Revenue Performance - Fortrea's revenues for the three months ended September 30, 2025, were $701.3 million, a 3.9% increase from $674.9 million in the same period of 2024, driven by a 3.5% increase in organic revenues and favorable foreign currency translation of 0.4%[107]. - For the nine months ended September 30, 2025, revenues reached $2,062.9 million, reflecting a 3.2% increase from $1,999.4 million in the corresponding period in 2024, primarily due to a 3.0% increase in organic revenues[108]. Direct Costs - Direct costs for the three months ended September 30, 2025, increased by 9.9% to $578.6 million, with direct costs as a percentage of revenues rising to 82.5% from 78.0% in the same period of 2024[109]. - For the nine months ended September 30, 2025, direct costs increased by 5.2% to $1,690.2 million, with direct costs as a percentage of revenues at 81.9%, up from 80.3% in the same period of 2024[111]. Expenses - Selling, general and administrative expenses decreased by 21.6% to $106.8 million for the three months ended September 30, 2025, primarily due to lower transition service agreement and information technology costs[112]. - For the nine months ended September 30, 2025, selling, general and administrative expenses decreased by 14.3% to $353.4 million, with reductions attributed to lower transition service agreement and information technology costs[114]. Backlog and Strategic Focus - The company's backlog was $7.6 billion as of September 30, 2025, reflecting anticipated future revenue from business awards[104]. - Fortrea's strategic focus includes leveraging its global scale and therapeutic expertise to meet the growing demand for clinical development services[101]. Amortization and Impairments - Amortization of intangibles and other assets decreased by 2.6% to $14.8 million for the three months ended September 30, 2025, and by 3.7% to $43.9 million for the nine months ended September 30, 2025 compared to 2024[116]. - Goodwill impairment for the nine months ended September 30, 2025 was $797.9 million, specific to the Clinical Development reporting unit, with no impairments recorded in the corresponding periods of 2024[117]. Restructuring and Charges - Restructuring and other charges amounted to $4.9 million for the three months ended September 30, 2025, a decrease of 44.3% from $8.8 million in 2024, and $21.7 million for the nine months ended September 30, 2025, down 3.6% from $22.5 million in 2024[118]. Interest and Foreign Exchange - Interest expense increased by 0.9% to $22.6 million for the three months ended September 30, 2025, but decreased by 33.1% to $68.2 million for the nine months ended September 30, 2025 compared to 2024[120]. - Foreign exchange loss for the three months ended September 30, 2025 was $(2.6) million, a significant increase of 1200.0% compared to $(0.2) million in 2024, and for the nine months ended September 30, 2025, it was $(28.1) million, up 301.4% from $(7.0) million in 2024[121]. Cash Flow and Financial Position - Cash and cash equivalents increased to $131.3 million as of September 30, 2025, compared to $105.3 million in 2024[132]. - Net cash used for operating activities was $(15.6) million for the nine months ended September 30, 2025, a decrease of $261.3 million compared to $245.7 million provided by operations in 2024[133]. - Net cash provided by investing activities was $21.9 million for the nine months ended September 30, 2025, down $226.2 million from $248.1 million in 2024[134]. Debt and Risk Management - The company has entered into a three-year $300.0 million accounts receivable securitization program, with $300.0 million of receivables sold and derecognized from the consolidated balance sheet as of September 30, 2025[129]. - The company believes existing cash and cash flows will be sufficient to cover operational needs for at least the next 12 months, while also evaluating strategic opportunities for acquisitions and investments[130]. - The company had $572.0 million outstanding related to variable rate debt as of September 30, 2025[151]. - A hypothetical 1% increase in interest rates would result in increased interest expenses of $5.7 million[151]. - The company entered into a variable-to-fixed interest rate swap in August 2023 to manage interest rate risk associated with floating rate debt[151]. - The company is exposed to market risks from foreign currency exchange rates and interest rates, and utilizes derivative financial instruments for risk management[147]. Operational Performance - Continued performance of the business units may be impacted by factors such as delays in new customer bookings and increases in operating costs[144].
Fortrea (FTRE) - 2025 Q3 - Quarterly Report