Second Quarter 2026
Filed Jul 29, 2026Everforth Reports Second Quarter 2026 Results Revenues, Net Income, Adjusted EBITDA and Adjusted EBITDA Margin Exceed the High-End of Guidance Estimates
Second-quarter revenue, net income, adjusted EBITDA and margins declined from the prior-year period, while sequential revenue, net income and adjusted EBITDA improved. Management issued third-quarter revenue guidance of $994.0 million to $1,024.0 million and adjusted EBITDA guidance of $95.0 million to $105.0 million.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Consolidated revenuesGAAP | $1,007.0 million | – | – |
| Commercial Segment revenuesGAAP | $701.7 million | – | – |
| Federal Government Segment revenuesGAAP | $305.3 million | – | – |
| Costs of servicesGAAP | $722.4 million | – | – |
| Gross profitGAAP | $284.6 million | – | – |
| Consolidated gross marginGAAP | 28.3 % | – | a compression of 40 basis points |
| Commercial Segment gross marginGAAP | 32.1 % | – | down 90 basis points year-over-year |
| Federal Government Segment gross marginGAAP | 19.6 % | – | up 40 basis points year over year |
| Selling, general, and administrative expensesGAAP | $226.2 million | – | – |
| Acquisition, integration, and strategic planning expensesGAAP | $9.8 million | – | – |
| Amortization of intangible assetsGAAP | $17.3 million | – | – |
| Operating incomeGAAP | $41.1 million | – | – |
| Interest expenseGAAP | $(20.4) million | – | – |
| Income before income taxesGAAP | $20.7 million | – | – |
| Provision for income taxesGAAP | $6.5 million | – | – |
| Net incomeGAAP | $14.2 million | – | – |
| Earnings per diluted shareGAAP | $0.35 | – | – |
| Adjusted Net Incomenon-GAAP | $37.2 million | – | – |
| Adjusted Net Income per diluted sharenon-GAAP | $0.91 | – | – |
| Adjusted EBITDAnon-GAAP | $96.7 million | – | – |
| Adjusted EBITDA marginnon-GAAP | 9.6 % | – | – |
| Operating cash flowsGAAP | $52.2 million | – | – |
| Free Cash Flownon-GAAP | $46.3 million | – | – |
| Commercial Segment IT Consulting book-to-bill ratio for the trailing-twelve-month periodother | 1.2 to 1 | – | – |
| Federal Government Segment new contract awards for the trailing-twelve-month periodother | $0.9 billion | – | – |
| Federal Government Segment book-to-bill ratio for the trailing-twelve-month periodother | 0.8 to 1 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Commercial SegmentFour of the industries decreased year-over-year, while TMT increased by $7.7 million or 5.6 percent. Gross margin was primarily affected by a lower mix of high-margin permanent placement revenues and changes in foreign exchange rates primarily related to the delivery center in Mexico. | $701.7 million | – | – |
| Federal Government SegmentThe year-over-year revenue decline was attributable to decreases in Defense and Intelligence and Federal Civilian, partially offset by increases in National Security and other clients. Gross-margin improvement was driven by focused efforts to improve profitability across the contract portfolio. | $305.3 million | – | – |
Third Quarter 2026 outlook
- Revenue$994.0 million to $1,024.0 million
- Gross margin28.0 % to 28.5 %
- Operating expenses$220.4 million to $221.9 million
- Tax rate29.0 % to 29.0 %
- NoteAmortization of intangible assets: $17.3 million to $17.3 million
- NoteNet income: $14.5 million to $23.0 million
- NoteEarnings per diluted share: $0.36 to $0.56
- NoteAdjusted EBITDA: $95.0 million to $105.0 million
- NoteAdjusted Net Income: $37.8 million to $44.8 million
- NoteAdjusted Net Income per diluted share: $0.92 to $1.10
- NoteAdjusted EBITDA margin: 9.6 % to 10.3 %
- NoteNon-cash expenses included in SG&A expenses: $27.2 million
- NoteStock-based compensation included in non-cash expenses: $14.0 million
- NoteDepreciation included in non-cash expenses: $10.1 million
- NoteAmortization related to capitalized cloud-based application implementation costs included in non-cash expenses: $3.1 million
- NoteAcquisition, integration, and strategic planning expenses: approximately $7.5 million to $9.5 million
- NoteCash tax savings benefit of the tax deduction received from amortization of goodwill and trademarks: approximately $9.6 million per quarter ($0.24 per diluted share)
Capital returns
- Repurchased 0.4 million shares of common stock for $11.5 million at an average price of $30.07 per share.
- Approximately $923 million remained available at quarter end for repurchases under the Company's stock repurchase plan.
- Repaid $23.9 million in debt.
What drove it
- Management cited strength across the Commercial enterprise platform portfolio and improving bookings conversion as support for quarterly performance.
- TMT increased by $7.7 million or 5.6 percent.
- Federal Government Segment gross margin improvement reflected focused efforts to improve profitability across the contract portfolio.
- Commercial IT Consulting trailing-twelve-month book-to-bill ratio was 1.2 to 1.
Concerns
- Consolidated revenues were $1,007.0 million compared with $1,020.6 million in the second quarter of 2025.
- Commercial Segment revenue and Federal Government Segment revenue were below their respective prior-year figures.
- Consolidated gross margin was 28.3 %, a compression of 40 basis points from the second quarter of 2025.
- Commercial Segment gross margin was down 90 basis points year-over-year, primarily due to lower mix of high-margin permanent placement revenues and foreign exchange changes.
- SG&A expenses were $226.2 million compared with $216.8 million in the prior-year period.
- Net income was $14.2 million compared with $29.3 million in the second quarter of 2025, while Adjusted EBITDA was $96.7 million compared with $108.5 million.
What to watch
- Third-quarter revenues guided to $994.0 million to $1,024.0 million.
- Third-quarter gross margin guided to 28.0 % to 28.5 % and Adjusted EBITDA margin guided to 9.6 % to 10.3 %.
- Commercial bookings conversion and the trailing-twelve-month Commercial IT Consulting book-to-bill ratio of 1.2 to 1.
- Federal Government Segment contract awards of $0.9 billion and trailing-twelve-month book-to-bill ratio of 0.8 to 1.
- Execution of strategic initiatives cited in guidance, including updates to the go-to market strategy, outsourcing of certain back-office functions, ERP implementation, and integration of Quinnox.
- Use of the new five-year $600 million revolving facility completed in July.
Balance sheet and cash flow
- Cash and cash equivalents of $152.9 million at June 30, 2026.
- Availability of approximately $180.0 million under the Company's $500.0 million Senior Secured Revolving Credit Facility (due 2028).
- Term Loan A facility with outstanding balance of $97.5 million (due 2028).
- Term Loan B facility with outstanding balance of $486.3 million (due 2030).
- Senior unsecured notes totaling $550.0 million at 4.625 percent (due 2028).
- Operating cash flows were $52.2 million and Free Cash Flow was $46.3 million.
- Subsequent to quarter end, in July the Company completed refinancing and upsizing of its revolver, replacing the previous revolver and Term Loan A with a new five-year $600 million revolving facility.
Analysis
Everforth reported second-quarter consolidated revenues of $1,007.0 million, compared with $1,020.6 million in the second quarter of 2025 and $968.3 million in the prior quarter. Commercial Segment revenues were $701.7 million and Federal Government Segment revenues were $305.3 million. Management attributed the Commercial result to strength across its enterprise platform portfolio and improving bookings conversion. TMT increased by $7.7 million or 5.6 percent, while four other Commercial industries decreased year-over-year. The Federal revenue decline reflected decreases in Defense and Intelligence and Federal Civilian, partly offset by National Security and other clients.
Profitability was lower than the prior-year period but improved sequentially. Consolidated gross margin was 28.3 %, a compression of 40 basis points year-over-year, and adjusted EBITDA margin was 9.6 % compared with 10.6 % in the second quarter of 2025. Commercial gross margin was 32.1 %, down 90 basis points year-over-year, primarily due to lower mix of high-margin permanent placement revenues and foreign exchange changes related to the delivery center in Mexico. Federal Government gross margin was 19.6 %, up 40 basis points year over year as the company focused on contract-portfolio profitability.
SG&A expenses increased to $226.2 million from $216.8 million in the prior-year period and included $9.8 million in acquisition, integration, and strategic planning expenses. Operating income was $41.1 million, net income was $14.2 million, and earnings per diluted share were $0.35. Adjusted Net Income was $37.2 million, or $0.91 per diluted share, while Adjusted EBITDA was $96.7 million. Operating cash flows were $52.2 million and Free Cash Flow was $46.3 million.
Capital allocation included repurchases of 0.4 million shares for $11.5 million and repayment of $23.9 million in debt. At June 30, 2026, cash and cash equivalents were $152.9 million, and approximately $923 million remained under the repurchase plan. Following quarter end, Everforth replaced its previous revolver and Term Loan A with a new five-year $600 million revolving facility, improving stated financial flexibility.
For the third quarter of 2026, the company guided revenues to $994.0 million to $1,024.0 million, gross margin to 28.0 % to 28.5 %, and adjusted EBITDA to $95.0 million to $105.0 million. The adjusted EBITDA margin range is 9.6 % to 10.3 %. The outlook assumes no deterioration in the markets served, making bookings conversion, the Commercial trailing-twelve-month book-to-bill ratio of 1.2 to 1, and the Federal Government trailing-twelve-month book-to-bill ratio of 0.8 to 1 key operating indicators.
Management, verbatim
Everforth delivered solid second quarter 2026 results, with revenues of $1 billion and Adjusted EBITDA margin of 9.6 percent both exceeding our expectations.
Ted Hanson, Chief Executive Officer of Everforth, Inc.
Performance in the quarter was supported by strength across our Commercial enterprise platform portfolio, where improving bookings conversion contributed meaningfully to our results and drove revenues above guidance for the quarter.
Ted Hanson, Chief Executive Officer of Everforth, Inc.
We enter this next phase of AI adoption with confidence in both our strategy and ability to execute.
Ted Hanson, Chief Executive Officer of Everforth, Inc.
Not in the filing
stated, not guessed- Previous-quarter outlook was not provided, so comparison of actual results with prior guidance is unavailable.
- Dividend declarations or payments were not reported.
- Prior-year and prior-quarter comparisons for operating cash flows and Free Cash Flow were not reported.
- Basic earnings per share figures were not available in the supplied filing text, which ends immediately after the Basic earnings per share label.
- Diluted weighted-average shares outstanding were not available in the supplied filing text.
- Third-quarter guidance for debt, cash, operating cash flow, Free Cash Flow, share repurchases, or dividends was not reported.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.