Bowman Consulting Group Ltd

Previous wording

Gross contract revenue for the three months ended June 30, 2024 and 2023 was $104.5 million and $82.8 million, respectively, representing year over year growth of 26.2%. Gross contract revenue derived from our workforce represented 90.0% and 89.2% of gross contract revenue for the three months ended June 30, 2024 and 2023, respectively (see Net service billing – non-GAAP below). Our net loss for the three months ended June 30, 2024 and 2023 was ($2.1) million and ($0.6) million, respectively. Our Adjusted EBITDA for the three months ended June 30, 2024 and 2023 was $13.4 million on net loss of ($2.1) million and $11.1 million on net loss of ($0.6) million, respectively.(see Adjusted EBITDA – non-GAAP below)

Current wording

Gross contract revenue for the three months ended September 30, 2024 and 2023 was $113.9 million and $94.4 million, respectively, representing year over year growth of 20.7%. Gross contract revenue derived from our workforce represented 89.0% and 87.0% of gross contract revenue for the three months ended September 30, 2024 and 2023, respectively (see Net service billing – non-GAAP below). Our net income for the three months ended September 30, 2024 and 2023 was $0.8 million and $1.2 million, respectively. Our Adjusted EBITDA for the three months ended September 30, 2024 and 2023 was $17.0 million on net income of $0.8 million and $15.1 million on net income of $1.2 million, respectively.(see Adjusted EBITDA – non-GAAP below)

Previous wording

Gross contract revenue for the six months ended June 30, 2024 and 2023 was $199.4 million and $158.9 million, respectively, representing year over year growth of 25.5%. Gross contract revenue derived from our workforce represented 90.1% and 89.0% of gross contract revenue for the six months ended June 30, 2024 and 2023, respectively (see Net service billing – non-GAAP below). Our net loss for the six months ended June 30, 2024 and 2023 was ($3.6) million and ($0.1) million, respectively. Our Adjusted EBITDA for the six months ended June 30, 2024 and 2023 was $25.5 million on net loss of ($3.6) million and $20.7 million on net loss of ($0.1) million, respectively.(see Adjusted EBITDA – non-GAAP below)

Current wording

Gross contract revenue for the nine months ended September 30, 2024 and 2023 was $313.3 million and $253.3 million, respectively, representing year over year growth of 23.7%. Gross contract revenue derived from our workforce represented 89.7% and 88.2% of gross contract revenue for the nine months ended September 30, 2024 and 2023, respectively (see Net service billing – non-GAAP below). Our net (loss) income for the nine months ended September 30, 2024 and 2023 was ($2.9) million and $1.1 million, respectively. Our Adjusted EBITDA for the nine months ended September 30, 2024 and 2023 was $42.5 million on net loss of ($2.9) million and $35.8 million on net income of $1.1 million, respectively.(see Adjusted EBITDA – non-GAAP below)

Previous wording

Subsequent to June 30, 2024, the Company completed two acquisitions, and paid total consideration of $14.3 million through combinations of cash, promissory notes, shares of common stock and assumed liabilities. No cash was acquired with these acquisitions. Shares of common stock issued in connection with the acquisitions are subject to a six-month lock- up. Promissory notes bear a simple interest rate of 5.00% with payments of principal and interest beginning October 2024 and ending in July 2027.

Current wording

On November 7, 2024, the Company completed the acquisition of Exeltech Consulting, Inc. and paid total consideration of $5.1 million, subject to adjustments, through combinations of cash, promissory notes, convertible promissory note and assumed liabilities. No cash was acquired with this acquisition. Promissory notes bear a simple interest rate of 5.00% with payments of principal and interest beginning February 2025 and ending February 2028. The convertible note bears a simple interest rate of 5.00% and may be convertible in whole or in part at any time to Bowman common stock at a conversion price of $32.32 per share and is subject to a six-month lock-up.

Previous wording

Hourly contracts, 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 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 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. Hourly assignments represented approximately $10.5 million and $20.3 million or 10% and 10% of our gross contract revenue for each of the three and six months ended June 30, 2024, respectively. For each of the three and six months ended June 30, 2023, hourly assignments represented approximately $9.2 million and $17.1 million or 11% of our gross contract revenue.

Current wording

Hourly contracts, 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 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 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. Hourly assignments represented approximately $9.8 million and $30.2 million or 9% and 10% of our gross contract revenue for each of the three and nine months ended September 30, 2024, respectively. For each of the three and nine months ended September 30, 2023, hourly assignments represented approximately $11.4 million and $28.5 million or 12% and 11% of our gross contract revenue, respectively.

Previous wording

Lump sum contracts, also referred to 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 tasks. The majority of our assignments are lump sum in nature representing approximately $94.0 million and $179.1 million or 90% and 90% of our gross contract revenue for the three and six months ended June 30, 2024, respectively. For each of the three and six months ended June 30, 2023, assignments that are lump sum in nature represented approximately $73.5 million and $141.8 million or 89% of our gross contract revenue. 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 has no documented customer commitment and is performed at risk.

Current wording

Lump sum contracts, also referred to 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 tasks. The majority of our assignments are lump sum in nature representing approximately $104.1 million and $283.1 million or 91% and 90% of our gross contract revenue for the three and nine months ended September 30, 2024, respectively. For each of the three and nine months ended September 30, 2023, assignments that are lump sum in nature represented approximately $83.0 million and $224.8 million or 88% and 89% of our gross contract revenue, respectively. 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 has no documented customer commitment and is performed at risk.

Previous wording

Contract costs consists of direct payroll costs, sub-consultant costs and other direct expenses exclusive of depreciation and amortization.

Current wording

Contract costs consist of direct payroll costs, sub-consultant costs and other direct expenses exclusive of depreciation and amortization.

Previous wording

Gross contract revenue for the three months ended June 30, 2024, increased $21.7 million or 26.3% to 104.5 million as compared to $82.8 million for the three months ended June 30, 2023. For the three months ended June 30, 2024, gross contract revenue attributable to work performed by our workforce increased $20.2 million, or 27.4% to $94.0 million or 90.0% of gross contract revenue as compared to $73.8 million or 89.2% for the three months ended June 30, 2023 (see Net service billing – non-GAAP). Of the $21.7 million increase in gross contract revenue during the three months ended June 30, 2024, acquisitions represented $17.5 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.

Current wording

Gross contract revenue for the three months ended September 30, 2024, increased $19.5 million or 20.6% to $113.9 million as compared to $94.4 million for the three months ended September 30, 2023. For the three months ended September 30, 2024, gross contract revenue attributable to work performed by our workforce increased $19.3 million, or 23.5% to $101.4 million or 89.0% of gross contract revenue as compared to $82.1 million or 87.0% for the three months ended September 30, 2023 (see Net service billing – non-GAAP). Of the $19.5 million increase in gross contract revenue during the three months ended September 30, 2024, acquisitions represented $23.3 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.

Previous wording

1 Represents environmental, mining, water resources and other

Current wording

1 Represents environmental, mining, water resources, imaging and mapping and other.

Previous wording

For the three months ended June 30, 2024, gross contract revenue from our building infrastructure market increased $7.3 million or 15.0% as compared to the three months ended June 30, 2023. Building Infrastructure includes commercial, municipal and residential infrastructure. The increase in building infrastructure revenue is the result of acquisitions. Within the building infrastructure market, 33.2% of gross contract revenue was derived from residential assignments including single family, multi-family and mixed-use housing stock, 45.7% from commercial assignments including retail, hospitality and quick-serve restaurants (QSR), office and industrial, data centers and healthcare, and 21.1% from municipal assignments, including parks and schools. Within residential, 52.2% of gross contract revenue was derived from for-sale homebuilding assignments, 41.4% from residential multi-family and 6.4% from mixed use projects. While the homebuilding market shows signs of rebounding from prior year interest rate impacts, for-sale residential services represented just 9.3% of our total gross contract revenue for the three months ended June 30, 2024. Within commercial, 36.3% of revenue was derived from office and industrial assignments, 40.1% from retail, hospitality, and quick serve restaurants, 13.7% from data centers, and 9.9% 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 data centers, quick serve restaurants, industrial distribution facilities, schools, and build-for-rent communities.

Current wording

For the three months ended September 30, 2024, gross contract revenue from our building infrastructure market increased $4.3 million or 8.2% as compared to the three months ended September 30, 2023. Building Infrastructure includes commercial, municipal and residential infrastructure. The increase in building infrastructure revenue is the result of acquisitions. Within the building infrastructure market, 39.3% of gross contract revenue was derived from residential assignments including single family, multi-family and mixed-use housing stock, 42.9% from commercial assignments including retail, hospitality and quick-serve restaurants (QSR), office and industrial, data centers and healthcare, and 17.7% from municipal assignments, including parks and schools. Within residential, 59.8% of gross contract revenue was derived from for-sale homebuilding assignments, 35.7% from residential multi-family and 4.5% from mixed use projects. While the homebuilding market shows signs of rebounding from prior year interest rate impacts, for-sale residential services represented just 11.6% of our total gross contract revenue for the three months ended September 30, 2024. Within commercial, 36.7% of revenue was derived from office and industrial assignments, 41.3% from retail, hospitality, and quick serve restaurants, 15.7% from data centers, and 6.2% 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 data centers, quick serve restaurants, industrial distribution facilities, schools, and build-for-rent communities.

Previous wording

For the three months ended June 30, 2024, revenue from transportation increased $3.4 million or 21.2% as compared to the three months ended June 30, 2023. The increase was attributable to new contract awards in transportation both from public and private customers along with acquired transportation backlog which we were able to deliver to customers, within transportation, 63.5% of our gross contract revenue was derived directly from public sector customers including state and local departments of transportation ("DOTs"), tollway operators, transit authorities aviation operators and others with the remaining 36.5% derived from private sector 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.

Current wording

For the three months ended September 30, 2024, revenue from transportation increased $2.1 million or 10.5% as compared to the three months ended September 30, 2023. The increase was attributable to new contract awards in transportation both from public and private customers along with acquired transportation backlog which we were able to deliver to customers, within transportation, 64.5% of our gross contract revenue was derived directly from public sector customers including state and local departments of transportation ("DOTs"), tollway operators, transit authorities aviation operators and others with the remaining 35.5% derived from private sector 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.

Previous wording

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 and utilities 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, 2024, revenue from power and utilities increased $3.9 million or 24.8% as compared to the three months ended June 30, 2023. 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, along with additional increases derived from gas pipeline and electric transmission projects nationally. Within the power and utilities market, 73.8% of our gross contract revenue was derived from customers operating traditional power operations and 26.2% was derived from customers focused on renewables, electric vehicle ("EV") infrastructure and energy transition operations. 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 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.

Current wording

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 and utilities 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 September 30, 2024, revenue from power and utilities increased $1.5 million or 7.8% as compared to the three months ended September 30, 2023. 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, along with additional increases derived from gas pipeline and electric transmission projects nationally. Within the power and utilities market, 73.8% of our gross contract revenue was derived from customers operating traditional power operations and 26.2% was derived from customers focused on renewables, electric vehicle ("EV") infrastructure and energy transition operations. 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 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.

Previous wording

Our other emerging markets consist of mining, water resources, imaging and mapping, environmental consulting, and other natural resources services. Adjusted for the change, for the three months ended June 30, 2024, revenue from emerging markets increased $7.2 million or 269.2% as compared to the three months ended June 30, 2023. This increase is primarily due to the acquisition of Surdex Corporation; see Note 4 - Acquisitions for additional information. Emerging market sectors represent lines of business that have not yet grown to a size whereby we would distinguish them as a separate market. Gross contract revenue within our emerging markets was 51.6% from imaging and mapping activities, 18.7% from mining activities where we have specialized in copper mining, 23.8% from water resources activities, and 5.9% 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 emerging market services.

Current wording

Our other emerging markets consist of mining, water resources, imaging and mapping, environmental consulting, and other natural resources services. Adjusted for the change, for the three months ended September 30, 2024, revenue from emerging markets increased $11.7 million or 280.5% as compared to the three months ended September 30, 2023. This increase is primarily due to the acquisition of Surdex Corporation; see Note 4 - Acquisitions for additional information. Emerging market sectors represent lines of business that have not yet grown to a size whereby we would distinguish them as a separate market. Gross contract revenue within our emerging markets was 54.0% from imaging and mapping activities, 12.9% from mining activities where we have specialized in copper mining, 25.3% from water resources activities, and 7.8% 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 emerging market services.

Previous wording

For the three months ended June 30, 2024 and 2023, public sector customers, defined as direct contracts with municipalities, public agencies, or governmental authorities, represented 24.6% and 17.1% 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.

Current wording

For the three months ended September 30, 2024 and 2023, public sector customers, defined as direct contracts with municipalities, public agencies, or governmental authorities, represented 32.3% and 14.8% of our gross contract revenue, respectively. A portion of that increase is due to the reclassification of contracts for the Pike Corporation from the private sector to the public sector. 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.

Previous wording

Total contract costs, exclusive of depreciation and amortization, increased $8.6 million or 21.0% to $49.6 million for the three months ended June 30, 2024, as compared to $41.0 million for the three months ended June 30, 2023. For the three months ended June 30, 2024 and 2023, total contract costs represented 47.5% and 49.6% of total contract revenue, respectively. For the three months ended June 30, 2024 and 2023 total contract costs represented 52.8% and 55.6% of revenue attributable to our workforce, respectively (see Net Service Billing).

Current wording

Total contract costs, exclusive of depreciation and amortization, increased $8.6 million or 18.8% to $54.3 million for the three months ended September 30, 2024, as compared to $45.7 million for the three months ended September 30, 2023. For the three months ended September 30, 2024 and 2023, total contract costs represented 47.7% and 48.4% of total contract revenue, respectively. For the three months ended September 30, 2024 and 2023 total contract costs represented 53.6% and 55.6% of revenue attributable to our workforce, respectively (see Net Service Billing).

Previous wording

Direct payroll costs increased $7.0 million or 21.8% to $39.1 million for the three months ended June 30, 2024, as compared to $32.1 million for the three months ended June 30, 2023. Direct payroll accounted for 78.8% of total contract costs for the three months ended June 30, 2024, an increase of 0.6 percentage points as compared to 78.2% for the three months ended June 30, 2023.

Current wording

Direct payroll costs increased $8.3 million or 24.9% to $41.7 million for the three months ended September 30, 2024, as compared to $33.4 million for the three months ended September 30, 2023. Direct payroll accounted for 76.8% of total contract costs for the three months ended September 30, 2024, an increase of 3.7 percentage points as compared to 73.1% for the three months ended September 30, 2023.

Previous wording

Direct labor, the component of direct payroll costs associated with the cost of labor relating to work performed on contracts increased $5.7 million or 24.4% to $29.1 million for the three months ended June 30, 2024 as compared to $23.4 million for the three months ended June 30, 2023. The increase in direct labor is primarily due to an increase in staffing to accommodate growth. For the three months ended June 30, 2024 and 2023, direct labor costs represented 27.8% and 28.3% of gross contract revenue, respectively and represented 31.0% and 31.7% of the revenue attributable to our workforce, respectively.

Current wording

Direct labor, the component of direct payroll costs associated with the cost of labor relating to work performed on contracts increased $5.8 million or 22.8% to $31.2 million for the three months ended September 30, 2024 as compared to $25.4 million for the three months ended September 30, 2023. The increase in direct labor is primarily due to an increase in staffing to accommodate growth. For the three months ended September 30, 2024 and 2023, direct labor costs represented 27.4% and 26.9% of gross contract revenue, respectively and represented 30.8% and 30.9% of the revenue attributable to our workforce, respectively.

Previous wording

Other direct payroll costs, the component of direct payroll costs associated with fringe and incentive compensation (cash and non-cash) increased by $1.4 million or 16.3% to $10.0 million as compared to $8.6 million.

Current wording

Other direct payroll costs, the component of direct payroll costs associated with fringe and incentive compensation (cash and non-cash) increased by $2.6 million or 32.5% to $10.6 million as compared to $8.0 million.

Previous wording

Sub-consultants and other direct expenses increased $1.5 million or 16.7% to $10.5 million for the three months ended June 30, 2024 as compared to $9.0 million for the three months ended June 30, 2023. For the three months ended June 30, 2024 and 2023, sub-consultant and other direct expenses represented 10.0% and 10.8% of gross contract revenue, respectively. This decrease is not indicative of an anticipated long-term shift in the composition of our gross contract revenue, and we expect to experience periodic volatility in concentration of sub-consultant utilization.

Current wording

Sub-consultants and other direct expenses increased $0.3 million or 2.4% to $12.6 million for the three months ended September 30, 2024 as compared to $12.3 million for the three months ended September 30, 2023. For the three months ended September 30, 2024 and 2023, sub-consultant and other direct expenses represented 11.1% and 13.0% of gross contract revenue, respectively. This decrease is not indicative of an anticipated long-term shift in the composition of our gross contract revenue, and we expect to experience periodic volatility in concentration of sub-consultant utilization.

Previous wording

Total operating expense increased $13.3 million or 31.1% to $56.1 million for the three months ended June 30, 2024 as compared to $42.8 million for the three months ended June 30, 2023.

Current wording

Total operating expense increased $13.1 million or 28.4% to $59.2 million for the three months ended September 30, 2024 as compared to $46.1 million for the three months ended September 30, 2023.

Previous wording

Selling, general and administrative expenses increased $10.9 million or 28.5% to $49.2 million for the three months ended June 30, 2024, as compared to $38.3 million for the three months ended June 30, 2023. Indirect labor increased $5.5 million or 33.1% to $22.1 million as compared to $16.6 million primarily due to an increase in staffing to accommodate growth. General overhead increased $4.8 million or 38.7% to $17.2 million as compared to $12.4 million due to increased costs associated with the overall growth of the Company. Non-cash stock compensation decreased ($0.8) million or (17.0%) to $3.9 million as compared to $4.7 million.

Current wording

Selling, general and administrative expenses increased $10.2 million or 24.5% to $51.9 million for the three months ended September 30, 2024, as compared to $41.7 million for the three months ended September 30, 2023. Indirect labor increased $4.5 million or 23.6% to $23.6 million as compared to $19.1 million primarily due to an increase in staffing to accommodate growth. General overhead increased $4.3 million or 32.6% to $17.5 million as compared to $13.2 million due to increased costs associated with the overall growth of the Company.

Previous wording

Depreciation and amortization increased $2.5 million or 53.2% to $7.2 million for the three months ended June 30, 2024 as compared to $4.7 million for the three months ended June 30, 2023. This increase is primarily due to an increase in intangible assets and assets leased under financing arrangements. We continue to increase the use of our finance lease facility as we continue to grow. Intangible assets have increased due to multiple acquisitions. Gains on the sale of certain IT equipment and automobiles remained $0.2 million for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.

Current wording

Depreciation and amortization increased $2.9 million or 64.4% to $7.4 million for the three months ended September 30, 2024 as compared to $4.5 million for the three months ended September 30, 2023. This increase is primarily due to an increase in intangible assets and assets leased under financing arrangements. We continue to increase the use of our finance lease facility as we continue to grow. Intangible assets have increased due to multiple acquisitions. Gains on the sale of certain IT equipment and automobiles remained $0.1 million for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

Previous wording

Income tax benefit for the three months ended June 30, 2024, decreased $0.4 million to a $1.2 million benefit, as compared to $1.6 million benefit for the three months ended June 30, 2023, see note 2, Income Taxes. Our effective tax rate for the three months ended June 30, 2024, is 34.0% as compared to 71.9% for the three months ended June 30, 2023.

Current wording

Income tax benefit for the three months ended September 30, 2024, increased $1.8 million to a $1.9 million benefit, as compared to $0.1 million benefit for the three months ended September 30, 2023, see note 2, Income Taxes. Our effective tax rate for the three months ended September 30, 2024, is 167.7% as compared to (5.5)% for the three months ended September 30, 2023.

Previous wording

Loss before tax increased by $1.0 million for the three months ended June 30, 2024, to ($3.3) million of loss compared to ($2.3) million of loss for the three months ended June 30, 2023. Net loss increased by $1.5 million to ($2.1) million for the three months ended June 30, 2024, as compared to ($0.6) million for the three months ended June 30, 2023.

Current wording

Loss before tax increased by $2.2 million for the three months ended September 30, 2024, to ($1.1) million of loss compared to $1.1 million of income for the three months ended September 30, 2023. Net income decreased by $0.4 million to $0.8 million for the three months ended September 30, 2024, as compared to $1.2 million for the three months ended September 30, 2023.

Previous wording

Net service billing increased $20.2 million or 27.4% to $94.0 million for the three months ended June 30, 2024, as compared to $73.8 million for the three months ended June 30, 2023. Net service billing reconciles to gross contract revenue as follows (in thousands):

Current wording

Net service billing increased $19.3 million or 23.5% to $101.4 million for the three months ended September 30, 2024, as compared to $82.1 million for the three months ended September 30, 2023. Net service billing reconciles to gross contract revenue as follows (in thousands):

Previous wording

Adjusted EBITDA increased $2.4 million or 21.3% to $13.4 million for the three months ended June 30, 2024 as compared to $11.1 million for the three months ended June 30, 2023. Adjusted EBITDA reconciles to net income as follows (in thousands):

Current wording

Adjusted EBITDA increased $1.9 million or 12.7% to $17.0 million for the three months ended September 30, 2024 as compared to $15.1 million for the three months ended September 30, 2023. Adjusted EBITDA reconciles to net income as follows (in thousands):

Previous wording

For the three months ended June 30, 2024 and 2023, Adjusted EBITDA includes add backs of $6.1 million and $6.9 million, respectively, relating to non-cash stock compensation expenses from restricted stock awards. For the three months ended June 30, 2024 and 2023, Adjusted EBITDA also includes $1.2 million and $0.3 million, respectively, relating to non-reocurring acquisition expenses such as professional fees, fair value adjustments and working capital adjustments.

Current wording

For the three months ended September 30, 2024 and 2023, Adjusted EBITDA includes add backs of $6.4 million and $7.2 million, respectively, relating to non-cash stock compensation expenses from restricted stock awards. For the three months ended September 30, 2024 and 2023, Adjusted EBITDA also includes $0.4 million and $0.1 million, respectively, relating to non-reocurring acquisition expenses such as professional fees, fair value adjustments and working capital adjustments.

Previous wording

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, 2024 and 2023, Adjusted EBITDA Margin, net was 14.3% and 15.0% respectively.

Current wording

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 September 30, 2024 and 2023, Adjusted EBITDA Margin, net was 16.7% and 18.3% respectively.

Previous wording

Gross contract revenue for the six months ended June 30, 2024, increased $40.5 million or 25.5% to $199.4 million as compared to $158.9 million for the six months ended June 30, 2023. For the six months ended June 30, 2024, gross contract revenue attributable to work performed by our workforce increased $38.3 million, or 27.1% to $179.7 million or 90.1% of gross contract revenue as compared to $141.4 million or 89.0% for the six months ended June 30, 2023 (see Net service billing – non-GAAP). Of the $40.5 million increase in gross contract revenue during the six months ended June 30, 2024, acquisitions represented $26.4 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.

Current wording

Gross contract revenue for the nine months ended September 30, 2024, increased $60.0 million or 23.7% to $313.3 million as compared to $253.3 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, gross contract revenue attributable to work performed by our workforce increased $57.5 million, or 25.7% to $281.0 million or 89.7% of gross contract revenue as compared to $223.5 million or 88.2% for the nine months ended September 30, 2023 (see Net service billing – non-GAAP). Of the $60.0 million increase in gross contract revenue during the nine months ended September 30, 2024, acquisitions represented $49.8 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.

Previous wording

1 Represents environmental, mining, water resources and other

Current wording

1 Represents environmental, mining, water resources, imaging and mapping and other.

Previous wording

For the six months ended June 30, 2024, gross contract revenue from our building infrastructure market increased $15.7 million or 16.9% as compared to the six months ended June 30, 2023. Building infrastructure includes commercial, municipal and residential infrastructure. The increase in building infrastructure revenue is the result of acquisitions. Within the building infrastructure market, 33.8% of gross contract revenue was derived from residential assignments including single family, multi-family and mixed-use housing stock, 45.7% from commercial assignments including retail, hospitality and quick-serve restaurants (QSR), office and industrial, data centers and healthcare, and 20.5% from municipal assignments including, parks and schools. Within residential, 52.1% of gross contract revenue was derived from for-sale homebuilding assignments, 40.6% from residential multi-family and 7.3% from mixed use projects. While the homebuilding market shows signs of rebounding from prior year interest rate impacts, for-sale residential services represented just 9.6% of our total gross contract revenue for the six months ended June 30, 2024. Within commercial, 35.4% of revenue was derived from office and industrial assignments, 40.2% from retail, hospitality, and quick serve restaurants, 13.8% from data centers, and 10.6% 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 data centers, quick serve restaurants, industrial distribution facilities, schools, and build-for-rent communities.

Current wording

For the nine months ended September 30, 2024, gross contract revenue from our building infrastructure market increased $20.9 million or 14.4% as compared to the nine months ended September 30, 2023. Building infrastructure includes commercial, municipal and residential infrastructure. The increase in building infrastructure revenue is the result of acquisitions. Within the building infrastructure market, 34.8% of gross contract revenue was derived from residential assignments including single family, multi-family and mixed-use housing stock, 45.3% from commercial assignments including retail, hospitality and quick-serve restaurants (QSR), office and industrial, data centers and healthcare, and 19.9% from municipal assignments including, parks and schools. Within residential, 53.3% of gross contract revenue was derived from for-sale homebuilding assignments, 40.3% from residential multi-family and 6.4% from mixed use projects. While the homebuilding market shows signs of rebounding from prior year interest rate impacts, for-sale residential services represented just 9.8% of our total gross contract revenue for the nine months ended September 30, 2024. Within commercial, 35.8% of revenue was derived from office and industrial assignments, 40.6% from retail, hospitality, and quick serve restaurants, 14.5% from data centers, and 9.1% 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 data centers, quick serve restaurants, industrial distribution facilities, schools, and build-for-rent communities.

Previous wording

For the six months ended June 30, 2024, revenue from transportation increased $5.5 million or 17.2% as compared to the six months ended June 30, 2023. The increase was attributable to new contract awards in transportation both from public and private customers along with acquired transportation backlog which we were able to deliver to customers, within transportation, 61.9% of our gross contract revenue was derived directly from public sector customers including state and local departments of transportation ("DOTs"), tollway operators, transit authorities, aviation operators and others with the remaining 38.1% derived from private sector 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.

Current wording

For the nine months ended September 30, 2024, revenue from transportation increased $8.5 million or 16.4% as compared to the nine months ended September 30, 2023. The increase was attributable to new contract awards in transportation both from public and private customers along with acquired transportation backlog which we were able to deliver to customers, within transportation, 62.0% of our gross contract revenue was derived directly from public sector customers including state and local departments of transportation ("DOTs"), tollway operators, transit authorities, aviation operators and others with the remaining 38.0% derived from private sector 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.

Previous wording

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 and utilities category (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, 2024, revenue from power and utilities increased $9.0 million or 31.2% as compared to the six months ended June 30, 2023. 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, 77.7% of our gross contract revenue was derived from customers operating traditional power operations and 22.3% was derived from customers focused on renewables, electric vehicle ("EV") infrastructure and energy transition operations. 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 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.

Current wording

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 and utilities category (sometimes referred to herein as the power, utilities and energy market) of our revenue mix and have adjusted historical balances accordingly. For the nine months ended September 30, 2024, revenue from power and utilities increased $8.8 million or 18.4% as compared to the nine months ended September 30, 2023. 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, 75.6% of our gross contract revenue was derived from customers operating traditional power operations and 24.4% was derived from customers focused on renewables, electric vehicle ("EV") infrastructure and energy transition operations. 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 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.

Previous wording

Our other emerging markets consist of mining, water resources, imaging and mapping, environmental consulting, and other natural resources services. Adjusted for the change, for the six months ended June 30, 2024, revenue from emerging markets increased $10.3 million or 202.4% as compared to the six months ended June 30, 2023. This increase is primarily due to the acquisition of Surdex Corporation; see Note 4 - Acquisitions for additional information. Emerging market sectors represent lines of business that have not yet grown to a size whereby we would distinguish them as a separate market. Gross contract revenue within our emerging markets was 33.2% from imaging and mapping activities, 26.6% from mining activities where we have specialized in copper mining, 30.1% from water resources activities, and 10.1% 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 emerging market services.

Current wording

Our other emerging markets consist of mining, water resources, imaging and mapping, environmental consulting, and other natural resources services. Adjusted for the change, for the nine months ended September 30, 2024, revenue from emerging markets increased $22.0 million or 236.5% as compared to the nine months ended September 30, 2023. This increase is primarily due to the acquisition of Surdex Corporation; see Note 4 - Acquisitions for additional information. Emerging market sectors represent lines of business that have not yet grown to a size whereby we would distinguish them as a separate market. Gross contract revenue within our emerging markets was 43.8% from imaging and mapping activities, 19.7% from mining activities where we have specialized in copper mining, 27.6% from water resources activities, and 8.9% 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 emerging market services.

Previous wording

For the six months ended June 30, 2024 and 2023, public sector customers, defined as direct contracts with municipalities, public agencies, or governmental authorities, represented 22.3% and 20.5% 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.

Current wording

For the nine months ended September 30, 2024 and 2023, public sector customers, defined as direct contracts with municipalities, public agencies, or governmental authorities, represented 26.0% and 12.8% of our gross contract revenue, respectively. A portion of that increase is due to the reclassification of contracts for the Pike Corporation from the private sector to the public sector. 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.

Previous wording

Total contract costs, exclusive of depreciation and amortization, increased $18.1 million or 23.1% to $96.5 million for the six months ended June 30, 2024, as compared to $78.4 million for the six months ended June 30, 2023. For the six months ended June 30, 2024 and 2023, total contract costs represented 48.4% and 49.3% of total contract revenue, respectively. For the six months ended June 30, 2024 and 2023 total contract costs represented 53.7% and 55.4% of revenue attributable to our workforce, respectively (see Net Service Billing).

Current wording

Total contract costs, exclusive of depreciation and amortization, increased $26.7 million or 21.5% to $150.8 million for the nine months ended September 30, 2024, as compared to $124.1 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024 and 2023, total contract costs represented 48.1% and 49.0% of total contract revenue, respectively. For the nine months ended September 30, 2024 and 2023 total contract costs represented 53.7% and 55.5% of revenue attributable to our workforce, respectively (see Net Service Billing).

Previous wording

Direct payroll costs increased $15.9 million or 26.1% to $76.8 million for the six months ended June 30, 2024, as compared to $60.9 million for the six months ended June 30, 2023. Direct payroll accounted for 79.6% of total contract costs for the six months ended June 30, 2024, an increase of 1.9 percentage points as compared to 77.7% for the six months ended June 30, 2023.

Current wording

Direct payroll costs increased $24.2 million or 25.7% to $118.5 million for the nine months ended September 30, 2024, as compared to $94.3 million for the nine months ended September 30, 2023. Direct payroll accounted for 78.6% of total contract costs for the nine months ended September 30, 2024, an increase of 2.6 percentage points as compared to 76.0% for the nine months ended September 30, 2023.

Previous wording

Direct labor, the component of direct payroll costs associated with the cost of labor relating to work performed on contracts increased $11.6 million or 25.6% to $56.9 million for the six months ended June 30, 2024 as compared to $45.3 million for the six months ended June 30, 2023. The increase in direct labor is primarily due to an increase in staffing to accommodate growth. For the six months ended June 30, 2024 and 2023, direct labor costs represented 28.5% and 28.5% of gross contract revenue, respectively and represented 31.7% and 32.0% of the revenue attributable to our workforce, respectively.

Current wording

Direct labor, the component of direct payroll costs associated with the cost of labor relating to work performed on contracts increased $17.5 million or 24.8% to $88.1 million for the nine months ended September 30, 2024 as compared to $70.6 million for the nine months ended September 30, 2023. The increase in direct labor is primarily due to an increase in staffing to accommodate growth. For the nine months ended September 30, 2024 and 2023, direct labor costs represented 28.1% and 27.9% of gross contract revenue, respectively and represented 31.4% and 31.6% of the revenue attributable to our workforce, respectively.

Previous wording

Other direct payroll costs, the component of direct payroll costs associated with fringe and incentive compensation (cash and non-cash) increased by $4.3 million or 27.6% to $19.9 million as compared to $15.6 million. This increase includes a $1.6 million increase in non-cash stock compensation as several new stock awards were granted to Company leadership as well as employees in connection with acquisitions. Also, stock compensation has become a larger part of our employee incentive plans.

Current wording

Other direct payroll costs, the component of direct payroll costs associated with fringe and incentive compensation (cash and non-cash) increased by $6.6 million or 27.8% to $30.3 million as compared to $23.7 million. This increase includes a $1.6 million increase in non-cash stock compensation as several new stock awards were granted to Company leadership as well as employees in connection with acquisitions. Also, stock compensation has become a larger part of our employee incentive plans.

Previous wording

Sub-consultants and other direct expenses increased $2.2 million or 12.6% to $19.7 million for the six months ended June 30, 2024 as compared to $17.5 million for the six months ended June 30, 2023. For the six months ended June 30, 2024 and 2023, sub-consultant and other direct expenses represented 9.9% and 11.0% of gross contract revenue, respectively. This decrease is not indicative of an anticipated long-term shift in the composition of our gross contract revenue, and we expect to experience periodic volatility in concentration of sub-consultant utilization.

Current wording

Sub-consultants and other direct expenses increased $2.5 million or 8.4% to $32.3 million for the nine months ended September 30, 2024 as compared to $29.8 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024 and 2023, sub-consultant and other direct expenses represented 10.3% and 11.8% of gross contract revenue, respectively. This decrease is not indicative of an anticipated long-term shift in the composition of our gross contract revenue, and we expect to experience periodic volatility in concentration of sub-consultant utilization.

Previous wording

Total operating expense increased $26.7 million or 33.4% to $106.7 million for the six months ended June 30, 2024 as compared to $80.0 million for the six months ended June 30, 2023.

Current wording

Total operating expense increased $39.8 million or 31.5% to $166.0 million for the nine months ended September 30, 2024 as compared to $126.2 million for the nine months ended September 30, 2023.