Bowman Consulting Group Ltd.

Previous wording

Bowman is a professional services firm delivering innovative engineering, technology 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 technical 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.

Current wording

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.

Previous wording

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 not a 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.

Current wording

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.

Previous wording

Gross contract revenue for the three months ended September 30, 2025 and 2024 was $126.0 million and $113.9 million, respectively, representing year over year growth of 10.6%. Gross contract revenue derived from our workforce represented 89.0% of gross contract revenue for each of the three months ended September 30, 2025 and 2024, respectively (see Net service billing – non-GAAP below). Our net income for the three months ended September 30, 2025 and 2024 was $6.6 million and $0.8 million, respectively. Our Adjusted EBITDA for the three months ended September 30, 2025 and 2024 was $18.3 million on net income of $6.6 million and $17.0 million on net income of $0.8 million, respectively.(see Adjusted EBITDA – non-GAAP below).

Current wording

Gross contract revenue for the three months ended March 31, 2026 and 2025 was $126.5 million and $112.9 million, respectively, representing year-over-year growth of 12.0%. Gross contract revenue derived from our workforce represented 90.3% and 88.7% of gross contract revenue for the three months ended March 31, 2026 and 2025, respectively (see Net service billing – non-GAAP below). Our net loss for the three months ended March 31, 2026 and 2025 was ($3.7) million and ($1.7) million, respectively. Our Adjusted EBITDA for the three months ended March 31, 2026 and 2025 was $16.8 million on net loss of ($3.7) million and $14.5 million on net loss of ($1.7) million, respectively. (see Adjusted EBITDA – non-GAAP below).

Previous wording

Subsequent to September 30, 2025, the Company completed three acquisitions, and paid total consideration of $7.4 million, subject to adjustments, through a combination of cash, promissory note, shares of common stock, and assumed liabilities. No cash was acquired with these acquisitions. Promissory notes bear a simple interest rate of 5.00% with payments of principal and interest beginning January 2026 and ending in October 2028. The purchase agreement includes a contingent consideration provision that affords the sellers the opportunity to earn up to $1.8 million in additional consideration payable in the form of a promissory note and shares of common stock, based on the achievement of certain financial performance thresholds.

Current wording

Subsequent to March 31, 2026, the Company completed an acquisition, and paid total consideration of $1.5 million, subject to adjustments, through a combination of cash, promissory note, and shares of common stock, No cash was acquired with this acquisition. The promissory note bears a simple interest rate of 7.00% with payments of principal and interest beginning August 2026 and ending in May 2029.

Previous wording

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 revenue, which represents total revenue billed to customers excluding taxes collected from customers. Gross 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 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.

Current wording

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.

Previous wording

We generally do not generate profit from the pass-through of sub-consultants and reimbursable expenses. As such, contract profitability is most heavily impacted by the mix of labor utilized to complete the tasks and the efficiency of those resources in completing the tasks. Our largest direct contract cost is consistently our labor. To grow our revenue and maximize overall profitability we carefully monitor and manage our cost of labor and the utilization thereof. Maintaining an optimal level of utilization on a balanced pool of growing labor resources represents our greatest prospect for delivering increasing profitability.

Current wording

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.

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.

Current wording

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 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.

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.

Current wording

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.

Previous wording

Our assignments that are lump sum in nature represent approximately 58% and 59% of our gross contract revenue for the three and nine months ended September 30, 2025, respectively. For the three and nine months ended September 30, 2024, assignments that are lump sum in nature represented approximately 61% and 59% 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 is performed at risk with no documented customer commitment.

Current wording

The majority of our assignments within a contract are lump sum in nature, representing approximately 59% and 57% of our gross contract revenue for the three months ended March 31, 2026 and 2025, respectively. However, when evaluated at the overall contract or project level, approximately 92% and 91% of our gross contract revenue for those same periods was recognized over time. 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.

Previous wording

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 under the terms of our contracts.

Current wording

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.

Previous wording

Performance under our contracts does not involve significant machinery or other long term depreciable assets. 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.

Current wording

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.

Previous wording

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-Sholes-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. Future non-cash stock compensation expense for unvested shares is the cumulative total of the unvested portion of all issued and outstanding awards and their individual grant date fair values. Stock awards will continue to be an important part of our long-term retention and rewards philosophy.

Current wording

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.

Previous wording

Income tax benefit, current and deferred, includes estimated federal, state and local tax benefit associated with our net income, as apportioned to the states in which we operate. Estimates of our tax benefit include both current and deferred tax expense along with all available tax incentives and credits.

Current wording

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.

Previous wording

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 represents our net service billing, which is a non-GAAP financial measure, and is the portion of our gross contract revenue attributable to services performed by our employees. 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.

Current wording

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.

Previous wording

Gross contract revenue for the three months ended September 30, 2025, increased $12.1 million or 10.6% to $126.0 million as compared to $113.9 million for the three months ended September 30, 2024. For the three months ended September 30, 2025, gross contract revenue attributable to work performed by our workforce increased $10.7 million, or 10.6% to $112.1 million or 89.0% of gross contract revenue as compared to $101.4 million or 89.0% for the three months ended September 30, 2024 (see Net service billing – non-GAAP). Of the $12.1 million increase in gross contract revenue during the three months ended September 30, 2025, acquisitions represented $4.4 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 three months ended March 31, 2026, increased $13.6 million or 12.0% to $126.5 million as compared to $112.9 million for the three months ended March 31, 2025. For the three months ended March 31, 2026, gross contract revenue attributable to work performed by our workforce increased $14.1 million, or 14.1% to $114.2 million or 90.3% of gross contract revenue as compared to $100.1 million or 88.7% for the three months ended March 31, 2025 (see Net service billing – non-GAAP). Of the $13.6 million increase in gross contract revenue during the three months ended March 31, 2026, acquisitions represented $8.6 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 Includes periodic reclassifications of revenue between categories from prior periods for consistency of presentation. For the three months ended September 30, 2024, $3.7 million of data center revenue was reclassified from Building Infrastructure to Power & Utilities.

Current wording

1 Includes periodic reclassifications of revenue between categories from prior periods for consistency of presentation. For the three months ended March 31, 2025, $3.9 million of data center revenue was reclassified from Building Infrastructure to Power, Utilities & Energy.

Previous wording

For the three months ended September 30, 2025, gross contract revenue from the building infrastructure market increased $4.3 million or 8.2% as compared to the three months ended September 30, 2024. Building Infrastructure includes commercial, municipal and residential infrastructure. The increase in building infrastructure revenue was the result of acquisitions. Within the building infrastructure market, 41.3% of gross contract revenue was derived from residential assignments including single family, multi-family and mixed-use housing stock, 42.6% from commercial assignments including retail, hospitality and quick-serve restaurants (QSR), office and industrial, data centers and healthcare, and 16.1% from municipal assignments, including parks and schools. Within residential, 52.6% of gross contract revenue was derived from for-sale homebuilding assignments, 40.7% from residential multi-family and 6.7% 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 three months ended September 30, 2025. Within commercial, 45.2% of revenue was derived from office and industrial assignments, 49.4% from retail, hospitality, and quick serve restaurants, and 5.4% 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.

Current wording

For the three months ended March 31, 2026, gross contract revenue from the building infrastructure market increased less than $0.1 million or 0.6% as compared to the three months ended March 31, 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, 37.5% 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 21.2% from municipal assignments. Within residential, 44.6% of gross contract revenue was derived from for-sale homebuilding assignments, 46.8% from residential multi-family and 8.6% from mixed use projects. While the homebuilding market shows signs of rebounding from prior year interest rate impacts, for-sale residential services represented just 6.9% of our total gross contract revenue for the three months ended March 31, 2026. Within commercial, 48.2% of revenue was derived from office and industrial assignments, 47.1% from retail, hospitality, and quick serve restaurants, and 4.7% 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.

Previous wording

For the three months ended September 30, 2025, revenue from transportation increased $4.4 million or 20.2% as compared to the three months ended September 30, 2024. 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, 65.4% of our gross contract revenue was derived from public sector roadway customers, including state and local departments of transportation ("DOTs") and tollway operators; 21.0% from private sector roadway customers; 3.8% from ports & harbors customers; 3.2% from aviation customers; and 6.6% 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.

Current wording

For the three months ended March 31, 2026, revenue from transportation increased $3.1 million or 13.0% as compared to the three months ended March 31, 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, 76.8% of our gross contract revenue was derived from public sector roadway customers, including state and local departments of transportation ("DOTs") and tollway operators; 19.8% from private sector roadway customers; 1.0% from ports & harbors customers; and 2.4% 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.

Previous wording

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 three months ended September 30, 2025, revenue from power and utilities increased $3.9 million or 16.6% as compared to the three months ended September 30, 2024. 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, 67.0% of our gross contract revenue was derived from customers operating traditional transmission operations, 17.3% was derived from customers focused on alternative energy operations and 15.7% 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 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, 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 March 31, 2026, revenue from power, utilities, and energy increased $9.4 million or 37.2% as compared to the three months ended March 31, 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, 60.7% of our gross contract revenue was derived from customers operating traditional transmission operations, 18.5% was derived from customers focused on alternative energy operations and 20.8% 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 power, utilities, and energy provide meaningful opportunity for continued growth and we are committed to investing resources accordingly.

Previous wording

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 September 30, 2025, revenue from natural resources and imaging markets decreased ($0.5) million or (3.3%) as compared to the three months ended September 30, 2024. 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 and imaging. The updated name reflects the evolved composition of this market. Gross contract revenue within our natural resources and imaging was 48.9% from imaging and mapping activities, 12.6% from mining activities where we have specialized in copper mining, 24.0% from water resources activities, and 14.5% 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.

Current wording

Our natural resources (formerly emerging markets) consist of mining, water resources, imaging and mapping, environmental consulting, and other natural resources services. For the three months ended March 31, 2026, revenue from natural resources markets decreased $0.8 million or 6.2% as compared to the three months ended March 31, 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 44.6% from imaging and mapping activities, 14.6% from mining activities where we have specialized in copper mining, 30.5% from water resources activities, and 10.3% 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.

Previous wording

For the three months ended September 30, 2025 and 2024, public sector customers, defined as direct contracts with municipalities, public agencies, or governmental authorities, represented 35.6% and 32.3% 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 customers are included in the end market most aligned with work performed.

Current wording

For the three months ended March 31, 2026 and 2025, public sector customers, defined as direct contracts with municipalities, public agencies, or governmental authorities, represented 29.2% and 28.8% 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 customers are included in the end market most aligned with work performed.

Previous wording

Total contract costs, exclusive of depreciation and amortization, increased $4.8 million or 8.8% to $59.1 million for the three months ended September 30, 2025, as compared to $54.3 million for the three months ended September 30, 2024. For the three months ended September 30, 2025 and 2024, total contract costs represented 46.9% and 47.7% of total contract revenue, respectively. For the three months ended September 30, 2025 and 2024 total contract costs represented 52.7% and 53.6% of revenue attributable to our workforce, respectively (see Net Service Billing).

Current wording

Total contract costs, exclusive of depreciation and amortization, increased $5.8 million or 10.6% to $60.6 million for the three months ended March 31, 2026, as compared to $54.8 million for the three months ended March 31, 2025. For the three months ended March 31, 2026 and 2025, total contract costs represented 47.9% and 48.5% of total contract revenue, respectively. For the three months ended March 31, 2026 and 2025 total contract costs represented 53.1% and 54.7% of revenue attributable to our workforce, respectively (see Net Service Billing).

Previous wording

Direct payroll costs increased $11.0 million or 9.3% to $129.5 million for the nine months ended September 30, 2025, as compared to $118.5 million for the nine months ended September 30, 2024. Direct payroll accounted for 76.0% of total contract costs for the nine months ended September 30, 2025, an decrease of 2.6 percentage points as compared to 78.6% for the nine months ended September 30, 2024.

Current wording

Direct payroll costs increased $6.3 million or 15.0% to $48.3 million for the three months ended March 31, 2026, as compared to $42.0 million for the three months ended March 31, 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 79.7% of total contract costs for the three months ended March 31, 2026, an increase of 3.1% as compared to 76.6% for the three months ended March 31, 2025.

Previous wording

Direct labor, the component of direct payroll costs associated with the cost of labor relating to work performed on contracts increased $3.5 million or 11.2% to $34.7 million for the three months ended September 30, 2025 as compared to $31.2 million for the three months ended September 30, 2024. The increase in direct labor is primarily due to an increase in staffing to accommodate growth. For the three months ended September 30, 2025 and 2024, direct labor costs represented 27.5% and 27.4% of gross contract revenue, respectively, and represented 31.0% and 30.8% 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 $5.4 million or 17.2% to $36.8 million for the three months ended March 31, 2026 as compared to $31.4 million for the three months ended March 31, 2025. The increase in direct labor is primarily due to an increase in staffing to accommodate growth. For the three months ended March 31, 2026 and 2025, direct labor costs represented 29.1% and 27.8% of gross contract revenue, respectively, and represented 32.2% and 31.4% 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) decreased by ($0.1) million or (0.9)% to $10.5 million as compared to $10.6 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 $1.0 million or 9.5% to $11.5 million for the three months ended March 31, 2026 as compared to $10.5 million for the three months ended March 31, 2025.

Previous wording

Sub-consultants and other direct expenses increased $1.3 million or 10.3% to $13.9 million for the three months ended September 30, 2025 as compared to $12.6 million for the three months ended September 30, 2024. For the three months ended September 30, 2025 and 2024, sub-consultant and other direct expenses represented 11.0% and 11.1% of gross contract revenue, respectively.

Current wording

Sub-consultants and other direct expenses decreased ($0.6) million or (4.7%) to $12.3 million for the three months ended March 31, 2026 as compared to $12.9 million for the three months ended March 31, 2025. For the three months ended March 31, 2026 and 2025, sub-consultant and other direct expenses represented 9.7% and 11.4% of gross contract revenue, respectively.

Previous wording

Total operating expense increased $2.4 million or 4.1% to $61.6 million for the three months ended September 30, 2025 as compared to $59.2 million for the three months ended September 30, 2024.

Current wording

Total operating expense increased $8.8 million or 15.4% to $65.8 million for the three months ended March 31, 2026 as compared to $57.0 million for the three months ended March 31, 2025.

Previous wording

Selling, general and administrative expenses increased $3.3 million or 6.4% to $55.2 million for the three months ended September 30, 2025, as compared to $51.9 million for the three months ended September 30, 2024. Indirect labor increased $2.0 million or 8.5% to $25.6 million as compared to $23.6 million due to increase in headcount along with merit increases. General overhead increased $2.1 million or 12.0% to $19.6 million as compared to $17.5 million due to increased costs associated with the overall growth of the Company.

Current wording

Selling, general and administrative expenses increased $7.3 million or 14.5% to $57.8 million for the three months ended March 31, 2026, as compared to $50.5 million for the three months ended March 31, 2025. Indirect labor increased $2.6 million or 11.5% to $25.2 million as compared to $22.6 million due to increase in headcount along with merit increases. General overhead increased $4.6 million or 26.3% to $22.1 million as compared to $17.5 million due to increased costs associated with the overall growth of the Company.

Previous wording

Depreciation and amortization decreased $0.5 million or (6.8)% to $6.9 million for the three months ended September 30, 2025 as compared to $7.4 million for the three months ended September 30, 2024. This decrease is primarily due to a decrease in amortization of intangibles. The net gain on the sale of certain IT equipment and automobiles increased $0.3 million to $0.4 million of gain for the three months ended September 30, 2025, as compared to $0.1 million in the three months ended September 30, 2024.

Current wording

Depreciation and amortization increased $1.9 million or 29.2% to $8.4 million for the three months ended March 31, 2026 as compared to $6.5 million for the three months ended March 31, 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 gain on the sale of certain IT equipment and automobiles increased $0.4 million to $0.4 million of gain for the three months ended March 31, 2026, as compared to less than $0.1 million of gain in the three months ended March 31, 2025.

Previous wording

Other expense increased by $0.4 million to $2.0 million of expense for the three months ended September 30, 2025 as compared to $1.6 million for the three months ended September 30, 2024.

Current wording

Other expense increased by $1.3 million to $3.4 million of expense for the three months ended March 31, 2026 as compared to $2.1 million for the three months ended March 31, 2025.

Previous wording

Income tax benefit for the three months ended September 30, 2025, increased by $1.4 million to $3.3 million, compared to $1.9 million benefit for the three months ended September 30, 2024, see Note 2, Income Taxes. Our effective tax rate for the three months ended September 30, 2025, was (102.1)% compared to 167.7% for the three months ended September 30, 2024.

Current wording

Income tax expense for the three months ended March 31, 2026, decreased by ($0.4) million to $0.4 million, compared to $0.8 million for the three months ended March 31, 2025, see Note 2, Income Taxes. Our effective tax rate for the three months ended March 31, 2026, was (12.3)% compared to (78.9)% for the three months ended March 31, 2025.

Previous wording

Income (Loss) Before Tax and Net Income (Loss)

Current wording

Loss Before Tax and Net Loss

Previous wording

Income (loss) before tax increased by $4.4 million for the three months ended September 30, 2025, to $3.3 million of income compared to ($1.1) million of loss for the three months ended September 30, 2024. Net income increased by $5.8 million to $6.6 million of net income for the three months ended September 30, 2025, as compared to $0.8 million of net income for the three months ended September 30, 2024.

Current wording

Loss before tax increased by ($2.3) million for the three months ended March 31, 2026, to ($3.3) million compared to ($1.0) million for the three months ended March 31, 2025. Net loss increased by ($2.0) million to ($3.7) million for the three months ended March 31, 2026, as compared to ($1.7) million for the three months ended March 31, 2025.

Previous wording

Net service billing increased $10.7 million or 10.6% to $112.1 million for the three months ended September 30, 2025, as compared to $101.4 million for the three months ended September 30, 2024. Net service billing reconciles to gross contract revenue as follows (in thousands):

Current wording

Net service billing increased $14.1 million or 14.1% to $114.2 million for the three months ended March 31, 2026, as compared to $100.1 million for the three months ended March 31, 2025. Net service billing reconciles to gross contract revenue as follows (in thousands):

Previous wording

Adjusted EBITDA increased $1.3 million or 7.8% to $18.3 million for the three months ended September 30, 2025 as compared to $17.0 million for the three months ended September 30, 2024. Adjusted EBITDA reconciles to net income as follows (in thousands):

Current wording

Adjusted EBITDA increased $2.3 million or 15.8% to $16.8 million for the three months ended March 31, 2026 as compared to $14.5 million for the three months ended March 31, 2025. Adjusted EBITDA reconciles to net income as follows (in thousands):

Previous wording

For the three months ended September 30, 2025 and 2024, Adjusted EBITDA includes add backs of $4.5 million and $6.4 million, respectively, relating to non-cash stock compensation expenses from restricted stock awards.

Current wording

For the three months ended March 31, 2026 and 2025, Adjusted EBITDA includes add backs of $4.2 million and $6.6 million, respectively, relating to non-cash stock compensation expenses from restricted stock awards.

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 September 30, 2025 and 2024, Adjusted EBITDA Margin, net was 16.3% and 16.7% 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 March 31, 2026 and 2025, Adjusted EBITDA Margin, net was 14.7% and 14.5% respectively.

Previous wording

Our backlog increased $48.7 million or 12.2% to $447.7 million during the nine months ended September 30, 2025, as compared to $399.0 million at December 31, 2024. At September 30, 2025 and December 31, 2024 our backlog was comprised as follows:

Current wording

Our backlog increased $173.6 million or 36.2% to $652.7 million during the three months ended March 31, 2026, as compared to $479.1 million at December 31, 2025. At March 31, 2026 and December 31, 2025 our backlog was comprised as follows:

Previous wording

Our principal sources of liquidity are our cash and cash equivalents balances, cash flow from operations, borrowing capacity under our Revolving Credit Facility (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 September 30, 2025, we maintained a $140.0 million Revolving Credit Facility with Bank of America, our primary lender. See -"Credit Facilities and Other Financing" below for more information on our Revolving Credit Facility. Under the terms of our Revolving Credit Facility, 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 deposits and payments in transit in our operating sweep account. Our cash on hand increased by $9.5 million on September 30, 2025 as compared to December 31, 2024.

Current wording

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 March 31, 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 deposits and payments in transit in our operating sweep account. Our cash on hand increased by $1.0 million on March 31, 2026 as compared to December 31, 2025.

Previous wording

During the nine months ended September 30, 2025, net cash provided by operating activities was $26.5 million, which primarily consisted of $10.9 million net income, adjusted for stock-based compensation expense of $14.2 million, depreciation and amortization expense of $20.0 million, and deferred taxes of $12.2 million, offset by a net cash outflow of $59.3 million from changes in operating assets and liabilities. The net outflow from changes in operating assets and liabilities was primarily due to a $18.9 million increase in accounts receivable resulting from a combination of acquired accounts receivable from acquisitions and increased billing to our customers, a $6.2 million increase in contract assets and liabilities, and a $35.4 million decrease in accounts payable and accrued expenses, partially offset by a $1.3 million decrease in prepaid expenses and other assets .

Current wording

During the three months ended March 31, 2026, net cash provided by operating activities was $11.6 million, which primarily consisted of ($3.7) million net loss, adjusted for stock-based compensation expense of $4.2 million, depreciation and amortization expense of $8.4 million, and a net cash inflow of $2.6 million from changes in operating assets and liabilities. The net inflow from changes in operating assets and liabilities was primarily due to a $7.7 million increase in accounts payable and accrued expenses, partially offset by a $3.6 million increase in accounts receivable resulting from a combination of acquired accounts receivable from acquisitions and increased billing to our customers, a $0.7 million increase in contract assets and liabilities, and a $0.8 million increase in prepaid expenses and other assets.