10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_____________________________________________

FORM 10-Q

_____________________________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-40371

_____________________________________________

BOWMAN CONSULTING GROUP LTD.

(Exact Name of Registrant as Specified in its Charter)

_____________________________________________

Delaware	54-1762351
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
12355 Sunrise Valley Drive, Suite 520 Reston, Virginia	20191
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (703) 464-1000

_____________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	BWMN	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	o	Smaller reporting company	x
Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ o No x

As of August 8, 2023, the registrant had 14,602,711 shares of common stock outstanding.

Table of Contents

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	1
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and June 30, 2022	2
	Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2023 and June 30, 2022	4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and June 30, 2022	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	48
PART II.	OTHER INFORMATION	49
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	51
	Signatures	52

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

BOWMAN CONSULTING GROUP LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands except per share data)

	June 30, 2023		December 31, 2022
	(Unaudited)
ASSETS
Current Assets
Cash and equivalents	$	9,746	$	13,282
Accounts receivable, net	81,874		64,443
Contract assets	26,050		16,321
Notes receivable - officers, employees, affiliates, current portion	938		1,016
Prepaid and other current assets	11,723		7,068
Total current assets	130,331		102,130
Non-Current Assets
Property and equipment, net	26,874		25,104
Operating lease, right-of-use assets	39,476		30,264
Goodwill	77,106		53,210
Notes receivable	903		903
Notes receivable - officers, employees, affiliates, less current portion	1,387		1,417
Other intangible assets, net	39,763		27,950
Deferred tax asset, net	21,098		13,759
Other assets	1,082		1,020
Total Assets	$	338,020	$	255,757
LIABILITIES AND EQUITY
Current Liabilities
Revolving Credit Facility	$	21,189	$	–
Accounts payable and accrued liabilities	32,878		40,293
Contract liabilities	10,046		6,370
Notes payable, current portion	12,438		10,168
Operating lease obligation, current portion	8,153		6,949
Finance lease obligation, current portion	6,001		5,297
Total current liabilities	90,705		69,077
Non-Current Liabilities
Other non-current obligations	28,827		356
Notes payable, less current portion	16,734		16,276
Operating lease obligation, less current portion	36,610		28,087
Finance lease obligation, less current portion	14,619		14,254
Pension and post-retirement obligation, less current portion	4,881		4,848
Total liabilities	$	192,376	$	132,898
Shareholders' Equity
Preferred Stock, $0.01 par value; 5,000,000 shares authorized, no shares issued and outstanding	$	–	$	–
Common stock, $0.01 par value; 30,000,000 shares authorized; 17,130,179 shares issued and 14,600,293 outstanding, and 15,949,805 shares issued and 13,556,550 outstanding, respectively	171		159
Additional paid-in-capital	189,351		162,922
Accumulated other comprehensive income	557		578
Treasury stock, at cost; 2,529,886 and 2,393,255, respectively	(24,417)		(20,831)
Stock subscription notes receivable	(125)		(173)
Accumulated deficit	(19,893)		(19,796)
Total shareholders' equity	$	145,644	$	122,859
TOTAL LIABILITIES AND EQUITY	$	338,020	$	255,757

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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BOWMAN CONSULTING GROUP LTD.

CONDENSED CONSOLIDATED INCOME STATEMENTS

(Amounts in thousands except per share data)

(Unaudited)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Gross Contract Revenue	$	82,755	$	62,399	$	158,855	$	114,860
Contract costs: (exclusive of depreciation and amortization below)
Direct payroll costs	32,075		25,071		60,919		45,746
Sub-consultants and expenses	8,963		5,983		17,501		10,743
Total contract costs	41,038		31,054		78,420		56,489
Operating Expenses:
Selling, general and administrative	38,340		28,065		71,965		50,868
Depreciation and amortization	4,719		2,823		8,285		5,213
(Gain) on sale	(226)		(27)		(237)		(32)
Total operating expenses	42,833		30,861		80,013		56,049
Income (loss) from operations	(1,116)		484		422		2,322
Other expense	1,143		994		2,358		1,491
Income (loss) before tax expense	(2,259)		(510)		(1,936)		831
Income tax (benefit) expense	(1,625)		(190)		(1,839)		(306)
Net income (loss)	$	(634)	$	(320)	$	(97)	$	1,137
Earnings allocated to non-vested shares	–		–		$	–	$	191
Net income (loss) attributable to common shareholders	$	(634)	$	(320)	$	(97)	$	946
Earnings (loss) per share
Basic	$	(0.05)	$	(0.03)	$	(0.01)	$	0.09
Diluted	$	(0.05)	$	(0.03)	$	(0.01)	$	0.09
Weighted average shares outstanding:
Basic	12,276,173		10,761,172		12,022,550		10,346,089
Diluted	12,276,173		10,761,172		12,022,550		10,427,602

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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BOWMAN CONSULTING GROUP LTD.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net Income (loss)	$	(634)	$	(320)	$	(97)	$	1,137
Other comprehensive income (loss)
Pension and post-retirement adjustments	(11)		–		(21)		–
Other comprehensive income (loss)	(11)		–		(21)		–
Income tax provision related to items of other comprehensive income (loss)	–		–		–		–
Other comprehensive income (loss), net of tax	(11)		–		(21)		–
Comprehensive income (loss), net of tax	$	(645)	(320)		$	(118)	1,137

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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BOWMAN CONSULTING GROUP LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the Three Months Ended June 30, 2023 and 2022

(Amounts in thousands except per share data)

(Unaudited)

	Common Stock			Additional Paid-in Capital		Treasury Stock			Accumulated  Other Comprehensive Income		Stock Subscription Notes Receivable		Accumulated Deficit		Total Shareholders' Equity
	Shares	Amount				Shares	Amount
Balance at March 31, 2022	14,809,363	$	148	$	139,996	(2,247,354)	$	(18,476)	$	–	$	(253)	$	(23,344)	$	98,071
Issuance of new common shares in common stock offering	—	—		—		–	–		–		–		–		—
Issuance of new common shares	476,796	5		7,936		–	–		–		–		–		7,941
Purchase of treasury stock	–	–		–		(91,264)	(1,381)		–		–		–		(1,381)
Issuance of new common shares under stock compensation plan	290,416	3		(3)		–	–		–		–		–		–
Issuance of new common shares under employee stock purchase plan	25,858	–		311		–	–		–		–		–		311
Stock based compensation	–	–		3,799		–	–		–		–		–		3,799
Collection on stock subscription notes receivable	–	–		–		–	–		–		23		–		23
Net loss	–	–		–		–	–		–		–		(320)		(320)
Balance at June 30, 2022	15,602,433	$	156	$	152,039	(2,338,618)	$	(19,857)	$	–	$	(230)	$	(23,664)	$	108,444
Balance at March 31, 2023	16,019,601	$	160	$	167,440	(2,425,755)	$	(21,498)	$	568	$	(151)	$	(19,259)	$	127,260
Issuance of new common shares	504,637	3		14,867		–	–		–		–		–		14,870
Purchase of treasury stock	–	–		–		(104,131)	(2,919)		–		–		–		(2,919)
Issuance of new common shares under stock compensation plan	566,882	6		(6)		–	–		–		–		–		–
Issuance of new common shares under employee stock purchase plan	15,058	–		379		–	–		–		–		–		379
Stock based compensation	–	–		6,337		–	–		–		–		–		6,337
Collections on stock subscription notes receivable	–	–		–		–	–		–		26		–		26
Exercises of conversion feature of convertible note	24,001	2		334		–	–		–		–		–		336
Other comprehensive loss, net of tax	–	–		–		–	–		(11)		–		–		(11)
Net loss	–	–		–		–	–		–		–		(634)		(634)
Balance at June 30, 2023	17,130,179	$	171	$	189,351	(2,529,886)	$	(24,417)	$	557	$	(125)	$	(19,893)	$	145,644

    

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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BOWMAN CONSULTING GROUP LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the Six Months Ended June 30, 2023 and 2022

(Amounts in thousands except per share data)

(Unaudited)

	Common Stock			Additional Paid-in Capital		Treasury Stock			Accumulated  Other Comprehensive Income		Stock Subscription Notes Receivable		Accumulated Deficit		Total Shareholders' Equity
	Shares	Amount				Shares	Amount
Balance at January 1, 2022	13,690,868	$	137	$	120,842	(2,201,289)	$	(17,488)	$	–	$	(277)	$	(24,801)	$	78,413
Issuance of new common shares in common stock offering	1,057,500	11		15,464		–	–		–		–		–		15,475
Issuance of new common shares	486,629	5		8,110		–	–		–		–		–		8,115
Purchase of treasury stock	–	–		–		(137,329)	(2,369)		–		–		–		(2,369)
Issuance of new common shares under stock compensation plan	321,373	3		(3)		–	–		–		–		–		–
Issuance of new common shares under employee stock purchase plan	46,063	–		593		–	–		–		–		–		593
Stock based compensation	–	–		7,025		–	–		–		–		–		7,025
Collection on stock subscription notes receivable	–	–		–		–	–		–		47		–		47
Conversion of redeemable common stock to permanent equity	–	–		8		–	–		–		–		–		8
Net income	–	–		–		–	–		–		–		1,137		1,137
Balance at June 30, 2022	15,602,433	$	156	$	152,039	(2,338,618)	$	(19,857)	$	–	$	(230)	$	(23,664)	$	108,444
Balance at January 1, 2023	15,949,805	$	159	$	162,922	(2,393,255)	$	(20,831)	$	578	$	(173)	$	(19,796)	$	122,859
Issuance of new common shares	504,637	3		14,873		–	–		–		–		–		14,876
Purchase of treasury stock	–	–		–		(136,631)	(3,586)		–		–		–		(3,586)
Issuance of new common shares under stock compensation plan	620,639	6		(6)		–	–		–		–		–		–
Issuance of new common shares under employee stock purchase plan	31,097	1		762		–	–		–		–		–		763
Stock based compensation	–	–		10,466		–	–		–		–		–		10,466
Collections on stock subscription notes receivable	–	–		–		–	–		–		48		–		48
Exercises of conversion feature of convertible note	24,001	2		334		–	–		—		–		–		336
Other comprehensive loss, net of tax	–	–		–		–	–		(21)		–		–		(21)
Net loss	–	–		–		–	–		–		–		(97)		(97)
Balance at June 30, 2023	17,130,179	$	171	$	189,351	(2,529,886)	$	(24,417)	$	557	$	(125)	$	(19,893)	$	145,644

    

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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BOWMAN CONSULTING GROUP LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Six Months Ended June 30,
	2023		2022
Cash Flows from Operating Activities:
Net Income (loss)	$	(97)	$	1,137
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	4,620		3,971
Amortization of intangible assets	3,665		1,241
Gain on sale of assets	(237)		(32)
Bad debt	289		365
Stock based compensation	11,169		7,274
Accretion of discounts on notes payable	264		–
Deferred taxes	(7,339)		–
Deferred rent	–		(237)
Changes in operating assets and liabilities, net of acquisition of businesses
Accounts receivable	(10,885)		(10,254)
Contract assets	(5,267)		(510)
Prepaid expenses and other assets	(4,174)		(5,124)
Accounts payable and accrued expenses	9,535		5,877
Contract liabilities	523		560
Net cash provided by operating activities	2,066		4,268
Cash Flows from Investing Activities:
Purchases of property and equipment	(632)		(368)
Fixed assets converted to lease financing	–		22
Proceeds from sale of assets and disposal of leases	237		32
Payments received under loans to shareholders	108		118
Acquisitions of businesses, net of cash acquired	(15,408)		(7,950)
Collections under stock subscription notes receivable	48		47
Net cash used in investing activities	(15,647)		(8,099)
Cash Flows from Financing Activities:
Proceeds from common stock offering, net of underwriting discounts and commissions and other offering costs	–		15,475
Borrowings under revolving credit facility	21,189		–
Repayments under fixed line of credit	(283)		(365)
Repayment under notes payable	(4,743)		(1,433)
Payments on finance leases	(3,309)		(2,921)
Payments for purchase of treasury stock	(3,586)		(2,368)
Proceeds from issuance of common stock	777		607
Net cash provided by financing activities	10,045		8,995
Net increase (decrease) in cash and cash equivalents	(3,536)		5,164
Cash and cash equivalents, beginning of period	13,282		20,619
Cash and cash equivalents, end of period	$	9,746	$	25,783
Supplemental disclosures of cash flow information:
Cash paid for interest	$	1,547	$	713
Cash paid for income taxes	$	745	383
Non-cash investing and financing activities:
Property and equipment acquired under finance lease	$	(4,385)	$	(4,262)
Issuance of notes payable for acquisitions	$	(7,825)	$	(3,697)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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BOWMAN CONSULTING GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of Business and Basis of Presentation

Nature of Business

Bowman Consulting Group Ltd. (along with its consolidated subsidiaries, “Bowman” or “we” or the “Company”) incorporated in the Commonwealth of Virginia on June 5, 1995 and reincorporated in the State of Delaware on November 13, 2020. Bowman is a professional services firm delivering innovative solutions to the marketplace of customers who own, develop and maintain the built environment. Within that arena, we provide planning, design, engineering, geospatial, survey, construction management, environmental consulting and land procurement services to markets that encompass the buildings in which people live, work and learn in; as well as the systems that provide water, electricity and other vital services, and the roads, bridges, and transportation systems used to get from place to place. We provide services to customers through fixed-price and time-and-material based contracts containing multiple milestones and independently priced deliverables. Typically, contract awards are on a negotiated basis, ranging in value from a few thousand dollars to multiple millions of dollars and can have varying durations depending on the size, scope, and complexity of the project.

The Company’s workforce typically provides the full scope of engineering and other contract services. However, with respect to certain specialty services or other compliance requirements within a particular contract, we may engage third-party sub-consultants. The Company’s headquarters is located in Reston, VA and the Company has over 70 offices throughout the United States and one office in Mexico.

Common Stock Offering

On February 11, 2022, the Company closed on an offering of common stock in which it issued and sold 900,000 shares at an offering price of $16.00 per share, resulting in net proceeds of $13.7 million after deducting underwriting discounts and commissions, but before expenses of the offering.

On February 28, 2022, the underwriters exercised their option to purchase an additional 157,500 shares of the Company’s common stock at an offering price of $16.00 per share, resulting in additional gross proceeds of approximately $2.5 million. After giving effect to this exercise of the overallotment option, the total number of shares sold by the Company in this common stock offering increased to 1,057,500 shares with total gross proceeds of approximately $16.9 million. The exercise of the over-allotment option closed on March 2, 2022, at which time the Company received net proceeds of $2.4 million after underwriting discounts and commissions.

Deferred offering costs consist primarily of accounting, legal and other fees related to the common stock offering. Prior to the offering, all deferred offering costs were capitalized within prepaid and other current assets in the consolidated balance sheet. No deferred offering costs were capitalized in the consolidated balance sheet as of June 30, 2023.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and footnotes of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in shareholders’ equity and cash flows. The results of operations for the current period are not necessarily indicative of the results for the full year or the results for any future periods.

The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 15, 2023.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

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2. Significant Accounting Policies

The following is a summary of the significant accounting policies and principles used in the preparation of the condensed consolidated financial statements:

Emerging Growth Company

Section 102(b)(1) of the Jumpstart Our Business Startups Act (“JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934 (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company that is either not an emerging growth company or, an emerging growth company that has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.

Revenue Recognition

As discussed in Note 1, the Company provides a variety of engineering and related professional services to customers located throughout the United States. The Company enters into agreements with clients that create enforceable rights and obligations and for which it is probable that the Company will collect the consideration to which it will be entitled as services transfer to the customer. It is customary practice for the Company to have written agreements with its customers and revenue on oral or implied arrangements is generally not recognized. The Company recognizes revenue based on the consideration specified in the applicable agreement. Excluded from the transaction price are amounts collected on behalf of third parties for sales and similar taxes.

Long-term contracts typically contain billing terms that provide for invoicing once a month and payment on a net 30-day basis. Exceptions to monthly billing terms are to ensure that the Company performs satisfactorily rather than representing a significant financing component. For example, fixed price contracts may provide for milestone billings based upon the attainment of specific project objectives to ensure the Company meets its contractual requirements rather than having billing monthly. Additionally, contracts may include retentions or holdbacks paid at the end of a project to ensure that Company meets the contract requirements. The Company does not assess whether a contract contains a significant financing component if the Company expects, at contract inception, that the period between payment by the customer and the transfer of promised services to the customer will be less than one year.

As a professional services engineering firm, the Company generally recognizes revenue over time as control transfers to a customer based upon the extent of progress towards satisfaction of the performance obligation.

For services delivered under fixed price contracts, the Company uses the ratio of actual costs incurred to total estimated costs since costs incurred (an input method) which represents a reasonable measure of progress towards the satisfaction of a performance in order to estimate the portion of revenue earned. This method faithfully depicts the transfer of value to the customer when the Company is satisfying a performance obligation that entails a number of interrelated tasks or activities for a combined output that requires the Company to coordinate the work of employees and sub-consultants. Contract costs typically include direct labor, subcontract and consultant costs, materials and indirect costs related to contract performance. Changes in estimated costs to complete these obligations result in adjustments to revenue on a cumulative catch-up basis, which causes the effect of revised estimates to be recognized in the current period. Changes in estimates can routinely occur over the contract term for a variety of reasons including, changes in scope, unanticipated costs, delays or favorable or unfavorable progress than original expectations. In situations where the estimated costs to perform exceeds the consideration to be received, the Company accrues the entire estimated loss during the period the loss becomes known.

When a performance obligation is billed using a time-and-material type contract, the Company measures its progress to complete based upon the hours incurred for the period times contractually agreed upon billing rates plus any materials delivered or consumed in the project. When applicable, the Company will recognize revenue under these contracts as invoiced under the practical expedient.

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In certain situations, it is possible that two or more contracts should be combined and accounted for as a single contract, or a single contract should be accounted for as multiple performance obligations. This requires significant judgment and could impact the amount and timing of revenue recognition. Such determinations are made using management’s best estimate and knowledge of contracts and related performance obligations.

The Company’s contracts may contain variable consideration in the form of unpriced or pending change orders or claims that either increase or decrease the contract price. Variable consideration is generally estimated using the expected value method but may from time to time be estimated using the most likely amount method depending on the circumstance. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are based upon historical experience and known trends.

The Company recognizes claims against vendors, sub-consultants, and others as a reduction in costs when the contract establishes enforceability, and the amounts of recovery are reasonably estimable and probable. Reduction in costs are recognized at the lesser of the amount management expects to recover or costs incurred.

Contract related assets and liabilities are classified as current assets and current liabilities. Significant balance sheet accounts related to the revenue cycle are as follows:

Accounts receivables, net:

Accounts receivable, net (contract receivables) includes amounts billed under the contract terms. The amounts are stated at their net realizable value. The Company maintains an allowance for doubtful accounts to provide for the estimated number of receivables that will not be collected. The Company considers several factors in its estimate of the allowance, including knowledge of a client’s financial condition, its historical collection experience, and other factors relevant to assessing the collectability of such receivables.

Contract Assets:

Contract Assets are recorded when progress to completion revenue earned on contracts exceeds amounts billed under the contract. It may also include contract retainages that can be billed once contract stipulations are satisfied.

Contract Liabilities:

Contract Liabilities are recorded when amounts billed under a contract exceeds the progress to completion revenue earned under the contract.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could vary from the estimates and assumptions that were used.

Concentration of Credit Risk and other Concentrations

The Company’s financial instruments that are exposed to concentrations of credit risk consist of cash and accounts receivable.

Cash balances at various times during the year may exceed the amount insured by the Federal Deposit Insurance Corporation. The Company’s cash deposits are held in institutions whose credit ratings are monitored by management, and the Company has not incurred any losses related to such deposits.

The Company can, at times, be subject to a concentration of credit risk with respect to outstanding accounts receivable. However, the Company believes no such concentration existed during the six months ended June 30, 2023, or the year ended December 31, 2022. The Company’s customers are located throughout the United States. Although the Company generally grants credit without collateral, management believes that its contract acceptance, billing, and collection policies are adequate to minimize material credit risk. Also, for non-governmental customers, the Company can often place mechanics liens against the real property associated with the contract in the event of non-payment.

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Fair Value Measurements

Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) provides the framework for measuring and reporting financial assets and liabilities at fair value. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The codification establishes a three-level disclosure hierarchy to indicate the level of judgment used to estimate fair value measurements:

Level 1:    Quoted prices in active markets for identical assets or liabilities as of the reporting date;

Level 2:    Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices (such as interest rate and yield curves);

Level 3:    Uses inputs that are unobservable, supported by little or no market activity and reflect significant management judgment.

As of June 30, 2023 and December 31, 2022:

•The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the relatively short duration of these instruments;

•The carrying amounts of debt obligations approximate their fair values as the terms are comparable to terms currently offered by local financial institutions for arrangements with similar terms to industry peers with comparable credit characteristics. Accordingly, the debt obligations involve Level 2 fair value inputs;

•The liability related to shares subject to repurchase was recognized at fair value using Level 1 inputs as there is an active market for the Company’s publicly traded stock. There was no remaining liability as of December 31, 2022. For further discussion, see Note 15, Employee Stock Purchase and Stock Incentive Plans.

Income Taxes

The Company recognizes deferred income tax assets or liabilities for expected future tax consequences of events recognized in the consolidated financial statements or tax returns. Under this method, deferred income tax assets or liabilities are determined based upon the difference between the financial statement and income tax bases of assets and liabilities using enacted tax rates expected to apply when the differences settle or become realized. Valuation allowances are provided when it is more likely than not that a deferred tax asset is not realizable or recoverable in the future. As of June 30, 2023, no valuation allowances are required, and all deferred tax assets are realizable.

The Company assesses uncertain tax positions to determine whether the position will more likely than not be sustained upon examination by the Internal Revenue Service or other taxing authorities. If the Company cannot reach a more-likely-than-not determination, no benefit is recorded. If the Company determines that the tax position is more likely than not to be sustained, the Company records the largest amount of benefit that is more likely than not to be realized when the tax position is settled. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. Beginning January 1, 2022, the Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the option to deduct research and development expenditures in the current year and now requires taxpayers to capitalize and amortize research and development costs pursuant to Internal Revenue Code Section 174. The capitalized expenses are amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses. As a result of this provision of the TCJA, we have established a $20.6 million uncertain tax position related to capitalized and amortizable research and development ("R&D") costs as of period ended June 30, 2023.

The Company recognizes the effect of a change in tax rates on deferred tax assets and liabilities in income in the period that includes the enactment date. The Company’s effective tax rate for the six months ended June 30, 2023 and 2022 was 95.0% and (37.9)%, respectively. The change in the Company’s effective tax rate is predominantly due to changes in the estimated annual effective tax rate. The most prominent factors include an increase in projected R&D credits generated for 2023, a change in the projected limitations of the deductible executive compensation, and an overall reduction in forecasted income for 2023 relative to 2022. With respect to the projected R&D credit, the Company anticipates the 2023 generated R&D credit to be $3.8 million as of June 30, 2023, as compared to the projected R&D credit to be generated for fiscal year 2022 was $2.0 million as of June 30, 2022. Similarly, the Company anticipates the annual projected limitation

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on the deductibility of executive compensation to be $9.8 million for 2023 as compared to $3.7 million for 2022. These factors as well as the forecasted change in book income predominantly resulted in the change in the estimated annual effective tax rate.

Furthermore, the Company also recognized net discrete benefits of $1.6 million for the six months ended June 30, 2023, as compared to net discrete benefit of $0.5 million for the six months ended June 30, 2022. The discrete benefits are predominantly the result of a windfall tax benefit for restricted stock awards and other non-recurring adjustments. More specifically, the windfall tax adjustment for restricted stock awards recognized at a value higher than the grant date fair value is $2.0 million for the six months ended June 30, 2023, and $0.5 million for the six months ended June 30, 2022. In addition, the Company recognized a one-time adjustment to the state income taxes payable, resulting in $0.2 million net discrete expense. These factors increased the rate by 82.6% and reduced the rate by 57.3% for the quarters ended June 30, 2023, and June 30, 2022, respectively.

For year ended December 31, 2022, the Company filed Form 3115, Application for Change in Accounting Method, with the Internal Revenue Service requesting to change its method of deducting stock-based compensation expense from an impermissible method to a permissible method; on July 27, 2022, the Form 3115 was approved by the Internal Revenue Service, which resulted in a reversal of a $1.9 million uncertain tax position to a deferred tax liability. In addition, the Company recorded a $0.4 million uncertain tax position during the year ended December 31, 2022, related to the annual limitation on the deductibility of executive compensation claimed on a prior period U.S. federal income tax return.

The Company files income tax returns in the U.S. federal jurisdiction and certain states in which it operates. Based on the timing of the filing of certain tax returns, the Company’s federal income tax returns for tax years 2019 and thereafter remain subject to examination by the U.S. Internal Revenue Service. The statute of limitations on the Company’s state income tax returns generally conforms to the federal three-year statute of limitations.

Segments

The Company operates in one segment based upon the financial information used by its chief operating decision maker in evaluating the financial performance of its business and allocating resources. The single segment represents the Company’s core business of providing engineering and related professional services to its customers.

Recently Issued Accounting Guidance

Accounting guidance recently adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) to replace the incurred loss impairment methodology under U.S. GAAP. This ASU introduces a new accounting model, the Current Expected Credit Losses model (CECL), which could result in earlier recognition of credit losses and additional disclosures related to credit risk. The CECL model will require the Company to use a forward-looking expected credit loss impairment methodology for the recognition of credit losses for financial instruments at the time the financial asset is originated or acquired, and require a loss be incurred before it is recognized. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. The new standard will apply to accounts receivable, notes, and other financial instruments. This standard is effective for the Company beginning January 1, 2023. Adoption of ASU 2016-13 will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date. The Company adopted the new guidance starting January 1, 2023. The impact of this ASU is reflected in the consolidated financial statements and was not material.

The Company does not believe that any recently issued standards other than those noted above would have a material effect on its consolidated financial statements.

3. Earnings per Share

Basic earnings per share is calculated by dividing net income attributable to the Company available to common stockholders by the weighted average number of common shares outstanding for the three and six months ended June 30, 2023 and 2022. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were either exercised or converted into common stock or resulted in the issuance of common stock that would share in the earnings of the Company. The dilutive effect of options is reflected in diluted earnings per share by application of the treasury stock method. The dilutive effect of shares to be purchased under the Company’s Employee

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Stock Purchase Plan is reflected in diluted earnings per share by the weighted-average number of shares outstanding that would have been outstanding during the period. The dilutive effect of convertible debt is reflected in diluted earnings per share by application of the if-converted method. The Company uses the two-class method to determine earnings per share.

For calculating basic earnings per share, for the three and six months ended June 30, 2023, the weighted average number of shares outstanding exclude 1,871,892 and 1,811,416 non-vested restricted shares and 8,566 and 9,125 unexercised substantive options. The computation of diluted earnings per share for the three and six months ended June 30, 2023 did not assume the effect of restricted shares or substantive options because the effects were antidilutive.

For calculating basic earnings per share, for the three and six months ended June 30, 2022, the weighted average number of shares outstanding exclude 2,073,783 and 2,077,218 non-vested restricted shares and 13,448 and 14,013 unexercised substantive options. The computation of diluted earnings per share for the three and six months ended June 30, 2022 did not assume the effect of restricted shares or substantive options because the effects were antidilutive.

The following table represents a reconciliation of the net income and weighted average shares outstanding for the calculation of basic and diluted earnings per share for the three and six months ended June 30, 2023 and 2022 (in thousands, except share data):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Numerator
Net income (loss)	$	(634)	$	(320)	$	(97)	$	1,137
Earnings allocated to non-vested shares	–		–		–		191
Subtotal	$	(634)	$	(320)	$	(97)	$	946
Denominator
Weighted average common shares outstanding	12,276,173		10,761,172		12,022,550		10,346,089
Effect of dilutive nominal options	–		–		–		–
Effect of dilutive contingently earned shares	–		–		–		81,513
Dilutive average shares outstanding	12,276,173		10,761,172		12,022,550		10,427,602
Basic earnings per share	$	(0.05)	$	(0.03)	$	(0.01)	$	0.09
Dilutive earnings per share	$	(0.05)	$	(0.03)	$	(0.01)	$	0.09

4. Acquisitions

Business Combinations

McMahon Associates, Inc.

In the second quarter of 2022, the Company signed a purchase agreement to acquire McMahon Associates, Inc. (“McMahon”), with an effective date of May 4, 2022. McMahon is a company that specializes in transportation planning and engineering based in Fort Washington, PA. The Company paid total consideration of $18.2 million, which was comprised of 476,796 shares of common stock, at $16.64 per share, for a total of $7.9 million, plus $10.3 million in cash, two promissory notes and assumed liabilities. The shares are subject to a six-month lock-up. The first and second promissory notes bears a simple interest rate fixed at 3.50%. The first promissory note has equal quarterly payments beginning on August 4, 2022 and ending May 4, 2025.The second promissory note was payable in one installment of principal and interest on March 15, 2023. For tax purposes, the acquisition is treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase price allocation consists primarily of goodwill. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The purchase price allocation has been completed and the amounts are deemed final.

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The following summarizes the final calculations of the fair values of McMahon’s assets acquired and liabilities assumed as of the acquisition date (in thousands):

	June 30, 2023
Total Purchase Price	$	18,189
Purchase Price Allocation:
Accounts Receivable, net	8,456
Contract assets	1,017
Prepaid and other current assets	291
Property and equipment, net	949
Intangible assets	3,392
Other assets	96
Notes receivable - officers, employees, affiliates, current portion	19
Accounts payable and accrued liabilities, current portion	(3,688)
Contract liabilities	(841)
Finance leases - non-current	(134)
Post-retirement obligations, less current portion	(5,782)
Total identifiable assets	$	3,775
Goodwill	14,414
Net assets acquired	$	18,189

For the six months ended June 30, 2023, the Company recorded no measurement period adjustments.

The consolidated financial statements of the Company include the results of operations since the date the business was acquired. The following table presents the results of operations of the acquired business for the three and six months ended June 30, 2023 (in thousands):

	For the Three Months Ended June 30, 2023		For the Six Months Ended June 30, 2023
Gross Contract Revenue	$	9,569	$	19,983
Pre-tax Net Income	$	328	$	1,626

The following table presents the unaudited, pro forma consolidated results of operations for the year ended December 31, 2022 and December 31, 2021, respectively, assuming that the McMahon acquisition described above occurred at January 1, 2021. These unaudited pro forma results are presented for informational purposes only and are not meant to represent actual operating results that would have been achieved had the related events occurred on such date (in thousands):

	For the Year Ended
	December 31, 2022		December 31, 2021
Gross Contract Revenue	$	273,924	$	183,595
Net Income	$	5,948	$	2,164

The pro forma information provided is compiled from the pre-acquisition financial information and includes pro forma adjustments to reflect additional amortization that would have been expensed assuming the respective assets had been acquired as of January 1, 2021. These results include additional non-cash stock compensation expense assuming acquired employees who received stock grants received those grants on January 1, 2021 and reflect the income tax effect of pro forma adjustments based on the statutory rate of 28.9%.

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Project Design Consultants, LLC.

In the third quarter of 2022, the Company signed a purchase agreement to acquire Project Design Consultants, LLC (“PDC”), with an effective date of July 15, 2022. PDC is a civil engineering and land surveying firm based in San Diego, CA. The Company paid total consideration of $14.2 million, which was comprised of cash, two promissory notes, a convertible note and assumed liabilities. The two promissory notes bear a simple interest rate fixed at 4.75%. The first promissory note is payable in equal quarterly payments of principal and interest beginning on October 15, 2022 and ending July 15, 2025 .The second promissory note is payable in two installments of principal and interest due on March 15, 2023 and on the first anniversary of the closing date. The convertible note bears simple interest fixed at 4.75% and is convertible into shares of common stock at any time, at a conversion price of $14.00 per share. Subject to the exercise of the conversion, the convertible note will have quarterly payments of principal, interest or both beginning October 2022 and ending April 2027. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The following summarizes the preliminary calculations of the fair values of PDC assets acquired and liabilities assumed as of the acquisition date (in thousands):

	June 30, 2023
Total Purchase Price	$	14,178
Purchase Price Allocation:
Accounts receivable	2,199
Contract assets	926
Prepaid and other current assets	161
Property and equipment, net	489
Intangible assets	10,344
Accounts payable and accrued liabilities, current portion	(1,118)
Contract liabilities	(1,362)
Other non-current obligations	(273)
Finance leases - non-current	36
Total identifiable assets	$	11,402
Goodwill	2,776
Net assets acquired	$	14,178

For the three months ended June 30, 2023, the Company recorded no measurement period adjustments.

The purchase price allocation consists primarily of goodwill and intangible assets and is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of PDC’s assets acquired and liabilities assumed. The Company is still in the process of finalizing the valuation of intangible assets. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill.

Identified intangible assets are comprised of customer relationships and contract rights for a total amount of $10.3 million, to be amortized over estimated useful lives of 10 years and 3 years, respectively.

The consolidated financial statements of the Company include the results of operations since the date the business was acquired. The following table presents the results of operations of the acquired business from the date of acquisition for the three and six months ended June 30, 2023 (in thousands):

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	For the Three Months Ended June 30, 2023		For the Six Months Ended June 30, 2023
Gross Contract Revenue	$	3,727	$	6,833
Pre-tax Net Income	$	1,478	$	2,117

Anchor Consultants, LLC.

In the third quarter of 2022, the Company signed a purchase agreement to acquire Anchor Consultants, LLC (“Anchor”), with an effective date of August 26, 2022. Anchor is an engineering firm based in Chadds Ford, PA specializing in the planning, permitting, design and construction management of infrastructure that forms the waterfront of the nation’s inland waterways. The Company paid total consideration of $4.0 million, which was comprised of cash, promissory notes, a convertible note and assumed liabilities. The promissory note bears a simple interest rate fixed at 5.50% with equal quarterly payments beginning on November 26, 2022 and ending on August 26, 2025. The convertible note bears a simple interest rate fixed at 5.50% and is convertible into shares of common stock at anytime at a conversion price of $18.00 per share. Subject to the exercise of the conversion, the convertible note has quarterly payments of principal, interest or both beginning November 2022 and ending May 2027. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase price allocation consists primarily of goodwill and intangible assets, in the amount of $4.0 million, and is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of Anchor’s assets acquired and liabilities assumed. The Company is still in the process of finalizing the valuation of intangible assets. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill.

SEI Engineering, LLC

In the fourth quarter of 2022, the Company signed a purchase agreement to acquire SEI Engineering, LLC (“SEI”), with an effective date of November 2, 2022. SEI is a professional firm based in Paonia, CO. The Company paid total consideration of $0.8 million, which was comprised of $0.4 million in cash, two promissory notes, and assumed liabilities. The two promissory notes bears a simple interest rate fixed at 6.25%. The first promissory note is payable in equal quarterly payments of principal and interest beginning on February 4, 2023 and ending November 4, 2025. The second promissory note was payable in one installment of principal and interest due on March 15, 2023. For tax purposes, the acquisition will be treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase price allocation consists primarily of goodwill, and is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of SEI’s assets acquired and liabilities assumed. The Company is still in the process of finalizing the valuation of intangible assets. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill.

Spatial Acuity, LLC

In the fourth quarter of 2022, the Company signed a purchase agreement to acquire Spatial Acuity, LLC (“Spatial”), with an effective date of November 2, 2022. Spatial is a professional firm based in Austin, TX. The Company paid total consideration of $4.1 million, which was comprised of 134,042 shares of common stock, at $15.15 per share, for a total of $2.0 million, plus $2.1 million in cash, two promissory notes, and assumed liabilities. The shares are subject to a six-month lock-up. The two promissory notes bears a simple interest rate fixed at 6.25%. The first promissory note is payable in equal quarterly payments of principal and interest beginning on February 4, 2023 and ending November 4, 2025. The second promissory note was payable in one installment of principal and interest due on March 15, 2023. For tax purposes, the

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acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase agreement includes a contingent consideration feature, which affords the sellers the opportunity to earn additional consideration up to $3.0 million in the form of the Company's common stock, cash and a non-negotiable promissory note, based on certain financial performance thresholds measured quarterly from January 1, 2023 through June 30, 2025. Contingent liability of $0.5 million was recorded as of June 30, 2023. The Company will continue to evaluate its estimated liability to the contingent consideration and adjust the balance as necessary.

The purchase price allocation consists primarily of goodwill and is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of assets acquired and liabilities assumed. The Company is still in the process of finalizing the valuation of intangible assets. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill.

H2H Geoscience Engineering, PLLC

In the fourth quarter of 2022, the Company signed a purchase agreement to acquire H2H Geoscience Engineering, PLLC (“H2H”), with an effective date of December 2, 2022. H2H is a professional firm based in Troy, NY. The Company paid total consideration of $3.7 million, which was comprised of $1.4 million in cash, a promissory note, a convertible note and assumed liabilities. The promissory note bears a simple interest rate fixed at 7.00%. The promissory note is payable in equal quarterly payments of principal and interest beginning on March 2, 2023 and ending December 2, 2024. The convertible note bears simple interest fixed at 7.00% and is convertible into shares of common stock at any time, at a conversion price of $18.00 per share. Subject to the exercise of the conversion, the convertible note has quarterly payments of principal, interest or both beginning December 2, 2024 and ending September 2, 2027. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

For the six months ended June 30, 2023, the Company recorded measurement period adjustment of $49,000 to accounts payable with a corresponding adjustment to goodwill. The change did not result in a change to operating income.

The purchase price allocation consists primarily of goodwill, and is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of H2H’s assets acquired and liabilities assumed. The Company is still in the process of finalizing the valuation of intangible assets. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill.

Richter & Associates, Inc.

In the second quarter of 2023, the Company signed a purchase agreement to acquire Richter & Associates, Inc. (“Richter”), with an effective date of April 3, 2023. Richter is a professional firm based in Rockville, MD. The Company paid total consideration of $5.4 million which was comprised of 75,784 shares of common stock, at $29.00 per share, for a total of $2.2 million, plus $3.2 million in cash, promissory note and assumed liabilities. The shares are subject to a six-month lock-up. The promissory note bears a simple interest rate fixed at 11.00%. The promissory note is payable in equal quarterly payments of principal and interest beginning on July 3, 2023 and ending April 3, 2025. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase price allocation consists primarily of goodwill and intangible assets in the amount of $3.2 million. This is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

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The Company has not completed its final assessment of the fair values of Richter’s assets acquired and liabilities assumed. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill and intangible assets.

Fisher Engineering, Inc.

In the second quarter of 2023, the Company signed a purchase agreement to acquire Fisher Engineering, Inc. (“Fisher”), with an effective date of May 12, 2023. Fisher is a professional firm with offices throughout the United States. The Company paid total consideration of $5.2 million which was comprised of 31,521 shares of common stock, at $27.66 per share, for a total of $0.9 million, plus $4.3 million in cash, promissory note and assumed liabilities. The shares are subject to a six-month lock-up. The promissory note bears a simple interest rate fixed at 8.25%. The promissory note is payable in equal quarterly payments of principal and interest beginning on August 12, 2023 and ending May 12, 2026. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase agreement includes a contingent consideration feature, which affords the sellers the opportunity to earn additional consideration up to $2.0 million in the form of cash and a promissory note, based on certain financial performance thresholds measured yearly from May 1, 2023 through April 30, 2026. Contingent liability of $1.8 million was recorded as of June 30, 2023. The Company will continue to evaluate its estimated liability to the contingent consideration and adjust the balance as necessary.

The purchase price allocation consists primarily of goodwill of $4.2 million. This is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of Fisher’s assets acquired and liabilities assumed. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill and intangible assets.

Hole Montes, Inc.

In the second quarter of 2023, the Company signed a purchase agreement to acquire Hole Montes, Inc. (“Hole Montes”), with an effective date of May 16, 2023. Hole Montes is a professional firm based in Naples and Fort Myers, FL. The Company paid total consideration of $7.4 million, which was comprised of 129,221 shares of common stock, at $27.60 per share, for a total of $3.6 million, plus $3.8 million in cash, two promissory notes, and assumed liabilities. The shares are subject to a six-month lock-up. The two promissory notes bears a simple interest rate fixed at 8.25%. The first promissory note is payable in equal quarterly payments of principal and interest beginning on August 16, 2023 and ending November 16, 2025. The second promissory note will be payable in one installment of principal and interest due on March 1, 2024. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase agreement includes a contingent consideration feature, which affords the sellers the opportunity to earn additional consideration up to $0.9 million in the form of the Company's common stock, cash and a non-negotiable promissory note, based on certain financial performance thresholds measured quarterly from April 1, 2023 through September 30, 2024. Contingent liability of $0.9 million was recorded as of June 30, 2023. The Company will continue to evaluate its estimated liability to the contingent consideration and adjust the balance as necessary.

The purchase price allocation consists primarily of goodwill of $4.2 million. This is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of Hole Montes’ assets acquired and liabilities assumed. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill and intangible assets.

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MTX Surveying, LLC

In the second quarter of 2023, the Company signed a purchase agreement to acquire MTX Surveying, LLC (“MTX”), with an effective date of June 2, 2023. MTX is a professional firm based in Marshall, TX. The Company paid total consideration of $11.7 million, which was comprised of 143,333 shares of common stock, at $28.09 per share, for a total of $4.0 million, plus $7.7 million in cash, promissory note, and assumed liabilities. The shares are subject to a six-month lock-up. The promissory note bears a simple interest rate fixed at 5.00%. The promissory note is payable in equal quarterly payments of principal and interest beginning on September 2, 2023 and ending June 2, 2026. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase agreement includes a contingent consideration feature, which affords the sellers the opportunity to earn additional consideration up to $3.0 million in the form of the Company's common stock, cash and a non-negotiable promissory note, based on certain financial performance thresholds measured quarterly from July 1, 2023 through December 31, 2024. Contingent liability of $3.0 million was recorded as of June 30, 2023. The Company will continue to evaluate its estimated liability to the contingent consideration and adjust the balance as necessary.

The purchase price allocation consists primarily of goodwill of $8.1 million. This is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of MTX’s assets acquired and liabilities assumed. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill and intangible assets.

Advanced Applied Engineering, Inc. dba Infrastructure Engineers

In the second quarter of 2023, the Company signed a purchase agreement to acquire Advanced Applied Engineering, Inc. (“Infrastructure”), with an effective date of June 12, 2023. Infrastructure is a professional firm based in Brea, CA. The Company paid total consideration of $8.5 million, which was comprised of 141,794 shares of common stock, at $29.81 per share, for a total of $4.2 million, plus $4.3 million in cash, promissory note, and assumed liabilities. The shares are subject to a six-month lock-up. The promissory note bears a simple interest rate fixed at 8.25%. The promissory note is payable in equal quarterly payments of principal and interest beginning on September 12, 2023 and ending December 12, 2024. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase agreement includes a contingent consideration feature, which affords the sellers the opportunity to earn additional consideration up to $1.5 million in the form of the Company's common stock and a non-negotiable promissory note, based on certain financial performance thresholds measured quarterly from July 1, 2023 through December 31, 2024. Contingent liability of $1.5 million was recorded as of June 30, 2023. The Company will continue to evaluate its estimated liability to the contingent consideration and adjust the balance as necessary.

The purchase price allocation consists primarily of goodwill of $6.5 million. This is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of MTX’s assets acquired and liabilities assumed. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill and intangible assets.

Results from Acquisitions

The condensed consolidated financial statements of the Company include the results of operations from any business acquired from their respective dates of acquisition. The following table presents the results of operations of business acquired from their respective dates of acquisition for the three and six months ended June 30, 2023 (in thousands):

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	For the Three Months Ended June 30, 2023		For the Six Months Ended June 30, 2023
Gross Contract Revenue1	$	5,769	$	5,769
Pre-tax Net Income	$	1,940	$	1,940

1 Gross contract revenue includes adjustments as required by ASC 606, Revenue from Contracts with Customers based on opening balance sheet provided by the acquired companies. There is no assurance these adjustments will be consistent in future periods. Opening balance sheet balances are subject to adjustment prior to being finalized.

The following table presents the unaudited, pro forma condensed consolidated results of operations for the three and six months ended June 30, 2023 and June 30, 2022 assuming that the companies acquired in the second quarter of 2023, described above, occurred on January 1, 2022. The unaudited pro forma results are presented for informational purposes only and are not meant to represent actual operating results that would have been achieved had the related events occurred on such date (in thousands):

	For the Six Months Ended June 30, 2023
	2023		2022
Gross Contract Revenue2	$	182,656	$	135,669
Pre-tax Net Income (loss)	$	3,402	$	(94)

2 Gross contract revenue in these pro forma financials does not conform to GAAP as required by ASC 606, Revenue from Contract with Customers, as it is impracticable to obtain the historical information necessary to apply this accounting standard. The historical estimates required to be able to accurately determine the percent complete accounting on the contracts that comprise the revenue is not available for the required periods.

The pro forma information provided is compiled from the pre-acquisition financial information and includes pro forma adjustments to reflect additional depreciation and amortization that would have been expensed assuming the respective assets had been acquired as of January 1, 2022. These results also include additional non-cash stock compensation expense assuming acquired employees who received stock grants received those grants on January 1, 2022.

5. Disaggregation of Revenue and Contract Balances

The Company disaggregates revenues by contract type, see Revenue Recognition in Note 2 for further details. For the three and six months ended June 30, 2023, the Company derived 88.8% and 89.2% of its revenue from contracts classified as lump sum, and 11.2% and 10.8% of its revenue from time and material contracts, respectively. The Company had approximately $234.6 million in remaining performance obligations as of June 30, 2023 of which it expects to recognize approximately 93.9% within the next twelve months and the remaining 6.1% in the next twelve to twenty-four months.

Disaggregated revenues by contract type were as follows (in thousands):

	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2023				2022				2023				2022
Fixed fee	$	73,508	88.8	%	$	58,488	93.7	%	$	141,753	89.2	%	$	108,074	94.1	%
Time-and-materials	9,247		11.2	%	3,911		6.3	%	17,102		10.8	%	6,786		5.9	%
Gross contract revenue	$	82,755	100.0	%	$	62,399	100.0	%	$	158,855	100.0	%	$	114,860	100.0	%

The Company recognized $0.2 million and $2.8 million of revenue for the three and six months ended June 30, 2023, respectively, which was included in the contract liabilities balance as of December 31, 2022, and $1.1 million and $2.5 million of revenue for the three and six months ended June 30, 2022, respectively, which was included in the contract liabilities balance as of December 31, 2021.

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6. Contracts in Progress

The following table reflects the calculation of the net balance of contract assets and contract liabilities. Costs and estimated earnings on contracts in progress consist of the following (in thousands):

	June 30, 2023		December 31, 2022
Costs incurred on uncompleted contracts	$	387,057	$	279,173
Estimated contract earnings in excess of costs	404,240		398,791
Estimated contract earnings to date	791,297		677,964
Less: billed to date	(775,293)		(668,013)
Net contract assets	$	16,004	$	9,951

7. Notes Receivable

The Company has unsecured notes receivable from related parties, certain non-executive officers of the Company and an unrelated third party. The following is a summary of these notes receivable (in thousands):

	June 30, 2023		December 31, 2022
Officers, employees and affiliated entities - Interest accrues annually at rates ranging from 0.0% - 5.5%. The notes receivable mature through December 2024.	$	2,325	$	2,433
Unrelated third party - Currently no interest is being accrued on this note. The note receivable matures in December 2023.	903		903
Total:	3,228		3,336
Less: current portion
Officers, employees and affiliates	(938)		(1,016)
Noncurrent portion	$	2,290	$	2,320

Each borrower may prepay all or part of the outstanding balance at any time prior to the date of maturity. During the six months ended June 30, 2023, interest accrued on the notes receivable at the stipulated rates between 0.0% and 5.50%.

8. Property and Equipment, Net

Property and equipment for fixed assets are as follows (in thousands):

	June 30, 2023		December 31, 2022
Computer equipment	$	2,218	$	2,101
Survey equipment	5,409		5,088
Vehicles	1,852		1,032
Furniture and fixtures	2,446		2,398
Leasehold improvements	8,194		7,727
Software	435		316
Fixed assets pending lease financing 1	316		181
Total:	20,870		18,843
Less: accumulated depreciation	(13,506)		(12,319)
Property and Equipment, net of finance leased assets	$	7,364	$	6,524

1assets acquired which will be re-financed under the Company's finance lease facilities

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Depreciation expense for fixed assets for the three and six months ended June 30, 2023 was $0.7 million and $1.2 million, respectively. Depreciation expense for fixed assets for the three and six months ended June 30, 2022 was $0.3 million and $0.6 million, respectively.

Property and equipment for finance leased assets are as follows (in thousands):

	June 30, 2023		December 31, 2022
Equipment	$	17,722	$	16,256
Vehicles	8,838		6,787
Total:	26,560		23,043
Less: accumulated amortization on leased assets	(7,050)		(4,463)
Finance Leased Assets, net	$	19,510	$	18,580

Amortization expense for finance leased assets for the three and six months ended June 30, 2023 was $1.8 million and $3.4 million, respectively. Amortization expense for finance leased assets for the three and six months ended June 30, 2022 was $1.8 million and $3.4 million, respectively.

9. Goodwill

Changes in the carrying amount of goodwill were as follows (in thousands):

	Goodwill
Balance as of December 31, 2022	$	53,210
Goodwill Acquired	23,896
Balance as of June 30, 2023	$	77,106

There were no impairments of goodwill during the periods presented.

10. Intangible Assets

Total intangible assets consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):

	June 30, 2023						December 31, 2022
	Gross Amount		Accumulated Amortization		Net Balance		Gross Amount		Accumulated Amortization		Net Balance
Customer relationships	$	35,909	$	(3,825)	$	32,084	$	23,595	$	(2,330)	$	21,265
Contract rights	10,471		(4,568)		5,903		7,281		(2,416)		4,865
Leasehold	187		(66)		121		187		(48)		139
Domain name	281		–		281		281		–		281
Licensing rights	1,374		–		1,374		1,400		–		1,400
Total	$	48,222	$	(8,459)	$	39,763	$	32,744	$	(4,794)	$	27,950

The domain name and licensing rights acquired for a total of $1.7 million, have indefinite useful lives.

The following table summarizes the weighted average useful lives of intangible assets by asset class used for straight-line expense purposes:

	June 30, 2023	December 31, 2022
Customer relationships	8.10	11.97
Contract rights	1.08	2.47
Leasehold	5.74	8.05

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Amortization expense for the three and six months ended June 30, 2023 was $2.3 million and $3.7 million, respectively. Amortization expense for the three and six months ended June 30, 2022 was $0.8 million and $1.2 million, respectively.

Future amortization for the remainder of 2023 and for the succeeding years is as follows (in thousands):

2023	6,256
2024	7,403
2025	5,930
2026	5,390
2027	2,142
Thereafter	10,987
Total	$	38,108

11. Revolving Credit Facility and Fixed Credit Facilities

The Company has one revolving credit facility (the “Revolving Credit Facility”) and three non-revolving credit facilities (“Fixed Line #1”, " Fixed Line #2” and “Fixed Line #4” collectively, the “Fixed Lines”) with Bank of America, N.A. On June 30, 2023 and June 30, 2022, the interest rate on the Revolving Credit Facility was 9.25% and 2.11%, respectively. All outstanding principal on the Revolving Credit Facility is due on September 30, 2024. On June 30, 2023 and December 31, 2022, there was $21.2 million and no outstanding balance on the Revolving Credit Facility, respectively.

On November 11, 2022, the Company and certain of its subsidiaries, as guarantors, entered into an Amended and Restated Credit Agreement with Bank of America, N.A. (the "Amended and Restated Agreement") as well as an Amended and Restated Pledge and Security Agreement. The Amended and Restated Agreement increased the maximum principal amount of the Revolving Credit Facility to $50 million, is secured by all the assets of the Company and the subsidiary guarantors and has a maturity date of September 30, 2024. Under the Amended and Restated Agreement, the Company is required to comply with certain covenants, including covenant on indebtedness, investments, liens and restricted payments, as well as maintain certain financial covenants, including a fixed charge coverage ratio and leverage ratio of debt to EBITDA (as defined in the Amended and Restated Agreement). On August 2, 2023, subsequent to the reporting period, the Company entered into a First Amendment to the Amended and Restated Credit Agreement whereby the maximum principal amount of the Revolving Credit Facility was increased to $70 million, the term was extended to July 31, 2025, and certain provisions relating to interest rate spreads and used fees were modified (see Footnote 17 - Subsequent Events).

Fixed Line #1 had a maximum advance of $1.0 million and does not allow for re-borrowings and is included in Notes Payable (see Note 12). The Company pays interest on a monthly basis at a rate equal to SOFR Simple APR plus 2.0%. On June 30, 2023 and 2022, the interest rate was 7.06% and 3.51%, respectively. Commencing the earlier of i) the date no remaining amount is available under the Fixed Line or, ii) August 31, 2018, the Company was obligated to pay the then outstanding principal balance in sixty equal monthly installments through maturity in August 2023. On each of June 30, 2023 and December 31, 2022, the outstanding balance on Fixed Line #1 was $49,000 and $0.1 million, respectively.

Fixed Line #2 had a maximum advance of $1.0 million and does not allow for re-borrowings and is included in Notes Payable (see Note 12). Commencing the earlier of i) the date no remaining amount is available under the Fixed Line or, ii) August 31, 2020, the Company was obligated to pay the then outstanding principal balance in sixty equal monthly installments through maturity in September 2025. On each of June 30, 2023 and December 31, 2022, the outstanding balance on Fixed Line #2 was $0.4 million and $0.5 million, respectively.

Facility #4 is a term loan with a principal loan amount of $1.0 million and is included in Notes Payable (see Note 12). The loan was to be repaid over thirty-six equal monthly installments beginning April 13, 2020, through maturity on March 13, 2023. The interest rate on this loan was 3.49%. As of June 30, 2023, Facility #4 was paid in full and there was no outstanding balance.

The Company secures its obligations under the Amended and Restated Agreement with substantially all assets of the Company. Obligations of the Company to certain other shareholders of the Company are subordinated to the Company’s obligations under the Amended and Restated Agreement and Fixed Line loans. The Company must maintain, on a combined basis certain financial covenants defined in the Amended and Restated Agreement.

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Interest expense on the Revolving Credit Facility and Fixed Lines totaled $12,000 and $0.2 million during the three and six months ended June 30, 2023, respectively. Interest expense on the Revolving Credit Facility and Fixed Lines totaled $11,000 and $21,000 during the three and six months ended June 30, 2022, respectively.

12. Notes Payable

Notes payable consist of the following (in thousands):

	June 30, 2023		December 31, 2022
Related parties:
Shareholders - Interest accrues annually at rates ranging from 3.25% - 11.00%. The notes payable mature on various dates through June 2026.	$	15,942	$	11,515
Owners of Acquired Entities - Interest accrues annually at rates ranging from 3.25% - 7.00% annually. The notes payable mature on various dates through October 2024.	6,803		8,134
Convertible Notes Payable - Interest accrues annually at rates ranging from 4.75% - 7.00% annually. The convertible notes payable mature on various dates through May 2027.	6,339		6,675
Unrelated third parties:
Note payable for purchase of software and vehicles	40		55
Note payable for purchase of intangible asset	50		50
Fixed line notes payable - see note 11	491		773
Discounts on notes payable issued as consideration in acquisitions:
Shareholders	(135)		(177)
Owners of acquired entities	(358)		(581)
Total	29,172		26,444
Less: current portion	(12,438)		(10,168)
Noncurrent portion	$	16,734	$	16,276

The Company’s President, Chairman and Chief Executive Officer guarantees certain of the notes payable, and certain of the notes payable are subordinate to the terms of the Credit Agreement disclosed in Note 11.

Interest expense attributable to the notes payable totaled $0.5 million and $0.9 million for the three and six months ended June 30, 2023, respectively. Interest expense attributable to the notes payable totaled $0.1 million and $0.2 million for the three and six months ended June 30, 2022, respectively.

Future principal payments on notes payable for remainder of 2023 and succeeding years are as follows (in thousands):

2023	$	7,221
2024	11,230
2025	7,105
2026	2,917
2027	1,192
Thereafter	–
Total	$	29,665

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Convertible Notes Payable

In July 2022, the Company issued a $4.0 million 4.75% unsubordinated convertible note with a maturity date in July 2027 as partial consideration for the acquisition of PDC (Note 4). The convertible note is convertible into shares of common stock at the option of the holders, at any time, at a conversion price of $14.00 per share upon proper notice. Subject to the exercise of the conversion, the convertible note is payable in quarterly payments of principal, interest or both beginning in October 2022 and ending in April 2027. At any time, upon ten business days’ notice to the Company, the holders may request that a prepayment of the principal or all or part of a regularly scheduled quarterly payment of the principal be made in the form of common stock of the Company, with the number of shares of common stock equal to the amount of the requested prepayment divided by the stock conversion price. If the request is made with respect to a regularly scheduled quarterly payment of principal, then the accrued interest shall be paid in cash. An election was made by the holders, and on April 5, 2023, $0.3 million of the note was converted to 24,001 shares of common stock at $14.00 per share.

In August 2022, the Company issued a $1.1 million 5.50% unsubordinated convertible note with a maturity date in May 2027 as partial consideration for the acquisition of Anchor (Note 4). The convertible note is convertible into shares of common stock at the option of the holders, at any time, at a conversion price of $18.00 per share upon proper notice. Subject to the exercise of the conversion, the convertible note has quarterly payments of principal, interest or both beginning in November 2022 and ending in May 2027. At any time, upon ten business days’ notice to the Company, the holders may request that a prepayment of the principal or all or part of a regularly scheduled quarterly payment of the principal be made in the form of common stock of the Company, with the number of shares of common stock equal to the amount of the requested prepayment divided by the stock conversion price. If the request is made with respect to a regularly scheduled quarterly payment of principal, then the accrued interest shall be paid in cash. As of June 30, 2023, there has been no election by the holders to convert any portions of the convertible note to common stock.

In December 2022, the Company issued a $1.6 million 7.00% unsubordinated convertible note with a maturity date in September 2027 as partial consideration for the acquisition of H2H (Note 4). The convertible note will be convertible into shares of common stock at the option of the holders, at any time, at a conversion price of $18.00 per share upon proper notice. Subject to the exercise of the conversion, the convertible note has quarterly payments of principal, interest or both beginning in December 2024 and ending in September 2027. At any time, upon ten business days’ notice to the Company, the holders may request that a prepayment of the principal or all or part of a regularly scheduled quarterly payment of the principal be made in the form of common stock of the Company, with the number of shares of common stock equal to the amount of the requested prepayment divided by the stock conversion price. If the request is made with respect to a regularly scheduled quarterly payment of principal, then the accrued interest shall be paid in cash. As of June 30, 2023, there has been no election by the holders to convert any portions of the convertible note to common stock.

13. Pension and Post-retirement Benefit Obligations

The Company sponsors various non-qualified defined benefit pension plans in the U.S. (the "Plan"). Individual benefits under the Plan generally are based on the employee’s years of creditable service and compliance with non-competes. The plan is unfunded and there are no plan assets.

The following table details the components of net periodic benefit costs for the Company's pension plan for the three and six months ended June 30, 2023 and 2022:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in thousands)	2023		2022		2023		2022
Components of net periodic benefit cost:
Service costs	$	53	$	–	$	64	$	–
Interest costs	25		–		93		–
Amortization of net gain	(10)		–		(21)		–
Net periodic benefit cost	$	68	$	–	$	136	$	–

There are no required minimum contributions for the pension plans.

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14. Related Party Transactions

The Company leases commercial office space from BCG Chantilly, LLC (BCC), an entity in which Mr. Bowman, Mr. Bruen and Mr. Hickey collectively own a 63.6% interest. As of June 30, 2023 and December 31, 2022 there were no amounts due to or receivables due from BCC. Rent expense for each of the three and six months ended June 30, 2023 was $21,000 and $41,000, respectively. Rent expense for each of the three and six months ended June 30, 2022 was $21,000 and $41,000, respectively.

Bowman Lansdowne Development, LLC (BLD) is an entity in which Mr. Bowman has an ownership interest. On each of June 30, 2023 and December 31, 2022, the Company’s notes receivable included $0.5 million from BLD, with a maturity date of January 31, 2024.

Lansdowne Development Group, LLC (LDG) is an entity in which BLD has a minority ownership interest. On each of June 30, 2023 and December 31, 2022, our accounts receivable included $0.1 million, due from LDG. On June 30, 2023 and December 31, 2022, notes receivable included $0.4 million and $0.4 million, respectively from LDG, with a maturity date of January 31, 2024.

Bowman Realty Investments 2010, LLC (BR10) is an entity in which Mr. Bowman has an ownership interest. On each of June 30, 2023 and December 31, 2022, the Company’s notes receivable included $0.2 million, from BR10, with a maturity date of January 31, 2024.

Alwington Farm Developers, LLC (AFD) is an entity in which BR10 has a minority ownership interest. On each of June 30, 2023 and December 31, 2022, notes receivable included $1.2 million, from AFD, with a maturity date of December 31, 2024.

MREC Shenandoah VA, LLC (“MREC Shenandoah”) is an entity in which Lake Frederick Holdings, LLC (“Lake Frederick Holdings”) owns a 92% interest and Shenandoah Station Partners LLC, an entity owned in part by BLD and in part by Bowman Realty Investments 2013 LLC "Bowman Realty" (BR13), owns an 8% interest. Mr. Bowman owns a 100% interest in, and is the manager of, Lake Frederick Holdings. Mr. Bowman is the sole member of Bowman Realty 2013 (BR13). Since 2020, the Company has provided engineering services to MREC Shenandoah in exchange for cash payments. During the three and six months ended June 30, 2023, and 2022 the Company invoiced $0.1 million and $0.1 million, respectively, and received payments of $0.1 million and $0.1 million, respectively.

During the six months ended June 30, 2023 and 2022, the Company provided administrative, accounting and project management services to certain of the related party entities. The cost of these services was $29,000 and $33,000, respectively. These entities were billed $30,000 and $38,000, respectively.

Gregory Bowman, the son of Mr. Bowman, is a full-time employee of the Company. Gregory Bowman was paid $71,000 and $65,000 for the six months ended June 30, 2023 and 2022, respectively.

On each of June 30, 2023 and December 31, 2022, the Company was due $0.1 million and $0.2 million, respectively, from shareholders under the terms of stock subscription notes receivable.

On June 30, 2023 and December 31, 2022, the Company owed $0.1 million and $0.2 million, respectively, to a retired shareholder and former director in connection with a 2015 acquisition.

On June 30, 2023 and December 31, 2022, the Company owed certain of our current and former shareholders $8.1 million and $11.5 million, respectively. The notes result from repurchases of stock from shareholders upon termination of employment and promissory notes issued in connection with acquisitions.

In August 2022, the Company agreed to reimburse Mr. Bowman at a fixed hourly rate for the business use of an aircraft owned by Sunrise Asset Management, a company owned 100% by Mr. Bowman. The Company paid $0.1 million for the six months ended June 30, 2023.

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15. Employee Stock Purchase and Stock Incentive Plans

Employee Stock Purchase Plan

Effective April 30, 2021, the Company established the Bowman Consulting Group Ltd. 2021 Employee Stock Purchase Plan (“ESPP”). Under the ESPP, eligible employees who elect to participate are granted the right to purchase shares of common stock at a 15% discount of the weighted average selling price of the Company stock for the 30 days prior to the last day of the offering period.

The following table summarizes the stock issuance activity under the ESPP for the six months ended June 30, 2023 (in thousands, except share data):

	June 30, 2023
Total purchase price paid by employees for shares sold	$	763
Number of shares sold	31,097

Stock Options

Effective May 11, 2021 the Company established the Bowman Consulting Group Ltd. 2021 Omnibus Equity Incentive Plan (“the Plan”). The plan is administered by the board of directors (the “Board”), who on its own action or through its designee may make grants of restricted stock options, including Incentive Stock Options (“ISO”), and non-qualified stock options (“NQSO”). The purpose of the Plan is to grant equity incentive awards to eligible participants to attract, motivate and retain key personnel. The Plan supersedes and replaces any prior plan for stock options except that the prior plan shall remain in effect with respect to options granted under such prior plan until such options have been exercised, expired or canceled.

The number of shares for which each option shall be granted, whether the option is an ISO or NQSO, the option price, the exercisability of the option, and all other terms and conditions of the option are determined by the Board at the time the option is granted. The options generally vest over a period between two and five years.

For the six months ended June 30, 2023, no new options were granted.

A summary of the status of stock options exercised, including the substantive options discussed in Note 3, is as follows:

	Number of shares	Weighted Average Exercise Price
Outstanding at December 31, 2022	10,030	$	5.99
Granted	–	–
Exercised	(2,419)	5.96
Expired or cancelled	–	–
Outstanding at June 30, 2023	7,611	$	6.00

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The following summarizes information about options outstanding and exercisable at January 1, 2023 and June 30, 2023:

	Options Outstanding and Exercisable
	Exercise Price		Total Outstanding	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price		Total Exercisable
December 31, 2022	$	6.28	10,030	5.0	$	5.99	10,030
June 30, 2023	$	6.28	7,611	5.0	$	6.00	7,611

The intrinsic value of these options on June 30, 2023 and December 31, 2022 was $25.60 and $15.57, respectively.

The Company received cash payments of $14,601 from the exercise of options under the Stock Option Plan in the six months ended June 30, 2023.

The Company did not record any compensation costs related to stock options during the three and six months ended June 30, 2023.

As of June 30, 2023, there is no unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Stock Option Plan. The remaining unexercised shares are from substantive options in which the non-recourse notes may be pre-paid, therefore the Company recognized the total calculated compensation expense at the time of issuance.

Restricted Stock

Effective May 11, 2021, the Company established the Bowman Consulting Group Ltd. 2021 Omnibus Equity Incentive Plan (“the Plan”). The Plan is administered by the Board through which they can issue restricted stock awards. As of June 30, 2023, 4,128,557 shares of common stock are authorized and reserved for issuance under the Plan. This reserve automatically increases on each January 1, for the duration of the Plan, in an amount equal to 5% of the total number of shares outstanding on December 31st of the preceding calendar year. The Plan supersedes and replaces any prior plan for stock bonus grants to employees of the Company except that the prior plan shall remain in effect with respect to awards granted under such prior plan until such awards have been forfeited or fully vested.

During the six months ended June 30, 2023, the Board granted 632,091 shares of restricted stock under the Plan. The shares have a vesting period of up to four years during which there are certain restrictions as described in the Plan and Stock Bonus Agreements. The grant date fair value of the award is the closing price of the shares on such date, or if there are no sales on such date, on the next preceding day on which there were sales.

Effective April 2003, the Company adopted the Bowman Consulting Group Ltd. Stock Bonus Plan (“the Stock Bonus Plan”), which allowed for the awarding of restricted stock to employees. The Stock Bonus Plan was superseded by the Bowman Consulting Group Ltd. 2021 Omnibus Equity Incentive Plan except that the Stock Bonus Plan shall remain in effect with respect to awards granted under it until such awards have been forfeited or fully vested.

During the six months ended June 30, 2023 no new restricted stock awards were granted under the Stock Bonus Plan.

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The following table summarizes the activity of restricted shares subject to forfeiture:

	Number of shares	Weighted Average Grant Price
Outstanding at January 1, 2023	1,837,309	14.33
Granted	632,091	39.84
Vested	(648,215)	12.26
Cancelled	(11,452)	18.00
Outstanding at June 30, 2023	1,809,733	17.79

On November 10, 2021 the Company’s Board adopted the 2021 Executive Officers Long Term Incentive Plan (the “Officers LTIP”). The Officers LTIP is established under the Plan and is subject to the terms and conditions thereof. The purpose of this plan is to attract, retain and motivate key officers and employees through the grant of equity-based awards that reward Company performance over a period greater than one year and align their interests with long-term stockholder value.

During the six months ended June 30, 2023, the compensation committee approved the grants of 245,710 performance-based stock units to certain executive officers of the Company under the Officers LTIP. The performance based restricted stock units are subject to a market condition, with a vesting period of 2.91 years. The number of units earned is based on total shareholder return (“TSR”) of the Company’s common stock relative to the TSR of the components of a custom peer group during the performance period from February 10, 2023 to December 31, 2025. The performance stock units are valued using a Monte Carlo simulation with model inputs of opening average share value, valuation date stock price, expected volatilities, correlation coefficient, risk-free interest rate, and expected dividend yield for the Company and the custom peer group.

The following table summarizes the activity of performance stock units subject to forfeiture:

	Number of shares	Weighted Average Grant Price
Outstanding at January 1, 2023	447,429	12.95
Granted	245,710	22.94
Vested	–	–
Cancelled	–	–
Outstanding at June 30, 2023	693,139	16.49

The Company recognizes forfeitures as they occur.

The following table represents the change in the liability to common shares subject to repurchase and the associated non-cash compensation expense for the six months ended June 30, 2023 and the year ended December 31, 2022 (in thousands):

	June 30, 2023		December 31, 2022
Beginning Balance	$	–	$	7
Non-cash compensation from ratable vesting	$	–	–
Non-cash compensation from change in fair value of liability	$	–	–
Other stock activity, net	$	–	(7)
Reclassification upon modification	–		–
Ending balance	$	–	$	–

As of June 30, 2023, the Company had 2,502,872 shares underlying unvested stock awards that vest between July 1, 2023 and December 31, 2027.

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The future expense of the unvested awards for the remainder of 2023 and succeeding years is as follows (in thousands):

2023	$	12,414
2024	15,728
2025	7,177
2026	694
Thereafter	13
Total	$	36,026

16. Leases

We lease certain office space, equipment and vehicles. These leases are either non-cancelable, cancellable only by the payment of penalties or cancellable upon notice provided. All lease payments are based on the lapse of time and certain leases are subject to annual escalations for increases in base rents. The Company's lease terms includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised.

The Company recognizes a right-of-use asset and lease liability for its operating leases at the commencement date equal to the present value of the contractual minimum lease payments over the lease term. The present value is calculated using the rate implicit in the lease, if known, or the Company's incremental borrowing rate. The discount rate used for operating leases is primarily determined based on an analysis of the Company's borrowing rate, while the discount rate used for finance leases is primarily determined by the rate specified in the lease.

Operating and Finance Leases

The Company's operating leases primarily include material leases of buildings (consisting primarily of office lease commitments) and equipment. These leases are classified as operating leases and are recognized as right-of-use assets and operating lease liabilities on the consolidated balance sheets.

The Company's finance leases primarily include equipment and vehicles in certain contracts with payment terms on the lease agreements that range between 30 and 50 months.

The following tables present our balance sheet information related to leases:

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		As of		As of
(Amounts in thousands)	Balance Sheet Classification	June 30, 2023		December 31, 2022
Assets:
Operating lease assets	Operating lease, right-of-use assets	$	39,476	$	30,264
Finance lease assets	Property and equipment, net	$	19,510	$	18,580
Total lease assets		$	58,986	$	48,844
Liabilities:
Current:
Operating lease liabilities	Operating lease obligation, current portion	$	(8,153)	$	(6,949)
Finance lease liabilities	Finance lease obligation, current portion	$	(6,001)	$	(5,297)
Total current lease liabilities		$	(14,154)	$	(12,246)
Non-current:
Operating lease liabilities	Operating lease obligation, less current portion	$	(36,610)	$	(28,087)
Finance lease liabilities	Finance lease obligation, less current portion	$	(14,619)	$	(14,254)
Total non-current lease liabilities		$	(51,229)	$	(42,341)

The following tables present selected financial information:

	Three Months Ended				Six Months Ended
(Amounts in thousands)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Operating lease cost
Amortization of right-of-use assets	$	2,711	$	1,948	$	5,204	$	3,679
Finance lease cost:
Amortization of right-of-use assets	1,778		1,776		3,448		3,401
Interest on lease liabilities	367		227		723		439
Sublease Income	(22)		–		(22)		–
Total lease cost	$	4,834	$	3,951	$	9,353	$	7,519

	Six Months Ended
(Amounts in thousands)	June 30, 2023		June 30, 2022
Cash paid for amounts included in the measurements of lease liabilities
Operating cash flows from operating leases	$	8,510	$	7,008
Operating cash flows from finance leases	722		439
Financing cash flows from finance leases	3,285		2,963
Right-of-use assets obtained in exchange for new operating leases	13,255		25,733
Right-of-use assets obtained in exchange for new finance leases	4,377		4,618

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	As of		As of
	June 30, 2023		December 31, 2022
Weighted average remaining lease term (in years):
Operating leases	5.49		5.62
Finance leases	3.00		3.28
Weighted average discount rates:
Operating leases	6.9	%	7.1	%
Finance leases	7.4	%	7.4	%

Future minimum commitments under leases for the succeeding years are as follows (in thousands):

(Amounts in thousands)
Year ending December 31,	Operating Lease		Finance Lease
2023 (six months remaining)	$	5,404	$	3,788
2024	10,511		6,900
2025	9,795		6,640
2026	8,127		3,205
2027	7,101		237
Thereafter	13,383		–
Total lease payments	$	54,321	$	20,770
Less: Amounts representing interest	$	(9,558)	$	(2,580)
Total lease liabilities	$	44,763	$	18,190

The above table is exclusive of the $2.4 million bargain purchase price associated with the $20.8 million total liability to finance leases as presented on the consolidated balance sheet.

17. Subsequent Events

On August 2, 2023, the Company and certain of its subsidiaries, as guarantors, entered into a First Amendment to the Amended and Restated Credit Agreement dated as of November 11, 2022 with Bank of America, N.A. ( the "Amended and Restated Agreement"). The Amendment increased the maximum principal amount of the Revolving Credit Facility to $70 million, is secured by all the assets of the Company and the subsidiary guarantors and has a maturity date of July 31, 2025. Under the Amended and Restated Agreement, the Company is required to comply with certain covenants, including covenant on indebtedness, investments, liens and restricted payments, as well as maintain certain financial covenants, including a fixed charge coverage ratio and leverage ratio of debt to EBITDA (as defined in the Amended and Restated Agreement).

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. 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 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “Annual Report on Form 10-K”) filed with the US Securities and Exchange Commission and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Cautionary Statement about Forward-Looking Statements,” 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 solutions to customers who own, develop and maintain the built environment. We provide planning, engineering, construction management, commissioning, environmental consulting, geospatial, survey, land procurement and other technical services to customers operating in a diverse set of end markets. We work as both a prime and sub-consultant for a broad base of public and private sector customers that generally operate in highly regulated environments.

We have a diversified business that is not dependent on any one service line, geographic region, or end market. We are deliberate in our efforts to balance our sources of revenue and avoid reliance on any one significant customer, service line, geography or end market concentration. Our strategic focus is on penetrating and expanding our presence in markets which best afford us opportunities to secure assignments that provide reoccurring revenue and multi-year engagements thus resulting in dependable and predictable revenue streams and high employee utilization. We limit our exposure to risk by providing professional and related services exclusively. We do not engage in general contracting activities either directly, or through joint ventures, and therefore have no related exposure. We are not a partner in any design-build construction projects. We carry no heavy equipment inventory, and our risk of contract loss is generally limited to time associated with fixed fee professional services assignments.

Gross contract revenue for the three months ended June 30, 2023 and 2022 was $82.8 million and $62.4 million, respectively, representing year over year growth of 32.6%. Gross contract revenue derived from our workforce represented 89.2% and 90.3% of gross contract revenue for the three months ended June 30, 2023 and 2022, respectively (see Net service billing – non-GAAP below). Our net loss for the three months ended June 30, 2023 and 2022 was $0.6 million and $0.3 million, respectively. Our Adjusted EBITDA for the three months ended June 30, 2023 and 2022 was $11.1 million on net loss of $0.6 million and $7.6 million on net loss of $0.3 million, respectively. (see Adjusted EBITDA – non-GAAP below)

Gross contract revenue for the six months ended June 30, 2023 and 2022 was $158.9 million and $114.9 million, respectively, representing year over year growth of 38.3%. Gross contract revenue derived from our workforce represented 89.0% and 90.6% of gross contract revenue for the six months ended June 30, 2023 and 2022, respectively (see Net service billing – non-GAAP below). Our net income (loss) for the six months ended June 30, 2023 and 2022 was ($0.1) million and $1.1 million, respectively. Our Adjusted EBITDA for the six months ended June 30, 2023 and 2022 was $20.7 million on net loss of $0.1 million and $15.0 million on net income of $1.1 million, respectively. (see Adjusted EBITDA – non-GAAP below)

Subsequent Events

On August 2, 2023, the Company and certain of its subsidiaries, as guarantors, entered into the First Amendment to the Amended and Restated Credit Agreement dated as of November 11, 2022 with Bank of America, N.A. (the "Amended and Restated Agreement"). The First Amendment increased the maximum principal amount of the Revolving Credit Facility to $70 million, is secured by all the assets of the Company and the subsidiary guarantors and extended the maturity date of the Revolving Credit Facility to July 31, 2025. Under the Amended and Restated Agreement, the

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Company is required to comply with certain covenants, including covenant on indebtedness, investments, liens and restricted payments, as well as maintain certain financial covenants, including a fixed charge coverage ratio and leverage ratio of debt to EBITDA (as defined in the Amended and Restated Agreement).

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 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.

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 revenue, which represents total revenue billed to customers excluding taxes collected from customers. Gross revenue less revenue derived from pass-through sub-consultant fees, reimbursable expenses and other direct expenses represents our net service billing, or that portion of our gross revenue attributable to services performed by our employees. Our industry uses the calculation underlying net service billing to normalize peer performance assessments and provide meaningful insight into trends over time. Refer to — Other Financial Data, Non-GAAP measurements and Key Performance Indicators below for further discussion of the use of this non-GAAP financial measure.

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

We enter into contracts that contain two types of pricing characteristics:

Hourly contracts, also referred to as time and materials, are common for professional and technical consulting assignments both short-term and multi-year in duration. Under these types of contracts, there is no predetermined maximum fee and we generally experience no risk associated with cost overruns. For hourly contracts, we negotiate billing rates and charge our customers based upon the actual hours expended toward a deliverable. These contracts may have not-to-exceed parameters requiring us to receive additional authorizations from our customer to continue working, but we likewise do not have to continue working without assurances of payment for such additional work. Hourly assignments represented approximately $9.2 million and $17.1 million or 11% of our gross contract revenue for each of the three and six months ended June 30, 2023, respectively. For each of the three and six months ended June 30, 2022, hourly assignments represented approximately $3.9 million and $6.8 million or 6% of our gross contract revenue, respectively.

Lump sum contracts, also referred to as fixed fee, typically require the performance of some, or all, of the obligations under the contract for a specified amount, subject to price adjustments only if the scope of the project changes or unforeseen requirements arise. Our fixed fee contracts generally include a specific scope of work and defined deliverables. Lump sum contracts can involve both hourly and fixed fee tasks. Most of our assignments are lump sum in nature representing approximately $73.5 million and $141.8 million or 89% and 89% of our gross contract revenue for the three and six months ended June 30, 2023, respectively. For each of the three and six months ended June 30, 2022, assignments that are lump sum in nature represented approximately $57.8 million and $107.5 million or 94% of our gross contract revenue, respectively. Recognizing revenue from lump sum assignments requires management estimates of both total contract value when there are contingent compensation elements of the fee arrangement and expected cost at completion.

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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.

Sub-consultants and direct expenses include both sub-consultants and other outside costs associated with performance under our contracts. Sub-consultant and direct costs are generally reimbursable by our customers under the terms of our contracts.

Performance under our contracts does not involve significant machinery or other long term depreciable assets. Most of the equipment we employ involves desktop computers and other shared ordinary course IT equipment. 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. Non-cash stock compensation cost will be the grant date fair value of the awards, or the Black-Sholes-Merton value of stock options on the grant date, recognized ratably over the vesting periods of each award. Future non-cash stock compensation expense for unvested shares is the cumulative total of the unvested portion of all issued and outstanding awards and their individual grant date fair values. Stock awards will continue to be an important part of our long-term retention and rewards philosophy.

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, including transaction related costs associated with acquisitions.

Tax 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

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Backlog

We measure the value of our undelivered gross 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 reconciles 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 revenue less revenue derived from pass-through sub-consultant fees and reimbursable expenses represents our net service billing, which is a non-GAAP financial measure, or that portion of our gross contract revenue attributable to services performed by our employees. Because the ratio of sub-contractor and direct expense costs to gross billing varies between contracts, gross revenue is not necessarily indicative of trends in our business. As a professional services company, we believe that metrics derived from net service billings more accurately demonstrate the productivity and profitability of our workforce. Our industry uses the calculation of net service billing to normalize peer performance assessments and provide meaningful insight into trends over time.

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 discontinued expenses, non-core legal settlements and other costs not in the ordinary course of business, non-cash stock-based compensation, and other acquisition related adjustments. 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.

Results of Operations

Combined results of operations

The following represents our condensed consolidated results of operations for periods indicated (in thousands):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Gross contract revenue	$	82,755		$	62,399		$	158,855		$	114,860
Contract costs (exclusive of depreciation and amortization)	41,038			31,054			78,420			56,489
Operating expense	42,833			30,861			80,013			56,049
Income (loss) from operations	(1,116)			484			422			2,322
Other expense	1,143			994			2,358			1,491
Income tax expense (benefit)	(1,625)			(190)			(1,839)			(306)
Net income (loss)	$	(634)		$	(320)		$	(97)		$	1,137
Net margin	(0.8)		%	(0.5)		%	(0.1)		%	1.0		%
Other financial information 1
Net service billing	$	73,792		$	56,416		$	141,354		$	104,117
Adjusted EBITDA	11,053			7,576			20,725			14,983
Adjusted EBITDA margin, net	15.0		%	13.4		%	14.7		%	14.4		%

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1Represents non-GAAP financial measures. See Other Financial Information and Non-GAAP key performance indicators below.

Three months ended June 30, 2023 as compared to the three months ended June 30, 2022

Gross Contract Revenue

Gross contract revenue for the three months ended June 30, 2023, increased $20.4 million or 32.7% to $82.8 million as compared to $62.4 million for the three months ended June 30, 2022. For the three months ended June 30, 2023, gross contract revenue attributable to work performed by our workforce increased $17.4 million, or 30.9% to $73.8 million or 89.2% of gross contract revenue as compared to $56.4 million or 90.4% of gross contract revenue for the three months ended June 30, 2022 (see Net service billing – non-GAAP). Of the $20.4 million increase in gross contract revenue during the three months ended June 30, 2023, acquisitions represented $12.2 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.

Changes in gross contract revenue disaggregated between our core and emerging end markets were as follows (in thousands other than percentages):

	For the Three Months Ended June 30,
Consolidated Gross Contract Revenue	2023		%GCR		2022		%GCR		Change		% Change
Building Infrastructure	$	48,616	58.7	%	$	42,571	68.2	%	$	6,045	14.2	%
Transportation	15,870		19.2	%	9,276		14.9	%	6,594		71.1	%
Power & Utilities	15,585		18.8	%	9,326		14.9	%	6,259		67.1	%
Other Emerging Markets 1	2,684		3.3	%	1,226		2.0	%	1,458		118.9	%
Total:	$	82,755	100.0	%	$	62,399	100.0	%	$	20,356	32.6	%
Organic	$	70,414	85.1	%	$	62,249	99.8	%	$	8,165	13.1	%
Acquired 2	12,341		14.9	%	150		0.2	%	12,191		n/a
Total:	$	82,755	100.0	%	$	62,399	100.0	%	$	20,356	32.6	%

1Represents mining, water resources and other. Effective December 31, 2022, we reclassified renewables as power & utilities. For the three months ended June 30, 2022, $1.4 million of renewables revenue was reclassified accordingly for consistency.

2After four quarters post-closing, acquired revenue is reclassified as organic; this results in a change from previously reported numbers. McMahon Associates, Inc. has reached its full four quarter milestone and was reclassified as organic.

For the three months ended June 30, 2023, gross contract revenue from our building infrastructure market increased $6.0 million or 14.2% as compared to the three months ended June 30, 2022. 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, 40.8% of gross contract revenue was derived from residential activities, 45.5% from commercial activities including in-building services, aviation related work, and 13.7% from municipal activities. Within residential, 53.0% of gross contract revenue was derived from for-sale homebuilding activity, 38.6% from residential multi-family and 8.5% from mixed use projects. While the homebuilding market shows signs of weakness, for-sale residential services represented 12.7% of our total gross contract revenue for the three months ended June 30, 2023. We continue to experience strong demand for our building infrastructure services and maintain a positive outlook on this market and expect it to represent most of our gross revenue for the remainder of 2023. We continue to experience strength in markets including data centers, quick serve restaurants, industrial distribution facilities, schools, and build-for-rent communities.

For the three months ended June 30, 2023, revenue from transportation increased $6.6 million or 71.1% as compared to the three months ended June 30, 2022. The increase was principally attributable to the acquisition of McMahon Associates, Inc. Contract awards in transportation, such as Cook County DOT, Illinois DOT, and Illinois Tollway Authority along with clients such as TXDOT, MassDOT and PennDOT added through various acquisitions are beginning to generate meaningful new transportation revenue. 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

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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 are now consolidating renewable energy into the power and utilities category of our revenue mix and have adjusted historical balances accordingly. We will continue to disclose the impact of renewables as a part of the power and utilities market. Adjusted for the change, for the three months ended June 30, 2023, revenue from power and utilities increased $6.3 million or 67.1% as compared to the three months ended June 30, 2022. Renewable energy and energy transition represented approximately $2.7 million and $1.4 million of the adjusted power and utilities revenue for the three months ended June 30, 2023 and 2022, respectively. Including the recent acquisition of Richter, the additional increase in gross contract revenue from the power and utilities market is principally attributable to increased revenue associated with the expansion of a multi-year utility undergrounding assignment in Florida, along with additional increases derived from gas pipeline and electric transmission projects nationally. 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 other emerging markets consist of mining, water resources, and other natural resources services. Adjusted for the change, for the three months ended June 30, 2023, revenue from emerging markets increased $1.5 million or 118.9% as compared to the three months ended June 30, 2022. Gross contract revenue in our emerging markets was 45.3% from mining activities where we have specialized in copper mining and 54.7% from water resources activities. 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 renewable energy and energy transition.

For the three months ended June 30, 2023 and 2022, public sector customers, defined as direct contracts with municipalities, public agencies, or governmental authorities, represented 17.1% and 20.0% of our gross contract revenue, respectively. This increase is principally attributable to our acquisition program. This does not include work done indirectly on public sector projects. Gross contract revenue from projects for public sector clients 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 $9.9 million or 31.8% to $41.0 million for the three months ended June 30, 2023, as compared to $31.1 million for the three months ended June 30, 2022. For the three months ended June 30, 2023 and 2022, total contract costs represented 49.6% and 49.8% of total contract revenue, respectively. For the three months ended June 30, 2023 and 2022 total contract costs represented 55.6% and 55.0% of revenue attributable to our workforce, respectively (see Net Service Revenue).

Direct payroll costs increased $7.0 million or 27.9% to $32.1 million for the three months ended June 30, 2023, as compared to $25.1 million for the three months ended June 30, 2022. Direct payroll accounted for 78.2% of total contract costs for the three months ended June 30, 2023, a decrease of 2.5 percentage points as compared to 80.7% for the three months ended June 30, 2022.

Direct labor, the component of direct payroll costs associated with the cost of labor relating to work performed on contracts increased $5.6 million or 31.5% to $23.4 million for the three months ended June 30, 2023 as compared to $17.8 million for the three months ended June 30, 2022. The increase in direct labor is primarily due to an increase in staffing to accommodate growth. For the three months ended June 30, 2023 and 2022, direct labor costs represented 28.3% and 28.6% of gross contract revenue, respectively and represented 31.7% and 31.6% 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 $1.5 million or 20.8% to $8.7 million as compared to $7.2 million. This increase includes a $1.0 million increase in payroll taxes and health care as well as a $0.2 million increase in personal leave, primarily due to the increase in overall labor .

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Sub-consultants and other direct expenses increased $3.0 million or 50.0% to $9.0 million for the three months ended June 30, 2023 as compared to $6.0 million for the three months ended June 30, 2022. For the three months ended June 30, 2023 and 2022, sub-consultant and other direct expenses represented 10.8% and 9.6% of gross contract revenue, respectively. This increase is not indicative of an anticipated long-term shift in the composition of our gross contract revenue, and we expect to experience periodic volatility in concentration of sub-consultant utilization.

Operating Expense

Total operating expense increased $11.9 million or 38.5% to $42.8 million for the three months ended June 30, 2023 as compared to $30.9 million for the three months ended June 30, 2022.

Selling, general and administrative expenses increased $10.2 million or 36.3% to $38.3 million for the three months ended June 30, 2023, as compared to $28.1 million for the three months ended June 30, 2022. Indirect labor increased $5.2 million or 45.6% to $16.6 million as compared to $11.4 million primarily due to an increase in staffing to accommodate growth. General overhead increased $2.8 million or 29.2% to $12.4 million as compared to $9.6 million due to increased costs associated with the overall growth of the company. Non-cash stock compensation increased $1.8 million or 62.1% to $4.7 million as compared to $2.9 million as several new stock awards were granted to Company leadership as well as employees in connection with acquisitions.

Depreciation and amortization increased $1.9 million or 67.9% to $4.7 million for the three months ended June 30, 2023 as compared to $2.8 million for the three months ended June 30, 2022. This increase is primarily due to an increase in leased assets and intangible assets. We continue to increase the use of our finance lease facility as we continue to grow. Intangible assets have increased due to multiple acquisitions throughout 2023. Gains on the sale of certain IT equipment and automobiles increased $0.2 million for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022.

Other Expense

Other expense increased by $0.1 million to $1.1 million of expense for the three months ended June 30, 2023 as compared to $1.0 million for the three months ended June 30, 2022. This increase is primarily attributable to an increase in interest expense of $0.8 million due to an increase in finance leases and a decrease in acquisition related expenses of $0.5 million.

Income Tax (Benefit) Expense

Income tax benefit for the three months ended June 30, 2023, increased $1.4 million to a $1.6 million benefit, as compared to $0.2 million benefit for the three months ended June 30, 2022, see note 2, Income Taxes. Our effective tax rate for the three months ended June 30, 2023, is 71.9% as compared to 37.1% for the three months ended June 30, 2022.

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

Loss before tax increased by $1.8 million for the three months ended June 30, 2023, to ($2.3) million of loss compared to ($0.5) million for the three months ended June 30, 2022. Net loss increased by $0.3 million to $0.6 million for the three months ended June 30, 2023, as compared to $0.3 million for the three months ended June 30, 2022.

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Other financial information and Non-GAAP key performance indicators

Net service billing (non-GAAP)

Net service billing increased $17.4 million or 30.9% to $73.8 million for the three months ended June 30, 2023, as compared to $56.4 million for the three months ended June 30, 2022. Net service billing reconciles to gross contract revenue as follows (in thousands):

	For the Three Months Ended June 30,
	2023		2022
Gross contract revenue	$	82,755	$	62,399
Less: sub-consultants and other direct expenses	8,963		5,983
Net service billing	$	73,792	$	56,416

Net service billing as a percentage of gross contract revenue decreased 2.1% for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022.

Because sub-consultants and reimbursable expenses are most often pass-through items with little or no mark-up, they generally have a dilutive effect on gross, operating, and net margins while having little accretive effect on profitability. As such, where possible, we focus our resources and business development efforts principally on increasing revenue derived from our own workforce. Management primarily focuses its internal performance metrics on net service billing.

Adjusted EBITDA (non-GAAP)

Adjusted EBITDA increased $3.5 million or 45.9% to $11.1 million for the three months ended June 30, 2023 as compared to $7.6 million for the three months ended June 30, 2022. Adjusted EBITDA reconciles to net income as follows (in thousands):

	For the Three Months Ended June 30,
	2023			2022			$ Change		% Change
Net Service Billing	$	73,792		$	56,416		$	17,376	30.8	%
Net Income (loss)	$	(634)		$	(320)		$	(314)	98.1	%
+ interest expense	1,112			350			762		217.7	%
+ depreciation & amortization	4,719			2,823			1,896		67.2	%
+ tax expense	(1,625)			(190)			(1,435)		755.3	%
EBITDA	$	3,572		$	2,663		$	909	34.1	%
+ non-cash stock compensation	6,888			4,038			2,850		70.6	%
+ transaction related expenses	123			–			123		100.0	%
+ settlements and other non-core expenses	113			215			(102)		(47.4)	%
+ acquisition expenses	357			660			(303)		(45.9)	%
Adjusted EBITDA	$	11,053		$	7,576		$	3,477	45.9	%
Adjusted EBITDA margin, net	15.0		%	13.4		%

For the three months ended June 30, 2023 and 2022, Adjusted EBITDA includes add backs of $6.9 million and $4.0 million, respectively, relating to non-cash stock compensation expenses resulting from the vesting of restricted stock awards. For the three months ended June 30, 2023 and 2022, Adjusted EBITDA also includes $0.4 million and $0.7 million, respectively, relating to non-recurring acquisition expenses.

Pursuant to the accounting for business combinations, we have up to one year from the date of closing to finalize the purchase accounting for an acquisition. From time to time, adjustments are made which impact the treatment of assets, liabilities and expenses associated with acquisitions. Non-recurring costs specifically allocatable to an acquisition are treated as add-backs to adjusted EBITDA in the period recognized.

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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 three months ended June 30, 2023 and 2022, Adjusted EBITDA Margin, net was 15.0% and 13.4% respectively.

Six months ended June 30, 2023 as compared to the six months ended June 30, 2022

Gross Contract Revenue

Gross contract revenue for the six months ended June 30, 2023, increased $44.0 million or 38.3% to $158.9 million as compared to $114.9 million for the six months ended June 30, 2022. For the six months ended June 30, 2023, gross contract revenue attributable to work performed by our workforce increased $37.3 million, or 35.8% to $141.4 million or 89.0% of gross contract revenue as compared to $104.1 million or 90.6% of gross contract revenue for the six months ended June 30, 2022 (see Net service billing – non-GAAP). Of the $44.0 million increase in gross contract revenue during the six months ended June 30, 2023, acquisitions represented $18.8 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.

Changes in gross contract revenue disaggregated between our core and emerging end markets were as follows (in thousands other than percentages):

	For the Six Months Ended June 30,
Consolidated Gross Contract Revenue	2023		%GCR		2022		%GCR		Change		% Change
Building Infrastructure	$	92,953	58.5	%	$	81,332	70.8	%	$	11,621	14.3	%
Transportation	31,889		20.1	%	13,247		11.5	%	18,642		140.7	%
Power & Utilities	28,909		18.2	%	18,075		15.7	%	10,834		59.9	%
Other Emerging Markets 1	5,104		3.2	%	2,206		2.0	%	2,898		131.4	%
Total:	$	158,855	99.9	%	$	114,860	100.0	%	$	43,995	38.3	%
Organic	$	139,857	88.0	%	$	114,710	99.9	%	$	25,147	21.9	%
Acquired 2	18,998		12.0	%	150		0.1	%	18,848		16.4	%
Total:	$	158,855	100.0	%	$	114,860	100.0	%	$	43,995	38.3	%

1Represents mining, water resources and other. Effective December 31, 2022, we reclassified renewables as power & utilities. For the six months ended June 30, 2022, $2.5 million of renewables revenue was reclassified accordingly for consistency.

2After four quarters post-closing, acquired revenue is reclassified as organic; this results in a change from previously reported numbers. McMahon Associates, Inc. has reached its full four quarter milestone and was reclassified as organic.

For the six months ended June 30, 2023, gross contract revenue from our building infrastructure market increased $11.6 million or 14.3% as compared to the six months ended June 30, 2022. 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, 41.3% of gross contract revenue was derived from residential activities, 45.7% from commercial activities including in-building services, aviation related work, and 13.0% from municipal activities. Within residential, 45.8% of gross contract revenue was derived from for-sale homebuilding activity, 44.2% from residential multi-family and 10.1% from mixed use projects. While the homebuilding market shows signs of weakness, for-sale residential services represented just 10.7% of our total gross contract revenue for six months ended June 30, 2023. We continue to experience strong demand for our building infrastructure services and maintain a positive outlook on this market and expect it to represent most of our gross revenue for the remainder of 2023. We continue to experience strength in markets including data centers, quick serve restaurants, industrial distribution facilities, schools, and build-for-rent communities.

For the six months ended June 30, 2023, revenue from transportation increased $18.6 million or 140.7% as compared to the six months ended June 30, 2022. The increase was principally attributable to the acquisition of McMahon Associates, Inc. Contract awards in transportation, such as Cook County DOT, Illinois DOT, and Illinois Tollway Authority along with clients such as TXDOT, MassDOT and PennDOT added through various acquisitions are beginning to generate meaningful new transportation revenue. We expect to continue to increase our transportation revenue and improve the diversification

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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 are now consolidating renewable energy into the power and utilities category of our revenue mix and have adjusted historical balances accordingly. We will continue to disclose the impact of renewables as a part of the power and utilities market. Adjusted for the change, for the six months ended June 30, 2023, revenue from power and utilities increased $10.8 million or 59.9% as compared to the six months ended June 30, 2022. Renewable energy and energy transition represented approximately $5.5 million and $2.5 million of the adjusted power and utilities revenue for the six months ended June 30, 2023 and 2022, respectively. Including the recent acquisition of Richter, the additional increase in gross contract revenue from the power and utilities market is principally attributable to increased revenue associated with the expansion of a multi-year utility undergrounding assignment in Florida, along with additional increases derived from gas pipeline and electric transmission projects nationally. 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 other emerging markets consist of mining, water resources, and other natural resources services. Adjusted for the change, for the six months ended June 30, 2023, revenue from emerging markets increased $2.9 million or 131.4% as compared to the six months ended June 30, 2022. Gross contract revenue in our emerging markets was 60.9% from mining activities where we have specialized in copper mining and 39.1% from water resources activities. 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 renewable energy and energy transition.

For the six months ended June 30, 2023 and 2022, public sector customers, defined as direct contracts with municipalities, public agencies, or governmental authorities, represented 20.5% and 17.9% of our gross contract revenue, respectively. This increase is principally attributable to our acquisition program. This does not include work done indirectly on public sector projects. Gross contract revenue from projects for public sector clients 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 $21.9 million or 38.8% to $78.4 million for the six months ended June 30, 2023, as compared to $56.5 million for the six months ended June 30, 2022. For the six months ended June 30, 2023 and 2022, total contract costs represented 49.4% and 49.2% of total contract revenue, respectively. For the six months ended June 30, 2023 and 2022 total contract costs represented 55.5% and 54.3% of revenue attributable to our workforce, respectively (see Net Service Revenue).

Direct payroll costs increased $15.2 million or 33.3% to $60.9 million for the six months ended June 30, 2023, as compared to $45.7 million for the six months ended June 30, 2022. Direct payroll accounted for 77.7% of total contract costs for the six months ended June 30, 2023, a decrease of 3.3 percentage points as compared to 81.0% for the six months ended June 30, 2022.

Direct labor, the component of direct payroll costs associated with the cost of labor relating to work performed on contracts increased $12.1 million or 36.4% to $45.3 million for the six months ended June 30, 2023 as compared to $33.2 million for the six months ended June 30, 2022. The increase in direct labor is primarily due to an increase in staffing to accommodate growth. For the six months ended June 30, 2023 and 2022, direct labor costs represented 28.5% and 28.9% of gross contract revenue, respectively and represented 32.0% and 31.9% 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 $3.0 million or 23.8% to $15.6 million as compared to $12.6 million. This increase includes a $1.8 million increase in fringe benefits primarily due to the increase in overall labor. This increase also includes $1.2 million in increased non-cash compensation expense as several new stock awards were granted to management as well as employees in connection with acquisitions.

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Sub-consultants and other direct expenses increased $6.8 million or 63.6% to $17.5 million for the six months ended June 30, 2023 as compared to $10.7 million for the six months ended June 30, 2022. For the six months ended June 30, 2023 and 2022, sub-consultant and other direct expenses represented 11.0% and 9.4% of gross contract revenue, respectively. This increase is not indicative of an anticipated long-term shift in the composition of our gross contract revenue, and we expect to experience periodic volatility in concentration of sub-consultant utilization.

Operating Expense

Total operating expense increased $24.0 million or 42.9% to $80.0 million for the six months ended June 30, 2023 as compared to $56.0 million for the six months ended June 30, 2022.

Selling, general and administrative expenses increased $21.1 million or 41.5% to $72.0 million for the six months ended June 30, 2023, as compared to $50.9 million for the six months ended June 30, 2022. Indirect labor increased $11.1 million or 54.4% to $31.5 million as compared to $20.4 million primarily due to an increase in staffing to accommodate growth. General overhead increased $5.5 million or 30.2% to $23.7 million as compared to $18.2 million due to increased costs associated with the overall growth of the company. Non-cash stock compensation increased $2.6 million or 49.1% to $7.9 million as compared to $5.3 million as several new stock awards were granted to Company leadership as well as employees in connection with acquisitions.

Depreciation and amortization increased $3.1 million or 59.6% to $8.3 million for the six months ended June 30, 2023 as compared to $5.2 million for the six months ended June 30, 2022. This increase is primarily due to an increase in leased assets and intangible assets. We continue to increase the use of our finance lease facility as we continue to grow. Intangible assets have increased due to multiple acquisitions throughout 2023. Gains on the sale of certain IT equipment and automobiles increased $0.2 million for the six months ended June 30, 2023.

Other (Income) Expense

Other expense increased by $0.9 million to $2.4 million of expense for the six months ended June 30, 2023 as compared to $1.5 million for the six months ended June 30, 2022. This increase is primarily attributable to an increase in interest expense due to an increase in finance leases, acquisitions and the line of credit.

Income Tax (Benefit) Expense

Income tax benefit for the six months ended June 30, 2023, increased $1.5 million to a $1.8 million benefit, as compared to $0.3 million benefit for the six months ended June 30, 2022, see note 2, Income Taxes. Our effective tax rate for the six months ended June 30, 2023, is 95.0% as compared to (37.9%) for the six months ended June 30, 2022.

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

Income (loss) before tax increased by ($2.7) million for the six months ended June 30, 2023, to ($1.9) million of loss compared to $0.8 million income for the six months ended June 30, 2022. Net income (loss) increased by ($1.2) million to ($0.1) million for the six months ended June 30, 2023, as compared to $1.1 million for the six months ended June 30, 2022.

Other financial information and Non-GAAP key performance indicators

Net service billing (non-GAAP)

Net service billing increased $37.3 million or 35.8% to $141.4 million for the six months ended June 30, 2023, as compared to $104.1 million for the six months ended June 30, 2022. Net service billing reconciles to gross contract revenue as follows (in thousands):

	For the Six Months Ended June 30,
	2023		2022
Gross contract revenue	$	158,855	$	114,860
Less: sub-consultants and other direct expenses	17,501		10,743
Net service billing	$	141,354	$	104,117

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Net service billing as a percentage of gross contract revenue decreased 1.6% for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022.

Because sub-consultants and reimbursable expenses are most often pass-through items with little or no mark-up, they generally have a dilutive effect on gross, operating, and net margins while having little accretive effect on profitability. As such, where possible, we focus our resources and business development efforts principally on increasing revenue derived from our own workforce. Management primarily focuses its internal performance metrics on net service billing.

Adjusted EBITDA (non-GAAP)

Adjusted EBITDA increased $5.7 million or 38.3% to $20.7 million for the six months ended June 30, 2023 as compared to $15.0 million for the six months ended June 30, 2022. Adjusted EBITDA reconciles to net income as follows (in thousands):

	For the Six Months Ended June 30,
	2023			2022			$ Change		% Change
Net Service Billing	$	141,354		$	104,117		$	37,237	35.8	%
Net Income (loss)	$	(97)		$	1,137		$	(1,234)	(108.5)	%
+ interest expense	2,007			685			1,322		193.0	%
+ depreciation & amortization	8,285			5,213			3,072		58.9	%
+ tax expense	(1,839)			(306)			(1,533)		501.0	%
EBITDA	$	8,356		$	6,729		$	1,627	24.2	%
+ non-cash stock compensation	11,322			7,274			4,048		55.7	%
+ transaction related expenses	123			–			123		100.0	%
+ settlements and other non-core expenses	113			215			(102)		(47.4)	%
+ acquisition expenses	811			765			46		6.0	%
Adjusted EBITDA	$	20,725		$	14,983		$	5,742	38.3	%
Adjusted EBITDA margin, net	14.7		%	14.4		%

For the six months ended June 30, 2023 and 2022, Adjusted EBITDA includes add backs of $11.3 million and $7.3 million, respectively, relating to non-cash stock compensation expenses resulting from the vesting of restricted stock awards. For the six months ended June 30, 2023, Adjusted EBITDA includes $0.8 million, respectively, relating to non-recurring acquisition expenses. For the six months ended June 30, 2022, Adjusted EBITDA also includes $1.0 million relating to non-recurring acquisition expense and a legal settlement.

Pursuant to the accounting for business combinations, we have up to one year from the date of closing to finalize the purchase accounting for an acquisition. From time to time, adjustments are made which impact the treatment of assets, liabilities and expenses associated with acquisitions. Non-recurring costs specifically allocatable to an acquisition are treated as add-backs to adjusted EBITDA in the period recognized.

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 six months ended June 30, 2023 and 2022, Adjusted EBITDA Margin, net was 14.7% and 14.4% respectively.

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Backlog (other key performance metrics)

Backlog (other key performance metrics)

Our backlog increased $51.3 million or 21.3% to $294.7 million during the six months ended June 30, 2023, as compared to $243.4 million at December 31, 2022. Our backlog increased $89.1 million or 43.3% as compared to $205.6 million at June 30, 2022. At June 30, 2023 and December 31, 2022 our backlog was comprised as follows:

	June 30, 2023		December 31, 2022
Building Infrastructure	56	%	51	%
Transportation	25	%	31	%
Power & Utilities	16	%	13	%
Other Emerging Markets	3	%	5	%

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, 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 June 30, 2023, we maintained a $50.0 million Revolving Credit Facility with Bank of America, our primary lender. Under the terms of our 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. Our cash on hand decreased by $3.5 million at June 30, 2023 as compared to December 31, 2022.

On August 2, 2023, the Company and certain of its subsidiaries, as guarantors, entered into a First Amendment to the Amended and Restated Credit Agreement dated as of November 11, 2022 with Bank of America, N.A. (the "Amended and Restated Agreement"). The First Amendment increased the maximum principal amount of the Revolving Credit Facility to $70 million, is secured by all the assets of the Company and the subsidiary guarantors and extended the maturity date of the Revolving Credit Facility to July 31, 2025. Under the Amended and Restated Agreement, the Company is required to comply with certain covenants, including covenant on indebtedness, investments, liens and restricted payments, as well as maintain certain financial covenants, including a fixed charge coverage ratio and leverage ratio of debt to EBITDA (as defined in the Amended and Restated Agreement).

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 debts 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. Currently, we have several acquisitions under consideration. 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. For a discussion of the acquisitions that were completed during the three months ended June 30, 2023, none of which were deemed significant, see Note 4 - Acquisitions.

On November 10, 2022, our board of directors authorized a program to repurchase up to $10.0 million of our common stock. The common stock may be purchased from time to time depending upon market conditions and may be purchased in the open market and through one or more trading plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The plan does not obligate us to repurchase any specific number or any specific dollar amount of shares and may be suspended at any time at our discretion. To date, we have not repurchased any shares under this authorization.

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Cash Flows

The following table summarizes our cash flows for the periods presented:

	For the Six Months Ended June 30,
Condensed Consolidated Statements of Cash Flows (amounts in thousands)	2023		2022
Net cash provided by operating activities	$	2,066	$	4,268
Net cash used in investing activities	(15,647)		(8,099)
Net cash provided by financing activities	10,045		8,995
Change in cash, cash equivalents and restricted cash	(3,536)		5,164
Cash and cash equivalents, end of period	9,746		25,783

Operating Activities

During the six months ended June 30, 2023, net cash provided by operating activities was $2.1 million, which primarily consisted of ($0.1) million net loss, adjusted for stock-based compensation expense of $11.2 million, depreciation and amortization expense of $8.3 million, and deferred taxes of ($7.3) million, offset by a net cash outflow of ($10.1) million from changes in operating assets and liabilities. Cash provided by operating activities before changes in operating assets and liabilities was $12.4 million. We believe this is significant given our high rate of growth. The net outflow from changes in operating assets and liabilities was primarily due to a ($10.9) million decrease in accounts receivable, a ($4.2) million decrease in prepaid expenses and other assets, and ($4.7) million decrease in contract assets and liabilities, partially offset by a $9.5 million increase in accounts payable and accrued expenses.

During the six months ended June 30, 2022, net cash provided by operating activities was $4.3 million, which primarily consisted of our $1.1 million net profit, adjusted for stock-based compensation expense of $7.3 million, and depreciation and amortization expense of $5.2 million, offset by a net cash outflow of $9.5 million from changes in operating assets and liabilities. The net outflow from changes in operating assets and liabilities was primarily due to a $10.3 million increase in accounts receivable resulting from increased billing to our clients, and a $5.1 million increase in prepaid expenses and other assets, partially offset by a $5.9 million increase in accounts payable and accrued expenses

Investing Activities

Net cash used in investing activities increased by $7.5 million to $15.6 million for the six months ended June 30, 2023 as compared to $8.1 million for the six months ended June 30, 2022. The increase in net cash used for investing is primarily attributable to acquisitions that occurred in the first half of 2023.

Financing Activities

Net cash provided by financing activities during the six months ended June 30, 2023 was $10.0 million compared to $9.0 million for the six months ended June 30, 2022, an increase of $1.0 million. The increase in net cash provided by financing is primarily attributable to the $21.2 million proceeds from the Revolving Credit Facility offset by an increase in repayments of notes payable of ($3.3) million during the six months ended June 30, 2023, compared to the $15.5 million from our common stock offering net of underwriting discounts commissions and other offering costs during the six months ended June 30, 2022.

Credit Facilities and Other Financing

As of June 30, 2023, we maintained a $50.0 million revolving credit facility (the “Revolving Credit Facility”) and two non-revolving credit facilities (“Fixed Line 1” and “Fixed Line 2”) pursuant to an Amended and Restated Credit Agreement (collectively with the Revolving Credit Facility, the “Credit Agreement”) with Bank of America, our primary lender. The Credit Agreement had a maturity date of September 30, 2024. Under the terms of the Revolving Credit Facility, available cash in our primary operating account sweeps against the outstanding balance every evening. As of June 30, 2023, the balance on this Revolving Credit Facility was $21.2 million.

On August 2, 2023, the Company and certain of its subsidiaries, as guarantors, entered into the First to Amended and Restated Agreement. The First Amendment increased the maximum principal amount of the Revolving Credit Facility to

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$70 million, is secured by all the assets of the Company and the subsidiary guarantors and extended the maturity date of the Revolving Credit Facility to July 31, 2025. Under the Amended and Restated Agreement, the Company is required to comply with certain covenants, including covenant on indebtedness, investments, liens and restricted payments, as well as maintain certain financial covenants, including a fixed charge coverage ratio and leverage ratio of debt to EBITDA (as defined in the Amended and Restated Agreement).

The Credit Agreement is secured by all the assets of the Company and the subsidiary guarantors. Under the Credit Agreement, 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). At June 30, 2023, we were in compliance with all covenants.

We utilize master lease facilities 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 June 30, 2023, we maintained a fleet of approximately 400 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 $0.7 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. On October 31, 2022, pursuant to a Bill of Sale among Huntington Technology Finance (“Huntington”), as Seller/Lessor, the Company, as Lessee, and Honour, as Buyer, approximately $9.5 million of equipment leased by the Company and financed by Huntington was purchased by Honour.

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 Facilities.

Registration Statement

We have on file with the Securities and Exchange Commission (the “SEC”) a shelf registration statement on Form S-3, which enables us to issue shares of our common stock and preferred stock, warrants and rights to purchase any of such securities and/or debt securities, either individually or in units, in one or more offerings. We will file a prospectus supplement containing the amount and type of securities each time we issue securities under our shelf registration statement on Form S-3. No securities were issued under this registration statement through the date of this filing.

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.

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.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies relating to the use of estimates described in our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the SEC dated March 15, 2023.

Cautionary Statement about Forward-Looking Statements

Our disclosure and analysis in this Quarterly Report on Form 10-Q, contains forward-looking statements. Such forward-looking statements include those that express plans, anticipation, intent, contingencies, goals, targets or future development and/ or otherwise are not statements of historical fact. In some cases, you can identify forward-looking

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statements by terminology, such as “expects,” “anticipates,” “intends,” “estimates,” “plans,” “believes,” “seeks,” “may,” “should,” “could” or the negative of such terms or similar expressions. The absence of these words does not mean that a statement is not forward-looking. Accordingly, these statements involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, our expectations regarding our recent and future acquisitions; our expectations regarding the impact of any completed or planned acquisition; our intentions regarding our growth strategies and investment of resources, including the markets in which we intend to focus our growth initiatives; our expectations regarding trends and opportunities for future growth and expansion, including our projections of growth in energy transitions; our expectations regarding the use of our current liquidity and capital resources for acquisitions; and our belief that our sources of liquidity will be sufficient to fund our projected cash requirements and strategic initiatives for the next year. Any forward-looking statements are qualified in their entirety by reference to the factors discussed in the Risk Factors section of our Annual Report on Form 10-K and throughout this Quarterly Report on Form 10-Q.

These forward-looking statements are based on our current expectations and projections about future events and they are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially from those expressed or implied in such statements. Important factors that could cause such differences include:

•our ability to retain the continued service of our key professionals and to identify, hire, retain and utilize additional qualified personnel;

•changes in demand from the clients that we serve;

•any material outbreak or material escalation of international hostilities, including developments in the conflict involving Russia and the Ukraine and the economic consequences of related events such as the imposition of economic sanctions and resulting market volatility;

•changes in general domestic and international economic conditions such as inflation rates, interest rates, tax rates, higher labor and healthcare costs, recessions, and changing government policies, laws and regulations;

•the U.S. government and other governmental and quasi-governmental budgetary and funding approval process;

•our ability to execute our acquisitions strategy, including successful completion of acquisitions and the integration of new acquisitions into our operations and financial reporting;

•the possibility that our contracts may be terminated by our clients;

•our ability to win new contracts and renew existing contracts;

•competitive pressures and trends in our industry and our ability to successfully compete with our competitors;

•our dependence on a limited number of clients;

•our ability to complete projects timely, in accordance with our customers’ expectations, or profitability;

•our ability to successfully manage our growth strategy;

•our ability to raise capital in the future;

•the credit and collection risks associated with our clients;

•our ability to comply with procurement laws and regulations;

•changes in laws, regulations, or policies;

•weather conditions and seasonal revenue fluctuations may adversely impact our financial results;

•the enactment of legislation that could limit the ability of local, state and federal agencies to contract for our privatized services;

•our ability to complete our backlog of uncompleted projects as currently projected;

•the risk of employee misconduct or our failure to comply with laws and regulations;

•our ability to control, and operational issues pertaining to, business activities that we conduct with business partners and other third parties;

•our need to comply with a number of restrictive covenants and similar provisions in our credit facility that generally limit our ability to (among other things) incur additional indebtedness, create liens, make acquisitions,

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pay dividends and undergo certain changes in control, which could affect our ability to finance future operations, acquisitions or capital needs;

•significant influence by our principal stockholder and the existence of certain anti-takeover measures in our governing documents; and

•the factors identified in our Annual Report on Form 10-K, including those discussed under the heading “Risk Factors”, and in our other filings with the SEC.

Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except to the extent required by applicable laws or rules. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor of our business or to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all information presented in this Quarterly Report on Form 10-Q, and particularly our forward-looking statements, by these cautionary statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, as defined in Rule 12b-2 of the Securities and Exchange Act of 1934 (the “Exchange Act”), we are not required to provide the information required by this item.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, our management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by the Company in reports it files or submits under the Exchange Act is accumulated and communicated to management, recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(e) and 15d-15(e) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are subject to various legal proceedings that arise in the normal course of our business activities. As of the date of this Quarterly Report on Form 10-Q, we are not party to any litigation, the outcome of which if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our results of operations or financial position.

Item 1A. Risk Factors

As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

During the three months ended June 30, 2023, we issued the following securities that were not registered under the Securities Act:

On April 3, 2023, we issued 75,784 shares of common stock at $29.00 per share, for a total of $2.2 million, as partial consideration for our acquisition of Richter & Associates, Inc.

On May 12, 2023, we issued 31,521 shares of common stock at $27.66 per share, for a total of $0.9 million, as partial consideration for our acquisition of Fisher Engineering, Inc.

On May 16, 2023, we issued 129,221 shares of common stock at $27.60 per share, for a total of $3.6 million, as partial consideration for our acquisition of Hole Montes, Inc.

On June 2, 2023, we issued 143,333 shares of common stock at $28.09 per share, for a total of $4.0 million, as partial consideration for our acquisition of MTX Surveying, LLC.

For a description of each of the foregoing acquisitions and convertible promissory notes, see note 4, Acquisitions and note 12, Notes Payable, appearing in Part I of this Quarterly Report on Form 10-Q.

Each of the foregoing issuances were made in private placements exempt from registration under Section 4(a)(2) of the Securities Act. Accordingly, there were no underwriters, underwriting discounts or commissions.

Issuer Purchase of Equity Securities

The following table summarizes the purchases of our common stock made by us during the three months ended June 30, 2023:

Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
04/1/23 - 04/30/23	18,877	28.73	-	10,000,000
05/1/23 - 05/31/23	85,254	27.88	-	10,000,000
06/1/23 - 06/30/23	-	-	-	10,000,000
Total	104,131	28.04	-	10,000,000

(1) This column reflects shares owned and tendered by employees to satisfy the required withholding taxes related to share-based payment awards, which are not deducted from shares available to be purchased under publicly announced programs.

(2) On November 10, 2022, our board of directors authorized a program to repurchase up to $10.0 million of our common stock. The common stock may be repurchased from time to time depending upon market conditions and may be purchased in the open market and through one or more trading plans designed to comply with Rule 10b5-1 under the Exchange Act.

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The plan does not obligate us to repurchase any specific number or any specific dollar amount of shares and may be suspended at any time at our discretion. As of June 30, 2023, we have not repurchased any shares under this authorization.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

None

Item 5. Other Information.

As previously disclosed, on August 2, 2023, the Company and certain of its subsidiaries entered into an amendment to the Amended and Restated Credit Agreement dated November 11, 2022 with Bank of America, N.A. The Amendment extends the initial term of the Amended and Restated Credit Agreement to July 31, 2025 from September 30, 2024. In addition, the Amendment increases the maximum principal amount of the revolving line of credit to $70 million from $50 million. Under the Amendment, monthly payments of interest on the revolving line are based on Term SOFR, plus an applicable rate which varies between 2.10% and 2.60% based on the Company ratio of Funded Debt to EBITDA (as each is defined in the Amended and Restated Credit Agreement).

During the quarter ended June 30, 2023, the following officers and directors of Company each adopted a trading arrangement for the sale of securities of the Company’s common stock (each, a “10b5-1 Plan”) that is intended to satisfy the affirmative defense conditions of the Securities Exchange Rule Act 10b5-1(c).

On May 15, 2023, Michael Bruen, the Company’s Chief Operating Officer and Director, adopted a 10b5-1 Plan related to the sales of up to 30,000 shares of the Company’s common stock. Subject to the terms and conditions of Mr. Bruen’s 10b5-1 Plan, a brokerage firm may periodically effect the transactions from September 2023 through February 2024.

On May 17, 2023, Bruce Labovitz, the Company’s Chief Financial Officer, adopted a 10b5-1 Plan related to the sales of up to 38,000 shares of the Company’s common stock. Subject to the terms and conditions of Mr. Labovitz’s 10b5-1 Plan, a brokerage firm may periodically effect the transactions from August 2023 through March 2024.

On June 13, 2023, Raymond Vicks, Jr., an independent Director of the Company, adopted a 10b5-1 Plan related to the sales of up to 3,902 shares of the Company’s common stock. Subject to the terms and conditions of Mr. Vick’s 10b5-1 Plan, a brokerage firm may periodically effect the transactions from September 2023 through May 2024.

On June 16, 2023, Robert Hickey, the Company’s Chief Legal Officer and Secretary, terminated a 10b5-1 Plan that he had previously adopted on December 16, 2022. Mr. Hickey’s former plan related to the sale of up to 32,000 shares of common stock pursuant to the terns of the plan from June 2023 through May 2024. Subsequent to the termination, Mr. Hickey adopted a new 10b5-1 Plan which provides for the sale of up to 24,000 shares of the Company’s common stock pursuant to the terms of the 10b5-1 Plan from September 2023 through May 2024.

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Item 6. Exhibits.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

Exhibit Number	Description
10.1*	First Amendment to Amended and Restated Credit Agreement dates as of August 2, 2023 among Bowman Consulting Group Ltd. certain subsidiaries thereof and Bank of America. N.A.
31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*+	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*+	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101:	XBRL.
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

_____________________

*Filed herewith.

*+    This certificate is being furnished solely to accompany the report pursuant to 18 U.S.C. 1350 and is not being “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BOWMAN CONSULTING GROUP LTD.
Date: August 8, 2023	By:	/s/ Gary Bowman
		Gary Bowman
		President, CEO and Chairman (Principal Executive Officer)
Date: August 8, 2023	By:	/s/ Bruce Labovitz
		Bruce Labovitz
		Chief Financial Officer (Principal Financial Officer)

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EX-10.1

FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) dated as of August 2, 2023, is by and among BOWMAN CONSULTING GROUP LTD., a Delaware corporation (the “Borrower”); BOWMAN NORTH CAROLINA LTD., a North Carolina corporation, BOWMAN REALTY CONSULTANTS LLC, a Florida limited liability company, MCMAHON ASSOCIATES, INC., a Pennsylvania corporation and PROJECT DESIGN CONSULTANTS, LLC a California limited liability company (each individually an “Existing Guarantor”, and collectively, the “Existing Guarantors”); RICHTER & ASSOCIATES, A BOWMAN COMPANY LLC, a Maryland limited liability company, FISHER ENGINEERING, INC., a Georgia corporation, BOWMAN GULF COAST LLC, a Florida limited liability company and BOWMAN INFRASTRUCTURE ENGINEERS LTD., a California corporation (each individually a “New Guarantor”, and collectively, the “New Guarantors”; and together with the Borrower and the Existing Guarantors, each individually a “Loan Party” and collectively, the “Loan Parties”); and BANK OF AMERICA, N.A., a national banking association, as the Lender (the “Lender”).

The Borrower, the Existing Guarantors and the Lender are parties to an Amended and Restated Credit Agreement dated as of November 11, 2022 (as amended, amended and restated, supplemented, substituted, extended, renewed or otherwise modified from time to time the “Credit Agreement”), and they now desire to, among other things, (i) increase the Revolving Commitment to Seventy Million Dollars ($70,000,000), and (ii) amend certain provisions of the Credit Agreement as provided herein.

Accordingly, for and in consideration of the premises and the mutual covenants contained herein, the receipt and sufficiency of which consideration are hereby mutually acknowledged, the Loan Parties and the Lender hereby agree as follows:

1.Capitalized Terms. Capitalized terms used in this Amendment which are not otherwise defined herein shall have the meanings assigned thereto in the Credit Agreement, as amended by this Amendment.

2.Amendments to the Credit Agreement. As of the date all of the conditions set forth in Section 4 of this Amendment are fully satisfied, the Loan Parties and the Lender agree that the following provisions of the Credit Agreement are amended as follows:

2.1.Defined Terms.

(a)The following defined terms in Section 1.01 of the Credit Agreement are hereby amended and restated in their entirety as follows:

“Applicable Rate” means, for any day, the rate per annum set forth below opposite the applicable Level then in effect (based on the Leverage Ratio), it being understood that the Applicable Rate for (a) Revolving Loans that are Base Rate Loans shall be the percentage set forth under the column “Base Rate Revolving Loans”, (b) Revolving Loans that are Term SOFR Loans shall be the percentage set forth under the column “Term SOFR Revolving Loans”, and (c) the Utilization Fee shall be the percentage set forth under the column “Utilization Fee”:

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Applicable Rate
Level	Leverage Ratio	Term SOFR Revolving Loans	Base Rate Revolving Loans	Unused Commitment Fee
1	Greater than or equal to 3.0 to 1.0	2.60%	1.60%	0.35%
2	Greater than or equal to 2.5 to 1.0 but less than 3.0 to 1.0	2.30%	1.30%	0.35%
3	Greater than or equal to 1.5 to 1.0 but less than 2.5 to 1.0	2.20%	1.20%	0.325%
4	Less than 1.5 to 1.0	2.10%	1.10%	0.30%

Any increase or decrease in the Applicable Rate resulting from a change in the Leverage Ratio shall become effective as of the first (1st) Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(b); provided, that, if a Compliance Certificate is not delivered when due in accordance with Section 6.02(b), then, Pricing Level 1 shall apply unless otherwise agreed to by the Lender, in each case as of the first (1st) Business Day after the date on which such Compliance Certificate was required to have been delivered and in each case shall remain in effect until the first (1st) Business Day following the date on which such Compliance Certificate is delivered.

Notwithstanding anything to the contrary contained in this definition, (a) the determination of the Applicable Rate for any period shall be subject to the provisions of Section 2.10 and (b) the initial Applicable Rate shall be set at Pricing Level 3 until the first (1st) Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(b) to the Lender. Any adjustment in the Applicable Rate shall be applicable to all Credit Extensions then existing or subsequently made or issued.

“Maturity Date” means July 31, 2025.

“Revolving Commitment” means the Lender’s obligation to make Revolving Loans to the Borrower pursuant to Section 2.01(b). The Revolving Commitment on the First Amendment Closing Date shall be $70,000,000.

(b)Section 1.01 of the Credit Agreement is hereby amended to add in the appropriate alphabetical order the following definition:

“First Amendment Closing Date” means August 2, 2023.

2.2.Increase in Revolving Facility. Section 2.12 of the Credit Agreement is hereby amended and restated in its entirety as follows:

2.12    Reserved.

3.Representations and Warranties. Each Loan Party hereby represents and warrants to the Lender that:

3.1.Each Loan Party is in compliance with all of the terms, covenants and conditions of the Credit Agreement, and all of the terms, covenants and conditions of each of the other Loan Documents to which it is a party.

3.2.There exists no Event of Default and no event has occurred, or condition exists which, with the giving of notice or lapse of time, or both, would constitute an Event of Default.

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3.3.After giving effect to this Amendment, the representations and warranties contained in the Credit Agreement are, except to the extent that they relate solely to an earlier date, true with the same effect as though such representations and warranties had been made on the date hereof.

3.4.Each Loan Party has full requisite power and authority to execute and deliver this Amendment, to perform its obligations under the Credit Agreement and to incur the obligations provided for herein and therein, all of which have been duly authorized by all proper and necessary corporate or limited liability company action. No consent or approval of the shareholders or members of each Loan Party which has not been obtained and no consent or approval of, notice to or filing with, any public authority which has not been obtained or made is required as a condition to the validity of this Amendment.

3.5.This Amendment and the Credit Agreement constitute the valid and legally binding obligations of the Loan Parties, enforceable in accordance with their respective terms, except as the enforceability hereof or thereof may be limited by bankruptcy, insolvency, or similar laws affecting creditors’ rights generally or by general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

3.6.There is no existing mortgage, lease, indenture, contract or other agreement binding on the Loan Parties or affecting their property, that would conflict with or in any way prevent the execution or delivery of this Amendment or the carrying out of the terms of the Credit Agreement.

3.7.No Loan Party is (1) an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), (2) a plan or account subject to Section 4975 of the Internal Revenue Code of 1986 (the “Code”); (3) an entity deemed to hold “plan assets” of any such plans or accounts for purposes of ERISA or the Code; or (4) a “governmental plan” within the meaning of ERISA.

4.Conditions. The effectiveness of this Amendment is subject to the following conditions precedent:

4.1.Amendment. The Loan Parties and the Lender shall have executed and delivered one or more counterparts of this Amendment.

4.2.Consent and Reaffirmation of Grantors. The Borrower shall have caused each Existing Guarantor to have executed and delivered to the Lender the Consent and Reaffirmation of Grantors attached hereto.

4.3.Joinder. The Borrower and the New Guarantors have executed and delivered the Joinder Agreement dated as of the date hereof and have performed all of the obligations thereunder.

4.4.Officer’s Certificate. The Lender shall have received an Officer’s Certificate dated as of the date hereof, certifying as to the Organization Documents of each Loan Party (which, to the extent filed with a Governmental Authority, shall be certified as of a recent date by such Governmental Authority), the resolutions of the governing body of each Loan Party, the good standing, existence or its equivalent of each Loan Party and of the incumbency (including specimen signatures) of the Responsible Officers of each Loan Party.

4.5.Perfection Certificate. The Loan Parties shall have executed and delivered to the Lender an updated Perfection Certificate dated as of the date hereof.

4.6.Solvency Certificate. The Lender shall have received a Solvency Certificate signed by a Responsible Officer of the Borrower as to the financial condition, solvency and related matters of the Borrower and its Subsidiaries (including the Loan Parties), after giving effect to the transactions contemplated hereby.

4.7.Financial Condition Certificate. The Lender shall have received, in form and substance satisfactory to the Lender, a certificate or certificates executed by a Responsible Officer of the Borrower as of the date hereof, as to certain financial matters.

4.8.KYC Information. Upon the request of the Lender, (a) the Loan Parties shall have provided to the Lender, and the Lender shall be reasonably satisfied with, the documentation and other information so requested in connection with applicable “know your customer” and anti-

159242646v8 200207.000098

money-laundering rules and regulations, including, without limitation, the PATRIOT Act, and (b) if any of the Loan Parties qualify as a “legal entity customer” under the Beneficial Ownership Regulation, such Loan Parties shall have delivered Beneficial Ownership Certifications to the Lender. For purposes hereof: (i) “Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation, and (ii) “Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

4.9.Payment of Fees. The Borrower shall pay to the Lender the fees and expenses set forth in Section 8 of this Amendment.

4.10.Other Conditions. The Lender shall have received any and all other certificates, statements, opinions and other documents required by the terms of this Amendment or otherwise requested by the Lender.

5.Post-Closing Obligations.

5.1.Evidence of Insurance. On or prior to August 31, 2023, the Loan Parties shall cause to be provided to the Lender, such evidence of insurance as required by the Lender, including, but not limited to: (i) certified copies of such insurance policies; (ii) evidence of such insurance policies (including, without limitation and as applicable, ACORD Form 28 certificates (or similar form of insurance certificate), and ACORD Form 25 certificates (or similar form of insurance certificate)); (iii) declaration pages for each insurance policy; and (iv) lender’s loss payable endorsement if the Lender is not on the declarations page for such policy.

5.2.Cash Management. Within ninety (90) days of the First Amendment Closing Date, each of the Loan Parties shall maintain all primary cash management and treasury business with Bank of America or any of its Affiliates, including, without limitation, all deposit accounts, disbursement accounts, investment accounts and lockbox accounts.

6.No Other Amendments; Reaffirmation; No Novation; No Waiver; Reservation of Rights and Release.

6.1. Except as expressly amended hereby, the terms of the Credit Agreement shall remain in full force and effect in all respects, and each Loan Party hereby reaffirms its obligations under the Credit Agreement and under each of the other Loan Documents to which it is a party. Each Loan Party acknowledges and agrees that (a) the execution and delivery of this Amendment and consummation of the transactions contemplated hereby do not reduce, discharge, release, impair or otherwise limit any such Loan Party’s obligations under the Credit Agreement or any of the other Loan Documents to which it is a party, (b) no Borrower has any offset, counterclaim or defense of any kind to its obligations, covenants or agreements under the Credit Agreement or any of the other Loan Documents to which it is a party, (c)  nothing contained in this Amendment shall be deemed to constitute a waiver or release by the Lender of any default or Event of Default that may now or hereafter exist under the Credit Agreement or any of the other Loan Documents, or of the Lender’s right to exercise any and all of its rights and remedies thereunder, all of which rights and remedies are hereby reserved by the Lender, and (d) nothing contained in this Amendment shall be construed to constitute a novation with respect to the indebtedness described in the Credit Agreement and the other Loan Documents.

6.2.Each Loan Party, for itself and for its successors and assigns, hereby releases and forever discharges the Lender and the Lender’s, respective predecessors, successors, assigns, officers, managers, directors, employees, agents, attorneys, representatives and affiliates (collectively, the “Lender Group”), from any and all presently existing claims, demands, damages, liabilities, actions and/or causes of action of any nature whatsoever, including, without limitation, all claims, demands and causes of action for contribution and indemnity, whether arising at law or in equity, whether known or unknown, whether liability be direct or indirect, liquidated or unliquidated, whether absolute or contingent, foreseen or unforeseen, and whether or not heretofore asserted, which any Loan Party may have or claim to have against any of the Lender Group arising out of facts or events in any way related to the Credit Agreement, any of the other Loan Documents, or the transactions contemplated thereby or hereby that exist on the date hereof or arise from facts or actions occurring prior hereto or on the date hereof.

6.3.Without limiting the generality of the foregoing or the Security Agreement, each Loan Party hereby acknowledges and agrees that (i) the security interests and liens granted under the

159242646v8 200207.000098

Security Agreement secure the Borrower’s indebtedness, obligations and liabilities under the Credit Agreement, as amended by this Amendment and the other Loan Documents (as each of such Loan Documents may have been affected by this Amendment), (ii) this Amendment does not release, impair or otherwise limit any of its obligations under the Security Agreement, (iii) the Security Agreement remains in full force and effect in all respects, and (iv) all references in the Security Agreement to the “Credit Agreement” shall be deemed references to the Credit Agreement as amended by this Amendment.

7.References. All references in the Credit Agreement to “this Agreement,” “herein,” “hereunder” or other words of similar import, and all references to the “Credit Agreement” or similar words in the other Loan Documents, or any other document or instrument that refers to the Credit Agreement, shall be deemed to be references to the Credit Agreement as amended by this Amendment.

8.Fees and Expenses. In consideration of Lender’s agreement to amend the terms of the Credit Agreement, the Borrower agrees to pay the Lender a nonrefundable renewable fee in the amount of $50,000. In addition, the Borrower hereby agrees that it will pay all reasonable out-of-pocket expenses incurred by the Lender in connection with the preparation of this Amendment and the consummation of the transactions described herein, including, without limitation, the reasonable attorneys’ fees and expenses of the Lender.

9.Applicable Law. This Amendment shall be construed in accordance with and governed by the laws of the Commonwealth of Virginia, without reference to conflicts of law principles.

10.Counterparts; Electronic Delivery. This Amendment may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same instrument. Delivery by any party to this Amendment of its signatures hereon through facsimile or other electronic image file (including .pdf) (i) may be relied upon as if this Amendment were physically delivered with an original hand-written signature of such party, and (ii) shall be binding on such party for all purposes.

11.Successors. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

12.FINAL AGREEMENT. BY SIGNING THIS AMENDMENT, EACH PARTY REPRESENTS AND AGREES THAT: (A) THIS AMENDMENT REPRESENTS THE FINAL AGREEMENT BETWEEN OR AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF, (B) THIS AMENDMENT SUPERSEDES ANY COMMITMENT LETTER, TERM SHEET OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS RELATING TO THE SUBJECT MATTER HEREOF, UNLESS SUCH COMMITMENT LETTER, TERM SHEET OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS EXPRESSLY PROVIDES TO THE CONTRARY, (C) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG THE PARTIES, AND (D) THIS AMENDMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.

[Signatures begin on following page]

159242646v8 200207.000098

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed under seal, all as of the day and year first above written.

BORROWER:    BOWMAN CONSULTING GROUP LTD.

By: /s/ Bruce Labovitz                

                          Bruce Labovitz

Chief Financial Officer

GUARANTORS:    BOWMAN NORTH CAROLINA LTD.

By: /s/ Bruce Labovitz                    

                          Bruce Labovitz

Chief Financial Officer

    BOWMAN REALTY CONSULTANTS LLC

By: /s/ Bruce Labovitz                    

                          Bruce Labovitz

Chief Financial Officer

    MCMAHON ASSOCIATES, INC.

By:    /s/ Bruce Labovitz                

                     Bruce Labovitz

Chief Financial Officer

    PROJECT DESIGN CONSULTANTS, LLC.

By: /s/ Bruce Labovitz                    

                     Bruce Labovitz

Chief Financial Officer

RICHTER & ASSOCIATES, A BOWMAN COMPANY LLC

By: /s/ Bruce Labovitz                    

                     Bruce Labovitz

Chief Financial Officer

FISHER ENGINEERING, INC.

By:    /s/ Rita Fisher                

                     Name: Rita Fisher

Title: President

BOWMAN GULF COAST LLC

[Signature Page to First Amendment to Amended and Restated Credit Agreement]

159242646v8 200207.000098

By: /s/ Bruce Labovitz                    

                     Bruce Labovitz

Chief Financial Officer

BOWMAN INFRASTRUCTURE ENGINEERS LTD.

By: /s/ Bruce Labovitz                    

                     Bruce Labovitz

Chief Financial Officer

[Signature Pages Continue]

[Signature Page to First Amendment to Amended and Restated Credit Agreement]

159242646v8 200207.000098

BANK OF AMERICA, N.A.,

as Lender

By: /s/ Holton Rivera

Holver Rivera

Senior Vice President

[Signature Page to First Amendment to Amended and Restated Credit Agreement]

159242646v8 200207.000098

CONSENT AND REAFFIRMATION OF GRANTORS

Capitalized terms used herein shall have the meanings specified in the foregoing Amendment. Pursuant to that certain Amended and Restated Security and Pledge Agreement dated as of November 11, 2022 (the “Security Agreement”) each of the undersigned (each, a “Grantor”) granted to Lender a continuing security interest in the Collateral to secure the Borrower’s obligations under the Credit Agreement. Each Grantor hereby consents and agrees to the terms of the Amendment, and, without limiting the generality of the terms of the Security Agreement and each other Collateral Document and/or any agreement under which it has granted to the Lender a lien or security interest in any of its real or personal property (collectively, the “Supporting Documents”), acknowledges and agrees that (i) the Supporting Documents cover and apply to the Borrower’s obligations under the Credit Agreement, as amended by the Amendment, (ii) each reference in the Supporting Documents to the “Credit Agreement” shall be deemed to be a reference to the Credit Agreement as amended by the Amendment, (iii) the Amendment does not release, impair or otherwise limit any of such Grantor’s obligations under the Supporting Documents, (iv) such Grantor does not have any offset, counterclaim or defense of any kind to its obligations, covenants or agreements under the Supporting Documents, all of which obligations, covenants and agreements are hereby expressly reaffirmed, and (v) the Supporting Documents remain in full force and effect in all respects. Although each has been informed of the terms of the Amendment, it understands and agrees that the Lender has no duty to so notify it or any other grantor now or in the future, or to seek this or any future acknowledgment, consent or reaffirmation, and nothing contained herein shall create or imply any such duty as to any transactions, past or future.

Each Grantor, for itself and for its successors and assigns, hereby releases and forever discharges the Lender and the Lender’s, respective predecessors, successors, assigns, officers, managers, directors, employees, agents, attorneys, representatives and affiliates (collectively, the “Lender Group”), from any and all presently existing claims, demands, damages, liabilities, actions and/or causes of action of any nature whatsoever, including, without limitation, all claims, demands and causes of action for contribution and indemnity, whether arising at law or in equity, whether known or unknown, whether liability be direct or indirect, liquidated or unliquidated, whether absolute or contingent, foreseen or unforeseen, and whether or not heretofore asserted, which such Grantor may have or claim to have against any of the Lender Group arising out of facts or events in any way related to the Supporting Documents, the Credit Agreement or the transactions contemplated thereby that exist on the date hereof or arise from facts or actions occurring prior hereto or on the date hereof.

[Signatures begin on following page]

159242646v8 200207.000098

    Each Grantor has duly executed this Consent and Reaffirmation of Grantors under seal, all as of the day and year first written in the foregoing Amendment.

GRANTORS:    BOWMAN CONSULTING GROUP LTD.

By:

                          Bruce Labovitz

     Chief Financial Officer

    BOWMAN NORTH CAROLINA LTD.

By:

                     Bruce Labovitz

Chief Financial Officer

    BOWMAN REALTY CONSULTANTS LLC

By:

                     Bruce Labovitz

Chief Financial Officer

    MCMAHON ASSOCIATES, INC.

By:

                          Bruce Labovitz

Chief Financial Officer

    PROJECT DESIGN CONSULTANTS, LLC.

By:

                          Bruce Labovitz

Chief Financial Officer

[Signature Page to Consent and Reaffirmation of Grantors]

159242646v8 200207.000098

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gary Bowman, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Bowman Consulting Group Ltd.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)(Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313);

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 8, 2023	By: /s/ Gary Bowman
	Gary Bowman
	President, CEO and Chairman
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bruce Labovitz, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Bowman Consulting Group Ltd.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)(Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313);

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 8, 2023	By: /s/ Bruce Labovitz
	Bruce Labovitz
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Bowman Consulting Group Ltd. (the “Company”) on Form 10-Q for the period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: August 8, 2023	By: /s/ Gary Bowman
	Gary Bowman
	President, CEO and Chairman
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Bowman Consulting Group Ltd. (the “Company”) on Form 10-Q for the period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: August 8, 2023	By: /s/ Bruce Labovitz
	Bruce Labovitz
	Chief Financial Officer
	(Principal Financial Officer)

XML

Cover - shares	6 Months Ended
	Jun. 30, 2023	Aug. 08, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-40371
Entity Registrant Name	BOWMAN CONSULTING GROUP LTD.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	54-1762351
Entity Address, Address Line One	12355 Sunrise Valley Drive
Entity Address, Address Line Two	Suite 520
Entity Address, City or Town	Reston
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	20191
City Area Code	703
Local Phone Number	464-1000
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	BWMN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		14,602,711
Entity Central Index Key	0001847590
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current Assets
Cash and equivalents	$ 9,746	$ 13,282
Accounts receivable, net	81,874	64,443
Contract assets	26,050	16,321
Notes receivable - officers, employees, affiliates, current portion	938	1,016
Prepaid and other current assets	11,723	7,068
Total current assets	130,331	102,130
Non-Current Assets
Property and equipment, net	26,874	25,104
Operating lease, right-of-use assets	39,476	30,264
Goodwill	77,106	53,210
Notes receivable	903	903
Notes receivable - officers, employees, affiliates, less current portion	1,387	1,417
Other intangible assets, net	39,763	27,950
Deferred tax asset, net	21,098	13,759
Other assets	1,082	1,020
Total Assets	338,020	255,757
Current Liabilities
Revolving Credit Facility	21,189	0
Accounts payable and accrued liabilities	32,878	40,293
Contract liabilities	10,046	6,370
Notes payable, current portion	12,438	10,168
Operating lease obligation, current portion	8,153	6,949
Finance lease obligation, current portion	6,001	5,297
Total current liabilities	90,705	69,077
Non-Current Liabilities
Other non-current obligations	28,827	356
Notes payable, less current portion	16,734	16,276
Operating lease obligation, less current portion	36,610	28,087
Finance lease obligation, less current portion	14,619	14,254
Pension and post-retirement obligation, less current portion	4,881	4,848
Total liabilities	192,376	132,898
Shareholders' Equity
Preferred Stock, $0.01 par value; 5,000,000 shares authorized, no shares issued and outstanding	0	0
Common stock, $0.01 par value; 30,000,000 shares authorized; 17,130,179 shares issued and 14,600,293 outstanding, and 15,949,805 shares issued and 13,556,550 outstanding, respectively	171	159
Additional paid-in-capital	189,351	162,922
Accumulated other comprehensive income	557	578
Treasury stock, at cost; 2,529,886 and 2,393,255, respectively	(24,417)	(20,831)
Stock subscription notes receivable	(125)	(173)
Accumulated deficit	(19,893)	(19,796)
Total shareholders' equity	145,644	122,859
TOTAL LIABILITIES AND EQUITY	$ 338,020	$ 255,757

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	30,000,000	30,000,000
Common stock, shares issued (in shares)	17,130,179	15,949,805
Common stock, shares outstanding (in shares)	14,600,293	13,556,550
Treasury stock, at cost shares (in shares)	2,529,886	2,393,255

XML

Condensed Consolidated Income Statements - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Gross Contract Revenue	$ 82,755	$ 62,399	$ 158,855	$ 114,860
Contract costs: (exclusive of depreciation and amortization below)
Direct payroll costs	32,075	25,071	60,919	45,746
Sub-consultants and expenses	8,963	5,983	17,501	10,743
Total contract costs	41,038	31,054	78,420	56,489
Operating Expenses:
Selling, general and administrative	38,340	28,065	71,965	50,868
Depreciation and amortization	4,719	2,823	8,285	5,213
(Gain) on sale	(226)	(27)	(237)	(32)
Total operating expenses	42,833	30,861	80,013	56,049
Income (loss) from operations	(1,116)	484	422	2,322
Other expense	1,143	994	2,358	1,491
Income (loss) before tax expense	(2,259)	(510)	(1,936)	831
Income tax (benefit) expense	(1,625)	(190)	(1,839)	(306)
Net income (loss)	(634)	(320)	(97)	1,137
Earnings allocated to non-vested shares	0	0	0	191
Net income (loss) attributable to common shareholders	$ (634)	$ (320)	$ (97)	$ 946
Earnings (loss) per share
Basic (in dollars per share)	$ (0.05)	$ (0.03)	$ (0.01)	$ 0.09
Diluted (in dollars per share)	$ (0.05)	$ (0.03)	$ (0.01)	$ 0.09
Weighted average shares outstanding:
Basic (in shares)	12,276,173	10,761,172	12,022,550	10,346,089
Diluted (in shares)	12,276,173	10,761,172	12,022,550	10,427,602

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (634)	$ (320)	$ (97)	$ 1,137
Other comprehensive income (loss)
Pension and post-retirement adjustments	(11)	0	(21)	0
Other comprehensive income (loss)	(11)	0	(21)	0
Income tax provision related to items of other comprehensive income (loss)	0	0	0	0
Other comprehensive income (loss), net of tax	(11)	0	(21)	0
Comprehensive income (loss), net of tax	$ (645)	$ (320)	$ (118)	$ 1,137

XML

Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	IPO	Common Stock	Common Stock IPO	Additional Paid-in Capital	Additional Paid-in Capital IPO	Treasury Stock	Accumulated Other Comprehensive Income	Stock Subscription Notes Receivable	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2021			13,690,868
Beginning balance at Dec. 31, 2021	$ 78,413		$ 137		$ 120,842		$ (17,488)	$ 0	$ (277)	$ (24,801)
Beginning balance (in shares) at Dec. 31, 2021							2,201,289
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of new common shares (in shares)			486,629	1,057,500
Issuance of new common shares	8,115	$ 15,475	$ 5	$ 11	8,110	$ 15,464
Purchase of treasury stock (in shares)							(137,329)
Purchase of treasury stock	(2,369)						$ (2,369)
Issuance of common shares under stock compensation plan (in shares)			321,373
Issuance of new common shares under stock compensation plan	0		$ 3		(3)
Issuance of new common shares under employee stock purchase plan (in shares)			46,063
Issuance of new common shares under employee stock purchase plan	593				593
Stock based compensation	7,025				7,025
Collections on stock subscription notes receivable	47								47
Conversion of redeemable common stock to permanent equity	8				8
Other comprehensive loss, net of tax	0
Net income (loss)	1,137									1,137
Ending balance (in shares) at Jun. 30, 2022			15,602,433
Ending balance at Jun. 30, 2022	108,444		$ 156		152,039		$ (19,857)	0	(230)	(23,664)
Ending balance (in shares) at Jun. 30, 2022							2,338,618
Beginning balance (in shares) at Mar. 31, 2022			14,809,363
Beginning balance at Mar. 31, 2022	98,071		$ 148		139,996		$ (18,476)	0	(253)	(23,344)
Beginning balance (in shares) at Mar. 31, 2022							2,247,354
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of new common shares (in shares)			476,796
Issuance of new common shares	7,941		$ 5		7,936
Purchase of treasury stock (in shares)							(91,264)
Purchase of treasury stock	(1,381)						$ (1,381)
Issuance of common shares under stock compensation plan (in shares)			290,416
Issuance of new common shares under stock compensation plan	0		$ 3		(3)
Issuance of new common shares under employee stock purchase plan (in shares)			25,858
Issuance of new common shares under employee stock purchase plan	311				311
Stock based compensation	3,799				3,799
Collections on stock subscription notes receivable	23								23
Other comprehensive loss, net of tax	0
Net income (loss)	(320)									(320)
Ending balance (in shares) at Jun. 30, 2022			15,602,433
Ending balance at Jun. 30, 2022	$ 108,444		$ 156		152,039		$ (19,857)	0	(230)	(23,664)
Ending balance (in shares) at Jun. 30, 2022							2,338,618
Beginning balance (in shares) at Dec. 31, 2022	13,556,550		15,949,805
Beginning balance at Dec. 31, 2022	$ 122,859		$ 159		162,922		$ (20,831)	578	(173)	(19,796)
Beginning balance (in shares) at Dec. 31, 2022	2,393,255						2,393,255
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of new common shares (in shares)			504,637
Issuance of new common shares	$ 14,876		$ 3		14,873
Purchase of treasury stock (in shares)							(136,631)
Purchase of treasury stock	(3,586)						$ (3,586)
Issuance of common shares under stock compensation plan (in shares)			620,639
Issuance of new common shares under stock compensation plan	$ 0		$ 6		(6)
Issuance of new common shares under employee stock purchase plan (in shares)	31,097		31,097
Issuance of new common shares under employee stock purchase plan	$ 763		$ 1		762
Stock based compensation	10,466				10,466
Collections on stock subscription notes receivable	48								48
Exercises of conversion feature of convertible note (in shares)			24,001
Exercises of conversion feature of convertible note	336		$ 2		334
Other comprehensive loss, net of tax	(21)							(21)
Net income (loss)	$ (97)									(97)
Ending balance (in shares) at Jun. 30, 2023	14,600,293		17,130,179
Ending balance at Jun. 30, 2023	$ 145,644		$ 171		189,351		$ (24,417)	557	(125)	(19,893)
Ending balance (in shares) at Jun. 30, 2023	2,529,886						2,529,886
Beginning balance (in shares) at Mar. 31, 2023			16,019,601
Beginning balance at Mar. 31, 2023	$ 127,260		$ 160		167,440		$ (21,498)	568	(151)	(19,259)
Beginning balance (in shares) at Mar. 31, 2023							2,425,755
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of new common shares (in shares)			504,637
Issuance of new common shares	14,870		$ 3		14,867
Purchase of treasury stock (in shares)							(104,131)
Purchase of treasury stock	(2,919)						$ (2,919)
Issuance of common shares under stock compensation plan (in shares)			566,882
Issuance of new common shares under stock compensation plan	0		$ 6		(6)
Issuance of new common shares under employee stock purchase plan (in shares)			15,058
Issuance of new common shares under employee stock purchase plan	379				379
Stock based compensation	6,337				6,337
Collections on stock subscription notes receivable	26								26
Exercises of conversion feature of convertible note (in shares)			24,001
Exercises of conversion feature of convertible note	336		$ 2		334
Other comprehensive loss, net of tax	(11)							(11)
Net income (loss)	$ (634)									(634)
Ending balance (in shares) at Jun. 30, 2023	14,600,293		17,130,179
Ending balance at Jun. 30, 2023	$ 145,644		$ 171		$ 189,351		$ (24,417)	$ 557	$ (125)	$ (19,893)
Ending balance (in shares) at Jun. 30, 2023	2,529,886						2,529,886

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash Flows from Operating Activities:
Net Income (loss)	$ (97)	$ 1,137
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	4,620	3,971
Amortization of intangible assets	3,665	1,241
Gain on sale of assets	(237)	(32)
Bad debt	289	365
Stock based compensation	11,169	7,274
Accretion of discounts on notes payable	264	0
Deferred taxes	(7,339)	0
Deferred rent	0	(237)
Changes in operating assets and liabilities, net of acquisition of businesses
Accounts receivable	(10,885)	(10,254)
Contract assets	(5,267)	(510)
Prepaid expenses and other assets	(4,174)	(5,124)
Accounts payable and accrued expenses	9,535	5,877
Contract liabilities	523	560
Net cash provided by operating activities	2,066	4,268
Cash Flows from Investing Activities:
Purchases of property and equipment	(632)	(368)
Fixed assets converted to lease financing	0	22
Proceeds from sale of assets and disposal of leases	237	32
Payments received under loans to shareholders	108	118
Acquisitions of businesses, net of cash acquired	(15,408)	(7,950)
Collections under stock subscription notes receivable	48	47
Net cash used in investing activities	(15,647)	(8,099)
Cash Flows from Financing Activities:
Proceeds from common stock offering, net of underwriting discounts and commissions and other offering costs	0	15,475
Borrowings under revolving credit facility	21,189	0
Repayments under fixed line of credit	(283)	(365)
Repayment under notes payable	(4,743)	(1,433)
Payments on finance leases	(3,309)	(2,921)
Payments for purchase of treasury stock	(3,586)	(2,368)
Proceeds from issuance of common stock	777	607
Net cash provided by financing activities	10,045	8,995
Net increase (decrease) in cash and cash equivalents	(3,536)	5,164
Cash and cash equivalents, beginning of period	13,282	20,619
Cash and cash equivalents, end of period	9,746	25,783
Supplemental disclosures of cash flow information:
Cash paid for interest	1,547	713
Cash paid for income taxes	745	383
Non-cash investing and financing activities:
Property and equipment acquired under finance lease	(4,385)	(4,262)
Issuance of notes payable for acquisitions	$ (7,825)	$ (3,697)

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Nature of Business and Basis of Presentation

6 Months Ended

Jun. 30, 2023

Nature Of Business And Basis Of Presentation [Abstract]

Nature of Business and Basis of Presentation

Nature of Business and Basis of Presentation

Nature of Business

Bowman Consulting Group Ltd. (along with its consolidated subsidiaries, “Bowman” or “we” or the “Company”) incorporated in the Commonwealth of Virginia on June 5, 1995 and reincorporated in the State of Delaware on November 13, 2020. Bowman is a professional services firm delivering innovative solutions to the marketplace of customers who own, develop and maintain the built environment. Within that arena, we provide planning, design, engineering, geospatial, survey, construction management, environmental consulting and land procurement services to markets that encompass the buildings in which people live, work and learn in; as well as the systems that provide water, electricity and other vital services, and the roads, bridges, and transportation systems used to get from place to place. We provide services to customers through fixed-price and time-and-material based contracts containing multiple milestones and independently priced deliverables. Typically, contract awards are on a negotiated basis, ranging in value from a few thousand dollars to multiple millions of dollars and can have varying durations depending on the size, scope, and complexity of the project.

The Company’s workforce typically provides the full scope of engineering and other contract services. However, with respect to certain specialty services or other compliance requirements within a particular contract, we may engage third-party sub-consultants. The Company’s headquarters is located in Reston, VA and the Company has over 70 offices throughout the United States and one office in Mexico.

Common Stock Offering

On February 11, 2022, the Company closed on an offering of common stock in which it issued and sold 900,000 shares at an offering price of $16.00 per share, resulting in net proceeds of $13.7 million after deducting underwriting discounts and commissions, but before expenses of the offering.

On February 28, 2022, the underwriters exercised their option to purchase an additional 157,500 shares of the Company’s common stock at an offering price of $16.00 per share, resulting in additional gross proceeds of approximately $2.5 million. After giving effect to this exercise of the overallotment option, the total number of shares sold by the Company in this common stock offering increased to 1,057,500 shares with total gross proceeds of approximately $16.9 million. The exercise of the over-allotment option closed on March 2, 2022, at which time the Company received net proceeds of $2.4 million after underwriting discounts and commissions.

Deferred offering costs consist primarily of accounting, legal and other fees related to the common stock offering. Prior to the offering, all deferred offering costs were capitalized within prepaid and other current assets in the consolidated balance sheet. No deferred offering costs were capitalized in the consolidated balance sheet as of June 30, 2023.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and footnotes of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in shareholders’ equity and cash flows. The results of operations for the current period are not necessarily indicative of the results for the full year or the results for any future periods.

The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 15, 2023.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

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Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

The following is a summary of the significant accounting policies and principles used in the preparation of the condensed consolidated financial statements:

Emerging Growth Company

Section 102(b)(1) of the Jumpstart Our Business Startups Act (“JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934 (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company that is either not an emerging growth company or, an emerging growth company that has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.

Revenue Recognition

As discussed in Note 1, the Company provides a variety of engineering and related professional services to customers located throughout the United States. The Company enters into agreements with clients that create enforceable rights and obligations and for which it is probable that the Company will collect the consideration to which it will be entitled as services transfer to the customer. It is customary practice for the Company to have written agreements with its customers and revenue on oral or implied arrangements is generally not recognized. The Company recognizes revenue based on the consideration specified in the applicable agreement. Excluded from the transaction price are amounts collected on behalf of third parties for sales and similar taxes.

Long-term contracts typically contain billing terms that provide for invoicing once a month and payment on a net 30-day basis. Exceptions to monthly billing terms are to ensure that the Company performs satisfactorily rather than representing a significant financing component. For example, fixed price contracts may provide for milestone billings based upon the attainment of specific project objectives to ensure the Company meets its contractual requirements rather than having billing monthly. Additionally, contracts may include retentions or holdbacks paid at the end of a project to ensure that Company meets the contract requirements. The Company does not assess whether a contract contains a significant financing component if the Company expects, at contract inception, that the period between payment by the customer and the transfer of promised services to the customer will be less than one year.

As a professional services engineering firm, the Company generally recognizes revenue over time as control transfers to a customer based upon the extent of progress towards satisfaction of the performance obligation.

For services delivered under fixed price contracts, the Company uses the ratio of actual costs incurred to total estimated costs since costs incurred (an input method) which represents a reasonable measure of progress towards the satisfaction of a performance in order to estimate the portion of revenue earned. This method faithfully depicts the transfer of value to the customer when the Company is satisfying a performance obligation that entails a number of interrelated tasks or activities for a combined output that requires the Company to coordinate the work of employees and sub-consultants. Contract costs typically include direct labor, subcontract and consultant costs, materials and indirect costs related to contract performance. Changes in estimated costs to complete these obligations result in adjustments to revenue on a cumulative catch-up basis, which causes the effect of revised estimates to be recognized in the current period. Changes in estimates can routinely occur over the contract term for a variety of reasons including, changes in scope, unanticipated costs, delays or favorable or unfavorable progress than original expectations. In situations where the estimated costs to perform exceeds the consideration to be received, the Company accrues the entire estimated loss during the period the loss becomes known.

When a performance obligation is billed using a time-and-material type contract, the Company measures its progress to complete based upon the hours incurred for the period times contractually agreed upon billing rates plus any materials delivered or consumed in the project. When applicable, the Company will recognize revenue under these contracts as invoiced under the practical expedient.

In certain situations, it is possible that two or more contracts should be combined and accounted for as a single contract, or a single contract should be accounted for as multiple performance obligations. This requires significant judgment and could impact the amount and timing of revenue recognition. Such determinations are made using management’s best estimate and knowledge of contracts and related performance obligations.

The Company’s contracts may contain variable consideration in the form of unpriced or pending change orders or claims that either increase or decrease the contract price. Variable consideration is generally estimated using the expected value method but may from time to time be estimated using the most likely amount method depending on the circumstance. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are based upon historical experience and known trends.

The Company recognizes claims against vendors, sub-consultants, and others as a reduction in costs when the contract establishes enforceability, and the amounts of recovery are reasonably estimable and probable. Reduction in costs are recognized at the lesser of the amount management expects to recover or costs incurred.

Contract related assets and liabilities are classified as current assets and current liabilities. Significant balance sheet accounts related to the revenue cycle are as follows:

Accounts receivables, net:

Accounts receivable, net (contract receivables) includes amounts billed under the contract terms. The amounts are stated at their net realizable value. The Company maintains an allowance for doubtful accounts to provide for the estimated number of receivables that will not be collected. The Company considers several factors in its estimate of the allowance, including knowledge of a client’s financial condition, its historical collection experience, and other factors relevant to assessing the collectability of such receivables.

Contract Assets:

Contract Assets are recorded when progress to completion revenue earned on contracts exceeds amounts billed under the contract. It may also include contract retainages that can be billed once contract stipulations are satisfied.

Contract Liabilities:

Contract Liabilities are recorded when amounts billed under a contract exceeds the progress to completion revenue earned under the contract.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could vary from the estimates and assumptions that were used.

Concentration of Credit Risk and other Concentrations

The Company’s financial instruments that are exposed to concentrations of credit risk consist of cash and accounts receivable.

Cash balances at various times during the year may exceed the amount insured by the Federal Deposit Insurance Corporation. The Company’s cash deposits are held in institutions whose credit ratings are monitored by management, and the Company has not incurred any losses related to such deposits.

The Company can, at times, be subject to a concentration of credit risk with respect to outstanding accounts receivable. However, the Company believes no such concentration existed during the six months ended June 30, 2023, or the year ended December 31, 2022. The Company’s customers are located throughout the United States. Although the Company generally grants credit without collateral, management believes that its contract acceptance, billing, and collection policies are adequate to minimize material credit risk. Also, for non-governmental customers, the Company can often place mechanics liens against the real property associated with the contract in the event of non-payment.

Fair Value Measurements

Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) provides the framework for measuring and reporting financial assets and liabilities at fair value. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The codification establishes a three-level disclosure hierarchy to indicate the level of judgment used to estimate fair value measurements:

Level 1:    Quoted prices in active markets for identical assets or liabilities as of the reporting date;

Level 2:    Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices (such as interest rate and yield curves);

Level 3:    Uses inputs that are unobservable, supported by little or no market activity and reflect significant management judgment.

As of June 30, 2023 and December 31, 2022:

•The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the relatively short duration of these instruments;

•The carrying amounts of debt obligations approximate their fair values as the terms are comparable to terms currently offered by local financial institutions for arrangements with similar terms to industry peers with comparable credit characteristics. Accordingly, the debt obligations involve Level 2 fair value inputs;

•The liability related to shares subject to repurchase was recognized at fair value using Level 1 inputs as there is an active market for the Company’s publicly traded stock. There was no remaining liability as of December 31, 2022. For further discussion, see Note 15, Employee Stock Purchase and Stock Incentive Plans.

Income Taxes

The Company recognizes deferred income tax assets or liabilities for expected future tax consequences of events recognized in the consolidated financial statements or tax returns. Under this method, deferred income tax assets or liabilities are determined based upon the difference between the financial statement and income tax bases of assets and liabilities using enacted tax rates expected to apply when the differences settle or become realized. Valuation allowances are provided when it is more likely than not that a deferred tax asset is not realizable or recoverable in the future. As of June 30, 2023, no valuation allowances are required, and all deferred tax assets are realizable.

The Company assesses uncertain tax positions to determine whether the position will more likely than not be sustained upon examination by the Internal Revenue Service or other taxing authorities. If the Company cannot reach a more-likely-than-not determination, no benefit is recorded. If the Company determines that the tax position is more likely than not to be sustained, the Company records the largest amount of benefit that is more likely than not to be realized when the tax position is settled. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. Beginning January 1, 2022, the Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the option to deduct research and development expenditures in the current year and now requires taxpayers to capitalize and amortize research and development costs pursuant to Internal Revenue Code Section 174. The capitalized expenses are amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses. As a result of this provision of the TCJA, we have established a $20.6 million uncertain tax position related to capitalized and amortizable research and development ("R&D") costs as of period ended June 30, 2023.

The Company recognizes the effect of a change in tax rates on deferred tax assets and liabilities in income in the period that includes the enactment date. The Company’s effective tax rate for the six months ended June 30, 2023 and 2022 was 95.0% and (37.9)%, respectively. The change in the Company’s effective tax rate is predominantly due to changes in the estimated annual effective tax rate. The most prominent factors include an increase in projected R&D credits generated for 2023, a change in the projected limitations of the deductible executive compensation, and an overall reduction in forecasted income for 2023 relative to 2022. With respect to the projected R&D credit, the Company anticipates the 2023 generated R&D credit to be $3.8 million as of June 30, 2023, as compared to the projected R&D credit to be generated for fiscal year 2022 was $2.0 million as of June 30, 2022. Similarly, the Company anticipates the annual projected limitation

on the deductibility of executive compensation to be $9.8 million for 2023 as compared to $3.7 million for 2022. These factors as well as the forecasted change in book income predominantly resulted in the change in the estimated annual effective tax rate.

Furthermore, the Company also recognized net discrete benefits of $1.6 million for the six months ended June 30, 2023, as compared to net discrete benefit of $0.5 million for the six months ended June 30, 2022. The discrete benefits are predominantly the result of a windfall tax benefit for restricted stock awards and other non-recurring adjustments. More specifically, the windfall tax adjustment for restricted stock awards recognized at a value higher than the grant date fair value is $2.0 million for the six months ended June 30, 2023, and $0.5 million for the six months ended June 30, 2022. In addition, the Company recognized a one-time adjustment to the state income taxes payable, resulting in $0.2 million net discrete expense. These factors increased the rate by 82.6% and reduced the rate by 57.3% for the quarters ended June 30, 2023, and June 30, 2022, respectively.

For year ended December 31, 2022, the Company filed Form 3115, Application for Change in Accounting Method, with the Internal Revenue Service requesting to change its method of deducting stock-based compensation expense from an impermissible method to a permissible method; on July 27, 2022, the Form 3115 was approved by the Internal Revenue Service, which resulted in a reversal of a $1.9 million uncertain tax position to a deferred tax liability. In addition, the Company recorded a $0.4 million uncertain tax position during the year ended December 31, 2022, related to the annual limitation on the deductibility of executive compensation claimed on a prior period U.S. federal income tax return.

The Company files income tax returns in the U.S. federal jurisdiction and certain states in which it operates. Based on the timing of the filing of certain tax returns, the Company’s federal income tax returns for tax years 2019 and thereafter remain subject to examination by the U.S. Internal Revenue Service. The statute of limitations on the Company’s state income tax returns generally conforms to the federal three-year statute of limitations.

Segments

The Company operates in one segment based upon the financial information used by its chief operating decision maker in evaluating the financial performance of its business and allocating resources. The single segment represents the Company’s core business of providing engineering and related professional services to its customers.

Recently Issued Accounting Guidance

Accounting guidance recently adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) to replace the incurred loss impairment methodology under U.S. GAAP. This ASU introduces a new accounting model, the Current Expected Credit Losses model (CECL), which could result in earlier recognition of credit losses and additional disclosures related to credit risk. The CECL model will require the Company to use a forward-looking expected credit loss impairment methodology for the recognition of credit losses for financial instruments at the time the financial asset is originated or acquired, and require a loss be incurred before it is recognized. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. The new standard will apply to accounts receivable, notes, and other financial instruments. This standard is effective for the Company beginning January 1, 2023. Adoption of ASU 2016-13 will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date. The Company adopted the new guidance starting January 1, 2023. The impact of this ASU is reflected in the consolidated financial statements and was not material.

The Company does not believe that any recently issued standards other than those noted above would have a material effect on its consolidated financial statements.

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Earnings per Share

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Earnings per Share

Earnings per ShareBasic earnings per share is calculated by dividing net income attributable to the Company available to common stockholders by the weighted average number of common shares outstanding for the three and six months ended June 30, 2023 and 2022. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were either exercised or converted into common stock or resulted in the issuance of common stock that would share in the earnings of the Company. The dilutive effect of options is reflected in diluted earnings per share by application of the treasury stock method. The dilutive effect of shares to be purchased under the Company’s Employee

Stock Purchase Plan is reflected in diluted earnings per share by the weighted-average number of shares outstanding that would have been outstanding during the period. The dilutive effect of convertible debt is reflected in diluted earnings per share by application of the if-converted method. The Company uses the two-class method to determine earnings per share.

For calculating basic earnings per share, for the three and six months ended June 30, 2023, the weighted average number of shares outstanding exclude 1,871,892 and 1,811,416 non-vested restricted shares and 8,566 and 9,125 unexercised substantive options. The computation of diluted earnings per share for the three and six months ended June 30, 2023 did not assume the effect of restricted shares or substantive options because the effects were antidilutive.

For calculating basic earnings per share, for the three and six months ended June 30, 2022, the weighted average number of shares outstanding exclude 2,073,783 and 2,077,218 non-vested restricted shares and 13,448 and 14,013 unexercised substantive options. The computation of diluted earnings per share for the three and six months ended June 30, 2022 did not assume the effect of restricted shares or substantive options because the effects were antidilutive.

The following table represents a reconciliation of the net income and weighted average shares outstanding for the calculation of basic and diluted earnings per share for the three and six months ended June 30, 2023 and 2022 (in thousands, except share data):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Numerator
Net income (loss)	$	(634)	$	(320)	$	(97)	$	1,137
Earnings allocated to non-vested shares	–		–		–		191
Subtotal	$	(634)	$	(320)	$	(97)	$	946
Denominator
Weighted average common shares outstanding	12,276,173		10,761,172		12,022,550		10,346,089
Effect of dilutive nominal options	–		–		–		–
Effect of dilutive contingently earned shares	–		–		–		81,513
Dilutive average shares outstanding	12,276,173		10,761,172		12,022,550		10,427,602
Basic earnings per share	$	(0.05)	$	(0.03)	$	(0.01)	$	0.09
Dilutive earnings per share	$	(0.05)	$	(0.03)	$	(0.01)	$	0.09

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Acquisitions

6 Months Ended

Jun. 30, 2023

Business Combinations [Abstract]

Acquisitions

Acquisitions

Business Combinations

McMahon Associates, Inc.

In the second quarter of 2022, the Company signed a purchase agreement to acquire McMahon Associates, Inc. (“McMahon”), with an effective date of May 4, 2022. McMahon is a company that specializes in transportation planning and engineering based in Fort Washington, PA. The Company paid total consideration of $18.2 million, which was comprised of 476,796 shares of common stock, at $16.64 per share, for a total of $7.9 million, plus $10.3 million in cash, two promissory notes and assumed liabilities. The shares are subject to a six-month lock-up. The first and second promissory notes bears a simple interest rate fixed at 3.50%. The first promissory note has equal quarterly payments beginning on August 4, 2022 and ending May 4, 2025.The second promissory note was payable in one installment of principal and interest on March 15, 2023. For tax purposes, the acquisition is treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase price allocation consists primarily of goodwill. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The purchase price allocation has been completed and the amounts are deemed final.

The following summarizes the final calculations of the fair values of McMahon’s assets acquired and liabilities assumed as of the acquisition date (in thousands):

	June 30, 2023
Total Purchase Price	$	18,189
Purchase Price Allocation:
Accounts Receivable, net	8,456
Contract assets	1,017
Prepaid and other current assets	291
Property and equipment, net	949
Intangible assets	3,392
Other assets	96
Notes receivable - officers, employees, affiliates, current portion	19
Accounts payable and accrued liabilities, current portion	(3,688)
Contract liabilities	(841)
Finance leases - non-current	(134)
Post-retirement obligations, less current portion	(5,782)
Total identifiable assets	$	3,775
Goodwill	14,414
Net assets acquired	$	18,189

For the six months ended June 30, 2023, the Company recorded no measurement period adjustments.

The consolidated financial statements of the Company include the results of operations since the date the business was acquired. The following table presents the results of operations of the acquired business for the three and six months ended June 30, 2023 (in thousands):

	For the Three Months Ended June 30, 2023		For the Six Months Ended June 30, 2023
Gross Contract Revenue	$	9,569	$	19,983
Pre-tax Net Income	$	328	$	1,626

The following table presents the unaudited, pro forma consolidated results of operations for the year ended December 31, 2022 and December 31, 2021, respectively, assuming that the McMahon acquisition described above occurred at January 1, 2021. These unaudited pro forma results are presented for informational purposes only and are not meant to represent actual operating results that would have been achieved had the related events occurred on such date (in thousands):

	For the Year Ended
	December 31, 2022		December 31, 2021
Gross Contract Revenue	$	273,924	$	183,595
Net Income	$	5,948	$	2,164

The pro forma information provided is compiled from the pre-acquisition financial information and includes pro forma adjustments to reflect additional amortization that would have been expensed assuming the respective assets had been acquired as of January 1, 2021. These results include additional non-cash stock compensation expense assuming acquired employees who received stock grants received those grants on January 1, 2021 and reflect the income tax effect of pro forma adjustments based on the statutory rate of 28.9%.

Project Design Consultants, LLC.

In the third quarter of 2022, the Company signed a purchase agreement to acquire Project Design Consultants, LLC (“PDC”), with an effective date of July 15, 2022. PDC is a civil engineering and land surveying firm based in San Diego, CA. The Company paid total consideration of $14.2 million, which was comprised of cash, two promissory notes, a convertible note and assumed liabilities. The two promissory notes bear a simple interest rate fixed at 4.75%. The first promissory note is payable in equal quarterly payments of principal and interest beginning on October 15, 2022 and ending July 15, 2025 .The second promissory note is payable in two installments of principal and interest due on March 15, 2023 and on the first anniversary of the closing date. The convertible note bears simple interest fixed at 4.75% and is convertible into shares of common stock at any time, at a conversion price of $14.00 per share. Subject to the exercise of the conversion, the convertible note will have quarterly payments of principal, interest or both beginning October 2022 and ending April 2027. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The following summarizes the preliminary calculations of the fair values of PDC assets acquired and liabilities assumed as of the acquisition date (in thousands):

	June 30, 2023
Total Purchase Price	$	14,178
Purchase Price Allocation:
Accounts receivable	2,199
Contract assets	926
Prepaid and other current assets	161
Property and equipment, net	489
Intangible assets	10,344
Accounts payable and accrued liabilities, current portion	(1,118)
Contract liabilities	(1,362)
Other non-current obligations	(273)
Finance leases - non-current	36
Total identifiable assets	$	11,402
Goodwill	2,776
Net assets acquired	$	14,178

For the three months ended June 30, 2023, the Company recorded no measurement period adjustments.

The purchase price allocation consists primarily of goodwill and intangible assets and is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of PDC’s assets acquired and liabilities assumed. The Company is still in the process of finalizing the valuation of intangible assets. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill.

Identified intangible assets are comprised of customer relationships and contract rights for a total amount of $10.3 million, to be amortized over estimated useful lives of 10 years and 3 years, respectively.

The consolidated financial statements of the Company include the results of operations since the date the business was acquired. The following table presents the results of operations of the acquired business from the date of acquisition for the three and six months ended June 30, 2023 (in thousands):

	For the Three Months Ended June 30, 2023		For the Six Months Ended June 30, 2023
Gross Contract Revenue	$	3,727	$	6,833
Pre-tax Net Income	$	1,478	$	2,117

Anchor Consultants, LLC.

In the third quarter of 2022, the Company signed a purchase agreement to acquire Anchor Consultants, LLC (“Anchor”), with an effective date of August 26, 2022. Anchor is an engineering firm based in Chadds Ford, PA specializing in the planning, permitting, design and construction management of infrastructure that forms the waterfront of the nation’s inland waterways. The Company paid total consideration of $4.0 million, which was comprised of cash, promissory notes, a convertible note and assumed liabilities. The promissory note bears a simple interest rate fixed at 5.50% with equal quarterly payments beginning on November 26, 2022 and ending on August 26, 2025. The convertible note bears a simple interest rate fixed at 5.50% and is convertible into shares of common stock at anytime at a conversion price of $18.00 per share. Subject to the exercise of the conversion, the convertible note has quarterly payments of principal, interest or both beginning November 2022 and ending May 2027. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase price allocation consists primarily of goodwill and intangible assets, in the amount of $4.0 million, and is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of Anchor’s assets acquired and liabilities assumed. The Company is still in the process of finalizing the valuation of intangible assets. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill.

SEI Engineering, LLC

In the fourth quarter of 2022, the Company signed a purchase agreement to acquire SEI Engineering, LLC (“SEI”), with an effective date of November 2, 2022. SEI is a professional firm based in Paonia, CO. The Company paid total consideration of $0.8 million, which was comprised of $0.4 million in cash, two promissory notes, and assumed liabilities. The two promissory notes bears a simple interest rate fixed at 6.25%. The first promissory note is payable in equal quarterly payments of principal and interest beginning on February 4, 2023 and ending November 4, 2025. The second promissory note was payable in one installment of principal and interest due on March 15, 2023. For tax purposes, the acquisition will be treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase price allocation consists primarily of goodwill, and is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of SEI’s assets acquired and liabilities assumed. The Company is still in the process of finalizing the valuation of intangible assets. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill.

Spatial Acuity, LLC

In the fourth quarter of 2022, the Company signed a purchase agreement to acquire Spatial Acuity, LLC (“Spatial”), with an effective date of November 2, 2022. Spatial is a professional firm based in Austin, TX. The Company paid total consideration of $4.1 million, which was comprised of 134,042 shares of common stock, at $15.15 per share, for a total of $2.0 million, plus $2.1 million in cash, two promissory notes, and assumed liabilities. The shares are subject to a six-month lock-up. The two promissory notes bears a simple interest rate fixed at 6.25%. The first promissory note is payable in equal quarterly payments of principal and interest beginning on February 4, 2023 and ending November 4, 2025. The second promissory note was payable in one installment of principal and interest due on March 15, 2023. For tax purposes, the

acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase agreement includes a contingent consideration feature, which affords the sellers the opportunity to earn additional consideration up to $3.0 million in the form of the Company's common stock, cash and a non-negotiable promissory note, based on certain financial performance thresholds measured quarterly from January 1, 2023 through June 30, 2025. Contingent liability of $0.5 million was recorded as of June 30, 2023. The Company will continue to evaluate its estimated liability to the contingent consideration and adjust the balance as necessary.

The purchase price allocation consists primarily of goodwill and is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of assets acquired and liabilities assumed. The Company is still in the process of finalizing the valuation of intangible assets. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill.

H2H Geoscience Engineering, PLLC

In the fourth quarter of 2022, the Company signed a purchase agreement to acquire H2H Geoscience Engineering, PLLC (“H2H”), with an effective date of December 2, 2022. H2H is a professional firm based in Troy, NY. The Company paid total consideration of $3.7 million, which was comprised of $1.4 million in cash, a promissory note, a convertible note and assumed liabilities. The promissory note bears a simple interest rate fixed at 7.00%. The promissory note is payable in equal quarterly payments of principal and interest beginning on March 2, 2023 and ending December 2, 2024. The convertible note bears simple interest fixed at 7.00% and is convertible into shares of common stock at any time, at a conversion price of $18.00 per share. Subject to the exercise of the conversion, the convertible note has quarterly payments of principal, interest or both beginning December 2, 2024 and ending September 2, 2027. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

For the six months ended June 30, 2023, the Company recorded measurement period adjustment of $49,000 to accounts payable with a corresponding adjustment to goodwill. The change did not result in a change to operating income.

The purchase price allocation consists primarily of goodwill, and is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of H2H’s assets acquired and liabilities assumed. The Company is still in the process of finalizing the valuation of intangible assets. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill.

Richter & Associates, Inc.

In the second quarter of 2023, the Company signed a purchase agreement to acquire Richter & Associates, Inc. (“Richter”), with an effective date of April 3, 2023. Richter is a professional firm based in Rockville, MD. The Company paid total consideration of $5.4 million which was comprised of 75,784 shares of common stock, at $29.00 per share, for a total of $2.2 million, plus $3.2 million in cash, promissory note and assumed liabilities. The shares are subject to a six-month lock-up. The promissory note bears a simple interest rate fixed at 11.00%. The promissory note is payable in equal quarterly payments of principal and interest beginning on July 3, 2023 and ending April 3, 2025. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase price allocation consists primarily of goodwill and intangible assets in the amount of $3.2 million. This is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of Richter’s assets acquired and liabilities assumed. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill and intangible assets.

Fisher Engineering, Inc.

In the second quarter of 2023, the Company signed a purchase agreement to acquire Fisher Engineering, Inc. (“Fisher”), with an effective date of May 12, 2023. Fisher is a professional firm with offices throughout the United States. The Company paid total consideration of $5.2 million which was comprised of 31,521 shares of common stock, at $27.66 per share, for a total of $0.9 million, plus $4.3 million in cash, promissory note and assumed liabilities. The shares are subject to a six-month lock-up. The promissory note bears a simple interest rate fixed at 8.25%. The promissory note is payable in equal quarterly payments of principal and interest beginning on August 12, 2023 and ending May 12, 2026. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase agreement includes a contingent consideration feature, which affords the sellers the opportunity to earn additional consideration up to $2.0 million in the form of cash and a promissory note, based on certain financial performance thresholds measured yearly from May 1, 2023 through April 30, 2026. Contingent liability of $1.8 million was recorded as of June 30, 2023. The Company will continue to evaluate its estimated liability to the contingent consideration and adjust the balance as necessary.

The purchase price allocation consists primarily of goodwill of $4.2 million. This is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of Fisher’s assets acquired and liabilities assumed. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill and intangible assets.

Hole Montes, Inc.

In the second quarter of 2023, the Company signed a purchase agreement to acquire Hole Montes, Inc. (“Hole Montes”), with an effective date of May 16, 2023. Hole Montes is a professional firm based in Naples and Fort Myers, FL. The Company paid total consideration of $7.4 million, which was comprised of 129,221 shares of common stock, at $27.60 per share, for a total of $3.6 million, plus $3.8 million in cash, two promissory notes, and assumed liabilities. The shares are subject to a six-month lock-up. The two promissory notes bears a simple interest rate fixed at 8.25%. The first promissory note is payable in equal quarterly payments of principal and interest beginning on August 16, 2023 and ending November 16, 2025. The second promissory note will be payable in one installment of principal and interest due on March 1, 2024. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase agreement includes a contingent consideration feature, which affords the sellers the opportunity to earn additional consideration up to $0.9 million in the form of the Company's common stock, cash and a non-negotiable promissory note, based on certain financial performance thresholds measured quarterly from April 1, 2023 through September 30, 2024. Contingent liability of $0.9 million was recorded as of June 30, 2023. The Company will continue to evaluate its estimated liability to the contingent consideration and adjust the balance as necessary.

The purchase price allocation consists primarily of goodwill of $4.2 million. This is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of Hole Montes’ assets acquired and liabilities assumed. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill and intangible assets.

MTX Surveying, LLC

In the second quarter of 2023, the Company signed a purchase agreement to acquire MTX Surveying, LLC (“MTX”), with an effective date of June 2, 2023. MTX is a professional firm based in Marshall, TX. The Company paid total consideration of $11.7 million, which was comprised of 143,333 shares of common stock, at $28.09 per share, for a total of $4.0 million, plus $7.7 million in cash, promissory note, and assumed liabilities. The shares are subject to a six-month lock-up. The promissory note bears a simple interest rate fixed at 5.00%. The promissory note is payable in equal quarterly payments of principal and interest beginning on September 2, 2023 and ending June 2, 2026. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase agreement includes a contingent consideration feature, which affords the sellers the opportunity to earn additional consideration up to $3.0 million in the form of the Company's common stock, cash and a non-negotiable promissory note, based on certain financial performance thresholds measured quarterly from July 1, 2023 through December 31, 2024. Contingent liability of $3.0 million was recorded as of June 30, 2023. The Company will continue to evaluate its estimated liability to the contingent consideration and adjust the balance as necessary.

The purchase price allocation consists primarily of goodwill of $8.1 million. This is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of MTX’s assets acquired and liabilities assumed. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill and intangible assets.

Advanced Applied Engineering, Inc. dba Infrastructure Engineers

In the second quarter of 2023, the Company signed a purchase agreement to acquire Advanced Applied Engineering, Inc. (“Infrastructure”), with an effective date of June 12, 2023. Infrastructure is a professional firm based in Brea, CA. The Company paid total consideration of $8.5 million, which was comprised of 141,794 shares of common stock, at $29.81 per share, for a total of $4.2 million, plus $4.3 million in cash, promissory note, and assumed liabilities. The shares are subject to a six-month lock-up. The promissory note bears a simple interest rate fixed at 8.25%. The promissory note is payable in equal quarterly payments of principal and interest beginning on September 12, 2023 and ending December 12, 2024. For tax purposes, the acquisition was treated as an asset acquisition, resulting in a step up in tax basis. Accordingly, there are no material deferred tax assets or liabilities to be recorded through purchase accounting.

The purchase agreement includes a contingent consideration feature, which affords the sellers the opportunity to earn additional consideration up to $1.5 million in the form of the Company's common stock and a non-negotiable promissory note, based on certain financial performance thresholds measured quarterly from July 1, 2023 through December 31, 2024. Contingent liability of $1.5 million was recorded as of June 30, 2023. The Company will continue to evaluate its estimated liability to the contingent consideration and adjust the balance as necessary.

The purchase price allocation consists primarily of goodwill of $6.5 million. This is based upon preliminary information that is subject to change when additional information is obtained. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of MTX’s assets acquired and liabilities assumed. The final purchase allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill and intangible assets.

Results from Acquisitions

The condensed consolidated financial statements of the Company include the results of operations from any business acquired from their respective dates of acquisition. The following table presents the results of operations of business acquired from their respective dates of acquisition for the three and six months ended June 30, 2023 (in thousands):

	For the Three Months Ended June 30, 2023		For the Six Months Ended June 30, 2023
Gross Contract Revenue1	$	5,769	$	5,769
Pre-tax Net Income	$	1,940	$	1,940

1 Gross contract revenue includes adjustments as required by ASC 606, Revenue from Contracts with Customers based on opening balance sheet provided by the acquired companies. There is no assurance these adjustments will be consistent in future periods. Opening balance sheet balances are subject to adjustment prior to being finalized.

The following table presents the unaudited, pro forma condensed consolidated results of operations for the three and six months ended June 30, 2023 and June 30, 2022 assuming that the companies acquired in the second quarter of 2023, described above, occurred on January 1, 2022. The unaudited pro forma results are presented for informational purposes only and are not meant to represent actual operating results that would have been achieved had the related events occurred on such date (in thousands):

	For the Six Months Ended June 30, 2023
	2023		2022
Gross Contract Revenue2	$	182,656	$	135,669
Pre-tax Net Income (loss)	$	3,402	$	(94)

2 Gross contract revenue in these pro forma financials does not conform to GAAP as required by ASC 606, Revenue from Contract with Customers, as it is impracticable to obtain the historical information necessary to apply this accounting standard. The historical estimates required to be able to accurately determine the percent complete accounting on the contracts that comprise the revenue is not available for the required periods.

The pro forma information provided is compiled from the pre-acquisition financial information and includes pro forma adjustments to reflect additional depreciation and amortization that would have been expensed assuming the respective assets had been acquired as of January 1, 2022. These results also include additional non-cash stock compensation expense assuming acquired employees who received stock grants received those grants on January 1, 2022.

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Disaggregation of Revenue and Contract Balances

6 Months Ended

Jun. 30, 2023

Disaggregation of Revenue [Abstract]

Disaggregation of Revenue and Contract Balances

Disaggregation of Revenue and Contract Balances

The Company disaggregates revenues by contract type, see Revenue Recognition in Note 2 for further details. For the three and six months ended June 30, 2023, the Company derived 88.8% and 89.2% of its revenue from contracts classified as lump sum, and 11.2% and 10.8% of its revenue from time and material contracts, respectively. The Company had approximately $234.6 million in remaining performance obligations as of June 30, 2023 of which it expects to recognize approximately 93.9% within the next twelve months and the remaining 6.1% in the next twelve to twenty-four months.

Disaggregated revenues by contract type were as follows (in thousands):

	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2023				2022				2023				2022
Fixed fee	$	73,508	88.8	%	$	58,488	93.7	%	$	141,753	89.2	%	$	108,074	94.1	%
Time-and-materials	9,247		11.2	%	3,911		6.3	%	17,102		10.8	%	6,786		5.9	%
Gross contract revenue	$	82,755	100.0	%	$	62,399	100.0	%	$	158,855	100.0	%	$	114,860	100.0	%

The Company recognized $0.2 million and $2.8 million of revenue for the three and six months ended June 30, 2023, respectively, which was included in the contract liabilities balance as of December 31, 2022, and $1.1 million and $2.5 million of revenue for the three and six months ended June 30, 2022, respectively, which was included in the contract liabilities balance as of December 31, 2021.

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Contracts in Progress

6 Months Ended

Jun. 30, 2023

Contract with Customer, Contract Asset, Contract Liability, and Receivable [Abstract]

Contracts in Progress

Contracts in Progress

The following table reflects the calculation of the net balance of contract assets and contract liabilities. Costs and estimated earnings on contracts in progress consist of the following (in thousands):

	June 30, 2023		December 31, 2022
Costs incurred on uncompleted contracts	$	387,057	$	279,173
Estimated contract earnings in excess of costs	404,240		398,791
Estimated contract earnings to date	791,297		677,964
Less: billed to date	(775,293)		(668,013)
Net contract assets	$	16,004	$	9,951

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Notes Receivable

6 Months Ended

Jun. 30, 2023

Receivables [Abstract]

Notes Receivable

Notes Receivable

The Company has unsecured notes receivable from related parties, certain non-executive officers of the Company and an unrelated third party. The following is a summary of these notes receivable (in thousands):

	June 30, 2023		December 31, 2022
Officers, employees and affiliated entities - Interest accrues annually at rates ranging from 0.0% - 5.5%. The notes receivable mature through December 2024.	$	2,325	$	2,433
Unrelated third party - Currently no interest is being accrued on this note. The note receivable matures in December 2023.	903		903
Total:	3,228		3,336
Less: current portion
Officers, employees and affiliates	(938)		(1,016)
Noncurrent portion	$	2,290	$	2,320

Each borrower may prepay all or part of the outstanding balance at any time prior to the date of maturity. During the six months ended June 30, 2023, interest accrued on the notes receivable at the stipulated rates between 0.0% and 5.50%.

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Property and Equipment, Net

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

Property and Equipment, Net

Property and equipment for fixed assets are as follows (in thousands):

	June 30, 2023		December 31, 2022
Computer equipment	$	2,218	$	2,101
Survey equipment	5,409		5,088
Vehicles	1,852		1,032
Furniture and fixtures	2,446		2,398
Leasehold improvements	8,194		7,727
Software	435		316
Fixed assets pending lease financing 1	316		181
Total:	20,870		18,843
Less: accumulated depreciation	(13,506)		(12,319)
Property and Equipment, net of finance leased assets	$	7,364	$	6,524

1assets acquired which will be re-financed under the Company's finance lease facilities

Depreciation expense for fixed assets for the three and six months ended June 30, 2023 was $0.7 million and $1.2 million, respectively. Depreciation expense for fixed assets for the three and six months ended June 30, 2022 was $0.3 million and $0.6 million, respectively.

Property and equipment for finance leased assets are as follows (in thousands):

	June 30, 2023		December 31, 2022
Equipment	$	17,722	$	16,256
Vehicles	8,838		6,787
Total:	26,560		23,043
Less: accumulated amortization on leased assets	(7,050)		(4,463)
Finance Leased Assets, net	$	19,510	$	18,580

Amortization expense for finance leased assets for the three and six months ended June 30, 2023 was $1.8 million and $3.4 million, respectively. Amortization expense for finance leased assets for the three and six months ended June 30, 2022 was $1.8 million and $3.4 million, respectively.

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Goodwill

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

Changes in the carrying amount of goodwill were as follows (in thousands):

	Goodwill
Balance as of December 31, 2022	$	53,210
Goodwill Acquired	23,896
Balance as of June 30, 2023	$	77,106

There were no impairments of goodwill during the periods presented.

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Intangible Assets

6 Months Ended

Jun. 30, 2023

Intangible Assets [Abstract]

Intangible Assets

Intangible Assets

Total intangible assets consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):

	June 30, 2023						December 31, 2022
	Gross Amount		Accumulated Amortization		Net Balance		Gross Amount		Accumulated Amortization		Net Balance
Customer relationships	$	35,909	$	(3,825)	$	32,084	$	23,595	$	(2,330)	$	21,265
Contract rights	10,471		(4,568)		5,903		7,281		(2,416)		4,865
Leasehold	187		(66)		121		187		(48)		139
Domain name	281		–		281		281		–		281
Licensing rights	1,374		–		1,374		1,400		–		1,400
Total	$	48,222	$	(8,459)	$	39,763	$	32,744	$	(4,794)	$	27,950

The domain name and licensing rights acquired for a total of $1.7 million, have indefinite useful lives.

The following table summarizes the weighted average useful lives of intangible assets by asset class used for straight-line expense purposes:

	June 30, 2023	December 31, 2022
Customer relationships	8.10	11.97
Contract rights	1.08	2.47
Leasehold	5.74	8.05

Amortization expense for the three and six months ended June 30, 2023 was $2.3 million and $3.7 million, respectively. Amortization expense for the three and six months ended June 30, 2022 was $0.8 million and $1.2 million, respectively.

Future amortization for the remainder of 2023 and for the succeeding years is as follows (in thousands):

2023	6,256
2024	7,403
2025	5,930
2026	5,390
2027	2,142
Thereafter	10,987
Total	$	38,108

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Revolving Credit Facility and Fixed Credit Facilities

6 Months Ended

Jun. 30, 2023

Line of Credit Facility [Abstract]

Revolving Credit Facility and Fixed Credit Facilities

Revolving Credit Facility and Fixed Credit Facilities

The Company has one revolving credit facility (the “Revolving Credit Facility”) and three non-revolving credit facilities (“Fixed Line #1”, " Fixed Line #2” and “Fixed Line #4” collectively, the “Fixed Lines”) with Bank of America, N.A. On June 30, 2023 and June 30, 2022, the interest rate on the Revolving Credit Facility was 9.25% and 2.11%, respectively. All outstanding principal on the Revolving Credit Facility is due on September 30, 2024. On June 30, 2023 and December 31, 2022, there was $21.2 million and no outstanding balance on the Revolving Credit Facility, respectively.

On November 11, 2022, the Company and certain of its subsidiaries, as guarantors, entered into an Amended and Restated Credit Agreement with Bank of America, N.A. (the "Amended and Restated Agreement") as well as an Amended and Restated Pledge and Security Agreement. The Amended and Restated Agreement increased the maximum principal amount of the Revolving Credit Facility to $50 million, is secured by all the assets of the Company and the subsidiary guarantors and has a maturity date of September 30, 2024. Under the Amended and Restated Agreement, the Company is required to comply with certain covenants, including covenant on indebtedness, investments, liens and restricted payments, as well as maintain certain financial covenants, including a fixed charge coverage ratio and leverage ratio of debt to EBITDA (as defined in the Amended and Restated Agreement). On August 2, 2023, subsequent to the reporting period, the Company entered into a First Amendment to the Amended and Restated Credit Agreement whereby the maximum principal amount of the Revolving Credit Facility was increased to $70 million, the term was extended to July 31, 2025, and certain provisions relating to interest rate spreads and used fees were modified (see Footnote 17 - Subsequent Events).

Fixed Line #1 had a maximum advance of $1.0 million and does not allow for re-borrowings and is included in Notes Payable (see Note 12). The Company pays interest on a monthly basis at a rate equal to SOFR Simple APR plus 2.0%. On June 30, 2023 and 2022, the interest rate was 7.06% and 3.51%, respectively. Commencing the earlier of i) the date no remaining amount is available under the Fixed Line or, ii) August 31, 2018, the Company was obligated to pay the then outstanding principal balance in sixty equal monthly installments through maturity in August 2023. On each of June 30, 2023 and December 31, 2022, the outstanding balance on Fixed Line #1 was $49,000 and $0.1 million, respectively.

Fixed Line #2 had a maximum advance of $1.0 million and does not allow for re-borrowings and is included in Notes Payable (see Note 12). Commencing the earlier of i) the date no remaining amount is available under the Fixed Line or, ii) August 31, 2020, the Company was obligated to pay the then outstanding principal balance in sixty equal monthly installments through maturity in September 2025. On each of June 30, 2023 and December 31, 2022, the outstanding balance on Fixed Line #2 was $0.4 million and $0.5 million, respectively.

Facility #4 is a term loan with a principal loan amount of $1.0 million and is included in Notes Payable (see Note 12). The loan was to be repaid over thirty-six equal monthly installments beginning April 13, 2020, through maturity on March 13, 2023. The interest rate on this loan was 3.49%. As of June 30, 2023, Facility #4 was paid in full and there was no outstanding balance.

The Company secures its obligations under the Amended and Restated Agreement with substantially all assets of the Company. Obligations of the Company to certain other shareholders of the Company are subordinated to the Company’s obligations under the Amended and Restated Agreement and Fixed Line loans. The Company must maintain, on a combined basis certain financial covenants defined in the Amended and Restated Agreement.

Interest expense on the Revolving Credit Facility and Fixed Lines totaled $12,000 and $0.2 million during the three and six months ended June 30, 2023, respectively. Interest expense on the Revolving Credit Facility and Fixed Lines totaled $11,000 and $21,000 during the three and six months ended June 30, 2022, respectively.

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Notes Payable

6 Months Ended

Jun. 30, 2023

Debt Instruments [Abstract]

Notes Payable

Notes Payable

Notes payable consist of the following (in thousands):

	June 30, 2023		December 31, 2022
Related parties:
Shareholders - Interest accrues annually at rates ranging from 3.25% - 11.00%. The notes payable mature on various dates through June 2026.	$	15,942	$	11,515
Owners of Acquired Entities - Interest accrues annually at rates ranging from 3.25% - 7.00% annually. The notes payable mature on various dates through October 2024.	6,803		8,134
Convertible Notes Payable - Interest accrues annually at rates ranging from 4.75% - 7.00% annually. The convertible notes payable mature on various dates through May 2027.	6,339		6,675
Unrelated third parties:
Note payable for purchase of software and vehicles	40		55
Note payable for purchase of intangible asset	50		50
Fixed line notes payable - see note 11	491		773
Discounts on notes payable issued as consideration in acquisitions:
Shareholders	(135)		(177)
Owners of acquired entities	(358)		(581)
Total	29,172		26,444
Less: current portion	(12,438)		(10,168)
Noncurrent portion	$	16,734	$	16,276

The Company’s President, Chairman and Chief Executive Officer guarantees certain of the notes payable, and certain of the notes payable are subordinate to the terms of the Credit Agreement disclosed in Note 11.

Interest expense attributable to the notes payable totaled $0.5 million and $0.9 million for the three and six months ended June 30, 2023, respectively. Interest expense attributable to the notes payable totaled $0.1 million and $0.2 million for the three and six months ended June 30, 2022, respectively.

Future principal payments on notes payable for remainder of 2023 and succeeding years are as follows (in thousands):

2023	$	7,221
2024	11,230
2025	7,105
2026	2,917
2027	1,192
Thereafter	–
Total	$	29,665

Convertible Notes Payable

In July 2022, the Company issued a $4.0 million 4.75% unsubordinated convertible note with a maturity date in July 2027 as partial consideration for the acquisition of PDC (Note 4). The convertible note is convertible into shares of common stock at the option of the holders, at any time, at a conversion price of $14.00 per share upon proper notice. Subject to the exercise of the conversion, the convertible note is payable in quarterly payments of principal, interest or both beginning in October 2022 and ending in April 2027. At any time, upon ten business days’ notice to the Company, the holders may request that a prepayment of the principal or all or part of a regularly scheduled quarterly payment of the principal be made in the form of common stock of the Company, with the number of shares of common stock equal to the amount of the requested prepayment divided by the stock conversion price. If the request is made with respect to a regularly scheduled quarterly payment of principal, then the accrued interest shall be paid in cash. An election was made by the holders, and on April 5, 2023, $0.3 million of the note was converted to 24,001 shares of common stock at $14.00 per share.

In August 2022, the Company issued a $1.1 million 5.50% unsubordinated convertible note with a maturity date in May 2027 as partial consideration for the acquisition of Anchor (Note 4). The convertible note is convertible into shares of common stock at the option of the holders, at any time, at a conversion price of $18.00 per share upon proper notice. Subject to the exercise of the conversion, the convertible note has quarterly payments of principal, interest or both beginning in November 2022 and ending in May 2027. At any time, upon ten business days’ notice to the Company, the holders may request that a prepayment of the principal or all or part of a regularly scheduled quarterly payment of the principal be made in the form of common stock of the Company, with the number of shares of common stock equal to the amount of the requested prepayment divided by the stock conversion price. If the request is made with respect to a regularly scheduled quarterly payment of principal, then the accrued interest shall be paid in cash. As of June 30, 2023, there has been no election by the holders to convert any portions of the convertible note to common stock.

In December 2022, the Company issued a $1.6 million 7.00% unsubordinated convertible note with a maturity date in September 2027 as partial consideration for the acquisition of H2H (Note 4). The convertible note will be convertible into shares of common stock at the option of the holders, at any time, at a conversion price of $18.00 per share upon proper notice. Subject to the exercise of the conversion, the convertible note has quarterly payments of principal, interest or both beginning in December 2024 and ending in September 2027. At any time, upon ten business days’ notice to the Company, the holders may request that a prepayment of the principal or all or part of a regularly scheduled quarterly payment of the principal be made in the form of common stock of the Company, with the number of shares of common stock equal to the amount of the requested prepayment divided by the stock conversion price. If the request is made with respect to a regularly scheduled quarterly payment of principal, then the accrued interest shall be paid in cash. As of June 30, 2023, there has been no election by the holders to convert any portions of the convertible note to common stock.

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Pension and Post-retirement Benefit Obligations

6 Months Ended

Jun. 30, 2023

Postemployment Benefits [Abstract]

Pension and Post-retirement Benefit Obligations

Pension and Post-retirement Benefit Obligations

The Company sponsors various non-qualified defined benefit pension plans in the U.S. (the "Plan"). Individual benefits under the Plan generally are based on the employee’s years of creditable service and compliance with non-competes. The plan is unfunded and there are no plan assets.

The following table details the components of net periodic benefit costs for the Company's pension plan for the three and six months ended June 30, 2023 and 2022:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in thousands)	2023		2022		2023		2022
Components of net periodic benefit cost:
Service costs	$	53	$	–	$	64	$	–
Interest costs	25		–		93		–
Amortization of net gain	(10)		–		(21)		–
Net periodic benefit cost	$	68	$	–	$	136	$	–

There are no required minimum contributions for the pension plans.

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Related Party Transactions

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The Company leases commercial office space from BCG Chantilly, LLC (BCC), an entity in which Mr. Bowman, Mr. Bruen and Mr. Hickey collectively own a 63.6% interest. As of June 30, 2023 and December 31, 2022 there were no amounts due to or receivables due from BCC. Rent expense for each of the three and six months ended June 30, 2023 was $21,000 and $41,000, respectively. Rent expense for each of the three and six months ended June 30, 2022 was $21,000 and $41,000, respectively.

Bowman Lansdowne Development, LLC (BLD) is an entity in which Mr. Bowman has an ownership interest. On each of June 30, 2023 and December 31, 2022, the Company’s notes receivable included $0.5 million from BLD, with a maturity date of January 31, 2024.

Lansdowne Development Group, LLC (LDG) is an entity in which BLD has a minority ownership interest. On each of June 30, 2023 and December 31, 2022, our accounts receivable included $0.1 million, due from LDG. On June 30, 2023 and December 31, 2022, notes receivable included $0.4 million and $0.4 million, respectively from LDG, with a maturity date of January 31, 2024.

Bowman Realty Investments 2010, LLC (BR10) is an entity in which Mr. Bowman has an ownership interest. On each of June 30, 2023 and December 31, 2022, the Company’s notes receivable included $0.2 million, from BR10, with a maturity date of January 31, 2024.

Alwington Farm Developers, LLC (AFD) is an entity in which BR10 has a minority ownership interest. On each of June 30, 2023 and December 31, 2022, notes receivable included $1.2 million, from AFD, with a maturity date of December 31, 2024.

MREC Shenandoah VA, LLC (“MREC Shenandoah”) is an entity in which Lake Frederick Holdings, LLC (“Lake Frederick Holdings”) owns a 92% interest and Shenandoah Station Partners LLC, an entity owned in part by BLD and in part by Bowman Realty Investments 2013 LLC "Bowman Realty" (BR13), owns an 8% interest. Mr. Bowman owns a 100% interest in, and is the manager of, Lake Frederick Holdings. Mr. Bowman is the sole member of Bowman Realty 2013 (BR13). Since 2020, the Company has provided engineering services to MREC Shenandoah in exchange for cash payments. During the three and six months ended June 30, 2023, and 2022 the Company invoiced $0.1 million and $0.1 million, respectively, and received payments of $0.1 million and $0.1 million, respectively.

During the six months ended June 30, 2023 and 2022, the Company provided administrative, accounting and project management services to certain of the related party entities. The cost of these services was $29,000 and $33,000, respectively. These entities were billed $30,000 and $38,000, respectively.

Gregory Bowman, the son of Mr. Bowman, is a full-time employee of the Company. Gregory Bowman was paid $71,000 and $65,000 for the six months ended June 30, 2023 and 2022, respectively.

On each of June 30, 2023 and December 31, 2022, the Company was due $0.1 million and $0.2 million, respectively, from shareholders under the terms of stock subscription notes receivable.

On June 30, 2023 and December 31, 2022, the Company owed $0.1 million and $0.2 million, respectively, to a retired shareholder and former director in connection with a 2015 acquisition.

On June 30, 2023 and December 31, 2022, the Company owed certain of our current and former shareholders $8.1 million and $11.5 million, respectively. The notes result from repurchases of stock from shareholders upon termination of employment and promissory notes issued in connection with acquisitions.

In August 2022, the Company agreed to reimburse Mr. Bowman at a fixed hourly rate for the business use of an aircraft owned by Sunrise Asset Management, a company owned 100% by Mr. Bowman. The Company paid $0.1 million for the six months ended June 30, 2023.

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Employee Stock Purchase and Stock Incentive Plans

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Employee Stock Purchase and Stock Incentive Plans

Employee Stock Purchase and Stock Incentive Plans

Employee Stock Purchase Plan

Effective April 30, 2021, the Company established the Bowman Consulting Group Ltd. 2021 Employee Stock Purchase Plan (“ESPP”). Under the ESPP, eligible employees who elect to participate are granted the right to purchase shares of common stock at a 15% discount of the weighted average selling price of the Company stock for the 30 days prior to the last day of the offering period.

The following table summarizes the stock issuance activity under the ESPP for the six months ended June 30, 2023 (in thousands, except share data):

	June 30, 2023
Total purchase price paid by employees for shares sold	$	763
Number of shares sold	31,097

Stock Options

Effective May 11, 2021 the Company established the Bowman Consulting Group Ltd. 2021 Omnibus Equity Incentive Plan (“the Plan”). The plan is administered by the board of directors (the “Board”), who on its own action or through its designee may make grants of restricted stock options, including Incentive Stock Options (“ISO”), and non-qualified stock options (“NQSO”). The purpose of the Plan is to grant equity incentive awards to eligible participants to attract, motivate and retain key personnel. The Plan supersedes and replaces any prior plan for stock options except that the prior plan shall remain in effect with respect to options granted under such prior plan until such options have been exercised, expired or canceled.

The number of shares for which each option shall be granted, whether the option is an ISO or NQSO, the option price, the exercisability of the option, and all other terms and conditions of the option are determined by the Board at the time the option is granted. The options generally vest over a period between two and five years.

For the six months ended June 30, 2023, no new options were granted.

A summary of the status of stock options exercised, including the substantive options discussed in Note 3, is as follows:

	Number of shares	Weighted Average Exercise Price
Outstanding at December 31, 2022	10,030	$	5.99
Granted	–	–
Exercised	(2,419)	5.96
Expired or cancelled	–	–
Outstanding at June 30, 2023	7,611	$	6.00

The following summarizes information about options outstanding and exercisable at January 1, 2023 and June 30, 2023:

	Options Outstanding and Exercisable
	Exercise Price		Total Outstanding	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price		Total Exercisable
December 31, 2022	$	6.28	10,030	5.0	$	5.99	10,030
June 30, 2023	$	6.28	7,611	5.0	$	6.00	7,611

The intrinsic value of these options on June 30, 2023 and December 31, 2022 was $25.60 and $15.57, respectively.

The Company received cash payments of $14,601 from the exercise of options under the Stock Option Plan in the six months ended June 30, 2023.

The Company did not record any compensation costs related to stock options during the three and six months ended June 30, 2023.

As of June 30, 2023, there is no unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Stock Option Plan. The remaining unexercised shares are from substantive options in which the non-recourse notes may be pre-paid, therefore the Company recognized the total calculated compensation expense at the time of issuance.

Restricted Stock

Effective May 11, 2021, the Company established the Bowman Consulting Group Ltd. 2021 Omnibus Equity Incentive Plan (“the Plan”). The Plan is administered by the Board through which they can issue restricted stock awards. As of June 30, 2023, 4,128,557 shares of common stock are authorized and reserved for issuance under the Plan. This reserve automatically increases on each January 1, for the duration of the Plan, in an amount equal to 5% of the total number of shares outstanding on December 31st of the preceding calendar year. The Plan supersedes and replaces any prior plan for stock bonus grants to employees of the Company except that the prior plan shall remain in effect with respect to awards granted under such prior plan until such awards have been forfeited or fully vested.

During the six months ended June 30, 2023, the Board granted 632,091 shares of restricted stock under the Plan. The shares have a vesting period of up to four years during which there are certain restrictions as described in the Plan and Stock Bonus Agreements. The grant date fair value of the award is the closing price of the shares on such date, or if there are no sales on such date, on the next preceding day on which there were sales.

Effective April 2003, the Company adopted the Bowman Consulting Group Ltd. Stock Bonus Plan (“the Stock Bonus Plan”), which allowed for the awarding of restricted stock to employees. The Stock Bonus Plan was superseded by the Bowman Consulting Group Ltd. 2021 Omnibus Equity Incentive Plan except that the Stock Bonus Plan shall remain in effect with respect to awards granted under it until such awards have been forfeited or fully vested.

During the six months ended June 30, 2023 no new restricted stock awards were granted under the Stock Bonus Plan.

The following table summarizes the activity of restricted shares subject to forfeiture:

	Number of shares	Weighted Average Grant Price
Outstanding at January 1, 2023	1,837,309	14.33
Granted	632,091	39.84
Vested	(648,215)	12.26
Cancelled	(11,452)	18.00
Outstanding at June 30, 2023	1,809,733	17.79

On November 10, 2021 the Company’s Board adopted the 2021 Executive Officers Long Term Incentive Plan (the “Officers LTIP”). The Officers LTIP is established under the Plan and is subject to the terms and conditions thereof. The purpose of this plan is to attract, retain and motivate key officers and employees through the grant of equity-based awards that reward Company performance over a period greater than one year and align their interests with long-term stockholder value.

During the six months ended June 30, 2023, the compensation committee approved the grants of 245,710 performance-based stock units to certain executive officers of the Company under the Officers LTIP. The performance based restricted stock units are subject to a market condition, with a vesting period of 2.91 years. The number of units earned is based on total shareholder return (“TSR”) of the Company’s common stock relative to the TSR of the components of a custom peer group during the performance period from February 10, 2023 to December 31, 2025. The performance stock units are valued using a Monte Carlo simulation with model inputs of opening average share value, valuation date stock price, expected volatilities, correlation coefficient, risk-free interest rate, and expected dividend yield for the Company and the custom peer group.

The following table summarizes the activity of performance stock units subject to forfeiture:

	Number of shares	Weighted Average Grant Price
Outstanding at January 1, 2023	447,429	12.95
Granted	245,710	22.94
Vested	–	–
Cancelled	–	–
Outstanding at June 30, 2023	693,139	16.49

The Company recognizes forfeitures as they occur.

The following table represents the change in the liability to common shares subject to repurchase and the associated non-cash compensation expense for the six months ended June 30, 2023 and the year ended December 31, 2022 (in thousands):

	June 30, 2023		December 31, 2022
Beginning Balance	$	–	$	7
Non-cash compensation from ratable vesting	$	–	–
Non-cash compensation from change in fair value of liability	$	–	–
Other stock activity, net	$	–	(7)
Reclassification upon modification	–		–
Ending balance	$	–	$	–

As of June 30, 2023, the Company had 2,502,872 shares underlying unvested stock awards that vest between July 1, 2023 and December 31, 2027.

The future expense of the unvested awards for the remainder of 2023 and succeeding years is as follows (in thousands):

2023	$	12,414
2024	15,728
2025	7,177
2026	694
Thereafter	13
Total	$	36,026

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Leases

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases

Leases

We lease certain office space, equipment and vehicles. These leases are either non-cancelable, cancellable only by the payment of penalties or cancellable upon notice provided. All lease payments are based on the lapse of time and certain leases are subject to annual escalations for increases in base rents. The Company's lease terms includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised.

The Company recognizes a right-of-use asset and lease liability for its operating leases at the commencement date equal to the present value of the contractual minimum lease payments over the lease term. The present value is calculated using the rate implicit in the lease, if known, or the Company's incremental borrowing rate. The discount rate used for operating leases is primarily determined based on an analysis of the Company's borrowing rate, while the discount rate used for finance leases is primarily determined by the rate specified in the lease.

Operating and Finance Leases

The Company's operating leases primarily include material leases of buildings (consisting primarily of office lease commitments) and equipment. These leases are classified as operating leases and are recognized as right-of-use assets and operating lease liabilities on the consolidated balance sheets.

The Company's finance leases primarily include equipment and vehicles in certain contracts with payment terms on the lease agreements that range between 30 and 50 months.

The following tables present our balance sheet information related to leases:

		As of		As of
(Amounts in thousands)	Balance Sheet Classification	June 30, 2023		December 31, 2022
Assets:
Operating lease assets	Operating lease, right-of-use assets	$	39,476	$	30,264
Finance lease assets	Property and equipment, net	$	19,510	$	18,580
Total lease assets		$	58,986	$	48,844
Liabilities:
Current:
Operating lease liabilities	Operating lease obligation, current portion	$	(8,153)	$	(6,949)
Finance lease liabilities	Finance lease obligation, current portion	$	(6,001)	$	(5,297)
Total current lease liabilities		$	(14,154)	$	(12,246)
Non-current:
Operating lease liabilities	Operating lease obligation, less current portion	$	(36,610)	$	(28,087)
Finance lease liabilities	Finance lease obligation, less current portion	$	(14,619)	$	(14,254)
Total non-current lease liabilities		$	(51,229)	$	(42,341)

The following tables present selected financial information:

	Three Months Ended				Six Months Ended
(Amounts in thousands)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Operating lease cost
Amortization of right-of-use assets	$	2,711	$	1,948	$	5,204	$	3,679
Finance lease cost:
Amortization of right-of-use assets	1,778		1,776		3,448		3,401
Interest on lease liabilities	367		227		723		439
Sublease Income	(22)		–		(22)		–
Total lease cost	$	4,834	$	3,951	$	9,353	$	7,519

	Six Months Ended
(Amounts in thousands)	June 30, 2023		June 30, 2022
Cash paid for amounts included in the measurements of lease liabilities
Operating cash flows from operating leases	$	8,510	$	7,008
Operating cash flows from finance leases	722		439
Financing cash flows from finance leases	3,285		2,963
Right-of-use assets obtained in exchange for new operating leases	13,255		25,733
Right-of-use assets obtained in exchange for new finance leases	4,377		4,618

	As of		As of
	June 30, 2023		December 31, 2022
Weighted average remaining lease term (in years):
Operating leases	5.49		5.62
Finance leases	3.00		3.28
Weighted average discount rates:
Operating leases	6.9	%	7.1	%
Finance leases	7.4	%	7.4	%

Future minimum commitments under leases for the succeeding years are as follows (in thousands):

(Amounts in thousands)
Year ending December 31,	Operating Lease		Finance Lease
2023 (six months remaining)	$	5,404	$	3,788
2024	10,511		6,900
2025	9,795		6,640
2026	8,127		3,205
2027	7,101		237
Thereafter	13,383		–
Total lease payments	$	54,321	$	20,770
Less: Amounts representing interest	$	(9,558)	$	(2,580)
Total lease liabilities	$	44,763	$	18,190

The above table is exclusive of the $2.4 million bargain purchase price associated with the $20.8 million total liability to finance leases as presented on the consolidated balance sheet.

Leases

Leases

We lease certain office space, equipment and vehicles. These leases are either non-cancelable, cancellable only by the payment of penalties or cancellable upon notice provided. All lease payments are based on the lapse of time and certain leases are subject to annual escalations for increases in base rents. The Company's lease terms includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised.

The Company recognizes a right-of-use asset and lease liability for its operating leases at the commencement date equal to the present value of the contractual minimum lease payments over the lease term. The present value is calculated using the rate implicit in the lease, if known, or the Company's incremental borrowing rate. The discount rate used for operating leases is primarily determined based on an analysis of the Company's borrowing rate, while the discount rate used for finance leases is primarily determined by the rate specified in the lease.

Operating and Finance Leases

The Company's operating leases primarily include material leases of buildings (consisting primarily of office lease commitments) and equipment. These leases are classified as operating leases and are recognized as right-of-use assets and operating lease liabilities on the consolidated balance sheets.

The Company's finance leases primarily include equipment and vehicles in certain contracts with payment terms on the lease agreements that range between 30 and 50 months.

The following tables present our balance sheet information related to leases:

		As of		As of
(Amounts in thousands)	Balance Sheet Classification	June 30, 2023		December 31, 2022
Assets:
Operating lease assets	Operating lease, right-of-use assets	$	39,476	$	30,264
Finance lease assets	Property and equipment, net	$	19,510	$	18,580
Total lease assets		$	58,986	$	48,844
Liabilities:
Current:
Operating lease liabilities	Operating lease obligation, current portion	$	(8,153)	$	(6,949)
Finance lease liabilities	Finance lease obligation, current portion	$	(6,001)	$	(5,297)
Total current lease liabilities		$	(14,154)	$	(12,246)
Non-current:
Operating lease liabilities	Operating lease obligation, less current portion	$	(36,610)	$	(28,087)
Finance lease liabilities	Finance lease obligation, less current portion	$	(14,619)	$	(14,254)
Total non-current lease liabilities		$	(51,229)	$	(42,341)

The following tables present selected financial information:

	Three Months Ended				Six Months Ended
(Amounts in thousands)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Operating lease cost
Amortization of right-of-use assets	$	2,711	$	1,948	$	5,204	$	3,679
Finance lease cost:
Amortization of right-of-use assets	1,778		1,776		3,448		3,401
Interest on lease liabilities	367		227		723		439
Sublease Income	(22)		–		(22)		–
Total lease cost	$	4,834	$	3,951	$	9,353	$	7,519

	Six Months Ended
(Amounts in thousands)	June 30, 2023		June 30, 2022
Cash paid for amounts included in the measurements of lease liabilities
Operating cash flows from operating leases	$	8,510	$	7,008
Operating cash flows from finance leases	722		439
Financing cash flows from finance leases	3,285		2,963
Right-of-use assets obtained in exchange for new operating leases	13,255		25,733
Right-of-use assets obtained in exchange for new finance leases	4,377		4,618

	As of		As of
	June 30, 2023		December 31, 2022
Weighted average remaining lease term (in years):
Operating leases	5.49		5.62
Finance leases	3.00		3.28
Weighted average discount rates:
Operating leases	6.9	%	7.1	%
Finance leases	7.4	%	7.4	%

Future minimum commitments under leases for the succeeding years are as follows (in thousands):

(Amounts in thousands)
Year ending December 31,	Operating Lease		Finance Lease
2023 (six months remaining)	$	5,404	$	3,788
2024	10,511		6,900
2025	9,795		6,640
2026	8,127		3,205
2027	7,101		237
Thereafter	13,383		–
Total lease payments	$	54,321	$	20,770
Less: Amounts representing interest	$	(9,558)	$	(2,580)
Total lease liabilities	$	44,763	$	18,190

The above table is exclusive of the $2.4 million bargain purchase price associated with the $20.8 million total liability to finance leases as presented on the consolidated balance sheet.

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Subsequent Events	6 Months Ended
	Jun. 30, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsOn August 2, 2023, the Company and certain of its subsidiaries, as guarantors, entered into a First Amendment to the Amended and Restated Credit Agreement dated as of November 11, 2022 with Bank of America, N.A. ( the "Amended and Restated Agreement"). The Amendment increased the maximum principal amount of the Revolving Credit Facility to $70 million, is secured by all the assets of the Company and the subsidiary guarantors and has a maturity date of July 31, 2025. Under the Amended and Restated Agreement, the Company is required to comply with certain covenants, including covenant on indebtedness, investments, liens and restricted payments, as well as maintain certain financial covenants, including a fixed charge coverage ratio and leverage ratio of debt to EBITDA (as defined in the Amended and Restated Agreement).

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ (634)	$ (320)	$ (97)	$ 1,137

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Insider Trading Arrangements	3 Months Ended
	Jun. 30, 2023 shares
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Terminated	true
Michael Bruen [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	On May 15, 2023, Michael Bruen, the Company’s Chief Operating Officer and Director, adopted a 10b5-1 Plan related to the sales of up to 30,000 shares of the Company’s common stock. Subject to the terms and conditions of Mr. Bruen’s 10b5-1 Plan, a brokerage firm may periodically effect the transactions from September 2023 through February 2024.
Name	Michael Bruen
Title	Chief Operating Officer and Director
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	May 15, 2023
Arrangement Duration	290 days
Bruce Labovitz [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	On May 17, 2023, Bruce Labovitz, the Company’s Chief Financial Officer, adopted a 10b5-1 Plan related to the sales of up to 38,000 shares of the Company’s common stock. Subject to the terms and conditions of Mr. Labovitz’s 10b5-1 Plan, a brokerage firm may periodically effect the transactions from August 2023 through March 2024.
Name	Bruce Labovitz
Title	Company’s Chief Financial Officer
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	May 17, 2023
Arrangement Duration	319 days
Raymond Vicks Jr [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	On June 13, 2023, Raymond Vicks, Jr., an independent Director of the Company, adopted a 10b5-1 Plan related to the sales of up to 3,902 shares of the Company’s common stock. Subject to the terms and conditions of Mr. Vick’s 10b5-1 Plan, a brokerage firm may periodically effect the transactions from September 2023 through May 2024.
Name	Raymond Vicks, Jr
Title	Director of the Company
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	June 13, 2023
Arrangement Duration	353 days
Robert Hickey [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	On June 16, 2023, Robert Hickey, the Company’s Chief Legal Officer and Secretary, terminated a 10b5-1 Plan that he had previously adopted on December 16, 2022. Mr. Hickey’s former plan related to the sale of up to 32,000 shares of common stock pursuant to the terns of the plan from June 2023 through May 2024. Subsequent to the termination, Mr. Hickey adopted a new 10b5-1 Plan which provides for the sale of up to 24,000 shares of the Company’s common stock pursuant to the terms of the 10b5-1 Plan from September 2023 through May 2024.
Name	Robert Hickey
Title	Chief Legal Officer and Secretary
Rule 10b5-1 Arrangement Adopted	true
Michael Bruen Rule Trading Arrangement, Common Stock [Member] | Michael Bruen [Member]
Trading Arrangements, by Individual
Aggregate Available	30,000
Bruce Labovitz Rule Trading Arrangement, Common Stock [Member] | Bruce Labovitz [Member]
Trading Arrangements, by Individual
Aggregate Available	38,000
Raymond Vicks Jr Rule Trading Arrangement, Common Stock [Member] | Raymond Vicks Jr [Member]
Trading Arrangements, by Individual
Aggregate Available	3,902
Robert Hickey New Rule Trading Arrangement, Common Stock [Member] | Robert Hickey [Member]
Trading Arrangements, by Individual
Adoption Date	June 16, 2023
Arrangement Duration	349 days
Aggregate Available	24,000
Robert Hickey Former Rule Trading Arrangement, Common Stock [Member] | Robert Hickey [Member]
Trading Arrangements, by Individual
Adoption Date	December 16, 2022
Arrangement Duration	182 days
Aggregate Available	32,000

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and footnotes of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in shareholders’ equity and cash flows. The results of operations for the current period are not necessarily indicative of the results for the full year or the results for any future periods.

The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 15, 2023.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Emerging Growth Company

Emerging Growth CompanySection 102(b)(1) of the Jumpstart Our Business Startups Act (“JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934 (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company that is either not an emerging growth company or, an emerging growth company that has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.

Revenue Recognition

Revenue Recognition

As discussed in Note 1, the Company provides a variety of engineering and related professional services to customers located throughout the United States. The Company enters into agreements with clients that create enforceable rights and obligations and for which it is probable that the Company will collect the consideration to which it will be entitled as services transfer to the customer. It is customary practice for the Company to have written agreements with its customers and revenue on oral or implied arrangements is generally not recognized. The Company recognizes revenue based on the consideration specified in the applicable agreement. Excluded from the transaction price are amounts collected on behalf of third parties for sales and similar taxes.

Long-term contracts typically contain billing terms that provide for invoicing once a month and payment on a net 30-day basis. Exceptions to monthly billing terms are to ensure that the Company performs satisfactorily rather than representing a significant financing component. For example, fixed price contracts may provide for milestone billings based upon the attainment of specific project objectives to ensure the Company meets its contractual requirements rather than having billing monthly. Additionally, contracts may include retentions or holdbacks paid at the end of a project to ensure that Company meets the contract requirements. The Company does not assess whether a contract contains a significant financing component if the Company expects, at contract inception, that the period between payment by the customer and the transfer of promised services to the customer will be less than one year.

As a professional services engineering firm, the Company generally recognizes revenue over time as control transfers to a customer based upon the extent of progress towards satisfaction of the performance obligation.

For services delivered under fixed price contracts, the Company uses the ratio of actual costs incurred to total estimated costs since costs incurred (an input method) which represents a reasonable measure of progress towards the satisfaction of a performance in order to estimate the portion of revenue earned. This method faithfully depicts the transfer of value to the customer when the Company is satisfying a performance obligation that entails a number of interrelated tasks or activities for a combined output that requires the Company to coordinate the work of employees and sub-consultants. Contract costs typically include direct labor, subcontract and consultant costs, materials and indirect costs related to contract performance. Changes in estimated costs to complete these obligations result in adjustments to revenue on a cumulative catch-up basis, which causes the effect of revised estimates to be recognized in the current period. Changes in estimates can routinely occur over the contract term for a variety of reasons including, changes in scope, unanticipated costs, delays or favorable or unfavorable progress than original expectations. In situations where the estimated costs to perform exceeds the consideration to be received, the Company accrues the entire estimated loss during the period the loss becomes known.

When a performance obligation is billed using a time-and-material type contract, the Company measures its progress to complete based upon the hours incurred for the period times contractually agreed upon billing rates plus any materials delivered or consumed in the project. When applicable, the Company will recognize revenue under these contracts as invoiced under the practical expedient.

In certain situations, it is possible that two or more contracts should be combined and accounted for as a single contract, or a single contract should be accounted for as multiple performance obligations. This requires significant judgment and could impact the amount and timing of revenue recognition. Such determinations are made using management’s best estimate and knowledge of contracts and related performance obligations.

The Company’s contracts may contain variable consideration in the form of unpriced or pending change orders or claims that either increase or decrease the contract price. Variable consideration is generally estimated using the expected value method but may from time to time be estimated using the most likely amount method depending on the circumstance. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are based upon historical experience and known trends.

The Company recognizes claims against vendors, sub-consultants, and others as a reduction in costs when the contract establishes enforceability, and the amounts of recovery are reasonably estimable and probable. Reduction in costs are recognized at the lesser of the amount management expects to recover or costs incurred.

Contract related assets and liabilities are classified as current assets and current liabilities. Significant balance sheet accounts related to the revenue cycle are as follows:

Accounts receivables, net:

Accounts receivable, net (contract receivables) includes amounts billed under the contract terms. The amounts are stated at their net realizable value. The Company maintains an allowance for doubtful accounts to provide for the estimated number of receivables that will not be collected. The Company considers several factors in its estimate of the allowance, including knowledge of a client’s financial condition, its historical collection experience, and other factors relevant to assessing the collectability of such receivables.

Contract Assets:

Contract Assets are recorded when progress to completion revenue earned on contracts exceeds amounts billed under the contract. It may also include contract retainages that can be billed once contract stipulations are satisfied.

Contract Liabilities:

Contract Liabilities are recorded when amounts billed under a contract exceeds the progress to completion revenue earned under the contract.

Use of Estimates

Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could vary from the estimates and assumptions that were used.

Concentration of Credit Risk and other Concentrations

Concentration of Credit Risk and other Concentrations

The Company’s financial instruments that are exposed to concentrations of credit risk consist of cash and accounts receivable.

Cash balances at various times during the year may exceed the amount insured by the Federal Deposit Insurance Corporation. The Company’s cash deposits are held in institutions whose credit ratings are monitored by management, and the Company has not incurred any losses related to such deposits.

The Company can, at times, be subject to a concentration of credit risk with respect to outstanding accounts receivable. However, the Company believes no such concentration existed during the six months ended June 30, 2023, or the year ended December 31, 2022. The Company’s customers are located throughout the United States. Although the Company generally grants credit without collateral, management believes that its contract acceptance, billing, and collection policies are adequate to minimize material credit risk. Also, for non-governmental customers, the Company can often place mechanics liens against the real property associated with the contract in the event of non-payment.

Fair Value Measurements

Fair Value Measurements

Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) provides the framework for measuring and reporting financial assets and liabilities at fair value. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The codification establishes a three-level disclosure hierarchy to indicate the level of judgment used to estimate fair value measurements:

Level 1:    Quoted prices in active markets for identical assets or liabilities as of the reporting date;

Level 2:    Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices (such as interest rate and yield curves);

Level 3:    Uses inputs that are unobservable, supported by little or no market activity and reflect significant management judgment.

As of June 30, 2023 and December 31, 2022:

•The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the relatively short duration of these instruments;

•The carrying amounts of debt obligations approximate their fair values as the terms are comparable to terms currently offered by local financial institutions for arrangements with similar terms to industry peers with comparable credit characteristics. Accordingly, the debt obligations involve Level 2 fair value inputs;

•The liability related to shares subject to repurchase was recognized at fair value using Level 1 inputs as there is an active market for the Company’s publicly traded stock. There was no remaining liability as of December 31, 2022. For further discussion, see Note 15, Employee Stock Purchase and Stock Incentive Plans.

Income Taxes

Income Taxes

The Company recognizes deferred income tax assets or liabilities for expected future tax consequences of events recognized in the consolidated financial statements or tax returns. Under this method, deferred income tax assets or liabilities are determined based upon the difference between the financial statement and income tax bases of assets and liabilities using enacted tax rates expected to apply when the differences settle or become realized. Valuation allowances are provided when it is more likely than not that a deferred tax asset is not realizable or recoverable in the future. As of June 30, 2023, no valuation allowances are required, and all deferred tax assets are realizable.

The Company assesses uncertain tax positions to determine whether the position will more likely than not be sustained upon examination by the Internal Revenue Service or other taxing authorities. If the Company cannot reach a more-likely-than-not determination, no benefit is recorded. If the Company determines that the tax position is more likely than not to be sustained, the Company records the largest amount of benefit that is more likely than not to be realized when the tax position is settled. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. Beginning January 1, 2022, the Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the option to deduct research and development expenditures in the current year and now requires taxpayers to capitalize and amortize research and development costs pursuant to Internal Revenue Code Section 174. The capitalized expenses are amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses. As a result of this provision of the TCJA, we have established a $20.6 million uncertain tax position related to capitalized and amortizable research and development ("R&D") costs as of period ended June 30, 2023.

The Company recognizes the effect of a change in tax rates on deferred tax assets and liabilities in income in the period that includes the enactment date. The Company’s effective tax rate for the six months ended June 30, 2023 and 2022 was 95.0% and (37.9)%, respectively. The change in the Company’s effective tax rate is predominantly due to changes in the estimated annual effective tax rate. The most prominent factors include an increase in projected R&D credits generated for 2023, a change in the projected limitations of the deductible executive compensation, and an overall reduction in forecasted income for 2023 relative to 2022. With respect to the projected R&D credit, the Company anticipates the 2023 generated R&D credit to be $3.8 million as of June 30, 2023, as compared to the projected R&D credit to be generated for fiscal year 2022 was $2.0 million as of June 30, 2022. Similarly, the Company anticipates the annual projected limitation

on the deductibility of executive compensation to be $9.8 million for 2023 as compared to $3.7 million for 2022. These factors as well as the forecasted change in book income predominantly resulted in the change in the estimated annual effective tax rate.

Furthermore, the Company also recognized net discrete benefits of $1.6 million for the six months ended June 30, 2023, as compared to net discrete benefit of $0.5 million for the six months ended June 30, 2022. The discrete benefits are predominantly the result of a windfall tax benefit for restricted stock awards and other non-recurring adjustments. More specifically, the windfall tax adjustment for restricted stock awards recognized at a value higher than the grant date fair value is $2.0 million for the six months ended June 30, 2023, and $0.5 million for the six months ended June 30, 2022. In addition, the Company recognized a one-time adjustment to the state income taxes payable, resulting in $0.2 million net discrete expense. These factors increased the rate by 82.6% and reduced the rate by 57.3% for the quarters ended June 30, 2023, and June 30, 2022, respectively.

For year ended December 31, 2022, the Company filed Form 3115, Application for Change in Accounting Method, with the Internal Revenue Service requesting to change its method of deducting stock-based compensation expense from an impermissible method to a permissible method; on July 27, 2022, the Form 3115 was approved by the Internal Revenue Service, which resulted in a reversal of a $1.9 million uncertain tax position to a deferred tax liability. In addition, the Company recorded a $0.4 million uncertain tax position during the year ended December 31, 2022, related to the annual limitation on the deductibility of executive compensation claimed on a prior period U.S. federal income tax return.

The Company files income tax returns in the U.S. federal jurisdiction and certain states in which it operates. Based on the timing of the filing of certain tax returns, the Company’s federal income tax returns for tax years 2019 and thereafter remain subject to examination by the U.S. Internal Revenue Service. The statute of limitations on the Company’s state income tax returns generally conforms to the federal three-year statute of limitations.

Segments

SegmentsThe Company operates in one segment based upon the financial information used by its chief operating decision maker in evaluating the financial performance of its business and allocating resources. The single segment represents the Company’s core business of providing engineering and related professional services to its customers.

Recently Issued Accounting Guidance

Recently Issued Accounting Guidance

Accounting guidance recently adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) to replace the incurred loss impairment methodology under U.S. GAAP. This ASU introduces a new accounting model, the Current Expected Credit Losses model (CECL), which could result in earlier recognition of credit losses and additional disclosures related to credit risk. The CECL model will require the Company to use a forward-looking expected credit loss impairment methodology for the recognition of credit losses for financial instruments at the time the financial asset is originated or acquired, and require a loss be incurred before it is recognized. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. The new standard will apply to accounts receivable, notes, and other financial instruments. This standard is effective for the Company beginning January 1, 2023. Adoption of ASU 2016-13 will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date. The Company adopted the new guidance starting January 1, 2023. The impact of this ASU is reflected in the consolidated financial statements and was not material.

The Company does not believe that any recently issued standards other than those noted above would have a material effect on its consolidated financial statements.

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Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Summary of Reconciliation of Net Income and Weighted Average Shares Outstanding for Calculation of Basic and Diluted Earnings per Share

The following table represents a reconciliation of the net income and weighted average shares outstanding for the calculation of basic and diluted earnings per share for the three and six months ended June 30, 2023 and 2022 (in thousands, except share data):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Numerator
Net income (loss)	$	(634)	$	(320)	$	(97)	$	1,137
Earnings allocated to non-vested shares	–		–		–		191
Subtotal	$	(634)	$	(320)	$	(97)	$	946
Denominator
Weighted average common shares outstanding	12,276,173		10,761,172		12,022,550		10,346,089
Effect of dilutive nominal options	–		–		–		–
Effect of dilutive contingently earned shares	–		–		–		81,513
Dilutive average shares outstanding	12,276,173		10,761,172		12,022,550		10,427,602
Basic earnings per share	$	(0.05)	$	(0.03)	$	(0.01)	$	0.09
Dilutive earnings per share	$	(0.05)	$	(0.03)	$	(0.01)	$	0.09

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2023

Business Combinations [Abstract]

Summary of Changes in Preliminary Calculations of the Fair Values of Assets Acquired and Liabilities Assumed

The following summarizes the final calculations of the fair values of McMahon’s assets acquired and liabilities assumed as of the acquisition date (in thousands):

	June 30, 2023
Total Purchase Price	$	18,189
Purchase Price Allocation:
Accounts Receivable, net	8,456
Contract assets	1,017
Prepaid and other current assets	291
Property and equipment, net	949
Intangible assets	3,392
Other assets	96
Notes receivable - officers, employees, affiliates, current portion	19
Accounts payable and accrued liabilities, current portion	(3,688)
Contract liabilities	(841)
Finance leases - non-current	(134)
Post-retirement obligations, less current portion	(5,782)
Total identifiable assets	$	3,775
Goodwill	14,414
Net assets acquired	$	18,189

The following summarizes the preliminary calculations of the fair values of PDC assets acquired and liabilities assumed as of the acquisition date (in thousands):

	June 30, 2023
Total Purchase Price	$	14,178
Purchase Price Allocation:
Accounts receivable	2,199
Contract assets	926
Prepaid and other current assets	161
Property and equipment, net	489
Intangible assets	10,344
Accounts payable and accrued liabilities, current portion	(1,118)
Contract liabilities	(1,362)
Other non-current obligations	(273)
Finance leases - non-current	36
Total identifiable assets	$	11,402
Goodwill	2,776
Net assets acquired	$	14,178

Summary of Results of Operations of Businesses Acquired From Dates of Acquisitions

The consolidated financial statements of the Company include the results of operations since the date the business was acquired. The following table presents the results of operations of the acquired business for the three and six months ended June 30, 2023 (in thousands):

	For the Three Months Ended June 30, 2023		For the Six Months Ended June 30, 2023
Gross Contract Revenue	$	9,569	$	19,983
Pre-tax Net Income	$	328	$	1,626

The following table presents the results of operations of the acquired business from the date of acquisition for the three and six months ended June 30, 2023 (in thousands):

	For the Three Months Ended June 30, 2023		For the Six Months Ended June 30, 2023
Gross Contract Revenue	$	3,727	$	6,833
Pre-tax Net Income	$	1,478	$	2,117

The following table presents the results of operations of business acquired from their respective dates of acquisition for the three and six months ended June 30, 2023 (in thousands):

	For the Three Months Ended June 30, 2023		For the Six Months Ended June 30, 2023
Gross Contract Revenue1	$	5,769	$	5,769
Pre-tax Net Income	$	1,940	$	1,940

1 Gross contract revenue includes adjustments as required by ASC 606, Revenue from Contracts with Customers based on opening balance sheet provided by the acquired companies. There is no assurance these adjustments will be consistent in future periods. Opening balance sheet balances are subject to adjustment prior to being finalized.

Summary of Unaudited Proforma Results

The following table presents the unaudited, pro forma consolidated results of operations for the year ended December 31, 2022 and December 31, 2021, respectively, assuming that the McMahon acquisition described above occurred at January 1, 2021. These unaudited pro forma results are presented for informational purposes only and are not meant to represent actual operating results that would have been achieved had the related events occurred on such date (in thousands):

	For the Year Ended
	December 31, 2022		December 31, 2021
Gross Contract Revenue	$	273,924	$	183,595
Net Income	$	5,948	$	2,164

The following table presents the unaudited, pro forma condensed consolidated results of operations for the three and six months ended June 30, 2023 and June 30, 2022 assuming that the companies acquired in the second quarter of 2023, described above, occurred on January 1, 2022. The unaudited pro forma results are presented for informational purposes only and are not meant to represent actual operating results that would have been achieved had the related events occurred on such date (in thousands):

	For the Six Months Ended June 30, 2023
	2023		2022
Gross Contract Revenue2	$	182,656	$	135,669
Pre-tax Net Income (loss)	$	3,402	$	(94)

2 Gross contract revenue in these pro forma financials does not conform to GAAP as required by ASC 606, Revenue from Contract with Customers, as it is impracticable to obtain the historical information necessary to apply this accounting standard. The historical estimates required to be able to accurately determine the percent complete accounting on the contracts that comprise the revenue is not available for the required periods.

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Disaggregation of Revenue and Contract Balances (Tables)

6 Months Ended

Jun. 30, 2023

Disaggregation of Revenue [Abstract]

Summary of Disaggregated Revenues by Contract Type

Disaggregated revenues by contract type were as follows (in thousands):

	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2023				2022				2023				2022
Fixed fee	$	73,508	88.8	%	$	58,488	93.7	%	$	141,753	89.2	%	$	108,074	94.1	%
Time-and-materials	9,247		11.2	%	3,911		6.3	%	17,102		10.8	%	6,786		5.9	%
Gross contract revenue	$	82,755	100.0	%	$	62,399	100.0	%	$	158,855	100.0	%	$	114,860	100.0	%

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Contracts in Progress (Tables)

6 Months Ended

Jun. 30, 2023

Contract with Customer, Contract Asset, Contract Liability, and Receivable [Abstract]

Summary of Costs and Estimated Earnings on Contracts

The following table reflects the calculation of the net balance of contract assets and contract liabilities. Costs and estimated earnings on contracts in progress consist of the following (in thousands):

	June 30, 2023		December 31, 2022
Costs incurred on uncompleted contracts	$	387,057	$	279,173
Estimated contract earnings in excess of costs	404,240		398,791
Estimated contract earnings to date	791,297		677,964
Less: billed to date	(775,293)		(668,013)
Net contract assets	$	16,004	$	9,951

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Notes Receivable (Tables)

6 Months Ended

Jun. 30, 2023

Receivables [Abstract]

Summary of Notes Receivable

The Company has unsecured notes receivable from related parties, certain non-executive officers of the Company and an unrelated third party. The following is a summary of these notes receivable (in thousands):

	June 30, 2023		December 31, 2022
Officers, employees and affiliated entities - Interest accrues annually at rates ranging from 0.0% - 5.5%. The notes receivable mature through December 2024.	$	2,325	$	2,433
Unrelated third party - Currently no interest is being accrued on this note. The note receivable matures in December 2023.	903		903
Total:	3,228		3,336
Less: current portion
Officers, employees and affiliates	(938)		(1,016)
Noncurrent portion	$	2,290	$	2,320

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Property and Equipment, Net (Tables)

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Summary of Property and Equipment for Fixed Assets

Property and equipment for fixed assets are as follows (in thousands):

	June 30, 2023		December 31, 2022
Computer equipment	$	2,218	$	2,101
Survey equipment	5,409		5,088
Vehicles	1,852		1,032
Furniture and fixtures	2,446		2,398
Leasehold improvements	8,194		7,727
Software	435		316
Fixed assets pending lease financing 1	316		181
Total:	20,870		18,843
Less: accumulated depreciation	(13,506)		(12,319)
Property and Equipment, net of finance leased assets	$	7,364	$	6,524

1assets acquired which will be re-financed under the Company's finance lease facilities

Property and equipment for finance leased assets are as follows (in thousands):

	June 30, 2023		December 31, 2022
Equipment	$	17,722	$	16,256
Vehicles	8,838		6,787
Total:	26,560		23,043
Less: accumulated amortization on leased assets	(7,050)		(4,463)
Finance Leased Assets, net	$	19,510	$	18,580

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Goodwill (Tables)

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Goodwill Resulting From Business Acquisitions

Changes in the carrying amount of goodwill were as follows (in thousands):

	Goodwill
Balance as of December 31, 2022	$	53,210
Goodwill Acquired	23,896
Balance as of June 30, 2023	$	77,106

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Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2023

Intangible Assets [Abstract]

Summary of Total Intangible Assets

Total intangible assets consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):

	June 30, 2023						December 31, 2022
	Gross Amount		Accumulated Amortization		Net Balance		Gross Amount		Accumulated Amortization		Net Balance
Customer relationships	$	35,909	$	(3,825)	$	32,084	$	23,595	$	(2,330)	$	21,265
Contract rights	10,471		(4,568)		5,903		7,281		(2,416)		4,865
Leasehold	187		(66)		121		187		(48)		139
Domain name	281		–		281		281		–		281
Licensing rights	1,374		–		1,374		1,400		–		1,400
Total	$	48,222	$	(8,459)	$	39,763	$	32,744	$	(4,794)	$	27,950

Summary of Weighted Average Useful Lives of Intangible Assets by Asset Class Used for Straight-line Expense Purposes

The following table summarizes the weighted average useful lives of intangible assets by asset class used for straight-line expense purposes:

	June 30, 2023	December 31, 2022
Customer relationships	8.10	11.97
Contract rights	1.08	2.47
Leasehold	5.74	8.05

Summary of Future amortization

Future amortization for the remainder of 2023 and for the succeeding years is as follows (in thousands):

2023	6,256
2024	7,403
2025	5,930
2026	5,390
2027	2,142
Thereafter	10,987
Total	$	38,108

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Notes Payable (Tables)

6 Months Ended

Jun. 30, 2023

Debt Instruments [Abstract]

Schedule of Notes Payable

Notes payable consist of the following (in thousands):

	June 30, 2023		December 31, 2022
Related parties:
Shareholders - Interest accrues annually at rates ranging from 3.25% - 11.00%. The notes payable mature on various dates through June 2026.	$	15,942	$	11,515
Owners of Acquired Entities - Interest accrues annually at rates ranging from 3.25% - 7.00% annually. The notes payable mature on various dates through October 2024.	6,803		8,134
Convertible Notes Payable - Interest accrues annually at rates ranging from 4.75% - 7.00% annually. The convertible notes payable mature on various dates through May 2027.	6,339		6,675
Unrelated third parties:
Note payable for purchase of software and vehicles	40		55
Note payable for purchase of intangible asset	50		50
Fixed line notes payable - see note 11	491		773
Discounts on notes payable issued as consideration in acquisitions:
Shareholders	(135)		(177)
Owners of acquired entities	(358)		(581)
Total	29,172		26,444
Less: current portion	(12,438)		(10,168)
Noncurrent portion	$	16,734	$	16,276

Schedule of Future Principal Payments on Notes Payable

Future principal payments on notes payable for remainder of 2023 and succeeding years are as follows (in thousands):

2023	$	7,221
2024	11,230
2025	7,105
2026	2,917
2027	1,192
Thereafter	–
Total	$	29,665

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Pension and Post-retirement Benefit Obligations (Tables)

6 Months Ended

Jun. 30, 2023

Postemployment Benefits [Abstract]

Schedule of Net Periodic Benefit Costs

The following table details the components of net periodic benefit costs for the Company's pension plan for the three and six months ended June 30, 2023 and 2022:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in thousands)	2023		2022		2023		2022
Components of net periodic benefit cost:
Service costs	$	53	$	–	$	64	$	–
Interest costs	25		–		93		–
Amortization of net gain	(10)		–		(21)		–
Net periodic benefit cost	$	68	$	–	$	136	$	–

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Employee Stock Purchase and Stock Incentive Plans (Tables)

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Issuance Activity Under Employee Stock Purchase Plan

The following table summarizes the stock issuance activity under the ESPP for the six months ended June 30, 2023 (in thousands, except share data):

	June 30, 2023
Total purchase price paid by employees for shares sold	$	763
Number of shares sold	31,097

Summary of Status of Stock Options Exercised, Including Substantive Options and Information about Options Outstanding and Exercisable

A summary of the status of stock options exercised, including the substantive options discussed in Note 3, is as follows:

	Number of shares	Weighted Average Exercise Price
Outstanding at December 31, 2022	10,030	$	5.99
Granted	–	–
Exercised	(2,419)	5.96
Expired or cancelled	–	–
Outstanding at June 30, 2023	7,611	$	6.00

The following summarizes information about options outstanding and exercisable at January 1, 2023 and June 30, 2023:

	Options Outstanding and Exercisable
	Exercise Price		Total Outstanding	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price		Total Exercisable
December 31, 2022	$	6.28	10,030	5.0	$	5.99	10,030
June 30, 2023	$	6.28	7,611	5.0	$	6.00	7,611

Summary of Activity of Restricted Shares Subject to Forfeiture

The following table summarizes the activity of restricted shares subject to forfeiture:

	Number of shares	Weighted Average Grant Price
Outstanding at January 1, 2023	1,837,309	14.33
Granted	632,091	39.84
Vested	(648,215)	12.26
Cancelled	(11,452)	18.00
Outstanding at June 30, 2023	1,809,733	17.79

Summary of Activity of Performance Stock Units Subject to Forfeiture

The following table summarizes the activity of performance stock units subject to forfeiture:

	Number of shares	Weighted Average Grant Price
Outstanding at January 1, 2023	447,429	12.95
Granted	245,710	22.94
Vested	–	–
Cancelled	–	–
Outstanding at June 30, 2023	693,139	16.49

Summary of Change in Liability to Common Shares Subject to Repurchase and Associated Non Cash Compensation Expense

The following table represents the change in the liability to common shares subject to repurchase and the associated non-cash compensation expense for the six months ended June 30, 2023 and the year ended December 31, 2022 (in thousands):

	June 30, 2023		December 31, 2022
Beginning Balance	$	–	$	7
Non-cash compensation from ratable vesting	$	–	–
Non-cash compensation from change in fair value of liability	$	–	–
Other stock activity, net	$	–	(7)
Reclassification upon modification	–		–
Ending balance	$	–	$	–

Summary of Future Expense of Unvested Awards

The future expense of the unvested awards for the remainder of 2023 and succeeding years is as follows (in thousands):

2023	$	12,414
2024	15,728
2025	7,177
2026	694
Thereafter	13
Total	$	36,026

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Leases (Tables)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Supplemental Balance Sheet Information

The following tables present our balance sheet information related to leases:

		As of		As of
(Amounts in thousands)	Balance Sheet Classification	June 30, 2023		December 31, 2022
Assets:
Operating lease assets	Operating lease, right-of-use assets	$	39,476	$	30,264
Finance lease assets	Property and equipment, net	$	19,510	$	18,580
Total lease assets		$	58,986	$	48,844
Liabilities:
Current:
Operating lease liabilities	Operating lease obligation, current portion	$	(8,153)	$	(6,949)
Finance lease liabilities	Finance lease obligation, current portion	$	(6,001)	$	(5,297)
Total current lease liabilities		$	(14,154)	$	(12,246)
Non-current:
Operating lease liabilities	Operating lease obligation, less current portion	$	(36,610)	$	(28,087)
Finance lease liabilities	Finance lease obligation, less current portion	$	(14,619)	$	(14,254)
Total non-current lease liabilities		$	(51,229)	$	(42,341)

Schedule of Selected Financial Information

The following tables present selected financial information:

	Three Months Ended				Six Months Ended
(Amounts in thousands)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Operating lease cost
Amortization of right-of-use assets	$	2,711	$	1,948	$	5,204	$	3,679
Finance lease cost:
Amortization of right-of-use assets	1,778		1,776		3,448		3,401
Interest on lease liabilities	367		227		723		439
Sublease Income	(22)		–		(22)		–
Total lease cost	$	4,834	$	3,951	$	9,353	$	7,519

	Six Months Ended
(Amounts in thousands)	June 30, 2023		June 30, 2022
Cash paid for amounts included in the measurements of lease liabilities
Operating cash flows from operating leases	$	8,510	$	7,008
Operating cash flows from finance leases	722		439
Financing cash flows from finance leases	3,285		2,963
Right-of-use assets obtained in exchange for new operating leases	13,255		25,733
Right-of-use assets obtained in exchange for new finance leases	4,377		4,618

	As of		As of
	June 30, 2023		December 31, 2022
Weighted average remaining lease term (in years):
Operating leases	5.49		5.62
Finance leases	3.00		3.28
Weighted average discount rates:
Operating leases	6.9	%	7.1	%
Finance leases	7.4	%	7.4	%

Summary of Future Minimum Lease Payments

Future minimum commitments under leases for the succeeding years are as follows (in thousands):

(Amounts in thousands)
Year ending December 31,	Operating Lease		Finance Lease
2023 (six months remaining)	$	5,404	$	3,788
2024	10,511		6,900
2025	9,795		6,640
2026	8,127		3,205
2027	7,101		237
Thereafter	13,383		–
Total lease payments	$	54,321	$	20,770
Less: Amounts representing interest	$	(9,558)	$	(2,580)
Total lease liabilities	$	44,763	$	18,190

Summary of Future Minimum Lease Payments

Future minimum commitments under leases for the succeeding years are as follows (in thousands):

(Amounts in thousands)
Year ending December 31,	Operating Lease		Finance Lease
2023 (six months remaining)	$	5,404	$	3,788
2024	10,511		6,900
2025	9,795		6,640
2026	8,127		3,205
2027	7,101		237
Thereafter	13,383		–
Total lease payments	$	54,321	$	20,770
Less: Amounts representing interest	$	(9,558)	$	(2,580)
Total lease liabilities	$	44,763	$	18,190

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Nature of Business and Basis of Presentation - Additional Information (Details) $ / shares in Units, $ in Thousands				6 Months Ended
	Mar. 02, 2022 USD ($) shares	Feb. 28, 2022 USD ($) $ / shares shares	Feb. 11, 2022 USD ($) $ / shares shares	Jun. 30, 2023 USD ($) office	Jun. 30, 2022 USD ($)
Nature Of Business And Basis Of Presentation [Line Items]
Shares price per share (in dollars per share) | $ / shares		$ 16.00
Number of shares issued and sold (in shares) | shares		157,500
Proceeds from issuance of common stock		$ 2,500		$ 777	$ 607
United States
Nature Of Business And Basis Of Presentation [Line Items]
Number of offices | office				70
MEXICO
Nature Of Business And Basis Of Presentation [Line Items]
Number of offices | office				1
Common Stock Offering
Nature Of Business And Basis Of Presentation [Line Items]
Shares price per share (in dollars per share) | $ / shares			$ 16.00
Number of shares issued and sold (in shares) | shares			900,000
Net proceeds from sale of common stock			$ 13,700
Over-Allotment Option
Nature Of Business And Basis Of Presentation [Line Items]
Number of shares issued and sold (in shares) | shares	1,057,500
Net proceeds from sale of common stock	$ 2,400
Proceeds from issuance of common stock	$ 16,900

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Significant Accounting Policies - Additional Information (Details) $ in Millions	3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2023 USD ($) segment	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Accounting Policies [Abstract]
Long term contract billing term		30 days
Uncertain tax position		$ 20.6
Effective tax rate		95.00%	(37.90%)
R&D credit		$ 3.8	$ 2.0
Annual projected limitation on deductibility of executive compensation		9.8	3.7
Net discrete benefits		1.6	0.5
Windfall tax adjustment for restricted stock awards		$ 2.0	$ 0.5
One-time adjustment to state tax payables	$ 0.2
Income tax rate reduction		82.60%	57.30%
Reversal in uncertain tax position				$ 1.9
Uncertain tax position				$ 0.4
Number of operating segment | segment		1

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Earnings per Share - Additional Information (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings Per Share [Abstract]
Non-vested restricted shares (in shares)	1,871,892	2,073,783	1,811,416	2,077,218
Substantive options shares (in shares)	8,566	13,448	9,125	14,013

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Earnings per Share - Summary of Reconciliation of Net Income and Weighted Average Shares Outstanding for Calculation of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings Per Share [Abstract]
Net income (loss)	$ (634)	$ (320)	$ (97)	$ 1,137
Earnings allocated to non-vested shares	0	0	0	191
Subtotal	$ (634)	$ (320)	$ (97)	$ 946
Weighted average common shares outstanding (in shares)	12,276,173	10,761,172	12,022,550	10,346,089
Effect of dilutive nominal options (in shares)	0	0	0	0
Effect of dilutive contingently earned shares (in shares)	0	0	0	81,513
Dilutive average shares outstanding (in shares)	12,276,173	10,761,172	12,022,550	10,427,602
Basic (in dollars per share)	$ (0.05)	$ (0.03)	$ (0.01)	$ 0.09
Diluted (in dollars per share)	$ (0.05)	$ (0.03)	$ (0.01)	$ 0.09

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Acquisitions - Additional Information (Details) - USD ($)									3 Months Ended		6 Months Ended
	Jun. 12, 2023	Jun. 02, 2023	May 16, 2023	May 12, 2023	Apr. 03, 2023	Dec. 02, 2022	Nov. 02, 2022	May 04, 2022	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2023	Dec. 31, 2022	Jul. 15, 2022
Business Acquisition [Line Items]
Goodwill											$ 77,106,000	$ 53,210,000
Customer relationships
Business Acquisition [Line Items]
Weighted average useful lives											8 years 1 month 6 days	11 years 11 months 19 days
Contract rights
Business Acquisition [Line Items]
Weighted average useful lives											1 year 29 days	2 years 5 months 19 days
McMahon Associates, Inc. (“McMahon”)
Business Acquisition [Line Items]
Total consideration paid								$ 18,200,000			$ 18,189,000
Issuance of common stock for acquisitions (in shares)								476,796
Price per share (in dollars per share)								$ 16.64
Equity issued in business combination, fair value								$ 7,900,000
Cash, promissory note and assumed liabilities payment on business combination								10,300,000
Deferred tax assets acquired								0
Deferred tax liabilities acquired								$ 0
Statutory income tax rate											28.90%
Intangible assets											$ 3,392,000
Goodwill											14,414,000
McMahon Associates, Inc. (“McMahon”) | Promissory Note First and Second
Business Acquisition [Line Items]
Interest rate								3.50%
Project Design Consultants, LLC (“PDC”)
Business Acquisition [Line Items]
Total consideration paid										$ 14,200,000	14,178,000
Deferred tax assets acquired													$ 0
Deferred tax liabilities acquired													$ 0
Intangible assets											10,344,000
Goodwill											$ 2,776,000
Project Design Consultants, LLC (“PDC”) | Customer relationships
Business Acquisition [Line Items]
Weighted average useful lives											10 years
Project Design Consultants, LLC (“PDC”) | Contract rights
Business Acquisition [Line Items]
Weighted average useful lives											3 years
Project Design Consultants, LLC (“PDC”) | Promissory Note First
Business Acquisition [Line Items]
Promissory note interest rate										4.75%
Project Design Consultants, LLC (“PDC”) | Promissory Note Second
Business Acquisition [Line Items]
Price per share (in dollars per share)										$ 14.00
Promissory note interest rate													4.75%
Anchor Consultants, LLC (“Anchor”)
Business Acquisition [Line Items]
Total consideration paid										$ 4,000,000
Goodwill										$ 4,000,000
Anchor Consultants, LLC (“Anchor”) | Promissory Note
Business Acquisition [Line Items]
Price per share (in dollars per share)										$ 18.00
Promissory note interest rate										5.50%
SEI Engineering , LLC
Business Acquisition [Line Items]
Total consideration paid							$ 800,000
Cash, promissory note and assumed liabilities payment on business combination							400,000
Deferred tax assets acquired							0
Deferred tax liabilities acquired							$ 0
SEI Engineering , LLC | Promissory Note First and Second
Business Acquisition [Line Items]
Promissory note interest rate							6.25%
Spatial Acuity, LLC
Business Acquisition [Line Items]
Total consideration paid							$ 4,100,000
Issuance of common stock for acquisitions (in shares)							134,042
Price per share (in dollars per share)							$ 15.15
Equity issued in business combination, fair value							$ 2,000,000
Cash, promissory note and assumed liabilities payment on business combination							2,100,000
Deferred tax assets acquired							0
Deferred tax liabilities acquired							0
Additional consideration in form of stock, cash and notes							3,000,000
Liability to contingent consideration							$ 500,000
Spatial Acuity, LLC | Promissory Note First and Second
Business Acquisition [Line Items]
Promissory note interest rate							6.25%
H2H Geoscience Engineering, PLLC
Business Acquisition [Line Items]
Total consideration paid						$ 3,700,000
Cash, promissory note and assumed liabilities payment on business combination						1,400,000
Deferred tax assets acquired						0
Deferred tax liabilities acquired						$ 0
Measurement period adjustment									$ 49,000
H2H Geoscience Engineering, PLLC | Promissory Note First
Business Acquisition [Line Items]
Promissory note interest rate						7.00%
H2H Geoscience Engineering, PLLC | Promissory Note Second
Business Acquisition [Line Items]
Price per share (in dollars per share)						$ 18.00
Promissory note interest rate						7.00%
Richter & Associates, Inc. ("Richter")
Business Acquisition [Line Items]
Total consideration paid					$ 5,400,000
Issuance of common stock for acquisitions (in shares)					75,784
Price per share (in dollars per share)					$ 29.00
Equity issued in business combination, fair value					$ 2,200,000
Cash, promissory note and assumed liabilities payment on business combination					$ 3,200,000
Goodwill and intangible assets											$ 3,200,000
Richter & Associates, Inc. ("Richter") | Promissory Note First and Second
Business Acquisition [Line Items]
Interest rate					11.00%
Fisher Engineering, Inc. ("Fisher")
Business Acquisition [Line Items]
Total consideration paid				$ 5,200,000
Issuance of common stock for acquisitions (in shares)				31,521
Price per share (in dollars per share)				$ 27.66
Equity issued in business combination, fair value				$ 900,000
Cash, promissory note and assumed liabilities payment on business combination				4,300,000
Goodwill											4,200,000
Additional consideration in form of stock, cash and notes				$ 2,000,000
Liability to contingent consideration											1,800,000
Fisher Engineering, Inc. ("Fisher") | Promissory Note First and Second
Business Acquisition [Line Items]
Interest rate				8.25%
Hole Montes, Inc. ("Hole Montes")
Business Acquisition [Line Items]
Total consideration paid			$ 7,400,000
Issuance of common stock for acquisitions (in shares)			129,221
Price per share (in dollars per share)			$ 27.60
Equity issued in business combination, fair value			$ 3,600,000
Cash, promissory note and assumed liabilities payment on business combination			3,800,000
Goodwill											4,200,000
Additional consideration in form of stock, cash and notes			$ 900,000
Liability to contingent consideration											900,000
Hole Montes, Inc. ("Hole Montes") | Promissory Note First and Second
Business Acquisition [Line Items]
Interest rate			8.25%
MTX Surveying, LLC ("MTX")
Business Acquisition [Line Items]
Total consideration paid		$ 11,700,000
Issuance of common stock for acquisitions (in shares)		143,333
Price per share (in dollars per share)		$ 28.09
Equity issued in business combination, fair value		$ 4,000,000
Cash, promissory note and assumed liabilities payment on business combination		7,700,000
Goodwill											8,100,000
Additional consideration in form of stock, cash and notes		$ 3,000,000
Liability to contingent consideration											3,000,000
MTX Surveying, LLC ("MTX") | Promissory Note First and Second
Business Acquisition [Line Items]
Interest rate		5.00%
Advanced Applied Engineering, Inc. dba Infrastructure Engineers ("Infrastructure")
Business Acquisition [Line Items]
Total consideration paid	$ 8,500,000
Issuance of common stock for acquisitions (in shares)	141,794
Price per share (in dollars per share)	$ 29.81
Equity issued in business combination, fair value	$ 4,200,000
Cash, promissory note and assumed liabilities payment on business combination	4,300,000
Goodwill											6,500,000
Additional consideration in form of stock, cash and notes	$ 1,500,000
Liability to contingent consideration											$ 1,500,000
Advanced Applied Engineering, Inc. dba Infrastructure Engineers ("Infrastructure") | Promissory Note First and Second
Business Acquisition [Line Items]
Interest rate	8.25%

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Acquisitions - Summary of Changes in Preliminary Calculations of the Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands		3 Months Ended	6 Months Ended
	May 04, 2022	Sep. 30, 2022	Jun. 30, 2023	Dec. 31, 2022
Purchase Price Allocation:
Goodwill			$ 77,106	$ 53,210
McMahon Associates, Inc. (“McMahon”)
Business Acquisition [Line Items]
Total Purchase Price	$ 18,200		18,189
Purchase Price Allocation:
Accounts Receivable, net			8,456
Contract assets			1,017
Prepaid and other current assets			291
Property and equipment, net			949
Intangible assets			3,392
Other assets			96
Notes receivable - officers, employees, affiliates, current portion			19
Accounts payable and accrued liabilities, current portion			(3,688)
Contract liabilities			(841)
Finance leases - non-current			(134)
Post-retirement obligations, less current portion			(5,782)
Total identifiable assets			3,775
Goodwill			14,414
Net assets acquired			18,189
Project Design Consultants, LLC (“PDC”)
Business Acquisition [Line Items]
Total Purchase Price		$ 14,200	14,178
Purchase Price Allocation:
Accounts Receivable, net			2,199
Contract assets			926
Prepaid and other current assets			161
Property and equipment, net			489
Intangible assets			10,344
Accounts payable and accrued liabilities, current portion			(1,118)
Contract liabilities			(1,362)
Other non-current obligations			(273)
Finance leases - non-current			36
Total identifiable assets			11,402
Goodwill			2,776
Net assets acquired			$ 14,178

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Acquisitions - Summary of Results of Operations of Businesses Acquired From Dates of Acquisitions (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Business Acquisition [Line Items]
Gross Contract Revenue	$ 82,755	$ 62,399	$ 158,855	$ 114,860
Pre-tax Net Income	(2,259)	$ (510)	(1,936)	$ 831
McMahon Associates, Inc. (“McMahon”)
Business Acquisition [Line Items]
Gross Contract Revenue	9,569		19,983
Pre-tax Net Income	328		1,626
Project Design Consultants, LLC (“PDC”)
Business Acquisition [Line Items]
Gross Contract Revenue	3,727		6,833
Pre-tax Net Income	1,478		2,117
Business Acquired
Business Acquisition [Line Items]
Gross Contract Revenue	5,769		5,769
Pre-tax Net Income	$ 1,940		$ 1,940

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Acquisitions - Summary of Unaudited Proforma Results (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
McMahon Associates, Inc. (“McMahon”)
Business Acquisition [Line Items]
Gross Contract Revenue			$ 273,924	$ 183,595
Net Income			$ 5,948	$ 2,164
Business Acquired
Business Acquisition [Line Items]
Gross Contract Revenue	$ 182,656	$ 135,669
Net Income	$ 3,402	$ (94)

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Disaggregation of Revenue and Contract Balances - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue from contracts classified as lump sum	88.80%		89.20%
Revenue from exclusively time and material contracts	11.20%		10.80%
Remaining performance obligations	$ 234.6		$ 234.6
Contract with customer, liability, revenue recognized	$ 0.2	$ 1.1	$ 2.8	$ 2.5
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-07-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligations expects to recognize	93.90%		93.90%
Remaining performance obligations, expected satisfaction period	12 months		12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligations expects to recognize	6.10%		6.10%
Remaining performance obligations, expected satisfaction period	24 months		24 months

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Disaggregation of Revenue and Contract Balances - Summary of Disaggregated Revenues by Contract Type (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Disaggregation Of Revenue [Line Items]
Gross Contract Revenue	$ 82,755	$ 62,399	$ 158,855	$ 114,860
Gross contract revenue, Percentage	100.00%	100.00%	100.00%	100.00%
Fixed fee
Disaggregation Of Revenue [Line Items]
Gross Contract Revenue	$ 73,508	$ 58,488	$ 141,753	$ 108,074
Gross contract revenue, Percentage	88.80%	93.70%	89.20%	94.10%
Time-and-materials
Disaggregation Of Revenue [Line Items]
Gross Contract Revenue	$ 9,247	$ 3,911	$ 17,102	$ 6,786
Gross contract revenue, Percentage	11.20%	6.30%	10.80%	5.90%

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Contracts in Progress - Summary of Costs and Estimated Earnings on Contracts (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Contract with Customer, Contract Asset, Contract Liability, and Receivable [Abstract]
Costs incurred on uncompleted contracts	$ 387,057	$ 279,173
Estimated contract earnings in excess of costs	404,240	398,791
Estimated contract earnings to date	791,297	677,964
Less: billed to date	(775,293)	(668,013)
Net contract assets	$ 16,004	$ 9,951

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Notes Receivable - Summary of Notes Receivable (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Dec. 31, 2022	Jun. 30, 2023
Accounts Notes And Loans Receivable [Line Items]
Unrelated third party - Currently no interest is being accrued on this note. The note receivable matures in December 2023.	$ 903	$ 903
Less: current portion
Officers, employees and affiliates	(1,016)	(938)
Unsecured Notes Receivable
Accounts Notes And Loans Receivable [Line Items]
Officers, employees and affiliated entities - Interest accrues annually at rates ranging from 0.0% - 5.5%. The notes receivable mature through December 2024.	2,433	2,325
Unrelated third party - Currently no interest is being accrued on this note. The note receivable matures in December 2023.	903	903
Total:	3,336	3,228
Less: current portion
Officers, employees and affiliates	(1,016)	(938)
Noncurrent portion	$ 2,320	$ 2,290
Unsecured Notes Receivable | Maximum
Less: current portion
Notes receivable, interest		5.50%
Unsecured Notes Receivable | Minimum
Less: current portion
Notes receivable, interest		0.00%
Unsecured Notes Receivable, Unrelated Third Party
Less: current portion
Notes receivable, interest	0.00%	0.00%

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Notes Receivable - Additional Information (Details) - Unsecured Notes Receivable	6 Months Ended
	Jun. 30, 2023
Minimum
Accounts Notes And Loans Receivable [Line Items]
Notes receivable, interest	0.00%
Maximum
Accounts Notes And Loans Receivable [Line Items]
Notes receivable, interest	5.50%

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Property and Equipment, Net - Summary of Property and Equipment for Fixed Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Property Plant And Equipment [Line Items]
Total:	$ 20,870	$ 18,843
Less: accumulated depreciation	(13,506)	(12,319)
Property and Equipment, net of finance leased assets	7,364	6,524
Computer equipment
Property Plant And Equipment [Line Items]
Total:	2,218	2,101
Survey equipment
Property Plant And Equipment [Line Items]
Total:	5,409	5,088
Vehicles
Property Plant And Equipment [Line Items]
Total:	1,852	1,032
Furniture and fixtures
Property Plant And Equipment [Line Items]
Total:	2,446	2,398
Leasehold improvements
Property Plant And Equipment [Line Items]
Total:	8,194	7,727
Software
Property Plant And Equipment [Line Items]
Total:	435	316
Fixed Assets Pending Lease Financing
Property Plant And Equipment [Line Items]
Total:	$ 316	$ 181

XML

Property and Equipment, Net - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Property, Plant and Equipment [Abstract]
Depreciation expense for fixed assets	$ 700	$ 300	$ 1,200	$ 600
Amortization of right-of-use assets	$ 1,778	$ 1,776	$ 3,448	$ 3,401

XML

Property and Equipment, Net - Summary of Property and Equipment for Capital Leased Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Property Plant And Equipment [Line Items]
Total:	$ 26,560	$ 23,043
Less: accumulated amortization on leased assets	(7,050)	(4,463)
Finance lease assets	19,510	18,580
Equipment
Property Plant And Equipment [Line Items]
Total:	17,722	16,256
Vehicles
Property Plant And Equipment [Line Items]
Total:	$ 8,838	$ 6,787

XML

Goodwill - Summary of Goodwill Resulting From Business Acquisitions (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Beginning balance	$ 53,210
Goodwill Acquired	23,896
Ending balance	$ 77,106

XML

Intangible Assets - Summary of Total Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets, Net [Abstract]
Accumulated Amortization	$ (8,459)	$ (4,794)
Net Balance	38,108
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract]
Gross Amount	48,222	32,744
Net Balance	39,763	27,950
Domain name
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract]
Gross Amount	281	281
Licensing rights
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract]
Gross Amount	1,374	1,400
Customer relationships
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	35,909	23,595
Accumulated Amortization	(3,825)	(2,330)
Net Balance	32,084	21,265
Contract rights
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	10,471	7,281
Accumulated Amortization	(4,568)	(2,416)
Net Balance	5,903	4,865
Leasehold
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	187	187
Accumulated Amortization	(66)	(48)
Net Balance	$ 121	$ 139

XML

Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Intangible Assets [Line Items]
Amortization of intangible assets	$ 2,300	$ 800	$ 3,665	$ 1,241
Domain name
Intangible Assets [Line Items]
Intangible assets acquired			1,700
Licensing rights
Intangible Assets [Line Items]
Intangible assets acquired			$ 1,700

XML

Intangible Assets - Summary of Weighted Average Useful Lives of Intangible Assets by Asset Class Used for Straight-line Expense Purposes (Details)	Jun. 30, 2023	Dec. 31, 2022
Customer relationships
Finite Lived Intangible Assets [Line Items]
Weighted average useful lives	8 years 1 month 6 days	11 years 11 months 19 days
Contract rights
Finite Lived Intangible Assets [Line Items]
Weighted average useful lives	1 year 29 days	2 years 5 months 19 days
Leasehold
Finite Lived Intangible Assets [Line Items]
Weighted average useful lives	5 years 8 months 26 days	8 years 18 days

XML

Intangible Assets - Summary of Future amortization (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2023	$ 6,256
2024	7,403
2025	5,930
2026	5,390
2027	2,142
Thereafter	10,987
Net Balance	$ 38,108

XML

Revolving Credit Facility and Fixed Credit Facilities - Additional Information (Details) $ in Thousands			3 Months Ended		6 Months Ended
	Aug. 31, 2020	Aug. 31, 2018	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) CreditFacility	Jun. 30, 2022 USD ($)	Aug. 03, 2023 USD ($)	Aug. 02, 2023 USD ($)	Dec. 31, 2022 USD ($)	Nov. 11, 2022 USD ($)
Line Of Credit Facility [Line Items]
Debt instrument outstanding amount			$ 29,665		$ 29,665
Revolving Credit Facility | Subsequent Event
Line Of Credit Facility [Line Items]
Line of credit maximum borrowing capacity								$ 70,000
Bank of America
Line Of Credit Facility [Line Items]
Line of credit interest expense			$ 12	$ 11	$ 200	$ 21
Bank of America | Term Loan
Line Of Credit Facility [Line Items]
Debt instrument payment terms					thirty-six equal monthly installments
Interest rate			3.49%
Debt instrument outstanding amount			$ 0		$ 0
Bank of America | Notes Payable | Term Loan
Line Of Credit Facility [Line Items]
Debt instrument principal amount			$ 1,000		$ 1,000
Bank of America | Revolving Credit Facility
Line Of Credit Facility [Line Items]
Number of credit facilities | CreditFacility					1
Line of credit interest rate			9.25%	2.11%	9.25%	2.11%
Line of credit outstanding amount			$ 21,200		$ 21,200				$ 0
Line of credit maximum borrowing capacity										$ 50,000
Bank of America | Revolving Credit Facility | Subsequent Event
Line Of Credit Facility [Line Items]
Line of credit maximum borrowing capacity							$ 70,000
Bank of America | Non-Revolving Credit Facility
Line Of Credit Facility [Line Items]
Number of credit facilities | CreditFacility					3
Bank of America | Fixed Line 1
Line Of Credit Facility [Line Items]
Line of credit interest rate			7.06%	3.51%	7.06%	3.51%
Line of credit outstanding amount			$ 49		$ 49				100
Line of credit remaining borrowing capacity			0		$ 0
Line of credit frequency of principal payments description		sixty equal monthly installments
Bank of America | Fixed Line 1 | Secured Overnight Financing Rate (SOFR) Simple ARR
Line Of Credit Facility [Line Items]
Line of credit basis spread on variable rate					2.00%
Bank of America | Fixed Line 1 | Notes Payable
Line Of Credit Facility [Line Items]
Line of credit maximum borrowing capacity			1,000		$ 1,000
Bank of America | Fixed Line 2
Line Of Credit Facility [Line Items]
Line of credit outstanding amount			400		400				$ 500
Line of credit remaining borrowing capacity			0		0
Line of credit frequency of principal payments description	sixty equal monthly installments
Bank of America | Fixed Line 2 | Notes Payable
Line Of Credit Facility [Line Items]
Line of credit maximum borrowing capacity			$ 1,000		$ 1,000

XML

Notes Payable - Schedule of Notes Payable (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Notes payable	$ 29,172	$ 26,444
Less: current portion	(12,438)	(10,168)
Notes payable, less current portion	16,734	16,276
Owners of Acquired Entity | Related Party
Debt Instrument [Line Items]
Notes payable	6,803	8,134
Related Parties | Shareholders
Debt Instrument [Line Items]
Discounts on notes payable issued as consideration in acquisitions:	(135)	(177)
Related Parties | Owners of Acquired Entity
Debt Instrument [Line Items]
Discounts on notes payable issued as consideration in acquisitions:	(358)	(581)
Unrelated Third Parties | Purchase of Software and Vehicles | Nonrelated Party
Debt Instrument [Line Items]
Notes payable	40	55
Unrelated Third Parties | Purchase of Intangible Asset | Nonrelated Party
Debt Instrument [Line Items]
Notes payable	50	50
Unrelated Third Parties | Fixed Line | Nonrelated Party
Debt Instrument [Line Items]
Notes payable	$ 491	$ 773
Notes Payable | Convertible Notes Payable | Minimum
Debt Instrument [Line Items]
Interest rate	4.75%	4.75%
Notes Payable | Convertible Notes Payable | Maximum
Debt Instrument [Line Items]
Interest rate	7.00%	7.00%
Notes Payable | Shareholders | Minimum
Debt Instrument [Line Items]
Interest rate	3.25%	3.25%
Notes Payable | Shareholders | Maximum
Debt Instrument [Line Items]
Interest rate	11.00%	11.00%
Notes Payable | Owners of Acquired Entity | Minimum
Debt Instrument [Line Items]
Interest rate	3.25%	3.25%
Notes Payable | Owners of Acquired Entity | Maximum
Debt Instrument [Line Items]
Interest rate	7.00%	7.00%
Interest Rate 3.25% - 7.50% | Shareholders | Related Party
Debt Instrument [Line Items]
Notes payable	$ 15,942	$ 11,515
Interest Rate 4.75% - 7.00% | Convertible Notes Payable | Related Party
Debt Instrument [Line Items]
Notes payable	$ 6,339	$ 6,675

XML

Notes Payable - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Aug. 31, 2022	Jul. 31, 2022
Project Design Consultants, LLC (“PDC”) | Convertible Notes Payable
Debt Instrument [Line Items]
Promissory notes convertible to common stock							$ 4.0
Promissory note interest rate							4.75%
Price per share (in dollars per share)	$ 14.00		$ 14.00				$ 14.00
Number of business days notice to the company							10 days
Net proceeds from sale of common stock			$ 0.3
Number of shares issued and sold (in shares)			24,001
Anchor Consultants, LLC (“Anchor”) | Convertible Notes Payable
Debt Instrument [Line Items]
Promissory notes convertible to common stock						$ 1.1
Promissory note interest rate						5.50%
Price per share (in dollars per share)						$ 18.00
Number of business days notice to the company						10 days
H2H Geoscience Engineering, PLLC | Convertible Notes Payable
Debt Instrument [Line Items]
Promissory notes convertible to common stock					$ 1.6
Promissory note interest rate					7.00%
Price per share (in dollars per share)					$ 18.00
Number of business days notice to the company					10 days
Notes Payable
Debt Instrument [Line Items]
Interest expense	$ 0.5	$ 0.1	$ 0.9	$ 0.2

XML

Notes Payable - Schedule of Future Principal Payments on Notes Payable (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Debt Instruments [Abstract]
2023	$ 7,221
2024	11,230
2025	7,105
2026	2,917
2027	1,192
Thereafter	0
Total	$ 29,665

XML

Pension and Post-retirement Benefit Obligations - Net Periodic Benefit Costs (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Postemployment Benefits [Abstract]
Service costs	$ 53,000	$ 0	$ 64,000	$ 0
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Interest Cost, Statement Of Income Or Comprehensive Income Extensible List Not Disclosed Flag			true
Interest costs	25,000	0	$ 93,000	0
Amortization of net gain	(10,000)	0	(21,000)	0
Net periodic benefit cost	68,000	$ 0	136,000	$ 0
Required minimum contributions for the pension plans	$ 0		$ 0

XML

Related Party Transactions - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Aug. 31, 2022
Related Party Transaction [Line Items]
Accounts receivable	$ 81,874,000		$ 81,874,000		$ 64,443,000
Related Party
Related Party Transaction [Line Items]
Related party transactions due	100,000		100,000		200,000
Related Party | 2015 Acquisition
Related Party Transaction [Line Items]
Related party transactions owed	100,000		100,000		200,000
Related Party | KTA Group Inc.
Related Party Transaction [Line Items]
Related party transactions owed	8,100,000		8,100,000		11,500,000
BCG Chantilly, LLC | Related Party
Related Party Transaction [Line Items]
Related party transactions owed	0		0		0
Rent expense	21,000	$ 21,000	41,000	$ 41,000
Bowman Lansdowne Development L L C | President, Chairman and Chief Executive Officer
Related Party Transaction [Line Items]
Notes receivable	500,000		500,000		500,000
Lansdowne Development Group, LLC | Related Party
Related Party Transaction [Line Items]
Notes receivable	400,000		400,000		400,000
Accounts receivable	100,000		100,000		100,000
Bowman Realty Investments2010 L L C | President, Chairman and Chief Executive Officer
Related Party Transaction [Line Items]
Notes receivable	200,000		200,000		200,000
Alwington Farm Developers, LLC | Related Party
Related Party Transaction [Line Items]
Notes receivable	1,200,000		1,200,000		$ 1,200,000
MREC Shenandoah VA, LLC | President, Chairman and Chief Executive Officer
Related Party Transaction [Line Items]
Invoices	100,000	100,000	100,000	100,000
Received payments	100,000	100,000	100,000	100,000
Administrative, Accounting and Project Management Services
Related Party Transaction [Line Items]
Related party transactions due	30,000	38,000	30,000	38,000
Administrative, Accounting and Project Management Services | Related Party
Related Party Transaction [Line Items]
General and administrative expense			29,000	33,000
Reimbursement Obligations | President, Chairman and Chief Executive Officer
Related Party Transaction [Line Items]
Related party transactions owed	$ 100,000		$ 100,000
Mr. Bowman, Mr. Bruen and Mr. Hickey | BCG Chantilly, LLC | Related Party
Related Party Transaction [Line Items]
Ownership percentage	63.60%		63.60%
Lake Frederick Holdings, LLC | MREC Shenandoah VA, LLC
Related Party Transaction [Line Items]
Ownership percentage	92.00%		92.00%
Bowman Lansdowne Development, LLC and Bowman Realty Investments 2013 LLC | MREC Shenandoah VA, LLC
Related Party Transaction [Line Items]
Ownership percentage	8.00%		8.00%
Mr. Bowman | MREC Shenandoah VA, LLC
Related Party Transaction [Line Items]
Ownership percentage	100.00%		100.00%
Gregory Bowman | Related Party
Related Party Transaction [Line Items]
Related party transactions due	$ 71,000	$ 65,000	$ 71,000	$ 65,000
Sunrise Asset Management
Related Party Transaction [Line Items]
Ownership percentage						100.00%

XML

Employee Stock Purchase and Stock Incentive Plans - Additional Information (Details) - USD ($)		3 Months Ended	6 Months Ended	12 Months Ended
	Apr. 30, 2021	Jun. 30, 2023	Jun. 30, 2023	Dec. 31, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
New option shares granted (in shares)			0
Number of shares vested (in shares)			(2,502,872)
Number of unvested stock awards vesting start date			Jul. 01, 2023
Number of unvested stock awards vesting end date			Dec. 31, 2027
Restricted Shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options vesting period			4 years
Number of shares granted (in shares)			632,091
Number of shares vested (in shares)			(648,215)
Performance Based Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares granted (in shares)			245,710
Number of shares vested (in shares)			0
Two Thousand Twenty One Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock purchase percentage			15.00%
Period prior to last day of offering period	30 days
Bowman Consulting Group Ltd. 2021 Omnibus Equity Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
New option shares granted (in shares)			0
Intrinsic value per share of options (in dollars per share)			$ 25.60	$ 15.57
Cash payments received from exercise of options		$ 14,601	$ 14,601
Compensation costs		0	0
Unrecognized compensation costs		$ 0	$ 0
Common stock authorized and reserved for issuance (in shares)		4,128,557	4,128,557
Percentage of common stock reserve automatically increases			5.00%
Bowman Consulting Group Ltd. 2021 Omnibus Equity Incentive Plan | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options vesting period			2 years
Bowman Consulting Group Ltd. 2021 Omnibus Equity Incentive Plan | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options vesting period			5 years
Bowman Consulting Group Ltd. Stock Bonus Plan | Restricted Shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares granted (in shares)			0
2021 Executive Officers Long Term Incentive Plan | Performance Based Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options vesting period			2 years 10 months 28 days
Number of shares granted (in shares)			245,710

XML

Employee Stock Purchase and Stock Incentive Plans - Schedule of Stock Issuance Activity Under Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-Based Payment Arrangement [Abstract]
Total purchase price paid by employees for shares sold	$ 379	$ 311	$ 763	$ 593
Number of shares sold (in shares)			31,097

XML

Employee Stock Purchase and Stock Incentive Plans - Summary of Status of Stock Options Exercised, Including Substantive Options (Details)	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Number of shares
Outstanding, beginning balance (in shares) | shares	10,030
Granted (in shares) | shares	0
Exercised (in shares) | shares	(2,419)
Expired or cancelled (in shares) | shares	0
Outstanding, ending balance (in shares) | shares	7,611
Weighted Average Exercise Price
Beginning balance (in dollars per share) | $ / shares	$ 5.99
Granted (in dollars per share) | $ / shares	0
Exercised (in dollars per share) | $ / shares	5.96
Expired or cancelled (in dollars per share) | $ / shares	0
Ending balance (in dollars per share) | $ / shares	$ 6.00

XML

Employee Stock Purchase and Stock Incentive Plans - Summary of Information about Options Outstanding and Exercisable (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]
Exercise Price (in dollars per share)	$ 6.28	$ 6.28
Total Outstanding (in shares)	7,611	10,030
Weighted Average Remaining Life (Years)	5 years	5 years
Weighted Average Exercise Price (in dollars per share)	$ 6.00	$ 5.99
Total Exercisable (in shares)	7,611	10,030

XML

Employee Stock Purchase and Stock Incentive Plans - Summary of Activity of Restricted Shares Subject to Forfeiture (Details)	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Number of shares
Vested (in shares)	(2,502,872)
Restricted Shares
Number of shares
Beginning balance (in shares)	1,837,309
Granted (in shares)	632,091
Vested (in shares)	(648,215)
Cancelled (in shares)	(11,452)
Ending balance (in shares)	1,809,733
Weighted Average Grant Price
Beginning balance (in dollars per share) | $ / shares	$ 14.33
Granted (in dollars per share) | $ / shares	39.84
Vested (in dollars per share) | $ / shares	12.26
Cancelled (in dollars per share) | $ / shares	18.00
Ending balance (in dollars per share) | $ / shares	$ 17.79

XML

Employee Stock Purchase and Stock Incentive Plans - Summary of Activity of Performance Stock Units Subject to Forfeiture (Details)	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Number of shares
Vested (in shares)	(2,502,872)
Performance Based Stock Units
Number of shares
Beginning balance (in shares)	447,429
Granted (in shares)	245,710
Vested (in shares)	0
Cancelled (in shares)	0
Ending balance (in shares)	693,139
Weighted Average Grant Price
Beginning balance (in dollars per share) | $ / shares	$ 12.95
Granted (in dollars per share) | $ / shares	22.94
Vested (in dollars per share) | $ / shares	0
Cancelled (in dollars per share) | $ / shares	0
Ending balance (in dollars per share) | $ / shares	$ 16.49

XML

Employee Stock Purchase and Stock Incentive Plans - Summary of Change in Liability to Common Shares Subject to Repurchase and Associated Non-Cash Compensation Expense (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]
Beginning Balance	$ 0	$ 7
Non-cash compensation from ratable vesting	0	0
Non-cash compensation from change in fair value of liability	0	0
Other stock activity, net	0	(7)
Reclassification upon modification	0	0
Ending balance	$ 0	$ 0

XML

Employee Stock Purchase and Stock Incentive Plans - Summary of Future expense of Unvested Awards (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Schedule Of Future Expense Of Unvested Awards [Abstract]
2023	$ 12,414
2024	15,728
2025	7,177
2026	694
Thereafter	13
Total	$ 36,026

XML

Leases - Additional Information (Details) $ in Millions	Jun. 30, 2023 USD ($)
Lessee, Lease, Description [Line Items]
Bargain purchase price	$ 2.4
Finance lease liability	$ 20.8
Minimum
Lessee, Lease, Description [Line Items]
Capital leases payment terms on lease agreements	30 months
Maximum
Lessee, Lease, Description [Line Items]
Capital leases payment terms on lease agreements	50 months

XML

Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Assets:
Operating lease assets	$ 39,476	$ 30,264
Finance lease assets	19,510	18,580
Total lease assets	$ 58,986	$ 48,844
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Property and equipment, net	Property and equipment, net
Current:
Operating lease liabilities	$ (8,153)	$ (6,949)
Finance lease liabilities	(6,001)	(5,297)
Total current lease liabilities	(14,154)	(12,246)
Non-Current Liabilities
Operating lease liabilities	(36,610)	(28,087)
Finance lease liabilities	(14,619)	(14,254)
Total non-current lease liabilities	$ (51,229)	$ (42,341)

XML

Leases - Selected Financial Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Leases [Abstract]
Amortization of right-of-use assets	$ 2,711	$ 1,948	$ 5,204	$ 3,679
Finance lease cost:
Amortization of right-of-use assets	1,778	1,776	3,448	3,401
Interest on lease liabilities	367	227	723	439
Sublease Income	(22)	0	(22)	0
Total lease cost	$ 4,834	$ 3,951	9,353	7,519
Cash paid for amounts included in the measurements of lease liabilities
Operating cash flows from operating leases			8,510	7,008
Operating cash flows from finance leases			722	439
Financing cash flows from finance leases			3,285	2,963
Financing cash flows from finance leases			13,255	25,733
Right-of-use assets obtained in exchange for new finance leases			$ 4,377	$ 4,618
Weighted average remaining lease term (in years):
Operating leases	5 years 5 months 26 days		5 years 5 months 26 days		5 years 7 months 13 days
Finance leases	3 years		3 years		3 years 3 months 10 days
Weighted average discount rates:
Operating leases	6.90%		6.90%		7.10%
Finance leases	7.40%		7.40%		7.40%

XML

Leases - Schedule of Future Minimum Commitments Under Leases (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Operating Lease
2023 (six months remaining)	$ 5,404
2024	10,511
2025	9,795
2026	8,127
2027	7,101
Thereafter	13,383
Total lease payments	54,321
Less: Amounts representing interest	(9,558)
Total lease liabilities	44,763
Finance Lease
2023 (six months remaining)	3,788
2024	6,900
2025	6,640
2026	3,205
2027	237
Thereafter	0
Total lease payments	20,770
Less: Amounts representing interest	(2,580)
Total lease liabilities	$ 18,190

XML

Subsequent Events - Additional Information (Details) - Revolving Credit Facility - USD ($) $ in Millions	Aug. 03, 2023	Aug. 02, 2023	Nov. 11, 2022
Subsequent Event
Subsequent Event [Line Items]
Line of credit maximum borrowing capacity		$ 70
Bank of America
Subsequent Event [Line Items]
Line of credit maximum borrowing capacity			$ 50
Bank of America | Subsequent Event
Subsequent Event [Line Items]
Line of credit maximum borrowing capacity	$ 70