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Item 3 — Quantitative and Qualitative Disclosures About Market Risk
Bowman Consulting Group Ltd. · 10-Q · Q2 FY2026 · Period ended Jun 30, 2026
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We are exposed to certain market risks from transactions that are entered into during the normal course of business. We have not entered into derivative financial instruments for trading purposes. We have no significant market risk exposure to interest rate changes related to the promissory notes issued as partial consideration for acquisitions since these contain fixed interest rates. Our only debt subject to interest rate risk is the Credit Agreement under which rates are tied to Term SOFR (Secured Overnight Financing Rate), plus an applicable rate which varies between 5.93% and 8.05% based on our ratio of Funded Debt to EBITDA (as each is defined in the Credit Agreement). As of June 30, 2026, there was $136.2 million outstanding on the Credit Agreement. A one percentage point change in the assumed interest rate of the Credit Agreement would change our annual interest expense by approximately $1.4 million in 2026.
Our finance lease obligations with Dext (formerly Honour) and Enterprise were an aggregate of $39.8 million as of June 30, 2026. These finance lease obligations bear interest at a fixed rate. Accordingly, there is no exposure to market risk related to these obligations.