Bowman Consulting Group Ltd.
03/05/2026 | Press release | Distributed by Public on 03/05/2026 15:41
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains "forward-looking statements" reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to several factors. Factors that could cause or contribute to such differences include, but are not limited to, economic and competitive conditions, regulatory changes, and other uncertainties, as well as those factors discussed in the "Risk Factors" section and "Cautionary Statements about Forward-Looking Statements," in this Annual Report on Form 10-K, all of which are difficult to predict. Considering these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We assume no obligation to update any of these forward-looking statements, except to the extent required by applicable laws or rules. Unless the context otherwise requires, references to "Bowman," the "company," the "Company," "we," "us," and "our" refer to Bowman Consulting Group Ltd., its wholly owned subsidiaries and combined entities under common control, or either or all of them as the context may require.
Overview
Bowman is a professional services firm delivering innovative engineering, technical consulting and program management services to customers who own, develop, and maintain the built environment. We provide planning, engineering, construction management, commissioning, environmental consulting, geospatial imaging, surveying, land procurement and other advisory services to customers operating in a diverse set of end markets. We work as both a prime and sub-consultant for a broad base of public and private sector customers that generally operate in highly regulated environments.
We have a diversified business that is not dependent on any one customer service line, geographic region, or end market. We are deliberate in our efforts to balance our sources of revenue and avoid reliance on any one significant customer, service line, geography or end market concentration. Our strategic focus is on penetrating and expanding our presence in markets which best afford us opportunities to secure assignments that provide reoccurring revenue and multi-year engagements thus resulting in dependable and predictable revenue streams with 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, 2025, and 2024 was $490.0 million and $426.6 million, respectively. Gross contract revenue derived from our workforce (see Net service billing - non-GAAP below) represented 88.7% and 89.0% of gross contract revenue for the years ended December 31, 2025 and 2024, respectively. Our net income for the years ended December 31, 2025, and 2024 was $12.8 million and $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 for the years ended December 31, 2025, and 2024, respectively. See "Other Financial Information and Non-GAAP Measurements and Key Performance Indicators" below for additional information.
Methods of Evaluation
We use a variety of financial and other information in monitoring the financial condition and operating performance of our business. Some of the information we use to evaluate our operations is financial information that is in accordance with Generally Accepted Accounting Principles (GAAP), while other information may be financial in nature and either built upon GAAP results or may not be in accordance with GAAP (Non-GAAP). We use all of this information together for planning and monitoring our operations, as well as determining certain management and employee compensation.
The Company operates as a single business segment represented by our core business of providing multi-disciplinary professional engineering solutions to customers. While we evaluate revenue and other key performance indicators relating to various divisions of labor, our leadership neither manages the business nor deliberately allocates resources by service line, geography, or end market. Our financial statements present results as a single operating segment.
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Components of Income and Expense
Revenue
We generate revenue from services performed by our employees, pass-through fees from sub-consultants, and reimbursable contract costs. On our consolidated financial statements, we report gross contract revenue, which represents total revenue billed to customers excluding taxes collected from customers. Gross contract revenue less revenue derived from pass-through sub-consultant fees, reimbursable expenses and other direct expenses represents our net service billing, or that portion of our gross contract revenue attributable to services performed by our employees. Our industry uses the calculation underlying net service billing to normalize peer performance assessments and provide meaningful insight into trends over time. Refer to - Other Financial Data, Non-GAAP measurements and Key Performance Indicators below for further discussion of the use of this Non-GAAP financial measure.
In general, we do not realize profit from the pass-through of sub-consultants and reimbursable expenses. As such, contract profitability is most heavily impacted by the mix of labor and assets utilized to complete the tasks and the efficiency of those resources in completing the assignments. Our largest and most consistent direct contract cost is our labor. To increase our revenue and maximize overall profitability we carefully monitor and manage our fixed and hourly labor and utilization thereof. Maintaining an optimal level of utilization on a balanced pool of labor resources represents our greatest prospect for delivering increasing profitability.
We enter into contracts that contain two types of pricing characteristics:
Hourly, also referred to as time and materials, are common for professional and technical consulting assignments both short-term and multi-year in duration. Under these types of contracts, there is generally no predetermined maximum fee and we generally experience no risk associated with cost overruns. For hourly contracts, we negotiate billing rates and charge our customers based upon the actual hours expended toward a deliverable. These contracts may have not-to-exceed parameters requiring us to receive additional authorizations from our customer to continue working, but we likewise do not have to continue working without assurances of payment for such additional work.
Lump sum, referred to interchangeably as fixed fee, typically require the performance of some, or all, of the obligations under the contract for a specified amount, subject to price adjustments only if the scope of the project changes or unforeseen requirements arise. Our fixed fee contracts generally include a specific scope of work and defined deliverables. Lump sum contracts can involve both hourly and fixed fee pricing components. Cost plus contracts and hourly contracts with not-to exceed parameters are characterized as fixed fee contracts when we distinguish percentages of revenue based on contracts.
From a financial reporting perspective, a contract is categorized as fixed fee and therefore subjected to percentage completion accounting under Accounting Standards Codification "ASC" Topic 606 if any one discrete assignment within the contract is priced on a lump sum or unit basis. For management discussion and analysis purposes, we evaluate the percentages of our revenues that are fixed fee and hourly based on the pricing of individual assignments within our contracts.
The majority of our assignments within a contract are lump sum in nature, representing approximately 59% and 60% of our gross contract revenue for the years ended December 31, 2025 and 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 variable elements of the fee arrangement and expected cost at completion. We closely monitor our progress to completion and adjust our estimates when necessary. We do not recognize revenue from work that is performed at risk with no documented customer commitment.
Contract Costs
Contract costs consists of direct payroll costs, sub-consultant costs and other direct expenses exclusive of depreciation and amortization.
Direct payroll costs represent the portion of salaries and wages incurred in connection with the production of deliverables under customer assignments and contracts. Direct payroll costs include allocated fringe costs (i.e. health benefits, employer payroll taxes, and retirement plan contributions), paid leave and incentive compensation.
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Sub-consultants and direct expenses include both sub-consultants and other outside costs associated with performance under our contracts. Sub-consultant and direct costs are generally reimbursable by our customers with little or no mark-up under the terms of our contracts.
Performance under our contracts does not involve significant heavy machinery or other long term depreciable assets, other than geospatial equipment. Most of the equipment we employ involves desktop computers and other shared ordinary course IT equipment, along with various geospatial systems and scanners. We present direct costs exclusive of depreciation and amortization and as such we do not present gross profit on our consolidated financial statements.
Operating Expense
Operating expenses consists of selling, general and administrative costs, non-cash stock compensation, depreciation and amortization and settlements and other non-core expenses.
Selling, general and administrative expenses represent corporate and other general overhead expenses, salaries and wages not allocated to customer projects including management and administrative personnel costs, incentive compensation, personal leave, office lease and occupancy costs, legal, professional and accounting fees.
Non-cash stock compensation represents the expenses incurred with respect to shares and options issued by the Company, both vested and unvested, to employees as long-term incentives. This expense is based on the amortization of the grant date fair value of equity grants over the vesting period. Non-cash stock compensation cost for permanent equity is the grant date fair value of the awards, or the Black-Scholes-Merton value of stock options on the grant date, recognized ratably over the vesting periods of each award. Stock issued as consideration in connection with acquisitions where there is no service period, and no risk of forfeiture, is considered a component of the purchase price and does not run through our income statement as non-cash compensation expense.
Depreciation and amortization represent the depreciation and amortization expense of our property and general IT equipment, capital lease assets, tenant improvements and intangible assets.
(Gain) loss on sale represents gains or losses inclusive of foreign exchange and accumulated depreciation recapture resulting from the disposal of an asset upon the sale or retirement of such asset.
Other (Income) Expense
Other (income) expense consists of other non-operating and non-core expenses.
Tax (Benefit) Expense
Income tax (benefit) expense, current and deferred, includes estimated federal, state and local tax expense associated with our net income, as apportioned to the states in which we operate. Estimates of our tax expense include both current and deferred tax expense along with all available tax incentives and credits.
Other Financial Data, Non-GAAP Measurements and Key Performance Indicators
Backlog
We measure the value of our undelivered gross 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.
Net Service Billing
In the normal course of providing services to our customers, we routinely subcontract services and incur direct third-party contract expenses that may or may not be reimbursable and may or may not be billed to customers with mark-up. Gross contract revenue less revenue derived from pass-through sub-consultant fees, 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
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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.
Beginning with the year ended December 31, 2025, we conformed our presentation of net service billing to exclude credit losses from this non-GAAP measure. We believe this change improves comparability with industry practice and better aligns the measure with its intended purpose as a metric of service revenue generated by our professional workforce, net of sub-consultant costs and other direct pass-through expenses. For clarity of presentation, we have not recast previously published net service billing.
Adjusted EBITDA
We view Adjusted EBITDA, which is a non-GAAP financial measure, as an important indicator of normalized performance. We define Adjusted EBITDA as net income before interest expense, income taxes and depreciation and amortization, plus expenses associated with discontinued operations, legal settlements not related to our general course of business professional services, and other costs not in the ordinary course of business, non-cash stock-based compensation (inclusive of expenses associated with the adjustment of our liability for common shares subject to redemption), and other adjustments such as costs associated with raising equity and other forms of capital. Our peers may define Adjusted EBITDA differently.
Adjusted EBITDA Margin, net
Adjusted EBITDA Margin, net, which is a non-GAAP financial measure, represents Adjusted EBITDA, as defined above, as a percentage of net service billings, as defined above.
Critical Accounting Policies and Estimates
We use estimates in the determination of certain financial results. Estimates used in financial reporting utilize only information available to us at the time of formulation. These estimates are subject to change as new information becomes available. Discussed below are the accounting policies for which we believe our judgments and estimates have the greatest potential impact.
Revenue Recognition
To determine the proper revenue recognition method under ASC Topic 606, we evaluate whether two or more contracts should be combined and accounted for as one single contract and if so, whether to account for the combined or single contract as more than one performance obligation. For most of our contracts, we conclude there to be a single performance obligation because the promise to transfer individual goods or services is not separately identifiable from the commitment to the deliverable of the contract and, therefore, is not distinct.
Our performance obligations are satisfied as work progresses. We recognize revenue for our lump sum contracts ratably over time based on cost-basis percentage of completion, calculated as a percentage of direct costs incurred to date relative to estimated total direct costs of the performance obligation at completion. Contract costs include labor, sub-consultant costs and other direct costs as incurred. We recognize revenue from lump sum contracts as we advance our work and transfer results to the customer. Contract change orders covering changes in scope, specifications, design, performance or period of completion are common with our customers. In most cases, we account for contract modifications as part of the existing contracts because they are for services that are not distinct from the original contract.
We base contract estimates on various assumptions about future costs and other inputs. Uncertainties inherent in the estimating process present the possibility that actual completion costs may vary from estimates. When estimated total costs on contracts indicate a loss, we recognize these losses in the period in which we identify the loss. We record adjustments required to align revenue with costs in place on the cumulative catch-up basis in the period in which we identify the revisions. We apply changes to projected revenue from contingent fee awards or penalties during the period in which we determine such contingencies to be probable.
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Goodwill and Intangible Assets
The purchase price of an acquired business is allocated to the tangible assets and separately identifiable intangible assets acquired, less liabilities assumed, based upon their respective fair values with any excess purchase price over such fair values being recorded as goodwill. We review goodwill and intangible assets acquired in a business combination determined to have indefinite useful life annually for impairment, or more frequently if impairment indicators arise. We do not amortize such assets. We do however amortize intangible assets with estimable useful lives over such lives and review such assets for impairment if indicators are present.
We perform an annual impairment test as of October 1 of each year with quarterly confirmations that no triggering events have occurred. As our business is highly integrated and its components have similar economic characteristics, we have concluded we operate as one reporting unit at the combined entity level. We evaluate goodwill for potential impairment on an annual basis or at other times during the year if indicators of impairment exist. We evaluate goodwill for potential impairment by comparing the carrying value of the reporting unit to its fair value. When we evaluate goodwill for potential impairment, generally, we first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If we determine qualitatively that it is more likely than not that the fair value of a reporting unit is less than its carrying value, or if we decide to bypass the qualitative assessment, we perform a quantitative analysis. The quantitative analysis is used to identify both the existence of impairment and the amount of the impairment loss by comparing the estimated fair value of a reporting unit to its carrying value, including goodwill. The estimated fair value is based on forward-looking estimates of performance and cash flows of our reporting units, which are based on historical operating results, adjusted for current and expected future market conditions, as well as various internal projections and external sources. If the carrying value of the reporting unit exceeds its estimated fair value, an impairment loss would be recognized in our consolidated statement of operations in an amount equal to the excess of the carrying value over the estimated fair value, limited to the total amount of goodwill allocated to that reporting unit.
We evaluate our indefinite-lived intangible assets for impairment on October 1st of each year. When we evaluate our indefinite-lived intangible assets for potential impairment, generally, we first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the asset is less than its carrying value. If we determine qualitatively that the fair value of the asset is more likely than not less than its carrying value, or if we decide to bypass the qualitative assessment, we perform a quantitative analysis. The estimated fair value of the indefinite-lived intangible assets is based on forward-looking estimates of performance and cash flows. If the carrying value of an indefinite-lived intangible asset exceeds its estimated fair value, an impairment loss would be recognized in our consolidated income statements in an amount equal to the excess of the carrying value over the estimated fair value.
We performed our annual impairment analysis for the years ended December 31, 2025 and 2024 and did not identify any indicators of impairment.
Income Tax
We are subject to income taxes in the U.S. in which we operate and record our tax provision for the anticipated tax consequences in our reported results of operations. Tax laws are complex and subject to different interpretations by the taxpayer and respective government taxing authorities. Significant judgment is required in determining our tax expense and in evaluating our tax positions, including evaluating uncertainties in the application of tax laws and regulations.
We account for income taxes under the provisions of ASC 740, "Income Taxes" ("ASC 740"). Under ASC 740, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using tax rates in effect for the year in which the differences are expected to affect taxable income. The assessment of the realizability of deferred tax assets involves a high degree of judgment and complexity. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are expected to be realized. When we determine that it is more likely than not that we will be able to realize our deferred tax assets in the future in excess of our net recorded amount, an adjustment to the deferred tax asset would be made and reflected either in income or as an adjustment to goodwill. This determination will be made by considering various factors, including our expected future results, that in our judgment will make it more likely than not that these deferred tax assets will be realized.
Our actual effective tax rate and income tax expense could vary from estimated amounts due to the future impacts of various items, including changes in income tax laws, tax planning and our forecasted financial condition, and results of operations in future periods. Although we believe current estimates are reasonable, actual results could differ from these estimates.
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ASC 740 prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that a company has taken or expects to take on a tax return. Under ASC 740, the financial statements reflect expected future tax consequences of such positions presuming the taxing authorities' full knowledge of the position and all relevant facts, but without considering time values. Recognized income tax positions are measured at the largest amount that has a greater than 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
We receive an annual research and development tax credit in connection with certain at-risk work performed on behalf of customers. We reduce our current and deferred tax provision by the estimated net annual R&D tax credit projection, limited to the statutory allowance for utilization of the credit. We reconcile the tax credit and its impact during the subsequent year after calculating the credit in connection with our tax returns. We maintain what we believe to be an appropriate reserve against our accumulated credits. Estimates of our tax expense include both current and deferred tax expense along with all available tax incentives and credits.
The Organization for Economic Cooperation and Development's Pillar Two Model Rules established a global minimum tax framework designed to ensure that large multinational enterprise groups are subject to a minimum effective tax rate of 15% on income earned in each jurisdiction where they operate. The rules also 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 legislation to implement various provisions of Pillar Two. We are continuing to monitor legislative developments related to the Pillar Two rules in the jurisdictions where we operate. Based on legislation enacted as of December 31, 2025, and our current operating profile, we do not currently anticipate a material impact.
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Results of Operations
Consolidated results of operations
The following represents our consolidated results of operations for periods indicated (in thousands):
| For The Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Gross contract revenue | $ | 490,017 | $ | 426,564 | |||||||
|
Contract costs (exclusive of depreciation and amortization)
|
228,476 | 203,761 | |||||||||
| Operating expense | 241,881 | 224,803 | |||||||||
| Income (loss) from operations | 19,660 | (2,000) | |||||||||
| Other expense | 8,502 | 6,946 | |||||||||
| Income tax (benefit) | (1,691) | (11,980) | |||||||||
| Net income | $ | 12,849 | $ | 3,034 | |||||||
| Net margin | 2.6 | % | 0.7 | % | |||||||
|
Other financial information 1
|
|||||||||||
|
Net service billing
|
$ | 434,783 | $ | 379,669 | |||||||
| Adjusted EBITDA | 72,859 | 59,520 | |||||||||
|
Adjusted EBITDA margin, net
|
16.8 | % | 15.7 | % | |||||||
1Represents non-GAAP financial measures. See Other Financial Information and Non-GAAP key performance indicators below in results of operations.
Year ended December 31, 2025 as compared to the year ended December 31, 2024
Gross Contract Revenue
Gross contract revenue for the year ended December 31, 2025 increased $63.4 million or 14.9% to $490.0 million as compared to $426.6 million for the year ended December 31, 2024. For the year ended December 31, 2025, gross contract revenue attributable to work performed by our workforce increased $55.1 million, or 14.5% to $434.8 million or 88.7% of gross contract revenue as compared to $379.7 million or 89.0% for year ended December 31, 2024 (see Net service billing - non-GAAP). Of the $63.4 million increase in gross contract revenue during the year ended December 31, 2025, acquisitions completed in 2025 represented $8.7 million or 13.8% of the increase.
Changes in gross contract revenue ("GCR") for the year ended December 31, 2025, disaggregated between our core end markets, were as follows (in thousands other than percentages):
| For the Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| Consolidated Gross Contract Revenue | 2025 | %GCR | 2024 | %GCR | Change | % Change | |||||||||||||||||||||||||||||
|
Building Infrastructure1
|
$ | 220,233 | 44.9 | % | $ | 205,075 | 48.0 | % | $ | 15,158 | 7.4 | % | |||||||||||||||||||||||
| Transportation | 103,709 | 21.2 | % | 87,746 | 20.6 | % | 15,963 | 18.2 | % | ||||||||||||||||||||||||||
|
Power, Utilities & Energy1
|
109,841 | 22.4 | % | 89,547 | 21.0 | % | 20,294 | 22.7 | % | ||||||||||||||||||||||||||
|
Natural Resources2
|
56,234 | 11.5 | % | 44,196 | 10.4 | % | 12,038 | 27.2 | % | ||||||||||||||||||||||||||
| Total: | $ | 490,017 | 100.0 | % | $ | 426,564 | 100.0 | % | $ | 63,453 | 14.9 | % | |||||||||||||||||||||||
|
Acquired3
|
$ | 8,737 | 1.8 | % | $ | 42,454 | 10.0 | % | $ | (33,717) | (79.4) | % | |||||||||||||||||||||||
1 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.
2 Formerly Emerging Markets which represents environmental, mining, water resources, imaging and mapping and other
3 Acquired revenue in prior periods is as previously reported; four quarters post-closing, acquired revenue is reclassified as organic for the purpose of calculating organic growth rates.
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For the year ended December 31, 2025, gross contract revenue from our building infrastructure market increased $15.2 million or 7.4% as compared to the year ended December 31, 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, 39.2% of gross contract revenue was derived from residential assignments including single family, multi-family and mixed-use housing stock, 42.8% from commercial assignments including retail, hospitality and quick-serve restaurants (QSR), office and industrial, data centers and healthcare, and 18.0% from municipal assignments. Within residential, 49.1% of gross contract revenue was derived from for-sale homebuilding assignments, 44.1% from residential multi-family and 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 8.6% of our total gross contract revenue for year ended December 31, 2025. Within commercial, 45.7% of revenue was derived from office and industrial assignments, 49.2% from retail, hospitality, and quick serve restaurants and 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, 2025, revenue from transportation increased $16.0 million or 18.2% as compared to the year ended December 31, 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, 64.4% of our gross contract revenue was derived from public sector roadway customers, including state and local departments of transportation ("DOTs") and tollway operators; 23.0% 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 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 year ended December 31, 2025, revenue from power and utilities increased $20.3 million or 22.7% as compared to the year ended December 31, 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, and to increases derived from gas pipeline and electric transmission projects nationally. Within the power and utilities market, 62.4% of our gross contract revenue was derived from customers operating traditional transmission operations, 19.4% was derived from customers focused on alternative energy 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, imaging and mapping, environmental consulting, and other natural resources services. Adjusted for the change, for the twelve months ended December 31, 2025, revenue from natural resources and imaging markets increased $12.0 million or 27.2% as compared to the year ended December 31, 2024. This increase is primarily due to the acquisition of Surdex Corporation; see Note 4 - Acquisitionsfor additional information. 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 48.3% from imaging and mapping activities, 15.7% from mining activities where we have specialized in copper mining, 26.4% from water resources activities, and 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 natural resources and imaging services.
For the years ended December 31, 2025 and 2024, public sector customers, defined as direct contracts with municipalities, public agencies, or governmental authorities, represented 29.8% and 26.8% of our gross contract revenue, respectively. A portion of that increase is due to the reclassification of Pike Corporation from the private sector to the
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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.
Contract costs (exclusive of depreciation and amortization)
Total contract costs, exclusive of depreciation and amortization, increased $24.7 million or 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. For the years ended December 31, 2025 and 2024, total contract costs represented 46.6% and 47.8% of total contract revenue, respectively. For the years ended December 31, 2025 and 2024 total contract costs represented 52.6% and 53.7% of revenue attributable to our workforce, respectively (see Net Service Billing). Total contract costs include both direct payroll costs, and sub-consultants and other expenses.
Total direct payroll costs increased $16.3 million or 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 due to increased staffing resulting from acquisitions and organic growth. Total direct payroll accounted for 75.8% of total contract costs for the year ended December 31, 2025, a decrease of 1.2 percentage points as compared to 77.0% for the year ended December 31, 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 $14.8 million or 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. For the year ended December 31, 2025 and 2024, direct labor costs represented 27.1% and 27.7% of gross contract revenue, respectively and represented 30.5% and 31.1% of the revenue attributable to our workforce, respectively. Labor costs not charged directly to customer contracts are considered indirect time and are 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 $1.6 million or 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. This increase was primarily driven by a $1.5 million increase in employee payroll taxes and a $6.5 million increase in health benefits, partially offset by a $2.9 million decrease in non-cash stock compensation relating to direct payroll costs, which declined to $5.3 million in 2025 from $8.2 million in 2024.
Sub-consultants and expenses increased $8.3 million or 17.7% to $55.2 million for the year ended December 31, 2025, as compared to $46.9 million for the year ended December 31, 2024. For the years ended December 31, 2025 and 2024, sub-consultant and expenses represented 11.3% and 11.0% of gross contract revenue, respectively. We expect sub-consultant costs to be in the range of 10-15% of gross contract revenue depending on contract mix at any given time, with transportation contracts tending to have a slightly higher sub-consultant percentage. The growth in sub-consultants and expenses is directly in-line with the increase of gross contract revenue.
Operating Expense
Total operating expense increased $17.1 million or 7.6% to $241.9 million for the year ended December 31, 2025, as compared to $224.8 million for the year ended December 31, 2024.
Selling, general and administrative expenses increased $17.6 million or 8.9% to $215.1 million for the year ended December 31, 2025, as compared to $197.5 million for the year ended December 31, 2024. Indirect labor increased $8.4 million or 9.3% to $98.7 million for the year ended December 31, 2025, as compared to $90.3 million for the year ended December 31, 2024, as a result of increased staffing to accommodate growth. General overhead increased $10.4 million or 15.7% to $76.5 million for the year ended December 31, 2025, as compared to $66.1 million for the year ended December 31, 2024, due to increased costs associated with operating as a public company, geographic expansion, and the overall growth of the company. Non-cash stock compensation associated with indirect labor hours, those not charged to customer contracts, decreased ($4.1) million or (23.4%) to $13.4 million for the year ended December 31, 2025, as compared to $17.5 million for the year ended December 31, 2024.
Depreciation and amortization decreased ($0.2) million or (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. The slight decrease was primarily attributable to certain assets becoming fully depreciated and lower amortization related to prior acquisitions, partially offset by increased depreciation associated with leased assets and amortization of intangible assets acquired in recent business combinations. We continue to increase utilization of our finance lease facility as we grow. Gains on the sale of certain IT equipment and automobiles increased $0.4 million or 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.
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Income (Loss) from Operations
Income from operations increased $21.7 million to $19.7 million for the year ended December 31, 2025 as compared to ($2.0) million loss for the year ended December 31, 2024.
Other Expense
Other expense increased by $1.6 million to $8.5 million of expense for the year ended December 31, 2025 as compared to $6.9 million of expense for the year ended December 31, 2024. Interest expense increased by $1.3 million. This increase is primarily attributable to increases in finance leases and acquisitions.
Income Tax (Benefit) Expense
Income tax benefit for the year ended December 31, 2025 decreased ($10.3) million or (85.8%) to $1.7 million benefit, as compared to $12.0 million income tax benefit for the year ended December 31, 2024. As an accrual basis taxpayer, this affects the timing of the payment of tax but not the tax expense. Our effective tax rate for the year ended December 31, 2025 was (15.1)%.
Income (Loss) Before Tax Expense and Net Income
Income before tax expense increased by $20.1 million or 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. Net income increased by $9.8 million or 326.7% to $12.8 million of income for the year ended December 31, 2025, as compared to $3.0 million of income for the year ended December 31, 2024.
Other financial information and non-GAAP key performance indicators
Net service billing (non-GAAP)
Net service billing increased $55.1 million or 14.5% to $434.8 million for the year ended December 31, 2025, as compared to $379.7 million for the year ended December 31, 2024. Net service billing reconciles to gross contract revenue as follows (in thousands):
| For The Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Gross contract revenue | $ | 490,017 | $ | 426,564 | |||||||
| Less: sub-consultants, reimbursable expenses and other direct expenses | 55,234 | 46,895 | |||||||||
|
Net service billing
|
$ | 434,783 | $ | 379,669 | |||||||
Net service billing decreased by (0.3) percentage points to 88.7% of gross contract revenue for the year ended December 31, 2025, as compared to 89.0% for the year ended December 31, 2024. This change was within our expected range of 85% to 90% of gross contract revenue, and varies depending on contract mix.
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Adjusted EBITDA (non-GAAP)
Adjusted EBITDA increased $13.3 million or 22.4% to $72.9 million for the year ended December 31, 2025 as compared to $59.5 million for the year ended December 31, 2024. Adjusted EBITDA reconciles to net income as follows (in thousands):
| For The Year Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
|
Net Service Billing
|
$ | 434,783 | $ | 379,669 | $ | 55,114 | 14.5 | % | |||||||||||||||
| Net Income | $ | 12,849 | $ | 3,034 | $ | 9,815 | 323.5 | % | |||||||||||||||
| + interest expense | 9,247 | 7,951 | 1,296 | 16.3 | % | ||||||||||||||||||
| + depreciation & amortization | 27,559 | 27,828 | (269) | (1.0 | %) | ||||||||||||||||||
|
+ tax (benefit) expense
|
(1,691) | (11,980) | 10,289 | (85.9 | %) | ||||||||||||||||||
| EBITDA | $ | 47,964 | $ | 26,833 | $ | 21,131 | 78.8 | % | |||||||||||||||
| + non-cash stock compensation | 18,810 | 25,841 | (7,031) | (27.2 | %) | ||||||||||||||||||
| + settlements and other non-core expenses | 4,905 | 3,000 | 1,905 | 63.5 | % | ||||||||||||||||||
| + acquisition expenses | 1,180 | 3,846 | (2,666) | (69.3 | %) | ||||||||||||||||||
| Adjusted EBITDA | $ | 72,859 | $ | 59,520 | $ | 13,339 | 22.4 | % | |||||||||||||||
| Adjusted EBITDA margin, net | 16.8 | % | 15.7 | % | |||||||||||||||||||
For the years ended December 31, 2025 and 2024, Adjusted EBITDA includes $18.8 million and $25.8 million, respectively, relating to non-cash stock compensation expenses resulting from the on-going vesting of restricted stock awards.
Adjusted EBITDA Margin, net (non-GAAP)
Adjusted EBITDA Margin, net represents Adjusted EBITDA (as defined above) as a percentage of net service billing (as defined above). For the years ended December 31, 2025 and 2024, Adjusted EBITDA Margin, net was 16.8% and 15.7% respectively.
Backlog (other key performance metrics)
Our backlog increased $80 million or 20.1% to approximately $479 million during the year ended December 31, 2025, as compared to $399 million at December 31, 2024. At December 31, 2025 and 2024, our backlog was comprised as follows:
| December 31, 2025 | December 31, 2024 | |||||||
|
Building Infrastructure1
|
32.8 | % | 38.1 | % | ||||
| Transportation | 29.3 | % | 34.5 | % | ||||
|
Power, Utilities & Energy1
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24.0 | % | 18.4 | % | ||||
|
Natural Resources
|
13.9 | % | 9.0 | % | ||||
1 includes reclassification of data center effective June 30, 2025.
Liquidity and Capital Resources
Our principal sources of liquidity are our cash and cash equivalents balances, cash flow from operations, borrowing capacity under our Revolving Credit Facility (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, 2025, we maintained a $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
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-"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 $4.4 million at December 31, 2025 as compared to December 31, 2024.
We regularly monitor our capital requirements and believe our sources of liquidity, including cash flow from operations, existing cash, and borrowing availability under our credit and lease facilities will be sufficient to fund our projected cash requirements and strategic initiatives for the next year. To the extent we experience any potential liquidity or capital shortfalls relating to growth and acquisition, we currently expect to rely on debt financing to meet those shortfalls. We use our equity as a component of consideration in acquisitions. In addition, depending on market conditions, we may opportunistically access the public debt and equity markets.
We are actively pursuing acquisitions as part of our strategic growth initiative. At any given time, we are assessing multiple opportunities at varying stages of due diligence. These acquisition opportunities range in size, timing of closing, valuation and composition of consideration. In connection with acquisitions, we use a combination of cash, bank financing, seller financing, and equity to satisfy the purchase price. There can be no assurance that any opportunity in the process of being reviewed will close but we expect over time to utilize a meaningful portion of our current liquidity and capital resources for acquisitions.
Cash Flows
The following table summarizes our cash flows for the periods presented:
| For The Year Ended December 31, | |||||||||||
| Consolidated Statement of Cash Flows (amounts in thousands) | 2025 | 2024 | |||||||||
| Net cash provided by operating activities | $ | 35,827 | $ | 24,301 | |||||||
| Net cash used in investing activities | (35,760) | (27,466) | |||||||||
|
Net cash provided (used) by financing activities
|
4,301 | (10,824) | |||||||||
| Change in cash and cash equivalents | 4,368 | (13,989) | |||||||||
| Cash and cash equivalents, end of period | 11,066 | 6,698 | |||||||||
Operating Activities
During the year ended December 31, 2025, net cash provided by operating activities was $35.8 million, which primarily consisted of $12.8 million net income, adjusted for stock-based compensation expense of $18.8 million and depreciation and amortization expense of $27.6 million, offset by an increase in deferred taxes relating to the capitalization of research and development costs of $36.5 million, and an increase in a net cash outflow of $61.6 million from changes in operating assets and liabilities. The net outflow from changes in operating assets and liabilities was primarily due to a $23.1 million increase in accounts receivable resulting from increased billing to our customers as well as additional billing from the acquired companies, a $33.7 million decrease in accounts payable and accrued expenses and a $8.1 million net increase in contract assets and liabilities, offset by a $3.2 million decrease in prepaid expenses, inclusive of a long-term accrual relating to an uncertain tax position with respect to the capitalization of research and development expenses.
During the year ended December 31, 2024, net cash provided by operating activities was $24.3 million, which primarily consisted of $3.0 million net income, adjusted for stock-based compensation expense of $25.7 million and depreciation and amortization expense of $28.4 million, offset by an increase in deferred taxes relating to the capitalization of research and development costs of $20.0 million, and an increase in a net cash inflow of $14.5 million from changes in operating assets and liabilities. The net inflow from changes in operating assets and liabilities was primarily due to a $9.3 million increase in accounts receivable resulting from increased billing to our customers as well as additional billing from the acquired companies, a $5.7 million increase in prepaid expenses and a $7.1 million net increase in contract assets and liabilities, offset by a $7.6 million increase in accounts payable and accrued expenses, inclusive of a long-term accrual relating to an uncertain tax position with respect to the capitalization of research and development expenses.
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Investing Activities
Net cash used in investing activities was $35.8 million for the year ended December 31, 2025, $35.2 million was related to acquisitions that occurred in 2025 and $2.4 million was for purchases of property and equipment.
Financing Activities
Net cash provided by financing activities was $4.3 million during the year ended December 31, 2025. This was primarily due to net borrowing of $58.3 million from our Revolving Credit Facility, offset by $5.2 million of payments for the purchase of treasury stock, $18.8 million for repurchase of common stock, $12.8 million of payments on finance leases and $17.6 million of payments on notes payable and our fixed lines of credit.
Credit Facilities and Other Financing
As of December 31, 2025, we maintained a $210.0 million revolving credit facility (the "Revolving Credit Facility") pursuant to a Credit Agreement, as amended, with lenders, Bank of America N.A., as Administrative Agent, the Swingline Lender and L/C Issuer, TD Bank, N.A. and PNC Bank. The Revolving Credit Facility has a maturity date of May 2, 2029.
On March 12, 2025, we entered into a First Amendment to the Credit Agreement, which increased the maximum aggregate revolving commitments from $100.0 million to $140.0 million. On October 30, 2025, we entered into a Second Amendment to the Credit Agreement and Joinder Agreement, which increased the maximum aggregate revolving commitments to $210.0 million and expanded the banking syndicate to include PNC Bank, National Association.
On March 3, 2026, we entered in to a Third Amendment to the Credit Agreement and Joinder Agreement, which increased the maximum aggregate revolving commitments from $210.0 million to $250.0 million.
Under the terms of the Revolving Credit Facility, available cash in our primary operating account sweeps against the outstanding balance every evening. As of December 31, 2025, the balance on this Revolving Credit Facility was $95.4 million.
The Revolving Credit Facility is secured by substantially all the assets of the Company and the subsidiary guarantors. Under the Revolving Credit 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 Credit Agreement. As of December 31, 2025, we were in compliance with all covenants.
We utilize master lease facilities primarily with Honour Capital LLC ("Honour") and Enterprise Leasing ("Enterprise"). The Honour Capital lease facility finances our acquisition of IT infrastructure, geospatial and survey equipment, furniture and other long-lived assets. The Enterprise lease facility finances the acquisition of field trucks and other service vehicles. At December 31, 2025, we maintained a fleet of approximately 500 vehicles. All of our leasing facilities allow for both operating and finance leasing. We allocate finance lease payments between amortization and interest. The payment terms on the lease agreements range between 30 and 50 months with payments totaling approximately $0.6 million per month. We utilize a third party valuation specialist to formulate the incremental borrowing rates for the Company, to calculate the present value on new leases.
We regularly evaluate our options with respect to capital and our requirements for operations and growth. We do not limit our consideration to traditional bank financing, but rather include other structured debt and equity as option for additional capital.
For more information about our credit facilities, see Note 11 - Revolving Credit Facility and Fixed Credit Facility.
Other Acquisitions
For information on the terms of additional promissory notes issued by the Company in connection with acquisitions during 2025 and 2024 that were not deemed significant acquisitions, see Note 4 - Acquisitionsand Note 12 - Notes Payable.
Off-Balance Sheet Arrangements
We have no material off-balance sheet arrangements, no special purpose entities, and no activities that include non-exchange-traded contracts accounted for at fair value.
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Effects of Inflation
Based on our analysis of the periods presented, we believe that inflation has not had a material effect on our operating results. There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition.
Bowman Consulting Group Ltd. published this content on March 05, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 05, 2026 at 21:41 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]