Good morning, and thank you for joining the Tetra Tech earnings call. By now, you should have received a copy of the press release. If you have not, please contact the company’s corporate office at (626) 351-4664. As a reminder, Tetra Tech is also simulcasting this presentation with slides in the Investors section of its website at www.tetratech.com. This call is being recorded at the request of Tetra Tech, and this broadcast is the copyright property of Tetra Tech. Any rebroadcast of this information in whole or part without the prior written permission of Tetra Tech is prohibited. With us today from management are Dan Batrack, Chairman and Chief Executive Officer; and Steve Burdick, Chief Financial Officer. They will provide a brief overview of the results, and we’ll open up the call for questions. I’d like to direct your attention to the safe harbor statement in today’s presentation. Today’s discussion contains forward-looking statements about future growth and financial expectations. Actual results may differ significantly from those projected in today’s forward-looking statements due to various risks and uncertainties, including the risks described in Tetra Tech’s periodic reports filed with the SEC. Except as required by law, Tetra Tech takes no obligation to update its forward-looking statements. In addition, since management will be presenting some non-GAAP financial measures as references, the appropriate GAAP financial reconciliations are posted in the Investors section of Tetra Tech’s website. Now, I would like to turn the call over to Dan Batrack. Please go ahead, Mr. Batrack.

Great. Thank you very much, Melissa, and good morning, and welcome to our fiscal year 2022 second quarter earnings conference call. We had an excellent quarter with record second quarter revenue, net revenue, and operating income. Our international and state and local markets grew at more than 20% year-over-year, driving an overall net revenue growth of 17% for the company for last year. This performance is a direct result of our successful long-term strategy to provide high-end differentiated services that are leading with science in the water and environmental markets. Our strategy has put us at the center of critical programs that are addressing many of the world’s climate change, resiliency, and adaptation challenges across all of our global operations. Recognizing our focus on water, just this week, we’re very proud to have been named again #1 in Water by the Engineering News-Record publication for the 19th consecutive year as the largest consultancy in the United States. Given the strength of our performance and outlook, we are increasing our guidance for both net revenue and for earnings per share for fiscal year 2022. I’ll begin today with an overview of our performance and our customers, followed by Steve Burdick, our Chief Financial Officer, who will provide a more detailed review of our financials in capital allocation both for the quarter and for year-to-date. And then I will address our customer outlook and earnings guidance for all of fiscal year 2022. In the quarter, we hit new all-time second quarter highs for revenue, net revenue, and operating income. Our net revenue increased 17% year-over-year from $600 million to $700 million, which is also the second-highest net revenue for the company for any quarter in our history. Our operating income increased at an even faster rate, up 23% from last year, reaching a second quarter record of $75 million. And finally, we delivered $0.98 in earnings per share, which is up 18% from our previous year’s results. I’d now like to provide an overview of our performance by our end customers. Our fastest-growing client sector in the quarter was international, where our net revenue was up 29%, which included the addition of Hoare Lea last year. Without this acquisition, our international work grew at about 15% with the expansion of sustainable infrastructure programs in Canada, Australia, and the United Kingdom. We saw continued strength in our state and local revenues, which were up 25% from the second quarter last year. Now excluding the extraordinary contributions from disaster response work that we had in the quarter, our state and local work still grew at a double-digit rate with continued strength in the municipal water business all across the U.S. Our U.S. commercial net revenue was 21% of our business, up 14% from last year, which is about double the 7% growth rate that we saw last quarter. Our services in sustainability, which include environmental permitting, high-performance building design, and clean energy services, all contributed to our growth in this sector. And our fourth client sector, work for the U.S. federal government was 27% of our net revenue in the quarter and was stable from the same quarter last year. Now excluding the one-time impact for the Afghanistan wind-down of our U.S. international development work, our federal work was up 7% on a year-on-year comparison, driven by growth in both our civilian and Department of Defense Agency Services. I’d now like to present our performance by segment for each of our two segments. The Commercial/International Group, or we refer to it as CIG, grew by 25% year-on-year, while also increasing its margin by 50 basis points from last year. This strong growth was across both the international and commercial markets within this business segment. The 50 basis point margin expansion is in line with our margin expansion goals and improves on the seasonally lower margins generated during the Canadian winter season, which aligns with our second quarter. We expect CIG margins to continue to expand as we move into the second half of our year, which will be both the spring and summer months in many of the Northern Latitude locations for this group. The base business for our Government Services Group, or the GSG segment, also expanded by approximately 50 basis points. With the benefit of extraordinary disaster response work and favorable project closeouts, GSG delivered overall a 150 basis point increase, resulting in a 14.9% margin for the quarter. Overall, the GSG segment grew its net revenue by 9% in the quarter. Backlog. Our backlog was also a very good indicator for us as we came out of the quarter. Our backlog was up 15% year-over-year and up 5% sequentially on strong broad-based orders, resulting in a 1.2 book-to-bill for the quarter and ending in an all-time high of $3.61 billion of contracted, funded, and authorized work for the company. The strong growth in backlog is particularly notable in the quarter with record revenue for the company. We had to cover both the amount of revenue we expended during the company and also increased the backlog by more than $100 million. In the second quarter, we won new programs and task orders across our global business that leveraged our more than $20 billion in federal contract capacity and expanded our long-term relationships with our key clients. We also won new programs with the U.S. Army and added new water programs with USAID and Mozambique. Our work for Australia’s International Development Agency, the Department of Foreign Affairs and Trade, or DFAT, also continued to expand with the addition of new programs in Indonesia. At this point, I’d now like to turn the presentation over to Steve Burdick to present the details of our financials. Steve?

Thank you, Dan. So I’d like to now review the GAAP financial results for the second quarter of 2022. Overall, as Dan noted earlier, we had strong Q2 results and revenue for revenue and earnings. The strong performance from operations resulted in top line growth with second quarter revenue of $853 million. The net revenue amounted to $700 million, which was above the upper end of our guidance range, which was $620 million to $670 million. Overall, our revenue and net revenue were both up 13% and 17%, respectively, over last year with strong growth from international, state and local, and commercial end markets. Our operating profit and earnings per share for the second quarter improved over last year. GAAP EPS came in at $0.98 in the second quarter, which is an increase of 18% over last year. Our GAAP EPS of $0.98 came in better than the top end of our guidance range, which was $0.86 to $0.91. This higher EPS was due to the improvement in reported operating income, which came in at $75 million this quarter, up 23% over last year. Our improved operating income for the second quarter was largely driven by a 31% growth in our CIG segment operating income and a 21% growth in our GSG segment operating income. The GSG margin of 14.9% was an improvement of 150 basis points over last year, and the resulting CIG margin of 11.2% is an improvement of 50 basis points over last year. And on a consolidated basis, these improvements resulted in an EBITDA margin of 11.6%, which is 60 basis points over the second quarter of last year. Further, regarding the year-over-year EPS, I would like to note that our tax rate this year of 25.7% is higher than last year’s tax rate of 21.5%, which equates to about a $0.05 headwind in this year’s current quarter. Now cash flows generated from operations for the second quarter totaled $95 million. The cash from operations year-to-date amounts to $178 million, which is an increase of 13% from the first half of last year. Our focus on working capital and cash flows has resulted in our DSO improving once again to an all-time low of 59 days. This is a further improvement of 6 days from last year at this time. And for many of you who’ve been following us for a while, you remember that our long-term goal was to generate a DSO of no more than 70 days. However, we now believe we can do better and generate a sustainable DSO below 70 days. This lower sustainable DSO trend reflects the outstanding work our project managers lead relative to higher-quality projects and highly satisfied clients in our broad portfolio across all of our end markets and geographies. Our net debt amounts to $56 million. Our net debt on EBITDA was a leverage of 0.2x with a total cash position of more than $194 million. And as we presented here today, the continued high-quality results with an improved EBITDA and higher margins, along with strong cash flows and lower working capital requirements, has shown that Tetra Tech has been able to invest in the business and generate very strong returns. As over the trailing 12 months, our return on invested capital is at 21%. Our long-term capital allocation strategy calls for a balance of investing in the growth of our business, managing the balance sheet, and as I will now present, providing returns to our shareholders. For the trailing 12 months, cash from operations generated $324 million or about $6 per share. And during the second quarter, we continued to provide significant returns to our shareholders through dividends and share buybacks. So regarding our dividend program, during the past quarter, we paid out $10.8 million in dividends. And I would like to announce today that our Board of Directors approved our 32nd consecutive dividend, which will be paid in the month of May at a rate of $0.23 per share, which is a 15% increase over last year. Also, this is the eighth consecutive double-digit annual increase since we started our dividend program. Further, we utilized $50 million in the second quarter on our stock buyback program. We have a total of $448 million remaining in our approved stock buyback programs. And all told, for the first half of fiscal 2022, we returned more than $120 million to our shareholders through both these dividends and share buyback programs. Our strong cash flow allowed us to successfully complete several strategic acquisitions, which Dan will discuss later, and continue to return capital to our shareholders while holding our net leverage to 0.2x. And our strong balance sheet and available liquidity of over $1 billion with our inaugural sustainability credit-linked facility positions us to continue investing in technical capabilities and strategic growth areas. I’m really pleased to share these financial results for the second quarter and the fiscal year-to-date. Thank you for your support, and I’ll hand the call back over to Dan.

Great. Thank you, Steve. I’d now like to start with discussing some of the drivers associated with our fastest-growing market in the company, our international work. Across our broad-based international markets, we’re seeing a new focus on climate change programs and an increase in associated budgets for critical programs such as ocean protection, biodiversity, land management, and decarbonizing buildings. This funding is resulting in an increased demand for our differentiated high-end consulting and engineering services with large multinational companies and new regional work in our key international operations in the United Kingdom, Australia, and all throughout Canada. This year, we’re quite pleased to see that the federal budget was finally approved in mid-March. The funding includes increases for key water, environmental, and international development priorities. We expect to see these funds convert to new task orders for our long-term clients that leverage our more than $20 billion we have in U.S. federal contract capacity. The U.S. Army Corps of Engineers has a budget of $8.3 billion, which is an increase of 7% over the previous year, to execute their programs that include dams and levees, navigable waterways, and key coastal protection projects. We expect to support the Corp with our more than 50 years of experience in world-class design expertise throughout all of these technical service areas. Our growth strategy includes investments and acquisitions, and the focus of the acquisitions has been to identify those that will further expand our high-end capabilities in water and environmental programs. I’m pleased to announce and share with you that in the second quarter, we added two excellent firms that bring specialized skills and talented staff to Tetra Tech. The first is Piteau Associates, who are global leaders in hydraulic modeling and sustainable water management for commercial clients. Their capabilities are essential to addressing programs that make commercial operations more sustainable and environmentally sensitive. I’m also very proud to announce that Axiom Data Science joined us, and they provide unique expertise in technology for the analysis of massive big data sets that often include billions of observations that are essential to global climate change assessments and investigations. Both of these firms have rapidly integrated into Tetra Tech's differentiated delta technologies and both of these firms have brought cutting-edge data analytics solutions that help further our Leading with Science strategy. I’d now like to present our outlook for the second half of fiscal year 2022 across our four client sectors. We see our growth rate projections staying the same as we saw in last quarter’s outlook for each of our four markets. Our highest growth markets are expected to be U.S. state and local work and international, which represent about half of the company growing at a 10% to 15% rate. Our U.S. federal and our U.S. commercial markets are expected to grow at a 5% to 10% rate. And as I’ve noted, both of these forecasts or outlooks remain unchanged from last quarter. I will note for modeling purposes that last year’s fourth quarter included an extra week, which we’ve adjusted for our year-to-year comparisons. I’d now like to present our guidance for the third quarter and for all of fiscal year 2022. Our guidance for the third quarter is as follows: for net revenue, our guidance ranges from $665 million to $715 million with an associated diluted earnings per share of $1 to $1.05. As noted in my opening remarks, we’re increasing our full year guidance for both net revenue and for earnings per share. For net revenue, we’re increasing the bottom end of our guidance by $70 million and increasing the upper end of our guidance by $20 million. Our new net revenue guidance is for a range of $2.72 billion to $2.82 billion. Earnings per share, we’re increasing the bottom end of our earnings per share guidance for fiscal year 2022 by $0.15 and the upper end by $0.10. If you do that math, this would result in an increase in the midpoint of our guidance by $0.13, which exceeds the flow-through of our Q2 earnings beat. Our new earnings per share guidance for fiscal year 2022 is for a range of $4.30 to an upper end of $4.40. This guidance includes the following assumptions as it has each of our quarters: it does include the expense for intangible amortization, which this year we estimate to be about $0.18 per share. We do estimate that for the remainder of the year, we’ll have a 26% tax rate. We have approximately 54.5 million average diluted shares that are used in the calculation. And as in the past, this guidance for the remainder of the year and the third quarter excludes any contributions from acquisitions that would be completed from this point forward. In summary, we’ve had just an excellent quarter in the second quarter, setting new Q2 records for revenue, net revenue, and operating income. We released on April 22, which was this year’s Earth Day, our sustainability report, which included a first-of-its-kind reporting of the quantitative impact of our high-end water, environment, sustainable infrastructure, and clean energy projects. We advanced our Leading with Science strategy with the addition of Piteau and Axiom Data Science. And we increased our guidance for the second successive quarter this year. And with that, Melissa, I’d like to open up the call for questions.

Our first question comes from Sean Eastman at KeyBanc Capital Markets.

Nice job this quarter. I think the extra week dynamic in the fourth quarter is an important call-out because the updated guidance for the second half kind of implies slowing growth into the fourth quarter at a headline level. So maybe some context for what that adjustment looks like. And if you could maybe comment on what you want us to take away from the second half guidance in terms of the pace of growth as we advance through this year and go into next year.

That’s a good question, Sean. Thank you for highlighting the extra week in the fourth quarter. Every 5 to 6 years, our fiscal year includes an extra week, making it 53 instead of 52, and this always falls in the fourth quarter. This was part of our guidance from the start of the year. When adjusting from 53 weeks to 52, it accounts for just under 2%, translating to about an 8% difference. If you compare the actual results for Q1 and Q2 with our guidance for Q3 and then adjust the remaining amount for Q4 by adding 8%, you'll get what we consider an equivalent basis for year-over-year comparisons. Looking specifically at the midpoint and especially the upper end of our guidance, you'll find that our growth rates for both the third and fourth quarters are consistent with what we've recently observed, reaching well into the double digits, even the teens. We want to convey that we see continued strength in our updated guidance, with growth rates steady similar to the first two quarters, projected to carry through the rest of the year. Additionally, we're witnessing our margins expand beyond those in the first and second quarters, as indicated by the increase in our earnings per share guidance, which has outpaced the revenue increase we've shared. I also want to note that this is the second time we've raised our guidance this year. After a strong first quarter, we adjusted our earnings per share forecast, and post the second quarter, we've raised our guidance for both revenue and earnings per share at an even greater rate. I want to emphasize that we've adjusted our guidance twice this year, which is significant. I'm truly proud of the company's achievement in providing opportunities for growth each quarter this year.

Very helpful, Dan. Good summary there. And it’s nice to see this big uptick in commercial revenue and new bookings this quarter. It’s interesting to see this at a time when people are starting to get worried about potential recession coming and commercial being where we’d expect the most sort of economic sensitivity in the Tetra Tech model. Do you think that the drivers of the commercial growth we’re seeing could be more durable in a recession scenario than we’ve seen in prior business cycles?

I believe our commercial performance will improve throughout this economic cycle for several reasons. First, it's not solely driven by one area, such as renewable energy, which we broadly refer to as clean energy. While it has contributed, it's not the only factor. High-performance buildings are performing and recovering well, and they too are a contributor but not the sole contributor. We've had success with our industrial clients, with increases in both high-performance buildings and clean energy. Additionally, support for sustainability and ESG initiatives from our commercial clients has been strong across the board. We've observed more environmental programs, particularly with our new design facilities in high tech and chip fabrication. This recovery and growth in the commercial sector is supported by a diverse range of areas rather than depending on a single component. The significant commercial orders we received came from a wide array of sectors. In the past, we experienced volatility in the commercial industry, especially during slower economic periods, primarily driven by commodity work in oil, gas, or mining, where fluctuations in commodity prices caused major downturns. We have largely removed that instability from our portfolio, and while that sector has not recovered significantly, our growth is driven by the other areas I mentioned. The impact of variable end markets on our portfolio is now minimal on the commercial side. Therefore, I don't anticipate a major negative impact from a potential recession or other economic challenges.

Our next question comes from the line of Noelle Dilts with Stifel.

Congrats on the strong results. I was hoping, Dan, that you could revisit the commentary that you provided previously on how you’re thinking about the growth rate by platform or by segment for the back half of the year and also the margins by division. And then any changes in how you’re thinking about sort of the longer-term margin profile for CIG and GSG.

Coming into the year, we expected Government Services to see an increase, projecting an annual expansion of about 50 basis points. We anticipated operating income margins to be between 13% and 14%. So far this year, we have exceeded that range, registering almost 100 basis points above the upper limit in the last quarter. Things are progressing well, and we forecast that our highest margin quarters are ahead. While I won't delve into specifics for 2023 just yet, I do expect margins for Q3 and Q4 to trend toward the upper end of that expected range in our Government Services. Increased fieldwork, particularly within our Commercial/International Group, has a significant impact. I'm pleased with the 50 basis points margin expansion in CIG. The second quarter traditionally poses challenges for margins in our CIG business, primarily due to our largest international activities in Canada, where we have the most employees, revenue, and clients. During winter, we focus on training, ongoing education, and maintenance in preparation for mobilizing for spring projects. Consequently, I anticipate natural and seasonal margin expansion for CIG as we move into the spring and summer months, leading to a notable increase in margins. This increase is not only seasonal but could also be structurally upward by around 50 basis points. If GSG were to slow its margin growth, which I do not want to see happen, CIG might close the gap with government margins by year-end. Ultimately, this is contingent on the types of work we engage in. Regarding timing and margin expansion, I predict the government segment will have less variability. However, it will still increase due to higher utilization, and there could be additional upside from disaster contributions during the summer. The most significant relative movement, I believe, will be seen in CIG as we head into summer.

Very helpful. In the past, you've mentioned how you consider the need to increase investment, particularly in labor, and how much more revenue you can support with your current staff given the strong growth across the platform. Could you share your thoughts on that today? Additionally, as you transition toward more federal advanced analytics work, how does that affect the staffing required to support revenue growth?

That's a great question. We have put considerable thought into this. To address the first part, I maintain my previous comments regarding the capacity of our existing staff. It's important to note that we are indeed expanding our team, not just through new hires but also by integrating staff from acquisitions. Currently, with our existing workforce, we can manage an additional 10% in terms of labor utilization. However, during the winter months, our utilization tends to dip slightly due to factors in Canada and other considerations. Overall, we're operating at about 70% utilization on a financial basis, which includes everyone in the company. We could potentially push that to the upper 70% range, estimating between 70% to 77%. The revenue we can generate is actually greater than that. The implementation of data analytics and advanced technology has allowed us to disconnect revenue growth from the number of hours billed. Right now, I would estimate that for each hour worked on a project, technology enables us to achieve an additional 50%. Thus, I anticipate about a 15% growth—10% attributed to labor and 50% stemming from technological efficiency. Our aim is to double our outputs through technology and productivity improvements. Therefore, a 10% increase in labor productivity could potentially yield a 20% rise in revenue. This approach allows us to grow without necessarily adding more personnel. It significantly enhances our productivity and boosts staff morale. Contrary to concerns about technology replacing jobs, we are utilizing cutting-edge solutions to better serve our clients. Job satisfaction is improving, and our teams can collaborate effectively using electronic platforms, allowing staff worldwide to contribute to projects regardless of their location. While we are closely monitoring staffing levels, technology has significantly lowered barriers to moving work around based on staff availability. So to answer your question, with our current team, we can maintain our growth rates and possibly achieve an additional 15%.

Our next question comes from the line of Tate Sullivan with Maxim Group.

Dan, you mentioned your sustainability-linked credit facility of $1 billion in your sustainability report. How will you track the metrics going forward? Are those metrics from all your projects worldwide regarding the emissions reduced? Consequently, does this lead to a lower cost of credit in that facility? Also, is this the first facility of its kind in the consulting industry?

I'll let Steve provide details about the credit facility, but I want to highlight its measurement and establishment. It is indeed the first of its kind in our industry. In many sustainability reports, you'll often encounter vague promises like consistent improvement or doing better, which tend to be subjective and qualitative statements. When I mention that we're the first of its kind, I mean we are the pioneers in precisely quantifying how we will improve the conditions for our 21,000 associates worldwide and how we will reduce our carbon footprint and greenhouse gas emissions through our projects. Currently, we are managing over 75,000 projects annually, focusing on those with the greatest potential for carbon reduction and positive impact on lives globally. Our initiative aims to enhance the lives of one billion people by improving the quality of their environments. As for how this correlates with financial reductions in our interest costs or rates, Steve might provide further insight on that.

I have been collaborating closely with Leslie Shoemaker, our Chief Sustainability Officer, for about a year to determine how we can track our progress. If we achieve certain goals and see improvements, we could secure up to a 5% reduction in our interest rates. This reduction is based on two metrics: one related to greenhouse gas emissions and the other concerning our commitment to impacting 1 billion people.

Yes. And one item, Tate or Steve, I would add to that is it’s not a soft, squishy qualitative. It’s a quantitative goal of working with our bankers. They don’t have columns in their spreadsheets that take words or letters; it’s only numbers. And so it has been quantified. And in fact, we have an internal audit process that goes through and makes sure that this is quantified, supported, and provided as an audit trail for the basis of the reduction in our interest costs.

And Steve, I just want to confirm, does this facility completely replace your previous credit facility? Is that correct?

Correct.

Okay. And then Dan, I imagine this kind of facility helps your customers themselves secure their own sustainability-linked credit facilities, or is that just speculation? I mean the tracking you’re doing for them then in turn they can take to their banks to get their own facilities. Has that already happened or potentially in the future?

Well, that’s a good question, Tate, that there are certain clients and projects that we have that tracking of sustainability goals and metrics are included by the very nature of the scope of work as deliverables that we have. And for instance, the U.S. Agency for International Development has mostly quantified metrics associated with the benefits that we’re providing to these developing countries. However, I will say that many of our clients have not requested that or have harvested that yet from the work that we’re providing. But it is something that we can bring to them. So I would say that it’s something that is available but not necessarily utilized by all of our clients at this time. But I will say it’s interesting. I was at one of our high-performance buildings practices just last week, and we have a sustainability component. And that’s an additional service that’s being pulled from us or asked as an additional deliverable item that can we go through and actually quantify the incremental differences per year. And of course, it always starts with the biggest assignment, which is establishing a baseline. So I would say yes, it will be helpful to them. But right now, it’s still only a small part of what’s being sought out from our clients.

Our next question comes from the line of Alexander Leach with Berenberg Capital Markets.

If we could just jump back to the conversation around employees first. Can you talk a bit about attrition and retention over the last couple of quarters given the hiring market has been so active? What was the net employee yield consultant change before accounting for any employees gained from Piteau and Axiom?

Yes, we evaluate this primarily based on our fiscal year, reviewing figures from the past year, specifically looking back to 2021. Although it seems recent, the pace of change in the world makes each week feel distinct. In 2021, we recorded a turnover rate of just under 10%, which we view as a target. The turnover rate for employees who have been with us for over five years is around 1%, focusing solely on voluntary departures. We do have temporary workers who are contracted for specific projects, which we do not consider in this statistic. This also includes staff hired for disaster response, where we may bring in up to 3,000 individuals for a limited time during events like hurricanes or fires. In the second quarter alone, we generated approximately $30 million from disaster response activities, reflecting the need for a significant workforce. To clarify, the voluntary turnover we measure relates to employees not tied to transient project roles. Our turnover for those under five years is approximately 9%, after accounting for the 1% from longer-term staff. Whether this figure is too high or too low is subjective, as the first five years are often a crucial period for employees to assess fit with our company's culture. If they decide to leave, it can be beneficial for both them and us. We’ve observed that this sorting process tends to encourage long-term retention. Also, the 1% includes retirements and leaves of absence, a figure we consider to be of best-in-class quality. Importantly, individuals who join us are typically seeking a career rather than just a job. This trend contributes to exceptionally low transitory turnover since most employees are looking for meaningful work in collaboration with talented colleagues. Hence, if someone seeks a different career path, they will likely find we are not the right fit for them. Our potential hires are those wanting to make a significant impact and engage in creative work daily, leading to low turnover rates. Furthermore, regarding wage changes, we are successfully attracting and retaining staff without eroding profit margins. Our salaries are competitive and aligned with the market, while increases are not aligned with the headline inflation rates driven by housing and fuel costs. Overall, we ensure our compensation, encompassing base salary, bonuses, and benefits, remains among the best in the industry, which further contributes to the low turnover rate of our senior staff.

Okay, great. If we could go to the state and local business as well. Are there any risks to net revenues rolling off in ‘23, given the strength in disaster response? I imagine it’s a lot of event-driven work there. I know it’s too early to call the next fiscal year. But any thoughts of how we think about the cadence going from here?

That's a great question. We've been fortunate to experience double-digit growth in state and local sectors, excluding disaster response. We’ve aimed to be as clear as possible regarding how much of our quarterly growth rate in this area can be attributed to disaster impacts. In the most recent quarter, that growth was 11%. Our underlying municipal work has maintained growth between 10% and 20%. This growth has been fueled by recovery in state and local budgets, lower unemployment rates, and increasing tax revenues from real estate and other factors. Some might wonder if we've reached optimal levels at the state and local levels, and what can drive further growth. We would highlight the IIJA or the Jobs Act, as well as the infrastructure stimulus, which includes a significant part of the additional $550 billion in federal funding earmarked for state and local budgets for grants, joint funding, and other projects related to technical engineering and infrastructure services. This funding will be forthcoming, we believe that it aligns with the 2023 federal government calendar, specifically late fall or into next fiscal year. We expect to see the transition from the bill being passed to actual funding being released. Therefore, we still see strong funding from state and local budgets to support these programs, with an additional boost anticipated in 2023. The timing of this funding in 2023, whether earlier or later, remains to be seen. However, we are confident this funding source will continue to enhance and elevate the investments in the types of work we perform to new heights. This is the basis for our outlook for late 2023, although we are not providing specific percentage guidance at this time.

Great. And if I could just slip one more in on Afghanistan very quickly. Were there any revenues recognized from Afghanistan in H1? And if so, what’s the roll-off impact next year from those revenues?

In the first half, we had minimal revenues, and I think the figure for Q2 was essentially zero or very close to it. In Q2, there was a slight amount, primarily from demobilization in October. Initially, there was some speculation that, following the withdrawal from Afghanistan, development agencies like USAID would keep some staff members in the country or retain local nationals on payroll due to a potential agreement to return quickly. However, that turned out not to be the case, and thus, the revenue in Q1 was quite minimal. In fact, I wouldn't characterize our Q1 year-on-year comparison as a headwind. For 2022, we expect a headwind of approximately $8 million to $10 million per quarter, compared to relatively consistent revenue in 2021. So the comparisons are roughly $10 million each quarter, totaling around $50 million in 2021. After that, the revenue dropped significantly to nearly nothing. Thus, the headwind from that comparison for Afghanistan is simply a factor of 2022.

Ladies and gentlemen, that concludes our question-and-answer session. I’ll turn the floor back to Mr. Batrack for any final comments.

Melissa, thank you very much. And thank you all for your insight, questions, interest, and support of Tetra Tech. And in closing, I really want to commend all of the associates at Tetra Tech. We really had a fantastic second quarter. And in even areas where it’s lower, our folks were very efficient in their programs and setting us up for a really productive third quarter, which we’re about 1 month into. And we look forward to presenting the results of both our third quarter and the progress through this year with you in about 90 days from now or next quarter. I hope you all have a safe day and a good rest of the week, and I’ll talk to you next quarter. Thank you.

Thank you. This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.