Bowman Consulting Group Ltd. Q3 FY2025 Earnings Call

Good morning. My name is Jasmine, and I will be the conference operator today. At this time, I would like to welcome everyone to the Bowman Consulting Third Quarter 2025 Conference Call. Please note that many of the comments made today are considered forward-looking statements under federal securities laws. As described in the company's filing with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and the company is not obligated to publicly update or revise these forward-looking statements. In addition, on today's call, the company will discuss certain non-GAAP financial information such as adjusted EBITDA, adjusted net income and net servicing billing. You can find this information together with the reconciliations to the most directly comparable GAAP information in the company's earnings press release filed with the SEC on the company's Investor Relations website at investors.bowman.com. Management will deliver prepared remarks, after which they will take questions from research analysts. Replay for the call will be available on the company's Investor Relations website. Mr. Bowman, you may begin your prepared remarks.

Thank you, Jasmine. Good morning, everyone. Thank you for joining our third quarter earnings call. Bruce Labovitz, our CFO, is here with me this morning. I'm going to start today's call with a welcome to all new Bowman employees who joined us this quarter. After my introductory remarks, I'll turn the call over to Bruce, who will cover our financial performance. I'll then end the call with closing statements before opening it to Q&A. Turn to Slide 3. The third quarter marked an important milestone in our continued evolution. For the first time, we surpassed a $500 million annualized gross revenue pace. This is a meaningful achievement, and the fact that we are ahead of schedule on this milestone demonstrates both the strength of our business model and the capabilities of our skilled team of professionals. For the third quarter, we delivered 11% year-over-year growth in both gross and net revenue and a 7.6% growth in adjusted EBITDA while maintaining healthy cash flow generation and a solid balance sheet. Our net revenue for the quarter was $112 million and was supported by strong activity in transportation, power and utilities, and energy. Together, these end markets grew over 20% during the quarter and account for more than 40% of our top line. Importantly, our backlog grew nearly 18% year-over-year to $448 million. This sustained growth reflects continued demand across our end markets. Our book-to-bill ratio continues to be above 1, a clear indicator of the momentum we are seeing as we head toward the end of 2025 and into 2026. In fact, bookings in the fourth quarter are once again outpacing the prior quarter. We've worked hard over the past year to regain our footing, and I'm proud to report that today we are a larger, more efficient, and more resilient organization than ever before. Our growing base of recurring public sector work and a solid foundation of private demand positions us well for the years ahead. With that, I'm going to turn the call over to Bruce to review the financials in more detail. Bruce?

Great. Thank you, Gary, and good morning, everyone. While the third quarter marked an important milestone for Bowman in terms of reaching the $500 million annualized gross revenue rate, it also represents our achievement of two basic commitments we made to our shareholders this time last year, to prioritize GAAP profitability and to improve our conversion of earnings to cash. This year, we've been hypervigilant about delivering on these two basic commitments because unlike political, macroeconomic, and labor market uncertainties, these are outcomes we control. We're pleased to have delivered on these commitments. For the third quarter and the nine months ending September 30, we dramatically increased GAAP net income to $6.6 million and $10.9 million, respectively, compared to net income of $700,000 and a loss of $2.9 million for the same period last year. Concurrently, we more than doubled our cash flow from operations to $26.5 million from $12.4 million, affirming the capital efficiency of our effort. We achieved this improved performance in part through consistent and sequential growth in billed revenue throughout this year with an 11% year-over-year increase in net revenue in the third quarter with no erosion of our net to gross ratio. Organic net revenue, which excludes revenue from acquisitions closed after September 30, 2024, grew 6.6% for the third quarter and now stands at approximately 11% through nine months. Also contributing to our improved profitability was our ability to achieve the benefits of scale with revenue growth rates that outpace overhead growth rates. To that end, as revenue grew year-over-year, total overhead, we define as COGS and SG&A, was down 290 basis points as a percentage of net revenue for the quarter at 89.5% and down 500 basis points for the nine months at 89%. This disciplined approach to overhead growth will be a significant contributor to sustained positive GAAP earnings and an industry-leading margin profile. Turning to some non-GAAP metrics. Adjusted EBITDA in the quarter increased by 8% to $18.3 million, representing a 16.3% margin on net revenue with adjusted EPS of $0.61, doubling Q3 2024. Through nine months, adjusted EBITDA is up nearly 25% to $53 million and a margin of 16.6% on net revenue, a 150 basis point year-over-year expansion with adjusted EPS of $1.26, again, doubling adjusted EPS in the same period last year. Absolute growth in revenue was broad-based with Transportation up 20%, Power, Utilities and Energy up 17%, and Building Infrastructure up 8%. Natural Resources & Imaging, to which we allocated all Surdex-related manned aerial and high-resolution mapping revenue last year saw a slight decline as we now allocate that revenue in a more deliberate manner across verticals. On an organic basis, Building Infrastructure grew 6%, Transportation grew 10%, Power and Utilities grew 13%, and Natural Resources & Imaging grew around 1%. In previous quarterly calls, we've been asked about the relative gross margins of our primary verticals. We've suggested we believe they are relatively equal apart from Transportation, which has a lower contribution margin based on the nature of its primarily cost-plus contracts. To corroborate this assertion, we calculated the gross margin of each vertical for the third quarter, during which gross margin was 53% and concluded that our representation was accurate. During the quarter, gross margins by vertical were 56% for both Building Infrastructure and Power and Utilities, 57% for Natural Resources & Imaging, and 46% for Transportation. With Building Infrastructure, gross margin is benefited by more fixed fee contracting. With Natural Resources & Imaging, gross margin is advantaged from a disproportionate use of labor leveraging technology. With Transportation, we enjoy meaningfully longer and larger government contracts that have lower labor multipliers, but generally generate higher utilizations and overhead leverage along with lower turnover costs. We will include this gross margin analysis in our quarterly presentations going forward. We ended the quarter with a record $448 million backlog, up 18% year-over-year, with 38% of that backlog from Building Infrastructure, 30% for Transportation, 23% from Power and Utilities, and 9% from Natural Resources & Imaging. This imbalance relative to revenue should indicate continuing diversification of our revenue mix, but it's likely not as dramatic as the percentages in backlog today reflect. Operating cash flow totaled $10.2 million for the quarter and sits at $26.5 million year-to-date, both more than twice last year's levels. While we are pleased with this significant increase in conversion, we're confident there is room for continuing improvement. Our balance sheet remains a strength and provides a solid foundation for growth. We ended the quarter with $16 million in cash and $57 million drawn on our revolver and net debt of approximately $105 million with a net leverage ratio of 1.5x trailing 12 months adjusted EBITDA. After quarter end, we expanded our revolver to $210 million from $140 million, adding PNC Bank to the existing Bank of America and TD Bank syndicate. As a result, we have roughly $150 million in available liquidity for investment in growth initiatives. Our internal innovation incubator, the BIG Fund, continues to produce high-value ideas and opportunities that present the prospect of tangible returns for us long term. We're actively engaged in advancing concepts that accelerate revenue growth through the deployment of proprietary AI-enabled asset control kits, which extend engagement with clients throughout the asset lifecycle. With concepts that expand the application of the proprietary technology tools we acquired in the recent ORCaS acquisition, which drastically reduced the time it takes to perform repetitive feasibility and planning functions, thereby unlocking additional labor utilization. Also concepts that connect all Bowman operating systems and platforms with AI-enabled capabilities, which empower employees to ask Bowman plain English questions, the timely informed answers to which improve business acquisition efforts and streamline proposal generation, estimation, and profitable project execution. Lastly, we're working on ideas that modify, extend, and evolve the inherent capabilities and uses of our high-end geospatial assets to expand their applications, improve the quality of capture, extend revenue opportunities, shorten delivery times and increase return on investment. All investments in innovation are measured against defined return thresholds, ensuring innovation spending meets the same rigorous financial discipline as acquisitions. To date, we have expended a little bit over $300,000 on advancing these ideas, the cost of which are not added back to adjusted EBITDA and the benefits of which are not yet contemplated in our current projections. And while not a BIG Fund project, we also completed the upgrade of our accounting and enterprise management platform this quarter, an effort that consumed a meaningful amount of time and energy, but will be a solid foundation for our next phase of growth. These costs will likewise not add back to adjusted EBITDA. It wouldn't be an earnings call if I didn't reference tax, so here it goes. Following enactment of OB3, we filed method change notifications with the IRS that allowed us to unwind our uncertain tax position with retroactive audit protection. The change in law and associated adoption by Bowman of the new standards released approximately $52 million of deferred tax assets and other non-current liabilities on our balance sheet and released $3.5 million in P&I accruals, which had previously run through the tax expense. In addition to committing to GAAP profitability and cash flow conversion, we also committed to the reduction of non-cash stock compensation as a percentage of revenue. For the first nine months of 2025, stock-based compensation totaled $14.2 million or 4.4% of net service billing, down from 7.3% a year earlier. Excluding about $1 million of pre-IPO related issuances, adjusted stock-based compensation was approximately 4.1% of net revenue. As we've discussed in the past, these pre-IPO grant expenses represent the runoff of GAAP costs related to awards issued prior to our IPO in 2021 and are not part of normalized long-term incentive costs. We expect total non-cash stock compensation for 2025 and '26 to be roughly $19 million and $20.5 million, respectively, which is consistent with our pledge to reduce equity compensation as a percentage of revenue while balancing its benefits for recruiting, retention, and efficient capital allocation. Thank you for your continued confidence in Bowman. With that, I'll turn the call back over to Gary.

Okay. Thank you, Bruce. As Bruce mentioned, our improved profitability and working capital management once again drove strong cash flow this quarter, with cash conversion now at about 50% year-to-date. Our margins and cash efficiency place us solidly in line with the best performing firms in the E&C space. Now let me take a few minutes to share a summary of our market performance and outlook as we move into 2026. Transportation remains one of our most stable and resilient end markets, delivering double-digit growth year-to-date. Our expanding client base spans a broader range of state and municipal transportation agencies than ever before. We're deeply engaged across state DOT programs and large local agencies throughout the Pacific Northwest, Midwest, and East Coast, where our teams are supporting multiyear bridge, roadway, and multimodal infrastructure programs. Our long-standing relationship with DOTs continues to be a key competitive advantage, creating recurring opportunities as agencies seek partners with both specialized technical expertise and the capacity to scale across geographies. We currently have strong bridge and roadway pipelines with backlog visibility through 2026. We continue to benefit from recurring construction management and inspection programs with multiple state agencies, including a major multiyear assignment with Illinois. Our ports and harbors practice, which is part of our Transportation segment, continues to gain momentum with coastal and port authorities, extending our reach into critical intermodal and maritime infrastructure projects in regions including Houston, Philadelphia, and the Pacific Northwest. We have a growing active backlog in ports and harbors with anticipated wins continuing through 2026 in existing and new geographies. Overall, we expect transportation to maintain steady, healthy growth. Less than 25% of IIJA funds have been released so far for permitted transportation projects, which we believe, coupled with state programs, ensures multiyear nationwide demand runway. We expect transportation will continue to provide the backbone of stability and recurring revenue across our portfolio. Our Power, Utilities & Energy division continues to be our fastest-growing market, up 38% year-over-year and driven by national investment in electrification, renewables, grid modernization, and data infrastructure. The recent acquisitions of Sierra Overhead Analytics, ORCaS, and Lazen Power Engineering significantly enhance our strategic positioning within this high-growth market. Sierra and its affiliate ORCaS expand our capabilities in technology-enabled engineering, adding automation, precision mapping, hydrology, and optimization tools that improve project delivery and efficiency across renewable energy, data center, and utility scale infrastructure design. These digital solutions strengthen our ability to provide faster, smarter, and more cost-efficient design workflows to clients in the power and energy transition space. The addition of Lazen establishes our platform in high-voltage overhead transmission line design, immediately positioning us to compete in one of the fastest-growing recurring revenue segments of the power industry. Lazen's expertise enhances our credentials with major utilities and transportation operators, transmission operators, while complementing our advanced geospatial and aerial imaging services for power corridor mapping. Together, these acquisitions broaden our reach across the generation to grid continuum, connecting our existing strengths in site design, renewables, and data centers with the infrastructure that delivers power across the U.S. Looking forward, Power, Utilities & Energy represent a long-term growth engine for us. We expect continued revenue and margin expansion in 2026 as integration matures, our national footprint expands, and our clients increasingly turn to us for end-to-end power infrastructure solutions. Our well-balanced Building Infrastructure business grew by just over 8% year-over-year in gross revenue, reflecting solid execution in public and mixed-use work that continues to balance softer conditions in the residential space. While some private development remains slightly constrained by interest rates, we see clear rebound potential emerging in mid- to late 2026 as financing conditions improve. Our current Building Infrastructure projects continue to generate long-term revenue visibility through 2027, and we remain well positioned to capture renewed private sector growth as market conditions improve. Our Natural Resources & Imaging segment remains a steady performer and margin stabilizer, representing roughly 11% of our net service revenue. We have robust visibility into 2026 in this market, supported by recurring federal programs and strong municipal demand in water, environmental, and geospatial services. Automation and recurring federal mapping programs will continue to underpin growth in this segment, and our geospatial and remote sensing services continue to enhance efficiency across our broader business. Operating margins in this market remain among the highest company-wide, and we expect growth to be driven by technology-enabled delivery and long-term public sector funding. Now I'd like to address the current operating environment, which includes the government shutdown. While the shutdown is causing some delays in project progression, invoicing collections within select federally supported programs and federally adjacent projects, our direct exposure to federal contracts remains limited, and we are not experiencing any unusual cancellation activity. Most of our public sector work is performed for state and local governments, which provide a natural buffer to extended interruptions such as the current government shutdown. We continue to monitor this particular situation closely, noting that the longer the shutdown continues, the more likely it is to extend near-term revenue somewhat further into the future. Looking ahead, our focus remains clear. We'll continue to convert backlog into revenue while improving utilization and project delivery efficiency. We will aggressively leverage technology and innovation to enhance margins and scalability, and we'll deploy capital strategically through disciplined M&A and organic growth derived from continued investment in people and systems. We're reaffirming our full year 2025 guidance. We're also initiating 2026 guidance of net revenue between $465 million and $480 million and an adjusted EBITDA margin between 17% and 17.5%. With that, I'll now turn the call back to Jasmine for questions.

Our first question comes from Laura Maher with B. Riley Securities.

So some of the larger specialty contractors have mentioned total solutions packages. Do you see this creating competitive pressure in your data center business?

No, I don't think that that's going to impede on any of the work that we do. I think it's similar to any trends in design build or that don't necessarily compete with other industries. I think it's a big market. And even when firms offer complete solutions, they end up subcontracting a good portion of that to specialized contractors like us anyway. So I don't think that's a real threat.

I agree with that.

And then one more. On M&A, are there specific service lines or regions where you still see gaps relative to your growth objectives?

Yes. We're really focused on some of these markets that we've been focused on expanding into for years now, especially transportation, certainly power and energy and data centers and also water-related opportunities as they come along. No specific regions we're focused on. We find the, I'd say, usual suspects appealing Texas, California, the Southeast, but we're not particularly focused on any particular region in the U.S.

It's more service line and skill set focused than it is geographically focused.

Our next question comes from Andy Wittmann with Baird.

I guess I'll start with some top line questions here. It looks like the fourth quarter guidance here for '25 is implying a bit of a revenue acceleration to something in the double digits. So I think that's right. Bruce, I was just wondering if you could comment on which end markets you think will pick up the growth rate here as you move into fourth quarter and what gives you confidence in that?

Yes. The increase represents a couple of days' worth of work. I wouldn't necessarily say it's anything out of the ordinary. We believe that we have a strong backlog of work progressing well. Sales are robust, particularly in what we classify as shorter-term contracts, which allow us to generate revenue fairly quickly. Thus, we are confident that with just a couple of days' improvement in the fourth quarter, we can achieve revenue growth.

You're suggesting that there are additional workdays in the fourth quarter?

No, I'm just saying that the amount of revenue to be accelerated is equivalent to just a couple of days' worth of work. So, a couple of improved utilization weeks here and there.

Got it. That makes sense.

Yes, we don't play the game of counting the days of the quarter. While quarters may have extra days and more holidays, we simply view them as quarters.

Yes, I understand. When you mentioned days' worth of work, I was trying to clarify that essentially you're suggesting we should maximize the utilization of our team. The positive side of that is it significantly enhances our margins. That makes sense. On a related note, regarding performance in the third quarter, I wanted to ask about margins as well. Since your business mix is changing due to diversification, I was curious if you addressed the margins earlier in the call. I believe they decreased slightly compared to last year. Was this due to investments in growth, utilization rates, or the change in mix? Each quarter has its unique factors, but I’d like to gain a clearer understanding of this in relation to the previous year.

Yes. I think, Andy, every year, as you said, every quarter is a little bit different. We talk about how we time labor sometimes can impact margins. You have to prepare for what's coming next. And so sometimes we'll get a little bit heavy on labor in a quarter in anticipation of stronger growth in the next quarter. We are not downsizing labor at the moment, contrary to employment reports that have come out. We're in the hiring game. And so when labor becomes available, we take it. The margin change, there is a couple of hundred thousand dollars' worth of revenue on this fixed set of labor. So we talk about our bands today is a 16% to 18% margin. We'll fall in there between periods. And so I don't think there's anything to read into a 40 basis point change between last year and this year in margin.

And then I guess there's a similar question that just happened since you gave us initial guidance for '26. Your margins are either up a little or up a little bit more to the 17% to 17.5% range. Obviously, this is, I think, a good year to be able to get the margins up there. And I was just wondering kind of what the knobs are to get you there next year. You talked about the overhead leverage. I have to imagine that's a big part of it. But what other things? Is the mix in your favor? Maybe, Bruce, why don't you just kind of fill us into what do you think is going to drive the year-over-year margin expansion in '26?

Yes, I believe the improvement is largely due to better overhead leverage. We remain focused on increasing revenue at a faster rate than our overhead expenses, which allows for additional margin expansion. We also see improved utilization of our labor. Looking ahead to next year and considering the work mix, we anticipate achieving this with a slightly higher revenue factor, which measures our labor efficiency. This contributes to some margin gain that's somewhat included in the total overhead since we combine these elements. Ultimately, it's about how we are leveraging geospatial technologies and existing technologies to enhance workforce efficiency and drive revenue growth more rapidly than our overhead increase.

Our next question comes from Alex Rygiel with Texas Capital.

Very nice quarter there. As it relates to data centers, can you talk a bit about bidding opportunities and how you see that progressing sort of in 2026 versus maybe 2025 and 2024? Are you seeing the sort of bidding opportunities or new project opportunities to be greater than the prior year? Or is the average project or contract size kind of greater than they have been in the past year? Just a little bit of color on that.

Yes. Alex, it's certainly tailwinds in that market. So there are continuing greater number of opportunities. The facilities are getting larger. Really as the data centers, we've spoken to this is, with AI as opposed to before the lack of being critical to be located proximate to fiber just provides a lot more opportunities for data centers spread out across the country. We're seeing lots of drivers to locate data centers near natural gas to power them. And our acquisition of e3i, as an example, just has expanded our network. So that in itself expands our opportunities.

I think Alex, another point is that data centers have become highly sought after by landowners. As a result, there is a certain amount of data center work that happens within our Building Infrastructure portfolio. When landowners approach us and ask about options, they want their projects to be data centers because there is a strong demand for them now. We conduct feasibility work related to data centers within that segment. However, it only becomes part of our data center revenue portfolio once it is officially identified as a data center. The increased opportunity for land to be used for data centers has led to more activity in this area.

And to take that another step, clearly, landowners in the past have seen sort of solar as being a big opportunity. How do you see your solar business right now and sort of as we think about the next 1 to 2 years?

For the next year, we're seeing it very strong. It's really being driven by the, I guess, a moment in the tax credits next year that's driving a lot of demand to accelerate planning of projects to get a critical mass of the project done before the middle of next year. So we see it very strong in 2026, certainly likely to taper off in 2027, but we're well positioned in that market and the development of solar projects is not going to go away. So we see a very strong 2026, cautious outlook after that.

And then lastly, your M&A activity this year has been, I don't know, a little bit slower than the last few years. Any comment on that and how we can think about M&A activity in 2026?

We're still committed to M&A. We got a strong pipeline of opportunities. I think we've shifted maybe more focus of our M&A to really focus on strategic opportunities. And certainly, with the new revolver in place and that dry powder really positions us for some strong M&A activity towards the end of this year and certainly into 2027. So we're still fully committed to inorganic growth to supplement our organic growth.

Our next question comes from Aaron Spychalla with Craig-Hallum.

Maybe first on Building Infrastructure. Can you kind of talk about how you're thinking about growth in that segment in 2026? It sounds like there's some crosscurrents between some of the subareas. And just maybe talk about your ability to kind of move labor kind of as projects kind of ebb and flow in that segment.

Well, the nice thing about our business is the skill set that we apply to Building Infrastructure is transferable to many of our other markets. So we do move that labor around readily. We're seeing with the interest rate decline, we're seeing projects come off the shelf earlier in the year and was a little more localized geographically. As we come into the end of the year here, we're seeing it more broadly across the geographies that we're located in. So we're probably looking at in 2026, maybe as we allocate labor, I would bet the directionality would be some labor allocated toward the Building Infrastructure as opposed to away from it.

All right. Regarding operating expenses, there was an earlier question about the increase in selling, general, and administrative expenses this quarter. Can you provide some insight into the allocation of projects and timing? Is this increase intended to support anticipated growth, or is it more opportunistic? A bit of context on this would be helpful.

Yes. One of the reasons we discuss total overhead instead of SG&A in relation to COGS is that our labor and operations may be allocated slightly more to COGS or SG&A depending on the utilization and the balance of direct and indirect labor during a given period. I wouldn't say that there's anything significant driving SG&A higher. It will increase as we grow. The key is whether we can manage it to grow at a slower pace than revenues. Therefore, I view it as the overall total being reduced as a percentage of revenue, which is our primary focus.

And then just maybe one last one. I mean, on labor, how are you feeling about availability there as you grow the business moving forward?

We have a very proactive talent acquisition team. Although the market is challenging when it comes to finding staff, the candidates are available. We have an effective process in place for recruiting and onboarding. Therefore, we are well positioned to acquire the labor we need.

And actually it's why we are so focused on developing labor leveraging innovation within the organization, not to shrink the labor pool, but to not have to grow it as dramatically as otherwise.

Our next question comes from Jeff Martin with ROTH Capital Partners.

I wanted to dive into a specific segment of the backlog. If you look at power and utilities, it looks like it's on a trajectory to double from where it was in the middle of 2024. Where are you seeing the strongest backlog growth there? And is this the segment that you're most focused on for M&A?

We are definitely observing this in the linear projects and transmission corridors, and we have now included data centers in that mix. Our activity in data centers is definitely increasing. While I wouldn’t call it the main focus of our mergers and acquisitions, it is one of several key areas we are concentrating on, including power and utilities, energy, and transportation, which we find particularly exciting and promising.

And then just how would you characterize the environment in terms of the timeliness of projects? And by timeliness, I mean, starting on time, no delays, no weather delays, no other factors driving. because I know Transportation is a bit of a wildcard. I mean the large projects that can come on, they can get pushed out a month or two, they can get pushed out a little longer. If you could just give an update of kind of how that's progressed this year. I know going back several quarters, Transportation kind of caused some disruption for you. So any insight there would be really helpful.

We experienced some delays in the start of certain projects, but they are still ongoing, which indicates that this business can be unpredictable. That’s why we provide guidance on a yearly basis rather than quarterly. Recently, we have encountered some delays attributed solely to specific project issues, with no influence from the broader economy or transportation funding.

And then how would you characterize the M&A environment from a valuation standpoint? I know when you allude to strategic acquisitions, I assume those being larger than you've done historically. So just curious how you're seeing the competitiveness of those more strategic level acquisitions out in the market today?

It's competitive, but no more so than it has been over the last year. These strategic opportunities attract a lot of attention, so we need to be focused and sell ourselves effectively. However, we are successfully securing our share of valuable strategic opportunities.

Our next question comes from Jean Veliz with D.A. Davidson.

I have a quick question regarding your comments on hiring. You mentioned that you are in hiring mode, and I'd like to understand how the project delays and the growth you're experiencing will affect the growth cadence in 2026 compared to the previous year. Should we anticipate a greater increase in the first half of next year compared to this year? Additionally, how should we consider EBITDA margins in light of a potential rise in SG&A? Should we expect efficiencies to begin to surface as the year progresses, and when might those efficiencies be noticeable?

I think one thing we're hoping for, for next year, the first half of this year was a relatively chaotic time with a lot of disruption associated with uncertainty around tariffs and other economic issues. And so I think that, that stifled the first half a little bit. So hopefully, ex that factor, we'll see a little bit more balanced growth first quarter, second quarter of next year into third and kind of through the end of the year. So I think our cycles are relatively the same. Hopefully, there'll be maybe a little bit more calm with rates lower and some of the transition issues behind us. Are you there?

In terms of the EBITDA margins, thank you for the insights. I wanted to gain a better understanding regarding the increase in projects or anticipated work as we head into the fourth quarter. Should we expect the SG&A to return to the levels seen in the second quarter, or will it align more closely with what you experienced this quarter?

I think it will be in between.

Makes sense. And just, I guess, into 2026, going back to my first question, should we expect more efficiencies that you talked about have a greater impact in SG&A sort of from the start of 2026? Or will that develop more as you head into the second half of 2026. Any color or comment around that helps.

Yes. I would expect it to be more beneficial on a relative basis in the second half of the year, but still be beneficial in the first half of the year.

There are currently no questions registered. There are no questions waiting at this time, so I'll pass the conference back over to the team for any closing remarks.

Thank you, Jasmine, and thank you, everyone, for joining us on this call this morning. We're really looking forward to finishing out the year on a high note and certainly looking forward to a banner 2026. So thanks for all the employees who are listening for all you're doing and for all the investors for the faith you put into us and for the analysts for staying in touch with us. With that, I'm going to wrap it up. Good morning, everyone.

Ladies and gentlemen, that will conclude today's conference call. Thank you for joining.