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Earnings analysis · 10-Q

EFOR earnings analysis

Filed October 29, 2026 · Our reading of the company's report

The latest report

Everforth delivered modest 2.0% year-over-year revenue growth to $1,031.4 million, led by 3.8% growth in the Federal Government segment, but profitability weakened substantially. Gross margin declined 110 basis points…

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Everforth delivered modest 2.0% year-over-year revenue growth to $1,031.4 million, led by 3.8% growth in the Federal Government segment, but profitability weakened substantially. Gross margin declined 110 basis points to 28.3%, net income fell 39.4% to $23.1 million, and nine-month operating cash flow dropped to $129.4 million from $225.6 million. Liquidity is adequate with $147.5 million of cash and $227.0 million of revolver availability, but higher borrowings, weaker cash conversion, lower bookings, and continued margin pressure are material concerns. The filing reports no material changes to the risk factors in the 2025 10-K.

Read the original on SEC.gov

From revenue to operating profit

Where each $100 of revenue went in this report.

Of every $100 of revenue Cost of sales $71 Operating expenses $23 Left as operating profit $6

Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.

Where revenue came from

The business segments reported by the company.

Commercial 69.8% Federal Government 30.2%

Shares of the segments disclosed in this filing, largest first.

What stood out

  • Revenue growth led by Federal Government

    Consolidated revenue increased 2.0% year over year to $1,031.4 million. Federal Government revenue grew 3.8% to $311.5 million, while Commercial revenue rose 1.2% to $719.9 million.

  • Operating margin remained positive

    Operating margin was approximately 5.5%, calculated from $291.6 million of gross profit less $217.7 million of SG&A and $17.3 million of amortization, versus approximately 6.7% based on the prior-year figures.

  • Liquidity remains adequate

    The company reported $147.5 million of cash and $528.5 million of working capital at September 30, 2026, with approximately $227.0 million available under its $600.0 million revolving credit facility.

  • Funded backlog improved

    Funded federal contract backlog increased to $638.1 million from $609.8 million at September 30, 2025, although total contract backlog was $2,943.4 million versus $3,086.5 million a year earlier.

  • Operating cash flow exceeded capex

    Net cash provided by operating activities was $129.4 million for the first nine months, and capital expenditures were $27.5 million, implying approximately $101.9 million of operating cash flow less capital expenditures before other investing items.

What to watch

  • Profitability deteriorated materially

    Net income declined 39.4% year over year to $23.1 million from $38.1 million. The effective tax rate increased to 36.5% from 24.6%, while interest expense rose to $20.2 million from $17.4 million.

  • Gross-margin compression continued

    Consolidated gross margin compressed to 28.3% from 29.4%, while gross profit declined 1.8% to $291.6 million. Commercial gross margin fell 130 basis points to 31.9%, driven by lower permanent-placement mix, foreign exchange, and lower-margin cloud and infrastructure services.

  • Cash conversion weakened

    Operating cash flow fell to $129.4 million from $225.6 million in the prior-year nine-month period. Changes in operating assets and liabilities used $49.5 million, primarily because of increased accounts-receivable days sales outstanding.

  • Debt and interest burden increased

    Weighted-average outstanding borrowings increased to $1.45 billion from $1.22 billion, and net borrowings under the senior secured credit facility totaled $225.5 million during the first nine months.

  • Federal bookings weakened

    Federal Government trailing-twelve-month new contract awards declined to $1,049.2 million from $1,158.6 million, and the Federal Government book-to-bill ratio was 0.9 to 1.

  • Strategic and integration costs rose

    SG&A included $8.3 million of acquisition, integration, and strategic-planning expenses versus $4.2 million a year earlier; nine-month expenses were $30.9 million versus $15.8 million.

Management's outlook

The 10-Q provides no quantitative revenue or EPS guidance. Management states that cash on hand, expected operating cash flows, and revolver availability should be sufficient for obligations, working capital, and capital expenditures for the next 12 months and beyond.

This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.