Third Quarter 2026
Filed Oct 28, 2026Everforth Reports Third Quarter 2026 Results Continued Momentum with Revenues, Net Income, and Adjusted EBITDA Above Guidance Adjusted EBITDA Margin at the Top End of the Guidance Range
Third-quarter revenues reached $1,031.4 million and management said revenues, net income, and Adjusted EBITDA surpassed the high end of guidance, but gross margin, net income, EPS, Adjusted EBITDA, operating cash flow, and free cash flow were below the prior-year period. Fourth-quarter estimates call for lower revenues and Adjusted EBITDA than reported in the third quarter.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Consolidated revenues, three months ended September 30, 2026GAAP | $1.03B | – | – |
| Consolidated gross margin, three months ended September 30, 2026GAAP | 28.3 % | – | a compression of 110 basis points |
| Gross profit, three months ended September 30, 2026GAAP | $291.6M | – | – |
| Selling, general, and administrative expenses, three months ended September 30, 2026GAAP | $217.7M | – | – |
| Amortization of intangible assets, three months ended September 30, 2026GAAP | $17.3M | – | – |
| Operating income, three months ended September 30, 2026GAAP | $56.6M | – | – |
| Interest expense, net, three months ended September 30, 2026GAAP | −$20.2M | – | – |
| Income before income taxes, three months ended September 30, 2026GAAP | $36.4M | – | – |
| Provision for income taxes, three months ended September 30, 2026GAAP | $13.3M | – | – |
| Net income, three months ended September 30, 2026GAAP | $23.1M | – | – |
| Basic earnings per share, three months ended September 30, 2026GAAP | $0.56 | – | – |
| Diluted earnings per share, three months ended September 30, 2026GAAP | $0.56 | – | – |
| EBITDA, three months ended September 30, 2026non-GAAP | $85.5M | – | – |
| Adjusted EBITDA, three months ended September 30, 2026non-GAAP | $106.3M | – | – |
| Adjusted EBITDA margin, three months ended September 30, 2026non-GAAP | 10.3 % | – | – |
| Non-GAAP net income, three months ended September 30, 2026non-GAAP | $29.8M | – | – |
| Adjusted Net Income, three months ended September 30, 2026non-GAAP | $45.5M | – | – |
| Adjusted Net Income per diluted share, three months ended September 30, 2026non-GAAP | $1.11 | – | – |
| Cash provided by operating activities, three months ended September 30, 2026GAAP | $58.7M | – | – |
| Capital expenditures, three months ended September 30, 2026GAAP | −$12.2M | – | – |
| Free Cash Flow, three months ended September 30, 2026non-GAAP | $46.5M | – | – |
| Cash used in investing activities, three months ended September 30, 2026GAAP | −$12.2M | – | – |
| Cash provided by (used in) financing activities, three months ended September 30, 2026GAAP | −$51.5M | – | – |
| Consolidated revenues, nine months ended September 30, 2026GAAP | $3.01B | – | – |
| Gross profit, nine months ended September 30, 2026GAAP | $842.8M | – | – |
| Selling, general, and administrative expenses, nine months ended September 30, 2026GAAP | $668.3M | – | – |
| Operating income, nine months ended September 30, 2026GAAP | $125.4M | – | – |
| Net income, nine months ended September 30, 2026GAAP | $42.8M | – | – |
| Diluted earnings per share, nine months ended September 30, 2026GAAP | $1.04 | – | – |
| Adjusted EBITDA, nine months ended September 30, 2026non-GAAP | $286.6M | – | – |
| Adjusted Net Income, nine months ended September 30, 2026non-GAAP | $111.4M | – | – |
| Adjusted Net Income per diluted share, nine months ended September 30, 2026non-GAAP | $2.70 | – | – |
| Cash provided by operating activities, nine months ended September 30, 2026GAAP | $129.4M | – | – |
| Free Cash Flow, nine months ended September 30, 2026non-GAAP | $101.9M | – | – |
| Commercial IT consulting book-to-bill ratio, trailing-twelve-month periodother | 1.1 to 1 | – | – |
| Federal Government Segment new contract awards, trailing-twelve-month periodother | $1B | – | – |
| Federal Government Segment book-to-bill ratio, trailing-twelve-month periodother | 0.9 to 1 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Commercial Segment, three months ended September 30, 2026TMT increased by $20.0 million, or 14.6 percent, and Business Services increased by $5.6 million, or 7.2 percent, year-over-year; the remaining three industries decreased. Sequentially, TMT increased by $12.4 million, or 8.6 percent, and Business Services increased by $6.3 million, or 8.2 percent, and the remaining three industries were stable. | $719.9M | – | – |
| Federal Government Segment, three months ended September 30, 2026National Security and Federal Civilian revenues increased year-over-year, partially offset by decreases in Defense and Intelligence and other clients. | $311.5M | – | – |
Fourth Quarter 2026 outlook
- Revenue$965.0 million to $995.0 million
- Gross margin28.4 % to 28.7 %
- Operating expensesSG&A expenses: $210.9 million
- Tax rate34.0 %
- NoteAmortization of intangible assets: $17.3 million
- NoteNet income: $17.9 million to $25.5 million
- NoteEarnings per diluted share: $0.43 to $0.62
- NoteAdjusted EBITDA: $93.0 million to $103.0 million
- NoteAdjusted EBITDA margin: 9.6 % to 10.4 %
- NoteAdjusted Net Income: $39.2 million to $45.7 million
- NoteAdjusted Net Income per diluted share: $0.95 to $1.11
- NoteThere are 61 Billable Days in the fourth quarter of 2026, which is equal to the year-ago period, and 3 fewer days than the third quarter of 2026.
Capital returns
- Reduced debt by $52.8 million, including payments of $43.8 million under the senior secured credit facility and $9.0 million of senior unsecured notes repurchased in the open market at a discount.
- There were no repurchases of the Company's common stock during the quarter.
- Approximately $923 million remained available for repurchases under the Company's stock repurchase plan.
What drove it
- Management said strong Commercial and Federal bookings reflect continued customer demand for AI and data, cybersecurity, cloud, and IT modernization services.
- Commercial Segment represented 70 percent of total revenues and Federal Government Segment represented 30 percent of total revenues.
- Commercial gross-margin compression reflected a lower mix of high-margin permanent placement revenues, foreign currency exchange rates primarily related to the delivery center in Mexico, and a solutions-mix shift toward cloud and infrastructure services with lower gross margins.
- Federal Government Segment gross-margin compression was primarily due to increased revenues from cost reimbursable contracts, which carry a lower margin than other contract types.
- SG&A expenses included $8.3 million in acquisition, integration, and strategic planning expenses, compared with $4.2 million in the prior-year period.
Concerns
- Consolidated gross margin was 28.3 %, a compression of 110 basis points from the third quarter of 2025.
- Commercial Segment gross margin was 31.9 %, down 130 basis points year-over-year, while Federal Government Segment gross margin was 19.8 %, down 50 basis points year-over-year.
- Net income was $23.1 million compared with $38.1 million in the third quarter of 2025.
- Adjusted EBITDA was $106.3 million compared with $112.6 million in the third quarter of 2025.
- Fourth-quarter revenue estimates of $965.0 million to $995.0 million are below third-quarter revenues of $1,031.4 million.
- The fourth quarter has the lowest number of billable days in the year because of the holidays.
What to watch
- Execution against fourth-quarter estimates for revenues of $965.0 million to $995.0 million and Adjusted EBITDA of $93.0 million to $103.0 million.
- Whether Commercial Segment mix continues toward cloud and infrastructure services and the resulting effect on gross margin.
- The impact of cost reimbursable contracts on Federal Government Segment gross margin.
- Commercial IT consulting book-to-bill ratio of 1.1 to 1 and Federal Government Segment book-to-bill ratio of 0.9 to 1.
- Progress of strategic initiatives, including go-to-market updates, outsourcing of certain back-office functions, ERP implementation, and Quinnox integration.
Balance sheet and cash flow
- Cash and cash equivalents were $147.5 million at September 30, 2026, compared with $161.2 million at December 31, 2025.
- Working capital was $528.5 million at September 30, 2026, compared with $491.9 million at December 31, 2025.
- Long-term debt was $1,391.0 million at September 30, 2026, compared with $1,169.4 million at December 31, 2025.
- Availability was approximately $227.0 million under the Company's $600.0 million senior secured revolving credit facility due 2031.
- The Term Loan B facility had an outstanding balance of $485.0 million due 2030.
- Senior unsecured notes totaled $541.0 million at 4.625 percent due 2028.
- The Company completed the refinancing and upsizing of its revolver, replacing the previous revolver and Term Loan A with a new five-year $600 million revolving credit facility, due in 2031.
Analysis
Everforth reported third-quarter consolidated revenues of $1,031.4 million, compared with $1,011.4 million in the third quarter of 2025 and $1,007.0 million in the second quarter of 2026. Commercial Segment revenue was $719.9 million and Federal Government Segment revenue was $311.5 million. Within Commercial, TMT and Business Services increased year-over-year, while the remaining three industries decreased. National Security and Federal Civilian revenue increased year-over-year in Federal, partly offset by declines in Defense and Intelligence and other clients.
Profitability declined against the prior-year quarter. Consolidated gross margin was 28.3 %, versus 29.4 %, with management citing lower permanent-placement mix, foreign-exchange effects related primarily to Mexico, and stronger growth in lower-margin cloud and infrastructure services. Federal gross margin also declined as cost reimbursable contracts represented a greater revenue mix. Operating income was $56.6 million, net income was $23.1 million, and diluted EPS was $0.56, compared with $67.9 million, $38.1 million, and $0.87, respectively, in the prior-year quarter.
Non-GAAP earnings and cash generation also trailed the prior-year period, despite improving from the immediately preceding quarter on the reported measures. Adjusted EBITDA was $106.3 million, with a 10.3 % margin, compared with $112.6 million and 11.1 % in the third quarter of 2025. Adjusted Net Income was $45.5 million and Adjusted Net Income per diluted share was $1.11. Cash provided by operating activities was $58.7 million and Free Cash Flow was $46.5 million, compared with $83.9 million and $72.0 million, respectively, in the prior-year quarter.
Capital allocation centered on debt and liquidity. The company refinanced and upsized its revolver to a new five-year $600 million revolving credit facility due in 2031, reduced debt by $52.8 million during the quarter, and ended the period with $147.5 million of cash and cash equivalents. There were no common-stock repurchases during the quarter, although approximately $923 million remained available under the repurchase plan. Long-term debt was $1,391.0 million at September 30, 2026, compared with $1,169.4 million at December 31, 2025.
Fourth-quarter estimates call for revenue of $965.0 million to $995.0 million, gross margin of 28.4 % to 28.7 %, and Adjusted EBITDA of $93.0 million to $103.0 million. The outlook assumes no deterioration in the markets served and incorporates 61 Billable Days, equal to the year-ago period and 3 fewer than the third quarter of 2026. Management identified ongoing customer demand in AI and data, cybersecurity, cloud, and IT modernization, while the reported book-to-bill ratios of 1.1 to 1 for Commercial IT consulting and 0.9 to 1 for Federal Government remain key demand indicators.
Management, verbatim
Everforth’s third quarter 2026 results demonstrated continued momentum in the business. Revenues of $1.03 billion and Adjusted EBITDA of $106.3 million surpassed the high end of our guidance, while Adjusted EBITDA margin of 10.3 percent was at the top end of our guidance range.
Ted Hanson, Chief Executive Officer of Everforth, Inc.
As we enter the final quarter of the year, strong Commercial and Federal bookings reflect continued customer demand for AI and data, cybersecurity, cloud, and IT modernization services.
Ted Hanson, Chief Executive Officer of Everforth, Inc.
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so comparison of actual results with prior guidance is unavailable.
- Dividend declaration or payment information was not reported.
- Consolidated operating margin was not reported.
- Prior-year and prior-quarter percentage changes for consolidated revenue, net income, EPS, Adjusted EBITDA, operating cash flow, and Free Cash Flow were not reported.
- Segment revenue percentage changes were not reported for the Commercial Segment and Federal Government Segment.
- Prior-period balance-sheet cash, debt, facility-availability, and stock-repurchase-plan availability figures on a comparable quarterly basis were not reported.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.