The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains “forward-looking statements” reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to several factors. Factors that could cause or contribute to such differences include, but are not limited to, economic and competitive conditions, regulatory changes, and other uncertainties, as well as those factors discussed in the Risk Factors section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “Annual Report on Form 10-K”) filed with the US Securities and Exchange Commission on March 5, 2026 (the “Annual Report on Form 10-K”) and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Cautionary Statement about Forward-Looking Statements,” all of which are difficult to predict. Considering these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We assume no obligation to update any of these forward-looking statements, except to the extent required by applicable laws or rules. Unless the context otherwise requires, references to “Bowman,” the “company,” the “Company,” “we,” “us,” and “our” refer to Bowman Consulting Group Ltd., its wholly owned subsidiaries and combined entities under common control, or either or all of them as the context may require.
Overview
Bowman is a professional services firm delivering innovative engineering, technical consulting and program management services to customers who own, develop and maintain the built environment. We provide planning, engineering, construction management, commissioning, environmental consulting, geospatial imaging, surveying, land procurement and other advisory services to customers operating in a diverse set of end markets. We work as both a prime and sub-consultant for a broad base of public and private sector customers that generally operate in highly regulated environments.
We have a diversified business that is not dependent on any one customer service line, geographic region, or end market. We are deliberate in our efforts to balance our sources of revenue and avoid reliance on any one significant customer, service line, geography or end market concentration. Our strategic focus is on penetrating and expanding our presence in markets which best afford us opportunities to secure assignments that provide reoccurring revenue and multi-year engagements thus resulting in dependable and predictable revenue streams and high employee utilization. We limit our exposure to risk by providing professional and related services exclusively. We do not engage in general contracting activities either directly, or through joint ventures, and therefore have no related exposure. We are likewise not a financial partner in any design-build construction projects. We carry no heavy equipment inventory, and our risk of contract loss is generally limited to time associated with fixed fee professional services assignments.
As AI-enhanced software applications and environments have rapidly commercialized, we are adopting a technology-forward approach toward the development and implementation of automation tools we believe will improve our efficiency on repetitive, non-critical tasks such as regulatory inquiry, modelling and iteration, feasibility assessment, productivity enhancement and quality control. Our strategy for technology relies on early adoption and leadership. We believe technological advancements and AI-enabled automation will provide us with the opportunity to meet increasing customer demand for timely execution of infrastructure planning and operational oversight thereby extending the breadth and tenure of our engagements.
Gross contract revenue for the three months ended June 30, 2026 and 2025 was $146.1 million and $122.1 million, respectively, representing year-over-year growth of 19.7%. Gross contract revenue derived from our workforce represented 88.3% and 88.5% of gross contract revenue for the three months ended June 30, 2026 and 2025, respectively (see Net service billing – non-GAAP below). Our net income for the three months ended June 30, 2026 and 2025 was $2.5 million and $6.0 million, respectively. Our Adjusted EBITDA for the three months ended June 30, 2026 and 2025 was $24.1 million on net income of $2.5 million and $20.2 million on net income of $6.0 million, respectively. (see Adjusted EBITDA – non-GAAP below).
Gross contract revenue for the six months ended June 30, 2026 and 2025 was $272.6 million and $235.0 million, respectively, representing year over year growth of 16.0%. Gross contract revenue derived from our workforce represented 89.2% and 88.6% of gross contract revenue for the six months ended June 30, 2026 and 2025, respectively (see Net service billing – non-GAAP below). Our net income for the six months ended June 30, 2026 and 2025 was ($1.2) million and $4.3 million, respectively. Our Adjusted EBITDA for the six months ended June 30, 2026 and 2025 was $40.9 million on net loss of ($1.2) million and $34.7 million on net income of $4.3 million, respectively. (see Adjusted EBITDA – non-GAAP below).
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In connection with the extensive investment of time and resources we have made in the automation of certain components of our business, we are now realizing, and expect to continue to realize, productivity improvements that have reduced estimated costs to complete for certain projects in process. Accordingly, management revised estimated costs to complete for those projects, which, consistent with the Company's revenue recognition policy, resulted in cumulative catch-up adjustments that increased gross contract revenue during the three and six months ended June 30, 2026.
Subsequent Events
On August 9, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Prive Parent, Inc., a Delaware corporation (“Parent”) and Prive Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”, and together with Parent, the “Buyer Parties”), pursuant to which Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation (such merger, the “Merger”). The Buyer Parties are affiliated with Bernhard Capital Partners (“Bernhard”).
If the Merger is consummated, the shares of our common stock that trade on The NASDAQ Stock Market LLC (“Nasdaq”) will be delisted from Nasdaq and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The Merger is expected to close in the fourth quarter of calendar year 2026 or the first quarter of calendar year 2027.
Methods of Evaluation
We use a variety of financial and other information in monitoring the financial condition and operating performance of our business. Some of the information we use to evaluate our operations is financial information that is in accordance with Generally Accepted Accounting Principles (GAAP), while other information may be financial in nature and either built upon GAAP results or may not be in accordance with GAAP (Non-GAAP). We use all this information together for planning and monitoring our operations, as well as determining certain management and employee compensation.
The Company operates as a single business segment represented by our core business of providing multi-disciplinary professional engineering solutions to customers. While we evaluate revenue and other key performance indicators relating to various divisions of labor, our leadership neither manages the business nor deliberately allocates resources by service line, geography, or end market. Our financial statements present results as a single operating segment.
Components of Income and Expense
Revenue
We generate revenue from services performed by our employees, pass-through fees from sub-consultants, and reimbursable contract costs. On our condensed consolidated financial statements, we report gross contract revenue, which represents total revenue billed to customers excluding taxes collected from customers. Gross contract revenue less revenue derived from pass-through sub-consultant fees, reimbursable expenses and other direct expenses represents our net service billing, or that portion of our gross contract revenue attributable to services performed by our employees. Our industry uses the calculation underlying net service billing to normalize peer performance assessments and provide meaningful insight into trends over time. Refer to — Other Financial Data, Non-GAAP measurements and Key Performance Indicators below for further discussion of the use of this non-GAAP financial measure.
In general, we do not realize profit from the pass-through of sub-consultants and reimbursable expenses. As such, contract profitability is most heavily impacted by the mix of labor and assets utilized to complete the tasks and the efficiency of those resources in completing the assignments. Our largest and most consistent direct contract cost is our labor. To increase our revenue and maximize overall profitability we carefully monitor and manage our fixed and hourly labor and the utilization thereof. Maintaining an optimal level of utilization on a balanced pool of labor resources represents our greatest prospect for delivering increasing profitability.
We enter into contracts that contain two types of pricing characteristics:
Hourly, also referred to as time and materials, are common for professional and technical consulting assignments both short-term and multi-year in duration. Under these types of contracts, there is generally no predetermined maximum fee and we generally experience no risk associated with cost overruns. For hourly contracts, we negotiate billing rates and charge our customers based upon the actual hours expended toward a deliverable. These contracts may have not-to-exceed
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parameters requiring us to receive additional authorizations from our customer to continue working, but we likewise do not have to continue working without assurances of payment for such additional work.
Lump sum, referred to interchangeably as fixed fee, typically require the performance of some, or all, of the obligations under the contract for a specified amount, subject to price adjustments only if the scope of the project changes or unforeseen requirements arise. Our fixed fee contracts generally include a specific scope of work and defined deliverables. Lump sum contracts can involve both hourly and fixed fee pricing components. Cost plus contracts and hourly contracts with not-to exceed parameters are characterized as fixed fee contracts when we distinguish percentages of revenue based on contracts.
From a financial reporting perspective, a contract is categorized as fixed fee and therefore subjected to percentage completion accounting under Accounting Standards Codification "ASC" Topic 606 if any one discrete assignment within the contract is priced on a lump sum or unit basis. For management discussion and analysis purposes, we evaluate the percentages of our revenues that are fixed fee and hourly based on the pricing of individual assignments within our contracts.
The majority of our assignments within a contract are lump sum in nature, representing approximately 54% of gross contract revenue for both the three and six months ended June 30, 2026, compared to approximately 61% and 59% for the three and six months ended June 30, 2025, respectively. However, when evaluated at the overall contract or project level, approximately 92% and 92% of gross contract revenue for the three and six months ended June 30, 2026, respectively, was recognized over time. Comparable percentages for the three and six months ended June 30, 2025 were 92% and 91%, respectively. This difference reflects the presence of both hourly and lump sum assignments within individual contracts. Recognizing revenue from lump sum assignments requires management estimates of both total contract value when there are contingent compensation elements of the fee arrangement and expected cost at completion. We closely monitor our progress to completion and adjust our estimates when necessary. We do not recognize revenue from work that is performed at risk with no documented customer commitment.
Contract Costs
Contract costs consist of direct payroll costs, sub-consultant costs and other direct expenses exclusive of depreciation and amortization.
Direct payroll costs represent the portion of salaries and wages incurred in connection with the production of deliverables under customer assignments and contracts. Direct payroll costs include allocated fringe costs (i.e. health benefits, employer payroll taxes, and retirement plan contributions), paid leave and incentive compensation.
Sub-consultants and direct expenses include both sub-consultants and other outside costs associated with performance under our contracts. Sub-consultant and direct costs are generally reimbursable by our customers with little or no mark-up under the terms of our contracts.
Performance under our contracts does not involve significant heavy machinery or other long term depreciable assets, other than geospatial equipment. Most of the equipment we employ involves desktop computers and other shared ordinary course IT equipment, along with various geospatial systems and scanners. We present direct costs exclusive of depreciation and amortization and as such we do not present gross profit on our condensed consolidated financial statements.
As technology evolves, we are developing efficiency enhancement automation tools that address repetitive information gathering functions, file preparation, extensive iteration, quality controls, and process management. These tools are positively impacting our budgeting and estimating with respect to revenue recognition. We are not automating critical professional judgment tasks upon which our customers rely to maintain public safety.
Operating Expense
Operating expenses consist of selling, general and administrative costs, non-cash stock compensation, depreciation and amortization and settlements and other non-core expenses.
Selling, general and administrative expenses represent corporate and other general overhead expenses, salaries and wages not allocated to customer projects including management and administrative personnel costs, incentive compensation, personal leave, office lease and occupancy costs, legal, professional and accounting fees.
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Non-cash stock compensation represents the expenses incurred with respect to shares and options issued by the Company, both vested and unvested, to employees as long-term incentives. This expense is based on the amortization of the grant date fair value of equity grants over the vesting period. Non-cash stock compensation cost for permanent equity is the grant date fair value of the awards, or the Black-Scholes-Merton value of stock options on the grant date, recognized ratably over the vesting periods of each award. Stock issued as consideration in connection with acquisitions where there is no service period, and no risk of forfeiture, is considered a component of the purchase price and does not run through our income statement as non-cash compensation expense.
Depreciation and amortization represent the depreciation and amortization expense of our property and general IT equipment, capital lease assets, tenant improvements and intangible assets.
(Gain) loss on sale represents gains or losses inclusive of foreign exchange and accumulated depreciation recapture resulting from the disposal of an asset upon the sale or retirement of such asset.
Other (Income) Expense
Other (income) expense consists of other non-operating and non-core expenses.
Income Tax Expense (Benefit)
The net income tax expense, current and deferred, includes estimated federal, state and local tax expense/benefit associated with our taxable income, as apportioned to the states in which we operate along with all available tax incentives and credits.
Other Financial Data, Non-GAAP Measurements and Key Performance Indicators
Backlog
We measure the value of our undelivered gross revenue in real time to calculate our backlog and predict future revenue. Backlog includes awarded, contracted, and otherwise secured commitments along with revenue we expect to realize over time for predictable long-term and reoccurring assignments. We report backlog quarterly as of the end of the last day of the reporting period. We use backlog to predict revenue growth and anticipate appropriate future staffing needs. Backlog definitions and methods of calculation vary within our industry. As such, backlog is not a reliable metric on which to evaluate us relative to our peers. Backlog neither derives from, nor reconciles to, any GAAP results.
Net Service Billing
In the normal course of providing services to our customers, we routinely subcontract services and incur direct third-party contract expenses that may or may not be reimbursable and may or may not be billed to customers with mark-up. Gross revenue less revenue derived from pass-through sub-consultant fees and reimbursable expenses and other direct expenses represents our net service billing, which is a non-GAAP financial measure, or that portion of our gross contract revenue attributable to services performed by our employees. Net service billing excludes the impact of credit losses, which are reflected in operating expenses and evaluated separately as part of our credit and collection processes. Because the ratio of sub-contractor and direct expense costs to gross billing varies between contracts, gross revenue is not necessarily indicative of trends in our business. As a professional services company, we believe that metrics derived from net service billings more accurately demonstrate the productivity and profitability of our workforce than do those derived from gross revenue. Our industry uses the calculation of net service billing to normalize peer performance assessments and provide meaningful insight into trends over time.
Beginning with the year ended December 31, 2025, we conformed our presentation of net service billing to exclude credit losses from this non-GAAP measure. We believe this change improves comparability with industry practice and better aligns the measure with its intended purpose as a metric of service revenue generated by our professional workforce, net of sub-consultant costs and other direct pass-through expenses. For clarity of presentation, we have not recast previously published net service billing.
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Adjusted EBITDA
We view Adjusted EBITDA, which is a non-GAAP financial measure, as an important indicator of normalized performance. We define Adjusted EBITDA as net income before interest expense, income taxes and depreciation and amortization, plus expenses associated with discontinued operations, legal settlements not related to our general course of business professional services, and other costs not in the ordinary course of business, non-cash stock-based compensation (inclusive of expenses associated with the adjustment of our liability for common shares subject to redemption), and other adjustments such as costs associated with raising equity and other forms of capital. Our peers may define Adjusted EBITDA differently.
Adjusted EBITDA Margin, net
Adjusted EBITDA Margin, net, which is a non-GAAP financial measure, represents Adjusted EBITDA, as defined above, as a percentage of net service billings, as defined above.
Results of Operations
Combined results of operations
The following represents our condensed consolidated results of operations for periods indicated (in thousands):
For the Three Months Ended June 30, For the Six Months Ended June 30,
2026 2025 2026 2025
Gross contract revenue $ 146,125 $ 122,090 $ 272,604 $ 235,021
Contract costs (exclusive of depreciation and amortization) 68,385 56,518 128,976 111,361
Operating expense 69,608 56,528 135,391 113,480
Income from operations 8,132 9,044 8,237 10,180
Other expense 5,796 1,636 9,197 3,746
Income tax (benefit) expense (159) 1,399 247 2,169
Net income (loss) $ 2,495 $ 6,009 $ (1,207) $ 4,265
Net margin 1.7 % 4.9 % (0.4) % 1.8 %
Other financial information 1
Net service billing $ 128,969 $ 107,997 $ 243,173 $ 208,050
Adjusted EBITDA 24,092 20,203 40,891 34,708
Adjusted EBITDA margin, net 18.7 % 18.7 % 16.8 % 16.7 %
1Represents non-GAAP financial measures. See Other Financial Information and Non-GAAP key performance indicators below.
Three months ended June 30, 2026 as compared to the three months ended June 30, 2025
Gross Contract Revenue
Gross contract revenue for the three months ended June 30, 2026, increased $24.0 million or 19.7% to $146.1 million as compared to $122.1 million for the three months ended June 30, 2025. For the three months ended June 30, 2026, gross contract revenue attributable to work performed by our workforce increased $21.0 million, or 19.4% to $129.0 million or 88.3% of gross contract revenue as compared to $108.0 million or 88.5% for the three months ended June 30, 2025 (see Net service billing – non-GAAP). Of the $24.0 million increase in gross contract revenue during the three months ended June 30, 2026, acquisitions represented $7.5 million of the increase. To evaluate the Company’s growth, revenue from acquisitions is treated as acquired for a period of four quarters post-closing, after which it is considered organic. For each measurement and comparison period, historical balances of acquired and organic revenue bases are adjusted to reflect revenue accordingly.
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Changes in gross contract revenue disaggregated between our core markets were as follows (in thousands other than percentages):
For the Three Months Ended June 30,
Consolidated Gross Contract Revenue 2026 %GCR 2025 %GCR Change % Change
Building Infrastructure $ 57,174 39.2 % $ 56,561 46.3 % $ 613 1.1 %
Transportation 28,382 19.4 % 24,611 20.2 % 3,771 15.3 %
Power, Utilities & Energy 37,034 25.3 % 26,843 22.0 % 10,191 38.0 %
Natural Resources 1 23,535 16.1 % 14,075 11.5 % 9,460 67.2 %
Total: $ 146,125 100.0 % $ 122,090 100.0 % $ 24,035 19.7 %
Acquired 2 $ 7,534 5.2 % $ 6,459 5.3 % $ 1,075 16.6 %
1Formerly Emerging Markets which represents environmental, mining, water resources, imaging and mapping and other.
2Acquired revenue in prior periods is as previously reported; four quarters post-closing, acquired revenue is reclassified as organic for the purpose of calculating organic growth rates.
For the three months ended June 30, 2026, gross contract revenue from the building infrastructure market increased $0.6 million or 1.1% as compared to the three months ended June 30, 2025. Building Infrastructure includes commercial, municipal and residential infrastructure. The increase in building infrastructure revenue was the result of acquisitions and organic growth. Within the building infrastructure market, 35.5% of gross contract revenue was derived from residential assignments including single family, multi-family and mixed-use housing stock, 41.3% from commercial assignments including retail, hospitality and quick-serve restaurants (QSR), office and industrial, data centers and healthcare, and 23.2% from municipal assignments. Within residential, 45.1% of gross contract revenue was derived from for-sale homebuilding assignments, 47.4% from residential multi-family and 7.5% from mixed use projects. While the homebuilding market shows signs of rebounding from prior year interest rate impacts, for-sale residential services represented just 6.3% of our total gross contract revenue for the three months ended June 30, 2026. Within commercial, 46.4% of revenue was derived from office and industrial assignments, 46.9% from retail, hospitality, and quick serve restaurants, and 6.7% from healthcare. We continue to experience strong demand for our building infrastructure services and maintain a positive outlook on this market as we continue to experience strength in markets including quick serve restaurants, data centers, industrial distribution facilities, schools, and build-for-rent communities.
For the three months ended June 30, 2026, revenue from transportation increased $3.8 million or 15.3% as compared to the three months ended June 30, 2025. The increase was attributable to new contract awards in transportation from roadways, transits, ports and harbors, program administration and others, along with acquired transportation backlog which we were able to deliver to customers. Within transportation, 77.3% of our gross contract revenue was derived from public sector roadway customers, including state and local departments of transportation ("DOTs") and tollway operators; 19.1% from private sector roadway customers; 1.6% from ports & harbors customers; 1.1% from bus, rail, and transit customers; and 0.9% from aviation customers. We expect to continue to increase our transportation revenue and improve the diversification of our revenue. We believe the transportation market continues to present significant opportunity for future growth and we remain committed to investing in leadership, technical expertise, business development and acquisitions for this market.
With the convergence of renewable energy with traditional transmission infrastructure and the continued growth we are projecting in the clean energy transition, we have consolidated renewable energy into the power, utilities and energy category (sometimes referred to herein as the power, utilities and energy market) of our revenue mix and have adjusted historical balances accordingly. For the three months ended June 30, 2026, revenue from power, utilities, and energy increased $10.2 million or 38.0% as compared to the three months ended June 30, 2025. The additional increase in gross contract revenue from the power, utilities, and energy market is principally attributable to acquisitions and increased revenue associated with the expansion of a multi-year utility undergrounding assignment in Florida, and to increases derived from gas pipeline and electric transmission projects nationally. Within the power, utilities, and energy market, 56.9% of our gross contract revenue was derived from customers operating traditional transmission operations, 18.4% was derived from customers focused on alternative energy operations and 24.7% derived from data center customers. The power, utilities, and energy market continues to experience increasing infrastructure investment as changing weather patterns, energy transition mandates and other safety initiatives positively impact demand for the services we provide. Based on recent increases in program commitments within the gas pipeline replacement market, we believe trends in
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power, utilities, and energy provide meaningful opportunity for continued growth and we are committed to investing resources accordingly.
Our natural resources and imaging (formerly emerging markets) consist of mining, water resources, imaging and mapping, environmental consulting, and other natural resources services. For the three months ended June 30, 2026, revenue from natural resources markets increased $9.5 million or 67.2% as compared to the three months ended June 30, 2025. What had previously been classified under emerging sectors grew to a scale that warranted separate market recognition. Accordingly, the emerging sector was renamed natural resources. The updated name reflects the evolved composition of this market. Gross contract revenue within natural resources was 64.3% from imaging and mapping activities, 13.3% from mining activities where we have specialized in copper mining, 19.3% from water resources activities, and 3.1% from environmental and other natural resources consulting. Scarcities in water resources and the increasing need for water management gives us confidence that we will be able to increase revenue accordingly. With recent and future acquisitions, we expect to experience continued growth from investment in various natural resources.
For the three months ended June 30, 2026 and 2025, public sector customers, defined as direct contracts with municipalities, public agencies, or governmental authorities, represented 28.7% and 35.4% of our gross contract revenue, respectively. This does not include work done indirectly on public sector projects. Gross contract revenue from projects for public sector customers are included in the end market most aligned with work performed.
Contract costs (exclusive of depreciation and amortization)
Total contract costs, exclusive of depreciation and amortization, increased $11.9 million or 21.1% to $68.4 million for the three months ended June 30, 2026, as compared to $56.5 million for the three months ended June 30, 2025. For the three months ended June 30, 2026 and 2025, total contract costs represented 46.8% and 46.3% of total contract revenue, respectively. For the three months ended June 30, 2026 and 2025 total contract costs represented 53.0% and 52.3% of revenue attributable to our workforce, respectively (see Net Service Billing).
Direct payroll costs increased $8.8 million or 20.8% to $51.2 million for the three months ended June 30, 2026, as compared to $42.4 million for the three months ended June 30, 2025. The increase in direct payroll costs is primarily driven by higher revenue and increased headcount to support growth, including contributions from recent acquisitions, as well as merit-based compensation increases. Direct payroll accounted for 74.9% of total contract costs for the three months ended June 30, 2026, a decrease of (0.1) percentage points as compared to 75.0% for the three months ended June 30, 2025.
Direct labor, the component of direct payroll costs associated with the cost of labor relating to work performed on contracts increased $5.6 million or 17.1% to $38.4 million for the three months ended June 30, 2026 as compared to $32.8 million for the three months ended June 30, 2025. The increase in direct labor is primarily due to an increase in staffing to accommodate growth. For the three months ended June 30, 2026 and 2025, direct labor costs represented 26.3% and 26.9% of gross contract revenue, respectively, and represented 29.8% and 30.4% of the revenue attributable to our workforce, respectively.
Other direct payroll costs, the component of direct payroll costs associated with fringe and incentive compensation (cash and non-cash) increased by $3.4 million or 35.8% to $12.9 million for the three months ended June 30, 2026 as compared to $9.5 million for the three months ended June 30, 2025.
Sub-consultants and other direct expenses increased $3.1 million or 22.0% to $17.2 million for the three months ended June 30, 2026 as compared to $14.1 million for the three months ended June 30, 2025. For the three months ended June 30, 2026 and 2025, sub-consultant and other direct expenses represented 11.8% and 11.5% of gross contract revenue, respectively.
Operating Expense
Total operating expense increased $13.1 million or 23.2% to $69.6 million for the three months ended June 30, 2026 as compared to $56.5 million for the three months ended June 30, 2025.
Selling, general and administrative expenses increased $12.5 million or 25.1% to $62.3 million for the three months ended June 30, 2026, as compared to $49.8 million for the three months ended June 30, 2025. Indirect labor increased $4.2 million or 18.3% to $27.1 million as compared to $22.9 million due to increase in headcount along with merit increases.
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General overhead increased $5.7 million or 31.5% to $23.8 million as compared to $18.1 million due to increased costs associated with the overall growth of the Company.
Depreciation and amortization increased $1.3 million or 20.0% to $7.8 million for the three months ended June 30, 2026 as compared to $6.5 million for the three months ended June 30, 2025. The increase is primarily driven by amortization of new leased assets and higher amortization of acquired intangible assets associated with the RPT acquisition completed in the fourth quarter of 2025, which was not reflected in the prior-year period. The net loss (gain) on the sale of certain IT equipment and automobiles decreased ($0.7) million to ($0.5) million of gain for the three months ended June 30, 2026, as compared to $0.2 million of expense in the three months ended June 30, 2025.
Other Expense
Other expense increased by $4.2 million to $5.8 million of expense for the three months ended June 30, 2026 as compared to $1.6 million for the three months ended June 30, 2025.
Income Tax Expense (Benefit)
Income tax expense for the three months ended June 30, 2026, decreased by $1.6 million to $(0.2) million benefit, compared to $1.4 million expense for the three months ended June 30, 2025, see Note 2, Income Taxes. Our effective tax rate for the three months ended June 30, 2026, was (6.8)% compared to 18.9% for the three months ended June 30, 2025.
Income Before Tax and Net Income
Income before tax decreased by ($5.1) million for the three months ended June 30, 2026, to $2.3 million compared to $7.4 million for the three months ended June 30, 2025. Net income decreased by ($3.5) million to $2.5 million for the three months ended June 30, 2026, as compared to $6.0 million for the three months ended June 30, 2025.
Other financial information and Non-GAAP key performance indicators
Net service billing (non-GAAP)
Net service billing increased $21.0 million or 19.4% to $129.0 million for the three months ended June 30, 2026, as compared to $108.0 million for the three months ended June 30, 2025. Net service billing reconciles to gross contract revenue as follows (in thousands):
For the Three Months Ended June 30,
2026 2025
Gross contract revenue $ 146,125 $ 122,090
Less: sub-consultants and other direct expenses 17,156 14,093
Net service billing $ 128,969 $ 107,997
Because sub-consultants and reimbursable expenses are most often pass-through items with little or no mark-up, they generally have a dilutive effect on gross, operating, and net margins while having little accretive effect on profitability. As such, where possible, we focus our resources and business development efforts principally on increasing revenue derived from our own workforce. Management primarily focuses its internal performance metrics on net service billing.
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Adjusted EBITDA (non-GAAP)
Adjusted EBITDA increased $3.9 million or 19.2% to $24.1 million for the three months ended June 30, 2026 as compared to $20.2 million for the three months ended June 30, 2025. Adjusted EBITDA reconciles to net income as follows (in thousands):
For the Three Months Ended June 30,
2026 2025 $ Change % Change
Net service billing $ 128,969 $ 107,997 $ 20,972 19.4 %
Net income $ 2,495 $ 6,009 $ (3,514) (58.5) %
+ interest expense 3,532 2,259 1,273 56.4 %
+ depreciation & amortization 7,813 6,544 1,269 19.4 %
+ income tax benefit (159) 1,399 (1,558) (111.4) %
EBITDA $ 13,681 $ 16,211 $ (2,530) (15.6) %
+ non-cash stock compensation 5,381 3,093 2,288 74.0 %
+ acquisition and other non-core expenses 5,030 899 4,131 459.5 %
Adjusted EBITDA $ 24,092 $ 20,203 $ 3,889 19.2 %
Adjusted EBITDA margin, net 18.7 % 18.7 %
For the three months ended June 30, 2026 and 2025, Adjusted EBITDA includes add backs of $5.4 million and $3.1 million, respectively, relating to non-cash stock compensation expenses from restricted stock awards.
Adjusted EBITDA Margin, net (non-GAAP)
Adjusted EBITDA Margin, net represents Adjusted EBITDA (as defined above) as a percentage of net service billing (as defined above). For the three months ended June 30, 2026 and 2025, Adjusted EBITDA Margin, net was 18.7% and 18.7% respectively.
Six months ended June 30, 2026 as compared to the six months ended June 30, 2025
Gross Contract Revenue
Gross contract revenue for the six months ended June 30, 2026, increased $37.6 million or 16.0% to $272.6 million as compared to $235.0 million for the six months ended June 30, 2025. For the six months ended June 30, 2026, gross contract revenue attributable to work performed by our workforce increased $35.1 million, or 16.9% to $243.2 million or 89.2% of gross contract revenue as compared to $208.1 million or 88.6% for the six months ended June 30, 2025 (see Net service billing – non-GAAP). Of the $37.6 million increase in gross contract revenue during the six months ended June 30, 2026, acquisitions represented $16.1 million of the increase. To evaluate the Company’s growth, revenue from acquisitions is treated as acquired for a period of four quarters post-closing, after which it is considered organic. For each measurement and comparison period, historical balances of acquired and organic revenue bases are adjusted to reflect revenue accordingly.
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Changes in gross contract revenue disaggregated between our core end markets were as follows (in thousands other than percentages):
For the Six Months Ended June 30,
Consolidated Gross Contract Revenue 2026 %GCR 2025 %GCR Change % Change
Building Infrastructure $ 109,521 40.2 % $ 108,593 46.2 % $ 928 0.9 %
Transportation 54,991 20.2 % 48,340 20.6 % 6,651 13.8 %
Power, Utilities & Energy 71,767 26.3 % 52,153 22.2 % 19,614 37.6 %
Natural Resources 1 36,325 13.3 % 25,935 11.0 % 10,390 40.1 %
Total: $ 272,604 100.0 % $ 235,021 100.0 % $ 37,583 16.0 %
Acquired 2 16,097 5.9 % 11,476 4.9 % 4,621 40.3 %
1Formerly Emerging Markets which represents environmental, mining, water resources, imaging and mapping and other.
2Acquired revenue in prior periods is as previously reported; four quarters post-closing, acquired revenue is reclassified as organic for the purpose of calculating organic growth rates.
For the six months ended June 30, 2026, gross contract revenue from our building infrastructure market increased $0.9 million or 0.9% as compared to the six months ended June 30, 2025. Building infrastructure includes commercial, municipal and residential infrastructure. The increase in building infrastructure revenue is the result of acquisitions. Within the building infrastructure market, 36.4% of gross contract revenue was derived from residential assignments including single family, multi-family and mixed-use housing stock, 41.4% from commercial assignments including retail, hospitality and quick-serve restaurants (QSR), office and industrial, data centers and healthcare, and 22.2% from municipal assignments including, parks and schools. Within residential, 44.8% of gross contract revenue was derived from for-sale homebuilding assignments, 47.2% from residential multi-family and 8.0% from mixed use projects. While the homebuilding market shows signs of rebounding from prior year interest rate impacts, for-sale residential services represented just 6.6% of our total gross contract revenue for the six months ended June 30, 2026. Within commercial, 47.4% of revenue was derived from office and industrial assignments, 46.9% from retail, hospitality, and quick serve restaurants, and 5.7% from healthcare. We continue to experience strong demand for our building infrastructure services and maintain a positive outlook on this market as we continue to experience strength in markets including quick serve restaurants, industrial distribution facilities, schools, and build-for-rent communities.
For the six months ended June 30, 2026, revenue from transportation increased $6.7 million or 13.8% as compared to the six months ended June 30, 2025. The increase was attributable to new contract awards in transportation from roadways, transits, ports and harbors, program administration and others, along with acquired transportation backlog which we were able to deliver to customers. Within transportation, 77.1% of our gross contract revenue was derived from public sector roadway customers, including state and local departments of transportation ("DOTs") and tollway operators; 19.4% from private sector roadway customers; 1.3% from ports & harbors customers; 1.6% from aviation customers; and 0.6% from bus, rail, and transit customers. We expect to continue to increase our transportation revenue and improve the diversification of our revenue. We believe the transportation market continues to present significant opportunity for future growth and we remain committed to investing in leadership, technical expertise, business development and acquisitions for this market.
With the convergence of alternative energy, data centers, and traditional transmission infrastructure, and in light of continued growth we are projecting across these areas, we have consolidated alternative energy and data centers into the power and utilities (sometimes referred to herein as the power, utilities and energy market) of our revenue mix and have adjusted historical balances accordingly. For the six months ended June 30, 2026, revenue from power and utilities increased $19.6 million or 37.6% as compared to the six months ended June 30, 2025. The additional increase in gross contract revenue from the power and utilities market is principally attributable to acquisitions and increased revenue associated with the expansion of a multi-year utility undergrounding assignment in Florida, and to increases derived from gas pipeline and electric transmission projects nationally. Within the power and utilities market, 58.8% of our gross contract revenue was derived from customers operating traditional transmission operations, 18.4% was derived from customers focused on alternative energy operations, with the remaining 22.8% derived from data center customers. The power and utilities market continues to experience increasing infrastructure investment as changing weather patterns, energy transition mandates and other safety initiatives positively impact demand for the services we provide. Based on
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recent increases in program commitments within the gas pipeline replacement market, we believe trends in power and utilities provide meaningful opportunity for continued growth and we are committed to investing resources accordingly.
Our natural resources and imaging (formerly emerging markets) consist of mining, water resources, imaging and mapping, environmental consulting, and other natural resources services. For the six months ended June 30, 2026, revenue from natural resources and imaging markets increased $10.4 million or 40.1% as compared to the six months ended June 30, 2025. What was previously classified under emerging sectors has now grown to a scale that warrants separate market recognition. As a result, the emerging sector is now being renamed natural resources and imaging. This updated name reflects the evolving composition of the market. Gross contract revenue within our natural resources and imaging was 57.2% from imaging and mapping activities, 13.8% from mining activities where we have specialized in copper mining, 23.3% from water resources activities, and 5.7% from environmental and other natural resources consulting. Scarcities in water resources and the increasing need for water management gives us confidence that we will be able to increase revenue accordingly. With recent and future acquisitions, we expect to experience continued growth from investment in various natural resources and imaging services.
For the six months ended June 30, 2026 and 2025, public sector customers, defined as direct contracts with municipalities, public agencies, or governmental authorities, represented 28.9% and 33.8% of our gross contract revenue, respectively. This does not include work done indirectly on public sector projects. Gross contract revenue from projects for public sector clients are included in the end market most aligned with work performed.
Contract costs (exclusive of depreciation and amortization)
Total contract costs, exclusive of depreciation and amortization, increased $17.6 million or 15.8% to $129.0 million for the six months ended June 30, 2026, as compared to $111.4 million for the six months ended June 30, 2025. For the six months ended June 30, 2026 and 2025, total contract costs represented 47.3% and 47.4% of total contract revenue, respectively. For the six months ended June 30, 2026 and 2025 total contract costs represented 53.0% and 53.5% of revenue attributable to our workforce, respectively (see Net Service Billing).
Direct payroll costs increased $15.1 million or 17.9% to $99.5 million for the six months ended June 30, 2026, as compared to $84.4 million for the six months ended June 30, 2025. Direct payroll accounted for 77.1% of total contract costs for the six months ended June 30, 2026, an increase of 1.3 percentage points as compared to 75.8% for the six months ended June 30, 2025.
Direct labor, the component of direct payroll costs associated with the cost of labor relating to work performed on contracts increased $11.0 million or 17.1% to $75.2 million for the six months ended June 30, 2026 as compared to $64.2 million for the six months ended June 30, 2025. The increase in direct labor is primarily due to an increase in staffing to accommodate growth. For the six months ended June 30, 2026 and 2025, direct labor costs represented 27.6% and 27.3% of gross contract revenue, respectively and represented 30.9% and 30.9% of the revenue attributable to our workforce, respectively.
Other direct payroll costs, the component of direct payroll costs associated with fringe and incentive compensation (cash and non-cash) increased by $4.2 million or 20.8% to $24.4 million as compared to $20.2 million.
Sub-consultants and other direct expenses increased $2.4 million or 8.9% to $29.4 million for the six months ended June 30, 2026 as compared to $27.0 million for the six months ended June 30, 2025. For the six months ended June 30, 2026 and 2025, sub-consultant and other direct expenses represented 10.8% and 11.5% of gross contract revenue, respectively.
Operating Expense
Total operating expense increased $21.9 million or 19.3% to $135.4 million for the six months ended June 30, 2026 as compared to $113.5 million for the six months ended June 30, 2025.
Selling, general and administrative expenses increased $19.9 million or 19.9% to $120.1 million for the six months ended June 30, 2026, as compared to $100.2 million for the six months ended June 30, 2025. Indirect labor increased $6.8 million or 14.9% to $52.3 million as compared to $45.5 million primarily due to an increase in staffing to accommodate growth. General overhead increased $10.3 million or 28.9% to $45.9 million as compared to $35.6 million due to increased costs associated with the overall growth of the Company.
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Depreciation and amortization increased $3.1 million or 23.7% to $16.2 million for the six months ended June 30, 2026 as compared to $13.1 million for the six months ended June 30, 2025. The net loss (gain) on the sale of certain IT equipment and automobiles decreased ($1.1) million to ($0.9) million of gain for the six months ended June 30, 2026, as compared to $0.2 million of loss for the six months ended June 30, 2025.
Other (Income) Expense
Other expense increased by $5.5 million to $9.2 million of expense for the six months ended June 30, 2026 as compared to $3.7 million for the six months ended June 30, 2025.
Income Tax Expense
Income tax expense for the six months ended June 30, 2026, decreased by $2.0 million to $0.2 million, as compared to $2.2 million for the six months ended June 30, 2025, see note 2, Income Taxes. Our effective tax rate for the six months ended June 30, 2026, was (25.7)% as compared to 33.7% for the six months ended June 30, 2025.
Income Before Tax and Net Income
Income before tax decreased by ($7.4) million for the six months ended June 30, 2026, to ($1.0) million of loss compared to $6.4 million of income for the six months ended June 30, 2025. Net income decreased by ($5.5) million to ($1.2) million of net loss for the six months ended June 30, 2026, as compared to $4.3 million of net income for the six months ended June 30, 2025.
Other financial information and Non-GAAP key performance indicators
Net service billing (non-GAAP)
Net service billing increased $35.1 million or 16.9% to $243.2 million for the six months ended June 30, 2026, as compared to $208.1 million for the six months ended June 30, 2025. Net service billing reconciles to gross contract revenue as follows (in thousands):
For the Six Months Ended June 30,
2026 2025
Gross contract revenue $ 272,604 $ 235,021
Less: sub-consultants and other direct expenses 29,431 26,971
Net service billing $ 243,173 $ 208,050
Because sub-consultants and reimbursable expenses are most often pass-through items with little or no mark-up, they generally have a dilutive effect on gross, operating, and net margins while having little accretive effect on profitability. As such, where possible, we focus our resources and business development efforts principally on increasing revenue derived from our own workforce. Management primarily focuses its internal performance metrics on net service billing.
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Adjusted EBITDA (non-GAAP)
Adjusted EBITDA increased $6.2 million or 17.8% to $40.9 million for the six months ended June 30, 2026 as compared to $34.7 million for the six months ended June 30, 2025. Adjusted EBITDA reconciles to net income as follows (in thousands):
For the Six Months Ended June 30,
2026 2025 $ Change % Change
Net Service Billing $ 243,173 $ 208,050 $ 35,123 16.9 %
Net (loss) income $ (1,207) $ 4,265 $ (5,472) (128.3) %
+ interest expense 6,794 4,372 2,422 55.4 %
+ depreciation & amortization 16,219 13,065 3,154 24.1 %
+ income tax benefit 247 2,169 (1,922) (88.6) %
EBITDA $ 22,053 $ 23,871 $ (1,818) (7.6) %
+ non-cash stock compensation 9,577 9,734 (157) (1.6) %
+ acquisition and other non-core expenses 9,261 1,103 8,158 739.6 %
Adjusted EBITDA $ 40,891 $ 34,708 $ 6,183 17.8 %
Adjusted EBITDA margin, net 16.8 % 16.7 %
For the six months ended June 30, 2026 and 2025, Adjusted EBITDA includes add backs of $9.6 million and $9.7 million, respectively, relating to non-cash stock compensation expenses from restricted stock awards.
Adjusted EBITDA Margin, net (non-GAAP)
Adjusted EBITDA Margin, net represents Adjusted EBITDA (as defined above) as a percentage of net service billing (as defined above). For the six months ended June 30, 2026 and 2025, Adjusted EBITDA Margin, net was 16.8% and 16.7% respectively.
Backlog (other key performance metrics)
Our backlog increased $179.6 million or 37.5% to $658.7 million during the six months ended June 30, 2026, as compared to $479.1 million at December 31, 2025. At June 30, 2026 and December 31, 2025 our backlog was comprised as follows:
June 30, 2026 December 31, 2025
Building Infrastructure 25 % 33 %
Transportation 21 % 29 %
Power, Utilities & Energy 19 % 24 %
Natural Resources 35 % 14 %
Liquidity and Capital Resources
Our principal sources of liquidity are our cash and cash equivalents balances, cash flow from operations, borrowing capacity under our revolving credit facility under our Credit Agreement (as defined below), lease financing, proceeds from stock sales and other structured debt securities. Our principal uses of cash are operating expenses, working capital requirements, capital expenditures, repayment of debt, acquisitions, and acquisition related payments. On June 30, 2026, we maintained $250.0 million of aggregate revolving commitments under our Credit Agreement with Bank of America, our primary lender. See -"Credit Facilities and Other Financing" below for more information on our Credit Agreement. Under the terms of our Credit Agreement, available cash in our primary operating account sweeps against the outstanding balance every evening. Our cash on hand therefore generally consists of petty cash and other non-operating funds not included in the nightly sweep. Cash on hand includes the cash we keep in short-term investment accounts along with
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deposits and payments in transit in our operating sweep account. Our cash on hand decreased by ($0.6) million on June 30, 2026 as compared to December 31, 2025.
We regularly monitor our capital requirements and believe our sources of liquidity, including cash flow from operations, existing cash, and borrowing availability under our credit and lease facilities will be sufficient to fund our projected cash requirements and strategic initiatives for the next year. To the extent we experience any potential liquidity or capital shortfalls relating to growth and acquisition, we currently expect to rely on debt financing to meet those shortfalls. We use our equity as a component of consideration in acquisitions. In addition, depending on market conditions, we may opportunistically access the public debts and equity markets.
We are actively pursuing acquisitions as part of our strategic growth initiative. At any given time, we are assessing multiple opportunities at varying stages of due diligence. These acquisition opportunities range in size, timing of closing, valuation, and composition of consideration. In connection with acquisitions, we use a combination of cash, bank financing, seller financing, and equity to satisfy the purchase price. Currently, we have several acquisitions under consideration. There can be no assurance that any opportunity in the process of being reviewed will close but we expect over time to utilize a meaningful portion of our current liquidity and capital resources for acquisitions.
Cash Flows
The following table summarizes our cash flows for the periods presented:
For the Six Months Ended June 30,
Condensed Consolidated Statements of Cash Flows (amounts in thousands) 2026 2025
Net cash provided by operating activities $ 3,705 $ 16,293
Net cash used in investing activities (10,058) (1,837)
Net cash provided by (used in) financing activities 5,773 (5,614)
Change in cash, cash equivalents and restricted cash (580) 8,842
Cash and cash equivalents, end of period 10,486 15,540
Operating Activities
During the six months ended June 30, 2026, net cash provided by operating activities was $3.7 million, which primarily consisted of ($1.2) million net loss, adjusted for stock-based compensation expense of $9.6 million, depreciation and amortization expense of $16.2 million, and a net cash outflow of ($21.3) million from changes in operating assets and liabilities. The net outflow from changes in operating assets and liabilities was primarily due to a $0.8 million decrease in accounts payable and accrued expenses, a $10.3 million increase in accounts receivable resulting from a combination of acquired accounts receivable from acquisitions and increased billing to our customers, and a $10.4 million increase in contract assets and liabilities, partially offset by a $0.1 million decrease in prepaid expenses and other assets.
Investing Activities
Net cash used in investing activities increased by $8.3 million to $10.1 million for the six months ended June 30, 2026 as compared to $1.8 million for the six months ended June 30, 2025.
Financing Activities
Net cash provided by (used in) financing activities during the six months ended June 30, 2026 was $5.8 million compared to ($5.6) million used in financing activities during the six months ended June 30, 2025, an increase of $11.4 million. The increase in net cash used in financing is primarily attributable to the net proceeds of $40.8 million from borrowing on the Revolving Credit Facility, offset by $7.9 million from payments on finance leases, $12.2 million for repurchase of common stock, $13.3 million used for repayment of notes and $2.3 million used to purchase treasury shares.
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Credit Facilities and Other Financing
As of June 30, 2026, we had $250.0 million of aggregate revolving commitments pursuant to credit agreement originally entered into on May 2, 2024, by the Company and certain of its subsidiaries, as guarantors, with lenders including Bank of America, N.A.as Administrative Agent, Swingline Lender and L/C Issuer, and TD Bank, N.A, as syndication agent (as amended from time to time, the "Credit Agreement"). The Credit Agreement has a maturity date of May 2, 2029.
On March 12, 2025, we entered into a First Amendment to the Credit Agreement, which increased the maximum aggregate revolving commitments from $100.0 million to $140.0 million.
On October 30, 2025, we entered into a Second Amendment to the Credit Agreement and Joinder Agreement, which increased the maximum aggregate revolving commitments to $210.0 million and expanded the banking syndicate to include PNC Bank, National Association.
On March 3, 2026, we entered into a Third Amendment to the Credit Agreement and Joinder Agreement with lenders, Bank of America N.A. as Administrative Agent, the Swingline Lender and L/C Issuer, TD Bank, N.A. and PNC Bank, which increased the maximum aggregate revolving commitments from $210.0 million to $250.0 million.
Under the terms of the Credit Agreement, available cash in our primary operating account sweeps against the outstanding balance every evening. As of June 30, 2026, the outstanding balance was $136.2 million.
The Credit Agreement is secured by all the assets of the Company and the subsidiary guarantors. Under the Credit Agreement, we are required to comply with certain covenants, including covenants on indebtedness, investments, liens and restricted payments, as well as to maintain certain financial covenants, including a fixed charge coverage ratio and leverage ratio of debt to EBITDA (as defined in the Credit Agreement). At June 30, 2026, we were in compliance with all covenants.
We utilize master lease facilities primarily with Dext Capital (“Dext”) (formerly Honour Capital, LLC) and Enterprise Leasing (“Enterprise”). The Dext lease facility finances our acquisition of IT infrastructure, geospatial and survey equipment, furniture and other long-lived assets. The Enterprise lease facility finances the acquisition of field trucks and other service vehicles. At June 30, 2026, we maintained a fleet of approximately 500 vehicles. All of our leasing facilities allow for both operating and finance leasing. We allocate finance lease payments between amortization and interest. The payment terms on the lease agreements range between 30 and 50 months with payments totaling approximately $1.5 million per month. We utilize a third party valuation specialist to formulate the incremental borrowing rates for the Company, to calculate the present value on new leases.
We regularly evaluate our options with respect to capital and our requirements for operations and growth. We do not limit our consideration to traditional bank financing, but rather include other structured debt and equity as option for additional capital.
For more information about our credit facility, see Note 11 – Revolving Credit Facilities.
Off-Balance Sheet Arrangements
We have no material off-balance sheet arrangements, no special purpose entities, and no activities that include non-exchange-traded contracts accounted for at fair value.
Critical Accounting Policies and Estimates
We use estimates in the determination of certain financial results. Estimates used in financial reporting utilize only information available to us at the time of formulation. These estimates are subject to change as new information becomes available.
There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies relating to the use of estimates described in our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K.
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