Fortrea (FTRE) - 2025 Q1 - Quarterly Report

Financial Performance - Fortrea's revenues for Q1 2025 were $651.3 million, a decrease of 1.6$662.1 million in Q1 2024, attributed to a 1.1% decline in organic revenues and a 0.5% unfavorable foreign currency translation[97]. - Direct costs for Q1 2025 were $534.8 million, down 3.5$554.2 million in Q1 2024, with direct costs as a percentage of revenues decreasing to 82.1% from 83.7%[98][99]. - Selling, general and administrative expenses increased by 1.4% to $121.8 million in Q1 2025, primarily due to higher personnel costs and professional fees[100][101]. - Goodwill impairment for Q1 2025 was$488.8 million, with no impairments reported in Q1 2024[104]. - Interest expense decreased by 35.0% to $22.3 million in Q1 2025, primarily due to the pay down of$70.2 million on term loan A and $412.5 million on term loan B[105]. - Foreign exchange loss for Q1 2025 was$(5.6) million, compared to $(5.3) million in Q1 2024, primarily due to fluctuations in the U.S. Dollar against the British Pound and Euro[106]. - For the three months ended March 31, 2025, the effective tax rate was (2.7)$488.8 million was recorded for the Clinical Development reporting unit due to a decline in share price and macroeconomic uncertainties[121]. Operational Metrics - The company's backlog was $7.7 billion as of March 31, 2025, reflecting anticipated future revenue from business awards[94]. - The company has approximately 15,000 employees operating in around 100 countries, providing comprehensive clinical trial management and consulting services[92]. - Restructuring and other charges increased by 97.0$6.5 million in Q1 2025, driven by actions to streamline operations and eliminate redundant positions[104]. Cash Flow and Indebtedness - Cash and cash equivalents increased to $101.6 million as of March 31, 2025, compared to$92.8 million in 2024[112]. - Net cash used for operating activities was $(124.2) million for the three months ended March 31, 2025, compared to$(25.6) million in 2024, reflecting a $98.6 million increase in cash used[113]. - Net cash provided by investing activities was$16.1 million for the three months ended March 31, 2025, a $25.3 million increase from$(9.2) million in 2024, primarily due to a milestone payment related to the sale of the Enabling Services Segment[114]. - Net cash provided by financing activities was $88.4 million for the three months ended March 31, 2025, compared to$21.3 million in 2024, mainly from net proceeds of the revolving credit facility[115]. - The company incurred total indebtedness of $1,640.0 million, with$89.0 million outstanding on the revolving credit facility as of March 31, 2025, and $361.0 million available for borrowing[108]. Capital Expenditures and Interest Rate Sensitivity - Capital expenditures for the three months ended March 31, 2025, were$2.9 million, representing 0.4% of revenues, aimed at supporting growth in core businesses[114]. - A hypothetical 1% increase in interest rates would result in increased interest expenses of $6.6 million, given the$661.0 million outstanding related to variable rate debt[129]. - Approximately 15.9% of revenues for the three months ended March 31, 2025, were denominated in currencies other than the U.S. dollar, with the Euro being the most significant exposure[126].