BWMN 10-K & 10-Q changes, risk factors and insider trading

•Our continued success is dependent upon our ability to hire,hire and retain key executives and utilizeto qualifiedplan personnelfor and manage the succession of key executives; continued success is dependent upon our ability to hire, retain and utilize qualified personnel;

We face continuing competition to provide technical,planning, professionalengineering, construction management, commissioning, environmental consulting, geospatial imaging, surveying, land procurement and constructionother technical consulting services to customers. The markets we serve are highly competitive and we compete against many regional, national and multi-national companies.

As a professional and technical engineering and consulting solutions provider we depend upon our ability to hire, retain, and utilize other qualified personnel, including our executive management team,personnel engineers, architects, designers, craft personnel and corporate management professionals who have the required experience and expertise at a reasonable cost. The market for these and other personnel is competitive. From time to time and in different regions, it may be difficult to attract and retain qualified individuals with the expertise, and in the timeframe, demanded by our customers, or to replace such personnel when needed in a timely manner. In certain geographic areas, for example, we may not be able to satisfy the demand for our services because of our inability to successfully hire and retain qualified personnel. Furthermore, we may become required to employ technical professions with government granted clearance to obtain or contribute to certain government projects. If we were to lose some or all of these personnel, they would be difficult to replace. Loss of the services of, or failure to recruit, qualified technical and management personnel could limit our ability to successfully complete existing projects and compete for new projects.

As part of our business strategy to pursue accretive acquisitions, we have in the past and intend to continue to selectively pursue targets that provide complementary, low-risk services and expand our national platform. We may not be able to identify suitable acquisition or strategic investment opportunities or may be unable to obtain the required consent of our lenders and, therefore, may not be able to complete such acquisitions or strategic investments. We have incurred, and mayexpect to continue to incur, expenses associated with sourcing, evaluating, and negotiating acquisitions (including those that do not get completed), and we have paid, and mayexpect to in the future also pay, fees and expenses associated with financing acquisitions to investment banks and other advisors. Any of these amounts may be substantial, and together with the size, timing, and number of acquisitions we pursue, may negatively affect, and cause significant volatility in our financial results.

Our expected future growth presents numerous managerial, administrative, and operational challenges. Our ability to manage the growth of our operations will require us to continue to improve our management information systems and our other internal systems and controls. In addition, our growth will increase our need to attract, develop, motivate, and retain both our management and professional employees. Our Chief Executive Officer has announced his intention to retire in 2026 and our board has initiated a search for a new Chief Executive Officer. If there is a lack of continuity of management, it may adversely impact our business operations and growth strategy. The inability of our management to effectively manage our growth or the inability of our employees to achieve anticipated performance could have a material adverse effect on our business.

The current macroeconomic environment is characterized by supply chain challenges, shortages of skilled labor and higher labor costs, high interest rates, foreign currency exchange volatility, volatility in the global capital markets, and uncertainty in debt markets. The instability created by these global uncertainties can make it extremely difficult for our customers, our vendors and us to accurately forecast and plan future business activities, and could cause constrained spending on our services, delays and a lengthening of our business development efforts, the demand for more favorable pricing or other terms and/or difficulty in collection of our accounts receivable. Our government customers may face budget deficits that prohibit them from funding proposed and existing projects. Further, ongoing economic instability in the global markets could limit our ability to access the capital markets at a time when we would like, or need, to raise capital, which could have an impact on our ability to react to changing business conditions or new opportunities. If political, social or economic conditions remain uncertain or weaken, or government spending is reduced, our revenue and profitability could be adversely affected.

DuringIn 2023recent and 2024,years, the economy in the United States and global markets encountered a material increase in the level of inflation. Geopolitical developments such as the Russia-Ukraine conflict, the conflict in the Middle East and global supply chain disruptions continue to increase uncertainty in the outlook of near-term and long-term economic activity, including whether inflation will continue and how long, and at what rate. Increases in inflation raise our costs for labor, materials and services and other costs required to grow and operate our business, and failure to secure these on reasonable terms may adversely impact our financial condition. Additionally, increases in inflation, along with the uncertainties surrounding geopolitical developments and global supply chain disruptions, have caused, and may in the future cause, global economic uncertainty and uncertainty about the interest rate environment, which may make it more difficult, costly or dilutive for us to secure additional financing. A failure to adequately respond to these risks could have a material adverse impact on our financial condition, results of operations or cash flows.

Our customers include many of the top homebuilders in the United States. Demand for new homes has historically been fueled by continued low interest rates and changing population demographics but remains sensitive to changes in economic conditions such as the level of employment, consumer confidence, consumer income, the availability of financing and interest rate levels. Demand for new homes is subject to fluctuations, often due to factors outside of our control. For example, during 2022, the housing market weakened in response to the Federal Reserve’s aggressive increase in interest rates in an effort to curtail inflation. We cannot predict whether and to what extent housing markets will grow, particularly if interest rates for mortgage loans, land costs, and construction costs continue to rise. It is likely that if one or more of the foregoing factors occurred or if there was an economic downturn, the resulting decline in demand for new homes would negatively impact the demand for our residential land planning and design services, which in turn could have a material adverse impact on our business, results of operations and financial condition.

In addition, our projects could involve the handling of hazardous and other highly regulated materials, which, if improperly handled or disposed of, could subject us to civil and/or criminal liabilities. We are also subject to regulations dealing with occupational health and safety. Although we maintain functional groups whose primary purpose is to ensure we implementsimplement effective health, safety and environmental (“HSE”) work procedures throughout our organization, including construction sites, roadways, mines and maintenance sites, the failure to comply with such regulations could subject us to liability. In addition, despite the work of our functional groups, we cannot guarantee the safety of our personnel or that there will be no damage to or loss of our work, equipment, or supplies.

We operate a large and diverse fleet of vehicles. Our employee drivers receive safety training, and we monitor for safe driving, however, we may be subject to liability associated with adverse incidents involving our fleet.fleet and drivers.

We maintain insurance coverage from third-party insurers as part of our overall risk management strategy and some of our contracts require us to maintain specific insurance coverage limits. If any of our third-party insurers fail or cancel coverage, or we are otherwise are unable to obtain adequate insurance coverage at a reasonable cost, our overall risk exposure and operational expenses would increase, and the management of our business operations would be disrupted. In addition, there can be no assurance that any of our existing insurance coverage will be renewable upon the expiration of the coverage period or that future coverage will be affordable at our desired limits.

CybersecurityWe face the threat to our computer systems of unauthorized access, computer hackers, computer viruses, malicious code, organized cyber-attacks and Infrastructureother Securitysecurity Agencyproblems issuedand system disruptions, including possible unauthorized access to our and our customers’ proprietary or classified information. These threats may increase as a “Shieldsresult Up” alert for American organizations notingof the potentialincreased forcapabilities Russia’sof cyber-attacks on Ukrainian governmentAI and criticalother infrastructureemerging organizationstechnologies tothat impactmay organizationsbe bothused withinmaliciously, andas beyondwell theas U.S.,geopolitical particularlyinstability inor the wake of sanctions imposed by the United States and its allies.conflicts. We rely on industry-accepted security measures and technology to maintain securely all confidential and proprietary information on our information systems. We have devoted and will continue to devote significant resources to the security of our computer systems, but they are still vulnerable to these threats. A user who circumvents security measures can misappropriate confidential or proprietary information, including information regarding us, our personnel and/or our customers, or cause interruptions or malfunctions in operations. Our industry has not been immune from organized cyber-attacks from persons seeking a ransom as a condition of releasing access to the firm’s computer systems. While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective. Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents. Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences. Vulnerabilities in our systems may pose material risks to our business. We have not and may not in the future, however, detect and remediate all such vulnerabilities including on a timely basis. Further, we have and may in the future experience delays in developing and deploying remedial measures and patches designed to address identified vulnerabilities. Any of these events could damage our reputation and have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, we cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims. As a result, we can be required to expend significant resources to protect against the threat of these system disruptions and security breaches or to alleviate problems caused by these disruptions and breaches. Any of these events can damage our reputation and have a material adverse effect on our business, financial condition, results of operations and cash flows.

Negative conditions in the credit and financial markets and delays in receiving customer payments could result in liquidity problems, adversely affecting our cost of borrowingborrowing, our ability to refinance our indebtedness and our business.

Although we finance much of our operations using cash provided by operations, at times we depend on the availability of credit to grow our business and to help fund business acquisitions. Instability in the credit markets in the U.S. or abroad could cause the availability of credit to be relatively difficult or expensive to obtain at competitive rates, on commercially reasonable terms or in sufficient amounts. This situation could make it more difficult or more expensive for us to access funds, refinance our existing indebtedness, enter into agreements for new indebtedness, or obtain funding through the issuance of securities or such additional capital may not be available on terms acceptable to us, or at all. We mayhave alsoin the past entered into and expect in the future to enter into business acquisition agreements that require us to access credit, which if not available at the closing of the acquisition could result in a breach of the acquisition agreement and a resulting claim for damages by the sellers of such business. In addition, market conditions could negatively impact our customers’ ability to fund their projects and, therefore, utilize our services, which could have a material adverse impact on our business, financial condition, and results of operations.

Borrowings under our credit agreement with Bank of America, N.A. bear interest at variable rates, exposing us to interest rate risk. Interest rates in the United States may continue to increase in the future. If interest rates continue to increase, our debt service obligations on borrowings under our credit agreement would continue to increase even though the amount borrowed would remain the same, and our results of operations and cash flows for servicing our indebtedness would decrease, perhaps significantly.

Legislation is proposed periodically that attempts to limit the ability of governmental agencies to contract with private consultants to provide services. Should such changes occur and be upheld, demand for our services may be materially adversely affected. For each of the years ended December 31, 20242025 and 2023,2024, approximately 27%35% and 21%27% of our gross contract revenue was derived from services performed under contracts with governmental agencies, respectively. While attempts at such legislation have failed in the past, such measures could be adopted in the future.

We are a party to claims and litigation in the normal course of business. Since we engage in engineering, surveying and related consulting activities for large facilities and projects where design, construction or systems failures can result in substantial injury or damage to employees or others, we are exposed to claims and litigation and investigations if there is a failure at any such facility or project. Such claims could relate to, among other things, personal injury, loss of life, business interruption, property damage, pollution and environmental damage and be brought by our customers or third parties, such as those who use or reside near our customers’’customers’ projects. We can also be exposed to claims if we agreed that a project will achieve certain performance standards or satisfy certain technical requirements and those standards or requirements are not met. In many of our contracts with customers, sub-consultants, and vendors, we agree to retain or assume potential liabilities for damages, penalties, losses and other exposures relating to projects that could result in claims that greatly exceed the anticipated profits relating to those contracts. In addition, while customers and sub-consultants may agree to indemnify us against certain liabilities, such third parties may refuse or be unable to pay it.

Some of our services are directly or indirectly impacted by changes in U.S. federal, state, local, or foreign laws and regulations pertaining to resource management, infrastructure, and the environment. InClimate addition,change growingand related legislative and regulatory initiatives may materially affect the Company's business and results of operations. The effects of climate change continue to raise significant concerns about the state of the environment. However, under the Trump administration, federal policy may shift to reduce the emphasis on climate change initiatives and environmental regulations. This could include scaling back federal participation in international agreements, such as the Paris Agreement, and reducing regulatory pressures on businesses, including banks, to address climate-related risks. Legislative and regulatory proposals aimed at combating climate change may resultface ingreater the imposition of additional regulations, international protocolsscrutiny or otherdiminished restrictionspriority. onThe emissions.enactment Accordingly, suchof additional laws and regulations or a relaxation or repeal of existing laws and regulations, or changes in governmental policies regarding the funding, implementation, or enforcement of these programs, could result in a decline in demand for our services, which could in turn negatively impact our revenue.

We must comply with several laws that strictly regulate the handling, removal, treatment, transportation and disposal of toxic and hazardous substances. Under the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended (“CERCLA”), and comparable state laws, we may be required to investigate and remediate regulated hazardous materials. CERCLA and comparable state laws typically impose strict joint and several liabilities without regard to whether a company knew of or caused the release of hazardous substances. The liability for the entire cost of clean-up could be imposed upon any responsible party. Other principal federal environmental, health, and safety laws affecting us include, among others, the Resource ConversationConservation and Recovery Act, the National Environmental Policy Act, the Clean Air Act, the Clean Water Act, the Occupational Safety and Health Act, the Toxic Substances Control Act, and the Superfund Amendments and Reauthorization Act. Our business operations may also be subject to similar state and international laws relating to environmental protection. Liabilities related to environmental contamination or human exposure to hazardous substances, or a failure to comply with applicable regulations, could result in substantial costs to us, including clean-up costs, fines and civil or criminal sanctions, third-party claims for property damage or personal injury, or cessation of remediation activities. Our continuing work in the areas governed by these laws and regulations exposes us to the risk of substantial liability.

Each state establishes licensing and organizational requirements for our services. Certain states allow only individuals and individually owned professional services corporations to hold licenses. In those states there may be grandfathering exemptions that allow corporations to hold licenses. In the event a state does not allow a corporation to hold a license, we have in the past formed professional services corporations owned by Mr. BowmanBowman, which we expect to transition in 2026, and other employees to facilitate our ability to work in such states. To the extent we cannot adequately satisfy a state’s licensing requirements, we do not operate in that state. As of December 31, 2024,2025, we were licensed to operate in all states within the United States either directly or through an affiliate.

Changes in tax laws or their implementation or interpretation could increase our tax rate and tax payments and materially affect our results of operations.

•the recruitment or departure of key personnelpersonnel, including our Chief Executive Officer;

Our Chairman and Chief Executive Officer owns a large percentage of our voting stock, which may allow him to have a significant influence on all matters requiring stockholder approval.

Gary Bowman, our Chairman and Chief Executive Officer, beneficially owned 2,339,0412,279,913 shares, or approximately 13.57%13.36% of our common stock as of March 12,5, 2025.2026. Mr. Bowman has significant power to influence the outcome of important corporate decisions or matters submitted to a vote of our stockholders, including decisions regarding mergers, going private transactions, and other extraordinary transactions, and to significantly influence the terms of any of these transactions. AlthoughOnce Mr. Bowman owesretires from the Company, he will no longer owe our stockholders certainany fiduciary duties as a director and an executive officer,officer. As such, Mr. Bowman could take actions to address his own interests, which may be different from those of our other stockholders.

On June 6, 2025, our board of directors authorized a $25 million share repurchase program under which we may repurchase up to $25 million of our common stock replacing the Company's prior share repurchase program, which was scheduled to expire on July 31, 2025. The authorization is effective through June 9, 2026. Under the terms of the program, the shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws. The actual manner, timing and amount of repurchases under the share repurchase program will be determined by management at its discretion and will depend on a number of factors, including the market price of our common stock, market conditions and capital allocation priorities. As a result, there can be no guarantee around the timing or volume of our share repurchases. In addition, as part of the Inflation Reduction Act of 2022, the United States implemented a 1% excise tax on the value of certain share repurchases by publicly traded companies. This tax could increase the costs to us of any share repurchases. We intend to finance any stock repurchases through operating cash flow. Repurchases also may be made under a trading plan under Rule 10b5-1, which would permit shares to be repurchased when we might otherwise be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions. There is no guarantee as to the number of shares that will be repurchased, and the share repurchase program may be extended, suspended or discontinued at any time without notice at our discretion, which may result in a decrease in the trading price of our common stock. The share repurchase program could increase volatility in and affect the price of our common stock. The existence of our share repurchase program could also cause the price of our common stock to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our common stock. Additionally, repurchases under our share repurchase program will diminish our cash reserves and negatively impact our access to debt and our overall indebtedness. There can be no assurance that any stock repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased such shares. Any failure to repurchase shares after we have announced our intention to do so may negatively impact our reputation and investor confidence in us and may negatively impact our stock price. Although our share repurchase program is intended to enhance long-term stockholder value, short-term stock price fluctuations could reduce the program’s effectiveness.

WeCommencing areDecember 31, 2026 we will no longer qualify as an emerging growth company, and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will makeno ourlonger common stock less attractiveapply to investors.us.

Bowman is a professional services firm delivering innovative engineering, technologytechnical 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 technicaladvisory services to over 4,750 customers operating in a diverse set of end markets. We work as both a prime and sub-consultant for a broad base of public and private sector customers that generally operate in highly regulated environments.

We have a diversified business that is not dependent on any one customer service line, geographic region, or end market. We are deliberate in our efforts to balance our sources of revenue and avoid reliance on any one significant customer, service line, geography or end market concentration. Our strategic focus is on penetrating and expanding our presence in markets which best afford us opportunities to secure assignments that provide reoccurring revenue and multi-year engagements thus resulting in dependable and predictable revenue streams andwith 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.

Gross contract revenue for the years ended December 31, 2024,2025, and 20232024 was $426.6$490.0 million and $346.3$426.6 million, respectively. Gross contract revenue derived from our workforce (see Net service billing – non-GAAP below) represented 89.0%88.7% and 87.8%89.0% of gross contract revenue for the years ended December 31, 20242025 and 2023,2024, respectively. Our net income (loss) for the years ended December 31, 2024,2025, and 20232024 was $3.0$12.8 million and ($6.6)$3.0 million, respectively. Our Adjusted EBITDA (see Adjusted EBITDA - non-GAAP below) was $72.9 million on net income of $12.8 million and $59.5 million on net income of $3.0 million and $47.0 million on net loss of $6.6 million for the years ended December 31, 2024,2025, and 2023,2024, respectively. See “Other Financial Information and Non-GAAP Measurements and Key Performance Indicators” below for additional information.

We generate revenue from services performed by our employees, pass-through fees from sub-consultants, and reimbursable contract costs. On our 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.

WeIn generallygeneral, we do not generaterealize 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 tasks.assignments. Our largest and most consistent direct contract cost is consistently our labor. To growincrease our revenue and maximize overall profitability we carefully monitor and manage our fixed costand ofhourly 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.

Hourly contracts,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.

Lump sum contracts, alsosum, 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 tasks.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.

The majority of our assignments within a contract are lump sum in naturenature, representing approximately 60%59% and 62%60% of our gross contract revenue for the years ended December 31, 20242025 and 2023,2024, 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 compensationvariable 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.

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

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-MertonBlack-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.

We measure the value of our undelivered gross contract revenue in real time to calculate our backlog and predict future revenue. Backlog includes awarded, contracted and otherwise secured commitments along with revenue we expect to realize over time for predictable long-term and reoccurring assignments. We report backlog quarterly as of the end of the last day of the reporting period. We use backlog to predict revenue growth and anticipate appropriate future staffing needs. Backlog definitions and methods of calculation vary within our industry. As such, backlog is not a reliable metric on which to evaluate us relative to our peers. Backlog neither derives from, nor connects to, any GAAP results.

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 contract revenue less revenue derived from pass-through sub-consultant feesfees, reimbursable expenses and reimbursableother 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 contract 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. Our industry uses the calculation of net service billing to normalize peer performance assessments and provide meaningful insight into trends over time.

The Organization for Economic Cooperation and Development has releasedDevelopment’s Pillar Two Model Rules,Rules established a 15%global minimum effective tax rateframework designed to ensure that large multinational enterprisesenterprise paygroups are subject to a minimum leveleffective tax rate of tax15% on the income arisingearned in each jurisdiction where they operateoperate. andThe mandatesrules sharingalso require the exchange of certain company information with taxing authorities on both a local and global basis. Certain jurisdictions have enacted, and others have proposed,proposed legislation to implement certainvarious provisions of Pillar Two. We are continuing to monitor thelegislative implicationsdevelopments resultingrelated fromto the potential enactment of Pillar Two rules in the jurisdictions where we operate,operate. Based on legislation enacted as of December 31, 2025, and our current operating profile, we do not currently anticipate a material impact.

Changes in gross contract revenue (“GCR”) for the year ended December 31, 2024,2025, disaggregated between our core and emerging end markets, were as follows (in thousands other than percentages):

31 Includes periodic reclassifications of revenue between categories from prior periods for consistency of presentation. For the twelve months ended December 31, 2024, $14.5 million of data center revenue was reclassified from Building Infrastructure to Power, Utilities & Energy.

For the year ended December 31, 2024,2025, gross contract revenue from our building infrastructure market increased $24.7$15.2 million or 12.7%7.4% as compared to the year ended December 31, 2023.2024. Building Infrastructure includes commercial, municipal and residential infrastructure. The increase in building infrastructure revenue is the result of organic growth and acquisitions. Within the building infrastructure market, 36.0%39.2% of gross contract revenue was derived from residential assignments including single family, multi-family and mixed-use housing stock, 45.0%42.8% from commercial assignments including retail, hospitality and quick-serve restaurants (QSR), office and industrial, data centers and healthcare, and 19.0%18.0% from municipal assignments. Within residential, 53.3%49.1% of gross contract revenue was derived from for-sale homebuilding assignments, 40.4%44.1% from residential multi-family and 6.3%6.8% from mixed use projects. While the homebuilding market shows signs of rebounding from prior year interest rate impacts, for-sale residential services represented just 9.9%8.6% of our total gross contract revenue for year ended December 31, 2024.2025. Within commercial, 36.6%45.7% of revenue was derived from office and industrial assignments, 40.0%49.2% from retail, hospitality, and quick serve restaurants,restaurants 15.1%and from data centers, 8.3%5.1% 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.

For the year ended December 31, 2024,2025, revenue from transportation increased $14.9$16.0 million or 20.5%18.2% as compared to the year ended December 31, 2023.2024. The increase was attributable to new contract awards in transportation both from publicroadways, transits, ports and privateharbors, customersprogram administration and others, along with acquired transportation backlog which we were able to deliver to customers,customers. withinWithin transportation, 61.8%64.4% of our gross contract revenue was derived directly from public sector customersroadway customers, including DOTs,state and local departments of transportation ("DOTs") and tollway operators,operators; transit authorities aviation operators and others with the remaining 38.2% derived23.0% from private sector roadway customers; 3.8% from ports & harbors customers; 2.6% from aviation customers; and 6.2% from bus, rail, and transit customers. We expect to continue to increase our transportation revenue and improve the diversification of our revenue. We believe the transportation market continues to present significant opportunity for future growth and we remain committed to investing in leadership, technical expertise, business development and acquisitions for this market.

With the convergence of 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 powerpower, utilities and utilitiesenergy category (sometimes referred to herein as the power, utilities and energy market) of our revenue mix and have adjusted historical balances accordingly. For the year ended December 31, 2024,2025, revenue from power and utilities increased $10.9$20.3 million or 16.9%22.7% as compared to the year ended December 31, 2023.2024. 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, alongand with additionalto increases derived from gas pipeline and electric transmission projects nationally. Within the power and utilities market, 75.4%62.4% of our gross contract revenue was derived from customers operating traditional powertransmission operationsoperations, and 24.6%19.4% was derived from customers focused on renewables, EV infrastructure andalternative energy transitionoperations, operations.with the remaining 18.2% 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.

Our natural resources (formerly emerging markets) consist of mining, water resources, environmental consulting, imaging and mappingmapping, environmental consulting, and other natural resources services. ForAdjusted for the yearchange, for the twelve months ended December 31, 2024,2025, revenue from emergingnatural resources and imaging markets increased $29.8$12.0 million or 206.8%27.2% as compared to the year ended December 31, 2023.2024. This increase is primarily due to the acquisition of Surdex Corporation; see Note 4 - Acquisitions for additional information. EmergingWhat markethad previously been classified under emerging sectors represent lines of business that have not yet growngrew to a sizescale wherebythat we would distinguish them as awarranted 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 emergingnatural marketsresources and imaging was 43.7%48.3% from imaging and mapping,mapping 19.9%activities, 15.7% from mining activities where we have specialized in copper mining, 26.3%26.4% from water resources activities, and 10.1%9.6% 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 emergingnatural marketresources and imaging services.

Total contract costs, exclusive of depreciation and amortization, increased $33.6$24.7 million or 19.7%12.1% to $228.5 million for the year ended December 31, 2025, as compared to $203.8 million for the year ended December 31, 2024, as compared to $170.2 million for the year ended December 31, 2023.2024. For the years ended December 31, 20242025 and 2023,2024, total contract costs represented 47.8%46.6% and 49.1%47.8% of total contract revenue, respectively. For the years ended December 31, 20242025 and 20232024 total contract costs represented 53.7%52.6% and 56.0%53.7% of revenue attributable to our workforce, respectively (see Net Service RevenueBilling). Total contract costs include both direct payroll costs, and sub-consultants and other expenses.

Total direct payroll costs increased $28.9$16.3 million or 22.6%10.4% to $173.2 million for the year ended December 31, 2025, as compared to $156.9 million for the year ended December 31, 2024, as compared to $128.0 million for the year ended December 31, 20232024 due to increased staffing resulting from acquisitions and organic growth. Total direct payroll accounted for 77.0%75.8% of total contract costs for the year ended December 31, 2024,2025, ana increasedecrease of 1.81.2 percentage points as compared to 75.2%77.0% for the year ended December 31, 2023.2024.

Direct labor, the component of total direct payroll costs associated with the cost of labor relating to work performed on contracts (often referred to within our industry as utilization) increased $22.0$14.8 million or 22.9%12.5% to $132.8 million for the year ended December 31, 2025 as compared $118.0 million for the year ended December 31, 2024 as compared $96.0 million for the year ended December 31, 2023.2024. For the year ended December 31, 20242025 and 2023,2024, direct labor costs represented 27.7%27.1% and 27.7% of gross contract revenue, respectively and represented 31.1%30.5% and 31.6%31.1% of the revenue attributable to our workforce, respectively. Labor costs not charged directly to customer contracts isare considered indirect time and isare treated as selling, general and administrative expense.

Other direct payroll costs, the component of total direct payroll costs associated with fringe and incentive compensation (cash and non-cash) increased by $6.9$1.6 million or 21.6%4.1% to $40.4 million for the year ended December 31, 2025 as compared to $38.8 million for the year ended December 31, 2024 as compared to $31.9 million for the year ended December 31, 2023.2024. This increase includeswas primarily driven by a $3.5$1.5 million increase in employee payroll taxes and a $1.1$6.5 million increase in health benefitsbenefits, forpartially theoffset yearby endeda December 31, 2024, primarily due to the increase in the overall labor pool. This increase includes an increase of $1.1$2.9 million decrease in the cost of non-cash stock compensation relating to direct payroll costscosts, which declined to $5.3 million in 2025 from $8.2 million for the year ended December 31, 2024, as compared to $7.1 million for the year ended December 31, 2023. The increase in non-cash stock compensation is likewise attributable to the increase in the overall labor pool.2024.

Depreciation and amortization increaseddecreased $9.1($0.2) million or 48.7%(0.7%) to $27.6 million for the year ended December 31, 2025, as compared to $27.8 million for the year ended December 31, 2024,2024. asThe comparedslight decrease was primarily attributable to $18.7certain millionassets forbecoming thefully yeardepreciated endedand Decemberlower 31,amortization 2023. This increase is primarily duerelated to anprior increaseacquisitions, inpartially offset by increased depreciation associated with leased assets and amortization of intangible assets accumulatedacquired throughin acquisitions.recent business combinations. We continue to increase the useutilization of our finance lease facility as we continue to grow. Intangible assets have increased due to multiple acquisitions in 2024. Gains on the sale of certain IT equipment and automobiles increased $0.1$0.4 million or 25.0%80.0% to $0.9 million for the year ended December 31, 2025, as compared to $0.5 million for the year ended December 31, 2024, as compared to $0.4 million for the year ended December 31, 2023.2024.

Income (Loss) Income from Operations

LossIncome from operations increased $1.3$21.7 million to ($2.0)$19.7 million for the year ended December 31, 20242025 as compared to ($0.7$2.0) million loss for the year ended December 31, 2023.2024.

Income Tax (ExpenseBenefit) BenefitExpense

Income tax benefit for the year ended December 31, 20242025 increaseddecreased $12.2($10.3) million or 6,100%(85.8%) to $12.0$1.7 million benefit, as compared to ($0.2)$12.0 million income tax expensebenefit for the year ended December 31, 2023.2024. As an accrual basis taxpayer, this affects the timing of the payment of tax but not the expensetax of tax.expense. Our effective tax rate for the year ended December 31, 20242025 was 133.91%.(15.1)%.

LossIncome before tax expense increased by $2.5$20.1 million or 39.1%225.8% to $11.2 million income for the year ended December 31, 2025, as compared to a ($8.9) million loss for the year ended December 31, 2024,2024. asNet comparedincome increased by $9.8 million or 326.7% to a $6.4$12.8 million lossof income for the year ended December 31, 2023.2025, Netas income (loss) increased by $9.6 million or 145.5%compared to $3.0 million of income for the year ended December 31, 2024, as compared to ($6.6) million of loss for the year ended December 31, 2023.2024.

Net service billing increaseddecreased by 1.2(0.3) percentage points to 89.0%88.7% of gross contract revenue for the year ended December 31, 2024,2025, as compared to 87.8%89.0% for the year ended December 31, 2023.2024. This change was within our expected range of 85% to 90% of gross contract revenue, and varies depending on contract mix.

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 December 31, 2024,2025, we maintained a $100.0$210.0 million Revolving Credit Facility with Bank of America, our syndicate administrator and primary lender. On March 3, 2026, we amended the Revolving Credit Facility to increase the aggregate revolving commitment to $250 million. 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 decreasedincreased by $14.0$4.4 million at December 31, 20242025 as compared to December 31, 2023.2024.

We are actively pursuing acquisitions as part of our strategic growth initiative. At any given time, we are assessing multiple opportunities at varying stages of due diligence. These acquisition opportunities range in size, timing of closing, valuation and composition of consideration. In connection with acquisitions, we use a combination of cash, bank financing, seller financing, and equity to satisfy the purchase price. There can be no assurance that any opportunity in the process of being reviewed will close but we expect over time to utilize a meaningful portion of our current liquidity and capital resources for acquisitions.

Net cash usedprovided inby financing activities was $10.8$4.3 million during the year ended December 31, 2024.2025. This was primarily due to net borrowing of $8.3$58.3 million from our Revolving Credit Facility, $11.1offset by $5.2 million of payments for the purchase of treasury stock, $23.3$18.8 million for repurchase of common stock, $9.0$12.8 million of payments on finance leases and $16.6$17.6 million of payments on notes payable and our fixed lines of credit, offset by $47.2 million of proceeds from a common share offering.credit.

As of December 31, 2024,2025, we maintained a $100.0$210.0 million revolving credit facility (the “Revolving Credit Facility 2024”) pursuant to a creditCredit agreementAgreement, as amended, with lenders, Bank of America N.A., as Administrative Agent, the Swingline Lender and L/C Issuer, and TD Bank, N.A. asand syndicationPNC agent.Bank. The Revolving Credit Facility 2024 has a maturity date of May 2, 2029. Under the terms of the Revolving Credit Facility 2024, available cash in our primary operating account sweeps against the outstanding balance every evening. As of December 31, 2024, the balance on this Revolving Credit Facility 2024 was $37.0 million.

The Revolving Credit Facility 2024 is secured by substantially all the assets of the Company and the subsidiary guarantors. Under the Revolving Credit Facility 2024,Facility, we are required to comply with certain covenants, including covenants on indebtedness, investments, liens and restricted payments, as well as to maintain certain financial covenants, including a fixed charge coverage ratio and leverage ratio of debt to EBITDA (as defined in the Revolving Credit FacilityAgreement. 2024).As Atof December 31, 2024,2025, we were in compliance with all covenants.

ThereExcept as set forth below, there have been no changes to any of the risks that we believe are material to our business, results of operations and financial condition, from the risk factors previously disclosed in our Annual Report on Form 10-K.

Gross contract revenue for the three months ended MarchJune 31,30, 2026 and 2025 was $126.5$146.1 million and $112.9$122.1 million, respectively, representing year-over-year growth of 12.0%.19.7%. Gross contract revenue derived from our workforce represented 90.3%88.3% and 88.7%88.5% of gross contract revenue for the three months ended MarchJune 31,30, 2026 and 2025, respectively (see Net service billing – non-GAAP below). Our net lossincome for the three months ended MarchJune 31,30, 2026 and 2025 was ($3.7)$2.5 million and ($1.7)$6.0 million, respectively. Our Adjusted EBITDA for the three months ended MarchJune 31,30, 2026 and 2025 was $16.8$24.1 million on net lossincome of ($3.7)$2.5 million and $14.5$20.2 million on net lossincome of ($1.7)$6.0 million, respectively. (see Adjusted EBITDA – non-GAAP below).

The majority of our assignments within a contract are lump sum in nature, representing approximately 59% and 57%54% of our gross contract revenue for both the three and six months ended MarchJune 31,30, 20262026, compared to approximately 61% and 59% for the three and six months ended June 30, 2025, respectively. However, when evaluated at the overall contract or project level, approximately 92% and 91%92% of our gross contract revenue for thosethe samethree periodsand six months ended June 30, 2026, respectively, was recognized over time. Comparable percentages for the three and six months ended June 30, 2025 were 92% and 91%, respectively. This difference reflects the presence of both hourly and lump sum assignments within individual contracts. Recognizing revenue from lump sum assignments requires management estimates of both total contract value when there are contingent compensation elements of the fee arrangement and expected cost at completion. We closely monitor our progress to completion and adjust our estimates when necessary. We do not recognize revenue from work that is performed at risk with no documented customer commitment.

Three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025

Gross contract revenue for the three months ended MarchJune 31,30, 2026, increased $13.6$24.0 million or 12.0%19.7% to $126.5$146.1 million as compared to $112.9$122.1 million for the three months ended MarchJune 31,30, 2025. For the three months ended MarchJune 31,30, 2026, gross contract revenue attributable to work performed by our workforce increased $14.1$21.0 million, or 14.1%19.4% to $114.2$129.0 million or 90.3%88.3% of gross contract revenue as compared to $100.1$108.0 million or 88.7%88.5% for the three months ended MarchJune 31,30, 2025 (see Net service billing – non-GAAP). Of the $13.6$24.0 million increase in gross contract revenue during the three months ended MarchJune 31,30, 2026, acquisitions represented $8.6$7.5 million of the increase. To evaluate the Company’s growth, revenue from acquisitions is treated as acquired for a period of four quarters post-closing, after which it is considered organic. For each measurement and comparison period, historical balances of acquired and organic revenue bases are adjusted to reflect revenue accordingly.

For the three months ended MarchJune 31,30, 2026, gross contract revenue from the building infrastructure market increased less than $0.1$0.6 million or 0.6%1.1% as compared to the three months ended MarchJune 31,30, 2025. Building Infrastructure includes commercial, municipal and residential infrastructure. The increase in building infrastructure revenue was the result of acquisitions and organic growth. Within the building infrastructure market, 37.5%35.5% of gross contract revenue was derived from residential assignments including single family, multi-family and mixed-use housing stock, 41.3% from commercial assignments including retail, hospitality and quick-serve restaurants (QSR), office and industrial, data centers and healthcare, and 21.2%23.2% from municipal assignments. Within residential, 44.6%45.1% of gross contract revenue was derived from for-sale homebuilding assignments, 46.8%47.4% from residential multi-family and 8.6%7.5% from mixed use projects. While the homebuilding market shows signs of rebounding from prior year interest rate impacts, for-sale residential services represented just 6.9%6.3% of our total gross contract revenue for the three months ended MarchJune 31,30, 2026. Within commercial, 48.2%46.4% of revenue was derived from office and industrial assignments, 47.1%46.9% from retail, hospitality, and quick serve restaurants, and 4.7%6.7% from healthcare. We continue to experience strong demand for our building infrastructure services and maintain a positive outlook on this market as we continue to experience strength in markets including quick serve restaurants, data centers, industrial distribution facilities, schools, and build-for-rent communities.

For the three months ended MarchJune 31,30, 2026, revenue from transportation increased $3.1$3.8 million or 13.0%15.3% as compared to the three months ended MarchJune 31,30, 2025. The increase was attributable to new contract awards in transportation from roadways, transits, ports and harbors, program administration and others, along with acquired transportation backlog which we were able to deliver to customers. Within transportation, 76.8%77.3% of our gross contract revenue was derived from public sector roadway customers, including state and local departments of transportation ("DOTs") and tollway operators; 19.8%19.1% from private sector roadway customers; 1.0%1.6% from ports & harbors customers; 1.1% from bus, rail, and 2.4%transit customers; and 0.9% from aviation customers. We expect to continue to increase our transportation revenue and improve the diversification of our revenue. We believe the transportation market continues to present significant opportunity for future growth and we remain committed to investing in leadership, technical expertise, business development and acquisitions for this market.

With the convergence of renewable energy with traditional transmission infrastructure and the continued growth we are projecting in the clean energy transition, we have consolidated renewable energy into the power, utilities and energy category (sometimes referred to herein as the power, utilities and energy market) of our revenue mix and have adjusted historical balances accordingly. For the three months ended MarchJune 31,30, 2026, revenue from power, utilities, and energy increased $9.4$10.2 million or 37.2%38.0% as compared to the three months ended MarchJune 31,30, 2025. The additional increase in gross contract revenue from the power, utilities, and energy market is principally attributable to acquisitions and increased revenue associated with the expansion of a multi-year utility undergrounding assignment in Florida, and to increases derived from gas pipeline and electric transmission projects nationally. Within the power, utilities, and energy market, 60.7%56.9% of our gross contract revenue was derived from customers operating traditional transmission operations, 18.5%18.4% was derived from customers focused on alternative energy operations and 20.8%24.7% derived from data center customers. The power, utilities, and energy market continues to experience increasing infrastructure investment as changing weather patterns, energy transition mandates and other safety initiatives positively impact demand for the services we provide. Based on recent increases in program commitments within the gas pipeline replacement market, we believe trends in power, utilities, and energy provide meaningful opportunity for continued growth and we are committed to investing resources accordingly.

Our natural resources and imaging (formerly emerging markets) consist of mining, water resources, imaging and mapping, environmental consulting, and other natural resources services. For the three months ended MarchJune 31,30, 2026, revenue from natural resources markets decreasedincreased $0.8$9.5 million or 6.2%67.2% as compared to the three months ended MarchJune 31,30, 2025. What had previously been classified under emerging sectors grew to a scale that warranted separate market recognition. Accordingly, the emerging sector was renamed natural resources. The updated name reflects the evolved composition of this market. Gross contract revenue within natural resources was 44.6%64.3% from imaging and mapping activities, 14.6%13.3% from mining activities where we have specialized in copper mining, 30.5%19.3% from water resources activities, and 10.3%3.1% from environmental and other natural resources consulting. Scarcities in water resources and the increasing need for water management gives us confidence that we will be able to increase revenue accordingly. With recent and future acquisitions, we expect to experience continued growth from investment in various natural resources.

For the three months ended MarchJune 31,30, 2026 and 2025, public sector customers, defined as direct contracts with municipalities, public agencies, or governmental authorities, represented 29.2%28.7% and 28.8%35.4% 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.

Total contract costs, exclusive of depreciation and amortization, increased $5.8$11.9 million or 10.6%21.1% to $60.6$68.4 million for the three months ended MarchJune 31,30, 2026, as compared to $54.8$56.5 million for the three months ended MarchJune 31,30, 2025. For the three months ended MarchJune 31,30, 2026 and 2025, total contract costs represented 47.9%46.8% and 48.5%46.3% of total contract revenue, respectively. For the three months ended MarchJune 31,30, 2026 and 2025 total contract costs represented 53.1%53.0% and 54.7%52.3% of revenue attributable to our workforce, respectively (see Net Service Billing).

Direct payroll costs increased $6.3$8.8 million or 15.0%20.8% to $48.3$51.2 million for the three months ended MarchJune 31,30, 2026, as compared to $42.0$42.4 million for the three months ended MarchJune 31,30, 2025. The increase in direct payroll costs is primarily driven by higher revenue and increased headcount to support growth, including contributions from recent acquisitions, as well as merit-based compensation increases. Direct payroll accounted for 79.7%74.9% of total contract costs for the three months ended MarchJune 31,30, 2026, ana increasedecrease of 3.1%(0.1) percentage points as compared to 76.6%75.0% for the three months ended MarchJune 31,30, 2025.

Direct labor, the component of direct payroll costs associated with the cost of labor relating to work performed on contracts increased $5.4$5.6 million or 17.2%17.1% to $36.8$38.4 million for the three months ended MarchJune 31,30, 2026 as compared to $31.4$32.8 million for the three months ended MarchJune 31,30, 2025. The increase in direct labor is primarily due to an increase in staffing to accommodate growth. For the three months ended MarchJune 31,30, 2026 and 2025, direct labor costs represented 29.1%26.3% and 27.8%26.9% of gross contract revenue, respectively, and represented 32.2%29.8% and 31.4%30.4% of the revenue attributable to our workforce, respectively.

Other direct payroll costs, the component of direct payroll costs associated with fringe and incentive compensation (cash and non-cash) increased by $1.0$3.4 million or 9.5%35.8% to $11.5$12.9 million for the three months ended MarchJune 31,30, 2026 as compared to $10.5$9.5 million for the three months ended MarchJune 31,30, 2025.

Sub-consultants and other direct expenses decreasedincreased ($0.6)$3.1 million or (4.7%)22.0% to $12.3$17.2 million for the three months ended MarchJune 31,30, 2026 as compared to $12.9$14.1 million for the three months ended MarchJune 31,30, 2025. For the three months ended MarchJune 31,30, 2026 and 2025, sub-consultant and other direct expenses represented 9.7%11.8% and 11.4%11.5% of gross contract revenue, respectively.

Total operating expense increased $8.8$13.1 million or 15.4%23.2% to $65.8$69.6 million for the three months ended MarchJune 31,30, 2026 as compared to $57.0$56.5 million for the three months ended MarchJune 31,30, 2025.

Selling, general and administrative expenses increased $7.3$12.5 million or 14.5%25.1% to $57.8$62.3 million for the three months ended MarchJune 31,30, 2026, as compared to $50.5$49.8 million for the three months ended MarchJune 31,30, 2025. Indirect labor increased $2.6$4.2 million or 11.5%18.3% to $25.2$27.1 million as compared to $22.6$22.9 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.

Depreciation and amortization increased $1.9$1.3 million or 29.2%20.0% to $8.4$7.8 million for the three months ended MarchJune 31,30, 2026 as compared to $6.5 million for the three months ended MarchJune 31,30, 2025. The increase is primarily driven by amortization of new leased assets and higher amortization of acquired intangible assets associated with the RPT acquisition completed in the fourth quarter of 2025, which was not reflected in the prior-year period. The net loss (gain) on the sale of certain IT equipment and automobiles increaseddecreased $0.4($0.7) million to $0.4($0.5) million of gain for the three months ended MarchJune 31,30, 2026, as compared to less than $0.1$0.2 million of gainexpense in the three months ended MarchJune 31,30, 2025.

Other expense increased by $1.3$4.2 million to $3.4$5.8 million of expense for the three months ended MarchJune 31,30, 2026 as compared to $2.1$1.6 million for the three months ended MarchJune 31,30, 2025.

Income Tax Expense (Benefit)

Income tax expense for the three months ended MarchJune 31,30, 2026, decreased by ($0.4)$1.6 million to $0.4$(0.2) million,million benefit, compared to $0.8$1.4 million expense for the three months ended MarchJune 31,30, 2025, see Note 2, Income Taxes. Our effective tax rate for the three months ended MarchJune 31,30, 2026, was (12.36.8)% compared to (78.9)%18.9% for the three months ended MarchJune 31,30, 2025.

LossIncome Before Tax and Net LossIncome

LossIncome before tax increaseddecreased by ($2.3$5.1) million for the three months ended MarchJune 31,30, 2026, to ($3.3)$2.3 million compared to ($1.0)$7.4 million for the three months ended MarchJune 31,30, 2025. Net lossincome increaseddecreased by ($2.0$3.5) million to ($3.7)$2.5 million for the three months ended MarchJune 31,30, 2026, as compared to ($1.7)$6.0 million for the three months ended MarchJune 31,30, 2025.

Net service billing increased $14.1$21.0 million or 14.1%19.4% to $114.2$129.0 million for the three months ended MarchJune 31,30, 2026, as compared to $100.1$108.0 million for the three months ended MarchJune 31,30, 2025. Net service billing reconciles to gross contract revenue as follows (in thousands):

Adjusted EBITDA increased $2.3$3.9 million or 15.8%19.2% to $16.8$24.1 million for the three months ended MarchJune 31,30, 2026 as compared to $14.5$20.2 million for the three months ended MarchJune 31,30, 2025. Adjusted EBITDA reconciles to net income as follows (in thousands):

For the three months ended MarchJune 31,30, 2026 and 2025, Adjusted EBITDA includes add backs of $4.2$5.4 million and $6.6$3.1 million, respectively, relating to non-cash stock compensation expenses from restricted stock awards.

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 MarchJune 31,30, 2026 and 2025, Adjusted EBITDA Margin, net was 14.7%18.7% and 14.5%18.7% respectively.