fiscal 2024. Our primary sources of liquidity are cash flows from operations and borrowings under our credit facilities.
Excluding these disposition gains and the COVID-19 charges, operating income increased $17.7 million in fiscal 2021 compared to fiscal 2020. Our operating margin, based on revenue, net of subcontractor costs, improved to 11.8% in fiscal 2021 compared to 11.1% fiscal 2020. Excluding the disposition gains and COVID-19 charges, our operating margin was 10.9% in fiscal 2020.
Conversely, the fiscal 2023 results were reduced by $8.3 million of the aforementioned lease impairment charge. The fiscal 2022 operating income included $1.9 million of the aforementioned ERC's. Our operating margin, based on revenue, net of subcontractor costs, was 11.5% in fiscal 2023 compared to 13.0% in fiscal 2022.
It is reasonably possible that the amount of the unrecognized benefit with respect to certain of our unrecognized tax positions may significantly decrease within the next 12 months. These liabilities represent our current estimates of the additional tax liabilities that we may be assessed when the related audits are concluded.
At the end of fiscal 2024 and 2023, the liability for income taxes associated with uncertain tax positions was $50.1 million and $62.0 million, respectively. 44 It is reasonably possible that the amount of the unrecognized benefit with respect to certain of our unrecognized tax positions may not significantly decrease within the next 12 months.
GAAP and industry practice, are included in our revenue when it is our contractual responsibility to procure or manage these activities. Because subcontractor services can vary significantly from project to project and period to period, changes in revenue may not necessarily be indicative of our business trends.
Generally, these subcontractor costs and grants are passed through to our clients and, in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") and industry practice, are included in our revenue when it is our contractual responsibility to procure or manage these activities.
Net cash used in investing activities was $55.7 million in fiscal 2022, a decrease of $37.3 million compared to fiscal 2021. The decrease was primarily due to lower payments for business acquisitions completed in fiscal 2022 compared to last fiscal year. Financing Activities.
To a lesser extent, the decline in our net cash provided by financing activities was due to $25 million more cash used for contingent earn-out payments in fiscal 2024 compared to last year. Debt Financing.
At October 2, 2022, we had $258.8 million in outstanding borrowings under the Amended Credit Agreement, which was comprised of $243.8 million under the Amended Term Loan Facility and $15.0 million under the Amended Revolving Credit Facility. The year-to-date weighted-average interest rate of the outstanding borrowings during fiscal 2022 was 1.97%.
See Note 9, "Long-Term Debt" of the "Notes to Consolidated Financial Statements" in Item 8 for further discussion. At fiscal 2024 year-end, we had $250 million in outstanding borrowings under the Amended Credit Agreement, which consisted of $250 million under the New Term Loan Facility and no borrowings under the Amended Revolving Credit Facility.
Both EPS and adjusted EPS were calculated using diluted weighted-average common shares outstanding for the respective periods as reflected in our consolidated statements of income. 36 Fiscal Year Ended October 2, 2022 October 3, 2021 Change $ % Income from operations $ 340,446 $ 278,701 $ 61,745 22.2 Earn-out adjustments — (3,273) 3,273 NM Employee Retention Credits (6,486) — (6,486) NM Adjusted income from operations (1) $ 333,960 $ 275,428 $ 58,532 21.3 EPS $ 4.86 $ 4.26 $ 0.60 14.1 Earn-out adjustments — (0.04) 0.04 NM Employee Retention Credits (0.08) — (0.08) NM Other income (0.28) — (0.28) NM Non-recurring tax items — (0.43) 0.43 NM Adjusted EPS (1) $ 4.50 $ 3.79 $ 0.71 18.7 NM = not meaningful (1) Non-U.S.
Both EPS and adjusted EPS were calculated using diluted weighted-average common shares outstanding for the respective periods as reflected in our consolidated statem ents of income. 36 Fiscal Year Ended September 29, 2024 October 1, 2023 Change $ % ($ in thousands, except per share data) Income from operations $ 500,737 $ 358,113 $ 142,624 39.8% Acquisition and integration expenses 7,138 33,169 (26,031) (78.5) Right-of-use operating lease asset impairment — 16,385 (16,385) NM Earn-out adjustments 2,541 12,255 (9,714) (79.3) Adjusted income from operations (1) $ 510,416 $ 419,922 $ 90,494 21.6% EPS $ 1.23 $ 1.02 $ 0.21 20.6% Acquisition and integration expenses 0.02 0.11 (0.09) (81.8) Right-of-use operating lease asset impairment — 0.04 (0.04) NM Earn-out adjustments 0.01 0.04 (0.03) (75.0) Foreign exchange forward contract gain — (0.25) 0.25 NM Non-recurring tax items — 0.08 (0.08) NM Adjusted EPS (1) $ 1.26 $ 1.04 $ 0.22 21.2% NM = not meaningful (1) Non-U.S.
Excluding the impact of the fiscal 2021 non-recurring tax items, the non-deductible goodwill impairment charge and the excess tax benefits on share-based payments, our effective tax rates in fiscal 2021 and 2020 were 25.7% and 25.6%, respectively. 40 Our EPS was $4.26 in fisc al 2021, compared to $3.16 in fiscal 2020.
Excluding the impact of the excess tax benefits on share-based payments in both years, the settlement amount in fiscal 2024 and the non-operating tax expenses in fiscal 2023, our effective tax rates in fiscal 2024 and 2023 were 28.1% and 27.8%, respectively.
The increase reflects improved results in our GSG and CIG segments, which are described below under "Government Services Group" and "Commercial/International Services Group", respectively. Our net interest expense w as $11.8 million and $13.1 million in fiscal 2021 and 2020, respectively. The decrease primarily reflects lower average borrowings.
These increases reflect improved results in both of our operating segments, which are described below under "Government Services Group" and "Commercial/International Group", respectively.
Our net interest expense was $11.6 million and $11.8 million in fiscal 2022 and 2021, respectively. The decrease primarily reflects lower average year-over-year borrowings, partially offset by higher borrowing rates. The effective tax rates for fiscal 2022 and 2021 were 24.5% and 12.8%, respectively.
Our net interest expense was $46.5 million and $11.6 million in fiscal 2023 and 2022, respectively.
The goodwill impairment charge in fiscal 2020 did not have related tax benefits, which increased our effective tax rate by 1.5% in fiscal 2020. Conversely, income tax expense was reduced by $12.9 million and $8.3 million of excess tax benefits on share-based payments in fiscal 2021 and 2020, respectively.
Income tax expense was reduced by $4.5 millio n and $4.6 million of excess tax benefits on share-based payments in fiscal 2024 and 2023, respectively. In addition, income tax expense in fiscal 2024 included $4.2 million of expense for the settlement of various tax positions that were under audit for fiscal years 2011 through 2021.
Removed
We report results of operations based on a 52 or 53-week period ending on the Sunday nearest September 30. Fiscal years 2022, 2021 and 2020 contained 52, 53 and 52 weeks, respectively. We estimate that our revenue increased approximately 11.0% in fiscal 2022 compared to last fiscal year adjusting for the extra week in fiscal 2021. U.S. Federal Government.
Added
The table below presents our revenue by client sector (amounts in thousands): Fiscal Year Ended September 29, 2024 October 1, 2023 Change $ % Client sector U.S. federal government (1) $ 1,675,996 $ 1,387,101 $ 288,895 20.8% U.S. state and local government 613,185 607,074 6,111 1.0 U.S. commercial 909,642 869,460 40,182 4.6 International (2) 1,999,856 1,658,915 340,941 20.6 Total $ 5,198,679 $ 4,522,550 $ 676,129 15.0% (1) Includes revenue generated under U.S. federal government contracts performed outside the United States.
Removed
Our U.S. federal government revenue decreased 1.6% in f iscal 2022 compared to fiscal 2021. This decrease primarily reflects the wind-down of our international development activities in Afghanistan that ceased in the fourth quarter of last fiscal year.
Added
(2) Includes revenue generated from non-U.S. clients, primarily in the United Kingdom, Australia and Canada. U.S.
Removed
During perio ds of economic volatility, our U.S. federal government business has historically been the most stable and predictable. We expect our U.S. federal government revenue to grow in fiscal 2023. Approximately $1 trillion in new U.S. federal funding passed in 2021 through the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and the CHIPS and Science Act.
Added
Federal Government Fiscal Year Ended September 29, 2024 October 1, 2023 Change $ % ($ in thousands) Revenue $ 1,675,996 $ 1,387,101 $ 288,895 20.8% Our 20.8% growth in U.S. federal revenue in fiscal 2024 compared to fiscal 2023 primarily reflects increased international development activity and increased environmental activity for both civilian and defense agencies.
Removed
The increase reflects continued broad-based growth in our U.S. state and local government infrastructure business, particularly with increased revenue from municipal water infrastructure work, including digital water projects, in the metropolitan areas of California, Texas and Florida. Our disaster response activities also increased compared to fiscal 2021.

… 132 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+2 added−5 removed5 unchanged
Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk We do not enter into derivative financial instruments for trading or speculation purposes.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk We do not enter into derivative financial instruments for trading or speculation purposes. In the normal course of business, we have exposure to both interest rate risk and foreign currency transaction and translation risk, primarily related to the Canadian and Australian dollars, the Euro, and the British Pound.
Although an effective economic hedge of our foreign exchange risk related to this transaction, the forward contract did not qualify for hedge accounting. As a result, the forward contract is marked-to-market with changes in fair value recognized in earnings each period.
Although an effective economic hedge of our foreign exchange risk related to this transaction, the forward contract did not qualify for hedge accounting. As a result, the forward contract was marked-to-market with changes in fair value recognized in earnings each period.
Borrowings at a SOFR rate have a term no l ess than 30 days and no greater than 180 days and may be prepaid without penalty.
Borrowings at a SOFR rate have a term no less than 30 days and no greater than 180 days and may be prepaid without penalty.
These amounts were recognized as an adjustment to equity through othe r comprehensive income. In the anticipation of the planned acquisition of RPS, we entered into a forward contract during the fourth quarter of fiscal 2022 to acquire GBP 714.0 million at a rate of 1.0852 for a total of USD 774.8 million. The contract matures on December 30, 2022.
These amounts were recognized as an adjustment to equity through other comprehensive income. In the fourth quarter of fiscal 2022, we entered into a forward contract to acquire GBP 714.0 million at a rate of 1.0852 for a total of USD 774.8 million that was integrated with our plan to acquire RPS. This contract matured on December 30, 2022.
We can borrow, at our option, under both the Amended Term Loan Facility and Amended Revolving Credit Facility.
We are exposed to interest rate risk under our Amended Credit Agreement. We can borrow, at our option, under both the Amended Term Loan Facility and Amended Revolving Credit Facility.
We attempt to minimize our exposure to these fluctuations by matching revenue and expenses in the same currency for our contracts. We reported $0.2 million and $1.4 million of foreign currency losses in fiscal 2022 and 2021, respectively, in “Selling, general and administrative expenses” on our consolidated statements of income.
We attempt to minimize our exposure to these fluctuations by matching revenue and expenses in the same currency for our contrac ts. We reported $1.8 million of foreign currency losses in fiscal 2024 in “Selling, general and administrative expenses” on our consolidated statement of income. The impact of foreign currency was immaterial in fiscal 2023.
For more information, see Note 14, “Derivative Financial Instruments” of the “Notes to Consolidated Financial Statements” in Item 8. Most of our transactions are in U.S. dollars; however, some of our subsidiaries conduct business in foreign currencies, primarily the Canadian and Australian dollar and the British Pound. Therefore, we are subject to currency exposure and volatility because of currency fluctuations.
The majority of our transactions are in U.S. dollars; however, some of our subsidiaries conduct business in foreign currencies, primarily the Canadian and Australian dollars, the Euro, and British Pound. Therefore, we are subject to currency exposure and volatility because of currency fluctuations.
For fiscal 2022 and 2021, 31.0% and 29.8% of our consolidated revenue, respectively, was generated by our international business. For fiscal 2022, the effect of foreign exchange rate translation on the consolidated balance sheets was a decrease in equity of $94.9 million compared to an increase in equity of $30.6 million in fiscal 2021.
For fiscal 2024 and 2023, 38.5% and 36.7% of our consolidated revenue, respectively, was generated by our international business. For fiscal 2024, the effect of foreign exchange rate translation on the consolidated balance sheets was an increase in equity of $115.1 million compared to an increase in equity of $12.6 million in fiscal 2023.
At October 2, 2022, we had $258.8 million in outstanding borrowings under the Amended Credit Agreement, which was comprised of $243.8 million under the Amended Term Loan Facility and $15.0 million under the Amended Revolving Credit Facility. The year-to-date weighted-average interest rate of the outstanding borrowings during fiscal 2022 was 1.97%.
At September 29, 2024, we had $250 million in outstanding borrowings under the Amended Credit Agreement, which was consisted of $250 million under the New Term Loan Facility, and no borrowings under the Amended Revolving Credit Facility. The year-to-date weighted-average interest rate of the outstanding borrowings during fiscal 2024 was 6.70%.
The intrinsic value of the forward contract was immaterial at inception as the GBP/USD spot and forward exchange rates were essentially the same.
The intrinsic value of the forward contract was immaterial at inception as the GBP/USD spot and forward exchange rates were essentially the same. The fair value of the forward contract at October 2, 2022 was $19.9 million, and an unrealized gain of the same amount was recognized in our fourth quarter of fiscal 2022 results.
Removed
In the normal course of business, we have exposure to both interest rate risk and foreign currency transaction and translation risk, primarily related to the Canadian and Australian dollar and the British Pound. 49 We are exposed to interest rate risk under our Amended Credit Agreement.
Added
On December 28, 2022, we entered into an extension of the integrated forward contract to acquire GBP 714.0 million at a rate of 1.086 for a total of USD 775.4 million, extending the maturity date to January 23, 2023, the closing date of the RPS acquisition.
Removed
In August 2018, we entered into five interest rate swap agreements with five banks to fix the variable interest rate on $250 million of our Amended Term Loan Facility. The objective of these interest rate swaps was to eliminate the variability of our cash flows on the amount of interest expense we pay under our Credit Agreement.
Added
On January 23, 2023, the forward contract was settled for cash proceeds of $109.3 million and we recognized additional gains of $89.4 million in fiscal 2023. All gains related to this transaction were reported in “Other non-operating income" on our consolidated income statements for the respective periods. 49
Removed
As of October 2, 2022, the notional principal of our outstanding interest swap agreements was $200.0 million ($40.0 million each.) Our year-to-date average effective interest rate on borrowings outstanding under the Credit Agreement, including the effects of interest rate swap agreements, at October 2, 2022, was 3.60%.
Removed
The fair value of the forward contract at October 2, 2022 was $19.9 million, which resulted in an unrealized gain of the same amount in the fourth quarter fiscal 2022 and is reflected in “Other income" on the consolidated income statement for fiscal 2022.
Removed
The related $19.9 million asset is reported in "Prepaid expenses and other current assets" on the consolidated balance sheet at October 2, 2022. 50

Other TTEK 10-K year-over-year comparisons