Core Insights - Tetra Tech, Inc. (TTEK) is positioned for growth due to strong performance in its end markets, strategic acquisitions, and a focus on operational excellence [1][5][10] - The company has a market capitalization of $9.5 billion and has outperformed the industry with a 22.4% gain over the past three months compared to the industry's 7.1% [3] Business Strength - TTEK is experiencing robust orders from various sectors including U.S. Federal, State & Local, Commercial, and International clients, with a 23.4% year-over-year increase in net sales from its Government Services Group in the first half of fiscal 2025 [5] - The CIG segment also saw a revenue increase of 1.8% year-over-year in the same period, aided by strong project performance in international operations and the RPS acquisition [6] Acquisition Benefits - Tetra Tech is actively acquiring businesses to enhance its customer base, geographic reach, and product offerings, including the acquisition of Convergence Controls & Engineering in May 2024, which expands its automation solutions in water and energy sectors [7] - The acquisition of LS Technologies in February 2024 strengthened its federal IT capabilities, while the RPS Group buyout in January 2023 enhanced its water practice in the UK and renewable energy focus [8] - A deal to acquire SAGE Group Holdings in May 2025 will further boost Tetra Tech's digital automation solutions across various sectors [9] Shareholder-Friendly Policies - Tetra Tech is committed to returning value to shareholders, having paid out $30.9 million in dividends in the first half of fiscal 2025, an 11.2% increase year-over-year, and a total of $58.8 million in fiscal 2024, up 12.9% [10] - The company raised its quarterly dividend rate by 12% in July 2024 [11] Bullish Guidance - Management has issued a positive revenue guidance for fiscal 2025, expecting revenues between $4.400 billion and $4.765 billion, an increase from $4.322 billion in fiscal 2024 [11]

Core Viewpoint - Tetra Tech (TTEK) shows potential as a strong investment opportunity due to significant revisions in earnings estimates, indicating an improving earnings outlook and potential for continued stock price gains [1][2]. Earnings Estimate Revisions - Analysts have become increasingly optimistic about Tetra Tech's earnings prospects, as reflected in the upward trend of estimate revisions, which typically correlate with stock price movements [2]. - The current-quarter earnings estimate is projected at $0.37 per share, representing a year-over-year increase of +15.63%. Over the past 30 days, the Zacks Consensus Estimate has risen by 8.82% with no negative revisions [6]. - For the full year, the earnings estimate stands at $1.47 per share, reflecting a +16.67% change from the previous year. The consensus estimate has increased by 7.3% during this period, with one estimate moving higher and no negative revisions [7][8]. Zacks Rank and Performance - Tetra Tech currently holds a Zacks Rank 2 (Buy), indicating strong agreement among analysts regarding the positive earnings revisions. This ranking is part of a system that has historically shown that Zacks 1 (Strong Buy) and 2 (Buy) stocks significantly outperform the S&P 500 [9]. - The Zacks Rank system has demonstrated an impressive track record, with Zacks 1 Ranked stocks generating an average annual return of +25% since 2008 [3]. Stock Performance - Tetra Tech's stock has appreciated by 15.8% over the past four weeks, driven by strong estimate revisions and positive investor sentiment, suggesting further upside potential [10].

Core Viewpoint - Tetra Tech (TTEK) has received a Zacks Rank 2 (Buy) upgrade, indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Rising earnings estimates for Tetra suggest an improvement in the company's underlying business, likely leading to higher stock prices [5]. Recent Earnings Estimate Revisions - For the fiscal year ending September 2025, Tetra is expected to earn $1.47 per share, reflecting a 16.7% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Tetra has increased by 7.3% [8]. Zacks Rank System Overview - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - Tetra's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10].

Core Viewpoint - Tetra Tech, Inc. reported strong second-quarter fiscal 2025 results, with adjusted earnings per share of 33 cents, exceeding expectations and reflecting an 18% year-over-year increase driven by robust performance across all segments [1][2]. Revenue & Segmental Performance - Tetra Tech generated revenues of $1.32 billion, a 5.6% year-over-year increase, surpassing management's guidance [1][2]. - Adjusted net revenues were $1.10 billion, up 5% year over year, also exceeding the Zacks Consensus Estimate of $1.05 billion [2]. - The backlog at the end of the fiscal second quarter was $4.09 billion, an increase of $127 million year over year [2]. - Revenues from U.S. Federal customers (30% of total revenues) increased by 1%, supported by projects from the Defense and U.S. Army Corps of Engineers [3]. - U.S. Commercial sales (17% of total revenues) rose by 5%, driven by environmental remediation and high-voltage transmission sales [3]. - U.S. State and Local sales (15% of total revenues) surged by 44% year over year, bolstered by disaster response efforts [4]. - International sales (38% of total revenues) increased by 1%, supported by U.K. planning and design [4]. - Government Services Group segment revenues were $521 million, up 12% year over year, while Commercial/International Services Group segment revenues totaled $597 million, a 2% increase [4]. Margin Profile - Subcontractor costs totaled $218.4 million, a 9.8% increase from the previous year [5]. - Adjusted operating income rose by 10.5% year over year to $130.09 million, with an adjusted margin increase of 40 basis points to 9.8% [6]. Balance Sheet and Cash Flow - Cash and cash equivalents at the end of the fiscal second quarter were $179.4 million, down from $232.7 million at the end of the previous quarter [7]. - Long-term debt decreased to $764.1 million from $812.6 million [7]. - In the first six months of fiscal 2025, net cash generated from operating activities was $7.24 million, compared to $112.2 million in the prior year [8]. - Capital expenditure increased by 25.6% year over year to $9.37 million [8]. - Proceeds from borrowings amounted to $215 million, with long-term debt repayments totaling $15 million [8]. Shareholder-Friendly Policies - Tetra Tech distributed dividends totaling $30.9 million in the first six months of fiscal 2025, up from $27.8 million in the previous year [9]. - The company repurchased shares worth $175 million during the same period [9]. Fiscal 2025 Outlook - For fiscal 2025, Tetra Tech anticipates net revenues in the range of $4.400-$4.765 billion, an increase from the previous guidance [10]. - Adjusted earnings are projected to be between $1.42 and $1.52 per share, compared to earlier expectations of $1.37-$1.52 [10]. - For the fiscal third quarter, management estimates net revenues of $1.10-$1.20 billion and adjusted earnings of 35-40 cents per share [11].

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited consolidated financial statements for Q1/H1 FY2025 are presented, detailing financial position and performance, impacted by impairment and legal costs [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet as of March 30, 2025, shows total assets of $4.18 billion, a slight decrease, with reduced cash and goodwill, and increased liabilities Consolidated Balance Sheet Highlights (in thousands) | Account | March 30, 2025 | September 29, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $179,433 | $232,689 | | Goodwill | $1,913,134 | $2,046,569 | | Total Assets | $4,184,304 | $4,192,676 | | Total Current Liabilities | $1,516,515 | $1,219,527 | | Total Stockholders' Equity | $1,573,781 | $1,830,413 | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) H1 FY2025 revenue grew 10.6% to $2.74 billion, but net income plummeted due to significant impairment and legal costs Statement of Income Summary (in thousands, except per share data) | Metric | Six Months Ended Mar 30, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Revenue | $2,742,674 | $2,479,883 | | Gross Profit | $435,659 | $397,993 | | Income from Operations | $62,129 | $228,764 | | Net Income Attributable to Tetra Tech | $6,135 | $151,418 | | Diluted EPS | $0.02 | $0.56 | - Significant charges in the six months ended March 30, 2025 include a **$115.0 million** legal contingency cost and a **$92.4 million** goodwill impairment, which severely impacted income from operations and net income[9](index=9&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly decreased to $7.2 million in H1 FY2025, impacted by a legal settlement and working capital changes Cash Flow Summary (in thousands) | Activity | Six Months Ended Mar 30, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,240 | $112,181 | | Net cash used in investing activities | ($12,768) | ($79,161) | | Net cash provided by (used in) financing activities | ($37,437) | $5,633 | | Net decrease in cash and cash equivalents | ($53,256) | $41,463 | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Detailed notes explain financial results, including revenue growth, goodwill impairment, a major legal settlement, and stock repurchase activities - On July 29, 2024, the Board of Directors approved a five-for-one stock split, effective September 6, 2024. All prior-period share and per-share amounts have been retroactively adjusted[24](index=24&type=chunk) Revenue by Client Sector (Six Months Ended, in thousands) | Client Sector | March 30, 2025 | March 31, 2024 | | :--- | :--- | :--- | | U.S. federal government | $915,270 | $789,078 | | U.S. state and local government | $410,425 | $298,476 | | U.S. commercial | $444,676 | $423,837 | | International | $490,168 | $495,656 | - A non-cash goodwill impairment charge of **$92.4 million** was recorded in Q2 2025, triggered by the cancellation of most USAID contracts impacting the Global Development Services (GDS) reporting unit[52](index=52&type=chunk)[53](index=53&type=chunk)[55](index=55&type=chunk) - A **$115.0 million** charge was recorded in Q1 2025 related to a settlement agreement with the U.S. government over claims at the Hunters Point Naval Shipyard, including **$97.0 million** for the settlement and an **$18.0 million** estimate for ancillary claims[102](index=102&type=chunk)[103](index=103&type=chunk)[108](index=108&type=chunk) - In H1 FY2025, the company repurchased **5.2 million** shares for **$175.0 million**. Subsequently, on May 5, 2025, the Board authorized an additional **$500 million** stock repurchase program[58](index=58&type=chunk)[59](index=59&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses 10.6% revenue growth, operating income impact from impairment and legal charges, and changes in backlog and liquidity Revenue by Client Sector (Six Months Ended, in thousands) | Client Sector | March 30, 2025 | March 31, 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | U.S. federal government | $915,270 | $789,078 | $126,192 | 16.0% | | U.S. state and local government | $410,425 | $298,476 | $111,949 | 37.5% | | U.S. commercial | $444,676 | $423,837 | $20,839 | 4.9% | | International | $972,303 | $968,492 | $3,811 | 0.4% | | **Total** | **$2,742,674** | **$2,479,883** | **$262,791** | **10.6%** | - The cancellation of **83%** of USAID programs following Executive Order 14169 led to the termination of nearly all of the company's USAID contracts, which had accounted for **$409.3 million** in revenue in H1 FY2025[128](index=128&type=chunk) Reconciliation of GAAP to Non-GAAP Adjusted EPS (Six Months Ended) | Metric | March 30, 2025 | March 31, 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | **GAAP Diluted EPS** | **$0.02** | **$0.56** | **($0.54)** | **(96.4)%** | | Legal contingency costs | $0.35 | - | | | | Impairment of goodwill | $0.31 | - | | | | **Adjusted EPS (Non-GAAP)** | **$0.68** | **$0.56** | **$0.12** | **21.4%** | - Backlog decreased by **$1.07 billion** (**19.9%**) from fiscal year-end 2024 to **$4.3 billion** at March 30, 2025, primarily due to the cancellation of USAID contracts[145](index=145&type=chunk) - Subsequent to the quarter end, on May 5, 2025, the company entered into a new Fourth Amended and Restated Credit Agreement, increasing total borrowing capacity to **$1.5 billion** and extending the maturity to May 2030[159](index=159&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk on variable-rate debt and foreign currency risk from international operations, with mitigation efforts in place - The company is exposed to interest rate risk on its **$450 million** in outstanding borrowings under the Third Amended Credit Agreement, which have variable rates tied to SOFR or a base rate. The weighted-average interest rate for H1 FY2025 was **5.78%**[172](index=172&type=chunk) - Foreign currency exposure exists from operations in Canadian dollars, Australian dollars, the Euro, and British Pound. In H1 FY2025, foreign exchange rate translation resulted in a **$74.3 million** decrease in equity[173](index=173&type=chunk)[174](index=174&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 30, 2025, with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[176](index=176&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[177](index=177&type=chunk) [PART II. OTHER INFORMATION](index=38&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings information is incorporated by reference, detailing a $115.0 million charge for a settlement related to the Hunters Point Naval Shipyard - Information regarding legal proceedings is incorporated by reference from Note 17, "Commitments and Contingencies" in the financial statements[178](index=178&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the 2024 Annual Report on Form 10-K are reported, with updated interest and exchange rate risk disclosures - There have been no material changes in risk factors from those disclosed in the 2024 Annual Report on Form 10-K[179](index=179&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details of stock repurchase activity are provided, including 5.2 million shares repurchased for $175.0 million in H1 FY2025 Stock Repurchase Summary (H1 FY2025) | Metric | Value | | :--- | :--- | | Shares Repurchased | 5,165,715 | | Average Price Paid per Share | $33.87 | | Total Cost | $175.0 million | | Remaining Authorization (at Mar 30, 2025) | $172.8 million | [Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Information concerning mine safety violations, as required by the Dodd-Frank Act, is included in Exhibit 95 - Information concerning mine safety violations required by the Dodd-Frank Act is included in Exhibit 95[182](index=182&type=chunk) [Other Information](index=39&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans during the second quarter of fiscal 2025 - No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans during the second quarter of fiscal 2025[183](index=183&type=chunk) [Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including CEO/CFO certifications, mine safety disclosures, and financial data in Inline XBRL format - Filed exhibits include CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2), Mine Safety Disclosure (Exhibit 95), and financial statements formatted in Inline XBRL (Exhibits 101, 104)[184](index=184&type=chunk)[186](index=186&type=chunk)

Financial Data and Key Metrics Changes - The company achieved record results for revenue, net revenue, operating income, and earnings per share in the second quarter, with net revenue increasing to $1.1 billion, up $51 million year-over-year, and operating income rising to $130 million, an 11% increase from the prior year [9][10] - Earnings per share for the quarter was $0.33, reflecting an 18% increase from the previous year [10] Business Line Data and Key Metrics Changes - The Government Services Group (GSG) segment saw a 12% year-over-year revenue increase to $521 million, with a margin of 13.8% [10][11] - The Commercial International Group (CIG) segment's revenue was $597 million, up approximately 2%, with a margin of 13.2% [11] - U.S. Federal client work (excluding USAID) increased by 16%, representing about 20% of total revenues, driven by disaster response activities and new programs for the Army Corps of Engineers [11][12] Market Data and Key Metrics Changes - International work accounted for about 38% of revenues, with slight growth on a constant currency basis, although Australian infrastructure work saw a reduction of over 10% due to a recent election [12][13] - The company reported a backlog of $4.31 billion, which includes $220 million in ongoing work with USAID, primarily in Ukraine [13][14] Company Strategy and Development Direction - The company is focusing on high-end data centers and water and environmental projects, which are expected to carry higher margins [16][31] - The addition of the Sage Group is expected to enhance capabilities in digital systems and automation, positioning the company for growth in these areas [34][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the funding streams from the U.S. Federal Government, particularly in defense-related services, and noted that the Department of Defense is expected to spend what they contract for [72][74] - The company anticipates continued strong demand for its services in water supply and environmental projects, driven by ongoing challenges such as drought and aging infrastructure [86] Other Important Information - The company announced a 12% increase in its quarterly dividend and reinstated its stock buyback program, with $150 million in stock repurchased in the second quarter [22][23] - A new credit facility of $1.5 billion was secured, providing more liquidity and favorable terms for future investments [20][39] Q&A Session All Questions and Answers Question: Concerns about federal expenditure reductions affecting state and local business - Management noted that they have not seen any near-term pressure on state and local projects, which are often funded through multi-year bonds [42][44] Question: Impact of proposed EPA deregulation on the company - Management indicated that most of their environmental work is driven by state and local regulations, and they do not foresee a direct impact from proposed federal regulations [49][52] Question: Core margin progression post-USAID cancellations - Management expects margins to grow slightly faster than the previously targeted 50 basis points annually, with a new higher baseline established [59][60] Question: Visibility and confidence from government partners for future projects - Management reported positive feedback from federal clients regarding funding commitments, particularly in defense and infrastructure projects [72][74] Question: Capital allocation preferences between share buybacks and M&A - Management stated that they have the ability to pursue both share buybacks and acquisitions simultaneously, with a focus on maintaining double-digit dividend increases [88][89] Question: Utilization rates of staff previously working with USAID - Management acknowledged a decrease in utilization rates for USAID staff but noted that overall staffing levels remained high due to disaster response projects [96]

Financial Data and Key Metrics Changes - The company achieved record results for revenue, net revenue, operating income, and earnings per share in Q2 2025, with net revenue increasing to $1.1 billion, up $51 million year-over-year, and operating income rising to $130 million, an 11% increase from the prior year [7][8] - Earnings per share for the quarter was $0.33, reflecting an 18% increase from the previous year [8] Business Segment Performance - The Government Services Group (GSG) segment saw a 12% year-over-year revenue increase to $521 million, with a margin of 13.8% [9] - The Commercial International Group (CIG) segment's revenue was $597 million, up approximately 2%, with a margin of 13.2% [10] Market Data and Key Metrics Changes - U.S. Federal client work (excluding USAID) increased by 16% year-over-year, now representing about 20% of total revenues [11] - State and local revenues grew by 44% year-over-year, driven by disaster response activities and ongoing municipal water programs [11][12] - International work represented about 38% of revenues, with slight growth on a constant currency basis, although Australian infrastructure work saw a reduction of over 10% [12] Company Strategy and Industry Competition - The company is focusing on high-end water and environmental projects, which are expected to carry higher margins across all end markets [17] - The addition of the Sage Group enhances the company's capabilities in digital systems and automation, positioning it to capitalize on the growing demand for data centers and smart infrastructure [34][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the funding streams from the U.S. Department of Defense and noted that the clarity within the DoD has improved, with commitments to spend contracted amounts [70] - The company anticipates continued growth in defense-related services and high-end water treatment projects, driven by increasing demand for infrastructure improvements [27][28] Other Important Information - The updated backlog stands at $4.31 billion, reflecting a solid book-to-bill ratio of 1.1 for the quarter [13] - The company has a new credit facility of $1.5 billion, providing more liquidity and favorable terms for future investments [22] Q&A Session Summary Question: Concerns about federal expenditure reductions affecting state and local business - Management indicated no current signs of pressure on state and local projects, citing strong funding in populous states like Florida and Texas [41][44] Question: Impact of proposed EPA deregulation on the company - Management noted that most of their environmental work is driven by state and local regulations, with minimal direct impact expected from federal regulatory changes [48][52] Question: Core margin progression post-USAID cancellations - Management expects margins to grow slightly faster than the previously targeted 50 basis points annually, indicating a new higher baseline for margins without USAID work [54][56] Question: Visibility and confidence from government partners for future projects - Management reported improved visibility and confidence from federal clients, particularly in defense and FAA projects, with a commitment to funding [66][70] Question: Capital allocation preferences between share buybacks and M&A - Management stated that there is sufficient capital to pursue both share buybacks and strategic acquisitions simultaneously [83]

Financial Performance - Q2-25 net revenue increased by 5% to $1.10 billion compared to $1.05 billion in Q2-24[5] - Q2-25 operating income increased by 11% to $130 million compared to $118 million in Q2-24[5] - Q2-25 EPS increased by 18% to $0.33 compared to $0.28 in Q2-24[5] - First half of 2025 net revenue increased by 11% year-over-year to $2301 million from $2068 million[14] - First half of 2025 EBITDA increased by 12% year-over-year to $297 million from $266 million[15] - First half of 2025 EPS increased by 21% year-over-year to $0.68 from $0.56[16] Segment Performance - CIG segment net revenue increased by 12%[7] - GSG segment net revenue increased by 2% based on constant currency[7,8] Backlog and Contracts - Total backlog reached $4.31 billion with a book-to-bill ratio of 1.1x, excluding USAID + DoS[10]

Group 1: Earnings Performance - Tetra Tech reported quarterly earnings of $0.33 per share, exceeding the Zacks Consensus Estimate of $0.31 per share, and up from $0.28 per share a year ago, representing an earnings surprise of 6.45% [1] - The company posted revenues of $1.1 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 4.82%, compared to year-ago revenues of $1.05 billion [2] Group 2: Stock Performance and Outlook - Tetra shares have declined approximately 23.3% since the beginning of the year, while the S&P 500 has decreased by 4.7% [3] - The current consensus EPS estimate for the upcoming quarter is $0.34 on revenues of $1.06 billion, and for the current fiscal year, it is $1.37 on revenues of $4.37 billion [7] Group 3: Industry Context - The Pollution Control industry, to which Tetra belongs, is currently ranked in the bottom 18% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment [5]

Credit Agreement Details - Tetra Tech, Inc. has entered into a Fourth Amended and Restated Credit Agreement as of May 5, 2025[15] - The agreement includes a revolving credit facility, a letter of credit subfacility, a swing line loan subfacility, and term loan facilities[17] - The existing revolving credit loans will continue under the new agreement, maintaining the respective applicable percentages for each lender[19] - The swing line subfacility and letter of credit subfacility from the existing credit agreement will be preserved in the new agreement[19] - The agreement amends and restates the terms of the existing credit agreement, superseding previous terms[20] - Bank of America, N.A. serves as the Administrative Agent and Swing Line Lender under the new agreement[15] - The agreement allows for multicurrency subfacility provisions[17] - The outstanding amounts of revolving credit loans will be deemed to continue under the new terms[19] - The agreement includes provisions for sustainability adjustments[6] - The company has requested and received agreement from lenders to extend certain credit facilities[18] - The 3-Year Maturity Date is set for May 5, 2028, and the 5-Year Maturity Date is set for May 3, 2030[23][27] - The 3-Year Term Loan Commitment is limited to the amounts specified for each lender, adjustable as per the agreement[24] - The 5-Year Term Loan Commitment is similarly defined with specific amounts for each lender, also adjustable[28] - The total amount of the 5-Year Term Loan Facility equals the aggregate principal amount of the 5-Year Term Loans outstanding at any time[29] - The Alternative Currency Sublimit is capped at $400,000,000, which is part of the Aggregate Revolving Credit Commitments[44] - The transactions outlined do not create any new payment obligations under the existing credit agreement[21] Financial Metrics and Definitions - "Consolidated EBITDA" includes net income plus various expenses such as interest charges, tax expenses, and depreciation, with specific limits on add-backs for extraordinary losses[96] - "Consolidated Funded Indebtedness" encompasses all obligations for borrowed money, including bonds and letters of credit, as well as certain guarantees[97] - The "Consolidated Interest Coverage Ratio" is calculated as Consolidated EBITDA divided by Consolidated Interest Charges over the previous four fiscal quarters[99] - The "Consolidated Leverage Ratio" is determined by the ratio of adjusted Consolidated Funded Indebtedness to Consolidated EBITDA for the most recent four fiscal quarters[101] - "Consolidated Net Income" refers to the net income of the Company and its subsidiaries, excluding extraordinary gains and losses[102] - "Commitment Fee" is defined in Section 2.09(a) of the agreement, indicating costs associated with credit commitments[87] - "Control" refers to the ability to direct the management or policies of a person, either directly or indirectly[104] - "Default Rate" is an interest rate that includes a base rate plus an additional 2% for various types of loans[111] - The term "Defaulting Lender" is defined, outlining conditions under which a lender may be classified as such, including failure to fund loans within two business days or notify the company of non-compliance[112] - "Designated Borrower" and related terms are specified, indicating the framework for borrower designation and associated agreements[113] Legal and Compliance Terms - "Environmental Liability" is described, detailing potential liabilities related to environmental laws and hazardous materials[134] - "Equity Interests" are defined, encompassing various forms of ownership and profit interests in a person or entity[135] - The term "Division" is explained, referring to the division of assets and liabilities among multiple entities[122] - "Effective Date" is specified as the date when all conditions precedent are satisfied or waived[127] - "EEA Financial Institution" is defined, including types of institutions subject to EEA regulations[126] - "Disqualified Equity Interests" are outlined, specifying conditions under which equity interests may be considered disqualified[119] - The definition of "ERISA Event" includes various scenarios such as withdrawal from a Pension Plan and events leading to termination of a Pension Plan, which could impact the company's financial obligations[137] - "Excluded Taxes" refers to specific taxes imposed on the recipient, including net income taxes and backup withholding taxes, which may affect the company's cash flow[144] - The term "Federal Funds Rate" is defined as the rate calculated by the Federal Reserve Bank of New York, which influences the company's borrowing costs[153] - "Guarantee" encompasses obligations that the company may have to ensure the payment of debts or obligations of other parties, impacting its financial liabilities[163] Borrowing and Loan Terms - The "Facility Termination Date" is contingent upon the termination of Aggregate Commitments and payment of all obligations, which is crucial for the company's financial planning[150] - "FATCA" refers to regulations that may impose additional compliance costs on the company, affecting its international operations[152] - The "Incremental Commitment" allows the company to increase its borrowing capacity, which is essential for funding growth initiatives[166] - The "Excluded Swap Obligation" indicates potential limitations on the company's ability to engage in certain financial contracts, impacting its risk management strategies[142] - "Existing Credit Agreement" outlines the terms under which the company can access credit, which is vital for its liquidity management[145] - "Hedge Bank" refers to entities that may engage in financial contracts with the company, influencing its exposure to market risks[165] - The definition of "Indebtedness" includes all obligations for borrowed money, contingent obligations under letters of credit, and net obligations under any Swap Contract[173] - "Indemnified Taxes" refers to taxes imposed on payments made by any Loan Party under any Loan Document, excluding Excluded Taxes[174] - Capital Leases and Synthetic Lease Obligations are included in the definition of Indebtedness[175] - "Investment" encompasses any direct or indirect acquisition or investment by a Person, including capital stock purchases and loans[179] - The "Letter of Credit Sublimit" is set at $100,000,000, with no more than $25,000,000 available for financial Letters of Credit[198] - "L/C Obligations" include the aggregate amount available to be drawn under all outstanding Letters of Credit plus all Unreimbursed Amounts[190] - "Limited Condition Transaction" refers to any Acquisition or Investment that is not conditioned on third-party financing and completed within 120 days of the purchase agreement[200] - The "Interest Payment Date" varies based on the type of loan, with specific dates outlined for different loan types[178] - "Lender" includes the Swing Line Lender and is defined in the introductory paragraph of the document[193] - "IP Rights" is defined in Section 5.21, indicating the importance of intellectual property in financial agreements[180]